HF 3201

1st Unofficial Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

1.1A bill for an act

1.2relating to financing and operation of government in this state; making
1.3policy, technical, administrative, payment, enforcement, collection, proceeds
1.4distribution, refund, and other changes to income, franchise, property, state
1.5and local sales and use, motor vehicle sales, minerals, estate, cigarette and
1.6tobacco products, gasoline, liquor, insurance premiums, mortgage and deed,
1.7healthcare gross revenues, and wheelage taxes, and other taxes and tax-related
1.8provisions; conforming to certain changes in the Internal Revenue Code;
1.9changing accelerated sales tax payments; providing for licensure of assessors;
1.10changing provisions relating to the sustainable forest resource management
1.11incentive program; providing for aids to local governments; providing for
1.12state debt collection; changing border city allocation, tax increment financing,
1.13and economic development, provisions, powers, and incentives; authorizing
1.14and providing terms and conditions related to the issuance of obligations and
1.15the financing of public improvements and services; changing and imposing
1.16powers, duties, and requirements on certain local governments and authorities
1.17and on the commissioner of revenue and other state departments and agencies;
1.18extending the time for certain publications of notices; requiring notices and
1.19publication of information; extending a petrofund fee exemption; providing for
1.20purchase of forest lands; authorizing and validating trusts to pay certain public
1.21postemployment benefits; providing for iron range higher education grants;
1.22changing revenue recapture, local impact notes, and data practices provisions;
1.23providing penalties; appropriating money;amending Minnesota Statutes 2006,
1.24sections 3.987, subdivision 1; 3.988, subdivision 3; 3.989, subdivisions 2,
1.253; 16A.103, subdivision 2; 16D.04, subdivisions 1, 2; 16D.11, subdivisions
1.262, 7; 62I.06, subdivision 6; 71A.04, subdivision 1; 97A.061, subdivision 2;
1.27118A.03, subdivision 3; 123B.61; 127A.48, subdivision 2; 270.071, subdivision
1.287; 270.072, subdivisions 2, 3, 6; 270.074, subdivision 3; 270.076, subdivision
1.291; 270.41, subdivisions 1, 2, 3, 5, by adding a subdivision; 270.44; 270.45;
1.30270.46; 270.47; 270.48; 270.50; 270A.03, subdivision 2; 270A.10; 270C.306;
1.31270C.34, subdivision 1; 270C.446, subdivision 2; 270C.56, subdivision 1;
1.32270C.63, subdivision 9; 272.02, by adding subdivisions; 272.115, subdivision
1.331; 273.05, by adding a subdivision; 273.111, subdivision 3; 273.117; 273.121;
1.34273.124, subdivision 13, by adding a subdivision; 273.125, subdivision 8;
1.35273.128, subdivision 1; 273.13, subdivisions 22, 23, 25, by adding a subdivision;
1.36273.1315; 273.1398, subdivision 4; 273.33, subdivision 2; 273.37, subdivision 2;
1.37273.371, subdivision 1; 274.01, subdivision 1; 274.13, subdivision 1; 275.025,
1.38subdivision 3; 275.065, subdivision 5a, by adding a subdivision; 275.066;
1.39275.067; 275.61, subdivision 1; 276.04, subdivision 2, by adding a subdivision;
2.1276A.01, subdivision 3; 276A.04; 277.01, subdivision 2; 278.05, subdivision
2.26; 279.01, subdivision 1; 279.37, subdivision 1a; 280.39; 287.22; 287.2205;
2.3289A.02, subdivision 7; 289A.08, subdivision 11; 289A.09, subdivision 2;
2.4289A.12, subdivisions 4, 14; 289A.18, subdivision 1; 289A.20, subdivision
2.54; 289A.38, subdivision 7; 289A.40, subdivision 2; 289A.56, by adding a
2.6subdivision; 289A.60, subdivisions 8, 12, 15, 25, 27, by adding subdivisions;
2.7290.01, subdivisions 19a, 19c, 19d; 290.06, subdivisions 2c, 33; 290.067,
2.8subdivision 2b; 290.0671, subdivision 7; 290.0677, subdivision 1; 290.091,
2.9subdivisions 2, 3; 290.0921, subdivision 3; 290.10; 290.17, subdivision 2;
2.10290.191, subdivision 8; 290.92, by adding a subdivision; 290A.03, subdivision 7;
2.11290B.03, subdivision 2; 290C.02, subdivision 3; 290C.04; 290C.05; 290C.07;
2.12290C.11; 291.005, subdivision 1; 291.215, subdivision 1; 295.52, subdivisions
2.134, 4a; 295.54, subdivision 2; 296A.18, subdivision 4; 297A.61, subdivisions
2.143, 4, 7, 10, 24, by adding subdivisions; 297A.63, subdivision 1; 297A.665;
2.15297A.668, by adding a subdivision; 297A.669, subdivisions 3, 13, 14, by adding
2.16subdivisions; 297A.67, subdivisions 7, 8, 9; 297A.68, subdivisions 11, 16,
2.1735; 297A.69, subdivision 2; 297A.70, subdivision 7, by adding a subdivision;
2.18297A.72; 297A.90, subdivision 2; 297B.035, subdivision 1; 297F.06, subdivision
2.194; 297F.09, subdivision 10; 297F.21, subdivision 3; 297F.25, by adding a
2.20subdivision; 297G.09, subdivision 9; 297I.06, subdivisions 1, 2; 297I.15, by
2.21adding a subdivision; 297I.20, subdivision 2; 297I.40, subdivision 5; 298.22, by
2.22adding a subdivision; 298.2214, subdivision 2; 298.24, subdivision 1; 298.25;
2.23298.28, subdivisions 4, 5, by adding a subdivision; 298.282, subdivision 1;
2.24298.292, subdivision 2; 298.296, subdivision 2; 298.2961, subdivisions 4, 5;
2.25298.75, subdivisions 1, 3, 7, by adding a subdivision; 331A.05, subdivision
2.262; 360.031; 365A.02; 365A.04; 365A.08; 365A.095; 373.01, subdivision 3;
2.27373.40, subdivision 4; 375B.09; 383B.117, subdivision 2; 383B.77, subdivisions
2.281, 2; 410.32; 412.301; 435.193; 453A.02, subdivision 3; 469.169, by adding a
2.29subdivision; 469.1734, subdivision 6; 469.174, subdivisions 10, 10a; 469.175,
2.30subdivisions 1, 3; 469.176, subdivisions 1, 2, 4l, 7; 469.1761, subdivision
2.311; 469.1763, subdivision 2; 469.177, subdivision 1; 469.178, subdivision 7;
2.32469.1791, subdivision 3; 473.39, by adding subdivisions; 475.51, subdivision
2.334; 475.52, subdivision 6; 475.53, subdivision 1; 475.58, subdivisions 1, 3b;
2.34477A.011, subdivision 36; 477A.013, subdivisions 8, 9; Minnesota Statutes
2.352007 Supplement, sections 270A.03, subdivision 5; 272.02, subdivision 64;
2.36273.124, subdivision 14; 275.065, subdivision 3; 290.01, subdivisions 19, 19b,
2.3731; 290A.03, subdivision 15; 424A.10, subdivision 3; Laws 1973, chapter 393,
2.38section 1, as amended; Laws 1980, chapter 511, section 1, subdivision 2, as
2.39amended; Laws 1988, chapter 645, section 3, as amended; Laws 1989, chapter
2.40211, section 8, subdivision 4, as amended; Laws 1994, chapter 587, article 9,
2.41section 14, subdivisions 1, 2, 3; Laws 1995, chapter 264, article 5, sections 44,
2.42subdivision 4, as amended; 45, subdivision 1, as amended; Laws 2003, chapter
2.43128, article 1, section 172, as amended; Laws 2005, First Special Session chapter
2.443, article 5, section 39; article 10, section 23, as amended; Laws 2006, chapter
2.45259, article 11, section 3; proposing coding for new law in Minnesota Statutes,
2.46chapters 270; 270C; 273; 274; 290C; 297A; 360; 471; 475; repealing Minnesota
2.47Statutes 2006, sections 16A.1522; 163.051, subdivision 5; 270.073; 270.41,
2.48subdivision 4; 270.43; 270.51; 270.52; 270.53; 295.60; 297A.61, subdivision
2.4920; 297A.668, subdivision 6; 297A.67, subdivision 22; 469.174, subdivision 29;
2.50Laws 1973, chapter 393, section 2; Laws 1994, chapter 587, article 9, section 8,
2.51subdivision 1, as amended; Laws 1998, chapter 389, article 11, section 18.
2.52BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

3.1ARTICLE 1

3.2AIDS TO LOCAL GOVERNMENTS

3.3    Section 1. Minnesota Statutes 2006, section 477A.011, subdivision 36, is amended to
3.4read:
3.5    Subd. 36. City aid base. (a) Except as otherwise provided in this subdivision,
3.6"city aid base" is zero.
3.7    (b) The city aid base for any city with a population less than 500 is increased by
3.8$40,000 for aids payable in calendar year 1995 and thereafter, and the maximum amount
3.9of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also
3.10increased by $40,000 for aids payable in calendar year 1995 only, provided that:
3.11    (i) the average total tax capacity rate for taxes payable in 1995 exceeds 200 percent;
3.12    (ii) the city portion of the tax capacity rate exceeds 100 percent; and
3.13    (iii) its city aid base is less than $60 per capita.
3.14    (c) The city aid base for a city is increased by $20,000 in 1998 and thereafter and
3.15the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
3.16paragraph (c), is also increased by $20,000 in calendar year 1998 only, provided that:
3.17    (i) the city has a population in 1994 of 2,500 or more;
3.18    (ii) the city is located in a county, outside of the metropolitan area, which contains a
3.19city of the first class;
3.20    (iii) the city's net tax capacity used in calculating its 1996 aid under section
3.21477A.013 is less than $400 per capita; and
3.22    (iv) at least four percent of the total net tax capacity, for taxes payable in 1996, of
3.23property located in the city is classified as railroad property.
3.24    (d) The city aid base for a city is increased by $200,000 in 1999 and thereafter and
3.25the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
3.26paragraph (c), is also increased by $200,000 in calendar year 1999 only, provided that:
3.27    (i) the city was incorporated as a statutory city after December 1, 1993;
3.28    (ii) its city aid base does not exceed $5,600; and
3.29    (iii) the city had a population in 1996 of 5,000 or more.
3.30    (e) The city aid base for a city is increased by $450,000 in 1999 to 2008 and the
3.31maximum amount of total aid it may receive under section 477A.013, subdivision 9,
3.32paragraph (c), is also increased by $450,000 in calendar year 1999 only, provided that:
3.33    (i) the city had a population in 1996 of at least 50,000;
3.34    (ii) its population had increased by at least 40 percent in the ten-year period ending
3.35in 1996; and
4.1    (iii) its city's net tax capacity for aids payable in 1998 is less than $700 per capita.
4.2    (f) The city aid base for a city is increased by $150,000 for aids payable in 2000 and
4.3thereafter, and the maximum amount of total aid it may receive under section 477A.013,
4.4subdivision 9 , paragraph (c), is also increased by $150,000 in calendar year 2000 only,
4.5provided that:
4.6    (1) the city has a population that is greater than 1,000 and less than 2,500;
4.7    (2) its commercial and industrial percentage for aids payable in 1999 is greater
4.8than 45 percent; and
4.9    (3) the total market value of all commercial and industrial property in the city
4.10for assessment year 1999 is at least 15 percent less than the total market value of all
4.11commercial and industrial property in the city for assessment year 1998.
4.12    (g) The city aid base for a city is increased by $200,000 in 2000 and thereafter, and
4.13the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
4.14paragraph (c), is also increased by $200,000 in calendar year 2000 only, provided that:
4.15    (1) the city had a population in 1997 of 2,500 or more;
4.16    (2) the net tax capacity of the city used in calculating its 1999 aid under section
4.17477A.013 is less than $650 per capita;
4.18    (3) the pre-1940 housing percentage of the city used in calculating 1999 aid under
4.19section 477A.013 is greater than 12 percent;
4.20    (4) the 1999 local government aid of the city under section 477A.013 is less than
4.2120 percent of the amount that the formula aid of the city would have been if the need
4.22increase percentage was 100 percent; and
4.23    (5) the city aid base of the city used in calculating aid under section 477A.013
4.24is less than $7 per capita.
4.25    (h) The city aid base for a city is increased by $102,000 in 2000 and thereafter, and
4.26the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
4.27paragraph (c), is also increased by $102,000 in calendar year 2000 only, provided that:
4.28    (1) the city has a population in 1997 of 2,000 or more;
4.29    (2) the net tax capacity of the city used in calculating its 1999 aid under section
4.30477A.013 is less than $455 per capita;
4.31    (3) the net levy of the city used in calculating 1999 aid under section 477A.013 is
4.32greater than $195 per capita; and
4.33    (4) the 1999 local government aid of the city under section 477A.013 is less than
4.3438 percent of the amount that the formula aid of the city would have been if the need
4.35increase percentage was 100 percent.
5.1    (i) The city aid base for a city is increased by $32,000 in 2001 and thereafter, and
5.2the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
5.3paragraph (c), is also increased by $32,000 in calendar year 2001 only, provided that:
5.4    (1) the city has a population in 1998 that is greater than 200 but less than 500;
5.5    (2) the city's revenue need used in calculating aids payable in 2000 was greater
5.6than $200 per capita;
5.7    (3) the city net tax capacity for the city used in calculating aids available in 2000
5.8was equal to or less than $200 per capita;
5.9    (4) the city aid base of the city used in calculating aid under section 477A.013
5.10is less than $65 per capita; and
5.11    (5) the city's formula aid for aids payable in 2000 was greater than zero.
5.12    (j) The city aid base for a city is increased by $7,200 in 2001 and thereafter, and
5.13the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
5.14paragraph (c), is also increased by $7,200 in calendar year 2001 only, provided that:
5.15    (1) the city had a population in 1998 that is greater than 200 but less than 500;
5.16    (2) the city's commercial industrial percentage used in calculating aids payable in
5.172000 was less than ten percent;
5.18    (3) more than 25 percent of the city's population was 60 years old or older according
5.19to the 1990 census;
5.20    (4) the city aid base of the city used in calculating aid under section 477A.013
5.21is less than $15 per capita; and
5.22    (5) the city's formula aid for aids payable in 2000 was greater than zero.
5.23    (k) The city aid base for a city is increased by $45,000 in 2001 and thereafter and
5.24by an additional $50,000 in calendar years 2002 to 2011, and the maximum amount of
5.25total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also
5.26increased by $45,000 in calendar year 2001 only, and by $50,000 in calendar year 2002
5.27only, provided that:
5.28    (1) the net tax capacity of the city used in calculating its 2000 aid under section
5.29477A.013 is less than $810 per capita;
5.30    (2) the population of the city declined more than two percent between 1988 and 1998;
5.31    (3) the net levy of the city used in calculating 2000 aid under section 477A.013 is
5.32greater than $240 per capita; and
5.33    (4) the city received less than $36 per capita in aid under section 477A.013,
5.34subdivision 9 , for aids payable in 2000.
5.35    (l) The city aid base for a city with a population of 10,000 or more which is located
5.36outside of the seven-county metropolitan area is increased in 2002 and thereafter, and the
6.1maximum amount of total aid it may receive under section 477A.013, subdivision 9,
6.2paragraph (b) or (c), is also increased in calendar year 2002 only, by an amount equal to
6.3the lesser of:
6.4    (1)(i) the total population of the city, as determined by the United States Bureau of
6.5the Census, in the 2000 census, (ii) minus 5,000, (iii) times 60; or
6.6    (2) $2,500,000.
6.7    (m) The city aid base is increased by $50,000 in 2002 and thereafter, and the
6.8maximum amount of total aid it may receive under section 477A.013, subdivision 9,
6.9paragraph (c), is also increased by $50,000 in calendar year 2002 only, provided that:
6.10    (1) the city is located in the seven-county metropolitan area;
6.11    (2) its population in 2000 is between 10,000 and 20,000; and
6.12    (3) its commercial industrial percentage, as calculated for city aid payable in 2001,
6.13was greater than 25 percent.
6.14    (n) The city aid base for a city is increased by $150,000 in calendar years 2002 to
6.152011 and by an additional $75,000 in calendar years 2009 to 2014 and the maximum
6.16amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is
6.17also increased by $150,000 in calendar year 2002 only and by $75,000 in calendar year
6.182009 only, provided that:
6.19    (1) the city had a population of at least 3,000 but no more than 4,000 in 1999;
6.20    (2) its home county is located within the seven-county metropolitan area;
6.21    (3) its pre-1940 housing percentage is less than 15 percent; and
6.22    (4) its city net tax capacity per capita for taxes payable in 2000 is less than $900
6.23per capita.
6.24    (o) The city aid base for a city is increased by $200,000 beginning in calendar
6.25year 2003 and the maximum amount of total aid it may receive under section 477A.013,
6.26subdivision 9 , paragraph (c), is also increased by $200,000 in calendar year 2003 only,
6.27provided that the city qualified for an increase in homestead and agricultural credit aid
6.28under Laws 1995, chapter 264, article 8, section 18.
6.29    (p) The city aid base for a city is increased by $200,000 in 2004 only and the
6.30maximum amount of total aid it may receive under section 477A.013, subdivision 9, is
6.31also increased by $200,000 in calendar year 2004 only, if the city is the site of a nuclear
6.32dry cask storage facility.
6.33    (q) The city aid base for a city is increased by $10,000 in 2004 and thereafter and the
6.34maximum total aid it may receive under section 477A.013, subdivision 9, is also increased
6.35by $10,000 in calendar year 2004 only, if the city was included in a federal major disaster
7.1designation issued on April 1, 1998, and its pre-1940 housing stock was decreased by
7.2more than 40 percent between 1990 and 2000.
7.3    (r) The city aid base for a city is increased by $25,000 $30,000 in 2006 only
7.42009 and thereafter and the maximum total aid it may receive under section 477A.013,
7.5subdivision 9 , is also increased by $25,000 in calendar year 2006 only if the city had a
7.6population in 2003 of at least 1,000 and has a state park for which the city provides rescue
7.7services and which comprised at least 14 percent of the total geographic area included
7.8within the city boundaries in 2000.
7.9    (s) The city aid base for a city with a population less than 5,000 is increased in
7.102006 and thereafter and the minimum and maximum amount of total aid it may receive
7.11under this section is also increased in calendar year 2006 only by an amount equal to
7.12$6 multiplied by its population.
7.13    (t) The city aid base for a city is increased by $80,000 in 2007 only 2009 and
7.14thereafter and the minimum and maximum amount of total aid it may receive under section
7.15477A.013 , subdivision 9, is also increased by $80,000 in calendar year 2007 2009 only, if:
7.16    (1) as of May 1, 2006, at least 25 percent of the tax capacity of the city is proposed
7.17to be placed in trust status as tax-exempt Indian land;
7.18    (2) the placement of the land is being challenged administratively or in court; and
7.19    (3) due to the challenge, the land proposed to be placed in trust is still on the tax
7.20rolls as of May 1, 2006.
7.21    (u) The city aid base for a city is increased by $100,000 in 2007 and thereafter and
7.22the minimum and maximum total amount of aid it may receive under this section is also
7.23increased in calendar year 2007 only, provided that:
7.24    (1) the city has a 2004 estimated population greater than 200 but less than 2,000;
7.25    (2) its city net tax capacity for aids payable in 2006 was less than $300 per capita;
7.26    (3) the ratio of its pay 2005 tax levy compared to its city net tax capacity for aids
7.27payable in 2006 was greater than 110 percent; and
7.28    (4) it is located in a county where at least 15,000 acres of land are classified as
7.29tax-exempt Indian reservations according to the 2004 abstract of tax-exempt property.
7.30    (v) The city aid base for a city is increased by $30,000 in 2009 only, and the
7.31maximum total aid it may receive under section 477A.013, subdivision 9, is also increased
7.32by $30,000 in calendar year 2009, only if the city had a population in 2005 of less than
7.333,000 and the city's boundaries as of 2007 were formed by the consolidation of two cities
7.34and one township in 2002.
7.35EFFECTIVE DATE.This section is effective for aids payable in calendar year
7.362009 and thereafter.

8.1    Sec. 2. Minnesota Statutes 2006, section 477A.013, subdivision 8, is amended to read:
8.2    Subd. 8. City formula aid. In calendar year 2004 and subsequent years, the
8.3formula aid for a city is equal to the need increase percentage multiplied by the difference
8.4between (1) the city's revenue need multiplied by its population, and (2) the sum of the
8.5city's net tax capacity multiplied by the tax effort rate; the taconite aids under sections
8.6298.28 and 298.282 to any city except a city directly impacted by a taconite mine or plant,
8.7multiplied by the following percentages:.
8.8    (i) zero percent for aids payable in 2004;
8.9    (ii) 25 percent for aids payable in 2005;
8.10    (iii) 50 percent for aids payable in 2006;
8.11    (iv) 75 percent for aids payable in 2007; and
8.12    (v) 100 percent for aids payable in 2008 and thereafter.
8.13    For purposes of this subdivision, "a city directly impacted by a taconite mine or
8.14plant" means: (1) Babbit, (2) Eveleth, (3) Hibbing, (4) Keewatin, (5) Mountain Iron, (6)
8.15Silver Bay, or (7) Virginia.
8.16No city may have a formula aid amount less than zero. The need increase percentage
8.17must be the same for all cities.
8.18    The applicable need increase percentage must be calculated by the Department of
8.19Revenue so that the total of the aid under subdivision 9 equals the total amount available
8.20for aid under section 477A.03 after the subtraction under section 477A.014, subdivisions
8.214 and 5 .
8.22EFFECTIVE DATE.This section is effective for aids payable in calendar year
8.232009 and thereafter.

8.24    Sec. 3. Minnesota Statutes 2006, section 477A.013, subdivision 9, is amended to read:
8.25    Subd. 9. City aid distribution. (a) In calendar year 2002 and thereafter, each
8.26city shall receive an aid distribution equal to the sum of (1) the city formula aid under
8.27subdivision 8, and (2) its city aid base. In calendar year 2009, each city shall receive an
8.28aid distribution equal to the sum of (1) the city formula aid under subdivision 8, (2) its city
8.29aid base, and (3) one-half of the difference between its total aid in the previous year under
8.30this subdivision and its city aid base in the previous year.
8.31(b) For aids payable in 2010 and thereafter, each city shall receive an aid distribution
8.32equal to (1) the city aid formula under subdivision 8, (2) its city aid base, and (3) its
8.33formula aid under subdivision 8 in the previous year, prior to any adjustments under
8.34this subdivision.
9.1    (b) (c) For aids payable in 2005 2009 and thereafter, the total aid for any city shall
9.2not exceed the sum of (1) ten percent of the city's net levy for the year prior to the aid
9.3distribution plus (2) its total aid in the previous year. For aids payable in 2005 2009 and
9.4thereafter, the total aid for any city with a population of 2,500 or more may not decrease
9.5from be less than its total aid under this section in the previous year by an amount greater
9.6than minus the lesser of $15 multiplied by its population, or ten percent of its net levy in
9.7the year prior to the aid distribution.
9.8    (c) For aids payable in 2004 only, the total aid for a city with a population less than
9.92,500 may not be less than the amount it was certified to receive in 2003 minus the greater
9.10of (1) the reduction to this aid payment in 2003 under Laws 2003, First Special Session
9.11chapter 21, article 5, or (2) five percent of its 2003 aid amount. (d) For aids payable in
9.122005 2009 and thereafter, the total aid for a city with a population less than 2,500 must not
9.13be less than the amount it was certified to receive in the previous year minus the lesser of
9.14$15 multiplied by its population, or five percent of its 2003 certified aid amount.
9.15    (d) (e) If a city's net tax capacity used in calculating aid under this section has
9.16decreased in any year by more than 25 percent from its net tax capacity in the previous
9.17year due to property becoming tax-exempt Indian land, the city's maximum allowed aid
9.18increase under paragraph (b) (c) shall be increased by an amount equal to (1) the city's tax
9.19rate in the year of the aid calculation, multiplied by (2) the amount of its net tax capacity
9.20decrease resulting from the property becoming tax exempt.
9.21EFFECTIVE DATE.This section is effective for aids payable in calendar year
9.222009 and thereafter.

9.23    Sec. 4. Laws 2006, chapter 259, article 11, section 3, is amended to read:
9.24    Sec. 3. MAHNOMEN COUNTY; COUNTY, CITY, SCHOOL DISTRICT,
9.25PROPERTY TAX REIMBURSEMENT; 2006 ONLY.
9.26    Subdivision 1. Aid appropriation. $600,000 is appropriated annually from the
9.27general fund to the commissioner of revenue to be used to make payments to compensate
9.28for the loss of property tax revenue due to the placement of land located in the city of
9.29Mahnomen that was put in trust status by the United Stated Department of the Interior,
9.30Bureau of Indian Affairs, during calendar year 2006 related to the trust conversion
9.31application of the Shooting Star Casino. The commissioner shall pay the county of
9.32Mahnomen, $450,000; the city of Mahnomen, $80,000; and Independent School District
9.33No. 432, Mahnomen, $70,000. The payments shall be made on July 20, 2006 of 2008
9.34and each subsequent year.
10.1    Subd. 2. School district tax base adjustments. The Department of Revenue
10.2must reduce the referendum market value and the adjusted net tax capacity certified
10.3for assessment year 2005 used to calculate school levies for taxes payable in 2007
10.4for Independent School District No. 432, Mahnomen, by the amounts of any values
10.5attributable to property that is no longer subject to property taxation because the land has
10.6been placed in trust in calendar year 2006 through action of the United States Department
10.7of Interior, Bureau of Indian Affairs. The Mahnomen County auditor must certify the
10.8reductions in value to the Department of Revenue in the form and manner specified by the
10.9Department of Revenue.
10.10EFFECTIVE DATE.This section is effective for aids payable in calendar year
10.112008 and thereafter.

10.12    Sec. 5. MAHNOMEN COUNTY; CITY, COUNTY, AND SCHOOL DISTRICT
10.13TAX BASE ADJUSTMENTS.
10.14    (a) The commissioner of revenue must reduce the referendum market value and
10.15adjusted net tax capacity used to calculate school levies beginning with taxes payable in
10.162009 and subsequent years for Independent School District No. 432, Mahnomen, by
10.17the amounts attributable to the Shooting Star Casino, which is pending placement into
10.18trust status by the United States Department of the Interior, Bureau of Indian Affairs.
10.19This adjustment shall be made for each assessment year that the property remains on
10.20the tax rolls. The Mahnomen County auditor must certify the reductions in value to the
10.21Department of Revenue in the form and manner specified by the commissioner of revenue.
10.22    (b) The commissioner of revenue must reduce the county and city net tax capacities
10.23used to calculate aids under Minnesota Statutes, sections 477A.011 to 477A.03, beginning
10.24with aids payable in 2009 for the county of Mahnomen and the city of Mahnomen, by the
10.25amounts attributable to property that is pending placement into trust status by the United
10.26States Department of the Interior, Bureau of Indian Affairs. This adjustment shall be made
10.27for each assessment year that the property remains on the tax rolls.
10.28EFFECTIVE DATE.This section is effective for aids and levies payable in 2009
10.29and thereafter.

10.30    Sec. 6. UTILITY PROPERTY; TAX BASE ADJUSTMENTS FOR
10.31CALCULATION OF SCHOOL DISTRICT AIDS AND LEVIES.
10.32    For purposes of calculating school levies and aids for fiscal years 2010 and 2011
10.33only, the commissioner of revenue shall compute the adjusted net tax capacity and
11.1referendum market value as if the tax base changes resulting from the amendments to
11.2Minnesota Rules, chapter 8100, including the phase-in provisions of Minnesota Rules,
11.3part 8100.0800, were effective one year earlier.

11.4    Sec. 7. UTILITY PROPERTY; TAX BASE ADJUSTMENTS FOR
11.5CALCULATION OF COUNTY, CITY, AND TOWN AIDS.
11.6    For purposes of calculating aid for towns and cities under section 477A.013, and for
11.7counties under section 477A.0124, for payment in 2009 and 2010 only, the commissioner
11.8of revenue shall calculate the adjusted net tax capacity of cities and counties, as defined
11.9in sections 477A.011 and 477A.0124, as if the tax base changes resulting from the
11.10amendments to Minnesota Rules, chapter 8100, including the phase-in provisions of
11.11Minnesota Rules, part 8100.0800, were effective one year earlier.

11.12ARTICLE 2

11.13PROPERTY TAXES

11.14    Section 1. Minnesota Statutes 2006, section 97A.061, subdivision 2, is amended to
11.15read:
11.16    Subd. 2. Allocation. (a) Except as provided in subdivision 3, the county treasurer
11.17shall allocate the payment among the county, towns, and school districts on the same basis
11.18as if the payments were taxes on the land received in the year. Payment of a town's or a
11.19school district's allocation must be made by the county treasurer to the town or school
11.20district within 30 days of receipt of the payment to the county. The county's share of the
11.21payment shall be deposited in the county general revenue fund.
11.22    (b) The county treasurer of a county with a population over 39,000 but less than
11.2342,000 in the 1950 federal census shall allocate the payment only among the towns and
11.24school districts on the same basis as if the payments were taxes on the lands received
11.25in the current year.
11.26    (c) If a town received a payment in calendar year 2006 or thereafter under this
11.27subdivision, and subsequently incorporated as a city, the city will continue to receive any
11.28future year's allocations that would have been made to the town had it not incorporated,
11.29provided that the payments will terminate if the governing body of the city passes an
11.30ordinance that prohibits hunting within the boundaries of the city.
11.31EFFECTIVE DATE.This section is effective retroactively for aid payments made
11.32in 2007 and thereafter.

12.1    Sec. 2. Minnesota Statutes 2006, section 127A.48, subdivision 2, is amended to read:
12.2    Subd. 2. Methodology. In making its annual assessment/sales ratio studies, the
12.3Department of Revenue must use a methodology consistent with the most recent Standard
12.4on Assessment Ratio Studies published by the assessment standards committee of the
12.5International Association of Assessing Officers. The commissioner of revenue shall
12.6supplement this general methodology with specific procedures necessary for execution of
12.7the study in accordance with other Minnesota laws impacting the assessment/sales ratio
12.8study. The commissioner shall document these specific procedures in writing and shall
12.9publish the procedures in the State Register, but these procedures will not be considered
12.10"rules" pursuant to the Minnesota Administrative Procedure Act. When property is
12.11sold and the purchaser changes its use in a manner that would result in a change of
12.12classification of the property, the assessment sales ratio study under this subdivision must
12.13take into account that changed classification as soon as practicable. A change in status
12.14from homestead to nonhomestead or from nonhomestead to homestead is not a change
12.15under this subdivision. For purposes of this section, sections 270.12, subdivision 2,
12.16clause (8), and 278.05, subdivision 4, the commissioner of revenue shall exclude from
12.17the assessment/sales ratio study the sale of any nonagricultural property which does not
12.18contain an improvement, if (1) the statutory basis on which the property's taxable value
12.19as most recently assessed is less than market value as defined in section 273.11, or (2)
12.20the property has undergone significant physical change or a change of use since the most
12.21recent assessment.
12.22EFFECTIVE DATE.This section is effective the day following final enactment.

12.23    Sec. 3. Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision
12.24to read:
12.25    Subd. 85. Modular homes used as models by dealers. (a) A modular home
12.26is exempt if it:
12.27    (1) is owned by a modular home dealer and is located on land owned or leased
12.28by that dealer;
12.29    (2) is a single-family model home;
12.30    (3) is not available for sale and is used exclusively as a model;
12.31    (4) is not permanently connected to any utilities except electricity; and
12.32    (5) is situated on a temporary foundation.
12.33    (b) The exemption under this subdivision is allowable for up to five assessment
12.34years after the date it becomes located on the property, provided that the modular home
12.35continues to meet all of the criteria under this subdivision each year. The owner of a
13.1modular model home must notify the county assessor within 60 days that it has been
13.2constructed or located on the property and must again notify the assessor if the modular
13.3home ceases to meet any of the criteria. If more than one modular home is constructed or
13.4situated on a property, the owner must notify the assessor within 60 days for each of the
13.5models placed on the property.
13.6    (c) For purposes of this subdivision, a "modular home" means a building or
13.7structural unit that has been in whole or substantial part manufactured or constructed at an
13.8off-site location to be wholly or partially assembled on-site as a single family dwelling.
13.9Construction of the modular home must comply with applicable standards adopted in
13.10Minnesota Rules authorized under Minnesota Statutes, chapter 16B. A modular home does
13.11not include a structure subject to the requirements of the National Manufactured Home
13.12Construction and Safety Standards Act of 1974 or prefabricated buildings, as defined in
13.13Minnesota Statutes, section 327.31, subdivision 6.
13.14EFFECTIVE DATE.This section is effective for assessment year 2008 and
13.15thereafter, for taxes payable in 2009 and thereafter. The five-year assessment time period
13.16begins with the 2008 assessment for a modular model home currently situated provided
13.17it meets all of the criteria and the county assessor is notified within 90 days of the day
13.18following final enactment.

13.19    Sec. 4. Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision
13.20to read:
13.21    Subd. 86. Apprenticeship training facilities. All or a portion of a building used
13.22exclusively for a state-approved apprenticeship program through the Department of Labor
13.23and Industry is exempt if (1) it is owned and operated by a nonprofit corporation, (2) the
13.24program participants receive no compensation, and (3) it is located in the Minneapolis and
13.25St. Paul standard metropolitan statistical area as determined by the 2000 federal census or
13.26in a city outside the Minneapolis and St. Paul standard metropolitan statistical area that
13.27has a population of 7,500 or greater according to the most recent federal census. This
13.28exemption does not include land.
13.29EFFECTIVE DATE.This section is effective for assessment year 2008 and
13.30thereafter, for taxes payable in 2009 and thereafter.

13.31    Sec. 5. Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision
13.32to read:
14.1    Subd. 87. Monosloped roofs for feedlots and manure storage areas. A
14.2monosloped, single-pitched roof installed over a feedlot or manure storage area to prevent
14.3runoff is exempt.
14.4EFFECTIVE DATE.This section is effective for assessment year 2008 for property
14.5taxes payable in 2009, and thereafter.

14.6    Sec. 6. Minnesota Statutes 2006, section 272.115, subdivision 1, is amended to read:
14.7    Subdivision 1. Requirement. Except as otherwise provided in subdivision 5,
14.8whenever any real estate is sold for a consideration in excess of $1,000, whether by
14.9warranty deed, quitclaim deed, contract for deed or any other method of sale, the grantor,
14.10grantee or the legal agent of either shall file a certificate of value with the county
14.11auditor in the county in which the property is located when the deed or other document
14.12is presented for recording. Contract for deeds are subject to recording under section
14.13507.235, subdivision 1 . Value shall, in the case of any deed not a gift, be the amount of
14.14the full actual consideration thereof, paid or to be paid, including the amount of any lien
14.15or liens assumed. The items and value of personal property transferred with the real
14.16property must be listed and deducted from the sale price. The certificate of value shall
14.17include the classification to which the property belongs for the purpose of determining
14.18the fair market value of the property, and shall include any proposed change in use of the
14.19property known to the person filing the certificate that could change the classification
14.20of the property. The certificate shall include financing terms and conditions of the sale
14.21which are necessary to determine the actual, present value of the sale price for purposes
14.22of the sales ratio study. If the property is being acquired as part of a like-kind exchange
14.23under section 1031 of the Internal Revenue Code of 1986, as amended through December
14.2431, 2006, that must be indicated on the certificate. The commissioner of revenue shall
14.25promulgate administrative rules specifying the financing terms and conditions which must
14.26be included on the certificate. Pursuant to the authority of the commissioner of revenue in
14.27section 270C.306, the certificate of value must include the Social Security number or the
14.28federal employer identification number of the grantors and grantees. The identification
14.29numbers of the grantors and grantees are private data on individuals or nonpublic data
14.30as defined in section 13.02, subdivisions 9 and 12, but, notwithstanding that section, the
14.31private or nonpublic data may be disclosed to the commissioner of revenue for purposes of
14.32tax administration. The information required to be shown on the certificate of value is
14.33limited to the information required as of the date of the acknowledgment on the deed or
14.34other document to be recorded.
15.1EFFECTIVE DATE.This section is effective for certificates filed after June 30,
15.22008.

15.3    Sec. 7. Minnesota Statutes 2007 Supplement, section 273.124, subdivision 14, is
15.4amended to read:
15.5    Subd. 14. Agricultural homesteads; special provisions. (a) Real estate of less than
15.6ten acres that is the homestead of its owner must be classified as class 2a under section
15.7273.13, subdivision 23 , paragraph (a), if:
15.8    (1) the parcel on which the house is located is contiguous on at least two sides to (i)
15.9agricultural land, (ii) land owned or administered by the United States Fish and Wildlife
15.10Service, or (iii) land administered by the Department of Natural Resources on which in
15.11lieu taxes are paid under sections 477A.11 to 477A.14;
15.12    (2) its owner also owns a noncontiguous parcel of agricultural land that is at least
15.1320 acres;
15.14    (3) the noncontiguous land is located not farther than four townships or cities, or a
15.15combination of townships or cities from the homestead; and
15.16    (4) the agricultural use value of the noncontiguous land and farm buildings is equal
15.17to at least 50 percent of the market value of the house, garage, and one acre of land.
15.18    Homesteads initially classified as class 2a under the provisions of this paragraph shall
15.19remain classified as class 2a, irrespective of subsequent changes in the use of adjoining
15.20properties, as long as the homestead remains under the same ownership, the owner owns a
15.21noncontiguous parcel of agricultural land that is at least 20 acres, and the agricultural use
15.22value qualifies under clause (4). Homestead classification under this paragraph is limited
15.23to property that qualified under this paragraph for the 1998 assessment.
15.24    (b)(i) Agricultural property consisting of at least 40 acres shall be classified as the
15.25owner's homestead, to the same extent as other agricultural homestead property, if all
15.26of the following criteria are met:
15.27(1) the property consists of at least 40 acres including undivided government lots
15.28and correctional 40's;
15.29    (1) (2) the owner, the owner's spouse, the son or daughter of the owner or owner's
15.30spouse, or the grandson or granddaughter of the owner or the owner's spouse, is actively
15.31farming the agricultural property, either on the person's own behalf as an individual or
15.32on behalf of a partnership operating a family farm, family farm corporation, joint family
15.33farm venture, or limited liability company of which the person is a partner, shareholder, or
15.34member;
16.1    (2) (3) both the owner of the agricultural property and the person who is actively
16.2farming the agricultural property under clause (1) (2), are Minnesota residents;
16.3    (3) (4) neither the owner nor the spouse of the owner claims another agricultural
16.4homestead in Minnesota; and
16.5    (4) (5) neither the owner nor the person actively farming the property lives farther
16.6than four townships or cities, or a combination of four townships or cities, from the
16.7agricultural property, except that if the owner or the owner's spouse is required to live in
16.8employer-provided housing, the owner or owner's spouse, whichever is actively farming
16.9the agricultural property, may live more than four townships or cities, or combination of
16.10four townships or cities from the agricultural property.
16.11    The relationship under this paragraph may be either by blood or marriage.
16.12    (ii) Real property held by a trustee under a trust is eligible for agricultural homestead
16.13classification under this paragraph if the qualifications in clause (i) are met, except that
16.14"owner" means the grantor of the trust.
16.15    (iii) Property containing the residence of an owner who owns qualified property
16.16under clause (i) shall be classified as part of the owner's agricultural homestead, if that
16.17property is also used for noncommercial storage or drying of agricultural crops.
16.18    (c) Noncontiguous land shall be included as part of a homestead under section
16.19273.13, subdivision 23 , paragraph (a), only if the homestead is classified as class 2a
16.20and the detached land is located in the same township or city, or not farther than four
16.21townships or cities or combination thereof from the homestead. Any taxpayer of these
16.22noncontiguous lands must notify the county assessor that the noncontiguous land is part of
16.23the taxpayer's homestead, and, if the homestead is located in another county, the taxpayer
16.24must also notify the assessor of the other county.
16.25    (d) Agricultural land used for purposes of a homestead and actively farmed by a
16.26person holding a vested remainder interest in it must be classified as a homestead under
16.27section 273.13, subdivision 23, paragraph (a). If agricultural land is classified class 2a,
16.28any other dwellings on the land used for purposes of a homestead by persons holding
16.29vested remainder interests who are actively engaged in farming the property, and up to
16.30one acre of the land surrounding each homestead and reasonably necessary for the use of
16.31the dwelling as a home, must also be assessed class 2a.
16.32    (e) Agricultural land and buildings that were class 2a homestead property under
16.33section 273.13, subdivision 23, paragraph (a), for the 1997 assessment shall remain
16.34classified as agricultural homesteads for subsequent assessments if:
16.35    (1) the property owner abandoned the homestead dwelling located on the agricultural
16.36homestead as a result of the April 1997 floods;
17.1    (2) the property is located in the county of Polk, Clay, Kittson, Marshall, Norman,
17.2or Wilkin;
17.3    (3) the agricultural land and buildings remain under the same ownership for the
17.4current assessment year as existed for the 1997 assessment year and continue to be used
17.5for agricultural purposes;
17.6    (4) the dwelling occupied by the owner is located in Minnesota and is within 30
17.7miles of one of the parcels of agricultural land that is owned by the taxpayer; and
17.8    (5) the owner notifies the county assessor that the relocation was due to the 1997
17.9floods, and the owner furnishes the assessor any information deemed necessary by the
17.10assessor in verifying the change in dwelling. Further notifications to the assessor are not
17.11required if the property continues to meet all the requirements in this paragraph and any
17.12dwellings on the agricultural land remain uninhabited.
17.13    (f) Agricultural land and buildings that were class 2a homestead property under
17.14section 273.13, subdivision 23, paragraph (a), for the 1998 assessment shall remain
17.15classified agricultural homesteads for subsequent assessments if:
17.16    (1) the property owner abandoned the homestead dwelling located on the agricultural
17.17homestead as a result of damage caused by a March 29, 1998, tornado;
17.18    (2) the property is located in the county of Blue Earth, Brown, Cottonwood,
17.19LeSueur, Nicollet, Nobles, or Rice;
17.20    (3) the agricultural land and buildings remain under the same ownership for the
17.21current assessment year as existed for the 1998 assessment year;
17.22    (4) the dwelling occupied by the owner is located in this state and is within 50 miles
17.23of one of the parcels of agricultural land that is owned by the taxpayer; and
17.24    (5) the owner notifies the county assessor that the relocation was due to a March 29,
17.251998, tornado, and the owner furnishes the assessor any information deemed necessary by
17.26the assessor in verifying the change in homestead dwelling. For taxes payable in 1999, the
17.27owner must notify the assessor by December 1, 1998. Further notifications to the assessor
17.28are not required if the property continues to meet all the requirements in this paragraph
17.29and any dwellings on the agricultural land remain uninhabited.
17.30    (g) Agricultural property consisting of at least 40 acres of a family farm corporation,
17.31joint family farm venture, family farm limited liability company, or partnership operating
17.32a family farm as described under subdivision 8 shall be classified homestead, to the same
17.33extent as other agricultural homestead property, if all of the following criteria are met:
17.34(1) the property consists of at least 40 acres including undivided government lots
17.35and correctional 40's;
18.1    (1) (2) a shareholder, member, or partner of that entity is actively farming the
18.2agricultural property;
18.3    (2) (3) that shareholder, member, or partner who is actively farming the agricultural
18.4property is a Minnesota resident;
18.5    (3) (4) neither that shareholder, member, or partner, nor the spouse of that
18.6shareholder, member, or partner claims another agricultural homestead in Minnesota; and
18.7    (4) (5) that shareholder, member, or partner does not live farther than four townships
18.8or cities, or a combination of four townships or cities, from the agricultural property.
18.9    Homestead treatment applies under this paragraph for property leased to a family
18.10farm corporation, joint farm venture, limited liability company, or partnership operating a
18.11family farm if legal title to the property is in the name of an individual who is a member,
18.12shareholder, or partner in the entity.
18.13    (h) To be eligible for the special agricultural homestead under this subdivision, an
18.14initial full application must be submitted to the county assessor where the property is
18.15located. Owners and the persons who are actively farming the property shall be required
18.16to complete only a one-page abbreviated version of the application in each subsequent
18.17year provided that none of the following items have changed since the initial application:
18.18    (1) the day-to-day operation, administration, and financial risks remain the same;
18.19    (2) the owners and the persons actively farming the property continue to live within
18.20the four townships or city criteria and are Minnesota residents;
18.21    (3) the same operator of the agricultural property is listed with the Farm Service
18.22Agency;
18.23    (4) a Schedule F or equivalent income tax form was filed for the most recent year;
18.24    (5) the property's acreage is unchanged; and
18.25    (6) none of the property's acres have been enrolled in a federal or state farm program
18.26since the initial application.
18.27    The owners and any persons who are actively farming the property must include
18.28the appropriate Social Security numbers, and sign and date the application. If any of the
18.29specified information has changed since the full application was filed, the owner must
18.30notify the assessor, and must complete a new application to determine if the property
18.31continues to qualify for the special agricultural homestead. The commissioner of revenue
18.32shall prepare a standard reapplication form for use by the assessors.
18.33    (i) Agricultural land and buildings that were class 2a homestead property under
18.34section 273.13, subdivision 23, paragraph (a), for the 2007 assessment shall remain
18.35classified agricultural homesteads for subsequent assessments if:
19.1    (1) the property owner abandoned the homestead dwelling located on the agricultural
19.2homestead as a result of damage caused by the August 2007 floods;
19.3    (2) the property is located in the county of Dodge, Fillmore, Houston, Olmsted,
19.4Steele, Wabasha, or Winona;
19.5    (3) the agricultural land and buildings remain under the same ownership for the
19.6current assessment year as existed for the 2007 assessment year;
19.7    (4) the dwelling occupied by the owner is located in this state and is within 50 miles
19.8of one of the parcels of agricultural land that is owned by the taxpayer; and
19.9    (5) the owner notifies the county assessor that the relocation was due to the August
19.102007 floods, and the owner furnishes the assessor any information deemed necessary by
19.11the assessor in verifying the change in homestead dwelling. For taxes payable in 2009, the
19.12owner must notify the assessor by December 1, 2008. Further notifications to the assessor
19.13are not required if the property continues to meet all the requirements in this paragraph
19.14and any dwellings on the agricultural land remain uninhabited.
19.15EFFECTIVE DATE.This section is effective for assessment year 2008, taxes
19.16payable in 2009 and thereafter.

19.17    Sec. 8. Minnesota Statutes 2006, section 273.124, is amended by adding a subdivision
19.18to read:
19.19    Subd. 22. Annual registration of certain relative homesteads. If the owner of
19.20property or the owner's relative who occupies property that is classified as a homestead
19.21under subdivision 1, paragraph (c), receives compensation for allowing occupancy of any
19.22part of that property for a period that exceeds 31 consecutive days during the calendar
19.23year, the recipient of the compensation must register the property with the city in which
19.24it is located no later than 60 days after the initial rental period began. This requirement
19.25applies to property located in a city that has a population over 25,000. Each city must
19.26maintain a file of these property registrations that is open to the public, and retain the
19.27registrations for one year after the date of filing.
19.28EFFECTIVE DATE.This section is effective July 1, 2008.

19.29    Sec. 9. Minnesota Statutes 2006, section 273.125, subdivision 8, is amended to read:
19.30    Subd. 8. Manufactured homes; sectional structures. (a) In this section,
19.31"manufactured home" means a structure transportable in one or more sections, which is
19.32built on a permanent chassis, and designed to be used as a dwelling with or without a
19.33permanent foundation when connected to the required utilities, and contains the plumbing,
20.1heating, air conditioning, and electrical systems in it. Manufactured home includes any
20.2accessory structure that is an addition or supplement to the manufactured home and, when
20.3installed, becomes a part of the manufactured home.
20.4    (b) Except as provided in paragraph (c), a manufactured home that meets each of the
20.5following criteria must be valued and assessed as an improvement to real property, the
20.6appropriate real property classification applies, and the valuation is subject to review and
20.7the taxes payable in the manner provided for real property:
20.8    (1) the owner of the unit holds title to the land on which it is situated;
20.9    (2) the unit is affixed to the land by a permanent foundation or is installed at its
20.10location in accordance with the Manufactured Home Building Code in sections 327.31
20.11to 327.34, and rules adopted under those sections, or is affixed to the land like other real
20.12property in the taxing district; and
20.13    (3) the unit is connected to public utilities, has a well and septic tank system, or is
20.14serviced by water and sewer facilities comparable to other real property in the taxing
20.15district.
20.16    (c) A manufactured home that meets each of the following criteria must be assessed
20.17at the rate provided by the appropriate real property classification but must be treated as
20.18personal property, and the valuation is subject to review and the taxes payable in the
20.19manner provided in this section:
20.20    (1) the owner of the unit is a lessee of the land under the terms of a lease, or the unit
20.21is located in a manufactured home park but is not the homestead of the park owner;
20.22    (2) the unit is affixed to the land by a permanent foundation or is installed at its
20.23location in accordance with the Manufactured Home Building Code contained in sections
20.24327.31 to 327.34, and the rules adopted under those sections, or is affixed to the land like
20.25other real property in the taxing district; and
20.26    (3) the unit is connected to public utilities, has a well and septic tank system, or is
20.27serviced by water and sewer facilities comparable to other real property in the taxing
20.28district.
20.29    (d) Sectional structures must be valued and assessed as an improvement to real
20.30property if the owner of the structure holds title to the land on which it is located or is a
20.31qualifying lessee of the land under section 273.19. In this paragraph "sectional structure"
20.32means a building or structural unit that has been in whole or substantial part manufactured
20.33or constructed at an off-site location to be wholly or partially assembled on-site alone or
20.34with other units and attached to a permanent foundation.
21.1    (e) The commissioner of revenue may adopt rules under the Administrative
21.2Procedure Act to establish additional criteria for the classification of manufactured homes
21.3and sectional structures under this subdivision.
21.4    (f) A storage shed, deck, or similar improvement constructed on property that is
21.5leased or rented as a site for a manufactured home, sectional structure, park trailer, or
21.6travel trailer is taxable as provided in this section. In the case of property that is leased or
21.7rented as a site for a travel trailer, a storage shed, deck, or similar improvement on the
21.8site that is considered personal property under this paragraph is taxable only if its total
21.9estimated market value is over $500 $1,000. The property is taxable as personal property
21.10to the lessee of the site if it is not owned by the owner of the site. The property is taxable
21.11as real estate if it is owned by the owner of the site. As a condition of permitting the owner
21.12of the manufactured home, sectional structure, park trailer, or travel trailer to construct
21.13improvements on the leased or rented site, the owner of the site must obtain the permanent
21.14home address of the lessee or user of the site. The site owner must provide the name
21.15and address to the assessor upon request.
21.16EFFECTIVE DATE.This section is effective for assessment year 2008 and
21.17thereafter, for taxes payable in 2009 and thereafter.

21.18    Sec. 10. Minnesota Statutes 2006, section 273.128, subdivision 1, is amended to read:
21.19    Subdivision 1. Requirement. Low-income rental property classified as class 4d
21.20under section 273.13, subdivision 25, is entitled to valuation under this section if at
21.21least 75 20 percent of the units in the rental housing property meet any of the following
21.22qualifications:
21.23    (1) the units are subject to a housing assistance payments contract under Section 8
21.24of the United States Housing Act of 1937, as amended;
21.25    (2) the units are rent-restricted and income-restricted units of a qualified low-income
21.26housing project receiving tax credits under section 42(g) of the Internal Revenue Code of
21.271986, as amended;
21.28    (3) the units are financed by the Rural Housing Service of the United States
21.29Department of Agriculture and receive payments under the rental assistance program
21.30pursuant to section 521(a) of the Housing Act of 1949, as amended; or
21.31    (4) the units are subject to rent and income restrictions under the terms of financial
21.32assistance provided to the rental housing property by the federal government or the
21.33state of Minnesota, or a local unit of government, as evidenced by a document recorded
21.34against the property.
22.1    The restrictions must require assisted units to be occupied by residents whose
22.2household income at the time of initial occupancy does not exceed 60 percent of the
22.3greater of area or state median income, adjusted for family size, as determined by the
22.4United States Department of Housing and Urban Development. The restriction must also
22.5require the rents for assisted units to not exceed 30 percent of 60 percent of the greater of
22.6area or state median income, adjusted for family size, as determined by the United States
22.7Department of Housing and Urban Development.
22.8EFFECTIVE DATE.This section is effective for property taxes payable in 2009,
22.9and thereafter.

22.10    Sec. 11. Minnesota Statutes 2006, section 273.13, subdivision 22, is amended to read:
22.11    Subd. 22. Class 1. (a) Except as provided in subdivision 23 and in paragraphs (b)
22.12and (c), real estate which is residential and used for homestead purposes is class 1a. In the
22.13case of a duplex or triplex in which one of the units is used for homestead purposes, the
22.14entire property is deemed to be used for homestead purposes. The market value of class 1a
22.15property must be determined based upon the value of the house, garage, and land.
22.16    The first $500,000 of market value of class 1a property has a net class rate of
22.17one percent of its market value; and the market value of class 1a property that exceeds
22.18$500,000 has a class rate of 1.25 percent of its market value.
22.19    (b) Class 1b property includes homestead real estate or homestead manufactured
22.20homes used for the purposes of a homestead by
22.21    (1) any person who is blind as defined in section 256D.35, or the blind person and
22.22the blind person's spouse; or
22.23    (2) any person, hereinafter referred to as "veteran," who:
22.24    (i) served in the active military or naval service of the United States; and
22.25    (ii) is entitled to compensation under the laws and regulations of the United States
22.26for permanent and total service-connected disability due to the loss, or loss of use, by
22.27reason of amputation, ankylosis, progressive muscular dystrophies, or paralysis, of both
22.28lower extremities, such as to preclude motion without the aid of braces, crutches, canes, or
22.29a wheelchair; and
22.30    (iii) has acquired a special housing unit with special fixtures or movable facilities
22.31made necessary by the nature of the veteran's disability, or the surviving spouse of the
22.32deceased veteran for as long as the surviving spouse retains the special housing unit
22.33as a homestead; or
22.34    (3) any person who is permanently and totally disabled.
23.1    Property is classified and assessed under clause (3) (2) only if the government
23.2agency or income-providing source certifies, upon the request of the homestead occupant,
23.3that the homestead occupant satisfies the disability requirements of this paragraph.
23.4    Property is classified and assessed pursuant to clause (1) under paragraph (b) only if
23.5the commissioner of revenue certifies to the assessor or the county assessor certifies that
23.6the homestead occupant satisfies the requirements of this paragraph.
23.7    Permanently and totally disabled for the purpose of this subdivision means a
23.8condition which is permanent in nature and totally incapacitates the person from working
23.9at an occupation which brings the person an income. The first $32,000 $50,000 market
23.10value of class 1b property has a net class rate of .45 percent of its market value. The
23.11remaining market value of class 1b property has a class rate using the rates for class 1a or
23.12class 2a property, whichever is appropriate, of similar market value.
23.13    (c) Class 1c property is commercial use real and personal property that abuts
23.14a lakeshore line public water as defined in section 103G.005, subdivision 15, and is
23.15devoted to temporary and seasonal residential occupancy for recreational purposes but
23.16not devoted to commercial purposes for more than 250 days in the year preceding the
23.17year of assessment, and that includes a portion used as a homestead by the owner, which
23.18includes a dwelling occupied as a homestead by a shareholder of a corporation that owns
23.19the resort, a partner in a partnership that owns the resort, or a member of a limited liability
23.20company that owns the resort even if the title to the homestead is held by the corporation,
23.21partnership, or limited liability company. For purposes of this clause, property is devoted
23.22to a commercial purpose on a specific day if any portion of the property, excluding the
23.23portion used exclusively as a homestead, is used for residential occupancy and a fee is
23.24charged for residential occupancy. Class 1c property must contain three or more rental
23.25units. A "rental unit" is defined as a cabin, condominium, townhouse, sleeping room,
23.26or individual camping site equipped with water and electrical hookups for recreational
23.27vehicles. Class 1c property must provide recreational activities such as the rental of ice
23.28fishing houses, boats and motors, snowmobiles, downhill or cross-country ski equipment;
23.29provide marina services, launch services, or guide services; or sell bait and fishing tackle.
23.30Any unit in which the right to use the property is transferred to an individual or entity
23.31by deeded interest, or the sale of shares or stock, no longer qualifies for class 1c even
23.32though it may remain available for rent. A camping pad offered for rent by a property
23.33that otherwise qualifies for class 1c is also class 1c, regardless of the term of the rental
23.34agreement, as long as the use of the camping pad does not exceed 250 days. The portion of
23.35the property used as a homestead is class 1a property under paragraph (a). The remainder
23.36of the property is classified as follows: the first $500,000 $600,000 of market value is tier
24.1I, the next $1,700,000 of market value is tier II, and any remaining market value is tier
24.2III. The class rates for class 1c are: tier I, 0.55 0.50 percent; tier II, 1.0 percent; and tier
24.3III, 1.25 percent. If a class 1c resort property has any market value in tier III, the entire
24.4property must meet the requirements of subdivision 25, paragraph (d), clause (1), to
24.5qualify for class 1c treatment under this paragraph. Owners of real and personal property
24.6devoted to temporary and seasonal residential occupancy for recreation purposes in which
24.7all or a portion of the property was devoted to commercial purposes for not more than 250
24.8days in the year preceding the year of assessment desiring classification as class 1c, must
24.9submit a declaration to the assessor designating the cabins or units occupied for 250 days
24.10or less in the year preceding the year of assessment by January 15 of the assessment year.
24.11Those cabins or units and a proportionate share of the land on which they are located must
24.12be designated as class 1c as otherwise provided. The remainder of the cabins or units and
24.13a proportionate share of the land on which they are located must be designated as class
24.143a commercial. The owner of property desiring designation as class 1c property must
24.15provide guest registers or other records demonstrating that the units for which class 1c
24.16designation is sought were not occupied for more than 250 days in the year preceding the
24.17assessment if so requested. The portion of a property operated as a (1) restaurant, (2) bar,
24.18(3) gift shop, (4) conference center or meeting room, and (5) other nonresidential facility
24.19operated on a commercial basis not directly related to temporary and seasonal residential
24.20occupancy for recreation purposes does not qualify for class 1c.
24.21    (d) Class 1d property includes structures that meet all of the following criteria:
24.22    (1) the structure is located on property that is classified as agricultural property under
24.23section 273.13, subdivision 23;
24.24    (2) the structure is occupied exclusively by seasonal farm workers during the time
24.25when they work on that farm, and the occupants are not charged rent for the privilege of
24.26occupying the property, provided that use of the structure for storage of farm equipment
24.27and produce does not disqualify the property from classification under this paragraph;
24.28    (3) the structure meets all applicable health and safety requirements for the
24.29appropriate season; and
24.30    (4) the structure is not salable as residential property because it does not comply
24.31with local ordinances relating to location in relation to streets or roads.
24.32    The market value of class 1d property has the same class rates as class 1a property
24.33under paragraph (a).
24.34EFFECTIVE DATE.The amendments of this section to paragraph (b) are effective
24.35for taxes payable in 2009 and thereafter. The rest of this section is effective for taxes
24.36payable in 2010 and thereafter.

25.1    Sec. 12. Minnesota Statutes 2006, section 273.13, subdivision 23, is amended to read:
25.2    Subd. 23. Class 2. (a) Class 2a property is agricultural land including any
25.3improvements that is homesteaded. The market value of the house and garage and
25.4immediately surrounding one acre of land has the same class rates as class 1a property
25.5under subdivision 22. The value of the remaining land including improvements up to
25.6the first tier valuation limit of agricultural homestead property has a net class rate of
25.70.55 percent of market value. The remaining property over the first tier has a class rate
25.8of one percent of market value. For purposes of this subdivision, the "first tier valuation
25.9limit of agricultural homestead property" and "first tier" means the limit certified under
25.10section 273.11, subdivision 23.
25.11    (b) Class 2b property is (1) real estate, rural in character and used exclusively for
25.12growing trees for timber, lumber, and wood and wood products; (2) real estate that is not
25.13improved with a structure and is used exclusively for growing trees for timber, lumber, and
25.14wood and wood products, if the owner has participated or is participating in a cost-sharing
25.15program for afforestation, reforestation, or timber stand improvement on that particular
25.16property, administered or coordinated by the commissioner of natural resources; (3) real
25.17estate that is nonhomestead agricultural land; or (4) a landing area or public access area of
25.18a privately owned public use airport. Class 2b property has a net class rate of one percent
25.19of market value, except that unplatted property described in clause (1) or (2) has a net
25.20class rate of .65 percent if it consists of no less than ten and no more than 1,920 acres
25.21and is being managed under a forest management plan that meets the requirements of
25.22chapter 290C, but is not enrolled in the sustainable forest resource management incentive
25.23program, provided that the owner of the property must apply to the assessor annually to
25.24receive the reduced class rate and provide the information required by the assessor to
25.25verify that the property qualifies for the reduced rate.
25.26    (c) Agricultural land as used in this section means contiguous acreage of ten acres or
25.27more, used during the preceding year for agricultural purposes. "Agricultural purposes" as
25.28used in this section means the raising or cultivation of agricultural products. "Agricultural
25.29purposes" also includes enrollment in the Reinvest in Minnesota program under sections
25.30103F.501 to 103F.535 or the federal Conservation Reserve Program as contained in Public
25.31Law 99-198 if the property was classified as agricultural (i) under this subdivision for
25.32the assessment year 2002 or (ii) in the year prior to its enrollment. Contiguous acreage
25.33on the same parcel, or contiguous acreage on an immediately adjacent parcel under the
25.34same ownership, may also qualify as agricultural land, but only if it is pasture, timber,
25.35waste, unusable wild land, or land included in state or federal farm programs. Agricultural
25.36classification for property shall be determined excluding the house, garage, and
26.1immediately surrounding one acre of land, and shall not be based upon the market value of
26.2any residential structures on the parcel or contiguous parcels under the same ownership.
26.3    (d) Real estate, excluding the house, garage, and immediately surrounding one acre
26.4of land, of less than ten acres which is exclusively and intensively used for raising or
26.5cultivating agricultural products, shall be considered as agricultural land.
26.6    Land shall be classified as agricultural even if all or a portion of the agricultural use
26.7of that property is the leasing to, or use by another person for agricultural purposes.
26.8    Classification under this subdivision is not determinative for qualifying under
26.9section 273.111.
26.10    The property classification under this section supersedes, for property tax purposes
26.11only, any locally administered agricultural policies or land use restrictions that define
26.12minimum or maximum farm acreage.
26.13    (e) The term "agricultural products" as used in this subdivision includes production
26.14for sale of:
26.15    (1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing
26.16animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains,
26.17bees, and apiary products by the owner;
26.18    (2) fish bred for sale and consumption if the fish breeding occurs on land zoned
26.19for agricultural use;
26.20    (3) the commercial boarding of horses if the boarding is done in conjunction with
26.21raising or cultivating agricultural products as defined in clause (1);
26.22    (4) property which is owned and operated by nonprofit organizations used for
26.23equestrian activities, excluding racing;
26.24    (5) game birds and waterfowl bred and raised for use on a shooting preserve licensed
26.25under section 97A.115;
26.26    (6) insects primarily bred to be used as food for animals;
26.27    (7) trees, grown for sale as a crop, and not sold for timber, lumber, wood, or wood
26.28products; and
26.29    (8) maple syrup taken from trees grown by a person licensed by the Minnesota
26.30Department of Agriculture under chapter 28A as a food processor.
26.31    (f) If a parcel used for agricultural purposes is also used for commercial or industrial
26.32purposes, including but not limited to:
26.33    (1) wholesale and retail sales;
26.34    (2) processing of raw agricultural products or other goods;
26.35    (3) warehousing or storage of processed goods; and
27.1    (4) office facilities for the support of the activities enumerated in clauses (1), (2),
27.2and (3),
27.3the assessor shall classify the part of the parcel used for agricultural purposes as class
27.41b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its
27.5use. The grading, sorting, and packaging of raw agricultural products for first sale is
27.6considered an agricultural purpose. A greenhouse or other building where horticultural
27.7or nursery products are grown that is also used for the conduct of retail sales must be
27.8classified as agricultural if it is primarily used for the growing of horticultural or nursery
27.9products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of
27.10those products. Use of a greenhouse or building only for the display of already grown
27.11horticultural or nursery products does not qualify as an agricultural purpose.
27.12    The assessor shall determine and list separately on the records the market value of
27.13the homestead dwelling and the one acre of land on which that dwelling is located. If any
27.14farm buildings or structures are located on this homesteaded acre of land, their market
27.15value shall not be included in this separate determination.
27.16    (g) To qualify for classification under paragraph (b), clause (4), a privately owned
27.17public use airport must be licensed as a public airport under section 360.018. For purposes
27.18of paragraph (b), clause (4), "landing area" means that part of a privately owned public use
27.19airport properly cleared, regularly maintained, and made available to the public for use by
27.20aircraft and includes runways, taxiways, aprons, and sites upon which are situated landing
27.21or navigational aids. A landing area also includes land underlying both the primary surface
27.22and the approach surfaces that comply with all of the following:
27.23    (i) the land is properly cleared and regularly maintained for the primary purposes of
27.24the landing, taking off, and taxiing of aircraft; but that portion of the land that contains
27.25facilities for servicing, repair, or maintenance of aircraft is not included as a landing area;
27.26    (ii) the land is part of the airport property; and
27.27    (iii) the land is not used for commercial or residential purposes.
27.28The land contained in a landing area under paragraph (b), clause (4), must be described
27.29and certified by the commissioner of transportation. The certification is effective until
27.30it is modified, or until the airport or landing area no longer meets the requirements of
27.31paragraph (b), clause (4). For purposes of paragraph (b), clause (4), "public access area"
27.32means property used as an aircraft parking ramp, apron, or storage hangar, or an arrival
27.33and departure building in connection with the airport.
27.34EFFECTIVE DATE.This section is effective for taxes payable in 2009 and
27.35thereafter.

28.1    Sec. 13. Minnesota Statutes 2006, section 273.13, subdivision 25, is amended to read:
28.2    Subd. 25. Class 4. (a) Class 4a is residential real estate containing four or more
28.3units and used or held for use by the owner or by the tenants or lessees of the owner
28.4as a residence for rental periods of 30 days or more, excluding property qualifying for
28.5class 4d. Class 4a also includes hospitals licensed under sections 144.50 to 144.56, other
28.6than hospitals exempt under section 272.02, and contiguous property used for hospital
28.7purposes, without regard to whether the property has been platted or subdivided. The
28.8market value of class 4a property has a class rate of 1.25 percent.
28.9    (b) Class 4b includes:
28.10    (1) residential real estate containing less than four units that does not qualify as class
28.114bb, other than seasonal residential recreational property;
28.12    (2) manufactured homes not classified under any other provision;
28.13    (3) a dwelling, garage, and surrounding one acre of property on a nonhomestead
28.14farm classified under subdivision 23, paragraph (b) containing two or three units; and
28.15    (4) unimproved property that is classified residential as determined under subdivision
28.1633.
28.17    The market value of class 4b property has a class rate of 1.25 percent.
28.18    (c) Class 4bb includes:
28.19    (1) nonhomestead residential real estate containing one unit, other than seasonal
28.20residential recreational property; and
28.21    (2) a single family dwelling, garage, and surrounding one acre of property on a
28.22nonhomestead farm classified under subdivision 23, paragraph (b).
28.23    Class 4bb property has the same class rates as class 1a property under subdivision 22.
28.24    Property that has been classified as seasonal residential recreational property at
28.25any time during which it has been owned by the current owner or spouse of the current
28.26owner does not qualify for class 4bb.
28.27    (d) Class 4c property includes:
28.28    (1) except as provided in subdivision 22, paragraph (c), or subdivision 23, paragraph
28.29(b), clause (1), real and personal property devoted to temporary and seasonal residential
28.30occupancy for recreation purposes, including real and personal property devoted to
28.31temporary and seasonal residential occupancy for recreation purposes and not devoted to
28.32commercial purposes for more than 250 days in the year preceding the year of assessment.
28.33For purposes of this clause, property is devoted to a commercial purpose on a specific
28.34day if any portion of the property is used for residential occupancy, and a fee is charged
28.35for residential occupancy. Class 4c property must contain three or more rental units. A
28.36"rental unit" is defined as a cabin, condominium, townhouse, sleeping room, or individual
29.1camping site equipped with water and electrical hookups for recreational vehicles. Class
29.24c property must provide recreational activities such as renting ice fishing houses, boats
29.3and motors, snowmobiles, downhill or cross-country ski equipment; provide marina
29.4services, launch services, or guide services; or sell bait and fishing tackle. A camping
29.5pad offered for rent by a property that otherwise qualifies for class 4c is also class 4c
29.6regardless of the term of the rental agreement, as long as the use of the camping pad
29.7does not exceed 250 days. In order for a property to be classified as class 4c, seasonal
29.8residential recreational for commercial purposes, at least 40 percent of the annual gross
29.9lodging receipts related to the property must be from business conducted during 90
29.10consecutive days and either (i) at least 60 percent of all paid bookings by lodging guests
29.11during the year must be for periods of at least two consecutive nights; or (ii) at least 20
29.12percent of the annual gross receipts must be from charges for rental of fish houses, boats
29.13and motors, snowmobiles, downhill or cross-country ski equipment, or charges for marina
29.14services, launch services, and guide services, or the sale of bait and fishing tackle. For
29.15purposes of this determination, a paid booking of five or more nights shall be counted as
29.16two bookings. Class 4c also includes commercial use real property used exclusively
29.17for recreational purposes in conjunction with class 4c property devoted to temporary
29.18and seasonal residential occupancy for recreational purposes, up to a total of two acres,
29.19provided the property is not devoted to commercial recreational use for more than 250
29.20days in the year preceding the year of assessment and is located within two miles of the
29.21class 4c property with which it is used. Owners of real and personal property devoted to
29.22temporary and seasonal residential occupancy for recreation purposes and all or a portion
29.23of which was devoted to commercial purposes for not more than 250 days in the year
29.24preceding the year of assessment desiring classification as class 1c or 4c, must submit a
29.25declaration to the assessor designating the cabins or units occupied for 250 days or less in
29.26the year preceding the year of assessment by January 15 of the assessment year. Those
29.27cabins or units and a proportionate share of the land on which they are located will must be
29.28designated class 1c or 4c as otherwise provided. The remainder of the cabins or units and
29.29a proportionate share of the land on which they are located will be designated as class 3a.
29.30The owner of property desiring designation as class 1c or 4c property must provide guest
29.31registers or other records demonstrating that the units for which class 1c or 4c designation
29.32is sought were not occupied for more than 250 days in the year preceding the assessment if
29.33so requested. The portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop,
29.34(4) conference center or meeting room, and (4) (5) other nonresidential facility operated
29.35on a commercial basis not directly related to temporary and seasonal residential occupancy
29.36for recreation purposes shall does not qualify for class 1c or 4c;
30.1    (2) qualified property used as a golf course if:
30.2    (i) it is open to the public on a daily fee basis. It may charge membership fees or
30.3dues, but a membership fee may not be required in order to use the property for golfing,
30.4and its green fees for golfing must be comparable to green fees typically charged by
30.5municipal courses; and
30.6    (ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).
30.7    A structure used as a clubhouse, restaurant, or place of refreshment in conjunction
30.8with the golf course is classified as class 3a property;
30.9    (3) real property up to a maximum of one acre three acres of land owned and used
30.10by a nonprofit community service oriented organization; provided that and that is not used
30.11for residential purposes on either a temporary or permanent basis, qualifies for class 4c
30.12provided that it meets either of the following:
30.13    (i) the property is not used for a revenue-producing activity for more than six days
30.14in the calendar year preceding the year of assessment and the property is not used for
30.15residential purposes on either a temporary or permanent basis; or
30.16    (ii) the organization makes annual charitable contributions and donations at least
30.17equal to the property's previous year's property taxes and the property is allowed to be
30.18used for public and community meetings or events for no charge, as appropriate to the
30.19size of the facility.
30.20    For purposes of this clause,
30.21    (A) "charitable contributions and donations" has the same meaning as lawful
30.22gambling purposes under section 349.12, subdivision 25, excluding those purposes
30.23relating to the payment of taxes, assessments, fees, auditing costs, and utility payments;
30.24    (B) "property taxes" excludes the state general tax;
30.25    (C) a "nonprofit community service oriented organization" means any corporation,
30.26society, association, foundation, or institution organized and operated exclusively for
30.27charitable, religious, fraternal, civic, or educational purposes, and which is exempt from
30.28federal income taxation pursuant to section 501(c)(3), (10), or (19) of the Internal Revenue
30.29Code of 1986, as amended through December 31, 1990. For purposes of this clause,; and
30.30    (D) "revenue-producing activities" shall include but not be limited to property or that
30.31portion of the property that is used as an on-sale intoxicating liquor or 3.2 percent malt
30.32liquor establishment licensed under chapter 340A, a restaurant open to the public, bowling
30.33alley, a retail store, gambling conducted by organizations licensed under chapter 349, an
30.34insurance business, or office or other space leased or rented to a lessee who conducts a
30.35for-profit enterprise on the premises.
31.1Any portion of the property qualifying under item (i) which is used for revenue-producing
31.2activities for more than six days in the calendar year preceding the year of assessment
31.3shall be assessed as class 3a. The use of the property for social events open exclusively
31.4to members and their guests for periods of less than 24 hours, when an admission is
31.5not charged nor any revenues are received by the organization shall not be considered a
31.6revenue-producing activity;.
31.7    The organization shall maintain records of its charitable contributions and donations
31.8and of public meetings and events held on the property and make them available upon
31.9request any time to the assessor to ensure eligibility. An organization meeting the
31.10requirement under item (ii) must file an application by May 1 with the assessor for
31.11eligibility for the current year's assessment. The commissioner shall prescribe a uniform
31.12application form and instructions;
31.13    (4) postsecondary student housing of not more than one acre of land that is owned by
31.14a nonprofit corporation organized under chapter 317A and is used exclusively by a student
31.15cooperative, sorority, or fraternity for on-campus housing or housing located within two
31.16miles of the border of a college campus;
31.17    (5) manufactured home parks as defined in section 327.14, subdivision 3;
31.18    (6) real property that is actively and exclusively devoted to indoor fitness, health,
31.19social, recreational, and related uses, is owned and operated by a not-for-profit corporation,
31.20and is located within the metropolitan area as defined in section 473.121, subdivision 2;
31.21    (7) a leased or privately owned noncommercial aircraft storage hangar not exempt
31.22under section 272.01, subdivision 2, and the land on which it is located, provided that:
31.23    (i) the land is on an airport owned or operated by a city, town, county, Metropolitan
31.24Airports Commission, or group thereof; and
31.25    (ii) the land lease, or any ordinance or signed agreement restricting the use of the
31.26leased premise, prohibits commercial activity performed at the hangar.
31.27    If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must
31.28be filed by the new owner with the assessor of the county where the property is located
31.29within 60 days of the sale;
31.30    (8) a privately owned noncommercial aircraft storage hangar not exempt under
31.31section 272.01, subdivision 2, and the land on which it is located, provided that:
31.32    (i) the land abuts a public airport; and
31.33    (ii) the owner of the aircraft storage hangar provides the assessor with a signed
31.34agreement restricting the use of the premises, prohibiting commercial use or activity
31.35performed at the hangar; and
32.1    (9) residential real estate, a portion of which is used by the owner for homestead
32.2purposes, and that is also a place of lodging, if all of the following criteria are met:
32.3    (i) rooms are provided for rent to transient guests that generally stay for periods
32.4of 14 or fewer days;
32.5    (ii) meals are provided to persons who rent rooms, the cost of which is incorporated
32.6in the basic room rate;
32.7    (iii) meals are not provided to the general public except for special events on fewer
32.8than seven days in the calendar year preceding the year of the assessment; and
32.9    (iv) the owner is the operator of the property.
32.10The market value subject to the 4c classification under this clause is limited to five rental
32.11units. Any rental units on the property in excess of five, must be valued and assessed as
32.12class 3a. The portion of the property used for purposes of a homestead by the owner must
32.13be classified as class 1a property under subdivision 22.
32.14    Class 4c property has a class rate of 1.5 percent of market value, except that (i) each
32.15parcel of seasonal residential recreational property not used for commercial purposes has
32.16the same class rates as class 4bb property, (ii) manufactured home parks assessed under
32.17clause (5) have the same class rate as class 4b property, (iii) commercial-use seasonal
32.18residential recreational property has a class rate of one percent for the first $500,000 of
32.19market value, and 1.25 percent for the remaining market value, (iv) the market value of
32.20property described in clause (4) has a class rate of one percent, (v) the market value of
32.21property described in clauses (2) and (6) has a class rate of 1.25 percent, and (vi) that
32.22portion of the market value of property in clause (9) qualifying for class 4c property
32.23has a class rate of 1.25 percent.
32.24    (e) Class 4d property is qualifying low-income rental housing certified to the assessor
32.25by the Housing Finance Agency under section 273.128, subdivision 3. If only a portion
32.26of the units in the building qualify as low-income rental housing units as certified under
32.27section 273.128, subdivision 3, only the proportion of qualifying units to the total number
32.28of units in the building qualify for class 4d. The remaining portion of the building shall be
32.29classified by the assessor based upon its use. Class 4d also includes the same proportion of
32.30land as the qualifying low-income rental housing units are to the total units in the building.
32.31For all properties qualifying as class 4d, the market value determined by the assessor must
32.32be based on the normal approach to value using normal unrestricted rents.
32.33    Class 4d property has a class rate of 0.75 percent.
32.34EFFECTIVE DATE.The part of this section relating to class 4c resorts in
32.35paragraph (d), clause (1), is effective for assessment year 2009 and thereafter, for taxes
33.1payable in 2010 and thereafter. The part of this section relating to nonprofit community
33.2service oriented organizations is effective for assessment year 2008 and thereafter, for
33.3taxes payable in 2009 and thereafter, except that the application date in paragraph (d),
33.4clause (3), item (ii), for the 2008 assessment is extended to September 1, 2008.

33.5    Sec. 14. Minnesota Statutes 2006, section 273.13, is amended by adding a subdivision
33.6to read:
33.7    Subd. 34. Homestead of disabled veteran. (a) All or a portion of the market value
33.8of property qualifying for homestead classification under subdivision 22 or 23 is excluded
33.9in determining the property's taxable market value if it serves as the homestead of a
33.10military veteran, as defined in section 197.447, who has a service-connected disability of
33.1170 percent or more. To qualify for exclusion under this subdivision, the veteran must have
33.12been honorably discharged from the United States armed forces, as indicated by United
33.13States Government Form DD214 or other official military discharge papers, and must be
33.14certified by the United States Veterans Administration as having a service-connected
33.15disability.
33.16    (b)(1) For a disability rating of 70 percent or more, $150,000 of market value is
33.17excluded, except as provided in clause (2); and
33.18    (2) for a total (100 percent) and permanent disability, $300,000 of market value is
33.19excluded.
33.20    (c) If a disabled veteran qualifying for a valuation exclusion under paragraph (b),
33.21clause (2), predeceases the veteran's spouse, and if upon the death of the veteran the
33.22spouse holds the legal or beneficial title to the homestead and permanently resides there,
33.23the exclusion shall carry over to the benefit of the veteran's spouse until such time as the
33.24spouse sells, transfers, or otherwise disposes of the property.
33.25    (d) In the case of an agricultural homestead, only the portion of the property
33.26consisting of the house and garage and immediately surrounding one acre of land qualifies
33.27for the valuation exclusion under this subdivision.
33.28    (e) A property qualifying for a valuation exclusion under this subdivision is not
33.29eligible for the credit under section 273.1384, subdivision 1.
33.30    (f) To qualify for a valuation exclusion under this subdivision a property owner must
33.31apply to the assessor by July 1 of each assessment year, except that an annual reapplication
33.32is not required once a property has been accepted for a valuation exclusion under paragraph
33.33(b), clause (2), and the property continues to qualify until there is a change in ownership.
33.34EFFECTIVE DATE.This section is effective for assessment year 2008 and
33.35thereafter, for taxes payable in 2009 and thereafter.

34.1    Sec. 15. Minnesota Statutes 2006, section 273.1315, is amended to read:
34.2273.1315 CERTIFICATION OF CLASS 1B PROPERTY.
34.3    Subdivision 1. Class 1b homestead declaration before 2009. Any property owner
34.4seeking classification and assessment of the owner's homestead as class 1b property
34.5pursuant to section 273.13, subdivision 22, paragraph (b), on or before October 1, 2008,
34.6shall file with the commissioner of revenue a 1b homestead declaration, on a form
34.7prescribed by the commissioner. The declaration shall contain the following information:
34.8    (a) the information necessary to verify that on or before June 30 of the filing year,
34.9the property owner or the owner's spouse satisfies the requirements of section 273.13,
34.10subdivision 22 , paragraph (b), for 1b classification; and
34.11    (b) any additional information prescribed by the commissioner.
34.12    The declaration must be filed on or before October 1 to be effective for property
34.13taxes payable during the succeeding calendar year. The declaration and any supplementary
34.14information received from the property owner pursuant to this section subdivision shall
34.15be subject to chapter 270B. If approved by the commissioner, the declaration remains
34.16in effect until the property no longer qualifies under section 273.13, subdivision 22,
34.17paragraph (b). Failure to notify the commissioner within 30 days that the property no
34.18longer qualifies under that paragraph because of a sale, change in occupancy, or change
34.19in the status or condition of an occupant shall result in the penalty provided in section
34.20273.124, subdivision 13 , computed on the basis of the class 1b benefits for the property,
34.21and the property shall lose its current class 1b classification.
34.22    The commissioner shall provide to the assessor on or before November 1 a listing
34.23of the parcels of property qualifying for 1b classification.
34.24    Subd. 2. Class 1b homestead declaration 2009 and thereafter. (a) Any property
34.25owner seeking classification and assessment of the owner's homestead as class 1b property
34.26pursuant to section 273.13, subdivision 22, paragraph (b), after October 1, 2008, shall file
34.27with the county assessor a class 1b homestead declaration, on a form prescribed by the
34.28commissioner of revenue. The declaration must contain the following information:
34.29    (1) the information necessary to verify that, on or before June 30 of the filing year,
34.30the property owner or the owner's spouse satisfies the requirements of section 273.13,
34.31subdivision 22, paragraph (b), for class 1b classification; and
34.32    (2) any additional information prescribed by the commissioner.
34.33    (b) The declaration must be filed on or before October 1 to be effective for property
34.34taxes payable during the succeeding calendar year. The Social Security numbers and
34.35income and medical information received from the property owner pursuant to this
34.36subdivision are private data on individuals as defined in section 13.02. If approved by
35.1the assessor, the declaration remains in effect until the property no longer qualifies under
35.2section 273.13, subdivision 22, paragraph (b). Failure to notify the assessor within 30
35.3days that the property no longer qualifies under that paragraph because of a sale, change in
35.4occupancy, or change in the status or condition of an occupant shall result in the penalty
35.5provided in section 273.124, subdivision 13, computed on the basis of the class 1b benefits
35.6for the property, and the property shall lose its current class 1b classification.
35.7EFFECTIVE DATE.This section is effective the day following final enactment.

35.8    Sec. 16. Minnesota Statutes 2006, section 275.025, subdivision 3, is amended to read:
35.9    Subd. 3. Seasonal residential recreational tax capacity. For the purposes of this
35.10section, "seasonal residential recreational tax capacity" means the tax capacity of tier III of
35.11class 1c under section 273.13, subdivision 22, and all class 4c(1) and 4c(3)(ii) property
35.12under section 273.13, subdivision 25, except that the first $76,000 of market value of each
35.13noncommercial class 4c(1) property has a tax capacity for this purpose equal to 40 percent
35.14of its tax capacity under section 273.13.
35.15EFFECTIVE DATE.This section is effective for taxes payable in 2009 and
35.16thereafter.

35.17    Sec. 17. Minnesota Statutes 2006, section 275.065, is amended by adding a subdivision
35.18to read:
35.19    Subd. 6c. Joint public hearing; nonmetropolitan county, cities, and school
35.20districts. (a) Notwithstanding any other provision of law, the county board may hold a
35.21joint hearing with the governing bodies of all taxing authorities located wholly or partially
35.22within the county that are required to hold a public hearing under this section, excluding
35.23special taxing districts. The primary purpose of the joint hearing is for taxpayer efficiency
35.24by allowing taxpayers to come to a single public hearing to discuss the budgets and
35.25proposed property tax levies of most taxing authorities that impact the taxes on their
35.26property.
35.27    (b) This subdivision applies only to counties located outside the metropolitan area
35.28as defined under section 473.121, subdivision 2. If a city or school district is located
35.29partially within the metropolitan area, that taxing jurisdiction may participate in its
35.30nonmetropolitan county's joint hearing, if it so chooses.
35.31    (c) Upon the adoption of a resolution by the county board to hold a joint public
35.32hearing, the county shall notify each city with a population over 500 and each school
35.33district located wholly or partially within the county of its intention to hold the joint
36.1hearing and ask each of the taxing authorities if it would like to participate. Participation
36.2is voluntary, and participation in the joint hearing is in lieu of the requirement for the
36.3governing body to hold a separate public hearing under subdivision 6. If a participating
36.4city or school district is located in more than one county, the hearing under this subdivision
36.5is in lieu of the requirement to hold a separate public hearing if 75 percent or more
36.6of that city or school district's previous year's net tax capacity is in the county where
36.7the hearing is held.
36.8    (d) The initial joint hearing must be held on the first Thursday in December. The
36.9county may hold an additional joint hearing on another date before December 20 if the
36.10majority of the participating taxing authorities want an additional hearing.
36.11    The county board shall obtain a meeting space to hold the joint hearing, preferably
36.12at a public building such as the courthouse, school, or community center. The location
36.13shall be as centrally located within the county as possible. The meeting shall generally be
36.14structured in the following general manner:
36.15    (1) 30 to 60 minutes must be devoted to discussion of the county's budget and levy;
36.16    (2) 30 to 60 minutes must be devoted to discussion of the city's budget and levy,
36.17with each city's discussion held in a separate room, preferably in the same building;
36.18    (3) 30 to 60 minutes must be devoted to discussion of the school district's levy,
36.19with each school district's discussion held in a separate room, preferably in the same
36.20building; and
36.21    (4) during the last 30 minutes the governing bodies must reassemble in a joint
36.22meeting to entertain any follow-up questions that have arisen from the separate discussions.
36.23    The county shall attempt to keep the total public hearing to within three hours.
36.24    (e) In lieu of the public advertisement requirement in subdivision 5a, the county shall
36.25have a single advertisement listing the county, each city with a population of over 500, and
36.26each school district participating in the joint public hearing listing. Any taxing authority
36.27participating under this subdivision is exempt from the separate public advertisement
36.28requirement under subdivision 5a. The cost of the joint hearing advertisement shall be
36.29apportioned in the same manner provided in subdivision 4. The notice must be published
36.30not less than two business days nor more than six business days before the hearing. The
36.31newspaper selected must be one of general interest and readership in the county, and not
36.32one of limited subject matter. The advertisement must appear in a newspaper that is
36.33published at least once per week. The advertisement must be in the following form:

36.34"NOTICE OF JOINT PUBLIC HEARING

36.35PROPOSED TOTAL PROPERTY TAXES

36.36FOR PARTICIPATING TAXING AUTHORITIES

37.1The property tax amounts below compare that portion of the current budget levied in
37.2property taxes in the county, cities, and school districts for (year) with the property
37.3taxes the county, cities, and school districts propose to collect in (year) for those taxing
37.4authorities participating in the joint public hearing.

37.5 37.6	Taxing Authority	(Year) Property Taxes	Proposed (Year) Property Taxes	Change (Year) - (Year)
37.7	$.......	$.......	$.......	...%
37.8	$.......	$.......	$.......	...%
37.9	$.......	$.......	$.......	...%

37.10ATTEND THE JOINT PUBLIC HEARING

37.11All residents are invited to attend the joint public hearing of the county/cities/school
37.12districts to express your opinions on the proposed amount of (year) property taxes. The
37.13hearing will be held on:

37.14(Month/Day/Year/Time)

37.15(Location/Address)

37.16If the discussion cannot be completed, and another hearing is scheduled, a time and place
37.17for that hearing will be announced at this hearing. You are also invited to send your
37.18written comments to the county auditor. If the comments relate to the city or school
37.19district's levy, please identify that on the envelope so the county auditor can direct the
37.20correspondence to the right jurisdiction."
37.21    The formal adoption of the taxing authority's levy must not be made at the joint
37.22public hearing held under this subdivision. The formal adoption must be made at one of
37.23the regularly scheduled meetings of the taxing authority's governing body. However, the
37.24property tax levy amount that is subsequently adopted cannot exceed the amount shown to
37.25taxpayers at the joint public hearing.
37.26EFFECTIVE DATE.This section is effective for hearings held in 2008 and
37.27thereafter.

37.28    Sec. 18. Minnesota Statutes 2006, section 275.066, is amended to read:
37.29275.066 SPECIAL TAXING DISTRICTS; DEFINITION.
37.30    For the purposes of property taxation and property tax state aids, the term "special
37.31taxing districts" includes the following entities:
37.32    (1) watershed districts under chapter 103D;
37.33    (2) sanitary districts under sections 115.18 to 115.37;
37.34    (3) regional sanitary sewer districts under sections 115.61 to 115.67;
37.35    (4) regional public library districts under section 134.201;
38.1    (5) park districts under chapter 398;
38.2    (6) regional railroad authorities under chapter 398A;
38.3    (7) hospital districts under sections 447.31 to 447.38;
38.4    (8) St. Cloud Metropolitan Transit Commission under sections 458A.01 to 458A.15;
38.5    (9) Duluth Transit Authority under sections 458A.21 to 458A.37;
38.6    (10) regional development commissions under sections 462.381 to 462.398;
38.7    (11) housing and redevelopment authorities under sections 469.001 to 469.047;
38.8    (12) port authorities under sections 469.048 to 469.068;
38.9    (13) economic development authorities under sections 469.090 to 469.1081;
38.10    (14) Metropolitan Council under sections 473.123 to 473.549;
38.11    (15) Metropolitan Airports Commission under sections 473.601 to 473.680;
38.12    (16) Metropolitan Mosquito Control Commission under sections 473.701 to 473.716;
38.13    (17) Morrison County Rural Development Financing Authority under Laws 1982,
38.14chapter 437, section 1;
38.15    (18) Croft Historical Park District under Laws 1984, chapter 502, article 13, section
38.166;
38.17    (19) East Lake County Medical Clinic District under Laws 1989, chapter 211,
38.18sections 1 to 6;
38.19    (20) Floodwood Area Ambulance District under Laws 1993, chapter 375, article
38.205, section 39;
38.21    (21) Middle Mississippi River Watershed Management Organization under sections
38.22103B.211 and 103B.241;
38.23    (22) emergency medical services special taxing districts under section 144F.01;
38.24    (23) a county levying under the authority of section 103B.241, 103B.245, or
38.25103B.251 ;
38.26    (24) Southern St. Louis County Special Taxing District; Chris Jensen Nursing Home
38.27under Laws 2003, First Special Session chapter 21, article 4, section 12; and
38.28    (25) an airport authority created under section 360.0426; and
38.29    (26) any other political subdivision of the state of Minnesota, excluding counties,
38.30school districts, cities, and towns, that has the power to adopt and certify a property tax
38.31levy to the county auditor, as determined by the commissioner of revenue.
38.32EFFECTIVE DATE.This section is effective for taxes payable in 2009, and
38.33thereafter.

38.34    Sec. 19. Minnesota Statutes 2006, section 276.04, subdivision 2, is amended to read:
39.1    Subd. 2. Contents of tax statements. (a) The treasurer shall provide for the
39.2printing of the tax statements. The commissioner of revenue shall prescribe the form
39.3of the property tax statement and its contents. The statement must contain a tabulated
39.4statement of the dollar amount due to each taxing authority and the amount of the state
39.5tax from the parcel of real property for which a particular tax statement is prepared. The
39.6dollar amounts attributable to the county, the state tax, the voter approved school tax, the
39.7other local school tax, the township or municipality, and the total of the metropolitan
39.8special taxing districts as defined in section 275.065, subdivision 3, paragraph (i), must
39.9be separately stated. The amounts due all other special taxing districts, if any, may be
39.10aggregated except that any levies made by the regional rail authorities in the county of
39.11Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 398A
39.12shall be listed on a separate line directly under the appropriate county's levy. If the county
39.13levy under this paragraph includes an amount for a lake improvement district as defined
39.14under sections 103B.501 to 103B.581, the amount attributable for that purpose must be
39.15separately stated from the remaining county levy amount. In the case of Ramsey County,
39.16if the county levy under this paragraph includes an amount for public library service
39.17under section 134.07, the amount attributable for that purpose may be separated from the
39.18remaining county levy amount. The amount of the tax on homesteads qualifying under the
39.19senior citizens' property tax deferral program under chapter 290B is the total amount of
39.20property tax before subtraction of the deferred property tax amount. The amount of the
39.21tax on contamination value imposed under sections 270.91 to 270.98, if any, must also
39.22be separately stated. The dollar amounts, including the dollar amount of any special
39.23assessments, may be rounded to the nearest even whole dollar. For purposes of this section
39.24whole odd-numbered dollars may be adjusted to the next higher even-numbered dollar.
39.25The amount of market value excluded under section 273.11, subdivision 16, if any, must
39.26also be listed on the tax statement.
39.27    (b) The property tax statements for manufactured homes and sectional structures
39.28taxed as personal property shall contain the same information that is required on the
39.29tax statements for real property.
39.30    (c) Real and personal property tax statements must contain the following information
39.31in the order given in this paragraph. The information must contain the current year tax
39.32information in the right column with the corresponding information for the previous year
39.33in a column on the left:
39.34    (1) the property's estimated market value under section 273.11, subdivision 1;
39.35    (2) the property's taxable market value after reductions under section 273.11,
39.36subdivisions 1a and 16 ;
40.1    (3) the property's gross tax, calculated by adding the property's total property tax to
40.2the sum of the aids enumerated in clause (4) before credits;
40.3    (4) a total of the following aids:
40.4    (i) education aids payable under chapters 122A, 123A, 123B, 124D, 125A, 126C,
40.5and 127A;
40.6    (ii) local government aids for cities, towns, and counties under sections 477A.011 to
40.7477A.04; and
40.8    (iii) disparity reduction aid under section 273.1398;
40.9    (5) (4) for homestead residential and agricultural properties, the credits under
40.10section 273.1384;
40.11    (6) (5) any credits received under sections 273.119; 273.123; 273.135; 273.1391;
40.12273.1398, subdivision 4 ; 469.171; and 473H.10, except that the amount of credit received
40.13under section 273.135 must be separately stated and identified as "taconite tax relief"; and
40.14    (7) (6) the net tax payable in the manner required in paragraph (a).
40.15    (d) If the county uses envelopes for mailing property tax statements and if the county
40.16agrees, a taxing district may include a notice with the property tax statement notifying
40.17taxpayers when the taxing district will begin its budget deliberations for the current
40.18year, and encouraging taxpayers to attend the hearings. If the county allows notices to
40.19be included in the envelope containing the property tax statement, and if more than
40.20one taxing district relative to a given property decides to include a notice with the tax
40.21statement, the county treasurer or auditor must coordinate the process and may combine
40.22the information on a single announcement.
40.23    The commissioner of revenue shall certify to the county auditor the actual or
40.24estimated aids enumerated in paragraph (c), clause (4), that local governments will receive
40.25in the following year. The commissioner must certify this amount by January 1 of each
40.26year.
40.27EFFECTIVE DATE.This section is effective for property tax statements for
40.28property taxes payable in 2009 and thereafter.

40.29    Sec. 20. Minnesota Statutes 2006, section 278.05, subdivision 6, is amended to read:
40.30    Subd. 6. Dismissal of petition; exclusion of certain evidence. (a) In cases where
40.31the petitioner contests the valuation of income-producing property, information, including
40.32income and expense figures in the form of (1) year-end financial statements for the
40.33year prior to the assessment date, (2) year-end financial statements for the year of the
40.34assessment date, and (3) rent rolls on the assessment date including tenant name, lease start
40.35and end dates, option terms, base rent, square footage leased and vacant space, verified net
41.1rentable areas in the form of net rentable square footage of the building or buildings, and
41.2anticipated income and expenses in the form of proposed budgets for the year subsequent
41.3to the year of the assessment date, for income-producing property must be provided to
41.4the county assessor no later than 60 days after the applicable filing deadline contained
41.5in section 278.01, subdivision 1 or 4. Failure to provide the information required in this
41.6paragraph shall result in the dismissal of the petition, unless (1) the failure to provide it was
41.7due to the unavailability of the evidence at the time that the information was due, or (2)
41.8the petitioner was not aware of or informed of the requirement to provide the information.
41.9If the petitioner proves that the requirements under clause (2) are met, the petitioner has
41.10an additional 30 days to provide the information from the time the petitioner became
41.11aware of or was informed of the requirement to provide the information, otherwise the
41.12petition shall be dismissed.
41.13    (b) Provided that the information as contained in paragraph (a) is timely submitted to
41.14the county assessor, the county assessor shall furnish the petitioner at least five days before
41.15the hearing under this chapter with the property's appraisal, if any, which will be presented
41.16to the court at the hearing. The petitioner shall furnish to the county assessor at least five
41.17days before the hearing under this chapter with the property's appraisal, if any, which
41.18will be presented to the court at the hearing. An appraisal of the petitioner's property
41.19done by or for the county shall not be admissible as evidence if the county assessor does
41.20not comply with the provisions in this paragraph. The petition shall be dismissed if the
41.21petitioner does not comply with the provisions in this paragraph.
41.22EFFECTIVE DATE.This section is effective for petitions filed on or after July
41.231, 2008.

41.24    Sec. 21. Minnesota Statutes 2006, section 279.37, subdivision 1a, is amended to read:
41.25    Subd. 1a. Class 3a property. (a) The delinquent taxes upon a parcel of property
41.26which was classified class 3a, for the previous year's assessment and had a total market
41.27value of $200,000 $500,000 or less for that same assessment shall be eligible to be
41.28composed into a confession of judgment. Property qualifying under this subdivision
41.29shall be subject to the same provisions as provided in this section except as provided
41.30in paragraphs (b) to (d).
41.31    (b) Current year taxes and penalty due at the time the confession of judgment
41.32is entered must be paid.
41.33    (c) The down payment must include all special assessments due in the current tax
41.34year, all delinquent special assessments, and 20 percent of the ad valorem tax, penalties,
42.1and interest accrued against the parcel. The balance remaining is payable in four equal
42.2annual installments.
42.3    (d) The amounts entered in judgment bear interest at the rate provided in section
42.4279.03, subdivision 1a , commencing with the date the judgment is entered. The interest
42.5rate is subject to change each year on the unpaid balance in the manner provided in section
42.6279.03, subdivision 1a .
42.7EFFECTIVE DATE.This section is effective the day following final enactment.

42.8    Sec. 22. Minnesota Statutes 2006, section 280.39, is amended to read:
42.9280.39 DELINQUENT TAXES MAY BE PAID IN INVERSE ORDER.
42.10    In any case where taxes for two or more years are delinquent against a parcel of
42.11land, such taxes for one or more entire years the taxes, or a portion of them, if held by
42.12the state, may be paid in the inverse order to that in which the taxes were levied, with
42.13accrued penalties, interest, and costs upon the taxes so paid, without payment of the
42.14taxes for the first of such years; provided, that such payment shall not affect the lien of
42.15any unpaid taxes or tax judgment.
42.16EFFECTIVE DATE.This section is effective the day following final enactment.

42.17    Sec. 23. Minnesota Statutes 2006, section 290C.07, is amended to read:
42.18290C.07 CALCULATION OF INCENTIVE PAYMENT.
42.19    An approved claimant under the sustainable forest incentive program is eligible to
42.20receive an annual payment. The payment shall equal the greater of:
42.21    (1) the difference between the property tax that would be paid on the land using the
42.22previous year's statewide average total township tax rate and the class rate for class 2b
42.23timberland under section 273.13, subdivision 23, paragraph (b), if the land were valued
42.24at (i) the average statewide timberland market value per acre calculated under section
42.25290C.06 , and (ii) the average statewide timberland current use value per acre calculated
42.26under section 290C.02, subdivision 5; or
42.27    (2) two-thirds of the property tax amount determined by using the previous year's
42.28statewide average total township tax rate, the estimated market value per acre as calculated
42.29in section 290C.06, and the class rate for 2b timberland under section 273.13, subdivision
42.3023 , paragraph (b); or
42.31    (3) $1.50, provided that the payment shall be no less than $7 per acre for each acre
42.32enrolled in the sustainable forest incentive program.
43.1EFFECTIVE DATE.This section is effective for payments made after June 30,
43.22008.

43.3    Sec. 24. Minnesota Statutes 2006, section 360.031, is amended to read:
43.4360.031 DEFINITION OF MUNICIPALITY.
43.5    For the purposes of sections 360.031 to 360.045, inclusive (except section 360.042),
43.6only, "municipality" means any county, city, or town, or airport authority of this state.

43.7    Sec. 25. [360.0425] GENERAL POWERS OF AUTHORITY.
43.8    An airport authority created under section 360.0426 has all the powers granted a
43.9municipality under sections 360.032 to 360.046.

43.10    Sec. 26. [360.0426] CREATION OF AN AIRPORT AUTHORITY;
43.11DISSOLUTION.
43.12    Subdivision 1. Members; definition. A city together with another city, county,
43.13town, or an Indian tribe may create an airport authority. For purposes of this chapter,
43.14"airport authority" means a governmental entity created pursuant to this section for the
43.15purpose of acquiring, establishing, constructing, maintaining, improving, and operating
43.16airports and other air navigation facilities.
43.17    Subd. 2. Process to establish authority. A city that owns an airport by joint
43.18resolution together with other willing governmental units may create an airport authority
43.19that is authorized to exercise its functions upon passage of a joint resolution by each of
43.20their governing bodies, including a proposed date for the first meeting of the authority.
43.21    Subd. 3. Airport authority commission. The powers of the airport authority shall
43.22be vested in the airport authority commissioners. The commission shall consist of at
43.23least five commissioners. Each governmental unit that is a member of the authority shall
43.24be represented by at least one commissioner. If fewer than five governmental units are
43.25members of the authority, there must be two commissioners appointed from each member
43.26unit of government. The terms of each commissioner are three years, provided that the
43.27length of the initial appointments must be staggered so that the terms of approximately
43.28one-third of the commissioners expire each calendar year.
43.29    Subd. 4. Appointment of commissioners. The governmental body of each member
43.30governmental unit shall appoint a resident of that governmental unit to be a commissioner
43.31of the airport authority. Upon vacancy of a commissioner prior to the end of a normal term,
43.32the appropriate governmental body shall appoint a commissioner to fill the unexpired term.
44.1    Subd. 5. Compensation; meetings; officers. Commissioners shall receive no
44.2compensation for services, but are entitled to payment for necessary expenses, including
44.3travel expenses, incurred in the discharge of the commissioners' duties.
44.4    The commission shall establish a regular meeting schedule. A majority of the
44.5commissioners of the authority constitutes a quorum for purposes of conducting business
44.6of the authority. Action may be taken by the majority vote of not less than a majority of
44.7the commissioners present, providing there is a quorum.
44.8    The commission shall elect a chair, a vice-chair, a secretary, and a treasurer at its
44.9organizational meeting. The authority may hire an executive director, a legal advisor,
44.10technical experts, and other employees, permanent and temporary, as it may require.
44.11    Subd. 6. Process to increase size of authority. An airport authority may be
44.12increased in size by adding additional governmental entities if each of the additional
44.13entities and each of the governmental entities currently included in the existing authority
44.14adopt a resolution agreeing to the size increase.
44.15    Subd. 7. Process to decrease size of authority. An airport authority may be
44.16decreased in size if each of the governmental entities that are members of the authority
44.17and the current commissioners consent to change and make provisions for the retention
44.18or disposition of its assets and liabilities.
44.19    Subd. 8. Process to dissolve authority. An airport authority may be dissolved after
44.20payment of all debts and adoption of a joint resolution of the governing bodies of all of
44.21the participating units of government. Before dissolution, the property of the airport
44.22authority must be sold, transferred, or distributed as agreed to by the participating units
44.23of government. Any remaining funds must be distributed to the general funds of the
44.24participating units of government in proportion to their relative shares of the most recent
44.25levy under section 360.0427.

44.26    Sec. 27. [360.0427] TAX LEVY MAY BE CERTIFIED BY AN AIRPORT
44.27AUTHORITY.
44.28    In any year in which it imposes a property tax levy under sections 275.065 to
44.29275.07, which requires an affirmative vote of at least two-thirds of the members of the
44.30authority, an airport authority must submit its proposed levy to the governing body of the
44.31municipality that contains the airport. The municipal governing body may approve or
44.32modify the amount of the levy, and, when it has determined the amount, the authority must
44.33certify to the auditor of the county where the airport is located the amount to be levied on
44.34all taxable property within the boundaries of the airport authority.
45.1EFFECTIVE DATE.This section is effective for taxes payable in 2009, and
45.2thereafter.

45.3    Sec. 28. Minnesota Statutes 2006, section 435.193, is amended to read:
45.4435.193 HARDSHIP ASSESSMENT DEFERRAL FOR SENIORS OR,
45.5DISABLED, OR MILITARY PERSONS.
45.6    (a) Notwithstanding the provisions of any law to the contrary, any county, statutory
45.7or home rule charter city, or town, making a special assessment may, at its discretion, defer
45.8the payment of that assessment for any homestead property:
45.9    (1) owned by a person 65 years of age or older or retired by virtue of a permanent
45.10and total disability for whom it would be a hardship to make the payments; or
45.11    (2) owned by a person who is a member of the Minnesota National Guard or other
45.12military reserves who is ordered into active military service, as defined in section 190.05,
45.13subdivision 5b or 5c, as stated in the person's military orders, for whom it would be a
45.14hardship to make the payments.
45.15    (b) Any county, statutory or home rule charter city, or town electing to defer
45.16special assessments shall adopt an ordinance or resolution establishing standards and
45.17guidelines for determining the existence of a hardship and for determining the existence of
45.18a disability, but nothing herein shall be construed to prohibit the determination of hardship
45.19on the basis of exceptional and unusual circumstances not covered by the standards and
45.20guidelines where the determination is made in a nondiscriminatory manner and does not
45.21give the applicant an unreasonable preference or advantage over other applicants.
45.22EFFECTIVE DATE.This section is effective the day following final enactment,
45.23and applies to any special assessment for which payment is due on or after that date.

45.24    Sec. 29. Laws 1973, chapter 393, section 1, as amended by Laws 1974, chapter 153,
45.25section 1, is amended to read:
45.26    Section 1. MINNEAPOLIS, CITY OF; STREET MAINTENANCE AND
45.27LIGHTING.
45.28    Notwithstanding the provisions of any statute or the charter of the city of
45.29Minneapolis to the contrary, the city council of said city may provide that all or part of the
45.30costs of construction, operation, and maintenance of streets and street lighting within the
45.31city may hereafter be paid from the general revenues of the city of Minneapolis; provided
45.32that the portion of the costs assessable against nongovernmental real property exempt from
45.33ad valorem taxation may be levied as a special assessment against the property.

46.1    Sec. 30. Laws 1988, chapter 645, section 3, as amended by Laws 1999, chapter 243,
46.2article 6, section 9, and Laws 2000, chapter 490, article 6, section 15, is amended to read:
46.3    Sec. 3. TAX; PAYMENT OF EXPENSES.
46.4    (a) The tax levied by the hospital district under Minnesota Statutes, section 447.34,
46.5must not be levied at a rate that exceeds 0.063 percent of taxable market value the amount
46.6authorized to be levied under that section. The proceeds of the tax may be used for all
46.7purposes of the hospital district, except as provided in paragraph (b).
46.8    (b) 0.048 percent of taxable market value of tax in paragraph (a) may be used only
46.9for acquisition, betterment, and maintenance of the district's hospital and nursing home
46.10facilities and equipment, and not for administrative or salary expenses.
46.11    (c) 0.015 percent of taxable market value of the tax in paragraph (a) may be used
46.12solely for the purpose of capital expenditures as it relates to ambulance acquisitions for
46.13the Cook ambulance service and the Orr ambulance service and not for administrative
46.14or salary expenses.
46.15    The part of the levy referred to in paragraph (c) (b) must be administered by the
46.16Cook Hospital and passed on directly to the Cook area ambulance service board and the
46.17city of Orr to be held in trust until funding for a new ambulance is needed by either the
46.18Cook ambulance service or the Orr ambulance service.
46.19EFFECTIVE DATE.This section is effective upon compliance with Minnesota
46.20Statutes, section 645.021, subdivision 3, by the governing body of the Cook-Orr Hospital
46.21District.

46.22    Sec. 31. Laws 1989, chapter 211, section 8, subdivision 4, as amended by Laws 2002,
46.23chapter 390, section 24, and Laws 2003, chapter 127, article 2, section 22, subdivision 4,
46.24is amended to read:
46.25    Subd. 4. Tax levy. The tax levied under Minnesota Statutes, section 447.34, shall
46.26not exceed $300,000 for taxes levied in 2002. For taxes levied in 2003 and subsequent
46.27years, the tax must not exceed the lesser of:
46.28    (1) the product of the hospital district's property tax levy limitation for the previous
46.29year determined under this subdivision, multiplied by 103 percent; or
46.30    (2) the product of the hospital district's property tax levy limitation for the previous
46.31year determined under this subdivision multiplied by the ratio of the most recent available
46.32annual medical care expenditure category of the revised Consumer Price Index, U.S.
46.33citywide average, for all urban consumers prepared by the United States Department of
46.34Labor to the same annual index for the previous year the amount authorized to be levied
46.35under that section.
47.1    The proceeds of the tax may be used for all purposes of the hospital district.
47.2EFFECTIVE DATE.This section is effective upon compliance with Minnesota
47.3Statutes, section 645.021, subdivision 3, by the governing body of the Cook County
47.4Hospital District.

47.5    Sec. 32. LAKEVIEW CEMETERY ASSOCIATION.
47.6    Subdivision 1. Authorized. Any two or more of the following cities and towns in
47.7Itasca County may enter into a joint powers agreement under Minnesota Statutes, section
47.8471.59, to establish the Lakeview Cemetery Association with the powers and duties of a
47.9cemetery association under Minnesota Statutes, chapter 306: the cities of Bovey, Calumet,
47.10Coleraine, Marble, and Taconite, and the towns of Greenway, Iron Range, Lawrence,
47.11and Trout Lake.
47.12    Subd. 2. Additions; withdrawals. (a) A city or town listed in subdivision 1 that
47.13does not join the association at the time of the initial agreement may join as provided in
47.14the joint powers agreement, or if the joint powers agreement does not provide for later
47.15additions, by providing the association a copy of the adopted resolution to join. If the
47.16joint powers agreement does not provide for adding members, a city or town that joins
47.17after the initial agreement is effective, may join prior to July 1 of the levy year, for taxes
47.18payable in the following year.
47.19    (b) A city or town may withdraw from the association as otherwise provided in the
47.20joint powers agreement, or providing to the association a copy of the adopted resolution of
47.21the city or town, prior to July 1 of the levy year for taxes payable in the following year.
47.22    Subd. 3. Operation; tax levy. The joint powers agreement for the association may
47.23provide for a uniform tax rate to be levied against all taxable properties located within each
47.24participating city or town. The maximum amount that may be levied by all participating
47.25cities and towns combined shall not exceed a total of $200,000 per year. If levied, the
47.26tax is in addition to all other taxes permitted to be levied on the property, including taxes
47.27permitted to be levied for cemetery purposes by a participating city or town. The levy
47.28under this section must be disregarded in the calculation of all other rate or per capita levy
47.29limitations imposed by law. One of the cities or towns within the association, chosen by
47.30the members of the association, shall certify a tax levy to the Itasca County auditor. When
47.31collected, the Itasca County auditor shall pay the Lakeview Cemetery Association directly.
47.32EFFECTIVE DATE.This section is effective for taxes payable in 2009 and
47.33thereafter.

48.1    Sec. 33. REPEALER.
48.2(a) Laws 1973, chapter 393, section 2, is repealed.
48.3(b) Laws 1994, chapter 587, article 9, section 8, subdivision 1, as amended by Laws
48.42005, First Special Session chapter 3, article 1, section 36, is repealed, effective for the
48.5same levy year in which the association initially levies under section 32.
48.6(c) Minnesota Statutes 2006, section 163.051, subdivision 5, is repealed, effective
48.7for taxes payable in 2007 and thereafter.

48.8ARTICLE 3

48.9INCOME TAXES

48.10    Section 1. Minnesota Statutes 2006, section 289A.12, subdivision 4, is amended to
48.11read:
48.12    Subd. 4. Returns by persons, corporations, cooperatives, governmental entities,
48.13or school districts. (a) The commissioner may by notice and demand require to the
48.14extent required by section 6041 of the Internal Revenue Code, a person, corporation,
48.15or cooperative, the state of Minnesota and its political subdivisions, and a city, county,
48.16and school district in Minnesota, making payments in the regular course of a trade or
48.17business during the taxable year to any person or corporation of $600 or more on account
48.18of rents or royalties, or of $10 or more on account of interest, or $10 or more on account
48.19of dividends or patronage dividends, or $600 or more on account of either wages, salaries,
48.20commissions, fees, prizes, awards, pensions, annuities, or any other fixed or determinable
48.21gains, profits or income, not otherwise reportable under section 289A.09, subdivision 2, or
48.22on account of earnings of $10 or more distributed to its members by savings associations
48.23or credit unions chartered under the laws of this state or the United States, (1) to file with
48.24the commissioner a return (except in cases where a valid agreement to participate in the
48.25combined federal and state information reporting system has been entered into, and the
48.26return is filed only with the commissioner of internal revenue under the applicable filing
48.27and informational reporting requirements of the Internal Revenue Code) with respect to
48.28the payments in excess of the amounts named, giving the names and addresses of the
48.29persons to whom the payments were made, the amounts paid to each, and (2) to make
48.30a return with respect to the total number of payments and total amount of payments,
48.31for each category of income named, which were in excess of the amounts named. This
48.32subdivision does not apply to the payment of interest or dividends to a person who was a
48.33nonresident of Minnesota for the entire year.
49.1    (b) For payments for which a return is covered by paragraph (a), regardless of
49.2whether the commissioner has required filing under paragraph (a), the payor must file a
49.3copy of the return with the commissioner if:
49.4    (i) the return is for a payment made to a Minnesota resident, to a recipient with a
49.5Minnesota address, or for activity occurring in the state of Minnesota; and
49.6    (ii) the payment is for wages, salaries, or other compensation for services provided.
49.7The commissioner may require this information to be filed in electronic or another form
49.8that the commissioner determines is appropriate, notwithstanding the provisions of
49.9paragraph (c).
49.10    (c) A person, corporation, or cooperative required to file returns under this
49.11subdivision must file the returns on magnetic media if magnetic media was used to satisfy
49.12the federal reporting requirement under section 6011(e) of the Internal Revenue Code,
49.13unless the person establishes to the satisfaction of the commissioner that compliance with
49.14this requirement would be an undue hardship.
49.15EFFECTIVE DATE.This section is effective for forms required to be filed by
49.16federal law after December 31, 2009.

49.17    Sec. 2. Minnesota Statutes 2006, section 290.01, subdivision 19a, is amended to read:
49.18    Subd. 19a. Additions to federal taxable income. For individuals, estates, and
49.19trusts, there shall be added to federal taxable income:
49.20    (1)(i) interest income on obligations of any state other than Minnesota or a political
49.21or governmental subdivision, municipality, or governmental agency or instrumentality
49.22of any state other than Minnesota exempt from federal income taxes under the Internal
49.23Revenue Code or any other federal statute; and
49.24    (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
49.25Code, except the portion of the exempt-interest dividends derived from interest income
49.26on obligations of the state of Minnesota or its political or governmental subdivisions,
49.27municipalities, governmental agencies or instrumentalities, but only if the portion of the
49.28exempt-interest dividends from such Minnesota sources paid to all shareholders represents
49.2995 percent or more of the exempt-interest dividends that are paid by the regulated
49.30investment company as defined in section 851(a) of the Internal Revenue Code, or the
49.31fund of the regulated investment company as defined in section 851(g) of the Internal
49.32Revenue Code, making the payment; and
49.33    (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
49.34government described in section 7871(c) of the Internal Revenue Code shall be treated as
49.35interest income on obligations of the state in which the tribe is located;
50.1    (2) the amount of income or sales and use taxes paid or accrued within the taxable
50.2year under this chapter and the amount of taxes based on net income paid or sales and use
50.3taxes paid to any other state or to any province or territory of Canada, to the extent allowed
50.4as a deduction under section 63(d) of the Internal Revenue Code, but the addition may not
50.5be more than the amount by which the itemized deductions as allowed under section 63(d)
50.6of the Internal Revenue Code exceeds the amount of the standard deduction as defined
50.7in section 63(c) of the Internal Revenue Code. For the purpose of this paragraph, the
50.8disallowance of itemized deductions under section 68 of the Internal Revenue Code of
50.91986, income or sales and use tax is the last itemized deduction disallowed;
50.10    (3) the capital gain amount of a lump sum distribution to which the special tax under
50.11section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
50.12    (4) the amount of income taxes paid or accrued within the taxable year under this
50.13chapter and taxes based on net income paid to any other state or any province or territory
50.14of Canada, to the extent allowed as a deduction in determining federal adjusted gross
50.15income. For the purpose of this paragraph, income taxes do not include the taxes imposed
50.16by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
50.17    (5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10
50.18other than expenses or interest used in computing net interest income for the subtraction
50.19allowed under subdivision 19b, clause (1);
50.20    (6) the amount of a partner's pro rata share of net income which does not flow
50.21through to the partner because the partnership elected to pay the tax on the income under
50.22section 6242(a)(2) of the Internal Revenue Code;
50.23    (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
50.24Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
50.25in the taxable year generates a deduction for depreciation under section 168(k) and the
50.26activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
50.27the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
50.28limited to excess of the depreciation claimed by the activity under section 168(k) over the
50.29amount of the loss from the activity that is not allowed in the taxable year. In succeeding
50.30taxable years when the losses not allowed in the taxable year are allowed, the depreciation
50.31under section 168(k) is allowed;
50.32    (8) 80 percent of the amount by which the deduction allowed by section 179 of the
50.33Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
50.34Revenue Code of 1986, as amended through December 31, 2003;
50.35    (9) to the extent deducted in computing federal taxable income, the amount of the
50.36deduction allowable under section 199 of the Internal Revenue Code; and
51.1    (10) the exclusion allowed under section 139A of the Internal Revenue Code for
51.2federal subsidies for prescription drug plans; and
51.3    (11) the amount of expenses disallowed under section 290.10, subdivision 2.
51.4EFFECTIVE DATE.This section is effective for taxable years beginning after
51.5December 31, 2007, for disallowed expenses assessed after the date of final enactment
51.6of this act.

51.7    Sec. 3. Minnesota Statutes 2007 Supplement, section 290.01, subdivision 19b, is
51.8amended to read:
51.9    Subd. 19b. Subtractions from federal taxable income. For individuals, estates,
51.10and trusts, there shall be subtracted from federal taxable income:
51.11    (1) net interest income on obligations of any authority, commission, or
51.12instrumentality of the United States to the extent includable in taxable income for federal
51.13income tax purposes but exempt from state income tax under the laws of the United States;
51.14    (2) if included in federal taxable income, the amount of any overpayment of income
51.15tax to Minnesota or to any other state, for any previous taxable year, whether the amount
51.16is received as a refund or as a credit to another taxable year's income tax liability;
51.17    (3) the amount paid to others, less the amount used to claim the credit allowed under
51.18section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten
51.19to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
51.20transportation of each qualifying child in attending an elementary or secondary school
51.21situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
51.22resident of this state may legally fulfill the state's compulsory attendance laws, which
51.23is not operated for profit, and which adheres to the provisions of the Civil Rights Act
51.24of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
51.25tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause,
51.26"textbooks" includes books and other instructional materials and equipment purchased
51.27or leased for use in elementary and secondary schools in teaching only those subjects
51.28legally and commonly taught in public elementary and secondary schools in this state.
51.29Equipment expenses qualifying for deduction includes expenses as defined and limited in
51.30section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional
51.31books and materials used in the teaching of religious tenets, doctrines, or worship, the
51.32purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
51.33or materials for, or transportation to, extracurricular activities including sporting events,
51.34musical or dramatic events, speech activities, driver's education, or similar programs. For
52.1purposes of the subtraction provided by this clause, "qualifying child" has the meaning
52.2given in section 32(c)(3) of the Internal Revenue Code;
52.3    (4) income as provided under section 290.0802;
52.4    (5) to the extent included in federal adjusted gross income, income realized on
52.5disposition of property exempt from tax under section 290.491;
52.6    (6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E)
52.7of the Internal Revenue Code in determining federal taxable income by an individual
52.8who does not itemize deductions for federal income tax purposes for the taxable year, an
52.9amount equal to 50 percent of the excess of charitable contributions over $500 allowable
52.10as a deduction for the taxable year under section 170(a) of the Internal Revenue Code and
52.11under the provisions of Public Law 109-1;
52.12    (7) for taxable years beginning before January 1, 2008, the amount of the federal
52.13small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code
52.14which is included in gross income under section 87 of the Internal Revenue Code;
52.15    (8) for individuals who are allowed a federal foreign tax credit for taxes that do not
52.16qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover
52.17of subnational foreign taxes for the taxable year, but not to exceed the total subnational
52.18foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
52.19"federal foreign tax credit" means the credit allowed under section 27 of the Internal
52.20Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
52.21under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
52.22the extent they exceed the federal foreign tax credit;
52.23    (9) in each of the five tax years immediately following the tax year in which an
52.24addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case
52.25of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
52.26of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
52.27the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or
52.28subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the
52.29positive value of any net operating loss under section 172 of the Internal Revenue Code
52.30generated for the tax year of the addition. The resulting delayed depreciation cannot be
52.31less than zero;
52.32    (10) job opportunity building zone income as provided under section 469.316;
52.33    (11) to the extent included in federal taxable income, the amount of compensation
52.34paid to members of the Minnesota National Guard or other reserve components of the
52.35United States military for active service performed in Minnesota, excluding compensation
52.36for services performed under the Active Guard Reserve (AGR) program. For purposes of
53.1this clause, "active service" means (i) state active service as defined in section 190.05,
53.2subdivision 5a , clause (1); (ii) federally funded state active service as defined in section
53.3190.05, subdivision 5b ; or (iii) federal active service as defined in section 190.05,
53.4subdivision 5c , but "active service" excludes services performed exclusively for purposes
53.5of basic combat training, advanced individual training, annual training, and periodic
53.6inactive duty training; special training periodically made available to reserve members;
53.7and service performed in accordance with section 190.08, subdivision 3;
53.8    (12) to the extent included in federal taxable income, the amount of compensation
53.9paid to Minnesota residents who are members of the armed forces of the United States or
53.10United Nations for active duty performed outside Minnesota under United States Code,
53.11title 10, section 101(d); United States Code, title 32, section 101(12); or the authority of
53.12the United Nations;
53.13    (13) an amount, not to exceed $10,000, equal to qualified expenses related to a
53.14qualified donor's donation, while living, of one or more of the qualified donor's organs
53.15to another person for human organ transplantation. For purposes of this clause, "organ"
53.16means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
53.17"human organ transplantation" means the medical procedure by which transfer of a human
53.18organ is made from the body of one person to the body of another person; "qualified
53.19expenses" means unreimbursed expenses for both the individual and the qualified donor
53.20for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
53.21may be subtracted under this clause only once; and "qualified donor" means the individual
53.22or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
53.23individual may claim the subtraction in this clause for each instance of organ donation for
53.24transplantation during the taxable year in which the qualified expenses occur;
53.25    (14) in each of the five tax years immediately following the tax year in which an
53.26addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a
53.27shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
53.28addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the
53.29case of a shareholder of a corporation that is an S corporation, minus the positive value of
53.30any net operating loss under section 172 of the Internal Revenue Code generated for the
53.31tax year of the addition. If the net operating loss exceeds the addition for the tax year, a
53.32subtraction is not allowed under this clause;
53.33    (15) to the extent included in federal taxable income, compensation paid to a
53.34nonresident who is a service member as defined in United States Code, title 10, section
53.35101(a)(5), for military service as defined in the Service Member Civil Relief Act, Public
53.36Law 108-189, section 101(2); and
54.1    (16) international economic development zone income as provided under section
54.2469.325 .
54.3EFFECTIVE DATE.This section is effective for tax years beginning after
54.4December 31, 2007.

54.5    Sec. 4. Minnesota Statutes 2006, section 290.01, subdivision 19c, is amended to read:
54.6    Subd. 19c. Corporations; additions to federal taxable income. For corporations,
54.7there shall be added to federal taxable income:
54.8    (1) the amount of any deduction taken for federal income tax purposes for income,
54.9excise, or franchise taxes based on net income or related minimum taxes, including but not
54.10limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
54.11another state, a political subdivision of another state, the District of Columbia, or any
54.12foreign country or possession of the United States;
54.13    (2) interest not subject to federal tax upon obligations of: the United States, its
54.14possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
54.15state, any of its political or governmental subdivisions, any of its municipalities, or any
54.16of its governmental agencies or instrumentalities; the District of Columbia; or Indian
54.17tribal governments;
54.18    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
54.19Revenue Code;
54.20    (4) the amount of any net operating loss deduction taken for federal income tax
54.21purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
54.22deduction under section 810 of the Internal Revenue Code;
54.23    (5) the amount of any special deductions taken for federal income tax purposes
54.24under sections 241 to 247 and 965 of the Internal Revenue Code;
54.25    (6) losses from the business of mining, as defined in section 290.05, subdivision 1,
54.26clause (a), that are not subject to Minnesota income tax;
54.27    (7) the amount of any capital losses deducted for federal income tax purposes under
54.28sections 1211 and 1212 of the Internal Revenue Code;
54.29    (8) the exempt foreign trade income of a foreign sales corporation under sections
54.30921(a) and 291 of the Internal Revenue Code;
54.31    (9) the amount of percentage depletion deducted under sections 611 through 614 and
54.32291 of the Internal Revenue Code;
54.33    (10) for certified pollution control facilities placed in service in a taxable year
54.34beginning before December 31, 1986, and for which amortization deductions were elected
54.35under section 169 of the Internal Revenue Code of 1954, as amended through December
55.131, 1985, the amount of the amortization deduction allowed in computing federal taxable
55.2income for those facilities;
55.3    (11) the amount of any deemed dividend from a foreign operating corporation
55.4determined pursuant to section 290.17, subdivision 4, paragraph (g);
55.5    (12) the amount of a partner's pro rata share of net income which does not flow
55.6through to the partner because the partnership elected to pay the tax on the income under
55.7section 6242(a)(2) of the Internal Revenue Code;
55.8    (13) the amount of net income excluded under section 114 of the Internal Revenue
55.9Code;
55.10    (14) any increase in subpart F income, as defined in section 952(a) of the Internal
55.11Revenue Code, for the taxable year when subpart F income is calculated without regard
55.12to the provisions of section 103 of Public Law 109-222;
55.13    (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
55.14and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
55.15has an activity that in the taxable year generates a deduction for depreciation under
55.16section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
55.17that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
55.18under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
55.19depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
55.20amount of the loss from the activity that is not allowed in the taxable year. In succeeding
55.21taxable years when the losses not allowed in the taxable year are allowed, the depreciation
55.22under section 168(k)(1)(A) and (k)(4)(A) is allowed;
55.23    (16) 80 percent of the amount by which the deduction allowed by section 179 of the
55.24Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
55.25Revenue Code of 1986, as amended through December 31, 2003;
55.26    (17) to the extent deducted in computing federal taxable income, the amount of the
55.27deduction allowable under section 199 of the Internal Revenue Code; and
55.28    (18) the exclusion allowed under section 139A of the Internal Revenue Code for
55.29federal subsidies for prescription drug plans.; and
55.30    (19) the amount of expenses disallowed under section 290.10, subdivision 2.
55.31EFFECTIVE DATE.This section is effective for taxable years beginning after
55.32December 31, 2007, for disallowed expenses assessed after the date of final enactment
55.33of this act.

55.34    Sec. 5. Minnesota Statutes 2006, section 290.0677, subdivision 1, is amended to read:
56.1    Subdivision 1. Credit allowed. (a) An individual is allowed a credit against the tax
56.2due under this chapter equal to $59 for each month or portion thereof that the individual
56.3was in active military service in a designated area after September 11, 2001, while a
56.4Minnesota domiciliary.
56.5    (b) For active service performed after September 11, 2001, and before December 31,
56.62006, the individual may claim the credit in the taxable year beginning after December 31,
56.72005, and before January 1, 2007.
56.8    (c) For active service performed after December 31, 2006, the individual may claim
56.9the credit for the taxable year in which the active service was performed.
56.10    (d) If a Minnesota domiciliary is killed while performing active military service in a
56.11designated area, the individual's surviving spouse or dependent child may take the credit
56.12in the taxable year of the death. If a Minnesota domiciliary was killed while performing
56.13active military service in a designated area between September 11, 2001, and December
56.1431, 2006, the individual's surviving spouse or dependent child may claim this credit in
56.15the taxable year beginning after December 31, 2005, and before January 1, 2007 an
56.16individual entitled to the credit died prior to January 1, 2006, the individual's estate or
56.17heirs at law, if the individual's probate estate has closed or the estate was not probated,
56.18may claim the credit.
56.19EFFECTIVE DATE.This section is effective retroactively for tax years beginning
56.20after December 31, 2005.

56.21    Sec. 6. Minnesota Statutes 2006, section 290.10, is amended to read:
56.22290.10 NONDEDUCTIBLE ITEMS.
56.23    Subdivision 1. Expenses, interest, and taxes. Except as provided in section 290.17,
56.24subdivision 4 , paragraph (i), in computing the net income of a taxpayer no deduction
56.25shall in any case be allowed for expenses, interest and taxes connected with or allocable
56.26against the production or receipt of all income not included in the measure of the tax
56.27imposed by this chapter, except that for corporations engaged in the business of mining
56.28or producing iron ore, the mining of which is subject to the occupation tax imposed by
56.29section 298.01, subdivision 4, this shall not prevent the deduction of expenses and other
56.30items to the extent that the expenses and other items are allowable under this chapter and
56.31are not deductible, capitalizable, retainable in basis, or taken into account by allowance
56.32or otherwise in computing the occupation tax and do not exceed the amounts taken for
56.33federal income tax purposes for that year. Occupation taxes imposed under chapter 298,
57.1royalty taxes imposed under chapter 299, or depletion expenses may not be deducted
57.2under this clause subdivision.
57.3    Subd. 2. Fines, fees, and penalties. (a) Except as provided in this subdivision, no
57.4deduction from taxable income for a trade or business expense under section 162(a) of
57.5the Internal Revenue Code shall be allowed for any amount paid or incurred, whether by
57.6suit, agreement, or otherwise, to, or at the direction of, a government or entity described in
57.7paragraph (d) in relation to the violation of any law or the investigation or inquiry by such
57.8government or entity into the potential violation of any law.
57.9    (b) Exception for amounts constituting restitution or paid to come into compliance
57.10with the law. Paragraph (a) does not apply to any amount which:
57.11    (1) the taxpayer establishes:
57.12    (i) constitutes restitution, including remediation of property for damage or harm
57.13caused by or which may be caused by the violation of any law or the potential violation
57.14of any law; or
57.15    (ii) is paid to come into compliance with any law which was violated or involved in
57.16the investigation or inquiry; and
57.17    (2) is identified as restitution or as an amount paid to come into compliance with the
57.18law, as the case may be, in the court order or settlement agreement.
57.19    This paragraph does not apply to any amount paid or incurred as reimbursement to
57.20the government or entity for the costs of any investigation or litigation.
57.21    (c) Paragraph (a) does not apply to any amount paid or incurred by order of a court
57.22in a suit in which no government or entity described in paragraph (d) is a party.
57.23    (d) An entity is described in this paragraph if it is:
57.24    (1) a nongovernmental entity which exercises self-regulatory powers, including
57.25imposing sanctions, in connection with a qualified board or exchange, as defined in section
57.261256(g)(7) of the Internal Revenue Code, or;
57.27    (2) to the extent provided in federal regulations, a nongovernmental entity which
57.28exercises self-regulatory powers, including imposing sanctions, as part of performing an
57.29essential governmental function.
57.30    (e) Paragraph (a) does not apply to any amount paid or incurred as taxes due.
57.31EFFECTIVE DATE.This section is effective for taxable years beginning after
57.32December 31, 2007, and for fines, fees, and penalties assessed after the date of enactment.

57.33    Sec. 7. Minnesota Statutes 2006, section 290.17, subdivision 2, is amended to read:
58.1    Subd. 2. Income not derived from conduct of a trade or business. The income of
58.2a taxpayer subject to the allocation rules that is not derived from the conduct of a trade or
58.3business must be assigned in accordance with paragraphs (a) to (f):
58.4    (a)(1) Subject to paragraphs (a)(2), and (a)(3), and (a)(4), income from wages as
58.5defined in section 3401(a) and (f) of the Internal Revenue Code is assigned to this state if,
58.6and to the extent that, the work of the employee is performed within it; all other income
58.7from such sources is treated as income from sources without this state.
58.8    Severance pay shall be considered income from labor or personal or professional
58.9services.
58.10    (2) In the case of an individual who is a nonresident of Minnesota and who is an
58.11athlete or entertainer, income from compensation for labor or personal services performed
58.12within this state shall be determined in the following manner:
58.13    (i) The amount of income to be assigned to Minnesota for an individual who is a
58.14nonresident salaried athletic team employee shall be determined by using a fraction in
58.15which the denominator contains the total number of days in which the individual is under
58.16a duty to perform for the employer, and the numerator is the total number of those days
58.17spent in Minnesota. For purposes of this paragraph, off-season training activities, unless
58.18conducted at the team's facilities as part of a team imposed program, are not included in
58.19the total number of duty days. Bonuses earned as a result of play during the regular season
58.20or for participation in championship, play-off, or all-star games must be allocated under
58.21the formula. Signing bonuses are not subject to allocation under the formula if they are
58.22not conditional on playing any games for the team, are payable separately from any other
58.23compensation, and are nonrefundable; and
58.24    (ii) The amount of income to be assigned to Minnesota for an individual who is a
58.25nonresident, and who is an athlete or entertainer not listed in clause (i), for that person's
58.26athletic or entertainment performance in Minnesota shall be determined by assigning to
58.27this state all income from performances or athletic contests in this state.
58.28    (3) For purposes of this section, amounts received by a nonresident as "retirement
58.29income" as defined in section (b)(1) of the State Income Taxation of Pension Income
58.30Act, Public Law 104-95, are not considered income derived from carrying on a trade
58.31or business or from wages or other compensation for work an employee performed in
58.32Minnesota, and are not taxable under this chapter.
58.33    (4) Wages, otherwise assigned to this state under clause (1) and not qualifying under
58.34clause (3), are not taxable under this chapter if the following conditions are met:
58.35    (i) the recipient was not a resident of this state for any part of the taxable year in
58.36which the wages were received; and
59.1    (ii) the wages are for work performed while the recipient was a resident of this state.
59.2    (b) Income or gains from tangible property located in this state that is not employed
59.3in the business of the recipient of the income or gains must be assigned to this state.
59.4    (c) Income or gains from intangible personal property not employed in the business
59.5of the recipient of the income or gains must be assigned to this state if the recipient of the
59.6income or gains is a resident of this state or is a resident trust or estate.
59.7    Gain on the sale of a partnership interest is allocable to this state in the ratio of the
59.8original cost of partnership tangible property in this state to the original cost of partnership
59.9tangible property everywhere, determined at the time of the sale. If more than 50 percent
59.10of the value of the partnership's assets consists of intangibles, gain or loss from the sale
59.11of the partnership interest is allocated to this state in accordance with the sales factor of
59.12the partnership for its first full tax period immediately preceding the tax period of the
59.13partnership during which the partnership interest was sold.
59.14    Gain on the sale of goodwill or income from a covenant not to compete that is
59.15connected with a business operating all or partially in Minnesota is allocated to this state
59.16to the extent that the income from the business in the year preceding the year of sale was
59.17assignable to Minnesota under subdivision 3.
59.18    When an employer pays an employee for a covenant not to compete, the income
59.19allocated to this state is in the ratio of the employee's service in Minnesota in the calendar
59.20year preceding leaving the employment of the employer over the total services performed
59.21by the employee for the employer in that year.
59.22    (d) Income from winnings on a bet made by an individual while in Minnesota is
59.23assigned to this state. In this paragraph, "bet" has the meaning given in section 609.75,
59.24subdivision 2 , as limited by section 609.75, subdivision 3, clauses (1), (2), and (3).
59.25    (e) All items of gross income not covered in paragraphs (a) to (d) and not part of the
59.26taxpayer's income from a trade or business shall be assigned to the taxpayer's domicile.
59.27    (f) For the purposes of this section, working as an employee shall not be considered
59.28to be conducting a trade or business.
59.29EFFECTIVE DATE.This section is effective for taxable years beginning after
59.30December 31, 2007.

59.31    Sec. 8. Minnesota Statutes 2006, section 290.92, is amended by adding a subdivision
59.32to read:
59.33    Subd. 31. Payments to persons who are not employees. (a) For purposes of this
59.34subdivision, "contractor" means a person carrying on a trade or business described in
60.1industry code numbers 23 through 238990 of the North American Industry Classification
60.2System.
60.3    (b) A contractor or a third-party bulk filer acting on behalf of a contractor, who
60.4makes payments to an individual, carrying on a trade or business described in paragraph
60.5(a) as a sole proprietorship, must deduct and withhold two percent of the payment as
60.6Minnesota withholding tax when the amount the contractor paid to that individual during
60.7the calendar year exceeds $600.
60.8    (c) A payment subject to withholding under this subdivision must be treated as if
60.9the payment were a wage paid by an employer to an employee. The requirements in the
60.10definitions of "employee" and "employer" in subdivision 1 relating to geographic location
60.11apply in determining whether withholding tax applies under this subdivision, but without
60.12regard to whether the contractor or the individual otherwise satisfy the definition of an
60.13employer or an employee. Each recipient of a payment subject to withholding under this
60.14subdivision must furnish the contractor with a statement of the recipient's name, address,
60.15and Social Security account number.
60.16EFFECTIVE DATE.This section is effective for payments made after December
60.1731, 2008.

60.18    Sec. 9. AUDIT AND REPORT TO LEGISLATURE.
60.19    The commissioner must conduct a random sample audit of withholdings under
60.20Minnesota Statutes, section 290.92, subdivision 31, and returns associated with those
60.21withholdings. The commissioner must report on the findings of the audit to the committees
60.22of the senate and house of representatives with jurisdiction over taxes, in compliance with
60.23Minnesota Statutes, sections 3.195 and 3.197, no later than February 1, 2011. The report
60.24must also include information on the number and amount of payments received, and on
60.25the types of contractors making payments, grouped by specialty skills definitions provided
60.26in the North American Industry Classification System.

60.27ARTICLE 4

60.28FEDERAL UPDATE

60.29    Section 1. Minnesota Statutes 2006, section 289A.02, subdivision 7, is amended to
60.30read:
60.31    Subd. 7. Internal Revenue Code. Unless specifically defined otherwise, "Internal
60.32Revenue Code" means the Internal Revenue Code of 1986, as amended through May 18,
60.332006 February 13, 2008.
61.1EFFECTIVE DATE.This section is effective the day following final enactment.

61.2    Sec. 2. Minnesota Statutes 2007 Supplement, section 290.01, subdivision 19, is
61.3amended to read:
61.4    Subd. 19. Net income. The term "net income" means the federal taxable income,
61.5as defined in section 63 of the Internal Revenue Code of 1986, as amended through the
61.6date named in this subdivision, incorporating the federal effective dates of changes to the
61.7Internal Revenue Code and any elections made by the taxpayer in accordance with the
61.8Internal Revenue Code in determining federal taxable income for federal income tax
61.9purposes, and with the modifications provided in subdivisions 19a to 19f.
61.10    In the case of a regulated investment company or a fund thereof, as defined in section
61.11851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
61.12company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
61.13except that:
61.14    (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
61.15Revenue Code does not apply;
61.16    (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
61.17Revenue Code must be applied by allowing a deduction for capital gain dividends and
61.18exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
61.19Revenue Code; and
61.20    (3) the deduction for dividends paid must also be applied in the amount of any
61.21undistributed capital gains which the regulated investment company elects to have treated
61.22as provided in section 852(b)(3)(D) of the Internal Revenue Code.
61.23    The net income of a real estate investment trust as defined and limited by section
61.24856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
61.25taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
61.26    The net income of a designated settlement fund as defined in section 468B(d) of
61.27the Internal Revenue Code means the gross income as defined in section 468B(b) of the
61.28Internal Revenue Code.
61.29    The Internal Revenue Code of 1986, as amended through May 18, 2006 February
61.3013, 2008, shall be in effect for taxable years beginning after December 31, 1996, and
61.31before January 1, 2006, and for taxable years beginning after December 31, 2006. The
61.32Internal Revenue Code of 1986, as amended through December 31, 2006, is in effect for
61.33taxable years beginning after December 31, 2005, and before January 1, 2007.
62.1    Except as otherwise provided, references to the Internal Revenue Code in
62.2subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
62.3the applicable year.
62.4EFFECTIVE DATE.This section is effective for taxable years beginning after
62.5December 31, 2006.

62.6    Sec. 3. Minnesota Statutes 2006, section 290.01, subdivision 19a, is amended to read:
62.7    Subd. 19a. Additions to federal taxable income. For individuals, estates, and
62.8trusts, there shall be added to federal taxable income:
62.9    (1)(i) interest income on obligations of any state other than Minnesota or a political
62.10or governmental subdivision, municipality, or governmental agency or instrumentality
62.11of any state other than Minnesota exempt from federal income taxes under the Internal
62.12Revenue Code or any other federal statute; and
62.13    (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
62.14Code, except the portion of the exempt-interest dividends derived from interest income
62.15on obligations of the state of Minnesota or its political or governmental subdivisions,
62.16municipalities, governmental agencies or instrumentalities, but only if the portion of the
62.17exempt-interest dividends from such Minnesota sources paid to all shareholders represents
62.1895 percent or more of the exempt-interest dividends that are paid by the regulated
62.19investment company as defined in section 851(a) of the Internal Revenue Code, or the
62.20fund of the regulated investment company as defined in section 851(g) of the Internal
62.21Revenue Code, making the payment; and
62.22    (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
62.23government described in section 7871(c) of the Internal Revenue Code shall be treated as
62.24interest income on obligations of the state in which the tribe is located;
62.25    (2) the amount of income or sales and use taxes paid or accrued within the taxable
62.26year under this chapter and the amount of taxes based on net income paid or sales and use
62.27taxes paid to any other state or to any province or territory of Canada, to the extent allowed
62.28as a deduction under section 63(d) of the Internal Revenue Code, but the addition may not
62.29be more than the amount by which the itemized deductions as allowed under section 63(d)
62.30of the Internal Revenue Code exceeds the amount of the standard deduction as defined
62.31in section 63(c) of the Internal Revenue Code. For the purpose of this paragraph, the
62.32disallowance of itemized deductions under section 68 of the Internal Revenue Code of
62.331986, income or sales and use tax is the last itemized deduction disallowed;
62.34    (3) the capital gain amount of a lump sum distribution to which the special tax under
62.35section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
63.1    (4) the amount of income taxes paid or accrued within the taxable year under this
63.2chapter and taxes based on net income paid to any other state or any province or territory
63.3of Canada, to the extent allowed as a deduction in determining federal adjusted gross
63.4income. For the purpose of this paragraph, income taxes do not include the taxes imposed
63.5by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
63.6    (5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10
63.7other than expenses or interest used in computing net interest income for the subtraction
63.8allowed under subdivision 19b, clause (1);
63.9    (6) the amount of a partner's pro rata share of net income which does not flow
63.10through to the partner because the partnership elected to pay the tax on the income under
63.11section 6242(a)(2) of the Internal Revenue Code;
63.12    (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
63.13Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
63.14in the taxable year generates a deduction for depreciation under section 168(k) and the
63.15activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
63.16the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
63.17limited to excess of the depreciation claimed by the activity under section 168(k) over the
63.18amount of the loss from the activity that is not allowed in the taxable year. In succeeding
63.19taxable years when the losses not allowed in the taxable year are allowed, the depreciation
63.20under section 168(k) is allowed;
63.21    (8) 80 percent of the amount by which the deduction allowed by section 179 of the
63.22Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
63.23Revenue Code of 1986, as amended through December 31, 2003;
63.24    (9) to the extent deducted in computing federal taxable income, the amount of the
63.25deduction allowable under section 199 of the Internal Revenue Code; and
63.26    (10) the exclusion allowed under section 139A of the Internal Revenue Code for
63.27federal subsidies for prescription drug plans.;
63.28    (11) for taxable years beginning after December 31, 2006, and before January 1,
63.292008, the amount deducted for qualified tuition and related expenses under section 222 of
63.30the Internal Revenue Code, to the extent deducted from gross income; and
63.31    (12) for taxable years beginning after December 31, 2006, and before January 1,
63.322008, the amount deducted for certain expenses of elementary and secondary school
63.33teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted
63.34from gross income.
63.35EFFECTIVE DATE.This section is effective for taxable years beginning after
63.36December 31, 2006.

64.1    Sec. 4. Minnesota Statutes 2006, section 290.01, subdivision 19c, is amended to read:
64.2    Subd. 19c. Corporations; additions to federal taxable income. For corporations,
64.3there shall be added to federal taxable income:
64.4    (1) the amount of any deduction taken for federal income tax purposes for income,
64.5excise, or franchise taxes based on net income or related minimum taxes, including but not
64.6limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
64.7another state, a political subdivision of another state, the District of Columbia, or any
64.8foreign country or possession of the United States;
64.9    (2) interest not subject to federal tax upon obligations of: the United States, its
64.10possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
64.11state, any of its political or governmental subdivisions, any of its municipalities, or any
64.12of its governmental agencies or instrumentalities; the District of Columbia; or Indian
64.13tribal governments;
64.14    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
64.15Revenue Code;
64.16    (4) the amount of any net operating loss deduction taken for federal income tax
64.17purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
64.18deduction under section 810 of the Internal Revenue Code;
64.19    (5) the amount of any special deductions taken for federal income tax purposes
64.20under sections 241 to 247 and 965 of the Internal Revenue Code;
64.21    (6) losses from the business of mining, as defined in section 290.05, subdivision 1,
64.22clause (a), that are not subject to Minnesota income tax;
64.23    (7) the amount of any capital losses deducted for federal income tax purposes under
64.24sections 1211 and 1212 of the Internal Revenue Code;
64.25    (8) the exempt foreign trade income of a foreign sales corporation under sections
64.26921(a) and 291 of the Internal Revenue Code;
64.27    (9) the amount of percentage depletion deducted under sections 611 through 614 and
64.28291 of the Internal Revenue Code;
64.29    (10) for certified pollution control facilities placed in service in a taxable year
64.30beginning before December 31, 1986, and for which amortization deductions were elected
64.31under section 169 of the Internal Revenue Code of 1954, as amended through December
64.3231, 1985, the amount of the amortization deduction allowed in computing federal taxable
64.33income for those facilities;
64.34    (11) the amount of any deemed dividend from a foreign operating corporation
64.35determined pursuant to section 290.17, subdivision 4, paragraph (g);
65.1    (12) the amount of a partner's pro rata share of net income which does not flow
65.2through to the partner because the partnership elected to pay the tax on the income under
65.3section 6242(a)(2) of the Internal Revenue Code;
65.4    (13) the amount of net income excluded under section 114 of the Internal Revenue
65.5Code;
65.6    (14) any increase in subpart F income, as defined in section 952(a) of the Internal
65.7Revenue Code, for the taxable year when subpart F income is calculated without regard
65.8to the provisions of section 103 of Public Law 109-222;
65.9    (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
65.10and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
65.11has an activity that in the taxable year generates a deduction for depreciation under
65.12section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
65.13that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
65.14under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
65.15depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
65.16amount of the loss from the activity that is not allowed in the taxable year. In succeeding
65.17taxable years when the losses not allowed in the taxable year are allowed, the depreciation
65.18under section 168(k)(1)(A) and (k)(4)(A) is allowed;
65.19    (16) 80 percent of the amount by which the deduction allowed by section 179 of the
65.20Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
65.21Revenue Code of 1986, as amended through December 31, 2003;
65.22    (17) to the extent deducted in computing federal taxable income, the amount of the
65.23deduction allowable under section 199 of the Internal Revenue Code; and
65.24    (18) the exclusion allowed under section 139A of the Internal Revenue Code for
65.25federal subsidies for prescription drug plans.; and
65.26    (19) for taxable years beginning after December 31, 2006, and before January 1,
65.272008, the additional amount allowed as a deduction for donation of computer technology
65.28and equipment under section 170(e)(6) of the Internal Revenue Code, to the extent
65.29deducted from taxable income.
65.30EFFECTIVE DATE.This section is effective for taxable years beginning after
65.31December 31, 2006.

65.32    Sec. 5. Minnesota Statutes 2007 Supplement, section 290.01, subdivision 31, is
65.33amended to read:
65.34    Subd. 31. Internal Revenue Code. Unless specifically defined otherwise, for
65.35taxable years beginning before January 1, 2006, and after December 31, 2006, "Internal
66.1Revenue Code" means the Internal Revenue Code of 1986, as amended through May 18,
66.22006; and for taxable years beginning after December 31, 2005, and before January 1,
66.32007, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
66.4through December 31, 2006 February 13, 2008.
66.5EFFECTIVE DATE.This section is effective the day following final enactment
66.6except the changes incorporated by federal changes are effective at the same time as the
66.7changes were effective for federal purposes.

66.8    Sec. 6. Minnesota Statutes 2006, section 290.06, subdivision 2c, is amended to read:
66.9    Subd. 2c. Schedules of rates for individuals, estates, and trusts. (a) The income
66.10taxes imposed by this chapter upon married individuals filing joint returns and surviving
66.11spouses as defined in section 2(a) of the Internal Revenue Code must be computed by
66.12applying to their taxable net income the following schedule of rates:
66.13    (1) On the first $25,680, 5.35 percent;
66.14    (2) On all over $25,680, but not over $102,030, 7.05 percent;
66.15    (3) On all over $102,030, 7.85 percent.
66.16    Married individuals filing separate returns, estates, and trusts must compute their
66.17income tax by applying the above rates to their taxable income, except that the income
66.18brackets will be one-half of the above amounts.
66.19    (b) The income taxes imposed by this chapter upon unmarried individuals must be
66.20computed by applying to taxable net income the following schedule of rates:
66.21    (1) On the first $17,570, 5.35 percent;
66.22    (2) On all over $17,570, but not over $57,710, 7.05 percent;
66.23    (3) On all over $57,710, 7.85 percent.
66.24    (c) The income taxes imposed by this chapter upon unmarried individuals qualifying
66.25as a head of household as defined in section 2(b) of the Internal Revenue Code must be
66.26computed by applying to taxable net income the following schedule of rates:
66.27    (1) On the first $21,630, 5.35 percent;
66.28    (2) On all over $21,630, but not over $86,910, 7.05 percent;
66.29    (3) On all over $86,910, 7.85 percent.
66.30    (d) In lieu of a tax computed according to the rates set forth in this subdivision, the
66.31tax of any individual taxpayer whose taxable net income for the taxable year is less than
66.32an amount determined by the commissioner must be computed in accordance with tables
66.33prepared and issued by the commissioner of revenue based on income brackets of not
66.34more than $100. The amount of tax for each bracket shall be computed at the rates set
67.1forth in this subdivision, provided that the commissioner may disregard a fractional part of
67.2a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.
67.3    (e) An individual who is not a Minnesota resident for the entire year must compute
67.4the individual's Minnesota income tax as provided in this subdivision. After the
67.5application of the nonrefundable credits provided in this chapter, the tax liability must
67.6then be multiplied by a fraction in which:
67.7    (1) the numerator is the individual's Minnesota source federal adjusted gross income
67.8as defined in section 62 of the Internal Revenue Code and increased by the additions
67.9required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), and (9),
67.10(11), and (12) and reduced by the Minnesota assignable portion of the subtraction for
67.11United States government interest under section 290.01, subdivision 19b, clause (1),
67.12and the subtractions under section 290.01, subdivision 19b, clauses (9), (10), (14), (15),
67.13and (16), after applying the allocation and assignability provisions of section 290.081,
67.14clause (a), or 290.17; and
67.15    (2) the denominator is the individual's federal adjusted gross income as defined in
67.16section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in
67.17section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), and (9), (11), and (12) and
67.18reduced by the amounts specified in section 290.01, subdivision 19b, clauses (1), (9),
67.19(10), (14), (15), and (16).
67.20EFFECTIVE DATE.This section is effective for taxable years beginning after
67.21December 31, 2006.

67.22    Sec. 7. Minnesota Statutes 2006, section 290.091, subdivision 2, is amended to read:
67.23    Subd. 2. Definitions. For purposes of the tax imposed by this section, the following
67.24terms have the meanings given:
67.25    (a) "Alternative minimum taxable income" means the sum of the following for
67.26the taxable year:
67.27    (1) the taxpayer's federal alternative minimum taxable income as defined in section
67.2855(b)(2) of the Internal Revenue Code;
67.29    (2) the taxpayer's itemized deductions allowed in computing federal alternative
67.30minimum taxable income, but excluding:
67.31    (i) the charitable contribution deduction under section 170 of the Internal Revenue
67.32Code:
67.33    (A) for taxable years beginning before January 1, 2006, to the extent that the
67.34deduction exceeds 1.0 percent of adjusted gross income;
68.1    (B) for taxable years beginning after December 31, 2005, to the full extent of the
68.2deduction.
68.3    For purposes of this clause, "adjusted gross income" has the meaning given in
68.4section 62 of the Internal Revenue Code;
68.5    (ii) the medical expense deduction;
68.6    (iii) the casualty, theft, and disaster loss deduction; and
68.7    (iv) the impairment-related work expenses of a disabled person;
68.8    (3) for depletion allowances computed under section 613A(c) of the Internal
68.9Revenue Code, with respect to each property (as defined in section 614 of the Internal
68.10Revenue Code), to the extent not included in federal alternative minimum taxable income,
68.11the excess of the deduction for depletion allowable under section 611 of the Internal
68.12Revenue Code for the taxable year over the adjusted basis of the property at the end of the
68.13taxable year (determined without regard to the depletion deduction for the taxable year);
68.14    (4) to the extent not included in federal alternative minimum taxable income, the
68.15amount of the tax preference for intangible drilling cost under section 57(a)(2) of the
68.16Internal Revenue Code determined without regard to subparagraph (E);
68.17    (5) to the extent not included in federal alternative minimum taxable income, the
68.18amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and
68.19    (6) the amount of addition required by section 290.01, subdivision 19a, clauses
68.20(7), (8), and to (9), (11), and (12);
68.21    less the sum of the amounts determined under the following:
68.22    (1) interest income as defined in section 290.01, subdivision 19b, clause (1);
68.23    (2) an overpayment of state income tax as provided by section 290.01, subdivision
68.2419b , clause (2), to the extent included in federal alternative minimum taxable income;
68.25    (3) the amount of investment interest paid or accrued within the taxable year on
68.26indebtedness to the extent that the amount does not exceed net investment income, as
68.27defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include
68.28amounts deducted in computing federal adjusted gross income; and
68.29    (4) amounts subtracted from federal taxable income as provided by section 290.01,
68.30subdivision 19b , clauses (9) to (16).
68.31    In the case of an estate or trust, alternative minimum taxable income must be
68.32computed as provided in section 59(c) of the Internal Revenue Code.
68.33    (b) "Investment interest" means investment interest as defined in section 163(d)(3)
68.34of the Internal Revenue Code.
68.35    (c) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable
68.36income after subtracting the exemption amount determined under subdivision 3.
69.1    (d) "Regular tax" means the tax that would be imposed under this chapter (without
69.2regard to this section and section 290.032), reduced by the sum of the nonrefundable
69.3credits allowed under this chapter.
69.4    (e) "Net minimum tax" means the minimum tax imposed by this section.
69.5EFFECTIVE DATE.This section is effective for taxable years beginning after
69.6December 31, 2006.

69.7    Sec. 8. Minnesota Statutes 2007 Supplement, section 290A.03, subdivision 15, is
69.8amended to read:
69.9    Subd. 15. Internal Revenue Code. For taxable years beginning before January 1,
69.102006, and after December 31, 2006, "Internal Revenue Code" means the Internal Revenue
69.11Code of 1986, as amended through May 18, 2006; and for taxable years beginning after
69.12December 31, 2005, and before January 1, 2007, "Internal Revenue Code" means the
69.13Internal Revenue Code of 1986, as amended through December 31, 2006 February 13,
69.142008.
69.15EFFECTIVE DATE.This section is effective for property tax refunds based on
69.16property taxes payable on or after December 31, 2007, and rent paid on or after December
69.1731, 2006.

69.18    Sec. 9. Minnesota Statutes 2006, section 291.005, subdivision 1, is amended to read:
69.19    Subdivision 1. Scope. Unless the context otherwise clearly requires, the following
69.20terms used in this chapter shall have the following meanings:
69.21    (1) "Federal gross estate" means the gross estate of a decedent as valued and
69.22otherwise determined for federal estate tax purposes by federal taxing authorities pursuant
69.23to the provisions of the Internal Revenue Code.
69.24    (2) "Minnesota gross estate" means the federal gross estate of a decedent after (a)
69.25excluding therefrom any property included therein which has its situs outside Minnesota,
69.26and (b) including therein any property omitted from the federal gross estate which is
69.27includable therein, has its situs in Minnesota, and was not disclosed to federal taxing
69.28authorities.
69.29    (3) "Personal representative" means the executor, administrator or other person
69.30appointed by the court to administer and dispose of the property of the decedent. If there
69.31is no executor, administrator or other person appointed, qualified, and acting within this
69.32state, then any person in actual or constructive possession of any property having a situs in
69.33this state which is included in the federal gross estate of the decedent shall be deemed
70.1to be a personal representative to the extent of the property and the Minnesota estate tax
70.2due with respect to the property.
70.3    (4) "Resident decedent" means an individual whose domicile at the time of death
70.4was in Minnesota.
70.5    (5) "Nonresident decedent" means an individual whose domicile at the time of
70.6death was not in Minnesota.
70.7    (6) "Situs of property" means, with respect to real property, the state or country in
70.8which it is located; with respect to tangible personal property, the state or country in which
70.9it was normally kept or located at the time of the decedent's death; and with respect to
70.10intangible personal property, the state or country in which the decedent was domiciled
70.11at death.
70.12    (7) "Commissioner" means the commissioner of revenue or any person to whom the
70.13commissioner has delegated functions under this chapter.
70.14    (8) "Internal Revenue Code" means the United States Internal Revenue Code of
70.151986, as amended through May 18, 2006 February 13, 2008.
70.16    (9) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as
70.17defined by section 2011(b)(3) of the Internal Revenue Code, increased by the amount of
70.18deduction for state death taxes allowed under section 2058 of the Internal Revenue Code.
70.19EFFECTIVE DATE.This section is effective the day following final enactment.

70.20ARTICLE 5

70.21SALES AND USE TAX

70.22    Section 1. Minnesota Statutes 2006, section 297A.668, is amended by adding a
70.23subdivision to read:
70.24    Subd. 8. Manufactured and modular housing. (a) Notwithstanding other
70.25subdivisions of this section, a sale of a manufactured or modular home shall be sourced to
70.26the site where the housing is first set up or installed.
70.27    (b) For purposes of this section, "manufactured home" has the meaning given
70.28in section 327.31, subdivision 6. For purposes of this section, "modular home" means
70.29a building or structural unit that has been substantially manufactured or constructed,
70.30in whole or in part, at an off-site location, with the final assembly occurring on-site
70.31alone or with other units and attached to a permanent foundation site and occupied
70.32as a single-family dwelling. Modular home construction must comply with applicable
70.33standards adopted in Minnesota Rules authorized under chapter 16B. A modular home
71.1does not include a structure subject to the requirements of the National Manufactured
71.2Home Construction and Safety Standards Act of 1974 or a manufactured home.
71.3EFFECTIVE DATE.This section is effective for sales and purchases made after
71.4June 30, 2008.

71.5    Sec. 2. Laws 1980, chapter 511, section 1, subdivision 2, as amended by Laws 1991,
71.6chapter 291, article 8, section 22, and Laws 1998, chapter 389, article 8, section 25, and
71.7Laws 2003, First Special Session chapter 21, article 8, section 11, is amended to read:
71.8    Subd. 2. Notwithstanding Minnesota Statutes, Section 477A.016, or any other law,
71.9ordinance, or city charter provision to the contrary, the city of Duluth may, by ordinance,
71.10impose an additional sales tax of up to one and one-half two and one-quarter percent on
71.11sales transactions which are described in Minnesota Statutes 2000, Section 297A.01,
71.12Subdivision 3, Clause (c). When the city council determines that the taxes imposed
71.13under this subdivision and under Laws 1998, chapter 389, article 8, section 26, at a rate
71.14of one-half of one percent have produced revenue sufficient to pay (1) the debt service
71.15on bonds in a principal amount of $8,000,000 issued for capital improvements to the
71.16Duluth Entertainment and Convention Center, and (2) debt service on outstanding bonds
71.17originally issued in the principal amount of $4,970,000 to finance capital improvements
71.18to the Great Lakes Aquarium since the imposition of the taxes at the rate of one and
71.19one-half percent, the rate of the tax under this subdivision is reduced to by one-half of
71.20one percent. The imposition of this tax shall not be subject to voter referendum under
71.21either state law or city charter provisions. When the city council determines that the taxes
71.22imposed under this subdivision at a rate of three-quarters of one percent and other sources
71.23of revenue produce revenue sufficient to pay debt service on bonds in the principal amount
71.24of $40,285,000 plus issuance and discount costs, issued for capital improvements at the
71.25Duluth Entertainment and Convention Center, which include a new arena, the rate of tax
71.26under this subdivision must be reduced by three-quarters of one percent.
71.27EFFECTIVE DATE.This section is effective the day after the governing body of
71.28the city of Duluth and its chief clerical officer comply with Minnesota Statutes, section
71.29645.021, subdivisions 2 and 3.

71.30    Sec. 3. Laws 2005, First Special Session chapter 3, article 5, section 39, is amended to
71.31read:
71.32    Sec. 39. CITY OF BEMIDJI.
72.1    Subdivision 1. Sales and use tax authorized. Notwithstanding Minnesota Statutes,
72.2section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to the
72.3approval of the city voters at the general election held on November 5, 2002, and at the
72.4general election held November 7, 2006, the city of Bemidji may impose by ordinance
72.5a sales and use tax of one-half of one percent for the purposes specified in subdivision
72.62. The provisions of Minnesota Statutes, section 297A.99, govern the imposition,
72.7administration, collection, and enforcement of the tax authorized under this subdivision.
72.8    Subd. 2. Use of revenues. Revenues received from the tax authorized by
72.9subdivision 1 must be used for the cost of collecting and administering the tax and to pay
72.10for the projects listed in this subdivision:
72.11    (1) To pay all or part of the capital or administrative costs of the acquisition,
72.12construction, and improvement of parks and trails within the city, as provided for in the
72.13city of Bemidji's parks, open space, and trail system plan, adopted by the Bemidji City
72.14Council on November 21, 2001. Authorized expenses include, but are not limited to,
72.15acquiring property, paying construction expenses related to the development of these
72.16facilities and improvements, and securing and paying debt service on bonds or other
72.17obligations issued to finance acquisition, construction, improvement, or development of
72.18parks and trails within the city of Bemidji.
72.19    (2) To pay all or part of the city's share of costs, not to exceed $44,000,000, for
72.20acquisition, design, and construction of a regional event center, plus any associated
72.21bond costs. Authorized expenses include, but are not limited to, acquiring property,
72.22paying demolition and construction expenses, improving associated infrastructure, and
72.23purchasing furniture, fixtures, and equipment for the regional event center, and securing
72.24and paying debt service on bonds or other obligations issued to finance the regional event
72.25center project.
72.26    Subd. 3. Bonds. (a) Pursuant to the approval of the city voters at the general
72.27election held on November 5, 2002, the city of Bemidji may issue, without an additional
72.28election, general obligation bonds of the city in an amount not to exceed $9,826,000 to
72.29pay capital and administrative expenses for the acquisition, construction, improvement,
72.30and development of parks and trails as specified in subdivision 2. The debt represented by
72.31the bonds must not be included in computing any debt limitations applicable to the city,
72.32and the levy of taxes required by Minnesota Statutes, section 475.61, to pay the principal
72.33of any interest on the bonds must not be subject to any levy limitations or be included in
72.34computing or applying any levy limitation applicable to the city.
72.35    (b) Pursuant to the approval of the city voters at the general election held on
72.36November 7, 2006, the city of Bemidji may issue, without an additional election, general
73.1obligation bonds of the city in an amount not to exceed $44,000,000 to pay capital and
73.2administrative expenses for the construction of the regional event center specified in
73.3subdivision 2. The debt represented by the bonds must not be included in computing
73.4any debt limitations applicable to the city, and the levy of taxes required by Minnesota
73.5Statutes, section 475.61, to pay the principal of any interest on the bonds must not be
73.6subject to any levy limitations or be included in computing or applying any levy limitation
73.7applicable to the city.
73.8    Subd. 4. Termination of tax. The tax imposed under subdivision 1 expires
73.9when the Bemidji City Council determines that the amount described in subdivision 3,
73.10paragraph (a), has been received from the tax to finance the capital and administrative
73.11costs for acquisition, construction, improvement, and development of parks and trails and
73.12to repay or retire at maturity the principal, interest, and premium due on any bonds issued
73.13for the park and trail improvements under subdivision 3, paragraph (a), plus the earlier of
73.14(1) 30 years after the tax extension to pay for the project in subdivision 2, clause (2), is
73.15first imposed, or (2) when the city council first determines that the additional revenues
73.16received from the extension of the tax equals or exceeds the amount authorized to be spent
73.17for the regional event center under subdivision 2, clause (2). Any funds remaining after
73.18completion of the park and trail improvements authorized projects and retirement or
73.19redemption of the bonds may be placed in the general fund of the city. The tax imposed
73.20under subdivision 1 may expire at an earlier time if the city so determines by ordinance.
73.21EFFECTIVE DATE.This section is effective the day after compliance by the
73.22governing body of the city of Bemidji and its chief clerical officer with Minnesota
73.23Statutes, section 645.021, subdivisions 2 and 3.

73.24ARTICLE 6

73.25JUNE ACCELERATED TAX PAYMENTS

73.26    Section 1. Minnesota Statutes 2006, section 289A.20, subdivision 4, is amended to
73.27read:
73.28    Subd. 4. Sales and use tax. (a) The taxes imposed by chapter 297A are due and
73.29payable to the commissioner monthly on or before the 20th day of the month following the
73.30month in which the taxable event occurred, or following another reporting period as the
73.31commissioner prescribes or as allowed under section 289A.18, subdivision 4, paragraph
73.32(f) or (g), except that use taxes due on an annual use tax return as provided under section
73.33289A.11, subdivision 1 , are payable by April 15 following the close of the calendar year.
74.1(b) A vendor having a liability of $120,000 or more during a fiscal year ending June
74.230 must remit the June liability for the next year in the following manner:
74.3(1) Two business days before June 30 of the year, the vendor must remit 78 80
74.4percent of the estimated June liability to the commissioner.
74.5(2) On or before August 20 of the year, the vendor must pay any additional amount
74.6of tax not remitted in June.
74.7(c) A vendor having a liability of:
74.8(1) $20,000 or more in the fiscal year ending June 30, 2005; or
74.9(2) $10,000 or more in the fiscal year ending June 30, 2006, and fiscal years
74.10thereafter,
74.11must remit all liabilities on returns due for periods beginning in the subsequent calendar
74.12year by electronic means on or before the 20th day of the month following the month in
74.13which the taxable event occurred, or on or before the 20th day of the month following the
74.14month in which the sale is reported under section 289A.18, subdivision 4, except for 78 80
74.15percent of the estimated June liability, which is due two business days before June 30. The
74.16remaining amount of the June liability is due on August 20.
74.17EFFECTIVE DATE.This section is effective beginning with June 2009 tax
74.18liabilities.

74.19    Sec. 2. Minnesota Statutes 2006, section 289A.60, subdivision 15, is amended to read:
74.20    Subd. 15. Accelerated payment of June sales tax liability; penalty for
74.21underpayment. For payments made after December 31, 2006, if a vendor is required by
74.22law to submit an estimation of June sales tax liabilities and 78 80 percent payment by a
74.23certain date, the vendor shall pay a penalty equal to ten percent of the amount of actual
74.24June liability required to be paid in June less the amount remitted in June. The penalty
74.25must not be imposed, however, if the amount remitted in June equals the lesser of 78 80
74.26percent of the preceding May's liability or 78 80 percent of the average monthly liability
74.27for the previous calendar year.
74.28EFFECTIVE DATE.This section is effective beginning with June 2009 tax
74.29liabilities.

74.30    Sec. 3. Minnesota Statutes 2006, section 297F.09, subdivision 10, is amended to read:
74.31    Subd. 10. Accelerated tax payment; cigarette or tobacco products distributor.
74.32A cigarette or tobacco products distributor having a liability of $120,000 or more during a
75.1fiscal year ending June 30, shall remit the June liability for the next year in the following
75.2manner:
75.3(a) Two business days before June 30 of the year, the distributor shall remit the
75.4actual May liability and 78 80 percent of the estimated June liability to the commissioner
75.5and file the return in the form and manner prescribed by the commissioner.
75.6(b) On or before August 18 of the year, the distributor shall submit a return showing
75.7the actual June liability and pay any additional amount of tax not remitted in June. A
75.8penalty is imposed equal to ten percent of the amount of June liability required to be paid
75.9in June, less the amount remitted in June. However, the penalty is not imposed if the
75.10amount remitted in June equals the lesser of:
75.11(1) 78 80 percent of the actual June liability; or
75.12(2) 78 80 percent of the preceding May's liability.
75.13EFFECTIVE DATE.This section is effective beginning with June 2009 tax
75.14liabilities.

75.15    Sec. 4. Minnesota Statutes 2006, section 297G.09, subdivision 9, is amended to read:
75.16    Subd. 9. Accelerated tax payment; penalty. A person liable for tax under this
75.17chapter having a liability of $120,000 or more during a fiscal year ending June 30, shall
75.18remit the June liability for the next year in the following manner:
75.19(a) Two business days before June 30 of the year, the taxpayer shall remit the actual
75.20May liability and 78 80 percent of the estimated June liability to the commissioner and file
75.21the return in the form and manner prescribed by the commissioner.
75.22(b) On or before August 18 of the year, the taxpayer shall submit a return showing
75.23the actual June liability and pay any additional amount of tax not remitted in June. A
75.24penalty is imposed equal to ten percent of the amount of June liability required to be paid
75.25in June less the amount remitted in June. However, the penalty is not imposed if the
75.26amount remitted in June equals the lesser of:
75.27(1) 78 80 percent of the actual June liability; or
75.28(2) 78 80 percent of the preceding May liability.
75.29EFFECTIVE DATE.This section is effective beginning with June 2009 tax
75.30liabilities.

75.31ARTICLE 7

75.32SPECIAL TAXES

75.33    Section 1. Minnesota Statutes 2006, section 291.215, subdivision 1, is amended to read:
76.1    Subdivision 1. Determination. All property includable in the Minnesota gross estate
76.2of a decedent shall be valued in accordance with the provisions of sections 2031 or 2032
76.3and, if applicable, 2032A, of the Internal Revenue Code and any elections made in valuing
76.4the federal gross estate shall be applicable in valuing the Minnesota gross estate. Values
76.5for purposes of the estate tax on both probate and nonprobate assets shall be the same as
76.6those finally determined for purposes of the federal estate tax on a decedent's estate.
76.7The value of all property includable in the Minnesota gross estate of a decedent may be
76.8independently determined under those sections for Minnesota estate tax purposes except:
76.9(1) as otherwise provided in section 291.075; or
76.10(2) if the Internal Revenue Service, after receiving the estate's federal estate tax
76.11return, either conducts a separate appraisal of an asset reported on the return or proposes
76.12a change in the reported valuation of an asset in the estate, in which case the federal
76.13final determination of the value controls.
76.14EFFECTIVE DATE.This section is effective retroactively for estates of decedents
76.15dying after December 31, 2006.

76.16    Sec. 2. Minnesota Statutes 2006, section 296A.18, subdivision 4, is amended to read:
76.17    Subd. 4. All-terrain vehicle. Approximately 0.15 0.27 of one percent of all gasoline
76.18received in or produced or brought into this state, except gasoline used for aviation
76.19purposes, is being used for the operation of all-terrain vehicles in this state, and of the total
76.20revenue derived from the imposition of the gasoline fuel tax, 0.15 0.27 of one percent is
76.21the amount of tax on fuel used in all-terrain vehicles operated in this state.
76.22EFFECTIVE DATE.This section is effective for revenue received after June
76.2330, 2008.

76.24    Sec. 3. Minnesota Statutes 2006, section 297F.21, subdivision 3, is amended to read:
76.25    Subd. 3. Inventory; judicial determination; appeal; disposition of seized
76.26property. (a) Within ten days after the seizure of any alleged contraband, the person
76.27making the seizure shall serve by certified mail an inventory of the property seized on the
76.28person from whom the seizure was made, if known, and on any person known or believed
76.29to have any right, title, interest, or lien in the property, at the last known address, and file
76.30a copy with the commissioner. The notice must include an explanation of the right to
76.31demand a judicial forfeiture determination.
76.32    (b) Within 60 days after the date of service of the inventory, which is the date of
76.33mailing, the person from whom the property was seized or any person claiming an interest
77.1in the property may file a demand for a judicial determination of the question as to whether
77.2the property was lawfully subject to seizure and forfeiture. The demand must be in the
77.3form of a civil complaint and must be filed with the court administrator in the county in
77.4which the seizure occurred, together with proof of service of a copy of the complaint
77.5on the commissioner of revenue, and the standard filing fee for civil actions unless the
77.6petitioner has the right to sue in forma pauperis under section 563.01. If the value of the
77.7seized property is $7,500 or less, the claimant may file an action in conciliation court for
77.8recovery of the property. If the value of the seized property is less than $500, the claimant
77.9does not have to pay the conciliation court filing fee.
77.10    (c) The complaint must be captioned in the name of the claimant as plaintiff and
77.11the seized property as defendant, and must state with specificity the grounds on which
77.12the claimant alleges the property was improperly seized and the plaintiff's interest in the
77.13property seized. No responsive pleading is required of the commissioner, and no court
77.14fees may be charged for the commissioner's appearance in the matter. The proceedings
77.15are governed by the Rules of Civil Procedure. Notwithstanding any law to the contrary,
77.16an action for the return of property seized under this section may not be maintained by
77.17or on behalf of any person who has been served with an inventory unless the person has
77.18complied with this subdivision. The court shall decide whether the alleged contraband is
77.19contraband, as defined in subdivision 1. The court shall hear the action without a jury and
77.20shall try and determine the issues of fact and law involved.
77.21    (d) When a judgment of forfeiture is entered, the commissioner may, unless the
77.22judgment is stayed pending an appeal, either the commissioner:
77.23    (1) deliver the forfeited cigarette packages or tobacco products to the commissioner
77.24of human services for use by patients in state institutions may authorize the forfeited
77.25property to be used for the purpose of enforcing a criminal provision of state or federal law;
77.26    (2) shall cause the property in clause (1) forfeited cigarette packages or tobacco
77.27products not used under clause (1) to be destroyed; or and products used under clause (1)
77.28to be destroyed upon the completion of use; and
77.29    (3) may cause the forfeited property, other than forfeited cigarette packages or
77.30tobacco products, to be sold at public auction as provided by law.
77.31The person making a sale, after deducting the expense of keeping the property, the fee
77.32for seizure, and the costs of the sale, shall pay all liens according to their priority, which
77.33are established as being bona fide and as existing without the lienor having any notice
77.34or knowledge that the property was being used or was intended to be used for or in
77.35connection with the violation. The balance of the proceeds must be paid 75 percent to the
77.36Department of Revenue for deposit as a supplement to its operating fund or similar fund
78.1for official use, and 25 percent to the county attorney or other prosecuting agency that
78.2handled the court proceeding, if there is one, for deposit as a supplement to its operating
78.3fund or similar fund for prosecutorial purposes. If there is no prosecuting authority
78.4involved in the forfeiture, the 25 percent of the proceeds otherwise designated for the
78.5prosecuting authority must be deposited into the general fund.
78.6    (e) If no demand for judicial determination is made, the property seized is considered
78.7forfeited to the state by operation of law and may be disposed of by the commissioner as
78.8provided in the case of a judgment of forfeiture.
78.9EFFECTIVE DATE.This section is effective the day following final enactment.

78.10    Sec. 4. Minnesota Statutes 2006, section 297I.15, is amended by adding a subdivision
78.11to read:
78.12    Subd. 11. Premiums paid to certain foreign insurance companies. With respect
78.13to the state employees group insurance program established under sections 43A.23 to
78.1443A.31, premiums paid for life insurance and accidental death and dismemberment
78.15insurance for eligible employees and dependents, including premiums paid by employees
78.16or dependents for optional coverage, are exempt from the taxes imposed under this chapter
78.17to the extent the premiums are paid to a foreign insurance company domiciled in a state
78.18that exempts its state employee group life insurance program from premium taxes.
78.19EFFECTIVE DATE.This section is effective for premiums paid after December
78.2031, 2007.

78.21    Sec. 5. Laws 2003, chapter 128, article 1, section 172, as amended by Laws 2005, First
78.22Special Session chapter 1, article 4, section 118, is amended to read:
78.23    Sec. 172. TEMPORARY PETROFUND FEE EXEMPTION FOR
78.24MINNESOTA COMMERCIAL AIRLINES.
78.25    (a) A commercial airline providing regularly scheduled jet service and with its
78.26corporate headquarters in Minnesota is exempt from the fee established in Minnesota
78.27Statutes, section 115C.08, subdivision 3, until July 1, 2007 2009, provided the airline
78.28develops a plan approved by the commissioner of commerce demonstrating that the
78.29savings from this exemption will go towards minimizing job losses in Minnesota, and to
78.30support the airline's efforts to avoid filing for resolve federal bankruptcy protections
78.31proceedings.
78.32    (b) A commercial airline exempted from the fee is ineligible to receive
78.33reimbursement under Minnesota Statutes, chapter 115C, until July 1, 2007 2009. A
79.1commercial airline that has a release during the fee exemption period is ineligible to
79.2receive reimbursement under Minnesota Statutes, chapter 115C, for the costs incurred in
79.3response to that release.
79.4EFFECTIVE DATE.This section is effective the day following final enactment.

79.5ARTICLE 8

79.6MINERALS

79.7    Section 1. Minnesota Statutes 2006, section 276A.01, subdivision 3, is amended to
79.8read:
79.9    Subd. 3. Commercial-industrial property. "Commercial-industrial property"
79.10means the following categories of property, as defined in section 273.13, excluding that
79.11portion of the property (i) that may, by law, constitute the tax base for a tax increment
79.12pledged pursuant to section 469.042 or 469.162 or sections 469.174 to 469.178,
79.13certification of which was requested prior to May 1, 1996, to the extent and while the tax
79.14increment is so pledged; or (ii) that is exempt from taxation under section 272.02:
79.15    (1) that portion of class 5 property consisting of unmined iron ore and low-grade
79.16iron-bearing formations as defined in section 273.14, tools, implements, and machinery,
79.17except the portion of high voltage transmission lines, the value of which is deducted from
79.18net tax capacity under section 273.425; and
79.19    (2) that portion of class 3 and class 5 property which is either used or zoned for
79.20use for any commercial or industrial purpose, including property that becomes taxable
79.21under section 298.25, except for such property which is, or, in the case of property under
79.22construction, will when completed be used exclusively for residential occupancy and
79.23the provision of services to residential occupants thereof. Property must be considered
79.24as used exclusively for residential occupancy only if each of not less than 80 percent
79.25of its occupied residential units is, or, in the case of property under construction, will
79.26when completed be occupied under an oral or written agreement for occupancy over a
79.27continuous period of not less than 30 days.
79.28    If the classification of property prescribed by section 273.13 is modified by
79.29legislative amendment, the references in this subdivision are to the successor class or
79.30classes of property, or portions thereof, that include the kinds of property designated
79.31in this subdivision.
79.32EFFECTIVE DATE.This section is effective for the 2008 assessment and
79.33thereafter.

80.1    Sec. 2. Minnesota Statutes 2006, section 276A.04, is amended to read:
80.2276A.04 INCREASE IN NET TAX CAPACITY.
80.3    By July 15 of 1997 and each subsequent year, the auditor of each county in the
80.4area shall determine the amount, if any, by which the net tax capacity determined in
80.5the preceding year pursuant to section 276A.03, of commercial-industrial property
80.6subject to taxation within each municipality in the county exceeds the net tax capacity
80.7in 1995 of commercial-industrial property subject to taxation within that municipality,
80.8including the total net tax capacity of property that becomes taxable under section 298.25.
80.9If a municipality is located in two or more counties within the area, the auditors of
80.10those counties shall certify the data required by section 276A.03 to the county auditor
80.11responsible for allocating the levies of that municipality between or among the affected
80.12counties. That county auditor shall determine the amount of the net excess, if any, for the
80.13municipality under this section, and certify that amount under section 276A.05. The
80.14increase in total net tax capacity determined by this section must be reduced by the amount
80.15of any decreases in the net tax capacity of commercial-industrial property resulting from
80.16any court decisions, court-related stipulation agreements, or abatements for a prior year,
80.17and only in the amount of such decreases made during the 12-month period ending on
80.18May 1 of the current assessment year, where the decreases, if originally reflected in the
80.19determination of a prior year's net tax capacity under section 276A.03, would have
80.20resulted in a smaller contribution from the municipality in that year. An adjustment for the
80.21decreases shall be made only if the municipality made a contribution in a prior year based
80.22on the higher net tax capacity of the commercial-industrial property.
80.23EFFECTIVE DATE.This section is effective for the 2008 assessment and
80.24thereafter.

80.25    Sec. 3. Minnesota Statutes 2006, section 298.22, is amended by adding a subdivision
80.26to read:
80.27    Subd. 5a. Forest trust. The commissioner, upon the affirmative vote of a majority
80.28of the members of the board, may purchase forest lands in the taconite assistance area
80.29defined in under section 273.1341 with funds specifically authorized for the purchase. The
80.30acquired forest lands must be held in trust for the benefit of the citizens of the taconite
80.31assistance area as the Iron Range Miners' Memorial Forest. The forest trust lands shall be
80.32managed and developed for recreation and economic development purposes. Proceeds
80.33derived from the management of the lands and from the sale of timber or removal of
80.34gravel or other minerals from these forest lands shall be deposited into an Iron Range
81.1Miners' Memorial Forest account that is established within the state financial accounts.
81.2Funds may be expended from the account upon approval of a majority of the members of
81.3the board to purchase, manage, administer, convey interests in, and improve the forest
81.4lands. By majority vote of the members of the board, money in the Iron Range Miners'
81.5Memorial Forest account may be transferred into the corpus of the Douglas J. Johnson
81.6economic protection trust fund established under sections 298.291 to 298.294. The
81.7property acquired under the authority granted by this subdivision and income derived from
81.8the property or the operation or management of the property are exempt from taxation
81.9by the state or its political subdivisions.
81.10EFFECTIVE DATE.This section is effective the day following final enactment.

81.11    Sec. 4. Minnesota Statutes 2006, section 298.2214, subdivision 2, is amended to read:
81.12    Subd. 2. Iron Range Higher Education Committee; membership. The members
81.13of the committee shall consist of:
81.14    (1) one member appointed by the governor;
81.15    (2) one member appointed by the president of the University of Minnesota;
81.16    (3) two four members appointed by the commissioner of the Iron Range Resources
81.17and Rehabilitation Board appointed by the chair; and
81.18    (4) the commissioner of Iron Range resources and rehabilitation; and
81.19    (5) the president of the Northeast Higher Education District or its successor.

81.20    Sec. 5. Minnesota Statutes 2006, section 298.24, subdivision 1, is amended to read:
81.21    Subdivision 1. Imposed; calculation. (a) For concentrate produced in 2001, 2002,
81.22and 2003, there is imposed upon taconite and iron sulphides, and upon the mining and
81.23quarrying thereof, and upon the production of iron ore concentrate therefrom, and upon
81.24the concentrate so produced, a tax of $2.103 per gross ton of merchantable iron ore
81.25concentrate produced therefrom. For concentrates produced in 2005, the tax rate is the
81.26same rate imposed for concentrates produced in 2004.
81.27    (b) For concentrates produced in 2006 and subsequent years, the tax rate shall be
81.28equal to the preceding year's tax rate plus an amount equal to the preceding year's tax rate
81.29multiplied by the percentage increase in the implicit price deflator from the fourth quarter
81.30of the second preceding year to the fourth quarter of the preceding year. "Implicit price
81.31deflator" means the implicit price deflator for the gross domestic product prepared by the
81.32Bureau of Economic Analysis of the United States Department of Commerce.
81.33    (c) On concentrates produced in 1997 and thereafter, an additional tax is imposed
81.34equal to three cents per gross ton of merchantable iron ore concentrate for each one
82.1percent that the iron content of the product exceeds 72 percent, when dried at 212 degrees
82.2Fahrenheit.
82.3    (d) The tax shall be imposed on the average of the production for the current year
82.4and the previous two years. The rate of the tax imposed will be the current year's tax rate.
82.5This clause shall not apply in the case of the closing of a taconite facility if the property
82.6taxes on the facility would be higher if this clause and section 298.25 were not applicable.
82.7    (e) If the tax or any part of the tax imposed by this subdivision is held to be
82.8unconstitutional, a tax of $2.103 per gross ton of merchantable iron ore concentrate
82.9produced shall be imposed.
82.10    (f) Consistent with the intent of this subdivision to impose a tax based upon the
82.11weight of merchantable iron ore concentrate, the commissioner of revenue may indirectly
82.12determine the weight of merchantable iron ore concentrate included in fluxed pellets by
82.13subtracting the weight of the limestone, dolomite, or olivine derivatives or other basic
82.14flux additives included in the pellets from the weight of the pellets. For purposes of this
82.15paragraph, "fluxed pellets" are pellets produced in a process in which limestone, dolomite,
82.16olivine, or other basic flux additives are combined with merchantable iron ore concentrate.
82.17No subtraction from the weight of the pellets shall be allowed for binders, mineral and
82.18chemical additives other than basic flux additives, or moisture.
82.19    (g)(1) Notwithstanding any other provision of this subdivision, for the first two years
82.20of a plant's commercial production of direct reduced ore, no tax is imposed under this
82.21section. As used in this paragraph, "commercial production" is production of more than
82.2250,000 tons of direct reduced ore in the current year or in any prior year, "noncommercial
82.23production" is production of 50,000 tons or less of direct reduced ore in any year, and
82.24"direct reduced ore" is ore that results in a product that has an iron content of at least 75
82.25percent. For the third year of a plant's commercial production of direct reduced ore, the
82.26rate to be applied to direct reduced ore is 25 percent of the rate otherwise determined
82.27under this subdivision. For the fourth commercial production year, the rate is 50 percent of
82.28the rate otherwise determined under this subdivision; for the fifth commercial production
82.29year, the rate is 75 percent of the rate otherwise determined under this subdivision; and for
82.30all subsequent commercial production years, the full rate is imposed.
82.31    (2) Subject to clause (1), production of direct reduced ore in this state is subject to
82.32the tax imposed by this section, but if that production is not produced by a producer
82.33of taconite or iron sulfides, the production of taconite or iron sulfides consumed in the
82.34production of direct reduced iron in this state is not subject to the tax imposed by this
82.35section on taconite or iron sulfides.
83.1    (3) Notwithstanding any other provision of this subdivision, no tax is imposed
83.2on direct reduced ore under this section during the facility's noncommercial production
83.3of direct reduced ore. The taconite or iron sulphides consumed in the noncommercial
83.4production of direct reduced ore is subject to the tax imposed by this section on taconite
83.5and iron sulphides. Three-year average production of direct reduced ore does not
83.6include production of direct reduced ore in any noncommercial year. Three-year average
83.7production for a direct reduced ore facility that has noncommercial production is the
83.8average of the commercial production of direct reduced ore for the current year and the
83.9previous two commercial years.
83.10    (4) This paragraph applies only to plants for which all environmental permits have
83.11been obtained and construction has begun before July 1, 2008.
83.12EFFECTIVE DATE.This section is effective the day following final enactment.

83.13    Sec. 6. Minnesota Statutes 2006, section 298.25, is amended to read:
83.14298.25 TAXES ADDITIONAL TO OCCUPATION TAX; IN LIEU OF OTHER
83.15TAXES.
83.16    The taxes imposed under section 298.24 shall be in addition to the occupation tax
83.17imposed upon the business of mining and producing iron ore. Except as herein otherwise
83.18provided, such taxes shall be in lieu of all other taxes upon such taconite, iron sulphides,
83.19and direct reduced ore or the lands in which they are contained, or upon the mining or
83.20quarrying thereof, or the production of concentrate or direct reduced ore therefrom, or
83.21upon the concentrate or direct reduced ore produced, or upon the machinery, equipment,
83.22tools, supplies and buildings used in such mining, quarrying or production, or upon the
83.23lands occupied by, or used in connection with, such mining, quarrying or production
83.24facilities. If electric or steam power for the mining, transportation or concentration of
83.25such taconite, concentrates or direct reduced ore produced therefrom is generated in
83.26plants principally devoted to the generation of power for such purposes, the plants in
83.27which such power is generated and all machinery, equipment, tools, supplies, transmission
83.28and distribution lines used in the generation and distribution of such power, shall not be
83.29considered to be machinery, equipment, tools, supplies and buildings used in the mining,
83.30quarrying, or production of taconite, taconite concentrates or direct reduced ore within
83.31the meaning of this section, and shall be subject to general property taxation. If part
83.32of the power generated in such a plant is used for purposes other than the mining or
83.33concentration of taconite or direct reduced ore or the transportation or loading of taconite,
83.34the concentrates thereof or direct reduced ore, a proportionate share of the value of such
84.1generating facilities, equal to the proportion that the power used for such other purpose
84.2bears to the generating capacity of the plant, shall be subject to the general property tax
84.3in the same manner as other property; provided, power generated in such a plant and
84.4exchanged for an equivalent amount of power which is used for the mining, transportation,
84.5or concentration of such taconite, concentrates or direct reduced ore produced therefrom,
84.6shall be considered as used for such purposes within the meaning of this section. Nothing
84.7herein shall prevent the assessment and taxation of the surface of reserve land containing
84.8taconite and not occupied by such facilities or used in connection therewith at the value
84.9thereof without regard to the taconite or iron sulphides therein, nor the assessment and
84.10taxation of merchantable iron ore or other minerals, or iron-bearing materials other than
84.11taconite or iron sulphides in such lands in the manner provided by law, nor the assessment
84.12and taxation of facilities used in producing sulphur or sulphur products from iron sulphide
84.13concentrates, or in refining such sulphur products, under the general property tax laws.
84.14Nothing herein shall except from general taxation or from taxation as provided by other
84.15laws any property used for residential or townsite purposes, including utility services
84.16thereto. This section does not provide an exemption from general property taxation for ore
84.17docks even if located at the site of a taconite production facility.
84.18EFFECTIVE DATE.This section is effective for taxes levied in 2008, payable
84.19in 2009, and thereafter.

84.20    Sec. 7. Minnesota Statutes 2006, section 298.28, subdivision 4, is amended to read:
84.21    Subd. 4. School districts. (a) 17.15 23.15 cents per taxable ton, plus the increase
84.22provided in paragraph (d) must be allocated to qualifying school districts to be distributed,
84.23based upon the certification of the commissioner of revenue, under paragraphs (b) and,
84.24(c), except as otherwise provided in paragraph and (f).
84.25    (b) (i) 3.43 cents per taxable ton must be distributed to the school districts in which
84.26the lands from which taconite was mined or quarried were located or within which the
84.27concentrate was produced. The distribution must be based on the apportionment formula
84.28prescribed in subdivision 2.
84.29    (ii) Four cents per taxable ton from each taconite facility must be distributed to
84.30each affected school district for deposit in a fund dedicated to building maintenance
84.31and repairs, as follows:
84.32    (1) proceeds from Keewatin Taconite or its successor are distributed to Independent
84.33School Districts Nos. 316, Coleraine, and 319, Nashwauk-Keewatin, or their successor
84.34districts;
85.1    (2) proceeds from the Hibbing Taconite Company or its successor are distributed to
85.2Independent School Districts Nos. 695, Chisholm, and 701, Hibbing, or their successor
85.3districts;
85.4    (3) proceeds from the Mittal Steel Company and Minntac or their successors are
85.5distributed to Independent School Districts Nos. 712, Mountain Iron-Buhl, 706, Virginia,
85.62711, Mesabi East, and 2154, Eveleth-Gilbert, or their successor districts;
85.7    (4) proceeds from the Northshore Mining Company or its successor are distributed
85.8to Independent School Districts Nos. 2142, St. Louis County, and 381, Lake Superior,
85.9or their successor districts; and
85.10    (5) proceeds from United Taconite or its successor are distributed to Independent
85.11School Districts Nos. 2142, St. Louis County, and 2154, Eveleth-Gilbert, or their
85.12successor districts.
85.13    Revenues that are required to be distributed to more than one district shall be
85.14apportioned according to the number of pupil units identified in section 126C.05,
85.15subdivision 1, enrolled in the second previous year.
85.16    (c)(i) 13.72 15.72 cents per taxable ton, less any amount distributed under paragraph
85.17(e), shall be distributed to a group of school districts comprised of those school districts
85.18which qualify as a tax relief area under section 273.134, paragraph (b), or in which there is
85.19a qualifying municipality as defined by section 273.134, paragraph (a), in direct proportion
85.20to school district indexes as follows: for each school district, its pupil units determined
85.21under section 126C.05 for the prior school year shall be multiplied by the ratio of the
85.22average adjusted net tax capacity per pupil unit for school districts receiving aid under
85.23this clause as calculated pursuant to chapters 122A, 126C, and 127A for the school year
85.24ending prior to distribution to the adjusted net tax capacity per pupil unit of the district.
85.25Each district shall receive that portion of the distribution which its index bears to the sum
85.26of the indices for all school districts that receive the distributions.
85.27    (ii) Notwithstanding clause (i), each school district that receives a distribution
85.28under sections 298.018; 298.23 to 298.28, exclusive of any amount received under this
85.29clause; 298.34 to 298.39; 298.391 to 298.396; 298.405; or any law imposing a tax on
85.30severed mineral values after reduction for any portion distributed to cities and towns under
85.31section 126C.48, subdivision 8, paragraph (5), that is less than the amount of its levy
85.32reduction under section 126C.48, subdivision 8, for the second year prior to the year of the
85.33distribution shall receive a distribution equal to the difference; the amount necessary to
85.34make this payment shall be derived from proportionate reductions in the initial distribution
85.35to other school districts under clause (i).
86.1    (d) Any school district described in paragraph (c) where a levy increase pursuant to
86.2section 126C.17, subdivision 9, was authorized by referendum for taxes payable in 2001,
86.3shall receive a distribution of 21.3 cents per ton. Each district shall receive $175 times the
86.4pupil units identified in section 126C.05, subdivision 1, enrolled in the second previous
86.5year or the 1983-1984 school year, whichever is greater, less the product of 1.8 percent
86.6times the district's taxable net tax capacity in the second previous year.
86.7    If the total amount provided by paragraph (d) is insufficient to make the payments
86.8herein required then the entitlement of $175 per pupil unit shall be reduced uniformly
86.9so as not to exceed the funds available. Any amounts received by a qualifying school
86.10district in any fiscal year pursuant to paragraph (d) shall not be applied to reduce general
86.11education aid which the district receives pursuant to section 126C.13 or the permissible
86.12levies of the district. Any amount remaining after the payments provided in this paragraph
86.13shall be paid to the commissioner of Iron Range resources and rehabilitation who shall
86.14deposit the same in the taconite environmental protection fund and the Douglas J. Johnson
86.15economic protection trust fund as provided in subdivision 11.
86.16    Each district receiving money according to this paragraph shall reserve the lesser of
86.17the amount received under this paragraph or $25 times the number of pupil units served
86.18in the district. It may use the money for early childhood programs or for outcome-based
86.19learning programs that enhance the academic quality of the district's curriculum. The
86.20outcome-based learning programs must be approved by the commissioner of education.
86.21    (e) There shall be distributed to any school district the amount which the school
86.22district was entitled to receive under section 298.32 in 1975.
86.23    (f) Effective for the distribution in 2003 only, five percent of the distributions to
86.24school districts under paragraphs (b), (c), and (e); subdivision 6, paragraph (c); subdivision
86.2511; and section 298.225, shall be distributed to the general fund. The remainder less any
86.26portion distributed to cities and towns under section 126C.48, subdivision 8, paragraph
86.27(5), shall be distributed to the Douglas J. Johnson economic protection trust fund created
86.28in section 298.292. Fifty percent of the amount distributed to the Douglas J. Johnson
86.29economic protection trust fund shall be made available for expenditure under section
86.30298.293 as governed by section 298.296. Effective in 2003 only, 100 percent of the
86.31distributions to school districts under section 477A.15 less any portion distributed to cities
86.32and towns under section 126C.48, subdivision 8, paragraph (5), shall be distributed to the
86.33general fund. Four cents per taxable ton must be distributed to qualifying school districts
86.34according to the distribution specified in paragraph (b), clause (ii), and two cents per
86.35taxable ton must be distributed according to the distribution specified in paragraph (c).
86.36These amounts are not subject to section 126C.48, subdivision 8.
87.1EFFECTIVE DATE.This section is effective for distributions in 2009 and
87.2thereafter.

87.3    Sec. 8. Minnesota Statutes 2006, section 298.28, subdivision 5, is amended to read:
87.4    Subd. 5. Counties. (a) 26.05 cents per taxable ton is allocated to counties to be
87.5distributed, based upon certification by the commissioner of revenue, under paragraphs
87.6(b) to (d).
87.7    (b) 20.525 15.525 cents per taxable ton shall be distributed to the county in which
87.8the taconite is mined or quarried or in which the concentrate is produced, less any
87.9amount which is to be distributed pursuant to paragraph (c). The apportionment formula
87.10prescribed in subdivision 2 is the basis for the distribution.
87.11    (c) If an electric power plant owned by and providing the primary source of power
87.12for a taxpayer mining and concentrating taconite is located in a county other than the
87.13county in which the mining and the concentrating processes are conducted, one cent per
87.14taxable ton of the tax distributed to the counties pursuant to paragraph (b) and imposed
87.15on and collected from such taxpayer shall be paid to the county in which the power plant
87.16is located.
87.17    (d) 5.525 10.525 cents per taxable ton shall be paid to the county from which the
87.18taconite was mined, quarried or concentrated to be deposited in the county road and
87.19bridge fund. If the mining, quarrying and concentrating, or separate steps in any of those
87.20processes are carried on in more than one county, the commissioner shall follow the
87.21apportionment formula prescribed in subdivision 2.
87.22EFFECTIVE DATE.This section is effective for distributions in 2009 and
87.23thereafter.

87.24    Sec. 9. Minnesota Statutes 2006, section 298.28, is amended by adding a subdivision
87.25to read:
87.26    Subd. 9d. Iron Range higher education account. Two cents per taxable ton must
87.27be allocated to the Iron Range Resources and Rehabilitation Board to be deposited in
87.28an Iron Range higher education account that is hereby created, to be used for higher
87.29education programs conducted at educational institutions in the taconite assistance area
87.30defined in section 273.1341. The Iron Range Higher Education committee under section
87.31298.2214 and the Iron Range Resources and Rehabilitation Board must approve all
87.32expenditures from the account.
88.1EFFECTIVE DATE.This section is effective for production in 2007, distributions
88.2in 2008, and thereafter.

88.3    Sec. 10. Minnesota Statutes 2006, section 298.282, subdivision 1, is amended to read:
88.4    Subdivision 1. Distribution of taconite municipal aid account. The amount
88.5deposited with the county as provided in section 298.28, subdivision 3, must be distributed
88.6as provided by this section among: (1) the municipalities comprising a tax relief area
88.7under section 273.134, paragraph (b),; (2) a township that contains a state park consisting
88.8primarily of an underground iron ore mine; and (3) a city located within five miles of that
88.9state park, each being referred to in this section as a qualifying municipality.
88.10EFFECTIVE DATE.This section is effective for distributions in 2008 and
88.11thereafter.

88.12    Sec. 11. Minnesota Statutes 2006, section 298.292, subdivision 2, is amended to read:
88.13    Subd. 2. Use of money. Money in the Douglas J. Johnson economic protection trust
88.14fund may be used for the following purposes:
88.15    (1) to provide loans, loan guarantees, interest buy-downs and other forms of
88.16participation with private sources of financing, but a loan to a private enterprise shall be
88.17for a principal amount not to exceed one-half of the cost of the project for which financing
88.18is sought, and the rate of interest on a loan to a private enterprise shall be no less than the
88.19lesser of eight percent or an interest rate three percentage points less than a full faith
88.20and credit obligation of the United States government of comparable maturity, at the
88.21time that the loan is approved;
88.22    (2) to fund reserve accounts established to secure the payment when due of the
88.23principal of and interest on bonds issued pursuant to section 298.2211;
88.24    (3) to pay in periodic payments or in a lump sum payment any or all of the interest
88.25on bonds issued pursuant to chapter 474 for the purpose of constructing, converting,
88.26or retrofitting heating facilities in connection with district heating systems or systems
88.27utilizing alternative energy sources; and
88.28    (4) to invest in a venture capital fund or enterprise that will provide capital to other
88.29entities that are engaging in, or that will engage in, projects or programs that have the
88.30purposes set forth in subdivision 1. No investments may be made in a venture capital fund
88.31or enterprise unless at least two other unrelated investors make investments of at least
88.32$500,000 in the venture capital fund or enterprise, and the investment by the Douglas
88.33J. Johnson economic protection trust fund may not exceed the amount of the largest
88.34investment by an unrelated investor in the venture capital fund or enterprise. For purposes
89.1of this subdivision, an "unrelated investor" is a person or entity that is not related to
89.2the entity in which the investment is made or to any individual who owns more than 40
89.3percent of the value of the entity, in any of the following relationships: spouse, parent,
89.4child, sibling, employee, or owner of an interest in the entity that exceeds ten percent of
89.5the value of all interests in it. For purposes of determining the limitations under this
89.6clause, the amount of investments made by an investor other than the Douglas J. Johnson
89.7economic protection trust fund is the sum of all investments made in the venture capital
89.8fund or enterprise during the period beginning one year before the date of the investment
89.9by the Douglas J. Johnson economic protection trust fund; and
89.10    (5) to purchase forest land in the taconite assistance area defined in section 273.1341
89.11to be held and managed as a public trust for the benefit of the area for the purposes
89.12authorized in section 298.22, subdivision 5a.
89.13    Money from the trust fund shall be expended only in or for the benefit of the taconite
89.14assistance area defined in section 273.1341.
89.15EFFECTIVE DATE.This section is effective the day following final enactment.

89.16    Sec. 12. Minnesota Statutes 2006, section 298.296, subdivision 2, is amended to read:
89.17    Subd. 2. Expenditure of funds. (a) Before January 1, 2028, funds may be expended
89.18on projects and for administration of the trust fund only from the net interest, earnings,
89.19and dividends arising from the investment of the trust at any time, including net interest,
89.20earnings, and dividends that have arisen prior to July 13, 1982, plus $10,000,000 made
89.21available for use in fiscal year 1983, except that any amount required to be paid out of the
89.22trust fund to provide the property tax relief specified in Laws 1977, chapter 423, article
89.23X, section 4, and to make school bond payments and payments to recipients of taconite
89.24production tax proceeds pursuant to section 298.225, may be taken from the corpus of
89.25the trust.
89.26    (b) Additionally, upon recommendation by the board, up to $13,000,000 from the
89.27corpus of the trust may be made available for use as provided in subdivision 4, and up to
89.28$10,000,000 from the corpus of the trust may be made available for use as provided in
89.29section 298.2961.
89.30    (c) Additionally, an amount equal to 20 percent of the value of the corpus of the trust
89.31on May 18, 2002, not including the funds authorized in paragraph (b), plus the amounts
89.32made available under section 298.28, subdivision 4, and Laws 2002, chapter 377, article
89.338, section 17, may be expended on projects. Funds may be expended for projects under
89.34this paragraph only if the project:
90.1    (1) is for the purposes established under section 298.292, subdivision 1, clause
90.2(1) or (2); and
90.3    (2) is approved by the board upon an affirmative vote of at least ten of its members.
90.4No money made available under this paragraph or paragraph (d) can be used for
90.5administrative or operating expenses of the Iron Range Resources and Rehabilitation
90.6Board or expenses relating to any facilities owned or operated by the board on May 18,
90.72002.
90.8    (d) Upon recommendation by a unanimous vote of all members of the board,
90.9amounts in addition to those authorized under paragraphs (a), (b), and (c) may be
90.10expended on projects described in section 298.292, subdivision 1.
90.11    (e) Annual administrative costs, not including detailed engineering expenses for the
90.12projects, shall not exceed five percent of the net interest, dividends, and earnings arising
90.13from the trust in the preceding fiscal year.
90.14    (f) Principal and interest received in repayment of loans made pursuant to this
90.15section, and earnings on other investments made under section 298.292, subdivision 2,
90.16clause (4), shall be deposited in the state treasury and credited to the trust. These receipts
90.17are appropriated to the board for the purposes of sections 298.291 to 298.298.
90.18    (g) Additionally, notwithstanding section 298.293, upon affirmative vote of a
90.19majority of the members of the board, money from the corpus of the trust may be expanded
90.20to purchase forest lands within the taconite assistance area as provided in sections 298.22,
90.21subdivision 5a, and 298.292, subdivision 2, clause (5).
90.22EFFECTIVE DATE.This section is effective the day following final enactment.

90.23    Sec. 13. Minnesota Statutes 2006, section 298.2961, subdivision 4, is amended to read:
90.24    Subd. 4. Grant and loan fund. (a) A fund is established to receive distributions
90.25under section 298.28, subdivision 9b, and to make grants or loans as provided in this
90.26subdivision. Any grant or loan made under this subdivision must be approved by
90.27a majority of the members of the Iron Range Resources and Rehabilitation Board,
90.28established under section 298.22.
90.29    (b) Distributions received in calendar year 2005 are allocated to the city of Virginia
90.30for improvements and repairs to the city's steam heating system.
90.31    (c) Distributions received in calendar year 2006 are allocated to a project of the
90.32public utilities commissions of the cities of Hibbing and Virginia to convert their electrical
90.33generating plants to the use of biomass products, such as wood.
91.1    (d) Distributions received in calendar year 2007 must be paid to the city of Tower to
91.2be used for the East Two Rivers project in or near the city of Tower.
91.3    (e) For distributions received in 2008, the first $2,000,000 of the 2008 distribution
91.4must be paid to St. Louis County for deposit in its county road and bridge fund to be
91.5used for relocation of St. Louis County Road 715, commonly referred to as Pike River
91.6Road. The remainder of the 2008 distribution and the full amount of the distributions
91.7must be paid to St. Louis County for a grant to the city of Virginia for connecting sewer
91.8and water lines to the St. Louis County maintenance garage on Highway 135, further
91.9extending the lines to interconnect with the city of Gilbert's sewer and water lines. All
91.10distributions received in 2009 and subsequent years is are allocated for projects under
91.11section 298.223, subdivision 1.
91.12EFFECTIVE DATE.This section is effective the day following final enactment.

91.13    Sec. 14. Minnesota Statutes 2006, section 298.2961, subdivision 5, is amended to read:
91.14    Subd. 5. Public works and local economic development fund. For distributions in
91.152007 only, a special fund is established to receive 38.4 cents per ton that otherwise would
91.16be allocated under section 298.28, subdivision 6. The following amounts are allocated to
91.17St. Louis County acting as the fiscal agent for the recipients for the specific purposes:
91.18    (1) 13.4 cents per ton for the Central Iron Range Sanitary Sewer District for
91.19construction of a combined wastewater facility and notwithstanding section 298.28,
91.20subdivision 11, paragraph (a), or any other law, interest accrued on this money while held
91.21by St. Louis County shall also be distributed to the recipient;
91.22    (2) six cents per ton to the city of Eveleth to redesign and design and construct
91.23improvements to renovate its water treatment facility;
91.24    (3) one cent per ton for the East Range Joint Powers Board to acquire land for and to
91.25design a central wastewater collection and treatment system;
91.26    (4) 0.5 cents per ton to the city of Hoyt Lakes to repair Leeds Road;
91.27    (5) 0.7 cents per ton to the city of Virginia to extend Eighth Street South;
91.28    (6) 0.7 cents per ton to the city of Mountain Iron to repair Hoover Road;
91.29    (7) 0.9 cents per ton to the city of Gilbert for alley repairs between Michigan and
91.30Indiana Avenues and for repayment of a loan to the Minnesota Department of Employment
91.31and Economic Development;
91.32    (8) 0.4 cents per ton to the city of Keewatin for a new city well;
91.33    (9) 0.3 cents per ton to the city of Grand Rapids for planning for a fire and hazardous
91.34materials center;
92.1    (10) 0.9 cents per ton to Aitkin County Growth for an economic development
92.2project for peat harvesting;
92.3    (11) 0.4 cents per ton to the city of Nashwauk to develop a comprehensive city plan;
92.4    (12) 0.4 cents per ton to the city of Taconite for development of a city comprehensive
92.5plan;
92.6    (13) 0.3 cents per ton to the city of Marble for water and sewer infrastructure;
92.7    (14) 0.8 cents per ton to Aitkin County for improvements to the Long Lake
92.8Environmental Learning Center;
92.9    (15) 0.3 cents per ton to the city of Coleraine for the Coleraine Technology Center;
92.10    (16) 0.5 cents per ton to the Economic Development Authority of the city of Grand
92.11Rapids for planning for the North Central Research and Technology Laboratory;
92.12    (17) 0.6 cents per ton to the city of Bovey for sewer and water extension;
92.13    (18) 0.3 cents per ton to the city of Calumet for infrastructure improvements; and
92.14    (19) ten cents per ton to an economic development authority in a city through which
92.15State Highway 1 passes, or a city in Independent School District No. 2142 that has an
92.16active mine, the commissioner of Iron Range Resources and Rehabilitation for deposit
92.17in a Highway 1 Corridor Account established by the commissioner, to be distributed by
92.18the commissioner to any of the cities of Babbitt, Cook, Ely, or Tower, for an economic
92.19development project projects approved by the Iron Range Resources and Rehabilitation
92.20Board; notwithstanding section 298.28, subdivision 11, paragraph (a), or any other law,
92.21interest accrued on this money while held by St. Louis County or the commissioner
92.22shall also be distributed to the recipient.
92.23EFFECTIVE DATE.This section is effective for distributions made in 2008 and
92.24thereafter.

92.25    Sec. 15. Minnesota Statutes 2006, section 298.75, subdivision 1, is amended to read:
92.26    Subdivision 1. Definitions. Except as may otherwise be provided, the following
92.27words, when used in this section, shall have the meanings herein ascribed to them.
92.28    (1) (a) "Aggregate material" shall mean means:
92.29    (1) nonmetallic natural mineral aggregate including, but not limited to sand, silica
92.30sand, gravel, crushed rock, limestone, granite, and borrow, but only if the borrow is
92.31transported on a public road, street, or highway., provided that nonmetallic aggregate
92.32material shall does not include dimension stone and dimension granite; and
92.33    (2) taconite tailings, crushed rock, and architectural or dimension stone and
92.34dimension granite removed from a taconite mine or the site of a previously operated
92.35taconite mine.
93.1    Aggregate material must be measured or weighed after it has been extracted from
93.2the pit, quarry, or deposit.
93.3    (2) (b) "Person" shall mean means any individual, firm, partnership, corporation,
93.4organization, trustee, association, or other entity.
93.5    (3) (c) "Operator" shall mean means any person engaged in the business of removing
93.6aggregate material from the surface or subsurface of the soil, for the purpose of sale,
93.7either directly or indirectly, through the use of the aggregate material in a marketable
93.8product or service.
93.9    (4) (d) "Extraction site" shall mean means a pit, quarry, or deposit containing
93.10aggregate material and any contiguous property to the pit, quarry, or deposit which is used
93.11by the operator for stockpiling the aggregate material.
93.12    (5) (e) "Importer" shall mean means any person who buys aggregate material
93.13produced from a county not listed in paragraph (6) (f) or another state and causes the
93.14aggregate material to be imported into a county in this state which imposes a tax on
93.15aggregate material.
93.16    (6) (f) "County" shall mean means the counties of Pope, Stearns, Benton, Sherburne,
93.17Carver, Scott, Dakota, Le Sueur, Kittson, Marshall, Pennington, Red Lake, Polk, Norman,
93.18Mahnomen, Clay, Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone, Sibley,
93.19Hennepin, Washington, Chisago, and Ramsey. County also means any other county whose
93.20board has voted after a public hearing to impose the tax under this section and has notified
93.21the commissioner of revenue of the imposition of the tax.
93.22    (7) (g) "Borrow" shall mean means granular borrow, consisting of durable particles
93.23of gravel and sand, crushed quarry or mine rock, crushed gravel or stone, or any
93.24combination thereof, the ratio of the portion passing the (#200) sieve divided by the
93.25portion passing the (1 inch) sieve may not exceed 20 percent by mass.
93.26EFFECTIVE DATE.This section is effective for aggregate material removed
93.27beginning June 1, 2008.

93.28    Sec. 16. Minnesota Statutes 2006, section 298.75, subdivision 3, is amended to read:
93.29    Subd. 3. Report and remittance. (a) By the 14th day following the last day of each
93.30calendar quarter, every operator or importer shall make and file with the county auditor of
93.31the county in which the aggregate material is removed or imported, a correct report under
93.32oath, in such form and containing such information as the auditor shall require relative to
93.33the quantity of aggregate material removed or imported during the preceding calendar
93.34quarter. The report shall be accompanied by a remittance of the amount of tax due.
94.1    (b) If any of the proceeds of the tax is to be apportioned as provided in subdivision
94.22, the operator or importer shall also include on the report any relevant information
94.3concerning the amount of aggregate material transported, the tax and the county of
94.4destination. The county auditor shall notify the county treasurer of the amount of such
94.5tax and the county to which it is due. The county treasurer shall remit the tax to the
94.6appropriate county within 30 days, except as provided in paragraph (c).
94.7    (c) The proceeds of the tax on aggregate material as defined in subdivision 1,
94.8paragraph (a), clause (2), must be remitted to the commissioner of iron range resources
94.9and rehabilitation to be deposited in the taconite area environmental protection fund under
94.10section 298.223, and used for the purposes of that fund.
94.11EFFECTIVE DATE.This section is effective for aggregate material removed
94.12beginning June 1, 2008.

94.13    Sec. 17. Minnesota Statutes 2006, section 298.75, subdivision 7, is amended to read:
94.14    Subd. 7. Proceeds of taxes. All money collected as taxes under this section on
94.15aggregate material as defined in subdivision 1, paragraph (a), clause (1), shall be deposited
94.16in the county treasury and credited as follows, for expenditure by the county board:
94.17    (a) Sixty percent to the county road and bridge fund for expenditure for the
94.18maintenance, construction and reconstruction of roads, highways and bridges;
94.19    (b) Thirty percent to the road and bridge fund of those towns as determined by the
94.20county board and to the general fund or other designated fund of those cities as determined
94.21by the county board, to be expended for maintenance, construction and reconstruction of
94.22roads, highways and bridges; and
94.23    (c) Ten percent to a special reserve fund which is hereby established, for expenditure
94.24for the restoration of abandoned pits, quarries, or deposits located upon public and tax
94.25forfeited lands within the county.
94.26    If there are no abandoned pits, quarries or deposits located upon public or tax
94.27forfeited lands within the county, this portion of the tax shall be deposited in the county
94.28road and bridge fund for expenditure for the maintenance, construction and reconstruction
94.29of roads, highways and bridges.
94.30EFFECTIVE DATE.This section is effective for aggregate material removed
94.31beginning June 1, 2008.

94.32    Sec. 18. IRON RANGE RESOURCES AND REHABILITATION BOARD;
94.33APPROPRIATION; RETIRE BONDS.
95.1    Commencing with taxes payable in 2008 there is annually appropriated from
95.2the distribution of the taconite production tax revenues to the taconite environmental
95.3protection fund under Minnesota Statutes, section 298.28, subdivision 11, and to the
95.4Douglas J. Johnson economic protection trust fund under Minnesota Statutes, section
95.5298.28, subdivisions 9 and 11, in equal shares, an amount of $500,000 per year.
95.6    The revenue received under this section shall be used only to retire Mesabi East
95.7School District No. 2711 bonds in the amount of $9,000,000 issued September 1, 2006,
95.8and in the amount of $6,250,000 issued March 1, 2007. The payments shall continue
95.9for a period of ten years ending with taxes payable in 2017. Payments to the school
95.10district shall be made annually on March 1, except that the initial annual payment shall
95.11be made by September 1, 2008.
95.12EFFECTIVE DATE.This section is effective the day following final enactment.

95.13ARTICLE 9

95.14ECONOMIC DEVELOPMENT

95.15    Section 1. Minnesota Statutes 2006, section 469.169, is amended by adding a
95.16subdivision to read:
95.17    Subd. 18. Additional border city allocations; 2008. (a) In addition to tax
95.18reductions authorized in subdivisions 7 to 17, the commissioner shall allocate $352,500
95.19for tax reductions to border city enterprise zones in cities located on the western border
95.20of the state. The commissioner shall make allocations to zones in cities on the western
95.21border on a per capita basis. Allocations made under this subdivision may be used for
95.22tax reductions as provided in section 469.171, or for other offsets of taxes imposed on
95.23or remitted by businesses located in the enterprise zone, but only if the municipality
95.24determines that the granting of the tax reduction or offset is necessary in order to retain a
95.25business within or attract a business to the zone. The city alternatively may elect to use
95.26any portion of the allocation provided in this paragraph for tax reductions under section
95.27469.1732 or 469.1734.
95.28    (b) The commissioner shall allocate $352,500 for tax reductions under section
95.29469.1732 or 469.1734 to cities with border city enterprise zones located on the western
95.30border of the state. The commissioner shall allocate this amount among the cities on a per
95.31capita basis. The city alternatively may elect to use any portion of the allocation provided
95.32in this paragraph for tax reductions as provided in section 469.171.
95.33EFFECTIVE DATE.This section is effective the day following final enactment.

96.1    Sec. 2. Minnesota Statutes 2006, section 469.174, subdivision 10, is amended to read:
96.2    Subd. 10. Redevelopment district. (a) "Redevelopment district" means a type of
96.3tax increment financing district consisting of a project, or portions of a project, within
96.4which the authority finds by resolution that one or more of the following conditions,
96.5reasonably distributed throughout the district, exists:
96.6    (1) parcels consisting of 70 percent of the area of the district are occupied by
96.7buildings, streets, utilities, paved or gravel parking lots, or other similar structures
96.8and more than 50 percent of the buildings, not including outbuildings, are structurally
96.9substandard to a degree requiring substantial renovation or clearance;
96.10    (2) the property consists of vacant, unused, underused, inappropriately used,
96.11or infrequently used railyards, rail storage facilities, or excessive or vacated railroad
96.12rights-of-way;
96.13    (3) tank facilities, or property whose immediately previous use was for tank
96.14facilities, as defined in section 115C.02, subdivision 15, if the tank facilities:
96.15    (i) have or had a capacity of more than 1,000,000 gallons;
96.16    (ii) are located adjacent to rail facilities; and
96.17    (iii) have been removed or are unused, underused, inappropriately used, or
96.18infrequently used; or
96.19    (4) a qualifying disaster area, as defined in subdivision 10b.
96.20    (b) For purposes of this subdivision, "structurally substandard" shall mean
96.21containing defects in structural elements or a combination of deficiencies in essential
96.22utilities and facilities, light and ventilation, fire protection including adequate egress,
96.23layout and condition of interior partitions, or similar factors, which defects or deficiencies
96.24are of sufficient total significance to justify substantial renovation or clearance.
96.25    (c) A building is not structurally substandard if it is in compliance with the building
96.26code applicable to new buildings or could be modified to satisfy the building code at
96.27a cost of less than 15 percent of the cost of constructing a new structure of the same
96.28square footage and type on the site. The municipality may find that a building is not
96.29disqualified as structurally substandard under the preceding sentence on the basis of
96.30reasonably available evidence, such as the size, type, and age of the building, the average
96.31cost of plumbing, electrical, or structural repairs, or other similar reliable evidence. The
96.32municipality may not make such a determination without an interior inspection of the
96.33property, but need not have an independent, expert appraisal prepared of the cost of repair
96.34and rehabilitation of the building. An interior inspection of the property is not required,
96.35if the municipality finds that (1) the municipality or authority is unable to gain access to
96.36the property after using its best efforts to obtain permission from the party that owns or
97.1controls the property; and (2) the evidence otherwise supports a reasonable conclusion that
97.2the building is structurally substandard. Items of evidence that support such a conclusion
97.3include recent fire or police inspections, on-site property tax appraisals or housing
97.4inspections, exterior evidence of deterioration, or other similar reliable evidence. Written
97.5documentation of the findings and reasons why an interior inspection was not conducted
97.6must be made and retained under section 469.175, subdivision 3, clause (1). Failure of a
97.7building to be disqualified under the provisions of this paragraph is a necessary, but not a
97.8sufficient, condition to determining that the building is substandard.
97.9    (d) A parcel is deemed to be occupied by a structurally substandard building
97.10for purposes of the finding under paragraph (a) or by the improvements described in
97.11paragraph (e) if all of the following conditions are met:
97.12    (1) the parcel was occupied by a substandard building or met the requirements
97.13of paragraph (e), as the case may be, within three years of the filing of the request for
97.14certification of the parcel as part of the district with the county auditor;
97.15    (2) the substandard building was or the improvements described in paragraph (e)
97.16were demolished or removed by the authority or the demolition or removal was financed
97.17by the authority or was done by a developer under a development agreement with the
97.18authority;
97.19    (3) the authority found by resolution before the demolition or removal that the
97.20parcel was occupied by a structurally substandard building or met the requirements of
97.21paragraph (e) and that after demolition and clearance the authority intended to include
97.22the parcel within a district; and
97.23    (4) upon filing the request for certification of the tax capacity of the parcel as part
97.24of a district, the authority notifies the county auditor that the original tax capacity of the
97.25parcel must be adjusted as provided by section 469.177, subdivision 1, paragraph (f).
97.26    (e) For purposes of this subdivision, a parcel is not occupied by buildings, streets,
97.27utilities, paved or gravel parking lots, or other similar structures unless 15 percent of the
97.28area of the parcel contains buildings, streets, utilities, paved or gravel parking lots, or
97.29other similar structures.
97.30    (f) For districts consisting of two or more noncontiguous areas, each area must
97.31qualify as a redevelopment district under paragraph (a) to be included in the district, and
97.32the entire area of the district must satisfy paragraph (a).
97.33EFFECTIVE DATE.This section is effective for requests for certification made
97.34after June 30, 2008.

97.35    Sec. 3. Minnesota Statutes 2006, section 469.174, subdivision 10a, is amended to read:
98.1    Subd. 10a. Renewal and renovation district. (a) "Renewal and renovation district"
98.2means a type of tax increment financing district consisting of a project, or portions of a
98.3project, within which the authority finds by resolution that:
98.4    (1)(i) parcels consisting of 70 percent of the area of the district are occupied by
98.5buildings, streets, utilities, paved or gravel parking lots, or other similar structures; (ii)
98.620 percent of the buildings are structurally substandard; and (iii) 30 percent of the other
98.7buildings require substantial renovation or clearance to remove existing conditions such
98.8as: inadequate street layout, incompatible uses or land use relationships, overcrowding of
98.9buildings on the land, excessive dwelling unit density, obsolete buildings not suitable for
98.10improvement or conversion, or other identified hazards to the health, safety, and general
98.11well-being of the community; and
98.12    (2) the conditions described in clause (1) are reasonably distributed throughout the
98.13geographic area of the district.
98.14    (b) For purposes of determining whether a building is structurally substandard,
98.15whether parcels are occupied by buildings, streets, utilities, paved or gravel parking lots,
98.16or other similar structures, or whether noncontiguous areas qualify, the provisions of
98.17subdivision 10, paragraphs (c), (e), and (b) through (f) apply.
98.18EFFECTIVE DATE.This section is effective for requests for certification made
98.19after June 30, 2008.

98.20    Sec. 4. Minnesota Statutes 2006, section 469.175, subdivision 1, is amended to read:
98.21    Subdivision 1. Tax increment financing plan. (a) A tax increment financing plan
98.22shall contain:
98.23    (1) a statement of objectives of an authority for the improvement of a project;
98.24    (2) a statement as to the development program for the project, including the property
98.25within the project, if any, that the authority intends to acquire, identified by parcel number,
98.26identifiable property name, block, or other appropriate means indicating the area in which
98.27the authority intends to acquire properties;
98.28    (3) a list of any development activities that the plan proposes to take place within
98.29the project, for which contracts have been entered into at the time of the preparation of
98.30the plan, including the names of the parties to the contract, the activity governed by the
98.31contract, the cost stated in the contract, and the expected date of completion of that activity;
98.32    (4) identification or description of the type of any other specific development
98.33reasonably expected to take place within the project, and the date when the development is
98.34likely to occur;
98.35    (5) estimates of the following:
99.1    (i) cost of the project, including administrative expenses, except that if part of the
99.2cost of the project is paid or financed with increment from the tax increment financing
99.3district, the tax increment financing plan for the district must contain an estimate of the
99.4amount of the cost of the project, including administrative expenses, that will be paid or
99.5financed with tax increments from the district;
99.6    (ii) amount of bonded indebtedness to be incurred;
99.7    (iii) sources of revenue to finance or otherwise pay public costs;
99.8    (iv) the most recent net tax capacity of taxable real property within the tax increment
99.9financing district and within any subdistrict;
99.10    (v) the estimated captured net tax capacity of the tax increment financing district
99.11at completion; and
99.12    (vi) the duration of the tax increment financing district's and any subdistrict's
99.13existence;
99.14    (6) statements of the authority's alternate estimates of the impact of tax increment
99.15financing on the net tax capacities of all taxing jurisdictions in which the tax increment
99.16financing district is located in whole or in part. For purposes of one statement, the
99.17authority shall assume that the estimated captured net tax capacity would be available to
99.18the taxing jurisdictions without creation of the district, and for purposes of the second
99.19statement, the authority shall assume that none of the estimated captured net tax capacity
99.20would be available to the taxing jurisdictions without creation of the district or subdistrict;
99.21    (7) identification and description of studies and analyses used to make the
99.22determination set forth in subdivision 3, clause (2); and
99.23    (8) identification of all parcels to be included in the district or any subdistrict.
99.24    (b) The authority may specify in the tax increment financing plan the first year in
99.25which it elects to receive increment, up to four years following the year of approval of the
99.26district. This paragraph does not apply to an economic development district.
99.27EFFECTIVE DATE.This section is effective for districts for which the request for
99.28certification is made after June 30, 2008.

99.29    Sec. 5. Minnesota Statutes 2006, section 469.175, subdivision 3, is amended to read:
99.30    Subd. 3. Municipality approval. (a) A county auditor shall not certify the original
99.31net tax capacity of a tax increment financing district until the tax increment financing plan
99.32proposed for that district has been approved by the municipality in which the district
99.33is located. If an authority that proposes to establish a tax increment financing district
99.34and the municipality are not the same, the authority shall apply to the municipality in
99.35which the district is proposed to be located and shall obtain the approval of its tax
100.1increment financing plan by the municipality before the authority may use tax increment
100.2financing. The municipality shall approve the tax increment financing plan only after a
100.3public hearing thereon after published notice in a newspaper of general circulation in the
100.4municipality at least once not less than ten days nor more than 30 days prior to the date
100.5of the hearing. The published notice must include a map of the area of the district from
100.6which increments may be collected and, if the project area includes additional area, a map
100.7of the project area in which the increments may be expended. The hearing may be held
100.8before or after the approval or creation of the project or it may be held in conjunction with
100.9a hearing to approve the project.
100.10    (b) Before or at the time of approval of the tax increment financing plan, the
100.11municipality shall make the following findings, and shall set forth in writing the reasons
100.12and supporting facts for each determination:
100.13    (1) that the proposed tax increment financing district is a redevelopment district, a
100.14renewal or renovation district, a housing district, a soils condition district, or an economic
100.15development district; if the proposed district is a redevelopment district or a renewal or
100.16renovation district, the reasons and supporting facts for the determination that the district
100.17meets the criteria of section 469.174, subdivision 10, paragraph (a), clauses (1) and (2), or
100.18subdivision 10a, must be documented in writing and retained and made available to the
100.19public by the authority until the district has been terminated;
100.20    (2) that, in the opinion of the municipality:
100.21    (i) the proposed development or redevelopment would not reasonably be expected to
100.22occur solely through private investment within the reasonably foreseeable future; and
100.23    (ii) the increased market value of the site that could reasonably be expected to
100.24occur without the use of tax increment financing would be less than the increase in the
100.25market value estimated to result from the proposed development after subtracting the
100.26present value of the projected tax increments for the maximum duration of the district
100.27permitted by the plan. The requirements of this item do not apply if the district is a
100.28qualified housing district;
100.29    (3) that the tax increment financing plan conforms to the general plan for the
100.30development or redevelopment of the municipality as a whole;
100.31    (4) that the tax increment financing plan will afford maximum opportunity,
100.32consistent with the sound needs of the municipality as a whole, for the development or
100.33redevelopment of the project by private enterprise;
100.34    (5) that the municipality elects the method of tax increment computation set forth in
100.35section 469.177, subdivision 3, paragraph (b), if applicable.
101.1    (c) When the municipality and the authority are not the same, the municipality shall
101.2approve or disapprove the tax increment financing plan within 60 days of submission by
101.3the authority. When the municipality and the authority are not the same, the municipality
101.4may not amend or modify a tax increment financing plan except as proposed by the
101.5authority pursuant to subdivision 4. Once approved, the determination of the authority
101.6to undertake the project through the use of tax increment financing and the resolution of
101.7the governing body shall be conclusive of the findings therein and of the public need for
101.8the financing.
101.9    (d) For a district that is subject to the requirements of paragraph (b), clause (2),
101.10item (ii), the municipality's statement of reasons and supporting facts must include all of
101.11the following:
101.12    (1) an estimate of the amount by which the market value of the site will increase
101.13without the use of tax increment financing;
101.14    (2) an estimate of the increase in the market value that will result from the
101.15development or redevelopment to be assisted with tax increment financing; and
101.16    (3) the present value of the projected tax increments for the maximum duration of
101.17the district permitted by the tax increment financing plan.
101.18    (e) For purposes of this subdivision, "site" means the parcels on which the
101.19development or redevelopment to be assisted with tax increment financing will be located.
101.20EFFECTIVE DATE.This section is effective the day following final enactment
101.21and applies to all districts, regardless of when the request for certification was made.

101.22    Sec. 6. Minnesota Statutes 2006, section 469.176, subdivision 1, is amended to read:
101.23    Subdivision 1. Duration of tax increment financing districts. (a) Subject to the
101.24limitations contained in subdivisions 1a to 1f, any tax increment financing district as to
101.25which bonds are outstanding, payment for which the tax increment and other revenues
101.26have been pledged, shall remain in existence at least as long as the bonds continue to be
101.27outstanding. The municipality may, at the time of approval of the initial tax increment
101.28financing plan, provide for one or both of the following:
101.29    (1) a shorter maximum duration limit than specified in subdivisions 1a to 1f.;
101.30    (2) an election as provided under section 469.175, subdivision 1, paragraph (b).
101.31The specified limit applies in place of the otherwise applicable limit, unless the authority
101.32modifies the plan following the procedures under section 469.175, subdivision 4,
101.33paragraph (b).
102.1    (b) The tax increment pledged to the payment of the bonds and interest thereon may
102.2be discharged and the tax increment financing district may be terminated if sufficient funds
102.3have been irrevocably deposited in the debt service fund or other escrow account held in
102.4trust for all outstanding bonds to provide for the payment of the bonds at maturity or date
102.5of redemption and interest thereon to the maturity or redemption date.
102.6    (c) For bonds issued pursuant to section 469.178, subdivisions 2 and 3, the full
102.7faith and credit and any taxing powers of the municipality or authority are pledged to the
102.8payment of the bonds until the principal of and interest on the bonds has been paid in full.
102.9EFFECTIVE DATE.This section is effective for districts for which the request for
102.10certification is made after June 30, 2008.

102.11    Sec. 7. Minnesota Statutes 2006, section 469.176, subdivision 2, is amended to read:
102.12    Subd. 2. Excess increments. (a) The authority shall annually determine the amount
102.13of excess increments for a district, if any. This determination must be based on the tax
102.14increment financing plan in effect on December 31 of the year and the increments and
102.15other revenues received as of December 31 of the year. The authority must spend or return
102.16the excess increments under paragraph (c) within nine months after the end of the year.
102.17    (b) For purposes of this subdivision, "excess increments" equals the excess of:
102.18    (1) total increments collected from the district since its certification, reduced by any
102.19excess increments paid under paragraph (c), clause (4), for a prior year, over
102.20    (2) the total costs authorized by the tax increment financing plan to be paid with
102.21increments from the district, reduced, but not below zero, by the sum of:
102.22    (i) the amounts of those authorized costs that have been paid from sources other than
102.23tax increments from the district;
102.24    (ii) revenues, other than tax increments from the district, that are dedicated for or
102.25otherwise required to be used to pay those authorized costs and that the authority has
102.26received and that are not included in item (i);
102.27    (iii) the amount of principal and interest obligations due on outstanding bonds after
102.28December 31 of the year and not prepaid under paragraph (c) in a prior year; and
102.29    (iv) increased by the sum of the transfers of increments made under section 469.1763,
102.30subdivision 6 , to reduce deficits in other districts made by December 31 of the year.
102.31    (c) The authority shall use excess increment only to do one or more of the following:
102.32    (1) prepay any outstanding bonds;
102.33    (2) discharge the pledge of tax increment for any outstanding bonds;
102.34    (3) pay into an escrow account dedicated to the payment of any outstanding bonds; or
103.1    (4) return the excess amount to the county auditor who shall distribute the excess
103.2amount to the city or town, county, and school district in which the tax increment financing
103.3district is located in direct proportion to their respective local tax rates.
103.4    (d) For purposes of a district for which the request for certification was made prior to
103.5August 1, 1979, excess increments equal the amount of increments on hand on December
103.631, less the principal and interest obligations due on outstanding bonds or advances,
103.7qualifying under subdivision 1c, clauses (1), (2), (4), and (5), after December 31 of the
103.8year and not prepaid under paragraph (c).
103.9    (e) The county auditor must report to the commissioner of education the amount of
103.10any excess tax increment distributed to a school district within 30 days of the distribution.
103.11    (f) For purposes of this subdivision, "outstanding bonds" means bonds which are
103.12secured by increments from the district.
103.13    (g) The state auditor may exempt an authority from reporting the amounts calculated
103.14under this subdivision for a calendar year, if the authority certifies to the auditor in
103.15its report that the total amount authorized by the tax increment plan to be paid with
103.16increments from the district exceeds the sum of the total increments collected for the
103.17district for all years by 20 percent.
103.18EFFECTIVE DATE.This section is effective the day following final enactment and
103.19applies to all districts regardless of when the request for certification was made, including
103.20districts for which the request for certification was made on or before August 1, 1979.

103.21    Sec. 8. Minnesota Statutes 2006, section 469.176, subdivision 4l, is amended to read:
103.22    Subd. 4l. Prohibited facilities. (a) No tax increment from any district may be
103.23used for:
103.24    (1) a commons area used as a public park; or
103.25    (2) a facility used for social, recreational, or conference purposes.
103.26    (b) This subdivision does not apply to a privately owned facility for conference
103.27purposes or a parking structure, whether it is public or privately owned or whether it is
103.28ancillary to a use listed in paragraph (a).
103.29EFFECTIVE DATE.This section confirms the original intent of the legislature
103.30in enacting Minnesota Statutes, section 469.176, subdivision 4l, and is effective the day
103.31following final enactment and applies to any expenditure subject to Minnesota Statutes,
103.32section 469.176, subdivision 4l.

103.33    Sec. 9. Minnesota Statutes 2006, section 469.176, subdivision 7, is amended to read:
104.1    Subd. 7. Parcels not includable in districts. (a) The authority may request
104.2inclusion in a tax increment financing district and the county auditor may certify the
104.3original tax capacity of a parcel or a part of a parcel that qualified under the provisions of
104.4section 273.111 or 273.112 or chapter 473H for taxes payable in any of the five calendar
104.5years before the filing of the request for certification only for:
104.6    (1) a district in which 85 percent or more of the planned buildings and facilities
104.7(determined on the basis of square footage) are a qualified manufacturing facility or a
104.8qualified distribution facility or a combination of both; or
104.9    (2) a qualified housing district.
104.10    (b)(1) A distribution facility means buildings and other improvements to real
104.11property that are used to conduct activities in at least each of the following categories:
104.12    (i) to store or warehouse tangible personal property;
104.13    (ii) to take orders for shipment, mailing, or delivery;
104.14    (iii) to prepare personal property for shipment, mailing, or delivery; and
104.15    (iv) to ship, mail, or deliver property.
104.16    (2) A manufacturing facility includes space used for manufacturing or producing
104.17tangible personal property, including processing resulting in the change in condition of the
104.18property, and space necessary for and related to the manufacturing activities.
104.19    (3) To be a qualified facility, the owner or operator of a manufacturing or distribution
104.20facility must agree to pay and pay 90 percent or more of the employees of the facility at
104.21a rate equal to or greater than 160 percent of the federal minimum wage for individuals
104.22over the age of 20.
104.23EFFECTIVE DATE.This section is effective the day following final enactment
104.24and applies to all districts regardless of when the request for certification was made.

104.25    Sec. 10. Minnesota Statutes 2006, section 469.1761, subdivision 1, is amended to read:
104.26    Subdivision 1. Requirement imposed. (a) In order for a tax increment financing
104.27district to qualify as a housing district:
104.28    (1) the income limitations provided in this section must be satisfied; and
104.29    (2) no more than 20 percent of the square footage of buildings that receive assistance
104.30from tax increments may consist of commercial, retail, or other nonresidential uses.
104.31    (b) The requirements imposed by this section apply to property receiving assistance
104.32financed with tax increments, including interest reduction, land transfers at less than the
104.33authority's cost of acquisition, utility service or connections, roads, parking facilities, or
104.34other subsidies. The provisions of this section do not apply to districts located in a targeted
104.35area as defined in section 462C.02, subdivision 9, clause (e).
105.1    (c) For purposes of the requirements of paragraph (a), the authority may elect to treat
105.2an addition to an existing structure as a separate building if:
105.3    (1) construction of the addition begins more than three years after construction of
105.4the existing structure was completed; and
105.5    (2) for an addition that does not meet the requirements of paragraph (a), clause (2), if
105.6it is treated as a separate building, the addition was not contemplated by the tax increment
105.7financing plan which includes the existing structure.
105.8EFFECTIVE DATE.This section is effective for expenditures of tax increment
105.9authorized and made after the day following final enactment, regardless of when the
105.10request for certification of the district was made.

105.11    Sec. 11. Minnesota Statutes 2006, section 469.1763, subdivision 2, is amended to read:
105.12    Subd. 2. Expenditures outside district. (a) For each tax increment financing
105.13district, an amount equal to at least 75 percent of the total revenue derived from tax
105.14increments paid by properties in the district must be expended on activities in the district
105.15or to pay bonds, to the extent that the proceeds of the bonds were used to finance activities
105.16in the district or to pay, or secure payment of, debt service on credit enhanced bonds.
105.17For districts, other than redevelopment districts for which the request for certification
105.18was made after June 30, 1995, the in-district percentage for purposes of the preceding
105.19sentence is 80 percent. Not more than 25 percent of the total revenue derived from tax
105.20increments paid by properties in the district may be expended, through a development fund
105.21or otherwise, on activities outside of the district but within the defined geographic area of
105.22the project except to pay, or secure payment of, debt service on credit enhanced bonds.
105.23For districts, other than redevelopment districts for which the request for certification was
105.24made after June 30, 1995, the pooling percentage for purposes of the preceding sentence is
105.2520 percent. The revenue derived from tax increments for the district that are expended on
105.26costs under section 469.176, subdivision 4h, paragraph (b), may be deducted first before
105.27calculating the percentages that must be expended within and without the district.
105.28    (b) In the case of a housing district, a housing project, as defined in section 469.174,
105.29subdivision 11 , is an activity in the district.
105.30    (c) All administrative expenses are for activities outside of the district, except that
105.31if the only expenses for activities outside of the district under this subdivision are for
105.32the purposes described in paragraph (d), administrative expenses will be considered as
105.33expenditures for activities in the district.
105.34    (d) The authority may elect, in the tax increment financing plan for the district,
105.35to increase by up to ten percentage points the permitted amount of expenditures for
106.1activities located outside the geographic area of the district under paragraph (a). As
106.2permitted by section 469.176, subdivision 4k, the expenditures, including the permitted
106.3expenditures under paragraph (a), need not be made within the geographic area of the
106.4project. Expenditures that meet the requirements of this paragraph are legally permitted
106.5expenditures of the district, notwithstanding section 469.176, subdivisions 4b, 4c, and 4j.
106.6To qualify for the increase under this paragraph, the expenditures must:
106.7    (1) be used exclusively to assist housing that meets the requirement for a qualified
106.8low-income building, as that term is used in section 42 of the Internal Revenue Code;
106.9    (2) not exceed the qualified basis of the housing, as defined under section 42(c) of
106.10the Internal Revenue Code, less the amount of any credit allowed under section 42 of
106.11the Internal Revenue Code; and
106.12    (3) be used to:
106.13    (i) acquire and prepare the site of the housing;
106.14    (ii) acquire, construct, or rehabilitate the housing; or
106.15    (iii) make public improvements directly related to the housing.
106.16    (e) For a district created within a biotechnology and health sciences industry zone
106.17as defined in section 469.330, subdivision 6, or for an existing district located within
106.18such a zone, tax increment derived from such a district may be expended outside of the
106.19district but within the zone only for expenditures required for the construction of public
106.20infrastructure necessary to support the activities of the zone, land acquisition, and other
106.21redevelopment costs as defined in section 469.176, subdivision 4j. Public infrastructure
106.22These expenditures are considered as expenditures for activities within the district.
106.23EFFECTIVE DATE.This section is effective for all districts located in bioscience
106.24zones, regardless of when the request for certification was made.

106.25    Sec. 12. Minnesota Statutes 2006, section 469.177, subdivision 1, is amended to read:
106.26    Subdivision 1. Original net tax capacity. (a) Upon or after adoption of a tax
106.27increment financing plan, the auditor of any county in which the district is situated shall,
106.28upon request of the authority, certify the original net tax capacity of the tax increment
106.29financing district and that portion of the district overlying any subdistrict as described in
106.30the tax increment financing plan and shall certify in each year thereafter the amount by
106.31which the original net tax capacity has increased or decreased as a result of a change in tax
106.32exempt status of property within the district and any subdistrict, reduction or enlargement
106.33of the district or changes pursuant to subdivision 4. The auditor shall certify the amount
106.34within 30 days after receipt of the request and sufficient information to identify the parcels
107.1included in the district. The certification relates to the taxes payable year as provided in
107.2subdivision 6.
107.3    (b) If the classification under section 273.13 of property located in a district changes
107.4to a classification that has a different assessment ratio, the original net tax capacity of that
107.5property must be redetermined at the time when its use is changed as if the property had
107.6originally been classified in the same class in which it is classified after its use is changed.
107.7    (c) The amount to be added to the original net tax capacity of the district as a result
107.8of previously tax exempt real property within the district becoming taxable equals the net
107.9tax capacity of the real property as most recently assessed pursuant to section 273.18 or, if
107.10that assessment was made more than one year prior to the date of title transfer rendering
107.11the property taxable, the net tax capacity assessed by the assessor at the time of the
107.12transfer. If improvements are made to tax exempt property after the municipality approves
107.13the district and before the parcel becomes taxable, the assessor shall, at the request of
107.14the authority, separately assess the estimated market value of the improvements. If the
107.15property becomes taxable, the county auditor shall add to original net tax capacity, the net
107.16tax capacity of the parcel, excluding the separately assessed improvements. If substantial
107.17taxable improvements were made to a parcel after certification of the district and if the
107.18property later becomes tax exempt, in whole or part, as a result of the authority acquiring
107.19the property through foreclosure or exercise of remedies under a lease or other revenue
107.20agreement or as a result of tax forfeiture, the amount to be added to the original net tax
107.21capacity of the district as a result of the property again becoming taxable is the amount
107.22of the parcel's value that was included in original net tax capacity when the parcel was
107.23first certified. The amount to be added to the original net tax capacity of the district as a
107.24result of enlargements equals the net tax capacity of the added real property as most
107.25recently certified by the commissioner of revenue as of the date of modification of the tax
107.26increment financing plan pursuant to section 469.175, subdivision 4.
107.27    (d) If the net tax capacity of a property increases because the property no longer
107.28qualifies under the Minnesota Agricultural Property Tax Law, section 273.111; the
107.29Minnesota Open Space Property Tax Law, section 273.112; or the Metropolitan
107.30Agricultural Preserves Act, chapter 473H, or because platted, unimproved property is
107.31improved or market value is increased after approval of the plat under section 273.11,
107.32subdivision 14 , 14a, or 14b, the increase in net tax capacity must be added to the original
107.33net tax capacity.
107.34    (e) The amount to be subtracted from the original net tax capacity of the district
107.35as a result of previously taxable real property within the district becoming tax exempt,
107.36or a reduction in the geographic area of the district, shall be the amount of original net
108.1tax capacity initially attributed to the property becoming tax exempt or being removed
108.2from the district. If the net tax capacity of property located within the tax increment
108.3financing district is reduced by reason of a court-ordered abatement, stipulation agreement,
108.4voluntary abatement made by the assessor or auditor or by order of the commissioner of
108.5revenue, the reduction shall be applied to the original net tax capacity of the district when
108.6the property upon which the abatement is made has not been improved since the date of
108.7certification of the district and to the captured net tax capacity of the district in each year
108.8thereafter when the abatement relates to improvements made after the date of certification.
108.9The county auditor may specify reasonable form and content of the request for certification
108.10of the authority and any modification thereof pursuant to section 469.175, subdivision 4.
108.11    (f) If a parcel of property contained a substandard building or improvements
108.12described in section 469.174, subdivision 10, paragraph (e), that was were demolished
108.13or removed and if the authority elects to treat the parcel as occupied by a substandard
108.14building under section 469.174, subdivision 10, paragraph (b), or by improvements under
108.15section 469.174, subdivision 10, paragraph (e), the auditor shall certify the original net
108.16tax capacity of the parcel using the greater of (1) the current net tax capacity of the
108.17parcel, or (2) the estimated market value of the parcel for the year in which the building
108.18was or other improvements were demolished or removed, but applying the class rates
108.19for the current year.
108.20    (g) For a redevelopment district qualifying under section 469.174, subdivision 10,
108.21paragraph (a), clause (4), as a qualified disaster area, the auditor shall certify the value of
108.22the land as the original tax capacity for any parcel in the district that contains a building
108.23that suffered substantial damage as a result of the disaster or emergency.
108.24EFFECTIVE DATE.This section is effective for requests for certification made
108.25after June 30, 2008.

108.26    Sec. 13. Minnesota Statutes 2006, section 469.178, subdivision 7, is amended to read:
108.27    Subd. 7. Interfund loans. The authority or municipality may advance or loan
108.28money to finance expenditures under section 469.176, subdivision 4, from its general
108.29fund or any other fund under which it has legal authority to do so. The loan or advance
108.30must be authorized, by resolution of the governing body or of the authority, whichever
108.31has jurisdiction over the fund from which the advance or loan is made, before money
108.32is transferred, advanced, or spent, whichever is earliest. The resolution may generally
108.33grant to the authority the power to make interfund loans under one or more tax increment
108.34financing plans or for one or more districts. The terms and conditions for repayment of the
108.35loan must be provided in writing and include, at a minimum, the principal amount, the
109.1interest rate, and maximum term. The maximum rate of interest permitted to be charged
109.2is limited to the greater of the rates specified under section 270C.40 or 549.09 as of the
109.3date the loan or advance is made, unless the written agreement states that the maximum
109.4interest rate will fluctuate as the interest rates specified under section 270C.40 or 549.09
109.5are from time to time adjusted.
109.6EFFECTIVE DATE.This section is effective the day following final enactment
109.7and applies to all districts subject to Minnesota Statutes, section 469.178, subdivision 7,
109.8regardless of when the request for certification was made.

109.9    Sec. 14. Minnesota Statutes 2006, section 469.1791, subdivision 3, is amended to read:
109.10    Subd. 3. Preconditions to establish district. (a) A city may establish a special
109.11taxing district within a tax increment financing district under this section only if the
109.12conditions under paragraphs (b) and (c) are met or if the city elects to exercise the
109.13authority under paragraph (d).
109.14    (b) The city has determined that:
109.15    (1) total tax increments from the district, including unspent increments from
109.16previous years and increments transferred under paragraph (c), will be insufficient to pay
109.17the amounts due in a year on preexisting obligations; and
109.18    (2) this insufficiency of increments resulted from the reduction in property tax class
109.19rates enacted in the 1997 and 1998 legislative sessions.
109.20    (c) The city has agreed to transfer any available increments from other tax increment
109.21financing districts in the city to pay the preexisting obligations of the district under section
109.22469.1763, subdivision 6 . This requirement does not apply to any available increments of a
109.23qualified housing district.
109.24    (d) If a tax increment financing district does not qualify under paragraphs (b) and
109.25(c), the governing body may elect to establish a special taxing district under this section.
109.26If the city elects to exercise this authority, increments from the tax increment financing
109.27district and the proceeds of the tax imposed under this section may only be used to pay
109.28preexisting obligations and reasonable administrative expenses of the authority for the tax
109.29increment financing district. The tax increment financing district must be decertified when
109.30all preexisting obligations have been paid.
109.31EFFECTIVE DATE.This section is effective the day following final enactment
109.32and applies to districts regardless of when the request for certification was made.

110.1    Sec. 15. Laws 1994, chapter 587, article 9, section 14, subdivision 1, is amended to
110.2read:
110.3    Subdivision 1. Establishment. The city of Brooklyn Center may establish an
110.4a redevelopment tax increment financing district in which 15 percent of the revenues
110.5generated from tax increment in any year is deposited in the housing and environmental
110.6remediation development account of the authority and expended according to the tax
110.7increment financing plan.
110.8EFFECTIVE DATE.This section is effective the day following final enactment.

110.9    Sec. 16. Laws 1994, chapter 587, article 9, section 14, subdivision 2, is amended to
110.10read:
110.11    Subd. 2. Eligible activities. The authority must identify in the plan the housing
110.12activities that will be assisted by the housing and environmental remediation development
110.13account. Housing activities may include rehabilitation, acquisition, construction,
110.14demolition, and financing of new or existing single family or multifamily housing.
110.15Housing and environmental remediation activities listed in the plan need not be located
110.16within the district or project area but must be activities that meet the income requirements
110.17of a qualified housing district under Minnesota Statutes, section 273.1399 or 469.1761,
110.18subdivision 2 .
110.19EFFECTIVE DATE.This section is effective the day following final enactment.

110.20    Sec. 17. Laws 1994, chapter 587, article 9, section 14, subdivision 3, is amended to
110.21read:
110.22    Subd. 3. Housing account. Tax increment to be expended for housing and
110.23environmental remediation activities under this section must be segregated by the
110.24authority into a special account on its official books and records. The account may also
110.25receive funds from other public and private sources.
110.26EFFECTIVE DATE.This section is effective the day following final enactment.

110.27    Sec. 18. Laws 1995, chapter 264, article 5, section 44, subdivision 4, as amended by
110.28Laws 1996, chapter 471, article 7, section 21, and Laws 1997, chapter 231, article 10,
110.29section 12, is amended to read:
110.30    Subd. 4. Authority. For housing replacement projects in the city of Crystal,
110.31"authority" means the Crystal economic development authority. For housing replacement
110.32projects in the city of Fridley, "authority" means the housing and redevelopment authority
111.1in and for the city of Fridley or a successor in interest. For housing replacement
111.2projects in the city of Minneapolis, "authority" means the Minneapolis community
111.3development agency or its successors and assigns. For housing replacement projects
111.4in the city of St. Paul, "authority" means the St. Paul housing and redevelopment
111.5authority. For housing replacement projects in the city of Duluth, "authority" means the
111.6Duluth economic development authority. For housing replacement projects in the city of
111.7Richfield, "authority" is the authority as defined in Minnesota Statutes, section 469.174,
111.8subdivision 2 , that is designated by the governing body of the city of Richfield. For
111.9housing replacement projects in the city of Columbia Heights, "authority" is the authority
111.10as defined in Minnesota Statutes, section 469.174, subdivision 2, that is designated by the
111.11governing body of the city of Columbia Heights.
111.12EFFECTIVE DATE.This section is effective the day following final enactment
111.13and upon compliance by the governing body of the city of Minneapolis with Minnesota
111.14Statutes, section 645.021, subdivision 3.

111.15    Sec. 19. Laws 1995, chapter 264, article 5, section 45, subdivision 1, as amended by
111.16Laws 1996, chapter 471, article 7, section 22, and Laws 1997, chapter 231, article 10,
111.17section 13, and Laws 2002, chapter 377, article 7, section 6, is amended to read:
111.18    Subdivision 1. Creation of projects. (a) An authority may create a housing
111.19replacement project under sections 44 to 47, as provided in this section.
111.20    (b) For the cities of Crystal, Fridley, Richfield, and Columbia Heights, the authority
111.21may designate up to 50 parcels in the city to be included in a housing replacement
111.22district. No more than ten parcels may be included in year one of the district, with up
111.23to ten additional parcels added to the district in each of the following nine years. For
111.24the cities of Minneapolis, St. Paul, and Duluth, each authority may designate not more
111.25than 200 parcels in the city to be included in a housing replacement district over the life
111.26of the district. For the city of Minneapolis, the authority may designate not more than
111.27400 parcels in the city to be included in housing replacement districts over the life of
111.28the districts. The only parcels that may be included in a district are (1) vacant sites, (2)
111.29parcels containing vacant houses, or (3) parcels containing houses that are structurally
111.30substandard, as defined in Minnesota Statutes, section 469.174, subdivision 10.
111.31    (c) The city in which the authority is located must pay at least 25 percent of the
111.32housing replacement project costs from its general fund, a property tax levy, or other
111.33unrestricted money, not including tax increments.
111.34    (d) The housing replacement district plan must have as its sole object the acquisition
111.35of parcels for the purpose of preparing the site to be sold for market rate housing. As
112.1used in this section, "market rate housing" means housing that has a market value that
112.2does not exceed 150 percent of the average market value of single-family housing in that
112.3municipality.
112.4EFFECTIVE DATE.This section is effective the day following final enactment
112.5and upon compliance by the governing body of the city of Minneapolis with Minnesota
112.6Statutes, section 645.021, subdivision 3.

112.7    Sec. 20. Laws 2005, First Special Session chapter 3, article 10, section 23, as amended
112.8by Laws 2006, chapter 259, article 13, section 16, is amended to read:
112.9    Sec. 23. GRANTS TO QUALIFYING BUSINESSES.
112.10    $750,000 is appropriated in fiscal year 2006 from the general fund to the
112.11commissioner of employment and economic development to be distributed to the
112.12foreign trade zone authority to provide grants to qualified businesses as determined
112.13by the authority, subject to Minnesota Statutes, sections 116J.993 to 116J.995, to
112.14provide incentives for the businesses to locate their operations in an international
112.15economic development zone. Of this appropriation, up to $250,000 may be used by the
112.16commissioner for a study to determine the economic viability of business plans for
112.17international economic development zones. If the money is not distributed during fiscal
112.18year 2006, it remains available for distribution under this section until December 31, 2010.
112.19EFFECTIVE DATE.This section is effective the day following final enactment.

112.20    Sec. 21. BURNSVILLE; NORTHWEST QUADRANT TAX INCREMENT
112.21FINANCING.
112.22    Subdivision 1. Definitions. (a) For the purposes of this section, the words and
112.23phrases defined have the meanings given them in this subdivision.
112.24    (b) "City" means the city of Burnsville.
112.25    (c) "Project area" means the area in the city bounded on the south, southeast, and
112.26southwest by the southerly right-of-way line of Minnesota Trunk Highway 13; on the east
112.27by the easterly right-of-way line of Interstate Highway I-35W; on the north and northwest
112.28by the Minnesota River; and on the west by the westerly corporate limits of the city,
112.29together with a single parcel to the east of said Interstate Highway I-35W described as
112.30the North 1370 feet of the West 1075 feet of the NW Quarter of Section 34 Township 27
112.31Range 24 in the city of Burnsville, Dakota County, except the North 50 feet thereof;
112.32provided that the project area includes the rights-of-way for all present and future highway
112.33interchanges abutting the area described in this paragraph.
113.1    (d) "Soil deficiency district" means a type of tax increment financing district
113.2consisting of a portion of the project area in which the city finds by resolution that the
113.3following conditions exist:
113.4    (1) unusual terrain or soil deficiencies for 80 percent of the acreage in the district
113.5require substantial filling, grading, or other physical preparation for use; and
113.6    (2) the estimated cost of the physical preparation under clause (1), but excluding
113.7costs directly related to roads as defined in Minnesota Statutes, section 160.01, and
113.8local improvements as described in Minnesota Statutes, sections 429.021, subdivision 1,
113.9clauses (1) to (7), (11), and (12), and 430.01, exceeds the fair market value of the land
113.10before completion of the preparation.
113.11    Subd. 2. Special rules. (a) If the city elects, upon the adoption of the tax increment
113.12financing plan for a district, the rules under this section apply to a redevelopment district,
113.13renewal and renovation district, soil condition district, or a soil deficiency district
113.14established by the city or a development authority of the city in the project area.
113.15    (b) Prior to or upon the adoption of the first tax increment plan subject to the special
113.16rules under this subdivision, the city must find by resolution that parcels consisting of at
113.17least 80 percent of the acreage of the project area (excluding street and railroad right of
113.18way) are characterized by one or more of the following conditions:
113.19    (1) peat or other soils with geotechnical deficiencies that impair development of
113.20residential or commercial buildings or infrastructure;
113.21    (2) soils or terrain that requires substantial filling in order to permit the development
113.22of commercial or residential buildings or infrastructure;
113.23    (3) landfills, dumps, or similar deposits of municipal or private waste;
113.24    (4) quarries or similar resource extraction sites;
113.25    (5) floodway; and
113.26    (6) substandard buildings within the meaning of Minnesota Statutes, section
113.27469.174, subdivision 10.
113.28    (c) For the purposes of paragraph (b), clauses (1) through (5), a parcel is deemed to
113.29be characterized by the relevant condition if at least 70 percent of the area of the parcel
113.30contains the relevant condition. For the purposes of paragraph (b), clause (6), a parcel is
113.31deemed to be characterized by substandard buildings if the buildings occupy at least 30
113.32percent of the area of the parcel.
113.33    (d) The five-year rule under Minnesota Statutes, section 469.1763, subdivision
113.343, is extended to ten years for any district, and section 469.1763, subdivision 4, does
113.35not apply to any district.
114.1    (e) Notwithstanding anything to the contrary in section 469.1763, subdivision 2,
114.2paragraph (a), not more than 80 percent of the total revenue derived from tax increments
114.3paid by properties in any district (measured over the life of the district) may be expended
114.4on activities outside the district but within the project area.
114.5    (f) For a soil deficiency district:
114.6    (1) increments may be collected through 20 years after the receipt by the authority of
114.7the first increment from the district; and
114.8    (2) except as otherwise provided in this subdivision, increments may be used only to:
114.9    (i) acquire parcels on which the improvements described in item (ii) will occur;
114.10    (ii) pay for the cost of correcting the unusual terrain or soil deficiencies and the
114.11additional cost of installing public improvements directly caused by the deficiencies; and
114.12    (iii) pay for the administrative expenses of the authority allocable to the district.
114.13    (g) Increments spent for any infrastructure costs, whether inside a district or outside
114.14a district but within the project area, are deemed to satisfy the requirements of paragraph
114.15(f) and Minnesota Statutes, section 469.176, subdivisions 4b and 4j.
114.16    (h) Increments from any district may not be used to pay the costs of landfill closure or
114.17public infrastructure located on the following parcels within the plat known as Burnsville
114.18Amphitheater: Lot 1, Block 1; Lots 1 and 2, Block 2; and Outlots A, B, C and D.
114.19    (i) The authority to approve tax increment financing plans to establish tax increment
114.20financing districts under this section expires on December 31, 2018.
114.21EFFECTIVE DATE.This section is effective upon compliance with Minnesota
114.22Statutes, section 645.021, subdivision 3.

114.23    Sec. 22. CITY OF EYOTA; TAX INCREMENT FINANCING DISTRICT.
114.24    Subdivision 1. Authorization. Notwithstanding the mileage limitation in Minnesota
114.25Statutes, section 469.174, subdivision 27, the city of Eyota is deemed to be a small city for
114.26the purposes of Minnesota Statutes, section 469.174 to 469.1799, as long as its population
114.27does not exceed the population limit in that section.
114.28    Subd. 2. Local approval. This section is effective for the city of Eyota upon
114.29approval of Eyota's governing body and compliance with Minnesota Statutes, section
114.30645.021, subdivisions 2 and 3.

114.31    Sec. 23. CITY OF FRIDLEY; TAX INCREMENT FINANCING DISTRICT;
114.32SPECIAL RULES.
114.33    (a) If the city elects upon the adoption of a tax increment financing plan for a district,
114.34the rules under this section apply to a redevelopment tax increment financing district
115.1established by the city of Fridley or the housing and redevelopment authority of the city.
115.2The redevelopment tax increment district includes the following parcels and adjacent
115.3railroad property and shall be referred to as the Northstar Transit Station District: parcel
115.4numbers 223024120010, 223024120009, 223024120017, 223024120016, 223024120018,
115.5223024120012, 223024120011, 223024120005, 223024120004, 223024120003,
115.6223024120013, 223024120008, 223024120007, 223024120006, 223024130005,
115.7223024130010, 223024130011, 223024130003, 153024440039, 153024440037,
115.8153024440041, 153024440042, 223024110013, 223024110016, 223024110017,
115.9223024140008, 223024130002, 223024420004, 223024410002, 223024410003,
115.10223024110008, 223024110007, 223024110019, 223024110018, 223024110003,
115.11223024140003, 223024140009, 223024140002, 223024140010, and 223024410007.
115.12    (b) The requirements for qualifying a redevelopment tax increment district under
115.13Minnesota Statutes, section 469.174, subdivision 10, do not apply to the parcels located
115.14within the Northstar Transit Station District, which are deemed eligible for inclusion
115.15in a redevelopment tax increment district.
115.16    (c) In addition to the costs permitted by Minnesota Statutes, section 469.176,
115.17subdivision 4j, eligible expenditures within the Northstar Transit Station District include
115.18those costs necessary to provide for the construction and land acquisition for a tunnel
115.19under the Burlington Northern Santa Fe railroad tracks.
115.20    (d) Notwithstanding the provisions of Minnesota Statutes, section 469.1763,
115.21subdivision 2, the city of Fridley may expend increments generated from its tax increment
115.22financing districts Nos. 11, 12, and 13 for costs permitted by paragraph (c) and Minnesota
115.23Statutes, section 469.176, subdivision 4j, outside the boundaries of tax increment financing
115.24districts Nos. 11, 12, and 13, but only within the Northstar Transit Station District.
115.25    (e) The five-year rule under Minnesota Statutes, section 469.1763, subdivision 3,
115.26does not apply to the Northstar Transit Station District or to tax increment financing
115.27districts Nos. 11, 12, and 13.
115.28    (f) The use of revenues for decertification under Minnesota Statutes, section
115.29469.1763, subdivision 4, does not apply to tax increment financing districts Nos. 11,
115.3012, and 13.
115.31EFFECTIVE DATE.This section is effective upon approval by the governing body
115.32of the city of Fridley and upon compliance by the city with Minnesota Statutes, section
115.33645.021, subdivision 3.

115.34    Sec. 24. CITY OF NEW BRIGHTON; TAX INCREMENT FINANCING;
115.35EXPENDITURES OUTSIDE DISTRICT.
116.1    Notwithstanding the provisions of Minnesota Statutes, section 469.1763, subdivision
116.22, the city of New Brighton may expend increments generated from its tax increment
116.3financing district No. 26 to facilitate eligible activities as permitted by Minnesota Statutes,
116.4section 469.176, subdivision 4e, outside the boundaries of tax increment financing district
116.5No. 26, but only within the area described in Laws 1998, chapter 389, article 11, section
116.624, subdivision 1, and commonly referred to as the Northwest Quadrant. Minnesota
116.7Statutes, section 469.1763, subdivisions 3 and 4, do not apply to expenditures permitted
116.8by this section.
116.9EFFECTIVE DATE.This section is effective upon approval by the governing
116.10body of the city of New Brighton and compliance by the city with Minnesota Statutes,
116.11section 645.021, subdivision 3.

116.12    Sec. 25. REPEALER.
116.13(a) Minnesota Statutes 2006, section 469.174, subdivision 29, is repealed.
116.14(b) Laws 1998, chapter 389, article 11, section 18, is repealed.
116.15EFFECTIVE DATE.Paragraph (a) is effective the day following final enactment.
116.16For purposes of any special law authorizing or limiting the use of increments to projects
116.17meeting the requirements of a qualified housing district, expenditures for housing districts
116.18satisfying the requirements of Minnesota Statutes, sections 469.174, subdivision 11;
116.19469.176, subdivision 4d; and 469.1761, as amended, also satisfy the requirements of
116.20the special law.
116.21    Paragraph (b) is effective upon compliance with Minnesota Statutes, section
116.22645.021, subdivision 3, by the governing body of the city of Burnsville. The balance of
116.23tax increments derived from tax increment financing district No. 2-1 as of the effective
116.24date of this section must be returned to the county for distribution in accordance with
116.25Minnesota Statutes, section 469.176, subdivision 2.

116.26ARTICLE 10

116.27PUBLIC FINANCE

116.28    Section 1. Minnesota Statutes 2006, section 118A.03, subdivision 3, is amended to read:
116.29    Subd. 3. Amount. The total amount of the collateral computed at its market value
116.30shall be at least ten percent more than the amount on deposit plus accrued interest at
116.31the close of the financial institution's banking day, except that where the collateral is
116.32irrevocable standby letters of credit issued by Federal Home Loan Banks, the amount of
116.33collateral shall be at least equal to the amount on deposit plus accrued interest at the close
117.1of the financial institution's banking day. The financial institution may furnish both a
117.2surety bond and collateral aggregating the required amount.

117.3    Sec. 2. Minnesota Statutes 2006, section 123B.61, is amended to read:
117.4123B.61 PURCHASE OF CERTAIN EQUIPMENT.
117.5    The board of a district may issue general obligation certificates of indebtedness
117.6or capital notes subject to the district debt limits to: (a) purchase vehicles, computers,
117.7telephone systems, cable equipment, photocopy and office equipment, technological
117.8equipment for instruction, and other capital equipment having an expected useful life at
117.9least as long as the terms of the certificates or notes; (b) purchase computer hardware and
117.10software, without regard to its expected useful life, whether bundled with machinery or
117.11equipment or unbundled, together with application development services and training
117.12related to the use of the computer; and (c) prepay special assessments. The certificates or
117.13notes must be payable in not more than five ten years and must be issued on the terms
117.14and in the manner determined by the board, except that certificates or notes issued to
117.15prepay special assessments must be payable in not more than 20 years. The certificates
117.16or notes may be issued by resolution and without the requirement for an election. The
117.17certificates or notes are general obligation bonds for purposes of section 126C.55. A tax
117.18levy must be made for the payment of the principal and interest on the certificates or
117.19notes, in accordance with section 475.61, as in the case of bonds. The sum of the tax
117.20levies under this section and section 123B.62 for each year must not exceed the lesser
117.21of the amount of the district's total operating capital revenue or the sum of the district's
117.22levy in the general and community service funds excluding the adjustments under this
117.23section for the year preceding the year the initial debt service levies are certified. The
117.24district's general fund levy for each year must be reduced by the sum of (1) the amount
117.25of the tax levies for debt service certified for each year for payment of the principal and
117.26interest on the certificates or notes issued under this section as required by section 475.61,
117.27(2) the amount of the tax levies for debt service certified for each year for payment of the
117.28principal and interest on bonds issued under section 123B.62, and (3) any excess amount
117.29in the debt redemption fund used to retire bonds, certificates, or notes issued under this
117.30section or section 123B.62 after April 1, 1997, other than amounts used to pay capitalized
117.31interest. If the district's general fund levy is less than the amount of the reduction, the
117.32balance shall be deducted first from the district's community service fund levy, and next
117.33from the district's general fund or community service fund levies for the following year. A
117.34district using an excess amount in the debt redemption fund to retire the certificates or
117.35notes shall report the amount used for this purpose to the commissioner by July 15 of the
118.1following fiscal year. A district having an outstanding capital loan under section 126C.69
118.2or an outstanding debt service loan under section 126C.68 must not use an excess amount
118.3in the debt redemption fund to retire the certificates or notes.

118.4    Sec. 3. Minnesota Statutes 2006, section 275.61, subdivision 1, is amended to read:
118.5    Subdivision 1. Market value. (a) For local governmental subdivisions other than
118.6school districts, any levy, including the issuance of debt obligations payable in whole or in
118.7part from property taxes, required to be approved and approved by the voters at a general
118.8or special election for taxes payable in 1993 and thereafter, shall be levied against the
118.9referendum market value of all taxable property within the governmental subdivision, as
118.10defined in section 126C.01, subdivision 3. Any levy amount subject to the requirements of
118.11this section shall be certified separately to the county auditor under section 275.07.
118.12    (b) The ballot shall state the maximum amount of the increased levy as a percentage
118.13of market value and the amount that will be raised by the new referendum tax rate in the
118.14first year it is to be levied.
118.15    (c) This subdivision does not apply to tax levies for the payment of debt obligations
118.16that are approved by the voters after June 30, 2008.
118.17EFFECTIVE DATE.This section is effective the day following final enactment.

118.18    Sec. 4. Minnesota Statutes 2006, section 331A.05, subdivision 2, is amended to read:
118.19    Subd. 2. Time of notice. Unless otherwise specified by a particular statute law, or
118.20by order of a court, publication of a public notice shall be as follows:
118.21    (a) the notice shall be published once;
118.22    (b) if the notice is intended to inform the public about a future event, the last
118.23publication shall occur not more than 14 30 days and not less than seven days before
118.24the event;
118.25    (c) if the notice is intended to inform the public about a past action or event, the last
118.26publication shall occur not more than 45 days after occurrence of the action or event.

118.27    Sec. 5. Minnesota Statutes 2006, section 365A.02, is amended to read:
118.28365A.02 DEFINITION DEFINITIONS.
118.29    Subdivision 1. Subordinate service district. "Subordinate service district" means a
118.30defined area within the town in which one or more governmental services or additions to
118.31townwide special services are provided by the town specially for the area and financed
119.1from revenues from the area. The boundaries of a single subordinate service district
119.2may not embrace an entire town.
119.3    Subd. 2. Special services. "Special services" means one or more governmental
119.4services or additions to townwide services provided by the town specially for the area
119.5and financed from revenues from the area.

119.6    Sec. 6. Minnesota Statutes 2006, section 365A.04, is amended to read:
119.7365A.04 CREATION BY PETITION.
119.8    Subdivision 1. Petition. A petition signed by at least 50 percent of the property
119.9owners in the part of the town proposed for the subordinate service district may be
119.10submitted to the town board requesting the establishment of a subordinate service district
119.11to provide a service that the town is otherwise authorized by law to provide. The petition
119.12must include the territorial boundaries of the proposed district and specify the kinds of
119.13services to be provided within the district.
119.14    Subd. 2. Public hearing. Upon receipt of the petition, and the verification of the
119.15signatures by the town clerk, the town board shall, within 30 days following verification,
119.16hold a public hearing on the question of whether or not the requested district shall be
119.17established. The notice of public hearing must specify the special services to be provided
119.18within the subordinate service district and must specify the territorial boundaries of the
119.19requested district. The notice of public hearing must be published once in a newspaper of
119.20general circulation in the town at least 14 days prior to the date of the public hearing.
119.21    Subd. 3. Approval; disapproval. Within 30 days after the public hearing, the
119.22town board by resolution shall approve or disapprove the establishment of the requested
119.23district. An approving resolution must specify the special services to be provided within
119.24the subordinate service district and must specify the territorial boundaries of the district.
119.25A resolution approving the establishment of the district may contain amendments or
119.26modifications of the district's boundaries or functions as set forth in the petition.

119.27    Sec. 7. Minnesota Statutes 2006, section 365A.08, is amended to read:
119.28365A.08 FINANCING.
119.29    Subdivision 1. Budget. (a) Upon adoption of the next annual budget following
119.30the creation of a subordinate service district the town board shall include in the budget
119.31appropriate provisions for the operation of the district including either a property tax
119.32levied only on property of the users of the service within the boundaries of the district
119.33or a levy of a service charge against the users of the service within the district, or a
119.34combination of a property tax and a service charge on the users of the service.
120.1    (b) A tax or service charge or a combination of them may be imposed to finance a
120.2function or service in the district that the town ordinarily provides throughout the town
120.3only to the extent that there is an increase in the level of the function or service provided
120.4in the service district over that provided throughout the town. In that case, in addition
120.5to the townwide tax levy, an amount necessary to pay for the increase in the level of the
120.6function or service may be imposed in the district.
120.7    Subd. 2. Bonds. At any time after the requirements of section 356A.06 have been
120.8met and the subordinate service district created, the town board may issue obligations
120.9in an amount it deems necessary to defray in whole or in part the expense incurred
120.10and estimated to be incurred in making capital improvements necessary to operate the
120.11subordinate service district and provide the special services in the district, including every
120.12item of cost from inception to completion and all fees and expenses incurred in connection
120.13with the capital improvements or the financing. The obligations are payable primarily
120.14out of the proceeds of the taxes and service charges imposed under subdivision 1, net
120.15revenues as described in section 444.075, and special assessments under chapter 429. The
120.16town board may by resolution pledge the full faith credit and taxing power of the town
120.17to ensure payment of the principal and interest on the obligations if the proceeds of the
120.18taxes and service charges are insufficient to pay the principal and interest. Obligations
120.19must be issued in accordance with chapter 475, except that an election is not required, and
120.20the amount of the obligations is not included in determining the net indebtedness of the
120.21town under the provisions of any law limiting indebtedness.
120.22    Subd. 3. Covenants to secure obligations. In resolutions authorizing the issuance
120.23of general or special obligations and pledging taxes and service charges imposed under
120.24subdivision 1, net revenues, or special assessments to their payment, the town board
120.25may make covenants for the protection of holders of the obligations and taxpayers of the
120.26town as it deems necessary, including a covenant that the town will impose and collect
120.27charges of the nature authorized by this chapter at the time and in the amounts required to
120.28produce, together with any taxes or special assessments designated as a primary source
120.29of payment of the obligations, funds adequate to pay all principal and interest when due
120.30on the obligations, and to create and maintain reserves securing the payments as may be
120.31provided in the resolutions.

120.32    Sec. 8. Minnesota Statutes 2006, section 365A.095, is amended to read:
120.33365A.095 PETITION FOR REMOVAL OF DISTRICT; PROCEDURE.
120.34    Subdivision 1. Petition. A petition signed by at least 75 percent of the property
120.35owners in the territory of the subordinate service district requesting the removal of the
121.1district may be presented to the town board. Within 30 days after the town board receives
121.2the petition, the town clerk shall determine the validity of the signatures on the petition. If
121.3the requisite number of signatures are certified as valid, the town board must hold a public
121.4hearing on the petitioned matter. Within 30 days after the end of the hearing, the town
121.5board must decide whether to discontinue the subordinate service district, continue as it is,
121.6or take some other action with respect to it.
121.7    Subd. 2. Bonds. If obligations have been issued for the benefit of the subordinate
121.8service district, the rates, charges, and tax levies, if any, continue until the obligations and
121.9any obligations issued to refund them have been paid in full.

121.10    Sec. 9. Minnesota Statutes 2006, section 373.01, subdivision 3, is amended to read:
121.11    Subd. 3. Capital notes. (a) A county board may, by resolution and without
121.12referendum, issue capital notes subject to the county debt limit to purchase capital
121.13equipment useful for county purposes that has an expected useful life at least equal to the
121.14term of the notes. The notes shall be payable in not more than ten years and shall be
121.15issued on terms and in a manner the board determines. A tax levy shall be made for
121.16payment of the principal and interest on the notes, in accordance with section 475.61,
121.17as in the case of bonds.
121.18    (b) For purposes of this subdivision, "capital equipment" means:
121.19    (1) public safety, ambulance, road construction or maintenance, and medical
121.20equipment; and
121.21    (2) computer hardware and software, whether bundled with machinery or equipment
121.22or unbundled. The authority to issue capital notes for software expires on July 1, 2007.

121.23    Sec. 10. Minnesota Statutes 2006, section 373.40, subdivision 4, is amended to read:
121.24    Subd. 4. Limitations on amount. A county, other than Ramsey, may not issue
121.25bonds under this section if the maximum amount of principal and interest to become due in
121.26any year on all the outstanding bonds issued pursuant to this section (including the bonds
121.27to be issued) will equal or exceed 0.05367 0.12 percent of taxable market value of property
121.28in the county. Ramsey county may not issue bonds under this section if the maximum
121.29amount of principal and interest to become due in any year on all the outstanding bonds
121.30issued pursuant to this section (including the bonds to be issued) will equal or exceed
121.310.06455 percent of taxable market value of property in the county. Calculation of the
121.32limit must be made using the taxable market value for the taxes payable year in which
121.33the obligations are issued and sold. This section does not limit the authority to issue
121.34bonds under any other special or general law.
122.1EFFECTIVE DATE.This section is effective the day following final enactment.

122.2    Sec. 11. Minnesota Statutes 2006, section 375B.09, is amended to read:
122.3375B.09 FINANCING.
122.4    Subdivision 1. Budget. (a) Upon adoption of the next annual budget following the
122.5creation of a subordinate service district the county board shall include in the budget
122.6appropriate provisions for the operation of the district including, as appropriate, either a
122.7property tax levied only on property within the boundaries of the district or a levy of a
122.8service charge against the users of the service within the district, or any combination of a
122.9property tax and a service charge.
122.10    (b) A tax or service charge or a combination thereof shall not be imposed to finance a
122.11function or service in the subordinate service district which the county generally provides
122.12throughout the county unless an increase in the level of the service is to be supplied in the
122.13subordinate service district in which case, in addition to the countywide tax levy, only an
122.14amount necessary to pay for the increased level of service may be imposed.
122.15    Subd. 2. Bonds. At any time after the requirements of section 375B.07 have been
122.16met and the subordinate service district created, the county board may issue obligations
122.17in an amount it deems necessary to defray in whole or in part the expense incurred
122.18and estimated to be incurred in making capital improvements necessary to operate the
122.19subordinate service district and provide the special services in the district, including every
122.20item of cost from inception to completion and all fees and expenses incurred in connection
122.21with the capital improvements or the financing. The obligations shall be payable primarily
122.22out of the proceeds of the taxes and service charges imposed pursuant to subdivision 1, net
122.23revenues as described in section 444.075, and special assessments under chapter 429. The
122.24county board may by resolution pledge the full faith credit and taxing power of the county
122.25to ensure payment of the principal and interest on the obligations if the proceeds of the
122.26taxes and service charges are insufficient to pay the principal and interest. Obligations
122.27must be issued in accordance with chapter 475, except that an election is not required, and
122.28the amount of the obligations is not included in determining the net indebtedness of the
122.29county under the provisions of any law limiting indebtedness.
122.30    Subd. 3. Covenants to secure obligations. In resolutions authorizing the issuance
122.31of general or special obligations and pledging taxes and service charges imposed under
122.32subdivision 1, net revenues, or special assessments to their payment, the county board
122.33may make covenants for the protection of holders of the obligations and taxpayers of the
122.34county as it deems necessary, including a covenant that the county will impose and collect
122.35charges of the nature authorized by this chapter at the time and in the amounts required to
123.1produce, together with any taxes or special assessments designated as a primary source
123.2of payment of the obligations, funds adequate to pay all principal and interest when due
123.3on the obligations and to create and maintain reserves securing the payments as may be
123.4provided in the resolutions.
123.5    Subd. 4. Continuance in the event of withdrawal. If obligations have been issued
123.6for the benefit of the subordinate service district, and the district is withdrawn or removed
123.7pursuant to either section 375B.10 or 375B.11, the rates, charges, and tax levies, if any, in
123.8the withdrawn or removed district must continue until the obligations and any obligations
123.9issued to refund them have been paid in full.
123.10EFFECTIVE DATE.This section is effective the day following final enactment.

123.11    Sec. 12. Minnesota Statutes 2006, section 383B.117, subdivision 2, is amended to read:
123.12    Subd. 2. Equipment acquisition; capital notes. The board may, by resolution and
123.13without public referendum, issue capital notes within existing debt limits for the purpose
123.14of purchasing ambulance and other medical equipment, road construction or maintenance
123.15equipment, public safety equipment and other capital equipment having an expected
123.16useful life at least equal to the term of the notes issued. The notes shall be payable in
123.17not more than five ten years and shall be issued on terms and in a manner as the board
123.18determines. The total principal amount of the notes issued for any fiscal year shall not
123.19exceed one percent of the total annual budget for that year and shall be issued solely for
123.20the purchases authorized in this subdivision. A tax levy shall be made for the payment
123.21of the principal and interest on such notes as in the case of bonds. For purposes of this
123.22subdivision, "equipment" includes computer hardware and software, whether bundled with
123.23machinery or equipment or unbundled. For purposes of this subdivision, the term "medical
123.24equipment" includes computer hardware and software and other intellectual property for
123.25use in medical diagnosis, medical procedures, research, record keeping, billing, and other
123.26hospital applications, together with application development services and training related
123.27to the use of the computer hardware and software and other intellectual property, all
123.28without regard to their useful life. For purposes of determining the amount of capital notes
123.29which the county may issue in any year, the budget of the county and Hennepin Healthcare
123.30System, Inc. shall be combined and the notes issuable under this subdivision shall be in
123.31addition to obligations issuable under section 373.01, subdivision 3.
123.32EFFECTIVE DATE.This section is effective the day following final enactment.

123.33    Sec. 13. Minnesota Statutes 2006, section 383B.77, subdivision 1, is amended to read:
124.1    Subdivision 1. Creation. The Hennepin County Housing and Redevelopment
124.2Authority is created in the county of Hennepin. It shall have all of the powers and duties
124.3of a housing and redevelopment authority under sections 469.001 to 469.047. For the
124.4purposes of applying the municipal housing and redevelopment act to Hennepin County,
124.5the county has all of the powers and duties of a city, the county board has all the powers
124.6and duties of a governing body, the chair of the county board has all of the powers and
124.7duties of a mayor, and, notwithstanding section 469.008, the area of operation includes the
124.8area within the territorial boundaries of the county.
124.9EFFECTIVE DATE.Because the population of Hennepin County is more than
124.101,000,000, under Minnesota Statutes, section 645.023, this section is effective without
124.11local approval.

124.12    Sec. 14. Minnesota Statutes 2006, section 383B.77, subdivision 2, is amended to read:
124.13    Subd. 2. Limitation. This section does not limit or restrict any existing housing
124.14and redevelopment authority or prevent a municipality from creating an authority. For
124.15purposes of this subdivision, "housing and redevelopment authority" includes any
124.16municipal department, agency, or authority of the city of Minneapolis which exercises the
124.17powers of a housing and redevelopment authority pursuant to section 469.003 or other
124.18law. The county authority shall notify a municipal authority by January 31 of each year
124.19as to the activities the county authority plans to participate in within the municipality.
124.20The municipal authority shall notify the county authority within 45 days of the date of
124.21the notice from the county authority, if the municipal authority does not consent to the
124.22activities of the county authority. The county authority shall not exercise its powers in a
124.23municipality where a housing and redevelopment authority was created under Minnesota
124.24Statutes 1969, chapter 462, before June 8, 1971, except as provided in this subdivision. If a
124.25city housing and redevelopment authority requests the county housing and redevelopment
124.26authority to exercise any power or perform any function of the municipal authority, the
124.27county authority may do so.
124.28EFFECTIVE DATE.Because the population of Hennepin County is more than
124.291,000,000, under Minnesota Statutes, section 645.023, this section is effective without
124.30local approval.

124.31    Sec. 15. Minnesota Statutes 2006, section 410.32, is amended to read:
124.32410.32 CITIES MAY ISSUE CAPITAL NOTES FOR CAPITAL EQUIPMENT.
125.1    (a) Notwithstanding any contrary provision of other law or charter, a home rule
125.2charter city may, by resolution and without public referendum, issue capital notes subject
125.3to the city debt limit to purchase capital equipment.
125.4    (b) For purposes of this section, "capital equipment" means:
125.5    (1) public safety equipment, ambulance and other medical equipment, road
125.6construction and maintenance equipment, and other capital equipment; and
125.7    (2) computer hardware and software, whether bundled with machinery or equipment
125.8or unbundled.
125.9    (c) The equipment or software must have an expected useful life at least as long as the
125.10term of the notes. The authority to issue capital notes for software expires on July 1, 2007.
125.11    (d) The notes shall be payable in not more than ten years and be issued on terms and
125.12in the manner the city determines. The total principal amount of the capital notes issued
125.13in a fiscal year shall not exceed 0.03 percent of the market value of taxable property
125.14in the city for that year.
125.15    (e) A tax levy shall be made for the payment of the principal and interest on the
125.16notes, in accordance with section 475.61, as in the case of bonds.
125.17    (f) Notes issued under this section shall require an affirmative vote of two-thirds of
125.18the governing body of the city.
125.19    (g) Notwithstanding a contrary provision of other law or charter, a home rule charter
125.20city may also issue capital notes subject to its debt limit in the manner and subject to the
125.21limitations applicable to statutory cities pursuant to section 412.301.
125.22EFFECTIVE DATE.This section is effective the day following final enactment.

125.23    Sec. 16. Minnesota Statutes 2006, section 412.301, is amended to read:
125.24412.301 FINANCING PURCHASE OF CERTAIN EQUIPMENT.
125.25    (a) The council may issue certificates of indebtedness or capital notes subject to the
125.26city debt limits to purchase capital equipment.
125.27    (b) For purposes of this section, "capital equipment" means:
125.28    (1) public safety equipment, ambulance and other medical equipment, road
125.29construction and maintenance equipment, and other capital equipment; and
125.30    (2) computer hardware and software, whether bundled with machinery or equipment
125.31or unbundled.
125.32    (c) The equipment or software must have an expected useful life at least as long as
125.33the terms of the certificates or notes. The authority to issue capital notes for software
125.34expires on July 1, 2007.
126.1    (d) Such certificates or notes shall be payable in not more than ten years and shall be
126.2issued on such terms and in such manner as the council may determine.
126.3    (e) If the amount of the certificates or notes to be issued to finance any such purchase
126.4exceeds 0.25 percent of the market value of taxable property in the city, they shall not
126.5be issued for at least ten days after publication in the official newspaper of a council
126.6resolution determining to issue them; and if before the end of that time, a petition asking
126.7for an election on the proposition signed by voters equal to ten percent of the number of
126.8voters at the last regular municipal election is filed with the clerk, such certificates or notes
126.9shall not be issued until the proposition of their issuance has been approved by a majority
126.10of the votes cast on the question at a regular or special election.
126.11    (f) A tax levy shall be made for the payment of the principal and interest on such
126.12certificates or notes, in accordance with section 475.61, as in the case of bonds.
126.13EFFECTIVE DATE.This section is effective the day following final enactment.

126.14    Sec. 17. Minnesota Statutes 2006, section 453A.02, subdivision 3, is amended to read:
126.15    Subd. 3. City. "City" means a city organized and existing under the laws of
126.16Minnesota or a city charter adopted pursuant thereto, and authorized by such laws or
126.17charter to engage in the local distribution and sale of gas, provided that any city so
126.18engaged on January 1, 1979 is authorized to continue such distribution and sale, and every
126.19city now or hereafter so authorized may exercise, either individually or as a member of a
126.20municipal gas agency, all of the powers granted in sections 453A.01 to 453A.12.
126.21    City also includes a city organized and existing under the laws of another state or
126.22a city charter adopted pursuant thereto which participates in a municipal gas agency
126.23with Minnesota cities.

126.24    Sec. 18. [471.6175] TRUST FOR POSTEMPLOYMENT BENEFITS.
126.25    Subdivision 1. Authorization; establishment. A political subdivision or other
126.26public entity that creates or has created an actuarial liability to pay postemployment
126.27benefits to employees or officers after their termination of service may establish a trust to
126.28pay those benefits. For purposes of this section, the term "postemployment benefits" means
126.29benefits giving rise to a liability under Statement No. 45 of the Governmental Accounting
126.30Standards Board and the term "trust" means a trust, a trust account, or a custodial account
126.31or contract authorized under section 401(f) of the Internal Revenue Code.
126.32    Subd. 2. Purpose of trust. The trust established under this section may only be
126.33used to pay postemployment benefits and may be either revocable or irrevocable.
127.1    Subd. 3. Trust administrator. The trust administrator of a trust established under
127.2this section shall be either:
127.3    (1) the Public Employees Retirement Association;
127.4    (2) a bank or banking association incorporated under the laws of the United States or
127.5of any state and authorized by the laws under which it is organized to exercise corporate
127.6trust powers; or
127.7    (3) an insurance company or agency qualified to do business in Minnesota which has
127.8at least five years' experience in investment products and services for group retirement
127.9benefits and which has a specialized department dedicated to services for retirement
127.10investment products.
127.11    A political subdivision or public entity may, in its discretion and in compliance
127.12with any applicable trust document, change trust administrators and transfer trust assets
127.13accordingly.
127.14    Subd. 4. Account maintenance. (a) A political subdivision or other public entity
127.15may establish a trust account to be held under the supervision of the trust administrator for
127.16the purposes of this section. A trust administrator shall establish a separate account for
127.17each participating political subdivision or public entity. The trust administrator may charge
127.18participating political subdivisions and public entities fees for reasonable administrative
127.19costs. The amount of any fees charged by the Public Employees Retirement Association is
127.20appropriated to the association from the account. A trust administrator may establish other
127.21reasonable terms and conditions for creation and maintenance of these accounts.
127.22    (b) The trust administrator must report to the political subdivision or other public
127.23entity on the investment returns of invested trust assets and on all investment fees or costs
127.24incurred by the trust. The annual rates of return, along with investment and administrative
127.25fees and costs for the trust, must be disclosed in the political subdivision's or public entity's
127.26annual financial audit in a manner prescribed by the state auditor.
127.27    (c) Effective for fiscal years beginning after December 31, 2009, the trust
127.28administrator must report electronically to the state auditor the portfolio and performance
127.29information specified in section 356.219, subdivision 3, in the manner prescribed by
127.30the state auditor.
127.31    Subd. 5. Investment. (a) The assets of a trust or trust account shall be invested and
127.32held as stipulated in paragraphs (b) to (e).
127.33    (b) The Public Employees Retirement Association must certify all money in the trust
127.34accounts for which it is trust administrator to the State Board of Investment for investment
127.35under section 11A.14, subject to the policies and procedures established by the State
128.1Board of Investment. Investment earnings must be credited to the trust account of the
128.2individual political subdivision or public entity.
128.3    (c) A trust administrator, other than the Public Employees Retirement Association,
128.4must ensure that all money in the trust accounts for which it is trust administrator is
128.5invested by a registered investment adviser, a bank investment trust department, or an
128.6insurance company or agency retirement investment department. Investment earnings
128.7must be credited to the trust account of the individual political subdivision or public entity.
128.8    (d) For trust assets invested by the State Board of Investment, the investment
128.9restrictions shall be the same as those generally applicable to the State Board of
128.10Investment. For trust assets invested by a trust administrator other than the Public
128.11Employees Retirement Association, the assets may only be invested in investments
128.12authorized under chapter 118A or section 356A.06, subdivision 7, in the manner specified
128.13in the applicable trust document.
128.14    (e) A political subdivision or public entity may provide investment direction to a
128.15trust administrator in compliance with any applicable trust document.
128.16    Subd. 6. Limit on deposit. A political subdivision or public entity may not
128.17deposit money in a trust or trust account created pursuant to this section if the total
128.18amount invested by that political subdivision or public entity would exceed the political
128.19subdivision's or public entity's actuarially determined liabilities for postemployment
128.20benefits due to officers and employees, as determined under the applicable standards of the
128.21Governmental Accounting Standards Board.
128.22    Subd. 7. Withdrawal of funds and termination of account. (a) For a revocable
128.23account, a political subdivision or public entity may withdraw some or all of its money
128.24or terminate the trust account. Money and accrued investment earnings withdrawn
128.25from a revocable account must be deposited in a fund separate and distinct from any
128.26other funds of the political subdivision or public entity. This money, with accrued
128.27investment earnings, must be used to pay legally enforceable postemployment benefits
128.28to former officers and employees, unless (i) there has been a change in state or federal
128.29law affecting that political subdivision's or public entity's liabilities for postemployment
128.30benefits, or (ii) there has been a change in the demographic composition of that political
128.31subdivision's or public entity's employees eligible for postemployment benefits, or (iii)
128.32there has been a change in the provisions or terms of the postemployment benefits in that
128.33political subdivision or public entity including, but not limited to, the portion of the costs
128.34eligible employees must pay to receive the benefits, or (iv) other factors exist that have
128.35a material effect on that political subdivision's or public entity's actuarially determined
128.36liabilities for postemployment benefits, in which event any amount in excess of 100
129.1percent of that political subdivision's or public entity's actuarially determined liabilities for
129.2postemployment benefits, as determined under standards of the Government Accounting
129.3Standards Board, may be withdrawn and used for any purpose.
129.4    (b) For an irrevocable account, a political subdivision or public entity may withdraw
129.5money only:
129.6    (1) as needed to pay postemployment benefits owed to former officers and employees
129.7of the political subdivision or public entity; or
129.8    (2) when all postemployment benefit liability owed to former officers or employees
129.9of the political subdivision or public entity has been satisfied or otherwise defeased.
129.10    (c) A political subdivision or public entity requesting withdrawal of money from
129.11an account created under this section must do so at a time and in the manner required by
129.12the executive director of the Public Employees Retirement Association or specified in an
129.13applicable trust document. The political subdivision or public entity that created the trust
129.14must ensure that withdrawals comply with the requirements of this section.
129.15    (d) The legislature may not divert funds in these trusts or trust accounts for use
129.16for another purpose.
129.17    Subd. 8. Status of irrevocable trust. (a) All money in an irrevocable trust or trust
129.18account created in this section is held in trust for the exclusive benefit of former officers
129.19and employees of the participating political subdivision or public entity, and is not subject
129.20to claims by creditors of the state, the participating political subdivision or public entity,
129.21the current or former officers and employees of the political subdivision or public entity,
129.22or the trust administrator.
129.23    (b) An irrevocable trust fund or trust account created in this section shall be deemed
129.24an arrangement equivalent to a trust for all legal purposes.
129.25EFFECTIVE DATE.This section is effective the day following final enactment,
129.26and is applicable immediately to all political subdivisions or public entities subject to
129.27Statement No. 45 of the Governmental Accounting Standards Board in 2007, to those
129.28political subdivisions or public entities whose trusts or trust accounts are validated
129.29by section 27, and to those political subdivisions or public entities that have begun
129.30consideration in 2007 of measures to implement Statement No. 45. This section is
129.31applicable on July 1, 2008, for all other political subdivisions or public entities.

129.32    Sec. 19. Minnesota Statutes 2006, section 473.39, is amended by adding a subdivision
129.33to read:
129.34    Subd. 1m. Obligations. After March 1, 2008, in addition to other authority in this
129.35section, the council may issue certificates of indebtedness, bonds, or other obligations
130.1under this section in an amount not exceeding $33,600,000 for capital expenditures as
130.2prescribed in the council's regional transit master plan and transit capital improvement
130.3program and for related costs, including the costs of issuance and sale of the obligations.
130.4APPLICATION AND EFFECTIVE DATE.This section applies in the counties of
130.5Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington, and is effective the
130.6day following final enactment.

130.7    Sec. 20. Minnesota Statutes 2006, section 473.39, is amended by adding a subdivision
130.8to read:
130.9    Subd. 5. Anticipation of grants. In addition to other authority granted in this
130.10section, the council may exercise the authority granted to an issuing political subdivision
130.11by section 475.522.
130.12APPLICATION AND EFFECTIVE DATE.This section applies in the counties of
130.13Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington, and is effective the
130.14day following final enactment.

130.15    Sec. 21. Minnesota Statutes 2006, section 475.51, subdivision 4, is amended to read:
130.16    Subd. 4. Net debt. "Net debt" means the amount remaining after deducting from its
130.17gross debt the amount of current revenues which are applicable within the current fiscal
130.18year to the payment of any debt and the aggregate of the principal of the following:
130.19    (1) Obligations issued for improvements which are payable wholly or partly from the
130.20proceeds of special assessments levied upon property specially benefited thereby, including
130.21those which are general obligations of the municipality issuing them, if the municipality is
130.22entitled to reimbursement in whole or in part from the proceeds of the special assessments.
130.23    (2) Warrants or orders having no definite or fixed maturity.
130.24    (3) Obligations payable wholly from the income from revenue producing
130.25conveniences.
130.26    (4) Obligations issued to create or maintain a permanent improvement revolving
130.27fund.
130.28    (5) Obligations issued for the acquisition, and betterment of public waterworks
130.29systems, and public lighting, heating or power systems, and of any combination thereof or
130.30for any other public convenience from which a revenue is or may be derived.
130.31    (6) Debt service loans and capital loans made to a school district under the provisions
130.32of sections 126C.68 and 126C.69.
131.1    (7) Amount of all money and the face value of all securities held as a debt service
131.2fund for the extinguishment of obligations other than those deductible under this
131.3subdivision.
131.4    (8) Obligations to repay loans made under section 216C.37.
131.5    (9) Obligations to repay loans made from money received from litigation or
131.6settlement of alleged violations of federal petroleum pricing regulations.
131.7    (10) Obligations issued to pay pension fund or other postemployment benefit
131.8liabilities under section 475.52, subdivision 6, or any charter authority.
131.9    (11) Obligations issued to pay judgments against the municipality under section
131.10475.52, subdivision 6 , or any charter authority.
131.11    (12) All other obligations which under the provisions of law authorizing their
131.12issuance are not to be included in computing the net debt of the municipality.
131.13EFFECTIVE DATE.This section is effective for obligations issued after June
131.1430, 2008.

131.15    Sec. 22. Minnesota Statutes 2006, section 475.52, subdivision 6, is amended to read:
131.16    Subd. 6. Certain purposes. Any municipality may issue bonds for paying
131.17judgments against it; for refunding outstanding bonds; for funding floating indebtedness;
131.18for funding actuarial liabilities to pay postemployment benefits to employees or officers
131.19after their termination of service; or for funding all or part of the municipality's current
131.20and future unfunded liability for a pension or retirement fund or plan referred to in
131.21section 356.20, subdivision 2, as those liabilities are most recently computed pursuant
131.22to sections 356.215 and 356.216. The board of trustees or directors of a pension fund or
131.23relief association referred to in section 69.77 or chapter 422A must consent and must
131.24be a party to any contract made under this section with respect to the fund held by it
131.25for the benefit of and in trust for its members. For purposes of this section, the term
131.26"postemployment benefits" means benefits giving rise to a liability under Statement No.
131.2745 of the Governmental Accounting Standards Board.

131.28    Sec. 23. [475.522] GRANT ANTICIPATION FINANCING OF
131.29TRANSPORTATION OR TRANSIT PROJECTS.
131.30    Subdivision 1. Definitions. For purposes of this section, the term "political
131.31subdivision" means a county or a statutory or home rule charter city, and the term
131.32"issuing political subdivision" means a political subdivision that issues obligations under
131.33subdivision 2.
132.1    Subd. 2. Authorization. An issuing political subdivision may enter into agreements
132.2with any other political subdivision of the state, within or without its jurisdiction, and any
132.3state agency, with respect to federal grants for transportation or transit projects to be
132.4received directly or indirectly by or on behalf of the political subdivision or agency,
132.5under an executed grant agreement with the relevant federal agency. The agreements
132.6may provide that the political subdivision or agency will pledge to the issuing political
132.7subdivision all or a specified portion of the federal grants received by or on behalf of the
132.8political subdivision or agency for a specified period of years, or until all obligations issued
132.9by the issuing political subdivision under subdivision 3 with respect to those federal grants
132.10have been paid or legally defeased. If the issuing political subdivision issues obligations
132.11under subdivision 3, the agreements must provide the method by which the proceeds of
132.12the obligations will be used to pay or reimburse the costs of the transportation or transit
132.13projects relating to the federal grants described in the executed federal grant agreement.
132.14    Subd. 3. Issuance of obligations. In anticipation of any federal grants for
132.15transportation or transit projects to be received directly or indirectly by any political
132.16subdivision or agency as specified in subdivision 1, or by an issuing political subdivision
132.17with respect to any transportation or transit projects within its jurisdiction, an issuing
132.18political subdivision may issue its obligations payable from the collections of those
132.19federal grants. The obligations may be issued in the principal amount the issuing political
132.20subdivision determines provided that the estimated collections of the federal grants under
132.21the relevant executed federal grant agreement in each year in which the obligations will
132.22be outstanding must be at least equal to:
132.23    (1) if the obligations are to be issued as revenue obligations, 150 percent of the
132.24maximum annual debt service on the obligations; or
132.25    (2) if the obligations are to be issued as general obligations, 110 percent of the
132.26maximum annual debt service on the obligations.
132.27    Except as otherwise provided in this section, the issuing political subdivision shall
132.28provide for the issuance, sale, and security of the obligations as provided in chapter 475,
132.29and has the same powers and duties as a municipality issuing bonds under that law, except
132.30that no election is required and the net debt limitations in chapter 475 do not apply to the
132.31obligations. The issuing political subdivision may determine to issue the obligations as
132.32revenue obligations, payable solely from the collections of the federal grants anticipated,
132.33or may pledge its full faith and credit to the payment of the obligations.
132.34    Subd. 4. Use of proceeds. The proceeds of the obligations must be used:
132.35    (1) to pay or reimburse the costs of the transportation or transit projects relating to
132.36the federal grants being anticipated;
133.1    (2) to pay the costs of issuance of the obligations, including credit enhancement;
133.2    (3) to pay interest on the obligations for a period not exceeding three years from
133.3their date of issue; and
133.4    (4) if the full faith and credit of the issuing political subdivision is not pledged to the
133.5payment of the obligations, to fund a debt service reserve fund for the obligations.

133.6    Sec. 24. Minnesota Statutes 2006, section 475.53, subdivision 1, is amended to read:
133.7    Subdivision 1. Generally. Except as otherwise provided in sections 475.51 to
133.8475.74 , no municipality, except a school district or a city of the first class, shall incur or
133.9be subject to a net debt in excess of two three percent of the market value of taxable
133.10property in the municipality.
133.11EFFECTIVE DATE.This section is effective for obligations issued after June
133.1230, 2008.

133.13    Sec. 25. Minnesota Statutes 2006, section 475.58, subdivision 1, is amended to read:
133.14    Subdivision 1. Approval by electors; exceptions. Obligations authorized by law or
133.15charter may be issued by any municipality upon obtaining the approval of a majority of
133.16the electors voting on the question of issuing the obligations, but an election shall not be
133.17required to authorize obligations issued:
133.18    (1) to pay any unpaid judgment against the municipality;
133.19    (2) for refunding obligations;
133.20    (3) for an improvement or improvement program, which obligation is payable wholly
133.21or partly from the proceeds of special assessments levied upon property specially benefited
133.22by the improvement or by an improvement within the improvement program, or from tax
133.23increments, as defined in section 469.174, subdivision 25, including obligations which are
133.24the general obligations of the municipality, if the municipality is entitled to reimbursement
133.25in whole or in part from the proceeds of such special assessments or tax increments and
133.26not less than 20 percent of the cost of the improvement or the improvement program is to
133.27be assessed against benefited property or is to be paid from the proceeds of federal grant
133.28funds or a combination thereof, or is estimated to be received from tax increments;
133.29    (4) payable wholly from the income of revenue producing conveniences;
133.30    (5) under the provisions of a home rule charter which permits the issuance of
133.31obligations of the municipality without election;
133.32    (6) under the provisions of a law which permits the issuance of obligations of a
133.33municipality without an election;
134.1    (7) to fund pension or retirement fund or postemployment benefit liabilities pursuant
134.2to section 475.52, subdivision 6;
134.3    (8) under a capital improvement plan under section 373.40; and
134.4    (9) under sections 469.1813 to 469.1815 (property tax abatement authority bonds), if
134.5the proceeds of the bonds are not used for a purpose prohibited under section 469.176,
134.6subdivision 4g , paragraph (b).

134.7    Sec. 26. Minnesota Statutes 2006, section 475.58, subdivision 3b, is amended to read:
134.8    Subd. 3b. Street reconstruction. (a) A municipality may, without regard to
134.9the election requirement under subdivision 1, issue and sell obligations for street
134.10reconstruction, if the following conditions are met:
134.11    (1) the streets are reconstructed under a street reconstruction plan that describes the
134.12streets to be reconstructed street reconstruction to be financed, the estimated costs, and
134.13any planned reconstruction of other streets in the municipality over the next five years,
134.14and the plan and issuance of the obligations has been approved by a vote of all of the
134.15members of the governing body present at the meeting following a public hearing for
134.16which notice has been published in the official newspaper at least ten days but not more
134.17than 28 days prior to the hearing; and
134.18    (2) if a petition requesting a vote on the issuance is signed by voters equal to
134.19five percent of the votes cast in the last municipal general election and is filed with the
134.20municipal clerk within 30 days of the public hearing, the municipality may issue the bonds
134.21only after obtaining the approval of a majority of the voters voting on the question of
134.22the issuance of the obligations.
134.23    (b) Obligations issued under this subdivision are subject to the debt limit of the
134.24municipality and are not excluded from net debt under section 475.51, subdivision 4.
134.25    (c) For purposes of this subdivision, street reconstruction includes utility
134.26replacement and relocation and other activities incidental to the street reconstruction, turn
134.27lanes and other improvements having a substantial public safety function, realignments,
134.28other modifications to intersect with state and county roads, and the local share of state
134.29and county road projects.
134.30    (d) Except in the case of turn lanes, safety improvements, realignments, intersection
134.31modifications, and the local share of state and county road projects, street reconstruction
134.32does not include the portion of project cost allocable to widening a street or adding curbs
134.33and gutters where none previously existed.

134.34    Sec. 27. VALIDATION.
135.1    Any trust or trust account or other custodial account or contract authorized under
135.2section 401(f) of the Internal Revenue Code, created prior to June 6, 2006, to pay
135.3postemployment benefits to employees or officers after termination of service, is hereby
135.4validated, may continue in full force and effect, and shall have continuing authority
135.5to accept new funds; however, this section does not validate or correct defects in any
135.6previously created trust document. Any funds held by a validated trust or account
135.7under this section may be invested as provided in Minnesota Statutes, section 471.6175,
135.8subdivision 5. A validated trust or account shall have until January 1, 2009, to bring
135.9its trust documents and procedures into compliance with Minnesota Statutes, section
135.10471.6175.
135.11EFFECTIVE DATE.This section is effective the day following final enactment.

135.12    Sec. 28. TOWN OF CRANE LAKE, CERTIFICATES OF INDEBTEDNESS.
135.13    Notwithstanding Minnesota Statutes, section 366.095, or any other law to the
135.14contrary, the town board of the town of Crane Lake in St. Louis County may issue one
135.15or more certificates of indebtedness in a total amount not to exceed $250,000, which
135.16are not subject to the debt limits of the town. The proceeds of the certificates must be
135.17used to acquire property and pay other costs related to a land exchange with the United
135.18States Forest Service. The certificates shall be payable in not more than 30 years and be
135.19issued on the terms and in the manner as the board may determine. Minnesota Statutes,
135.20sections 475.54, subdivision 1, and 475.56, paragraph (c), do not apply to the certificates
135.21issued under this section. A tax levy shall be made to pay the principal and interest on the
135.22certificates as in the case of bonds.
135.23EFFECTIVE DATE.This section is effective the day after the governing body of
135.24the town of Crane Lake and its chief clerical officer timely complete their compliance with
135.25Minnesota Statutes, section 645.021, subdivisions 2 and 3.

135.26    Sec. 29. CITY OF WINSTED; BONDING AUTHORITY.
135.27    (a) The city of Winsted may issue general obligation bonds under Minnesota
135.28Statutes, chapter 475, to finance the acquisition and betterment of a facility consisting of
135.29a city hall, community center, and police station; park improvements, including trails
135.30and an amphitheater; related public improvements; and substantial landscaping for the
135.31improvements.
135.32    (b) The bonds may be issued as general obligations of the city without an election to
135.33approve the bonds under Minnesota Statutes, section 475.58.
136.1    (c) The bonds are not included in computing any debt limitation applicable to the
136.2city, including, but not limited to, the net debt limits under Minnesota Statutes, section
136.3475.53, and the levy of taxes under Minnesota Statutes, section 475.61, to pay principal of
136.4and interest on the bonds is not subject to any levy limitation.
136.5    (d) The aggregate principal amount of bonds used to pay costs of the acquisition and
136.6betterment of the facility consisting of a city hall, community center, and police station;
136.7park improvements, including trails and an amphitheater; related public improvements;
136.8and substantial landscaping for the improvements may not exceed $4,900,000, plus an
136.9amount equal to the costs related to issuance of the bonds and capitalized interest.
136.10EFFECTIVE DATE.This section is effective upon compliance by the governing
136.11body of the city of Winsted with Minnesota Statutes, section 645.021, subdivision 3.

136.12ARTICLE 11

136.13DEPARTMENT INCOME AND FRANCHISE TAXES

136.14    Section 1. Minnesota Statutes 2007 Supplement, section 270A.03, subdivision 5,
136.15is amended to read:
136.16    Subd. 5. Debt. (a) "Debt" means a legal obligation of a natural person to pay a fixed
136.17and certain amount of money, which equals or exceeds $25 and which is due and payable
136.18to a claimant agency. The term includes criminal fines imposed under section 609.10 or
136.19609.125 , fines imposed for petty misdemeanors as defined in section 609.02, subdivision
136.204a , and restitution. A debt may arise under a contractual or statutory obligation, a court
136.21order, or other legal obligation, but need not have been reduced to judgment.
136.22    A debt includes any legal obligation of a current recipient of assistance which is
136.23based on overpayment of an assistance grant where that payment is based on a client
136.24waiver or an administrative or judicial finding of an intentional program violation;
136.25or where the debt is owed to a program wherein the debtor is not a client at the time
136.26notification is provided to initiate recovery under this chapter and the debtor is not a
136.27current recipient of food support, transitional child care, or transitional medical assistance.
136.28    (b) A debt does not include any legal obligation to pay a claimant agency for medical
136.29care, including hospitalization if the income of the debtor at the time when the medical
136.30care was rendered does not exceed the following amount:
136.31    (1) for an unmarried debtor, an income of $8,800 or less;
136.32    (2) for a debtor with one dependent, an income of $11,270 or less;
136.33    (3) for a debtor with two dependents, an income of $13,330 or less;
136.34    (4) for a debtor with three dependents, an income of $15,120 or less;
137.1    (5) for a debtor with four dependents, an income of $15,950 or less; and
137.2    (6) for a debtor with five or more dependents, an income of $16,630 or less.
137.3    The income amounts in this subdivision shall be adjusted for inflation for debts
137.4incurred in calendar years 2001 and thereafter. The dollar amount of each income level
137.5that applied to debts incurred in the prior year shall be increased in the same manner
137.6as provided in section 1(f) of the Internal Revenue Code of 1986, as amended through
137.7December 31, 2000, except that for the purposes of this subdivision the percentage
137.8increase shall be determined from the year starting September 1, 1999, and ending August
137.931, 2000, as the base year for adjusting for inflation for debts incurred after December
137.1031, 2000. (c) The commissioner shall adjust the income amounts in paragraph (b) by the
137.11percentage determined pursuant to the provisions of section 1(f) of the Internal Revenue
137.12Code, except that in section 1(f)(3)(B) the word "1999" shall be substituted for the word
137.13"1992." For 2001, the commissioner shall then determine the percent change from the 12
137.14months ending on August 31, 1999, to the 12 months ending on August 31, 2000, and in
137.15each subsequent year, from the 12 months ending on August 31, 1999, to the 12 months
137.16ending on August 31 of the year preceding the taxable year. The determination of the
137.17commissioner pursuant to this subdivision shall not be considered a "rule" and shall not
137.18be subject to the Administrative Procedure Act contained in chapter 14. The income
137.19amount as adjusted must be rounded to the nearest $10 amount. If the amount ends in
137.20$5, the amount is rounded up to the nearest $10 amount.
137.21    (d) Debt also includes an agreement to pay a MinnesotaCare premium, regardless of
137.22the dollar amount of the premium authorized under section 256L.15, subdivision 1a.
137.23EFFECTIVE DATE.This section is effective for debts incurred after December
137.2431, 2007.

137.25    Sec. 2. Minnesota Statutes 2006, section 289A.08, subdivision 11, is amended to read:
137.26    Subd. 11. Information included in income tax return. (a) The return must state:
137.27    (1) the name of the taxpayer, or taxpayers, if the return is a joint return, and the
137.28address of the taxpayer in the same name or names and same address as the taxpayer has
137.29used in making the taxpayer's income tax return to the United States, and must state;
137.30    (2) the date or dates of birth of the taxpayer or taxpayers;
137.31    (3) the Social Security number of the taxpayer, or taxpayers, if a Social Security
137.32number has been issued by the United States with respect to the taxpayers, and must
137.33state; and
137.34    (4) the amount of the taxable income of the taxpayer as it appears on the federal
137.35return for the taxable year to which the Minnesota state return applies.
138.1    (b) The taxpayer must attach to the taxpayer's Minnesota state income tax return
138.2a copy of the federal income tax return that the taxpayer has filed or is about to file for
138.3the period, unless the taxpayer is eligible to telefile the federal return and does file the
138.4Minnesota return by telefiling.
138.5EFFECTIVE DATE.This section is effective for taxable years beginning after
138.6December 31, 2007.

138.7    Sec. 3. Minnesota Statutes 2006, section 289A.09, subdivision 2, is amended to read:
138.8    Subd. 2. Withholding statement to employee or payee and to commissioner. (a)
138.9A person required to deduct and withhold from an employee a tax under section 290.92,
138.10subdivision 2a or 3, or 290.923, subdivision 2, or who would have been required to
138.11deduct and withhold a tax under section 290.92, subdivision 2a or 3, or persons required
138.12to withhold tax under section 290.923, subdivision 2, determined without regard to
138.13section 290.92, subdivision 19, if the employee or payee had claimed no more than one
138.14withholding exemption, or who paid wages or made payments not subject to withholding
138.15under section 290.92, subdivision 2a or 3, or 290.923, subdivision 2, to an employee or
138.16person receiving royalty payments in excess of $600, or who has entered into a voluntary
138.17withholding agreement with a payee under section 290.92, subdivision 20, must give
138.18every employee or person receiving royalty payments in respect to the remuneration paid
138.19by the person to the employee or person receiving royalty payments during the calendar
138.20year, on or before January 31 of the succeeding year, or, if employment is terminated
138.21before the close of the calendar year, within 30 days after the date of receipt of a written
138.22request from the employee if the 30-day period ends before January 31, a written statement
138.23showing the following:
138.24    (1) name of the person;
138.25    (2) the name of the employee or payee and the employee's or payee's Social Security
138.26account number;
138.27    (3) the total amount of wages as that term is defined in section 290.92, subdivision
138.281 , paragraph (1); the total amount of remuneration subject to withholding under section
138.29290.92, subdivision 20 ; the amount of sick pay as required under section 6051(f) of the
138.30Internal Revenue Code; and the amount of royalties subject to withholding under section
138.31290.923, subdivision 2 ; and
138.32    (4) the total amount deducted and withheld as tax under section 290.92, subdivision
138.332a or 3, or 290.923, subdivision 2.
139.1    (b) The statement required to be furnished by this paragraph (a) with respect to any
139.2remuneration must be furnished at those times, must contain the information required, and
139.3must be in the form the commissioner prescribes.
139.4    (c) The commissioner may prescribe rules providing for reasonable extensions of
139.5time, not in excess of 30 days, to employers or payers required to give the statements to
139.6their employees or payees under this subdivision.
139.7    (d) A duplicate of any statement made under this subdivision and in accordance
139.8with rules prescribed by the commissioner, along with a reconciliation in the form the
139.9commissioner prescribes of the statements for the calendar year, including a reconciliation
139.10of the quarterly returns required to be filed under subdivision 1, must be filed with the
139.11commissioner on or before February 28 of the year after the payments were made.
139.12    (e) If an employer cancels the employer's Minnesota withholding account number
139.13required by section 290.92, subdivision 24, the information required by paragraph (d),
139.14must be filed with the commissioner within 30 days of the end of the quarter in which
139.15the employer cancels its account number.
139.16    (f) The employer must submit the statements required to be sent to the commissioner
139.17on magnetic media, if the magnetic media was in the same manner required to satisfy the
139.18federal reporting requirements of section 6011(e) of the Internal Revenue Code and the
139.19regulations issued under it. For wages paid in calendar year 2008, an employer must
139.20submit statements to the commissioner required by this section by electronic means if the
139.21employer is required to send more than 100 statements to the commissioner, even though
139.22the employer is not required to submit the returns federally by electronic means. For
139.23calendar year 2009, the 100 statements threshold is reduced to 50, and for calendar year
139.242010, the threshold is reduced to 25, and for 2011 and after, the threshold is reduced to ten.
139.25    (g) A "third-party bulk filer" as defined in section 290.92, subdivision 30, paragraph
139.26(a), clause (2), must submit the returns required by this subdivision and subdivision 1,
139.27paragraph (a), with the commissioner by electronic means.
139.28EFFECTIVE DATE.This section is effective for wages paid after December 31,
139.292007.

139.30    Sec. 4. Minnesota Statutes 2006, section 289A.12, subdivision 14, is amended to read:
139.31    Subd. 14. Regulated investment companies; reporting exempt-interest
139.32dividends. (a) A regulated investment company paying $10 or more in exempt-interest
139.33dividends to an individual who is a resident of Minnesota must make a return indicating
139.34the amount of the exempt-interest dividends, the name, address, and Social Security
139.35number of the recipient, and any other information that the commissioner specifies. The
140.1return must be provided to the shareholder no later than 30 days after the close of the
140.2taxable year. The return provided to the shareholder must include a clear statement, in the
140.3form prescribed by the commissioner, that the exempt-interest dividends must be included
140.4in the computation of Minnesota taxable income. The commissioner may by notice and
140.5demand require the regulated investment company is required in a manner prescribed by
140.6the commissioner to file a copy of the return with the commissioner.
140.7    (b) This subdivision applies to regulated investment companies required to register
140.8under chapter 80A.
140.9    (c) For purposes of this subdivision, the following definitions apply.
140.10    (1) "Exempt-interest dividends" mean exempt-interest dividends as defined in
140.11section 852(b)(5) of the Internal Revenue Code, but does not include the portion of
140.12exempt-interest dividends that are not required to be added to federal taxable income
140.13under section 290.01, subdivision 19a, clause (1)(ii).
140.14    (2) "Regulated investment company" means regulated investment company as
140.15defined in section 851(a) of the Internal Revenue Code or a fund of the regulated
140.16investment company as defined in section 851(g) of the Internal Revenue Code.
140.17EFFECTIVE DATE.This section is effective for taxable years beginning after
140.18December 31, 2007.

140.19    Sec. 5. Minnesota Statutes 2006, section 289A.18, subdivision 1, is amended to read:
140.20    Subdivision 1. Individual income, fiduciary income, corporate franchise, and
140.21entertainment taxes; partnership and S corporation returns; information returns;
140.22mining company returns. The returns required to be made under sections 289A.08 and
140.23289A.12 must be filed at the following times:
140.24    (1) returns made on the basis of the calendar year must be filed on April 15 following
140.25the close of the calendar year, except that returns of corporations must be filed on March
140.2615 following the close of the calendar year;
140.27    (2) returns made on the basis of the fiscal year must be filed on the 15th day of the
140.28fourth month following the close of the fiscal year, except that returns of corporations
140.29must be filed on the 15th day of the third month following the close of the fiscal year;
140.30    (3) returns for a fractional part of a year must be filed on the 15th day of the fourth
140.31month following the end of the month in which falls the last day of the period for which
140.32the return is made, except that the returns of corporations must be filed on the 15th day of
140.33the third month following the end of the tax year of the unitary group in which falls the
140.34last day of the period for which the return is made;
141.1    (4) in the case of a final return of a decedent for a fractional part of a year, the return
141.2must be filed on the 15th day of the fourth month following the close of the 12-month
141.3period that began with the first day of that fractional part of a year;
141.4    (5) in the case of the return of a cooperative association, returns must be filed on or
141.5before the 15th day of the ninth month following the close of the taxable year;
141.6    (6) if a corporation has been divested from a unitary group and files a return for
141.7a fractional part of a year in which it was a member of a unitary business that files a
141.8combined report under section 290.34, subdivision 2, the divested corporation's return
141.9must be filed on the 15th day of the third month following the close of the common
141.10accounting period that includes the fractional year;
141.11    (7) returns of entertainment entities must be filed on April 15 following the close of
141.12the calendar year;
141.13    (8) returns required to be filed under section 289A.08, subdivision 4, must be filed
141.14on the 15th day of the fifth month following the close of the taxable year;
141.15    (9) returns of mining companies must be filed on May 1 following the close of the
141.16calendar year; and
141.17    (10) returns required to be filed with the commissioner under section 289A.12,
141.18subdivision 2 , or 4 to 10, or 14, must be filed within 30 days after being demanded by
141.19the commissioner.
141.20EFFECTIVE DATE.This section is effective for taxable years beginning after
141.21December 31, 2007.

141.22    Sec. 6. Minnesota Statutes 2006, section 289A.38, subdivision 7, is amended to read:
141.23    Subd. 7. Federal tax changes. If the amount of income, items of tax preference,
141.24deductions, or credits for any year of a taxpayer as reported to the Internal Revenue
141.25Service is changed or corrected by the commissioner of Internal Revenue or other officer
141.26of the United States or other competent authority, or where a renegotiation of a contract or
141.27subcontract with the United States results in a change in income, items of tax preference,
141.28deductions, credits, or withholding tax, or, in the case of estate tax, where there are
141.29adjustments to the taxable estate resulting in a change to the credit for state death taxes,
141.30the taxpayer shall report the change or correction or renegotiation results in writing to the
141.31commissioner. The report must be submitted within 180 days after the final determination
141.32and must be in the form of either an amended Minnesota estate, withholding tax, corporate
141.33franchise tax, or income tax return conceding the accuracy of the federal determination
141.34or a letter detailing how the federal determination is incorrect or does not change the
141.35Minnesota tax. An amended Minnesota income tax return must be accompanied by an
142.1amended property tax refund return, if necessary. A taxpayer filing an amended federal
142.2tax return must also file a copy of the amended return with the commissioner of revenue
142.3within 180 days after filing the amended return.
142.4EFFECTIVE DATE.This section is effective the day following final enactment.

142.5    Sec. 7. Minnesota Statutes 2006, section 289A.60, subdivision 8, is amended to read:
142.6    Subd. 8. Penalty for Penalties; failure to file informational return; incorrect
142.7taxpayer identification number. (a) In the case of a failure to file an informational return
142.8required by section 289A.12 with the commissioner on the date prescribed (determined
142.9with regard to any extension of time for filing), the person failing to file the return shall pay
142.10a penalty of $50 for each failure or in the case of a partnership, S corporation, or fiduciary
142.11return, $50 for each partner, shareholder, or beneficiary; but the total amount imposed on
142.12the delinquent person for all failures during any calendar year must not exceed $25,000. If
142.13a failure to file a return is due to intentional disregard of the filing requirement, then the
142.14penalty imposed under the preceding sentence must not be less than an amount equal to:
142.15    (1) in the case of a return not described in clause (2) or (3), ten percent of the
142.16aggregate amount of the items required to be reported;
142.17    (2) in the case of a return required to be filed under section 289A.12, subdivision 5,
142.18five percent of the gross proceeds required to be reported; and
142.19    (3) in the case of a return required to be filed under section 289A.12, subdivision 9,
142.20relating to direct sales, $100 for each failure; however, the total amount imposed on the
142.21delinquent person for intentional failures during a calendar year must not exceed $50,000.
142.22The penalty must be collected in the same manner as a delinquent income tax.
142.23    (b) If a partnership or S corporation files a partnership or S corporation return with
142.24an incorrect tax identification number used for a partner or shareholder after being notified
142.25by the commissioner that the identification number is incorrect, the partnership or S
142.26corporation must pay a penalty of $50 for each such incorrect number.
142.27EFFECTIVE DATE.This section is effective for returns filed after December
142.2831, 2008.

142.29    Sec. 8. Minnesota Statutes 2006, section 289A.60, subdivision 12, is amended to read:
142.30    Subd. 12. Penalties relating to property tax refunds. (a) If it is determined that a
142.31property tax refund claim is excessive and was negligently prepared, a claimant is liable
142.32for a penalty of ten percent of the corrected claim must be disallowed claim. If the claim
142.33has been paid, the amount disallowed must be recovered by assessment and collection.
143.1    (b) An owner who without reasonable cause fails to give a certificate of rent
143.2constituting property tax to a renter, as required by section 290A.19, paragraph (a), is
143.3liable to the commissioner for a penalty of $100 for each failure.
143.4    (c) If the owner or managing agent knowingly gives rent certificates that report total
143.5rent constituting property taxes in excess of the amount of actual rent constituting property
143.6taxes paid on the rented part of a property, the owner or managing agent is liable for a
143.7penalty equal to the greater of (1) $100 or (2) 50 percent of the excess that is reported. An
143.8overstatement of rent constituting property taxes is presumed to be knowingly made if it
143.9exceeds by ten percent or more the actual rent constituting property taxes.
143.10EFFECTIVE DATE.This section is effective for property tax refund claims filed
143.11after June 30, 2008.

143.12    Sec. 9. Minnesota Statutes 2006, section 289A.60, subdivision 27, is amended to read:
143.13    Subd. 27. Reportable transaction understatement. (a) If a taxpayer has a
143.14reportable transaction understatement for any taxable year, an amount equal to 20 percent
143.15of the amount of the reportable transaction understatement must be added to the tax.
143.16    (b)(1) For purposes of this subdivision, "reportable transaction understatement"
143.17means the product of:
143.18    (i) the amount of the increase, if any, in taxable income that results from a difference
143.19between the proper tax treatment of an item to which this section applies and the taxpayer's
143.20treatment of that item as shown on the taxpayer's tax return; and
143.21    (ii) the highest rate of tax imposed on the taxpayer under section 290.06 determined
143.22without regard to the understatement.
143.23    (2) For purposes of clause (1)(i), any reduction of the excess of deductions allowed
143.24for the taxable year over gross income for that year, and any reduction in the amount of
143.25capital losses which would, without regard to section 1211 of the Internal Revenue Code,
143.26be allowed for that year, must be treated as an increase in taxable income.
143.27    (c) This subdivision applies to any item that is attributable to:
143.28    (1) any listed transaction under section 289A.121; and
143.29    (2) any reportable transaction, other than a listed transaction, if a significant purpose
143.30of that transaction is the avoidance or evasion of federal income tax liability.
143.31    (d) Paragraph (a) applies by substituting "30 percent" for "20 percent" with respect
143.32to the portion of any reportable transaction understatement with respect to which the
143.33disclosure requirements of section 289A.121, subdivision 5, and section 6664(d)(2)(A)
143.34of the Internal Revenue Code are not met.
144.1    (e)(1) No penalty applies under this subdivision with respect to any portion of a
144.2reportable transaction understatement if the taxpayer shows that there was reasonable
144.3cause for the portion and that the taxpayer acted in good faith with respect to the portion.
144.4This paragraph applies only if:
144.5    (i) the relevant facts affecting the tax treatment of the item are adequately disclosed
144.6as required under section 289A.121;
144.7    (ii) there is or was substantial authority for the treatment; and
144.8    (iii) the taxpayer reasonably believed that the treatment was more likely than not
144.9the proper treatment.
144.10    (2) A taxpayer who did not adequately disclose under section 289A.121 meets
144.11the requirements of clause (1)(i), if the commissioner abates the penalty imposed by
144.12subdivision 26, paragraph (d), under section 270C.34 subdivision 26, paragraph (g).
144.13    (3) For purposes of clause (1)(iii), a taxpayer is treated as having a reasonable belief
144.14with respect to the tax treatment of an item only if the belief:
144.15    (i) is based on the facts and law that exist when the return of tax which includes the
144.16tax treatment is filed; and
144.17    (ii) relates solely to the taxpayer's chances of success on the merits of the treatment
144.18and does not take into account the possibility that a return will not be audited, the
144.19treatment will not be raised on audit, or the treatment will be resolved through settlement
144.20if it is raised.
144.21    (4) An opinion of a tax advisor may not be relied upon to establish the reasonable
144.22belief of a taxpayer if:
144.23    (i) the tax advisor:
144.24    (A) is a material advisor, as defined in section 289A.121, and participates in the
144.25organization, management, promotion, or sale of the transaction or is related (within the
144.26meaning of section 267(b) or 707(b)(1) of the Internal Revenue Code) to any person
144.27who so participates;
144.28    (B) is compensated directly or indirectly by a material advisor with respect to the
144.29transaction;
144.30    (C) has a fee arrangement with respect to the transaction which is contingent on all
144.31or part of the intended tax benefits from the transaction being sustained; or
144.32    (D) has a disqualifying financial interest with respect to the transaction, as
144.33determined under United States Treasury regulations prescribed to implement the
144.34provisions of section 6664(d)(3)(B)(ii)(IV) of the Internal Revenue Code; or
144.35    (ii) the opinion:
145.1    (A) is based on unreasonable factual or legal assumptions, including assumptions
145.2as to future events;
145.3    (B) unreasonably relies on representations, statements, findings, or agreements of
145.4the taxpayer or any other person;
145.5    (C) does not identify and consider all relevant facts; or
145.6    (D) fails to meet any other requirement as the Secretary of the Treasury may
145.7prescribe under federal law.
145.8    (f) The penalty imposed by this subdivision applies in lieu of the penalty imposed
145.9under subdivision 4.
145.10EFFECTIVE DATE.This section is effective the day following final enactment.

145.11    Sec. 10. Minnesota Statutes 2006, section 289A.60, is amended by adding a
145.12subdivision to read:
145.13    Subd. 28. Preparer identification number. Any Minnesota individual income tax
145.14return or claim for refund prepared by a "tax refund or return preparer" as defined in
145.15subdivision 13, paragraph (f), shall bear the identification number the preparer is required
145.16to use federally under section 6109(a)(4) of the Internal Revenue Code. A tax refund
145.17or return preparer who prepares a Minnesota individual income tax return or claim for
145.18refund and fails to include the required number on the return or claim is subject to a
145.19penalty of $50 for each failure.
145.20EFFECTIVE DATE.This section is effective for returns prepared for taxable
145.21years beginning after December 31, 2007.

145.22    Sec. 11. Minnesota Statutes 2007 Supplement, section 290.01, subdivision 19b,
145.23is amended to read:
145.24    Subd. 19b. Subtractions from federal taxable income. For individuals, estates,
145.25and trusts, there shall be subtracted from federal taxable income:
145.26    (1) net interest income on obligations of any authority, commission, or
145.27instrumentality of the United States to the extent includable in taxable income for federal
145.28income tax purposes but exempt from state income tax under the laws of the United States;
145.29    (2) if included in federal taxable income, the amount of any overpayment of income
145.30tax to Minnesota or to any other state, for any previous taxable year, whether the amount
145.31is received as a refund or as a credit to another taxable year's income tax liability;
145.32    (3) the amount paid to others, less the amount used to claim the credit allowed under
145.33section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten
146.1to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
146.2transportation of each qualifying child in attending an elementary or secondary school
146.3situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
146.4resident of this state may legally fulfill the state's compulsory attendance laws, which
146.5is not operated for profit, and which adheres to the provisions of the Civil Rights Act
146.6of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
146.7tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause,
146.8"textbooks" includes books and other instructional materials and equipment purchased
146.9or leased for use in elementary and secondary schools in teaching only those subjects
146.10legally and commonly taught in public elementary and secondary schools in this state.
146.11Equipment expenses qualifying for deduction includes expenses as defined and limited in
146.12section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional
146.13books and materials used in the teaching of religious tenets, doctrines, or worship, the
146.14purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
146.15or materials for, or transportation to, extracurricular activities including sporting events,
146.16musical or dramatic events, speech activities, driver's education, or similar programs. For
146.17purposes of the subtraction provided by this clause, "qualifying child" has the meaning
146.18given in section 32(c)(3) of the Internal Revenue Code;
146.19    (4) income as provided under section 290.0802;
146.20    (5) to the extent included in federal adjusted gross income, income realized on
146.21disposition of property exempt from tax under section 290.491;
146.22    (6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E)
146.23of the Internal Revenue Code in determining federal taxable income by an individual
146.24who does not itemize deductions for federal income tax purposes for the taxable year, an
146.25amount equal to 50 percent of the excess of charitable contributions over $500 allowable
146.26as a deduction for the taxable year under section 170(a) of the Internal Revenue Code and
146.27under the provisions of Public Law 109-1;
146.28    (7) for taxable years beginning before January 1, 2008, the amount of the federal
146.29small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code
146.30which is included in gross income under section 87 of the Internal Revenue Code;
146.31    (8) for individuals who are allowed a federal foreign tax credit for taxes that do not
146.32qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover
146.33of subnational foreign taxes for the taxable year, but not to exceed the total subnational
146.34foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
146.35"federal foreign tax credit" means the credit allowed under section 27 of the Internal
146.36Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
147.1under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
147.2the extent they exceed the federal foreign tax credit;
147.3    (9) in each of the five tax years immediately following the tax year in which an
147.4addition is required under subdivision 19a, clause (7), or 19c, clause (15) (14), in the case
147.5of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
147.6of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
147.7the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or
147.8subdivision 19c, clause (15) (14), in the case of a shareholder of an S corporation, minus
147.9the positive value of any net operating loss under section 172 of the Internal Revenue
147.10Code generated for the tax year of the addition. The resulting delayed depreciation
147.11cannot be less than zero;
147.12    (10) job opportunity building zone income as provided under section 469.316;
147.13    (11) to the extent included in federal taxable income, the amount of compensation
147.14paid to members of the Minnesota National Guard or other reserve components of the
147.15United States military for active service performed in Minnesota, excluding compensation
147.16for services performed under the Active Guard Reserve (AGR) program. For purposes of
147.17this clause, "active service" means (i) state active service as defined in section 190.05,
147.18subdivision 5a , clause (1); (ii) federally funded state active service as defined in section
147.19190.05, subdivision 5b ; or (iii) federal active service as defined in section 190.05,
147.20subdivision 5c , but "active service" excludes services performed exclusively for purposes
147.21of basic combat training, advanced individual training, annual training, and periodic
147.22inactive duty training; special training periodically made available to reserve members;
147.23and service performed in accordance with section 190.08, subdivision 3;
147.24    (12) to the extent included in federal taxable income, the amount of compensation
147.25paid to Minnesota residents who are members of the armed forces of the United States or
147.26United Nations for active duty performed outside Minnesota;
147.27    (13) an amount, not to exceed $10,000, equal to qualified expenses related to a
147.28qualified donor's donation, while living, of one or more of the qualified donor's organs
147.29to another person for human organ transplantation. For purposes of this clause, "organ"
147.30means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
147.31"human organ transplantation" means the medical procedure by which transfer of a human
147.32organ is made from the body of one person to the body of another person; "qualified
147.33expenses" means unreimbursed expenses for both the individual and the qualified donor
147.34for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
147.35may be subtracted under this clause only once; and "qualified donor" means the individual
147.36or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
148.1individual may claim the subtraction in this clause for each instance of organ donation for
148.2transplantation during the taxable year in which the qualified expenses occur;
148.3    (14) in each of the five tax years immediately following the tax year in which an
148.4addition is required under subdivision 19a, clause (8), or 19c, clause (16) (15), in the case
148.5of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
148.6of the addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause
148.7(16) (15), in the case of a shareholder of a corporation that is an S corporation, minus the
148.8positive value of any net operating loss under section 172 of the Internal Revenue Code
148.9generated for the tax year of the addition. If the net operating loss exceeds the addition for
148.10the tax year, a subtraction is not allowed under this clause;
148.11    (15) to the extent included in federal taxable income, compensation paid to a
148.12nonresident who is a service member as defined in United States Code, title 10, section
148.13101(a)(5), for military service as defined in the Service Member Civil Relief Act, Public
148.14Law 108-189, section 101(2); and
148.15    (16) international economic development zone income as provided under section
148.16469.325 .
148.17EFFECTIVE DATE.Clauses (9) and (14) of this section are effective the day
148.18following final enactment. Clauses (11) and (12) are effective retroactively for taxable
148.19years beginning after December 31, 2004.

148.20    Sec. 12. Minnesota Statutes 2006, section 290.01, subdivision 19d, is amended to read:
148.21    Subd. 19d. Corporations; modifications decreasing federal taxable income. For
148.22corporations, there shall be subtracted from federal taxable income after the increases
148.23provided in subdivision 19c:
148.24    (1) the amount of foreign dividend gross-up added to gross income for federal
148.25income tax purposes under section 78 of the Internal Revenue Code;
148.26    (2) the amount of salary expense not allowed for federal income tax purposes due
148.27to claiming the federal jobs work opportunity credit under section 51 of the Internal
148.28Revenue Code;
148.29    (3) any dividend (not including any distribution in liquidation) paid within the
148.30taxable year by a national or state bank to the United States, or to any instrumentality of
148.31the United States exempt from federal income taxes, on the preferred stock of the bank
148.32owned by the United States or the instrumentality;
148.33    (4) amounts disallowed for intangible drilling costs due to differences between
148.34this chapter and the Internal Revenue Code in taxable years beginning before January
148.351, 1987, as follows:
149.1    (i) to the extent the disallowed costs are represented by physical property, an amount
149.2equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09,
149.3subdivision 7 , subject to the modifications contained in subdivision 19e; and
149.4    (ii) to the extent the disallowed costs are not represented by physical property, an
149.5amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
149.6290.09, subdivision 8 ;
149.7    (5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
149.8Internal Revenue Code, except that:
149.9    (i) for capital losses incurred in taxable years beginning after December 31, 1986,
149.10capital loss carrybacks shall not be allowed;
149.11    (ii) for capital losses incurred in taxable years beginning after December 31, 1986,
149.12a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
149.13allowed;
149.14    (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
149.15capital loss carryback to each of the three taxable years preceding the loss year, subject to
149.16the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
149.17    (iv) for capital losses incurred in taxable years beginning before January 1, 1987,
149.18a capital loss carryover to each of the five taxable years succeeding the loss year to the
149.19extent such loss was not used in a prior taxable year and subject to the provisions of
149.20Minnesota Statutes 1986, section 290.16, shall be allowed;
149.21    (6) an amount for interest and expenses relating to income not taxable for federal
149.22income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
149.23expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
149.24291 of the Internal Revenue Code in computing federal taxable income;
149.25    (7) in the case of mines, oil and gas wells, other natural deposits, and timber for
149.26which percentage depletion was disallowed pursuant to subdivision 19c, clause (11) (9), a
149.27reasonable allowance for depletion based on actual cost. In the case of leases the deduction
149.28must be apportioned between the lessor and lessee in accordance with rules prescribed
149.29by the commissioner. In the case of property held in trust, the allowable deduction must
149.30be apportioned between the income beneficiaries and the trustee in accordance with the
149.31pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
149.32of the trust's income allocable to each;
149.33    (8) for certified pollution control facilities placed in service in a taxable year
149.34beginning before December 31, 1986, and for which amortization deductions were elected
149.35under section 169 of the Internal Revenue Code of 1954, as amended through December
150.131, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
150.21986, section 290.09, subdivision 7;
150.3    (9) amounts included in federal taxable income that are due to refunds of income,
150.4excise, or franchise taxes based on net income or related minimum taxes paid by the
150.5corporation to Minnesota, another state, a political subdivision of another state, the
150.6District of Columbia, or a foreign country or possession of the United States to the extent
150.7that the taxes were added to federal taxable income under section 290.01, subdivision 19c,
150.8clause (1), in a prior taxable year;
150.9    (10) 80 percent of royalties, fees, or other like income accrued or received from a
150.10foreign operating corporation or a foreign corporation which is part of the same unitary
150.11business as the receiving corporation;
150.12    (11) income or gains from the business of mining as defined in section 290.05,
150.13subdivision 1 , clause (a), that are not subject to Minnesota franchise tax;
150.14    (12) the amount of disability access expenditures in the taxable year which are not
150.15allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
150.16    (13) the amount of qualified research expenses not allowed for federal income tax
150.17purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that
150.18the amount exceeds the amount of the credit allowed under section 290.068;
150.19    (14) the amount of salary expenses not allowed for federal income tax purposes due
150.20to claiming the Indian employment credit under section 45A(a) of the Internal Revenue
150.21Code;
150.22    (15) the amount of any refund of environmental taxes paid under section 59A of the
150.23Internal Revenue Code;
150.24    (16) (15) for taxable years beginning before January 1, 2008, the amount of the
150.25federal small ethanol producer credit allowed under section 40(a)(3) of the Internal
150.26Revenue Code which is included in gross income under section 87 of the Internal Revenue
150.27Code;
150.28    (17) (16) for a corporation whose foreign sales corporation, as defined in section
150.29922 of the Internal Revenue Code, constituted a foreign operating corporation during any
150.30taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
150.31claiming the deduction under section 290.21, subdivision 4, for income received from
150.32the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of
150.33income excluded under section 114 of the Internal Revenue Code, provided the income is
150.34not income of a foreign operating company;
151.1    (18) (17) any decrease in subpart F income, as defined in section 952(a) of the
151.2Internal Revenue Code, for the taxable year when subpart F income is calculated without
151.3regard to the provisions of section 614 103 of Public Law 107-147 109-222;
151.4    (19) (16) in each of the five tax years immediately following the tax year in which
151.5an addition is required under subdivision 19c, clause (15), an amount equal to one-fifth
151.6of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
151.7the amount of the addition made by the taxpayer under subdivision 19c, clause (15). The
151.8resulting delayed depreciation cannot be less than zero; and
151.9    (20) (17) in each of the five tax years immediately following the tax year in which an
151.10addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of the
151.11amount of the addition.
151.12EFFECTIVE DATE.The amendment to clause (2) is effective the day following
151.13final enactment. The rest of this section is effective for taxable years beginning after
151.14December 31, 2007.

151.15    Sec. 13. Minnesota Statutes 2006, section 290.06, subdivision 33, is amended to read:
151.16    Subd. 33. Bovine testing credit. (a) An owner of cattle in Minnesota may take a
151.17credit against the tax due under this chapter for an amount equal to one-half the expenses
151.18incurred during the taxable year to conduct tuberculosis testing on those cattle.
151.19    (b) If the amount of credit which the taxpayer is eligible to receive under this
151.20subdivision exceeds the taxpayer's tax liability under this chapter, the commissioner of
151.21revenue shall refund the excess to the taxpayer.
151.22    (c) The amount necessary to pay claims for the refund provided in this subdivision is
151.23appropriated from the general fund to the commissioner of revenue.
151.24    (d) Expenses incurred in a calendar year in which tuberculosis testing of cattle in
151.25Minnesota is not federally required are not allowed in claiming the credit under paragraph
151.26(a).
151.27EFFECTIVE DATE.This section is effective for taxable years beginning after
151.28December 31, 2007.

151.29    Sec. 14. Minnesota Statutes 2006, section 290.067, subdivision 2b, is amended to read:
151.30    Subd. 2b. Inflation adjustment. The commissioner shall adjust the dollar amount
151.31of the income threshold at which the maximum credit begins to be reduced under
151.32subdivision 2 must be adjusted for inflation. The commissioner shall make the inflation
151.33adjustments in accordance with section 1(f) of the Internal Revenue Code except that for
152.1the purposes of this subdivision the percentage increase must be determined from the year
152.2starting September 1, 1999, and ending August 31, 2000, as the base year for adjusting
152.3for inflation for the tax year beginning after December 31, 2000. The determination of
152.4the commissioner under this subdivision is not a rule under the Administrative Procedure
152.5Act. by the percentage determined pursuant to the provisions of section 1(f) of the Internal
152.6Revenue Code, except that in section 1(f)(3)(B) the word "1999" shall be substituted for
152.7the word "1992." For 2001, the commissioner shall then determine the percent change
152.8from the 12 months ending on August 31, 1999, to the 12 months ending on August 31,
152.92000, and in each subsequent year, from the 12 months ending on August 31, 1999, to the
152.1012 months ending on August 31 of the year preceding the taxable year. The determination
152.11of the commissioner pursuant to this subdivision must not be considered a "rule" and is
152.12not subject to the Administrative Procedure Act contained in chapter 14. The threshold
152.13amount as adjusted must be rounded to the nearest $10 amount. If the amount ends in
152.14$5, the amount is rounded up to the nearest $10 amount.
152.15EFFECTIVE DATE.This section is effective for taxable years beginning after
152.16December 31, 2007.

152.17    Sec. 15. Minnesota Statutes 2006, section 290.0671, subdivision 7, is amended to read:
152.18    Subd. 7. Inflation adjustment. The earned income amounts used to calculate the
152.19credit and the income thresholds at which the maximum credit begins to be reduced in
152.20subdivision 1 must be adjusted for inflation. The commissioner shall make the inflation
152.21adjustments in accordance with section 1(f) of the Internal Revenue Code except that for
152.22the purposes of this subdivision the percentage increase shall be determined from the year
152.23starting September 1, 1999, and ending August 31, 2000, as the base year for adjusting for
152.24inflation for the tax year beginning after December 31, 2000. adjust by the percentage
152.25determined pursuant to the provisions of section 1(f) of the Internal Revenue Code, except
152.26that in section 1(f)(3)(B) the word "1999" shall be substituted for the word "1992." For
152.272001, the commissioner shall then determine the percent change from the 12 months
152.28ending on August 31, 1999, to the 12 months ending on August 31, 2000, and in each
152.29subsequent year, from the 12 months ending on August 31, 1999, to the 12 months ending
152.30on August 31 of the year preceding the taxable year. The earned income thresholds as
152.31adjusted for inflation must be rounded to the nearest $10 amount. If the amount ends
152.32in $5, the amount is rounded up to the nearest $10 amount. The determination of the
152.33commissioner under this subdivision is not a rule under the Administrative Procedure Act.
153.1EFFECTIVE DATE.This section is effective for taxable years beginning after
153.2December 31, 2007.

153.3    Sec. 16. Minnesota Statutes 2006, section 290.091, subdivision 3, is amended to read:
153.4    Subd. 3. Exemption amount. (a) For purposes of computing the alternative
153.5minimum tax, the exemption amount is:
153.6    (1) for taxable years beginning before January 1, 2006, the exemption determined
153.7under section 55(d) of the Internal Revenue Code, as amended through December 31,
153.81992; and
153.9    (2), for taxable years beginning after December 31, 2005, $60,000 for married
153.10couples filing joint returns, $30,000 for married individuals filing separate returns, estates,
153.11and trusts, and $45,000 for unmarried individuals.
153.12    (b) The exemption amount determined under this subdivision is subject to the phase
153.13out under section 55(d)(3) of the Internal Revenue Code, except that alternative minimum
153.14taxable income as determined under this section must be substituted in the computation of
153.15the phase out.
153.16    (c) For taxable years beginning after December 31, 2006, the exemption amount
153.17under paragraph (a), clause (2), must be adjusted for inflation. The commissioner shall
153.18make the inflation adjustments in accordance with section 1(f) of the Internal Revenue
153.19Code except that for the purposes of this subdivision the percentage increase must be
153.20determined from the year starting September 1, 2005, and ending August 31, 2006, as the
153.21base year for adjusting for inflation for the tax year beginning after December 31, 2006.
153.22The commissioner shall adjust the exemption amount by the percentage determined
153.23pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in
153.24section 1(f)(3)(B) the word "2005" shall be substituted for the word "1992." For 2007,
153.25the commissioner shall then determine the percent change from the 12 months ending on
153.26August 31, 2005, to the 12 months ending on August 31, 2006, and in each subsequent
153.27year, from the 12 months ending on August 31, 2005, to the 12 months ending on August
153.2831 of the year preceding the taxable year. The exemption amount as adjusted must be
153.29rounded to the nearest $10. If the amount ends in $5, it must be rounded up to the nearest
153.30$10 amount. The determination of the commissioner under this subdivision is not a rule
153.31under the Administrative Procedure Act.
153.32EFFECTIVE DATE.This section is effective for taxable years beginning after
153.33December 31, 2007.

153.34    Sec. 17. Minnesota Statutes 2006, section 290.0921, subdivision 3, is amended to read:
154.1    Subd. 3. Alternative minimum taxable income. "Alternative minimum taxable
154.2income" is Minnesota net income as defined in section 290.01, subdivision 19, and
154.3includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e),
154.4(f), and (h) of the Internal Revenue Code. If a corporation files a separate company
154.5Minnesota tax return, the minimum tax must be computed on a separate company basis.
154.6If a corporation is part of a tax group filing a unitary return, the minimum tax must be
154.7computed on a unitary basis. The following adjustments must be made.
154.8(1) For purposes of the depreciation adjustments under section 56(a)(1) and
154.956(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in
154.10service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal
154.11income tax purposes, including any modification made in a taxable year under section
154.12290.01, subdivision 19e , or Minnesota Statutes 1986, section 290.09, subdivision 7,
154.13paragraph (c).
154.14For taxable years beginning after December 31, 2000, the amount of any remaining
154.15modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986,
154.16section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation
154.17allowance in the first taxable year after December 31, 2000.
154.18(2) The portion of the depreciation deduction allowed for federal income tax
154.19purposes under section 168(k) of the Internal Revenue Code that is required as an addition
154.20under section 290.01, subdivision 19c, clause (16) (15), is disallowed in determining
154.21alternative minimum taxable income.
154.22(3) The subtraction for depreciation allowed under section 290.01, subdivision
154.2319d , clause (19) (18), is allowed as a depreciation deduction in determining alternative
154.24minimum taxable income.
154.25(4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d)
154.26of the Internal Revenue Code does not apply.
154.27(5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal
154.28Revenue Code does not apply.
154.29(6) The special rule for dividends from section 936 companies under section
154.3056(g)(4)(C)(iii) does not apply.
154.31(7) The tax preference for depletion under section 57(a)(1) of the Internal Revenue
154.32Code does not apply.
154.33(8) The tax preference for intangible drilling costs under section 57(a)(2) of the
154.34Internal Revenue Code must be calculated without regard to subparagraph (E) and the
154.35subtraction under section 290.01, subdivision 19d, clause (4).
155.1(9) The tax preference for tax exempt interest under section 57(a)(5) of the Internal
155.2Revenue Code does not apply.
155.3(10) The tax preference for charitable contributions of appreciated property under
155.4section 57(a)(6) of the Internal Revenue Code does not apply.
155.5(11) For purposes of calculating the tax preference for accelerated depreciation or
155.6amortization on certain property placed in service before January 1, 1987, under section
155.757(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the
155.8deduction allowed under section 290.01, subdivision 19e.
155.9For taxable years beginning after December 31, 2000, the amount of any remaining
155.10modification made under section 290.01, subdivision 19e, not previously deducted is a
155.11depreciation or amortization allowance in the first taxable year after December 31, 2004.
155.12(12) For purposes of calculating the adjustment for adjusted current earnings in
155.13section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable
155.14income" as it is used in section 56(g) of the Internal Revenue Code, means alternative
155.15minimum taxable income as defined in this subdivision, determined without regard to the
155.16adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code.
155.17(13) For purposes of determining the amount of adjusted current earnings under
155.18section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section
155.1956(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign dividend
155.20gross-up subtracted as provided in section 290.01, subdivision 19d, clause (1), (ii) the
155.21amount of refunds of income, excise, or franchise taxes subtracted as provided in section
155.22290.01, subdivision 19d , clause (10) (9), or (iii) the amount of royalties, fees or other like
155.23income subtracted as provided in section 290.01, subdivision 19d, clause (11) (10).
155.24(14) Alternative minimum taxable income excludes the income from operating in a
155.25job opportunity building zone as provided under section 469.317.
155.26(15) Alternative minimum taxable income excludes the income from operating in a
155.27biotechnology and health sciences industry zone as provided under section 469.337.
155.28(16) Alternative minimum taxable income excludes the income from operating in an
155.29international economic development zone as provided under section 469.326.
155.30Items of tax preference must not be reduced below zero as a result of the
155.31modifications in this subdivision.
155.32EFFECTIVE DATE.This section is effective for taxable years beginning after
155.33December 31, 2007.

155.34    Sec. 18. Minnesota Statutes 2006, section 290.191, subdivision 8, is amended to read:
156.1    Subd. 8. Deposit; definition. (a) "Deposit," as used in subdivision 7 6, paragraph
156.2(n), has the meanings in this subdivision.
156.3    (b) "Deposit" means the unpaid balance of money or its equivalent received or
156.4held by a financial institution in the usual course of business and for which it has given
156.5or is obligated to give credit, either conditionally or unconditionally, to a commercial,
156.6checking, savings, time, or thrift account whether or not advance notice is required to
156.7withdraw the credited funds, or which is evidenced by its certificate of deposit, thrift
156.8certificate, investment certificate, or certificate of indebtedness, or other similar name, or a
156.9check or draft drawn against a deposit account and certified by the financial institution,
156.10or a letter of credit or a traveler's check on which the financial institution is primarily
156.11liable. However, without limiting the generality of the term "money or its equivalent," any
156.12such account or instrument must be regarded as evidencing the receipt of the equivalent
156.13of money when credited or issued in exchange for checks or drafts or for a promissory
156.14note upon which the person obtaining the credit or instrument is primarily or secondarily
156.15liable, or for a charge against a deposit account, or in settlement of checks, drafts, or other
156.16instruments forwarded to the bank for collection.
156.17    (c) "Deposit" means trust funds received or held by the financial institution, whether
156.18held in the trust department or held or deposited in any other department of the financial
156.19institution.
156.20    (d) "Deposit" means money received or held by a financial institution, or the credit
156.21given for money or its equivalent received or held by a financial institution, in the usual
156.22course of business for a special or specific purpose, regardless of the legal relationship so
156.23established. Under this paragraph, "deposit" includes, but is not limited to, escrow funds,
156.24funds held as security for an obligation due to the financial institution or others, including
156.25funds held as dealers reserves, or for securities loaned by the financial institution, funds
156.26deposited by a debtor to meet maturing obligations, funds deposited as advance payment
156.27on subscriptions to United States government securities, funds held for distribution or
156.28purchase of securities, funds held to meet its acceptances or letters of credit, and withheld
156.29taxes. It does not include funds received by the financial institution for immediate
156.30application to the reduction of an indebtedness to the receiving financial institution, or
156.31under condition that the receipt of the funds immediately reduces or extinguishes the
156.32indebtedness.
156.33    (e) "Deposit" means outstanding drafts, including advice or another such institution,
156.34cashier's checks, money orders, or other officer's checks issued in the usual course
156.35of business for any purpose, but not including those issued in payment for services,
156.36dividends, or purchases or other costs or expenses of the financial institution itself.
157.1    (f) "Deposit" means money or its equivalent held as a credit balance by a financial
157.2institution on behalf of its customer if the entity is engaged in soliciting and holding such
157.3balances in the regular course of its business.
157.4    (g) Interinstitution fund transfers are not deposits.
157.5EFFECTIVE DATE.This section is effective the day following final enactment.

157.6    Sec. 19. Minnesota Statutes 2006, section 290A.03, subdivision 7, is amended to read:
157.7    Subd. 7. Dependent. "Dependent" means any person who is considered a
157.8dependent under sections 151 and 152 of the Internal Revenue Code. In the case of a son,
157.9stepson, daughter, or stepdaughter of the claimant, amounts received as a Minnesota
157.10family investment program grant, allowance to or on behalf of the child, surplus food, or
157.11other relief in kind supplied by a governmental agency must not be taken into account
157.12in determining whether the child received more than half of the child's support from
157.13the claimant.
157.14EFFECTIVE DATE.This section is effective for property tax refunds based on
157.15rents paid after December 31, 2007, and property taxes payable after December 31, 2008.

157.16ARTICLE 12

157.17DEPARTMENT SALES AND USE TAXES

157.18    Section 1. Minnesota Statutes 2006, section 289A.40, subdivision 2, is amended to
157.19read:
157.20    Subd. 2. Bad debt loss. If a claim relates to an overpayment because of a failure to
157.21deduct a loss due to a bad debt or to a security becoming worthless, the claim is considered
157.22timely if filed within seven years from the date prescribed for the filing of the return. A
157.23claim relating to an overpayment of taxes under chapter 297A must be filed within 3-1/2
157.24years from the date prescribed for filing the return, plus any extensions granted for filing
157.25the return, but only if filed within the extended time when the bad debt was (1) written off
157.26as uncollectible in the taxpayer's books and records, and (2) either eligible to be deducted
157.27for federal income tax purposes or would have been eligible for a bad debt deduction for
157.28federal income tax purposes if the taxpayer were required to file a federal income tax
157.29return, or within one year from the date the taxpayer's federal income tax return is timely
157.30filed claiming the bad debt deduction, whichever period is later. The refund or credit is
157.31limited to the amount of overpayment attributable to the loss. "Bad debt" for purposes
157.32of this subdivision, has the same meaning as that term is used in United States Code,
157.33title 26, section 166, except that for a claim relating to an overpayment of taxes under
158.1chapter 297A the following are excluded from the calculation of bad debt: financing
158.2charges or interest; sales or use taxes charged on the purchase price; uncollectible amounts
158.3on property that remain in the possession of the seller until the full purchase price is
158.4paid; expenses incurred in attempting to collect any debt; and repossessed property. For
158.5purposes of reporting a payment received on previously claimed bad debt under chapter
158.6297A, any payments made on a debt or account are applied first proportionally to the
158.7taxable price of the property or service and the sales tax on it, and secondly to interest,
158.8service charges, and any other charges.
158.9EFFECTIVE DATE.This section is effective the day following final enactment.

158.10    Sec. 2. Minnesota Statutes 2006, section 289A.56, is amended by adding a subdivision
158.11to read:
158.12    Subd. 8. Border city zone refunds. Notwithstanding subdivision 3, for refunds
158.13payable under section 469.1734, subdivision 6, interest is computed from 90 days after the
158.14refund claim is filed with the commissioner.
158.15EFFECTIVE DATE.This section is effective for refund claims filed after June
158.1630, 2008.

158.17    Sec. 3. Minnesota Statutes 2006, section 289A.60, subdivision 25, is amended to read:
158.18    Subd. 25. Penalty for failure to properly complete sales and use tax return. A
158.19person who fails to report local sales tax taxes required to be reported on a sales and use
158.20tax return or who fails to report local sales tax taxes on separate tax lines on the sales
158.21and use tax return is subject to a penalty of five percent of the amount of tax not properly
158.22reported on the return. A person who files a consolidated tax return but fails to report
158.23location information is subject to a $500 penalty for each return not containing location
158.24information. In addition, the commissioner may revoke the privilege for a taxpayer to
158.25file consolidated returns and may require the taxpayer to separately register each location
158.26and to file a tax return for each location.
158.27EFFECTIVE DATE.This section is effective for returns filed after June 30, 2008.

158.28    Sec. 4. Minnesota Statutes 2006, section 289A.60, is amended by adding a subdivision
158.29to read:
158.30    Subd. 29. Penalty for failure to report liquor sales. In the case of a failure to file
158.31an informational report required by section 297A.8155 with the commissioner on or before
159.1the date prescribed, the person failing to file the report shall pay a penalty of $500 each
159.2failure. If a failure to file a report is intentional, the penalty shall be $1,000 each failure.
159.3EFFECTIVE DATE.This section is effective for reports filed after December
159.431, 2008.

159.5    Sec. 5. Minnesota Statutes 2006, section 297A.61, subdivision 3, is amended to read:
159.6    Subd. 3. Sale and purchase. (a) "Sale" and "purchase" include, but are not limited
159.7to, each of the transactions listed in this subdivision.
159.8    (b) Sale and purchase include:
159.9    (1) any transfer of title or possession, or both, of tangible personal property, whether
159.10absolutely or conditionally, for a consideration in money or by exchange or barter; and
159.11    (2) the leasing of or the granting of a license to use or consume, for a consideration
159.12in money or by exchange or barter, tangible personal property, other than a manufactured
159.13home used for residential purposes for a continuous period of 30 days or more.
159.14    (c) Sale and purchase include the production, fabrication, printing, or processing of
159.15tangible personal property for a consideration for consumers who furnish either directly or
159.16indirectly the materials used in the production, fabrication, printing, or processing.
159.17    (d) Sale and purchase include the preparing for a consideration of food.
159.18Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited
159.19to, the following:
159.20    (1) prepared food sold by the retailer;
159.21    (2) soft drinks;
159.22    (3) candy;
159.23    (4) dietary supplements; and
159.24    (5) all food sold through vending machines.
159.25    (e) A sale and a purchase includes the furnishing for a consideration of electricity,
159.26gas, water, or steam for use or consumption within this state.
159.27    (f) A sale and a purchase includes the transfer for a consideration of prewritten
159.28computer software whether delivered electronically, by load and leave, or otherwise.
159.29    (g) A sale and a purchase includes the furnishing for a consideration of the following
159.30services:
159.31    (1) the privilege of admission to places of amusement, recreational areas, or athletic
159.32events, and the making available of amusement devices, tanning facilities, reducing
159.33salons, steam baths, turkish baths, health clubs, and spas or athletic facilities;
159.34    (2) lodging and related services by a hotel, rooming house, resort, campground,
159.35motel, or trailer camp, including furnishing the guest of the facility with access to
160.1telecommunication services, and the granting of any similar license to use real property
160.2in a specific facility, other than the renting or leasing of it for a continuous period of
160.330 days or more under an enforceable written agreement that may not be terminated
160.4without prior notice;
160.5    (3) nonresidential parking services, whether on a contractual, hourly, or other
160.6periodic basis, except for parking at a meter;
160.7    (4) the granting of membership in a club, association, or other organization if:
160.8    (i) the club, association, or other organization makes available for the use of its
160.9members sports and athletic facilities, without regard to whether a separate charge is
160.10assessed for use of the facilities; and
160.11    (ii) use of the sports and athletic facility is not made available to the general public
160.12on the same basis as it is made available to members.
160.13Granting of membership means both onetime initiation fees and periodic membership
160.14dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and
160.15squash courts; basketball and volleyball facilities; running tracks; exercise equipment;
160.16swimming pools; and other similar athletic or sports facilities;
160.17    (5) delivery of aggregate materials and concrete block by a third party, excluding
160.18delivery of aggregate material used in road construction, and delivery of concrete block by
160.19a third party if the delivery would be subject to the sales tax if provided by the seller of the
160.20aggregate material or concrete block; and
160.21    (6) services as provided in this clause:
160.22    (i) laundry and dry cleaning services including cleaning, pressing, repairing, altering,
160.23and storing clothes, linen services and supply, cleaning and blocking hats, and carpet,
160.24drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not
160.25include services provided by coin operated facilities operated by the customer;
160.26    (ii) motor vehicle washing, waxing, and cleaning services, including services
160.27provided by coin operated facilities operated by the customer, and rustproofing,
160.28undercoating, and towing of motor vehicles;
160.29    (iii) building and residential cleaning, maintenance, and disinfecting services and
160.30pest control and exterminating services;
160.31    (iv) detective, security, burglar, fire alarm, and armored car services; but not
160.32including services performed within the jurisdiction they serve by off-duty licensed peace
160.33officers as defined in section 626.84, subdivision 1, or services provided by a nonprofit
160.34organization for monitoring and electronic surveillance of persons placed on in-home
160.35detention pursuant to court order or under the direction of the Minnesota Department
160.36of Corrections;
161.1    (v) pet grooming services;
161.2    (vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting
161.3and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor
161.4plant care; tree, bush, shrub, and stump removal, except when performed as part of a land
161.5clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for
161.6public utility lines. Services performed under a construction contract for the installation of
161.7shrubbery, plants, sod, trees, bushes, and similar items are not taxable;
161.8    (vii) massages, except when provided by a licensed health care facility or
161.9professional or upon written referral from a licensed health care facility or professional for
161.10treatment of illness, injury, or disease; and
161.11    (viii) the furnishing of lodging, board, and care services for animals in kennels and
161.12other similar arrangements, but excluding veterinary and horse boarding services.
161.13    In applying the provisions of this chapter, the terms "tangible personal property"
161.14and "retail sale" include taxable services listed in clause (6), items (i) to (vi) and (viii),
161.15and the provision of these taxable services, unless specifically provided otherwise.
161.16Services performed by an employee for an employer are not taxable. Services performed
161.17by a partnership or association for another partnership or association are not taxable if
161.18one of the entities owns or controls more than 80 percent of the voting power of the
161.19equity interest in the other entity. Services performed between members of an affiliated
161.20group of corporations are not taxable. For purposes of the preceding sentence, "affiliated
161.21group of corporations" means those entities that would be classified as members of an
161.22affiliated group as defined under United States Code, title 26, section 1504, disregarding
161.23the exclusions in section 1504(b).
161.24    For purposes of clause (5), "road construction" means construction of (1) public
161.25roads, (2) cartways, and (3) private roads in townships located outside of the seven-county
161.26metropolitan area up to the point of the emergency response location sign.
161.27    (h) A sale and a purchase includes the furnishing for a consideration of tangible
161.28personal property or taxable services by the United States or any of its agencies or
161.29instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political
161.30subdivisions.
161.31    (i) A sale and a purchase includes the furnishing for a consideration
161.32of telecommunications services, including ancillary services associated with
161.33telecommunication services, cable television services and, direct satellite services, and
161.34ring tones. Telecommunications Telecommunication services include, but are not limited
161.35to, the following services, as defined in section 297A.669: air-to-ground radiotelephone
161.36service, mobile telecommunication service, postpaid calling service, prepaid calling
162.1service, prepaid wireless calling service, and private communication services. The
162.2services in this paragraph are taxed to the extent allowed under federal law.
162.3    (j) A sale and a purchase includes the furnishing for a consideration of installation if
162.4the installation charges would be subject to the sales tax if the installation were provided
162.5by the seller of the item being installed.
162.6    (k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer
162.7to a customer when (1) the vehicle is rented by the customer for a consideration, or (2)
162.8the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section
162.965B.29, subdivision 1 , clause (1).
162.10EFFECTIVE DATE.This section is effective for sales and purchases made after
162.11June 30, 2008, except that the amendments to paragraphs (g), clause (2), and (i), are
162.12effective retroactively for sales and purchases made after December 31, 2007.

162.13    Sec. 6. Minnesota Statutes 2006, section 297A.61, subdivision 4, is amended to read:
162.14    Subd. 4. Retail sale. (a) A "retail sale" means any sale, lease, or rental for any
162.15purpose, other than resale, sublease, or subrent of items by the purchaser in the normal
162.16course of business as defined in subdivision 21.
162.17    (b) A sale of property used by the owner only by leasing it to others or by holding it
162.18in an effort to lease it, and put to no use by the owner other than resale after the lease or
162.19effort to lease, is a sale of property for resale.
162.20    (c) A sale of master computer software that is purchased and used to make copies for
162.21sale or lease is a sale of property for resale.
162.22    (d) A sale of building materials, supplies, and equipment to owners, contractors,
162.23subcontractors, or builders for the erection of buildings or the alteration, repair, or
162.24improvement of real property is a retail sale in whatever quantity sold, whether the sale is
162.25for purposes of resale in the form of real property or otherwise.
162.26    (e) A sale of carpeting, linoleum, or similar floor covering to a person who provides
162.27for installation of the floor covering is a retail sale and not a sale for resale since a sale
162.28of floor covering which includes installation is a contract for the improvement of real
162.29property.
162.30    (f) A sale of shrubbery, plants, sod, trees, and similar items to a person who provides
162.31for installation of the items is a retail sale and not a sale for resale since a sale of
162.32shrubbery, plants, sod, trees, and similar items that includes installation is a contract for
162.33the improvement of real property.
162.34    (g) A sale of tangible personal property that is awarded as prizes is a retail sale and
162.35is not considered a sale of property for resale.
163.1    (h) A sale of tangible personal property utilized or employed in the furnishing or
163.2providing of services under subdivision 3, paragraph (g), clause (1), including, but not
163.3limited to, property given as promotional items, is a retail sale and is not considered a
163.4sale of property for resale.
163.5    (i) A sale of tangible personal property used in conducting lawful gambling under
163.6chapter 349 or the State Lottery under chapter 349A, including, but not limited to,
163.7property given as promotional items, is a retail sale and is not considered a sale of
163.8property for resale.
163.9    (j) A sale of machines, equipment, or devices that are used to furnish, provide, or
163.10dispense goods or services, including, but not limited to, coin-operated devices, is a retail
163.11sale and is not considered a sale of property for resale.
163.12    (k) In the case of a lease, a retail sale occurs (1) when an obligation to make a lease
163.13payment becomes due under the terms of the agreement or the trade practices of the
163.14lessor or (2) in the case of a lease of a motor vehicle, as defined in section 297B.01,
163.15subdivision 5 , but excluding vehicles with a manufacturer's gross vehicle weight rating
163.16greater than 10,000 pounds and rentals of vehicles for not more than 28 days, at the time
163.17the lease is executed.
163.18    (l) In the case of a conditional sales contract, a retail sale occurs upon the transfer of
163.19title or possession of the tangible personal property.
163.20    (m) A sale of a bundled transaction in which one or more of the products included
163.21in the bundle is a taxable product is a retail sale, except that if one of the products
163.22is a telecommunication service, ancillary service, Internet access, or audio or video
163.23programming service, and the seller has maintained books and records identifying through
163.24reasonable and verifiable standards the portions of the price that are attributable to the
163.25distinct and separately identifiable products, then the products are not considered part of a
163.26bundled transaction. For purposes of this paragraph:
163.27    (1) the books and records maintained by the seller must be maintained in the regular
163.28course of business, and do not include books and records created and maintained by the
163.29seller primarily for tax purposes;
163.30    (2) books and records maintained in the regular course of business include, but are
163.31not limited to, financial statements, general ledgers, invoicing and billing systems and
163.32reports, and reports for regulatory tariffs and other regulatory matters; and
163.33    (3) books and records are maintained primarily for tax purposes when the books
163.34and records identify taxable and nontaxable portions of the price, but the seller maintains
163.35other books and records that identify different prices attributable to the distinct products
163.36included in the same bundled transaction.
164.1EFFECTIVE DATE.This section is effective retroactively for sales and purchases
164.2made after December 31, 2007.

164.3    Sec. 7. Minnesota Statutes 2006, section 297A.61, subdivision 7, is amended to read:
164.4    Subd. 7. Sales price. (a) "Sales price" means the measure subject to sales tax, and
164.5means the total amount of consideration, including cash, credit, personal property, and
164.6services, for which personal property or services are sold, leased, or rented, valued in
164.7money, whether received in money or otherwise, without any deduction for the following:
164.8    (1) the seller's cost of the property sold;
164.9    (2) the cost of materials used, labor or service cost, interest, losses, all costs of
164.10transportation to the seller, all taxes imposed on the seller, and any other expenses of
164.11the seller;
164.12    (3) charges by the seller for any services necessary to complete the sale, other than
164.13delivery and installation charges;
164.14    (4) delivery charges, except the percentage of the delivery charge allocated to
164.15delivery of tax exempt property, when the delivery charge is allocated by using either (i) a
164.16percentage based on the total sales price of the taxable property compared to the total sales
164.17price of all property in the shipment, or (ii) a percentage based on the total weight of the
164.18taxable property compared to the total weight of all property in the shipment; and
164.19    (5) installation charges; and.
164.20    (6) the value of exempt property given to the purchaser when taxable and exempt
164.21personal property have been bundled together and sold by the seller as a single product
164.22or piece of merchandise.
164.23    (b) Sales price does not include:
164.24    (1) discounts, including cash, terms, or coupons, that are not reimbursed by a third
164.25party and that are allowed by the seller and taken by a purchaser on a sale;
164.26    (2) interest, financing, and carrying charges from credit extended on the sale of
164.27personal property or services, if the amount is separately stated on the invoice, bill of sale,
164.28or similar document given to the purchaser; and
164.29    (3) any taxes legally imposed directly on the consumer that are separately stated on
164.30the invoice, bill of sale, or similar document given to the purchaser.
164.31    (c) Sales price includes consideration received by the seller from third parties if:
164.32    (1) the seller actually receives consideration from a party other than the purchaser
164.33and the consideration is directly related to a price reduction or discount on the sale;
164.34    (2) the seller has an obligation to pass the price reduction or discount through to
164.35the purchaser;
165.1    (3) the amount of the consideration attributable to the sale is fixed and determinable
165.2by the seller at the time of the sale of the item to the purchaser; and
165.3    (4) one of the following criteria is met:
165.4    (i) the purchaser presents a coupon, certificate, or other documentation to the seller
165.5to claim a price reduction or discount when the coupon, certificate, or documentation is
165.6authorized, distributed, or granted by a third party with the understanding that the third
165.7party will reimburse any seller to whom the coupon, certificate, or documentation is
165.8presented;
165.9    (ii) the purchaser identifies himself or herself to the seller as a member of a group or
165.10organization entitled to a price reduction or discount. A "preferred customer" card that is
165.11available to any customer does not constitute membership in such a group; or
165.12    (iii) the price reduction or discount is identified as a third-party price reduction or
165.13discount on the invoice received by the purchaser or on a coupon, certificate, or other
165.14documentation presented by the purchaser.
165.15EFFECTIVE DATE.This section is effective retroactively for sales and purchases
165.16made after December 31, 2007, except that the amendment to paragraph (a), clause (4), is
165.17effective the day following final enactment.

165.18    Sec. 8. Minnesota Statutes 2006, section 297A.61, subdivision 10, is amended to read:
165.19    Subd. 10. Tangible personal property. (a) "Tangible personal property" means
165.20personal property that can be seen, weighed, measured, felt, or touched, or that is in any
165.21other manner perceptible to the senses. "Tangible personal property" includes, but is not
165.22limited to, electricity, water, gas, steam, and prewritten computer software, and prepaid
165.23calling cards.
165.24    (b) Tangible personal property does not include:
165.25    (1) large ponderous machinery and equipment used in a business or production
165.26activity which at common law would be considered to be real property;
165.27    (2) property which is subject to an ad valorem property tax;
165.28    (3) property described in section 272.02, subdivision 9, clauses (a) to (d); and
165.29    (4) property described in section 272.03, subdivision 2, clauses (3) and (5).
165.30EFFECTIVE DATE.This section is effective retroactively for sales and purchases
165.31made after December 31, 2007.

165.32    Sec. 9. Minnesota Statutes 2006, section 297A.61, subdivision 24, is amended to read:
166.1    Subd. 24. Telecommunications services. (a) "Telecommunications services" means
166.2the electronic transmission, conveyance, or routing of voice, data, audio, video, or any
166.3other information or signals to a point, or between or among points, by or through any
166.4electronic, satellite, optical, microwave, or other medium or method now in existence or
166.5hereafter devised, regardless of the protocol used for such transmission, conveyance,
166.6or routing.
166.7    (b) Telecommunications services includes the furnishing for consideration of access
166.8to telephone services by a hotel to its guests. include transmission, conveyance, or routing
166.9in which computer processing applications are used to act on the form, code, or protocol
166.10of the content for purposes of transmission, conveyance, or routing, without regard to
166.11whether the service is referred to as voice over Internet protocol services or is classified by
166.12the Federal Communications Commission as enhanced or value added.
166.13    (c) Telecommunications services do not include:
166.14    (1) services purchased with a prepaid telephone calling card;
166.15    (2) private communication service purchased by an agent acting on behalf of the
166.16State Lottery;
166.17    (3) information services; and
166.18    (4) purchases of telecommunications when the purchaser uses the purchased services
166.19as a component part of or integrates such service into another telecommunications service
166.20that is sold by the purchaser in the normal course of business.
166.21    (d) For purposes of this subdivision, "information services" means the offering of
166.22the capability for generating, acquiring, storing, transforming, processing, retrieving,
166.23utilizing, or making available information.
166.24    (1) data processing and information services that allow data to be generated,
166.25acquired, stored, processed, or retrieved and delivered by an electronic transmission to
166.26a purchaser when the purchaser's primary purpose for the underlying transaction is the
166.27processed data or information;
166.28    (2) installation or maintenance of wiring or equipment on a customer's premises;
166.29    (3) tangible personal property;
166.30    (4) advertising, including, but not limited to, directory advertising;
166.31    (5) billing and collection services provided to third parties;
166.32    (6) Internet access service;
166.33    (7) radio and television audio and video programming services, regardless of the
166.34medium, including the furnishing of transmission, conveyance, and routing of such
166.35services by the programming service provider. Radio and television audio and video
166.36programming services includes, but is not limited to, cable service as defined in United
167.1States Code, title 47, section 522(6), and audio and video programming services delivered
167.2by commercial mobile radio service providers, as defined in Code of Federal Regulations,
167.3title 47, section 20.3;
167.4    (8) ancillary services; or
167.5    (9) digital products delivered electronically, including, but not limited to, software,
167.6music, video, reading materials, or ring tones.
167.7EFFECTIVE DATE.This section is effective retroactively for sales and purchases
167.8made after December 31, 2007.

167.9    Sec. 10. Minnesota Statutes 2006, section 297A.61, is amended by adding a
167.10subdivision to read:
167.11    Subd. 38. Bundled transaction. (a) "Bundled transaction" means the retail sale
167.12of two or more products when the products are otherwise distinct and identifiable, and
167.13the products are sold for one nonitemized price. As used in this subdivision, "product"
167.14includes tangible personal property, services, intangibles, and digital goods, but does not
167.15include real property or services to real property. A bundled transaction does not include
167.16the sale of any products in which the sales price varies, or is negotiable, based on the
167.17selection by the purchaser of the products included in the transaction.
167.18    (b) For purposes of this subdivision, "distinct and identifiable" products does not
167.19include:
167.20    (1) packaging and other materials, such as containers, boxes, sacks, bags, and
167.21bottles, wrapping, labels, tags, and instruction guides, that accompany the retail sale of the
167.22products and are incidental or immaterial to the retail sale. Examples of packaging that are
167.23incidental or immaterial include grocery sacks, shoe boxes, dry cleaning garment bags,
167.24and express delivery envelopes and boxes;
167.25    (2) a promotional product provided free of charge with the required purchase of
167.26another product. A promotional product is provided free of charge if the sales price of
167.27another product, which is required to be purchased in order to receive the promotional
167.28product, does not vary depending on the inclusion of the promotional product; and
167.29    (3) items included in the definition of sales price.
167.30    (c) For purposes of this subdivision, the term "one nonitemized price" does not
167.31include a price that is separately identified by product on binding sales or other supporting
167.32sales-related documentation made available to the customer in paper or electronic form
167.33including, but not limited to an invoice, bill of sale, receipt, contract, service agreement,
167.34lease agreement, periodic notice of rates and services, rate card, or price list.
168.1    (d) A transaction that otherwise meets the definition of a bundled transaction is
168.2not a bundled transaction if it is:
168.3    (1) the retail sale of tangible personal property and a service and the tangible
168.4personal property is essential to the use of the service, and is provided exclusively in
168.5connection with the service, and the true object of the transaction is the service;
168.6    (2) the retail sale of services if one service is provided that is essential to the use or
168.7receipt of a second service and the first service is provided exclusively in connection with
168.8the second service and the true object of the transaction is the second service;
168.9    (3) a transaction that includes taxable products and nontaxable products and the
168.10purchase price or sales price of the taxable products is de minimis; or
168.11    (4) the retail sale of exempt tangible personal property and taxable tangible personal
168.12property if:
168.13    (i) the transaction includes food and food ingredients, drugs, durable medical
168.14equipment, mobility enhancing equipment, over-the-counter drugs, prosthetic devices,
168.15or medical supplies; and
168.16    (ii) the seller's purchase price or sales price of the taxable tangible personal property
168.17is 50 percent or less of the total purchase price or sales price of the bundled tangible
168.18personal property. Sellers must not use a combination of the purchase price and sales
168.19price of the tangible personal property when making the 50 percent determination for
168.20a transaction.
168.21    (e) For purposes of this subdivision, "purchase price" means the measure subject to
168.22use tax on purchases made by the seller, and "de minimis" means that the seller's purchase
168.23price or sales price of the taxable products is ten percent or less of the total purchase
168.24price or sales price of the bundled products. Sellers shall use either the purchase price
168.25or the sales price of the products to determine if the taxable products are de minimis.
168.26Sellers must not use a combination of the purchase price and sales price of the products
168.27to determine if the taxable products are de minimis. Sellers shall use the full term of a
168.28service contract to determine if the taxable products are de minimis.
168.29EFFECTIVE DATE.This section is effective retroactively for sales and purchases
168.30made after December 31, 2007.

168.31    Sec. 11. Minnesota Statutes 2006, section 297A.61, is amended by adding a
168.32subdivision to read:
168.33    Subd. 39. Ancillary services. "Ancillary services" means services that are
168.34associated with or incidental to the provision of telecommunications services, including,
169.1but not limited to, conference bridging service, detailed telecommunications billing,
169.2directory assistance, vertical service, and voice mail services.
169.3EFFECTIVE DATE.This section is effective retroactively for sales and purchases
169.4made after December 31, 2007.

169.5    Sec. 12. Minnesota Statutes 2006, section 297A.61, is amended by adding a
169.6subdivision to read:
169.7    Subd. 40. Conference bridging service. "Conference bridging service" means an
169.8ancillary service that links two or more participants of an audio or video conference call
169.9and may include the provision of a telephone number. Conference bridging service does
169.10not include the telecommunications services used to reach the conference bridge.
169.11EFFECTIVE DATE.This section is effective retroactively for sales and purchases
169.12made after December 31, 2007.

169.13    Sec. 13. Minnesota Statutes 2006, section 297A.61, is amended by adding a
169.14subdivision to read:
169.15    Subd. 41. Detailed telecommunications billing service. "Detailed
169.16telecommunications billing service" means an ancillary service of separately stating
169.17information pertaining to individual calls on a customer's billing statement.
169.18EFFECTIVE DATE.This section is effective retroactively for sales and purchases
169.19made after December 31, 2007.

169.20    Sec. 14. Minnesota Statutes 2006, section 297A.61, is amended by adding a
169.21subdivision to read:
169.22    Subd. 42. Directory assistance. "Directory assistance" means an ancillary service
169.23of providing telephone number information or address information, or both.
169.24EFFECTIVE DATE.This section is effective retroactively for sales and purchases
169.25made after December 31, 2007.

169.26    Sec. 15. Minnesota Statutes 2006, section 297A.61, is amended by adding a
169.27subdivision to read:
169.28    Subd. 43. Vertical service. "Vertical service" means an ancillary service that is
169.29offered in connection with one or more telecommunications services and which offers
170.1advanced calling features that allow customers to identify callers and to manage multiple
170.2calls and call connections, including conference bridging services.
170.3EFFECTIVE DATE.This section is effective retroactively for sales and purchases
170.4made after December 31, 2007.

170.5    Sec. 16. Minnesota Statutes 2006, section 297A.61, is amended by adding a
170.6subdivision to read:
170.7    Subd. 44. Voice mail service. "Voice mail service" means an ancillary service that
170.8enables the customer to store, send, or receive recorded messages. Voice mail service
170.9does not include any vertical services that the customer may be required to have in order
170.10to utilize the voice mail service.
170.11EFFECTIVE DATE.This section is effective retroactively for sales and purchases
170.12made after December 31, 2007.

170.13    Sec. 17. Minnesota Statutes 2006, section 297A.61, is amended by adding a
170.14subdivision to read:
170.15    Subd. 45. Ring tone. "Ring tone" means a digitized sound file that is downloaded
170.16onto a device and that may be used to alert the customer of a telecommunication service
170.17with respect to a communication.
170.18EFFECTIVE DATE.This section is effective retroactively for sales and purchases
170.19made after December 31, 2007.

170.20    Sec. 18. Minnesota Statutes 2006, section 297A.61, is amended by adding a
170.21subdivision to read:
170.22    Subd. 46. Fur clothing. "Fur clothing" means human wearing apparel that is
170.23required by the Federal Fur Products Labeling Act, United States Code, title 15, section
170.2469, to be labeled as a fur product, and the value of the fur components in the product
170.25is more than three times the value of the next most valuable tangible component. For
170.26purposes of this subdivision, "fur" means any animal skin or part of an animal skin with
170.27hair, fleece, or fur fibers attached to it, either in its raw or processed state, but does not
170.28include animal skins that have been converted into leather or suede, or from which the
170.29hair, fleece, or fur fiber has been completely removed in processing the skins.
170.30EFFECTIVE DATE.This section is effective for sales and purchases made after
170.31June 30, 2008.

171.1    Sec. 19. Minnesota Statutes 2006, section 297A.63, subdivision 1, is amended to read:
171.2    Subdivision 1. Use of tangible personal property or taxable services. (a) For the
171.3privilege of using, storing, distributing, or consuming in Minnesota tangible personal
171.4property or taxable services purchased for use, storage, distribution, or consumption in
171.5this state, a use tax is imposed on a person in Minnesota. The tax is imposed on the
171.6purchase price of retail sales of the tangible personal property or taxable services at the
171.7rate of tax imposed under section 297A.62. A person that purchases property from a
171.8Minnesota retailer and returns the tangible personal property to a point within Minnesota,
171.9except in the course of interstate commerce, after it was delivered outside of Minnesota,
171.10is subject to the use tax.
171.11    (b) No tax is imposed under paragraph (a) if the tax imposed by section 297A.62
171.12was paid on the sales price of the tangible personal property or taxable services.
171.13    (c) No tax is imposed under paragraph (a) if the purchase meets the requirements for
171.14exemption under section 297A.67, subdivision 21.
171.15    (d) When a transaction otherwise meets the definition of a bundled transaction, but
171.16is not a bundled transaction under section 297A.61, subdivision 38, paragraph (d), and
171.17the seller's purchase price of the taxable product or taxable tangible personal property is
171.18equal to or greater than $100, then use tax is imposed on the purchase price of the taxable
171.19product or taxable personal property. For purposes of this paragraph, "purchase price"
171.20means the measure subject to use tax on purchases made by the seller.
171.21EFFECTIVE DATE.This section is effective retroactively for sales and purchases
171.22made after December 31, 2007.

171.23    Sec. 20. Minnesota Statutes 2006, section 297A.665, is amended to read:
171.24297A.665 PRESUMPTION OF TAX; BURDEN OF PROOF.
171.25    (a) For the purpose of the proper administration of this chapter and to prevent
171.26evasion of the tax, until the contrary is established, it is presumed that:
171.27    (1) all gross receipts are subject to the tax; and
171.28    (2) all retail sales for delivery in Minnesota are for storage, use, or other consumption
171.29in Minnesota.
171.30    (b) The burden of proving that a sale is not a taxable retail sale is on the seller.
171.31However, the seller may take from the purchaser at the time of the sale a fully completed
171.32exemption certificate which conclusively relieves the seller from collecting and remitting
171.33the tax. This However, a seller is relieved of liability if:
172.1    (1) the seller obtains a fully completed exemption certificate or all the relevant
172.2information required by section 297A.72, subdivision 2, at the time of the sale or within
172.390 days after the date of the sale; or
172.4    (2) if the seller has not obtained a fully completed exemption certificate or all the
172.5relevant information required by section 297A.72, subdivision 2, within the time provided
172.6in clause (1), within 120 days after a request for substantiation by the commissioner,
172.7the seller either:
172.8    (i) obtains in good faith a fully completed exemption certificate or all the relevant
172.9information required by section 297A.72, subdivision 2, from the purchaser; or
172.10    (ii) proves by other means that the transaction was not subject to tax.
172.11    (c) Notwithstanding paragraph (b), relief from liability does not apply to a seller who:
172.12    (1) fraudulently fails to collect the tax; or
172.13    (2) solicits purchasers to participate in the unlawful claim of an exemption. If a
172.14seller claiming that certain sales are exempt is not in possession of the required exemption
172.15certificates within 60 days after receiving written notice from the commissioner that the
172.16certificates are required, deductions claimed by the seller that required delivery of the
172.17certificates must be disallowed. If the certificates are delivered to the commissioner within
172.18the 60-day period, the commissioner may verify the reason or basis for the exemption
172.19claimed in the certificates before allowing any deductions. A deduction must not be
172.20granted on the basis of certificates delivered to the commissioner after the 60-day period.
172.21    (c) (d) A purchaser of tangible personal property or any items listed in section
172.22297A.63 that are shipped or brought to Minnesota by the purchaser has the burden
172.23of proving that the property was not purchased from a retailer for storage, use, or
172.24consumption in Minnesota.
172.25EFFECTIVE DATE.This section is effective retroactively for sales and purchases
172.26made after December 31, 2007.

172.27    Sec. 21. Minnesota Statutes 2006, section 297A.669, subdivision 3, is amended to read:
172.28    Subd. 3. Defined telecommunications services sourcing. The sale of the following
172.29telecommunication services shall be sourced to each level of taxing jurisdiction in
172.30paragraphs (a) to (d).
172.31    (a) A sale of mobile telecommunications services, other than air-to-ground
172.32radiotelephone service and prepaid calling service, is sourced to the customer's place of
172.33primary use as required by the Mobile Telecommunications Sourcing Act.
172.34    (b) A sale of postpaid calling service is sourced to the origination point of the
172.35telecommunications signal as first identified by either:
173.1    (1) the seller's telecommunications system; or
173.2    (2) information received by the seller from its service provider, where the system
173.3used to transport such signals is not that of the seller.
173.4    (c) A sale of prepaid calling service or prepaid wireless calling service is sourced in
173.5accordance with section 297A.668, subdivision 2. However, in the case of a sale of mobile
173.6telecommunications service that is a prepaid telecommunications wireless calling service,
173.7the rule provided in section 297A.668, subdivision 2, paragraph (f), shall include as an
173.8option the location associated with the mobile telephone number.
173.9    (d) A sale of a private communication service is sourced as follows:
173.10    (1) service for a separate charge related to a customer channel termination point is
173.11sourced to each level of jurisdiction in which the customer channel termination point
173.12is located;
173.13    (2) service where all customer termination points are located entirely within one
173.14jurisdiction or levels of jurisdiction is sourced in such jurisdiction in which the customer
173.15channel termination points are located;
173.16    (3) service for segments of a channel between two customer channel termination
173.17points located in different jurisdictions and which segment of channel are separately
173.18charged is sourced 50 percent in each level of jurisdiction in which the customer channel
173.19termination points are located; and
173.20    (4) service for segments of a channel located in more than one jurisdiction or
173.21levels of jurisdiction and which segments are not separately billed is sourced in each
173.22jurisdiction based on the percentage determined by dividing the number of customer
173.23channel termination points in the jurisdiction by the total number of customer channel
173.24termination points.
173.25EFFECTIVE DATE.This section is effective retroactively for sales and purchases
173.26made after December 31, 2007.

173.27    Sec. 22. Minnesota Statutes 2006, section 297A.669, subdivision 13, is amended to
173.28read:
173.29    Subd. 13. Postpaid calling service. "Postpaid calling service," for purposes of
173.30this section, means the telecommunications service obtained by making a payment
173.31on a call-by-call basis either through the use of a credit card or payment mechanism
173.32such as a bank card, travel card, credit card, or debit card, or by a charge made to
173.33a telephone number that is not associated with the origination or termination of the
173.34telecommunications service. A postpaid calling service includes a telecommunications
174.1service, except a prepaid wireless calling service, that would be a prepaid calling service
174.2except it is not exclusively a telecommunication service.
174.3EFFECTIVE DATE.This section is effective retroactively for sales and purchases
174.4made after December 31, 2007.

174.5    Sec. 23. Minnesota Statutes 2006, section 297A.669, subdivision 14, is amended to
174.6read:
174.7    Subd. 14. Prepaid calling service. "Prepaid calling service," for purposes of this
174.8section, means a telecommunications service that:
174.9    (1) provides the right to access exclusively telecommunications services, which;
174.10    (2) must be paid for in advance and which;
174.11    (3) enables the origination of calls using an access number or authorization code,
174.12whether manually or electronically dialed,; and that
174.13    (4) is sold in predetermined units or dollars of which the number declines with
174.14use in a known amount.
174.15EFFECTIVE DATE.This section is effective retroactively for sales and purchases
174.16made after December 31, 2007.

174.17    Sec. 24. Minnesota Statutes 2006, section 297A.669, is amended by adding a
174.18subdivision to read:
174.19    Subd. 14a. Prepaid wireless calling service. "Prepaid wireless calling service," for
174.20purposes of this section, means a telecommunications service that:
174.21    (1) provides the right to utilize mobile wireless service as well as other
174.22nontelecommunications services, including the download of digital products delivered
174.23electronically, content, and ancillary services;
174.24    (2) must be paid for in advance; and
174.25    (3) is sold in predetermined units or dollars of which the number declines with
174.26use in a known amount.
174.27EFFECTIVE DATE.This section is effective retroactively for sales and purchases
174.28made after December 31, 2007.

174.29    Sec. 25. Minnesota Statutes 2006, section 297A.669, is amended by adding a
174.30subdivision to read:
174.31    Subd. 17. Ancillary service. The sale of an ancillary service is sourced to the
174.32customer's place of primary use.
175.1EFFECTIVE DATE.This section is effective retroactively for sales and purchases
175.2made after December 31, 2007.

175.3    Sec. 26. Minnesota Statutes 2006, section 297A.67, subdivision 7, is amended to read:
175.4    Subd. 7. Drugs; medical devices. (a) Sales of the following drugs and medical
175.5devices are exempt:
175.6    (1) drugs for human use, including over-the-counter drugs;
175.7    (2) single-use finger-pricking devices for the extraction of blood and other single-use
175.8devices and single-use diagnostic agents used in diagnosing, monitoring, or treating
175.9diabetes;
175.10    (3) insulin and medical oxygen for human use, regardless of whether prescribed
175.11or sold over the counter;
175.12    (4) prosthetic devices;
175.13    (5) durable medical equipment for home use only;
175.14    (6) mobility enhancing equipment; and
175.15    (7) prescription corrective eyeglasses.; and
175.16    (8) kidney dialysis equipment, including repair and replacement parts.
175.17    (b) For purposes of this subdivision:
175.18    (1) "Drug" means a compound, substance, or preparation, and any component of
175.19a compound, substance, or preparation, other than food and food ingredients, dietary
175.20supplements, or alcoholic beverages that is:
175.21    (i) recognized in the official United States Pharmacopoeia, official Homeopathic
175.22Pharmacopoeia of the United States, or official National Formulary, and supplement
175.23to any of them;
175.24    (ii) intended for use in the diagnosis, cure, mitigation, treatment, or prevention
175.25of disease; or
175.26    (iii) intended to affect the structure or any function of the body.
175.27    (2) "Durable medical equipment" means equipment, including repair and
175.28replacement parts, but not including mobility enhancing equipment, that:
175.29    (i) can withstand repeated use;
175.30    (ii) is primarily and customarily used to serve a medical purpose;
175.31    (iii) generally is not useful to a person in the absence of illness or injury; and
175.32    (iv) is not worn in or on the body.
175.33    (3) "Mobility enhancing equipment" means equipment, including repair and
175.34replacement parts, but not including durable medical equipment, that:
176.1    (i) is primarily and customarily used to provide or increase the ability to move from
176.2one place to another and that is appropriate for use either in a home or a motor vehicle;
176.3    (ii) is not generally used by persons with normal mobility; and
176.4    (iii) does not include any motor vehicle or equipment on a motor vehicle normally
176.5provided by a motor vehicle manufacturer.
176.6    (4) "Over-the-counter drug" means a drug that contains a label that identifies the
176.7product as a drug as required by Code of Federal Regulations, title 21, section 201.66. The
176.8label must include a "drug facts" panel or a statement of the active ingredients with a list of
176.9those ingredients contained in the compound, substance, or preparation. Over-the-counter
176.10drugs do not include grooming and hygiene products, regardless of whether they otherwise
176.11meet the definition. "Grooming and hygiene products" are soaps, cleaning solutions,
176.12shampoo, toothpaste, mouthwash, antiperspirants, and suntan lotions and sunscreens.
176.13    (5) "Prescribed" and "prescription" means a direction in the form of an order,
176.14formula, or recipe issued in any form of oral, written, electronic, or other means of
176.15transmission by a duly licensed health care professional.
176.16    (6) "Prosthetic device" means a replacement, corrective, or supportive device,
176.17including repair and replacement parts, worn on or in the body to:
176.18    (i) artificially replace a missing portion of the body;
176.19    (ii) prevent or correct physical deformity or malfunction; or
176.20    (iii) support a weak or deformed portion of the body.
176.21Prosthetic device does not include corrective eyeglasses.
176.22    (7) "Kidney dialysis equipment" means equipment that:
176.23    (i) is used to remove waste products that build up in the blood when the kidneys are
176.24not able to do so on their own; and
176.25    (ii) can withstand repeated use, including multiple use by a single patient.
176.26EFFECTIVE DATE.This section is effective the day following final enactment.

176.27    Sec. 27. Minnesota Statutes 2006, section 297A.67, subdivision 8, is amended to read:
176.28    Subd. 8. Clothing. (a) Clothing is exempt. For purposes of this subdivision,
176.29"clothing" means all human wearing apparel suitable for general use.
176.30    (b) Clothing includes, but is not limited to, aprons, household and shop; athletic
176.31supporters; baby receiving blankets; bathing suits and caps; beach capes and coats; belts
176.32and suspenders; boots; coats and jackets; costumes; children and adult diapers, including
176.33disposable; ear muffs; footlets; formal wear; garters and garter belts; girdles; gloves and
176.34mittens for general use; hats and caps; hosiery; insoles for shoes; lab coats; neckties;
177.1overshoes; pantyhose; rainwear; rubber pants; sandals; scarves; shoes and shoe laces;
177.2slippers; sneakers; socks and stockings; steel-toed boots; underwear; uniforms, athletic
177.3and nonathletic; and wedding apparel.
177.4    (c) Clothing does not include the following:
177.5    (1) belt buckles sold separately;
177.6    (2) costume masks sold separately;
177.7    (3) patches and emblems sold separately;
177.8    (4) sewing equipment and supplies, including but not limited to, knitting needles,
177.9patterns, pins, scissors, sewing machines, sewing needles, tape measures, and thimbles;
177.10    (5) sewing materials that become part of clothing, including but not limited to,
177.11buttons, fabric, lace, thread, yarn, and zippers;
177.12    (6) clothing accessories or equipment;
177.13    (7) sports or recreational equipment; and
177.14    (8) protective equipment.
177.15Clothing also does not include apparel made from fur if a uniform definition of "apparel
177.16made from fur" is developed by the member states of the Streamlined Sales and Use Tax
177.17Agreement "fur clothing" as defined in section 297A.61, subdivision 46.
177.18    For purposes of this subdivision, "clothing accessories or equipment" means
177.19incidental items worn on the person or in conjunction with clothing. Clothing accessories
177.20and equipment include, but are not limited to, briefcases; cosmetics; hair notions, including
177.21barrettes, hair bows, and hairnets; handbags; handkerchiefs; jewelry; nonprescription
177.22sunglasses; umbrellas; wallets; watches; and wigs and hairpieces. "Sports or recreational
177.23equipment" means items designed for human use and worn in conjunction with an athletic
177.24or recreational activity that are not suitable for general use. Sports and recreational
177.25equipment includes, but is not limited to, ballet and tap shoes; cleated or spiked athletic
177.26shoes; gloves, including, but not limited to, baseball, bowling, boxing, hockey, and golf
177.27gloves; goggles; hand and elbow guards; life preservers and vests; mouth guards; roller
177.28and ice skates; shin guards; shoulder pads; ski boots; waders; and wetsuits and fins.
177.29"Protective equipment" means items for human wear and designed as protection of the
177.30wearer against injury or disease or as protection against damage or injury of other persons
177.31or property but not suitable for general use. Protective equipment includes, but is not
177.32limited to, breathing masks; clean room apparel and equipment; ear and hearing protectors;
177.33face shields; finger guards; hard hats; helmets; paint or dust respirators; protective gloves;
177.34safety glasses and goggles; safety belts; tool belts; and welders gloves and masks.
178.1EFFECTIVE DATE.This section is effective for sales and purchases made after
178.2June 30, 2008.

178.3    Sec. 28. Minnesota Statutes 2006, section 297A.67, subdivision 9, is amended to read:
178.4    Subd. 9. Baby products. Breast pumps, baby bottles and nipples, pacifiers, teething
178.5rings, and infant syringes are exempt.
178.6EFFECTIVE DATE.This section is effective the day following final enactment.

178.7    Sec. 29. Minnesota Statutes 2006, section 297A.68, subdivision 11, is amended to read:
178.8    Subd. 11. Advertising materials. Materials designed to advertise and promote the
178.9sale of merchandise or services are exempt if these materials are mailed or transferred to a
178.10person outside the state for use solely outside the state. Mailing and reply envelopes and
178.11cards and other shipping materials including, but not limited to, boxes, labels, containers,
178.12and banding, used exclusively in connection with these advertising and promotional
178.13materials are included in this exemption. The exemption applies regardless of where the
178.14mailing occurs. The storage of these materials in the state for the purpose of subsequently
178.15shipping or otherwise transferring the material out of state is also exempt if the other
178.16conditions in this subdivision are met. For purposes of this subdivision, materials that have
178.17a primary purpose other than advertising, such as fulfilling a legal obligation or furnishing
178.18nonadvertising information, are not materials designed to advertise and promote the sale
178.19of merchandise or services even if they do include advertising content.
178.20EFFECTIVE DATE.This section is effective the day following final enactment.

178.21    Sec. 30. Minnesota Statutes 2006, section 297A.68, subdivision 16, is amended to read:
178.22    Subd. 16. Packing materials. Packing materials used to pack and ship household
178.23goods and that are provided to and remain with the customer of a for-hire carrier are
178.24exempt if the ultimate destination of the goods is outside Minnesota and if the goods
178.25packing materials are not later returned to a point within Minnesota, except in the course
178.26of interstate commerce. This exemption does not apply to tools, equipment, pads, or
178.27accessories owned or leased by the for-hire carrier.
178.28EFFECTIVE DATE.This section is effective retroactively for sales and purchases
178.29after December 31, 2007.

178.30    Sec. 31. Minnesota Statutes 2006, section 297A.68, subdivision 35, is amended to read:
179.1    Subd. 35. Telecommunications, cable television, and direct satellite equipment.
179.2    (a) Telecommunications, cable television, or direct satellite machinery and equipment
179.3purchased or leased for use directly by a telecommunications, cable television, or
179.4direct satellite service provider primarily in the provision of telecommunications, cable
179.5television, or direct satellite services that are ultimately to be sold at retail are exempt,
179.6regardless of whether purchased by the owner, a contractor, or a subcontractor.
179.7    (b) For purposes of this subdivision, "telecommunications, cable television, or direct
179.8satellite machinery and equipment" includes, but is not limited to:
179.9    (1) machinery, equipment, and fixtures utilized in receiving, initiating,
179.10amplifying, processing, transmitting, retransmitting, recording, switching, or monitoring
179.11telecommunications, cable television, or direct satellite services, such as computers,
179.12transformers, amplifiers, routers, bridges, repeaters, multiplexers, and other items
179.13performing comparable functions;
179.14    (2) machinery, equipment, and fixtures used in the transportation of
179.15telecommunications, cable television, or direct satellite services, radio transmitters and
179.16receivers, satellite equipment, microwave equipment, and other transporting media, but
179.17not wire, cable, fiber, poles, or conduit;
179.18    (3) ancillary machinery, equipment, and fixtures that regulate, control, protect, or
179.19enable the machinery in clauses (1) and (2) to accomplish its intended function, such as
179.20auxiliary power supply, test equipment, towers, heating, ventilating, and air conditioning
179.21equipment necessary to the operation of the telecommunications, cable television, or direct
179.22satellite equipment; and software necessary to the operation of the telecommunications,
179.23cable television, or direct satellite equipment; and
179.24    (4) repair and replacement parts, including accessories, whether purchased as spare
179.25parts, repair parts, or as upgrades or modifications to qualified machinery or equipment.
179.26    (c) For purposes of this subdivision, "telecommunications services" means
179.27telecommunications services as defined in section 297A.61, subdivision 24, paragraphs
179.28(a), (c), and (d).
179.29EFFECTIVE DATE.This section is effective retroactively for sales and purchases
179.30made after December 31, 2007.

179.31    Sec. 32. Minnesota Statutes 2006, section 297A.69, subdivision 2, is amended to read:
179.32    Subd. 2. Materials consumed in agricultural production. Materials stored, used,
179.33or consumed in agricultural production of personal property intended to be sold ultimately
179.34at retail are exempt, whether or not the item becomes an ingredient or constituent part
180.1of the property produced. Materials that qualify for this exemption include, but are not
180.2limited to, the following:
180.3    (1) feeds, seeds, trees, fertilizers, and herbicides, including when purchased for use
180.4by farmers in a federal or state farm or conservation program;
180.5    (2) materials sold to a veterinarian to be used or consumed in the care, medication,
180.6and treatment of agricultural production animals and horses;
180.7    (3) chemicals, including chemicals used for cleaning food processing machinery
180.8and equipment;
180.9    (4) materials, including chemicals, fuels, and electricity purchased by persons
180.10engaged in agricultural production to treat waste generated as a result of the production
180.11process;
180.12    (5) fuels, electricity, gas, and steam used or consumed in the production process,
180.13except that including electricity, gas, or steam used for space heating, cooling, or lighting
180.14is exempt if (i) it is in excess of the average climate control or lighting for the production
180.15area, and (ii) it is necessary to produce that particular product of facilities housing
180.16agricultural animals;
180.17    (6) petroleum products and lubricants;
180.18    (7) packaging materials, including returnable containers used in packaging food and
180.19beverage products; and
180.20    (8) accessory tools and equipment that are separate detachable units with an ordinary
180.21useful life of less than 12 months used in producing a direct effect upon the product.
180.22Machinery, equipment, implements, tools, accessories, appliances, contrivances, and
180.23furniture and fixtures, except those listed in this clause are not included within this
180.24exemption.
180.25EFFECTIVE DATE.This section is effective the day following final enactment.

180.26    Sec. 33. Minnesota Statutes 2006, section 297A.70, subdivision 7, is amended to read:
180.27    Subd. 7. Hospitals and outpatient surgical centers. (a) Sales, except for those
180.28listed in paragraph (c), to a hospital are exempt, if the items purchased are used in
180.29providing hospital services. For purposes of this subdivision, "hospital" means a hospital
180.30organized and operated for charitable purposes within the meaning of section 501(c)(3) of
180.31the Internal Revenue Code, and licensed under chapter 144 or by any other jurisdiction,
180.32and "hospital services" are services authorized or required to be performed by a "hospital"
180.33under chapter 144.
181.1    (b) Sales, except for those listed in paragraph (c), to an outpatient surgical center
181.2are exempt, if the items purchased are used in providing outpatient surgical services. For
181.3purposes of this subdivision, "outpatient surgical center" means an outpatient surgical
181.4center organized and operated for charitable purposes within the meaning of section
181.5501(c)(3) of the Internal Revenue Code, and licensed under chapter 144 or by any other
181.6jurisdiction. For the purposes of this subdivision, "outpatient surgical services" means:
181.7(1) services authorized or required to be performed by an outpatient surgical center under
181.8chapter 144; and (2) urgent care. For purposes of this subdivision, "urgent care" means
181.9health services furnished to a person whose medical condition is sufficiently acute to
181.10require treatment unavailable through, or inappropriate to be provided by, a clinic or
181.11physician's office, but not so acute as to require treatment in a hospital emergency room.
181.12    (c) This exemption does not apply to the following products and services:
181.13    (1) purchases made by a clinic, physician's office, or any other medical facility not
181.14operating as a hospital or outpatient surgical center, even though the clinic, office, or
181.15facility may be owned and operated by a hospital or outpatient surgical center;
181.16    (2) sales under section 297A.61, subdivision 3, paragraph (g), clause (2), and
181.17prepared food, candy, and soft drinks;
181.18    (3) building and construction materials used in constructing buildings or facilities
181.19that will not be used principally by the hospital or outpatient surgical center;
181.20    (4) building, construction, or reconstruction materials purchased by a contractor
181.21or a subcontractor as a part of a lump-sum contract or similar type of contract with a
181.22guaranteed maximum price covering both labor and materials for use in the construction,
181.23alteration, or repair of a hospital or outpatient surgical center; or
181.24    (5) the leasing of a motor vehicle as defined in section 297B.01, subdivision 5.
181.25    (d) A limited liability company also qualifies for exemption under this subdivision if
181.26(1) it consists of a sole member that would qualify for the exemption, and (2) the items
181.27purchased qualify for the exemption.
181.28    (e) An entity that contains both a hospital and a nonprofit unit may claim this
181.29exemption on purchases made for both the hospital and nonprofit unit provided that:
181.30    (1) the nonprofit unit would have qualified for exemption under subdivision 4; and
181.31    (2) the items purchased would have qualified for the exemption.
181.32EFFECTIVE DATE.This section is effective the day following final enactment.

181.33    Sec. 34. Minnesota Statutes 2006, section 297A.70, is amended by adding a
181.34subdivision to read:
182.1    Subd. 18. Private communication service for State Lottery. Private
182.2communication service, as defined in section 297A.61, subdivision 26, is exempt if the
182.3service is purchased by an agent acting on behalf of the State Lottery.
182.4EFFECTIVE DATE.This section is effective retroactively for sales and purchases
182.5made after December 31, 2007.

182.6    Sec. 35. Minnesota Statutes 2006, section 297A.72, is amended to read:
182.7297A.72 EXEMPTION CERTIFICATES.
182.8    Subd. 2. Content and form of exemption certificate. An exemption certificate
182.9must be substantially in the form prescribed by the commissioner and. To be fully
182.10completed, the exemption certificate must:
182.11    (1) either be signed by the purchaser if it is a paper form, or meet the requirements
182.12of section 270C.304 if in electronic form;
182.13    (2) bear the name and address of the purchaser; and
182.14    (3) indicate the sales tax account identification number, if any, issued to the
182.15purchaser. as follows:
182.16    (i) the purchaser's Minnesota tax identification number;
182.17    (ii) if the purchaser does not have a Minnesota tax identification number, then the
182.18purchaser's state tax identification number that is issued by a state other than Minnesota,
182.19and the name of that state;
182.20    (iii) if the purchaser does not have an identification number described in either item
182.21(i) or (ii), then the purchaser's federal Employer Identification Number; or
182.22    (iv) if the purchaser does not have an identification number described in item (i), (ii),
182.23or (iii), then either the number of the purchaser's state-issued driver's license, if valid in
182.24the state of issue, or if the purchaser does not have a driver's license, a valid state-issued
182.25identification number, and the name of the state of issue;
182.26    (4) indicate the purchaser's type of business, using a business-type coding system
182.27prescribed by the commissioner; and
182.28    (5) indicate the reason for the exemption, using an exemption reason coding system
182.29prescribed by the commissioner.
182.30    Subd. 3. Purchaser requirement. A blanket exemption certificate is an exemption
182.31certificate used for continuing future purchases. A purchaser using a blanket exemption
182.32certificate must update it as needed to accurately reflect the information that is required
182.33under subdivision 2.
182.34EFFECTIVE DATE.This section is effective the day following final enactment.

183.1    Sec. 36. [297A.8155] LIQUOR REPORTING REQUIREMENTS; PENALTY.
183.2    A person who sells liquor, as defined in section 295.75, subdivision 1, in Minnesota
183.3to a retailer that sells liquor, shall file with the commissioner an annual informational
183.4report, in the form and manner prescribed by the commissioner, indicating the name,
183.5address, and Minnesota business identification number of each retailer, and the total dollar
183.6amount of liquor sold to each retailer in the previous calendar year. The report must be
183.7filed on or before March 31 following the close of the calendar year. A person failing to file
183.8this report is subject to the penalty imposed under Minnesota Statutes, section 289A.60.
183.9EFFECTIVE DATE.This section is effective for reports filed after December
183.1031, 2008.

183.11    Sec. 37. Minnesota Statutes 2006, section 297A.90, subdivision 2, is amended to read:
183.12    Subd. 2. Payment of tax. (a) Persons who are registered as retailers may make
183.13purchases in this state or import property into this state without payment of the sales or use
183.14taxes imposed by this chapter at the time of purchase or importation, if the purchases or
183.15importations come within the provisions of this section and are made in strict compliance
183.16with the rules of the commissioner.
183.17    (b) A person described in subdivision 1 may elect to pay directly to the commissioner
183.18any sales or use tax that may be due under this chapter for the acquisition of mobile
183.19transportation equipment and parts and accessories attached or to be attached to such
183.20equipment registered under section 168.187.
183.21    (c) The total cost of such equipment and parts and accessories attached or to be
183.22attached to such equipment must be multiplied by a fraction. The numerator of the fraction
183.23is the Minnesota mileage as reported on the current pro rata application provided for in
183.24section 168.187 and the denominator of the fraction is the total mileage reported on the
183.25current pro rata registration application. The amount so determined must be multiplied by
183.26the tax rate to obtain the tax due.
183.27In computing the tax under this section "sales price" does not include the amount of any
183.28tax, except any manufacturer's or importer's excise tax, imposed by the United States
183.29upon or with respect to retail sales, whether taxes imposed directly on the retailer or the
183.30consumer that are separately stated on the invoice, bill of sale, or similar document given
183.31to the purchaser.
183.32    (d) A retailer covered by this section shall make a return and remit to the
183.33commissioner the tax due for the preceding calendar month in accordance with sections
183.34289A.11 and 289A.20, subdivision 4.
184.1EFFECTIVE DATE.This section is effective the day following final enactment.

184.2    Sec. 38. Minnesota Statutes 2006, section 297B.035, subdivision 1, is amended to read:
184.3    Subdivision 1. Ordinary course of business. Except as provided in this section,
184.4motor vehicles purchased solely for resale in the ordinary course of business by any motor
184.5vehicle dealer, as defined in section 168.011, subdivision 21, who is licensed under section
184.6168.27, subdivision 2 or 3, including vehicles which bear dealer plates as authorized by
184.7section 168.27, subdivision 16, shall be exempt from the provisions of this chapter.
184.8EFFECTIVE DATE.This section is effective the day following final enactment.

184.9    Sec. 39. Minnesota Statutes 2006, section 469.1734, subdivision 6, is amended to read:
184.10    Subd. 6. Sales tax exemption; equipment; construction materials. (a) The gross
184.11receipts from the sale of machinery and equipment and repair parts are exempt from
184.12taxation under chapter 297A, if the machinery and equipment:
184.13    (1) are used in connection with a trade or business;
184.14    (2) are placed in service in a city that is authorized to designate a zone under section
184.15469.1731 , regardless of whether the machinery and equipment are used in a zone; and
184.16    (3) have a useful life of 12 months or more.
184.17    (b) The gross receipts from the sale of construction materials are exempt, if they are
184.18used to construct:
184.19    (1) a facility for use in a trade or business located in a city that is authorized to
184.20designate a zone under section 469.1731, regardless of whether the facility is located in a
184.21zone; or
184.22    (2) housing that is located in a zone.
184.23The exemptions under this paragraph apply regardless of whether the purchase is made by
184.24the owner, the user, or a contractor.
184.25    (c) A purchaser may claim an exemption under this subdivision for tax on the
184.26purchases up to, but not exceeding:
184.27    (1) the amount of the tax credit certificates received from the city, less
184.28    (2) any tax credit certificates used under the provisions of subdivisions 4 and 5, and
184.29section 469.1732, subdivision 2.
184.30    (d) The tax on sales of items exempted under this subdivision shall be imposed and
184.31collected as if the applicable rate under section 297A.62 applied. Upon application by the
184.32purchaser, on forms prescribed by the commissioner, a refund equal to the tax paid shall
184.33be paid to the purchaser. The application must include sufficient information to permit
185.1the commissioner to verify the sales tax paid and the eligibility of the claimant to receive
185.2the credit. No more than two applications for refunds may be filed under this subdivision
185.3in a calendar year. The provisions of section 289A.40 apply to the refunds payable
185.4under this subdivision. There is annually appropriated to the commissioner of revenue
185.5the amount required to make the refunds, which must be deducted from the amount of
185.6the city's allocation under section 469.169, subdivision 12, that remains available and its
185.7limitation under section 469.1735.
185.8    (e) The amount to be refunded shall bear interest at the rate in section 270C.405
185.9from the date 90 days after the refund claim is filed with the commissioner.
185.10EFFECTIVE DATE.This section is effective for refund claims filed after June
185.1130, 2008.

185.12    Sec. 40. FUR TAX PAYMENTS.
185.13    (a) Furriers must file the annual return, required by Minnesota Statutes, section
185.14295.60, subdivision 5, which otherwise would be due March 15, 2009, by September
185.1515, 2008.
185.16    (b) If a furrier is required by Minnesota Statutes, section 295.60, subdivision 3, to
185.17make installments of quarterly estimates, then the furrier shall make the last installment by
185.18July 15, 2008.
185.19EFFECTIVE DATE.This section is effective July 1, 2008, for sales and purchases
185.20made prior to July 1, 2008.

185.21    Sec. 41. REPEALER.
185.22(a) Minnesota Statutes 2006, section 295.60, is repealed.
185.23(b) Minnesota Statutes 2006, section 297A.61, subdivision 20, is repealed.
185.24(c) Minnesota Statutes 2006, section 297A.668, subdivision 6, is repealed.
185.25(d) Minnesota Statutes 2006, section 297A.67, subdivision 22, is repealed.
185.26EFFECTIVE DATE.Paragraph (a) of this section is effective for sales and
185.27purchases made after June 30, 2008; paragraph (b) is effective retroactively for sales and
185.28purchases made after December 31, 2007; and paragraphs (c) and (d) are effective the
185.29day following final enactment.

186.1ARTICLE 13

186.2DEPARTMENT PROPERTY TAXES

186.3    Section 1. Minnesota Statutes 2006, section 270.071, subdivision 7, is amended to read:
186.4    Subd. 7. Flight property. "Flight property" means all aircraft and flight equipment
186.5used in connection therewith, including spare flight equipment. Flight property also
186.6includes computers and computer software used in operating, controlling, or regulating
186.7aircraft and flight equipment.
186.8EFFECTIVE DATE.This section is effective the day following final enactment.

186.9    Sec. 2. Minnesota Statutes 2006, section 270.072, subdivision 2, is amended to read:
186.10    Subd. 2. Assessment of flight property. The Flight property of all that is owned
186.11by, or is leased, loaned, or otherwise made available to an airline companies company
186.12operating in Minnesota shall be assessed and appraised annually by the commissioner
186.13with reference to its value on January 2 of the assessment year in the manner prescribed
186.14by sections 270.071 to 270.079. Aircraft with a gross weight of less than 30,000 pounds
186.15and used on intermittent or irregularly timed flights shall be excluded from the provisions
186.16of sections 270.071 to 270.079.
186.17EFFECTIVE DATE.This section is effective the day following final enactment.

186.18    Sec. 3. Minnesota Statutes 2006, section 270.072, subdivision 3, is amended to read:
186.19    Subd. 3. Report by airline company. Each year, on or before July 1, every airline
186.20company engaged in air commerce in this state shall file with the commissioner on or
186.21before the time fixed by the commissioner a report under oath setting forth specifically
186.22the information prescribed by the commissioner to enable the commissioner to make the
186.23assessment required in sections 270.071 to 270.079, unless the commissioner determines
186.24that the airline company or person should be excluded from filing because its activities do
186.25not constitute air commerce as defined herein. A penalty of five percent of the tax being
186.26assessed is imposed on a late filing of the annual report. If the report is not filed within
186.2730 days, an additional penalty of five percent of the assessed tax is imposed for each
186.28additional 30 days or fraction of 30 days until the return is filed. The penalty imposed
186.29under this section must not exceed the lesser of $25,000 or 25 percent of the assessed tax.
186.30EFFECTIVE DATE.This section is effective beginning January 2, 2008, for taxes
186.31payable in 2009 and thereafter.

187.1    Sec. 4. Minnesota Statutes 2006, section 270.072, subdivision 6, is amended to read:
187.2    Subd. 6. Airflight property tax lien. The tax imposed under sections 270.071 to
187.3270.079 is a lien on all real and personal property within this state of the airline company
187.4in whose name the property is assessed. For purposes of sections 270C.62 and 270C.63,
187.5the date of assessment for the tax imposed under sections 270.071 to 270.079 is The lien
187.6attaches on January 2 of each year for the taxes payable in the following year.
187.7EFFECTIVE DATE.This section is effective beginning January 2, 2008, for taxes
187.8payable in 2009 and thereafter.

187.9    Sec. 5. [270.0725] PENALTIES.
187.10    Subdivision 1. Penalty for late filing. If an airline company does not file its annual
187.11report by the date designated in section 270.072, subdivision 3, a penalty of five percent
187.12of the tax being assessed is imposed on that company. On August 1, and on the first day
187.13of each succeeding calendar month, an additional five percent penalty is imposed if the
187.14report has not yet been filed. For each airline company, the penalties imposed under
187.15this subdivision for any one year are limited to the lesser of $25,000 or 25 percent of
187.16the assessed tax.
187.17    Subd. 2. Penalty for repeated instances of late filing. If there is a pattern of
187.18repeated failures by an airline company to timely file the report required by this section, a
187.19penalty of ten percent of the tax being assessed is imposed on that company.
187.20    Subd. 3. Penalty for frivolous report. If an airline company files a frivolous annual
187.21report, a penalty of 25 percent of the tax being assessed is imposed on that company. A
187.22frivolous report under this section is a report that would fulfill the criteria for a frivolous
187.23return under section 289A.60, subdivision 7, notwithstanding the restriction in section
187.24289A.01. In a proceeding involving the issue of whether or not an airline company is
187.25liable for this penalty, the burden of proof is on the commissioner.
187.26    Subd. 4. Penalty for fraudulent report. If an airline company files a false or
187.27fraudulent annual report with intent to evade or defeat the tax, a penalty equal to 50
187.28percent of the tax being assessed is imposed on that company.
187.29    Subd. 5. Penalties added to tax. Penalties imposed under this section are added to
187.30the tax and collected as a part of it.
187.31EFFECTIVE DATE.This section is effective for annual reports due after June
187.3230, 2008.

187.33    Sec. 6. [270.0735] EXAMINATION; INVESTIGATIONS; SUBPOENAS.
188.1    In addition to the powers granted to the commissioner in this chapter, and in order to
188.2determine net tax capacities and issue notices of net tax capacity and tax under sections
188.3270.071 to 270.079, the commissioner has the powers contained in sections 270C.31 and
188.4270C.32, for which purpose the word "taxpayer" as defined in section 270C.01 includes
188.5an airline company.
188.6EFFECTIVE DATE.This section is effective the day following final enactment.

188.7    Sec. 7. Minnesota Statutes 2006, section 270.074, subdivision 3, is amended to read:
188.8    Subd. 3. Tax capacity. (a) The net tax capacity of the flight property of every airline
188.9company shall have a tax capacity of is 70 percent of the value thereof apportioned to this
188.10state under subdivision 1, except that the net tax capacity of quiet aircraft shall have a
188.11tax capacity of is 40 percent of the value determined under subdivision 1. Quiet aircraft
188.12shall include "Quiet aircraft" means turboprops and aircraft defined as stage III or IV by
188.13the Federal Aeronautics Administration. If, in the opinion of the commissioner, other
188.14aircraft may be qualified as quiet aircraft, the commissioner may adopt rules providing
188.15additional qualifications.
188.16    (b) The flight property of an airline company that owns or leases aircraft the majority
188.17of which are turboprops, and which provides, during six months or more of the year that
188.18taxes are levied, scheduled passenger service to three or more airports inside or outside of
188.19this state that serve small or medium sized communities, shall be assessed at 50 percent of
188.20the assessment percentage otherwise set by paragraph (a).
188.21EFFECTIVE DATE.This section is effective the day following final enactment.

188.22    Sec. 8. Minnesota Statutes 2006, section 270.076, subdivision 1, is amended to read:
188.23    Subdivision 1. Appeal. Any airline company against which a tax has been imposed
188.24under sections 270.071 to 270.079 shall have the right to appeal within 60 days from the
188.25date of notice of the levy of the tax The notices of net tax capacity and of tax required
188.26under section 270.075, subdivision 2, are orders of the commissioner. These orders must
188.27be issued in conformance with section 270C.33, subdivisions 1 and 2, but are not subject
188.28to administrative review under section 270C.35. These orders may be appealed to the Tax
188.29Court in the manner provided by law in section 271.06 for appealing official orders of
188.30the commissioner that do not deal with valuation, assessment, or taxation for property
188.31tax purposes, and the provisions of section 273.125, subdivisions 4 and 5, and chapter
188.32278 do not apply.
188.33EFFECTIVE DATE.This section is effective the day following final enactment.

189.1    Sec. 9. Minnesota Statutes 2006, section 270.41, subdivision 1, is amended to read:
189.2    Subdivision 1. Creation; purpose; powers. A Board of Assessors is created.
189.3The board shall establish, conduct, review, supervise, coordinate, and approve courses
189.4in assessment practices, and establish criteria for determining assessor's qualifications.
189.5The board shall also consider other matters relating to assessment administration brought
189.6before it by the commissioner of revenue. The board may grant, renew, suspend, or revoke
189.7an assessor's license.
189.8EFFECTIVE DATE.This section is effective the day following final enactment.

189.9    Sec. 10. Minnesota Statutes 2006, section 270.41, is amended by adding a subdivision
189.10to read:
189.11    Subd. 1a. Definition. For purposes of sections 270.41 to 270.50, "board" means
189.12the Board of Assessors.
189.13EFFECTIVE DATE.This section is effective the day following final enactment.

189.14    Sec. 11. Minnesota Statutes 2006, section 270.41, subdivision 2, is amended to read:
189.15    Subd. 2. Members. The board shall consist of nine members, who shall be
189.16appointed by the commissioner of revenue, in the manner provided herein. The members
189.17shall include:
189.18    (1) two from the Department of Revenue;
189.19    (2) two county assessors;
189.20    (3) two assessors who are not county assessors, one of whom shall be a township
189.21assessor;
189.22    (4) one from the private appraisal field holding a professional appraisal designation;
189.23and
189.24    (5) two public members as defined by section 214.02.
189.25    The appointment provided in clauses (2) and (3) may be made from two lists a list
189.26of not less than three names each, one submitted to the commissioner of revenue by the
189.27Minnesota Association of Assessing Officers or its successor organization containing
189.28recommendations for the appointment of appointees described in clause clauses (2),
189.29and one by the Minnesota Association of Assessors, Inc. or its successor organization
189.30containing recommendations for the appointees described in clause (3) and (3). The lists
189.31list must be submitted 30 days before the commencement of the term. In the case of a
189.32vacancy, a new list shall be furnished to the commissioner by the respective organization
190.1immediately. A member of the board who is no longer engaged in the capacity listed
190.2above that was the basis of appointment is disqualified from membership in the board.
190.3    The board shall annually elect a chair and a secretary vice-chair of the board.
190.4EFFECTIVE DATE.This section is effective the day following final enactment.

190.5    Sec. 12. Minnesota Statutes 2006, section 270.41, subdivision 3, is amended to read:
190.6    Subd. 3. Licenses; refusal or revocation. The board may refuse to grant or renew,
190.7or may suspend or revoke, a license of an applicant or licensee for any of the following
190.8causes or acts:
190.9    (1) failure to complete required training;
190.10    (2) inefficiency or neglect of duty;
190.11    (3) "unprofessional conduct" which means knowingly neglecting to perform a duty
190.12required by law, or violation of the laws of this state relating to the assessment of property
190.13or unlawfully exempting property or knowingly and intentionally listing property on the
190.14tax list at substantially less than its market value or the level required by law in order to
190.15gain favor or benefit, or knowingly and intentionally misclassifying property in order to
190.16gain favor or benefit failure to comply with the Code of Conduct and Ethics for Licensed
190.17Minnesota Assessors adopted by the board pursuant to Laws 2005, First Special Session
190.18chapter 3, article 1, section 38;
190.19    (4) conviction of a crime involving moral turpitude; or
190.20    (5) any other cause or act that in the board's opinion warrants a refusal to issue
190.21or suspension or revocation of a license.
190.22EFFECTIVE DATE.This section is effective the day following final enactment.

190.23    Sec. 13. Minnesota Statutes 2006, section 270.41, subdivision 5, is amended to read:
190.24    Subd. 5. Prohibited activity. An assessor, deputy assessor, assistant assessor,
190.25appraiser, A licensed assessor or other person employed by an assessment jurisdiction
190.26or contracting with an assessment jurisdiction for the purpose of valuing or classifying
190.27property for property tax purposes is prohibited from making appraisals or analyses,
190.28accepting an appraisal assignment, or preparing an appraisal report as defined in section
190.2982B.02, subdivisions 2 to 5 , on any property within the assessment jurisdiction where the
190.30individual is employed or performing the duties of the assessor under contract. Violation
190.31of this prohibition shall result in immediate revocation of the individual's license to assess
190.32property for property tax purposes. This prohibition must not be construed to prohibit an
190.33individual from carrying out any duties required for the proper assessment of property
191.1for property tax purposes. If a formal resolution has been adopted by the governing body
191.2of a governmental unit, which specifies the purposes for which such work will be done,
191.3this prohibition does not apply to appraisal activities undertaken on behalf of and at the
191.4request of the governmental unit that has employed or contracted with the individual.
191.5The resolution may only allow appraisal activities which are related to condemnations,
191.6right-of-way acquisitions, or special assessments.
191.7EFFECTIVE DATE.This section is effective the day following final enactment.

191.8    Sec. 14. Minnesota Statutes 2006, section 270.44, is amended to read:
191.9270.44 CHARGES FOR COURSES, EXAMINATIONS OR MATERIALS.
191.10    The board shall charge the following fees:
191.11    (1) $105 for a senior accredited Minnesota assessor license;
191.12    (2) $80 for an accredited Minnesota assessor license;
191.13    (3) $65 for a certified Minnesota assessor specialist license;
191.14    (4) $55 for a certified Minnesota assessor license;
191.15    (5) $50 for a course challenge examination;
191.16    (6) (5) $35 for grading a form appraisal;
191.17    (7) (6) $60 for grading a narrative appraisal;
191.18    (8) (7) $30 for a reinstatement fee;
191.19    (9) (8) $25 for a record retention fee; and
191.20    (10) (9) $20 for an educational transcript; and.
191.21    (11) $30 for all retests of board-sponsored educational courses.
191.22EFFECTIVE DATE.This section is effective the day following final enactment.

191.23    Sec. 15. Minnesota Statutes 2006, section 270.45, is amended to read:
191.24270.45 DISPOSITION OF FEES.
191.25    All fees so established and collected shall be paid to the commissioner of finance for
191.26deposit in the general fund. The expenses of carrying out the provisions of sections 270.41
191.27to 270.53 shall be paid from appropriations made to the board of Assessors.
191.28EFFECTIVE DATE.This section is effective the day following final enactment.

191.29    Sec. 16. Minnesota Statutes 2006, section 270.46, is amended to read:
191.30270.46 TRAINING COURSES, ESTABLISHMENT; OTHER COURSES,
191.31REGULATION.
192.1    The board shall establish review and approve training courses on assessment
192.2practices and shall review and approve courses on assessment practices, techniques of
192.3assessment, and ethics offered by schools, colleges and, universities as well as courses that
192.4are offered by any units of government on techniques of assessment. Courses shall be
192.5established in various places throughout the state and be offered on regular intervals, units
192.6of government, and other entities.
192.7EFFECTIVE DATE.This section is effective the day following final enactment.

192.8    Sec. 17. Minnesota Statutes 2006, section 270.47, is amended to read:
192.9270.47 RULES.
192.10    The board shall establish the adopt rules necessary to accomplish the purpose of
192.11section sections 270.41 to 270.51, and shall establish criteria required of assessing officials
192.12in the state. Separate criteria may be established depending upon the responsibilities of the
192.13assessor. The board shall prepare and give examinations from time to time to determine
192.14whether assessing officials possess the necessary qualifications for performing the
192.15functions of the office. Such tests shall be given immediately upon completion of courses
192.16required by the board, or to persons who already possess the requisite qualifications under
192.17the rules of the board. An action of the board in refusing to grant or renew a license or in
192.18suspending or revoking a license is subject to review in accordance with chapter 14.
192.19EFFECTIVE DATE.This section is effective the day following final enactment.

192.20    Sec. 18. Minnesota Statutes 2006, section 270.48, is amended to read:
192.21270.48 LICENSURE OF QUALIFIED PERSONS.
192.22    The board shall may license persons as possessing the necessary qualifications of an
192.23assessing official. Different levels of licensure may be established as to classes of property
192.24which assessors may be certified to assess at the discretion of the board. Every person,
192.25except a local or county assessor, regularly employed by the assessor to assist in making
192.26decisions regarding valuing and classifying property for assessment purposes shall be
192.27required to must become licensed within three years of the date of employment. Licensure
192.28shall be required for local and county assessors as otherwise provided in sections 270.41
192.29to 270.53 270.50 and 273.061, and rules adopted by the board.
192.30EFFECTIVE DATE.This section is effective the day following final enactment.

193.1    Sec. 19. Minnesota Statutes 2006, section 270.50, is amended to read:
193.2270.50 EMPLOYMENT OF LICENSED ASSESSORS.
193.3    No assessor shall be employed who has not been licensed as qualified by the board,
193.4provided the time to comply may be extended after application to the board upon a
193.5showing that licensed assessors are not available for employment. The board may license
193.6that a county or local assessor who has not received the training, but possesses the
193.7necessary qualifications for performing the functions of the office by the passage of an
193.8approved examination or may waive the examination if such person has demonstrated
193.9competence in performing the functions of the office for a period of time the board deems
193.10reasonable. The county or local assessing district shall assume the cost of training of its
193.11assessors in courses approved by the board for the purpose of obtaining the assessor's
193.12license to the extent of course fees, mileage, meals and lodging, and recognized travel
193.13expenses not paid by the state. If the governing body of any township or city fails to
193.14employ an assessor as required by sections 270.41 to 270.53, the assessment shall be
193.15made by the county assessor.
193.16    In the case of cities incorporated or townships organized after April 11, 1974, except
193.17cities or towns located in Ramsey county or which have elected a county assessor system
193.18in accordance with section 273.055, the board shall allow the city or town 90 days from
193.19the date of incorporation or organization to employ a licensed assessor.
193.20EFFECTIVE DATE.This section is effective the day following final enactment.

193.21    Sec. 20. Minnesota Statutes 2006, section 270C.306, is amended to read:
193.22270C.306 COMMISSIONER MAY REQUIRE SOCIAL SECURITY OR
193.23IDENTIFYING NUMBERS ON FORMS.
193.24    Notwithstanding the provisions of any other law except section 272.115, the
193.25commissioner may require that a form required to be filed with the commissioner include
193.26the Social Security number, federal employer identification number, or Minnesota
193.27taxpayer identification number of the taxpayer or applicant.
193.28EFFECTIVE DATE.This section is effective beginning after June 30, 2008.

193.29    Sec. 21. Minnesota Statutes 2006, section 270C.34, subdivision 1, is amended to read:
193.30    Subdivision 1. Authority. (a) The commissioner may abate, reduce, or refund any
193.31penalty or interest that is imposed by a law administered by the commissioner as a result
193.32of the late payment of tax or late filing of a return, if the failure to timely pay the tax or
194.1failure to timely file the return is due to reasonable cause, or if the taxpayer is located
194.2in a presidentially declared disaster area.
194.3    (b) The commissioner shall abate any part of a penalty or additional tax charge
194.4under section 289A.25, subdivision 2, or 289A.26, subdivision 4, attributable to erroneous
194.5advice given to the taxpayer in writing by an employee of the department acting in
194.6an official capacity, if the advice:
194.7    (1) was reasonably relied on and was in response to a specific written request of the
194.8taxpayer; and
194.9    (2) was not the result of failure by the taxpayer to provide adequate or accurate
194.10information.
194.11    (c) The commissioner may abate a penalty imposed under section 270.0725,
194.12subdivision 1 or 2, if the failure to timely file is due to reasonable cause, or if the airline
194.13company is located in a presidentially declared disaster area.
194.14EFFECTIVE DATE.This section is effective for penalties imposed after June
194.1530, 2008.

194.16    Sec. 22. Minnesota Statutes 2007 Supplement, section 272.02, subdivision 64, is
194.17amended to read:
194.18    Subd. 64. Job opportunity building zone property. (a) Improvements to real
194.19property, and personal property, classified under section 273.13, subdivision 24, and
194.20located within a job opportunity building zone, designated under section 469.314, are
194.21exempt from ad valorem taxes levied under chapter 275.
194.22    (b) Improvements to real property, and tangible personal property, of an agricultural
194.23production facility located within an agricultural processing facility zone, designated
194.24under section 469.314, is exempt from ad valorem taxes levied under chapter 275.
194.25    (c) For property to qualify for exemption under paragraph (a), the occupant must be
194.26a qualified business, as defined in section 469.310.
194.27    (d) The exemption applies beginning for the first assessment year after designation
194.28of the job opportunity building zone by the commissioner of employment and economic
194.29development. The exemption applies to each assessment year that begins during the
194.30duration of the job opportunity building zone. To be exempt, the property must be
194.31occupied by July 1 of the assessment year by a qualified business that has signed the
194.32business subsidy agreement and relocation agreement, if required, by July 1 of the
194.33assessment year. This exemption does not apply to:
194.34    (1) the levy under section 475.61 or similar levy provisions under any other law to
194.35pay general obligation bonds; or
195.1    (2) other school district levies included in the debt service levy of the district
195.2under section 123B.55.
195.3    (e) Except for property of a business that was exempt under this subdivision for
195.4taxes payable in 2008, a business must notify the county assessor in writing of eligibility
195.5under this subdivision by July 1 in order to begin receiving the exemption under this
195.6subdivision for taxes payable in the following year. The business need not annually notify
195.7the county assessor of its continued exemption under this subdivision, but must notify the
195.8county assessor immediately if the exemption no longer applies.
195.9EFFECTIVE DATE.This section is effective the day following final enactment.

195.10    Sec. 23. Minnesota Statutes 2006, section 272.115, subdivision 1, is amended to read:
195.11    Subdivision 1. Requirement. Except as otherwise provided in subdivision 5,
195.12whenever any real estate is sold for a consideration in excess of $1,000, whether by
195.13warranty deed, quitclaim deed, contract for deed or any other method of sale, the grantor,
195.14grantee or the legal agent of either shall file a certificate of value with the county auditor
195.15in the county in which the property is located when the deed or other document is
195.16presented for recording. Contract for deeds are subject to recording under section 507.235,
195.17subdivision 1 . Value shall, in the case of any deed not a gift, be the amount of the full
195.18actual consideration thereof, paid or to be paid, including the amount of any lien or liens
195.19assumed. The items and value of personal property transferred with the real property
195.20must be listed and deducted from the sale price. The certificate of value shall include
195.21the classification to which the property belongs for the purpose of determining the fair
195.22market value of the property. The certificate shall include financing terms and conditions
195.23of the sale which are necessary to determine the actual, present value of the sale price
195.24for purposes of the sales ratio study. The commissioner of revenue shall promulgate
195.25administrative rules specifying the financing terms and conditions which must be included
195.26on the certificate. Pursuant to the authority of the commissioner of revenue in section
195.27270C.306, The certificate of value must include the Social Security number or the federal
195.28employer identification number of the grantors and grantees. However, a married person
195.29who is not an owner of record and who is signing a conveyance instrument along with
195.30the person's spouse solely to release and convey their marital interest, if any, in the real
195.31property being conveyed is not a grantor for the purpose of the preceding sentence. A
195.32statement in the deed that is substantially in the following form is sufficient to allow the
195.33county auditor to accept a certificate for filing without the Social Security number of the
195.34named spouse: " (Name) claims no ownership interest in the real property being conveyed
195.35and is executing this instrument solely to release and convey a marital interest, if any, in
196.1that real property." The identification numbers of the grantors and grantees are private
196.2data on individuals or nonpublic data as defined in section 13.02, subdivisions 9 and 12,
196.3but, notwithstanding that section, the private or nonpublic data may be disclosed to the
196.4commissioner of revenue for purposes of tax administration. The information required to
196.5be shown on the certificate of value is limited to the information required as of the date of
196.6the acknowledgment on the deed or other document to be recorded.
196.7EFFECTIVE DATE.This section is effective for certificates of value filed after
196.8June 30, 2008.

196.9    Sec. 24. Minnesota Statutes 2006, section 273.05, is amended by adding a subdivision
196.10to read:
196.11    Subd. 3. Cities and townships; employment of licensed assessor. In the case
196.12of cities or townships, except cities or towns located in Ramsey County or which have
196.13elected a county assessor system in accordance with section 273.055, the commissioner
196.14shall allow the city or town 90 days from the date of incorporation or organization to
196.15employ a licensed assessor.
196.16EFFECTIVE DATE.This section is effective the day following final enactment.

196.17    Sec. 25. [273.0535] COUNTY OR LOCAL ASSESSING DISTRICT TO ASSUME
196.18COST OF TRAINING.
196.19    The county or local assessing district must assume the cost of training its assessors
196.20in courses approved by the board for the purpose of obtaining the assessor's license to
196.21the extent of course fees, mileage, meals, and lodging, and recognized travel expenses
196.22not paid by the state.
196.23EFFECTIVE DATE.This section is effective the day following final enactment.

196.24    Sec. 26. Minnesota Statutes 2006, section 273.111, subdivision 3, is amended to read:
196.25    Subd. 3. Requirements. (a) Real estate consisting of ten acres or more or a nursery
196.26or greenhouse, and qualifying for classification as class 1b, 2a, or 2b under section 273.13,
196.27shall be entitled to valuation and tax deferment under this section only if it is primarily
196.28devoted to agricultural use, and meets the qualifications in subdivision 6, and either:
196.29    (1) is the homestead of the owner, or of a surviving spouse, child, or sibling of the
196.30owner or is real estate which is farmed with the real estate which contains the homestead
196.31property; or
197.1    (2) has been in possession of the applicant, the applicant's spouse, parent, or sibling,
197.2or any combination thereof, for a period of at least seven years prior to application for
197.3benefits under the provisions of this section, or is real estate which is farmed with the
197.4real estate which qualifies under this clause and is within four townships or cities or
197.5combination thereof from the qualifying real estate; or
197.6    (3) is the homestead of a shareholder in a family farm corporation as defined in
197.7section 500.24, notwithstanding the fact that legal title to the real estate may be held in the
197.8name of the family farm corporation; or
197.9    (4) is in the possession of a nursery or greenhouse or an entity owned by a proprietor,
197.10partnership, or corporation which also owns the nursery or greenhouse operations on
197.11the parcel or parcels.
197.12    (b) Valuation of real estate under this section is limited to parcels the ownership of
197.13which is in noncorporate entities except for:
197.14    (1) family farm corporations organized pursuant to section 500.24; and
197.15    (2) corporations that derive 80 percent or more of their gross receipts from the
197.16wholesale or retail sale of horticultural or nursery stock.
197.17    Corporate entities who previously qualified for tax deferment pursuant to this section
197.18and who continue to otherwise qualify under subdivisions 3 and 6 for a period of at least
197.19three years following the effective date of Laws 1983, chapter 222, section 8, will not be
197.20required to make payment of the previously deferred taxes, notwithstanding the provisions
197.21of subdivision 9. Special assessments are payable at the end of the three-year period
197.22or at time of sale, whichever comes first.
197.23    (c) Land that previously qualified for tax deferment under this section and no longer
197.24qualifies because it is not primarily used for agricultural purposes but would otherwise
197.25qualify under subdivisions 3 and 6 for a period of at least three years will not be required
197.26to make payment of the previously deferred taxes, notwithstanding the provisions of
197.27subdivision 9. Sale of the land prior to the expiration of the three-year period requires
197.28payment of deferred taxes as follows: sale in the year the land no longer qualifies requires
197.29payment of the current year's deferred taxes plus payment of deferred taxes for the two
197.30prior years; sale during the second year the land no longer qualifies requires payment of
197.31the current year's deferred taxes plus payment of the deferred taxes for the prior year; and
197.32sale during the third year the land no longer qualifies requires payment of the current
197.33year's deferred taxes. Deferred taxes shall be paid even if the land qualifies pursuant to
197.34subdivision 11a. When such property is sold or no longer qualifies under this paragraph, or
197.35at the end of the three-year period, whichever comes first, all deferred special assessments
197.36plus interest are payable in equal installments spread over the time remaining until the last
198.1maturity date of the bonds issued to finance the improvement for which the assessments
198.2were levied. If the bonds have matured, the deferred special assessments plus interest
198.3are payable within 90 days. The provisions of section 429.061, subdivision 2, apply
198.4to the collection of these installments. Penalties are not imposed on any such special
198.5assessments if timely paid.
198.6EFFECTIVE DATE.This section is effective the day following final enactment.

198.7    Sec. 27. Minnesota Statutes 2006, section 273.117, is amended to read:
198.8273.117 CONSERVATION PROPERTY TAX VALUATION.
198.9    The value of real property which is subject to a conservation restriction or easement
198.10shall be entitled to reduced valuation under this section may be adjusted by the assessor if:
198.11    (a) The restriction or easement is for a conservation purpose as defined in section
198.1284.64, subdivision 2 , and is recorded on the property;
198.13    (b) The property is being used in accordance with the terms of the conservation
198.14restriction or easement.
198.15EFFECTIVE DATE.This section is effective the day following final enactment.

198.16    Sec. 28. Minnesota Statutes 2006, section 273.121, is amended to read:
198.17273.121 VALUATION OF REAL PROPERTY, NOTICE.
198.18    Any county assessor or city assessor having the powers of a county assessor, valuing
198.19or classifying taxable real property shall in each year notify those persons whose property
198.20is to be included on the assessment roll that year if the person's address is known to the
198.21assessor, otherwise the occupant of the property. The notice shall be in writing and shall be
198.22sent by ordinary mail at least ten days before the meeting of the local board of appeal and
198.23equalization under section 274.01 or the review process established under section 274.13,
198.24subdivision 1c . Upon written request by the owner of the property, the assessor may send
198.25the notice in electronic form or by electronic mail instead of on paper or by ordinary mail.
198.26It shall contain: (1) the market value for the current and prior assessment, (2) the limited
198.27market value under section 273.11, subdivision 1a, for the current and prior assessment,
198.28(3) the qualifying amount of any improvements under section 273.11, subdivision 16,
198.29for the current assessment, (4) the market value subject to taxation after subtracting the
198.30amount of any qualifying improvements for the current assessment, (5) the classification
198.31of the property for the current and prior assessment, (6) a note that if the property is
198.32homestead and at least 45 years old, improvements made to the property may be eligible
198.33for a valuation exclusion under section 273.11, subdivision 16, (7) the assessor's office
199.1address, and (8) the dates, places, and times set for the meetings of the local board of
199.2appeal and equalization, the review process established under section 274.13, subdivision
199.31c , and the county board of appeal and equalization. The commissioner of revenue shall
199.4specify the form of the notice. The assessor shall attach to the assessment roll a statement
199.5that the notices required by this section have been mailed. Any assessor who is not
199.6provided sufficient funds from the assessor's governing body to provide such notices,
199.7may make application to the commissioner of revenue to finance such notices. The
199.8commissioner of revenue shall conduct an investigation and, if satisfied that the assessor
199.9does not have the necessary funds, issue a certification to the commissioner of finance
199.10of the amount necessary to provide such notices. The commissioner of finance shall
199.11issue a warrant for such amount and shall deduct such amount from any state payment
199.12to such county or municipality. The necessary funds to make such payments are hereby
199.13appropriated. Failure to receive the notice shall in no way affect the validity of the
199.14assessment, the resulting tax, the procedures of any board of review or equalization, or
199.15the enforcement of delinquent taxes by statutory means.
199.16EFFECTIVE DATE.This section is effective the day following final enactment.

199.17    Sec. 29. Minnesota Statutes 2006, section 273.124, subdivision 13, is amended to read:
199.18    Subd. 13. Homestead application. (a) A person who meets the homestead
199.19requirements under subdivision 1 must file a homestead application with the county
199.20assessor to initially obtain homestead classification.
199.21    (b) On or before January 2, 1993, each county assessor shall mail a homestead
199.22application to the owner of each parcel of property within the county which was
199.23classified as homestead for the 1992 assessment year. The format and contents of a
199.24uniform homestead application shall be prescribed by the commissioner of revenue. The
199.25commissioner shall consult with the chairs of the house and senate tax committees on the
199.26contents of the homestead application form. The application must clearly inform the
199.27taxpayer that this application must be signed by all owners who occupy the property or
199.28by the qualifying relative and returned to the county assessor in order for the property to
199.29continue receiving receive homestead treatment. The envelope containing the homestead
199.30application shall clearly identify its contents and alert the taxpayer of its necessary
199.31immediate response.
199.32    (c) Every property owner applying for homestead classification must furnish to the
199.33county assessor the Social Security number of each occupant who is listed as an owner
199.34of the property on the deed of record, the name and address of each owner who does not
199.35occupy the property, and the name and Social Security number of each owner's spouse who
200.1occupies the property. The application must be signed by each owner who occupies the
200.2property and by each owner's spouse who occupies the property, or, in the case of property
200.3that qualifies as a homestead under subdivision 1, paragraph (c), by the qualifying relative.
200.4    If a property owner occupies a homestead, the property owner's spouse may not
200.5claim another property as a homestead unless the property owner and the property owner's
200.6spouse file with the assessor an affidavit or other proof required by the assessor stating that
200.7the property qualifies as a homestead under subdivision 1, paragraph (e).
200.8    Owners or spouses occupying residences owned by their spouses and previously
200.9occupied with the other spouse, either of whom fail to include the other spouse's name
200.10and Social Security number on the homestead application or provide the affidavits or
200.11other proof requested, will be deemed to have elected to receive only partial homestead
200.12treatment of their residence. The remainder of the residence will be classified as
200.13nonhomestead residential. When an owner or spouse's name and Social Security number
200.14appear on homestead applications for two separate residences and only one application is
200.15signed, the owner or spouse will be deemed to have elected to homestead the residence for
200.16which the application was signed.
200.17    The Social Security numbers or affidavits or other proofs of the property owners
200.18and spouses, and the federal income tax schedule F required by this section, are private
200.19data on individuals as defined by section 13.02, subdivision 12, but, notwithstanding
200.20that section, the private data may be disclosed to the commissioner of revenue, or, for
200.21purposes of proceeding under the Revenue Recapture Act to recover personal property
200.22taxes owing, to the county treasurer.
200.23    (d) If residential real estate is occupied and used for purposes of a homestead by a
200.24relative of the owner and qualifies for a homestead under subdivision 1, paragraph (c), in
200.25order for the property to receive homestead status, a homestead application must be filed
200.26with the assessor. The Social Security number of each relative and spouse of a relative
200.27occupying the property and the Social Security number of each owner who is related to an
200.28occupant of the property shall be required on the homestead application filed under this
200.29subdivision. If a different relative of the owner subsequently occupies the property, the
200.30owner of the property must notify the assessor within 30 days of the change in occupancy.
200.31The Social Security number of a relative or relative's spouse occupying the property
200.32is private data on individuals as defined by section 13.02, subdivision 12, but may be
200.33disclosed to the commissioner of revenue, or, for the purposes of proceeding under the
200.34Revenue Recapture Act to recover personal property taxes owing, to the county treasurer.
200.35    (e) The homestead application shall also notify the property owners that the
200.36application filed under this section will not be mailed annually and that if the property
201.1is granted homestead status for the 1993 assessment, or any assessment year thereafter,
201.2that same property shall remain classified as homestead until the property is sold or
201.3transferred to another person, or the owners, the spouse of the owner, or the relatives no
201.4longer use the property as their homestead. Upon the sale or transfer of the homestead
201.5property, a certificate of value must be timely filed with the county auditor as provided
201.6under section 272.115. Failure to notify the assessor within 30 days that the property has
201.7been sold, transferred, or that the owner, the spouse of the owner, or the relative is no
201.8longer occupying the property as a homestead, shall result in the penalty provided under
201.9this subdivision and the property will lose its current homestead status.
201.10    (f) If the homestead application is not returned within 30 days, the county will send a
201.11second application to the present owners of record. The notice of proposed property taxes
201.12prepared under section 275.065, subdivision 3, shall reflect the property's classification.
201.13Beginning with assessment year 1993 for all properties, If a homestead application has
201.14not been filed with the county by December 15, the assessor shall classify the property
201.15as nonhomestead for the current assessment year for taxes payable in the following year,
201.16provided that the owner may be entitled to receive the homestead classification by proper
201.17application under section 375.192.
201.18    (g) At the request of the commissioner, each county must give the commissioner a
201.19list that includes the name and Social Security number of each occupant of homestead
201.20property who is the property owner and the, property owner's spouse occupying the
201.21property, or, qualifying relative of a property owner, applying for homestead classification
201.22under this subdivision or a spouse of a qualifying relative. The commissioner shall use the
201.23information provided on the lists as appropriate under the law, including for the detection
201.24of improper claims by owners, or relatives of owners, under chapter 290A.
201.25    (h) If the commissioner finds that a property owner may be claiming a fraudulent
201.26homestead, the commissioner shall notify the appropriate counties. Within 90 days of
201.27the notification, the county assessor shall investigate to determine if the homestead
201.28classification was properly claimed. If the property owner does not qualify, the county
201.29assessor shall notify the county auditor who will determine the amount of homestead
201.30benefits that had been improperly allowed. For the purpose of this section, "homestead
201.31benefits" means the tax reduction resulting from the classification as a homestead under
201.32section 273.13, the taconite homestead credit under section 273.135, the residential
201.33homestead and agricultural homestead credits under section 273.1384, and the
201.34supplemental homestead credit under section 273.1391.
201.35    The county auditor shall send a notice to the person who owned the affected property
201.36at the time the homestead application related to the improper homestead was filed,
202.1demanding reimbursement of the homestead benefits plus a penalty equal to 100 percent
202.2of the homestead benefits. The person notified may appeal the county's determination
202.3by serving copies of a petition for review with county officials as provided in section
202.4278.01 and filing proof of service as provided in section 278.01 with the Minnesota Tax
202.5Court within 60 days of the date of the notice from the county. Procedurally, the appeal
202.6is governed by the provisions in chapter 271 which apply to the appeal of a property tax
202.7assessment or levy, but without requiring any prepayment of the amount in controversy. If
202.8the amount of homestead benefits and penalty is not paid within 60 days, and if no appeal
202.9has been filed, the county auditor shall certify the amount of taxes and penalty to the county
202.10treasurer. The county treasurer will add interest to the unpaid homestead benefits and
202.11penalty amounts at the rate provided in section 279.03 for real property taxes becoming
202.12delinquent in the calendar year during which the amount remains unpaid. Interest may be
202.13assessed for the period beginning 60 days after demand for payment was made.
202.14    If the person notified is the current owner of the property, the treasurer may add the
202.15total amount of homestead benefits, penalty, interest, and costs to the ad valorem taxes
202.16otherwise payable on the property by including the amounts on the property tax statements
202.17under section 276.04, subdivision 3. The amounts added under this paragraph to the ad
202.18valorem taxes shall include interest accrued through December 31 of the year preceding
202.19the taxes payable year for which the amounts are first added. These amounts, when added
202.20to the property tax statement, become subject to all the laws for the enforcement of real or
202.21personal property taxes for that year, and for any subsequent year.
202.22    If the person notified is not the current owner of the property, the treasurer may
202.23collect the amounts due under the Revenue Recapture Act in chapter 270A, or use any of
202.24the powers granted in sections 277.20 and 277.21 without exclusion, to enforce payment
202.25of the homestead benefits, penalty, interest, and costs, as if those amounts were delinquent
202.26tax obligations of the person who owned the property at the time the application related
202.27to the improperly allowed homestead was filed. The treasurer may relieve a prior owner
202.28of personal liability for the homestead benefits, penalty, interest, and costs, and instead
202.29extend those amounts on the tax lists against the property as provided in this paragraph
202.30to the extent that the current owner agrees in writing. On all demands, billings, property
202.31tax statements, and related correspondence, the county must list and state separately the
202.32amounts of homestead benefits, penalty, interest and costs being demanded, billed or
202.33assessed.
202.34    (i) Any amount of homestead benefits recovered by the county from the property
202.35owner shall be distributed to the county, city or town, and school district where the
202.36property is located in the same proportion that each taxing district's levy was to the total
203.1of the three taxing districts' levy for the current year. Any amount recovered attributable
203.2to taconite homestead credit shall be transmitted to the St. Louis County auditor to be
203.3deposited in the taconite property tax relief account. Any amount recovered that is
203.4attributable to supplemental homestead credit is to be transmitted to the commissioner of
203.5revenue for deposit in the general fund of the state treasury. The total amount of penalty
203.6collected must be deposited in the county general fund.
203.7    (j) If a property owner has applied for more than one homestead and the county
203.8assessors cannot determine which property should be classified as homestead, the county
203.9assessors will refer the information to the commissioner. The commissioner shall make
203.10the determination and notify the counties within 60 days.
203.11    (k) In addition to lists of homestead properties, the commissioner may ask the
203.12counties to furnish lists of all properties and the record owners. The Social Security
203.13numbers and federal identification numbers that are maintained by a county or city
203.14assessor for property tax administration purposes, and that may appear on the lists retain
203.15their classification as private or nonpublic data; but may be viewed, accessed, and used by
203.16the county auditor or treasurer of the same county for the limited purpose of assisting the
203.17commissioner in the preparation of microdata samples under section 270C.12.
203.18    (l) On or before April 30 each year beginning in 2007, each county must provide the
203.19commissioner with the following data for each parcel of homestead property by electronic
203.20means as defined in section 289A.02, subdivision 8:
203.21    (i) the property identification number assigned to the parcel for purposes of taxes
203.22payable in the current year;
203.23    (ii) the name and Social Security number of each occupant of homestead property
203.24who is the property owner and, property owner's spouse, as shown on the tax rolls for the
203.25current and the prior assessment year qualifying relative of a property owner, or spouse
203.26of a qualifying relative;
203.27    (iii) the classification of the property under section 273.13 for taxes payable in the
203.28current year and in the prior year;
203.29    (iv) an indication of whether the property was classified as a homestead for taxes
203.30payable in the current year or for taxes payable in the prior year because of occupancy by
203.31a relative of the owner or by a spouse of a relative;
203.32    (v) the property taxes payable as defined in section 290A.03, subdivision 13, for the
203.33current year and the prior year;
203.34    (vi) the market value of improvements to the property first assessed for tax purposes
203.35for taxes payable in the current year;
204.1    (vii) the assessor's estimated market value assigned to the property for taxes payable
204.2in the current year and the prior year;
204.3    (viii) the taxable market value assigned to the property for taxes payable in the
204.4current year and the prior year;
204.5    (ix) whether there are delinquent property taxes owing on the homestead;
204.6    (x) the unique taxing district in which the property is located; and
204.7    (xi) such other information as the commissioner decides is necessary.
204.8    The commissioner shall use the information provided on the lists as appropriate
204.9under the law, including for the detection of improper claims by owners, or relatives
204.10of owners, under chapter 290A.
204.11EFFECTIVE DATE.This section is effective the day following final enactment.

204.12    Sec. 30. Minnesota Statutes 2006, section 273.1398, subdivision 4, is amended to read:
204.13    Subd. 4. Disparity reduction credit. (a) Beginning with taxes payable in 1989,
204.14class 4a, class 3a, and class 3b property qualifies for a disparity reduction credit if: (1)
204.15the property is located in a border city that has an enterprise zone designated pursuant
204.16to section 469.168, subdivision 4; (2) the property is located in a city with a population
204.17greater than 2,500 and less than 35,000 according to the 1980 decennial census; (3) the
204.18city is adjacent to a city in another state or immediately adjacent to a city adjacent to a city
204.19in another state; and (4) the adjacent city in the other state has a population of greater than
204.205,000 and less than 75,000 according to the 1980 decennial census.
204.21    (b) The credit is an amount sufficient to reduce (i) the taxes levied on class 4a
204.22property to 2.3 percent of the property's market value and (ii) the tax on class 3a and class
204.233b property to 2.3 percent of market value.
204.24    (c) The county auditor shall annually certify the costs of the credits to the
204.25Department of Revenue. The department shall reimburse local governments for the
204.26property taxes foregone as the result of the credits in proportion to their total levies.
204.27EFFECTIVE DATE.This section is effective retroactively for taxes payable in
204.282001 and thereafter.

204.29    Sec. 31. Minnesota Statutes 2006, section 273.33, subdivision 2, is amended to read:
204.30    Subd. 2. Listing and assessment by commissioner. The personal property,
204.31consisting of the pipeline system of mains, pipes, and equipment attached thereto, of
204.32pipeline companies and others engaged in the operations or business of transporting
204.33natural gas, gasoline, crude oil, or other petroleum products by pipelines, shall be listed
205.1with and assessed by the commissioner of revenue and the values provided to the city
205.2or county assessor by order. This subdivision shall not apply to the assessment of
205.3the products transported through the pipelines nor to the lines of local commercial gas
205.4companies engaged primarily in the business of distributing gas to consumers at retail nor
205.5to pipelines used by the owner thereof to supply natural gas or other petroleum products
205.6exclusively for such owner's own consumption and not for resale to others. If more than
205.785 percent of the natural gas or other petroleum products actually transported over the
205.8pipeline is used for the owner's own consumption and not for resale to others, then this
205.9subdivision shall not apply; provided, however, that in that event, the pipeline shall be
205.10assessed in proportion to the percentage of gas actually transported over such pipeline that
205.11is not used for the owner's own consumption. On or before June 30, the commissioner
205.12shall certify to the auditor of each county, the amount of such personal property assessment
205.13against each company in each district in which such property is located.
205.14EFFECTIVE DATE.This section is effective the day following final enactment.

205.15    Sec. 32. Minnesota Statutes 2006, section 273.37, subdivision 2, is amended to read:
205.16    Subd. 2. Listing and assessment by commissioner. Transmission lines of less
205.17than 69 kv, transmission lines of 69 kv and above located in an unorganized township,
205.18and distribution lines, and equipment attached thereto, having a fixed situs outside the
205.19corporate limits of cities except distribution lines taxed as provided in sections 273.40
205.20and 273.41, shall be listed with and assessed by the commissioner of revenue in the
205.21county where situated and the values provided to the city or county assessor by order.
205.22The commissioner shall assess such property at the percentage of market value fixed by
205.23law; and, on or before June 30, shall certify to the auditor of each county in which such
205.24property is located the amount of the assessment made against each company and person
205.25owning such property.
205.26EFFECTIVE DATE.This section is effective the day following final enactment.

205.27    Sec. 33. Minnesota Statutes 2006, section 273.371, subdivision 1, is amended to read:
205.28    Subdivision 1. Report required. Every electric light, power, gas, water, express,
205.29stage, and transportation company and pipeline doing business in Minnesota shall
205.30annually file with the commissioner on or before March 31 a report under oath setting
205.31forth the information prescribed by the commissioner to enable the commissioner to make
205.32valuations, recommended valuations, and equalization required under sections 273.33,
205.33273.35 , 273.36, and 273.37, and 273.3711. If all the required information is not available
206.1on March 31, the company or pipeline shall file the information that is available on or
206.2before March 31, and the balance of the information as soon as it becomes available.
206.3EFFECTIVE DATE.This section is effective the day following final enactment.

206.4    Sec. 34. [273.3711] RECOMMENDED AND ORDERED VALUES.
206.5    For purposes of sections 273.33, 273.35, 273.36, 273.37, 273.371, and 273.372,
206.6all values not required to be listed and assessed by the commissioner of revenue are
206.7recommended values.
206.8EFFECTIVE DATE.This section is effective the day following final enactment.

206.9    Sec. 35. Minnesota Statutes 2006, section 274.01, subdivision 1, is amended to read:
206.10    Subdivision 1. Ordinary board; meetings, deadlines, grievances. (a) The town
206.11board of a town, or the council or other governing body of a city, is the board of appeal
206.12and equalization except (1) in cities whose charters provide for a board of equalization or
206.13(2) in any city or town that has transferred its local board of review power and duties to
206.14the county board as provided in subdivision 3. The county assessor shall fix a day and
206.15time when the board or the board of equalization shall meet in the assessment districts
206.16of the county. Notwithstanding any law or city charter to the contrary, a city board of
206.17equalization shall be referred to as a board of appeal and equalization. On or before
206.18February 15 of each year the assessor shall give written notice of the time to the city or
206.19town clerk. Notwithstanding the provisions of any charter to the contrary, the meetings
206.20must be held between April 1 and May 31 each year. The clerk shall give published and
206.21posted notice of the meeting at least ten days before the date of the meeting.
206.22    The board shall meet at the office of the clerk to review the assessment and
206.23classification of property in the town or city. No changes in valuation or classification
206.24which are intended to correct errors in judgment by the county assessor may be made by
206.25the county assessor after the board has adjourned in those cities or towns that hold a
206.26local board of review; however, corrections of errors that are merely clerical in nature or
206.27changes that extend homestead treatment to property are permitted after adjournment until
206.28the tax extension date for that assessment year. The changes must be fully documented and
206.29maintained in the assessor's office and must be available for review by any person. A copy
206.30of the changes made during this period in those cities or towns that hold a local board of
206.31review must be sent to the county board no later than December 31 of the assessment year.
206.32    (b) The board shall determine whether the taxable property in the town or city has
206.33been properly placed on the list and properly valued by the assessor. If real or personal
207.1property has been omitted, the board shall place it on the list with its market value, and
207.2correct the assessment so that each tract or lot of real property, and each article, parcel,
207.3or class of personal property, is entered on the assessment list at its market value. No
207.4assessment of the property of any person may be raised unless the person has been
207.5duly notified of the intent of the board to do so. On application of any person feeling
207.6aggrieved, the board shall review the assessment or classification, or both, and correct
207.7it as appears just. The board may not make an individual market value adjustment or
207.8classification change that would benefit the property if the owner or other person having
207.9control over the property has refused the assessor access to inspect the property and the
207.10interior of any buildings or structures as provided in section 273.20. A board member
207.11shall not participate in any actions of the board which result in market value adjustments
207.12or classification changes to property owned by the board member, the spouse, parent,
207.13stepparent, child, stepchild, grandparent, grandchild, brother, sister, uncle, aunt, nephew,
207.14or niece of a board member, or property in which a board member has a financial interest.
207.15The relationship may be by blood or marriage.
207.16    (c) A local board may reduce assessments upon petition of the taxpayer but the total
207.17reductions must not reduce the aggregate assessment made by the county assessor by more
207.18than one percent. If the total reductions would lower the aggregate assessments made by
207.19the county assessor by more than one percent, none of the adjustments may be made. The
207.20assessor shall correct any clerical errors or double assessments discovered by the board
207.21without regard to the one percent limitation.
207.22    (d) A local board does not have authority to grant an exemption or to order property
207.23removed from the tax rolls.
207.24    (e) A majority of the members may act at the meeting, and adjourn from day to day
207.25until they finish hearing the cases presented. The assessor shall attend, with the assessment
207.26books and papers, and take part in the proceedings, but must not vote. The county assessor,
207.27or an assistant delegated by the county assessor shall attend the meetings. The board shall
207.28list separately, on a form appended to the assessment book, all omitted property added
207.29to the list by the board and all items of property increased or decreased, with the market
207.30value of each item of property, added or changed by the board, placed opposite the item.
207.31The county assessor shall enter all changes made by the board in the assessment book.
207.32    (f) Except as provided in subdivision 3, if a person fails to appear in person, by
207.33counsel, or by written communication before the board after being duly notified of the
207.34board's intent to raise the assessment of the property, or if a person feeling aggrieved by an
207.35assessment or classification fails to apply for a review of the assessment or classification,
207.36the person may not appear before the county board of appeal and equalization for a review
208.1of the assessment or classification. This paragraph does not apply if an assessment was
208.2made after the local board meeting, as provided in section 273.01, or if the person can
208.3establish not having received notice of market value at least five days before the local
208.4board meeting.
208.5    (g) The local board must complete its work and adjourn within 20 days from the
208.6time of convening stated in the notice of the clerk, unless a longer period is approved by
208.7the commissioner of revenue. No action taken after that date is valid. All complaints
208.8about an assessment or classification made after the meeting of the board must be heard
208.9and determined by the county board of equalization. A nonresident may, at any time,
208.10before the meeting of the board file written objections to an assessment or classification
208.11with the county assessor. The objections must be presented to the board at its meeting by
208.12the county assessor for its consideration.
208.13EFFECTIVE DATE.This section is effective the day following final enactment.

208.14    Sec. 36. Minnesota Statutes 2006, section 274.13, subdivision 1, is amended to read:
208.15    Subdivision 1. Members; meetings; rules for equalizing assessments. The county
208.16commissioners, or a majority of them, with the county auditor, or, if the auditor cannot be
208.17present, the deputy county auditor, or, if there is no deputy, the court administrator of the
208.18district court, shall form a board for the equalization of the assessment of the property
208.19of the county, including the property of all cities whose charters provide for a board of
208.20equalization. This board shall be referred to as the county board of appeal and equalization.
208.21The board shall meet annually, on the date specified in section 274.14, at the office of the
208.22auditor. Each member shall take an oath to fairly and impartially perform duties as a
208.23member. Members shall not participate in any actions of the board which result in market
208.24value adjustments or classification changes to property owned by the board member, the
208.25spouse, parent, stepparent, child, stepchild, grandparent, grandchild, brother, sister, uncle,
208.26aunt, nephew, or niece of a board member, or property in which a board member has a
208.27financial interest. The relationship may be by blood or marriage. The board shall examine
208.28and compare the returns of the assessment of property of the towns or districts, and
208.29equalize them so that each tract or lot of real property and each article or class of personal
208.30property is entered on the assessment list at its market value, subject to the following rules:
208.31    (1) The board shall raise the valuation of each tract or lot of real property which
208.32in its opinion is returned below its market value to the sum believed to be its market
208.33value. The board must first give notice of intention to raise the valuation to the person in
208.34whose name it is assessed, if the person is a resident of the county. The notice must fix
208.35a time and place for a hearing.
209.1    (2) The board shall reduce the valuation of each tract or lot which in its opinion is
209.2returned above its market value to the sum believed to be its market value.
209.3    (3) The board shall raise the valuation of each class of personal property which
209.4in its opinion is returned below its market value to the sum believed to be its market
209.5value. It shall raise the aggregate value of the personal property of individuals, firms, or
209.6corporations, when it believes that the aggregate valuation, as returned, is less than the
209.7market value of the taxable personal property possessed by the individuals, firms, or
209.8corporations, to the sum it believes to be the market value. The board must first give notice
209.9to the persons of intention to do so. The notice must set a time and place for a hearing.
209.10    (4) The board shall reduce the valuation of each class of personal property that
209.11is returned above its market value to the sum it believes to be its market value. Upon
209.12complaint of a party aggrieved, the board shall reduce the aggregate valuation of the
209.13individual's personal property, or of any class of personal property for which the individual
209.14is assessed, which in its opinion has been assessed at too large a sum, to the sum it believes
209.15was the market value of the individual's personal property of that class.
209.16    (5) The board must not reduce the aggregate value of all the property of its county, as
209.17submitted to the county board of equalization, with the additions made by the auditor under
209.18this chapter, by more than one percent of its whole valuation. The board may raise the
209.19aggregate valuation of real property, and of each class of personal property, of the county,
209.20or of any town or district of the county, when it believes it is below the market value of the
209.21property, or class of property, to the aggregate amount it believes to be its market value.
209.22    (6) The board shall change the classification of any property which in its opinion
209.23is not properly classified.
209.24    (7) The board does not have the authority to grant an exemption or to order property
209.25removed from the tax rolls.
209.26EFFECTIVE DATE.This section is effective the day following final enactment.

209.27    Sec. 37. [274.135] COUNTY BOARDS; APPEALS AND EQUALIZATION
209.28COURSE AND MEETING REQUIREMENTS.
209.29    Subdivision 1. Handbook for county boards. By no later than January 1, 2009, the
209.30commissioner of revenue must develop a handbook detailing procedures, responsibilities,
209.31and requirements for county boards of appeal and equalization. The handbook must
209.32include, but need not be limited to, the role of the county board in the assessment process,
209.33the legal and policy reasons for fair and impartial appeal and equalization hearings, county
209.34board meeting procedures that foster fair and impartial assessment reviews and other best
210.1practices recommendations, quorum requirements for county boards, and explanations
210.2of alternate methods of appeal.
210.3    Subd. 2. Appeals and equalization course. Beginning in 2009, and each year
210.4thereafter, there must be at least one member at each meeting of a county board of appeal
210.5and equalization who has attended an appeals and equalization course developed or
210.6approved by the commissioner within the last four years, as certified by the commissioner.
210.7The course may be offered in conjunction with a meeting of the Minnesota Association
210.8of Assessment Officers. The course content must include, but need not be limited to, a
210.9review of the handbook developed by the commissioner under subdivision 1.
210.10    Subd. 3. Proof of compliance; transfer of duties. (a) Any county that
210.11conducts county boards of appeal and equalization meetings must provide proof to the
210.12commissioner by December 1, 2009, and each year thereafter, that it is in compliance
210.13with the requirements of subdivision 2. Beginning in 2009, this notice must also verify
210.14that there was a quorum of voting members at each meeting of the board of appeal and
210.15equalization in the current year. A county that does not comply with these requirements
210.16is deemed to have transferred its board of appeal and equalization powers to the special
210.17board of equalization appointed pursuant to section 274.13, subdivision 2, beginning
210.18with the following year's assessment and continuing unless the powers are reinstated
210.19under paragraph (c). A county that does not comply with the requirements of subdivision
210.202 and has not appointed a special board of equalization shall appoint a special board of
210.21equalization before the following year's assessment.
210.22    (b) The county shall notify the taxpayers when the board of appeal and equalization
210.23for a county has been transferred to the special board of equalization under this subdivision
210.24and, prior to the meeting time of the special board of equalization, the county shall make
210.25available to those taxpayers a procedure for a review of the assessments, including, but
210.26not limited to, open book meetings. This alternate review process must take place in
210.27April and May.
210.28    (c) A county board whose powers are transferred to the special board of equalization
210.29under this subdivision may be reinstated by resolution of the county board and upon proof
210.30of compliance with the requirements of subdivision 2. The resolution and proofs must be
210.31provided to the commissioner by December 1 in order to be effective for the following
210.32year's assessment.
210.33EFFECTIVE DATE.This section is effective the day following final enactment.

210.34    Sec. 38. Minnesota Statutes 2007 Supplement, section 275.065, subdivision 3, is
210.35amended to read:
211.1    Subd. 3. Notice of proposed property taxes. (a) The county auditor shall prepare
211.2and the county treasurer shall deliver after November 10 and on or before November 24
211.3each year, by first class mail to each taxpayer at the address listed on the county's current
211.4year's assessment roll, a notice of proposed property taxes. Upon written request by
211.5the taxpayer, the treasurer may send the notice in electronic form or by electronic mail
211.6instead of on paper or by ordinary mail.
211.7    (b) The commissioner of revenue shall prescribe the form of the notice.
211.8    (c) The notice must inform taxpayers that it contains the amount of property taxes
211.9each taxing authority proposes to collect for taxes payable the following year. In the case
211.10of a town, or in the case of the state general tax, the final tax amount will be its proposed
211.11tax. In the case of taxing authorities required to hold a public meeting under subdivision 6,
211.12the notice must clearly state that each taxing authority, including regional library districts
211.13established under section 134.201, and including the metropolitan taxing districts as
211.14defined in paragraph (i), but excluding all other special taxing districts and towns, will
211.15hold a public meeting to receive public testimony on the proposed budget and proposed or
211.16final property tax levy, or, in case of a school district, on the current budget and proposed
211.17property tax levy. It must clearly state the time and place of each taxing authority's
211.18meeting, a telephone number for the taxing authority that taxpayers may call if they have
211.19questions related to the notice, and an address where comments will be received by mail.
211.20    (d) The notice must state for each parcel:
211.21    (1) the market value of the property as determined under section 273.11, and used
211.22for computing property taxes payable in the following year and for taxes payable in the
211.23current year as each appears in the records of the county assessor on November 1 of the
211.24current year; and, in the case of residential property, whether the property is classified as
211.25homestead or nonhomestead. The notice must clearly inform taxpayers of the years to
211.26which the market values apply and that the values are final values;
211.27    (2) the items listed below, shown separately by county, city or town, and state general
211.28tax, net of the residential and agricultural homestead credit under section 273.1384, voter
211.29approved school levy, other local school levy, and the sum of the special taxing districts,
211.30and as a total of all taxing authorities:
211.31    (i) the actual tax for taxes payable in the current year; and
211.32    (ii) the proposed tax amount.
211.33    If the county levy under clause (2) includes an amount for a lake improvement
211.34district as defined under sections 103B.501 to 103B.581, the amount attributable for that
211.35purpose must be separately stated from the remaining county levy amount.
212.1    In the case of a town or the state general tax, the final tax shall also be its proposed
212.2tax unless the town changes its levy at a special town meeting under section 365.52. If a
212.3school district has certified under section 126C.17, subdivision 9, that a referendum will
212.4be held in the school district at the November general election, the county auditor must
212.5note next to the school district's proposed amount that a referendum is pending and that, if
212.6approved by the voters, the tax amount may be higher than shown on the notice. In the
212.7case of the city of Minneapolis, the levy for Minneapolis Park and Recreation shall be
212.8listed separately from the remaining amount of the city's levy. In the case of the city of
212.9St. Paul, the levy for the St. Paul Library Agency must be listed separately from the
212.10remaining amount of the city's levy. In the case of Ramsey County, any amount levied
212.11under section 134.07 may be listed separately from the remaining amount of the county's
212.12levy. In the case of a parcel where tax increment or the fiscal disparities areawide tax
212.13under chapter 276A or 473F applies, the proposed tax levy on the captured value or the
212.14proposed tax levy on the tax capacity subject to the areawide tax must each be stated
212.15separately and not included in the sum of the special taxing districts; and
212.16    (3) the increase or decrease between the total taxes payable in the current year and
212.17the total proposed taxes, expressed as a percentage.
212.18    For purposes of this section, the amount of the tax on homesteads qualifying under
212.19the senior citizens' property tax deferral program under chapter 290B is the total amount
212.20of property tax before subtraction of the deferred property tax amount.
212.21    (e) The notice must clearly state that the proposed or final taxes do not include
212.22the following:
212.23    (1) special assessments;
212.24    (2) levies approved by the voters after the date the proposed taxes are certified,
212.25including bond referenda and school district levy referenda;
212.26    (3) a levy limit increase approved by the voters by the first Tuesday after the first
212.27Monday in November of the levy year as provided under section 275.73;
212.28    (4) amounts necessary to pay cleanup or other costs due to a natural disaster
212.29occurring after the date the proposed taxes are certified;
212.30    (5) amounts necessary to pay tort judgments against the taxing authority that become
212.31final after the date the proposed taxes are certified; and
212.32    (6) the contamination tax imposed on properties which received market value
212.33reductions for contamination.
212.34    (f) Except as provided in subdivision 7, failure of the county auditor to prepare or
212.35the county treasurer to deliver the notice as required in this section does not invalidate the
212.36proposed or final tax levy or the taxes payable pursuant to the tax levy.
213.1    (g) If the notice the taxpayer receives under this section lists the property as
213.2nonhomestead, and satisfactory documentation is provided to the county assessor by the
213.3applicable deadline, and the property qualifies for the homestead classification in that
213.4assessment year, the assessor shall reclassify the property to homestead for taxes payable
213.5in the following year.
213.6    (h) In the case of class 4 residential property used as a residence for lease or rental
213.7periods of 30 days or more, the taxpayer must either:
213.8    (1) mail or deliver a copy of the notice of proposed property taxes to each tenant,
213.9renter, or lessee; or
213.10    (2) post a copy of the notice in a conspicuous place on the premises of the property.
213.11    The notice must be mailed or posted by the taxpayer by November 27 or within
213.12three days of receipt of the notice, whichever is later. A taxpayer may notify the county
213.13treasurer of the address of the taxpayer, agent, caretaker, or manager of the premises to
213.14which the notice must be mailed in order to fulfill the requirements of this paragraph.
213.15    (i) For purposes of this subdivision, subdivisions 5a and 6, "metropolitan special
213.16taxing districts" means the following taxing districts in the seven-county metropolitan area
213.17that levy a property tax for any of the specified purposes listed below:
213.18    (1) Metropolitan Council under section 473.132, 473.167, 473.249, 473.325,
213.19473.446 , 473.521, 473.547, or 473.834;
213.20    (2) Metropolitan Airports Commission under section 473.667, 473.671, or 473.672;
213.21and
213.22    (3) Metropolitan Mosquito Control Commission under section 473.711.
213.23    For purposes of this section, any levies made by the regional rail authorities in the
213.24county of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter
213.25398A shall be included with the appropriate county's levy and shall be discussed at that
213.26county's public hearing.
213.27    (j) The governing body of a county, city, or school district may, with the consent
213.28of the county board, include supplemental information with the statement of proposed
213.29property taxes about the impact of state aid increases or decreases on property tax
213.30increases or decreases and on the level of services provided in the affected jurisdiction.
213.31This supplemental information may include information for the following year, the current
213.32year, and for as many consecutive preceding years as deemed appropriate by the governing
213.33body of the county, city, or school district. It may include only information regarding:
213.34    (1) the impact of inflation as measured by the implicit price deflator for state and
213.35local government purchases;
213.36    (2) population growth and decline;
214.1    (3) state or federal government action; and
214.2    (4) other financial factors that affect the level of property taxation and local services
214.3that the governing body of the county, city, or school district may deem appropriate to
214.4include.
214.5    The information may be presented using tables, written narrative, and graphic
214.6representations and may contain instruction toward further sources of information or
214.7opportunity for comment.
214.8EFFECTIVE DATE.This section is effective for notices required in 2008 and
214.9thereafter, for taxes payable in 2009 and thereafter.

214.10    Sec. 39. Minnesota Statutes 2006, section 275.065, subdivision 5a, is amended to read:
214.11    Subd. 5a. Public advertisement. (a) A city that has a population of more than
214.122,500, county, a metropolitan special taxing district as defined in subdivision 3, paragraph
214.13(i), a regional library district established under section 134.201, or school district shall
214.14advertise in a newspaper a notice of its intent to adopt a budget and property tax levy or,
214.15in the case of a school district, to review its current budget and proposed property taxes
214.16payable in the following year, at a public hearing, if a public hearing is required under
214.17subdivision 6. The notice must be published not less than two business days nor more
214.18than six business days before the hearing.
214.19    The advertisement must be at least one-eighth page in size of a standard-size or a
214.20tabloid-size newspaper. The advertisement must not be placed in the part of the newspaper
214.21where legal notices and classified advertisements appear. The advertisement must be
214.22published in an official newspaper of general circulation in the taxing authority. The
214.23newspaper selected must be one of general interest and readership in the community, and
214.24not one of limited subject matter. The advertisement must appear in a newspaper that is
214.25published at least once per week.
214.26    For purposes of this section, the metropolitan special taxing district's advertisement
214.27must only be published in the Minneapolis Star and Tribune and the Saint Paul Pioneer
214.28Press.
214.29    In addition to other requirements, a county and a city having a population of
214.30more than 2,500 must show in the public advertisement required under this subdivision
214.31the current local tax rate, the proposed local tax rate if no property tax levy increase
214.32is adopted, and the proposed rate if the proposed levy is adopted. For purposes of this
214.33subdivision, "local tax rate" means the city's or county's net tax capacity levy divided by
214.34the city's or county's taxable net tax capacity.
215.1    (b) Subject to the provisions of paragraph (g), the advertisement for school districts,
215.2metropolitan special taxing districts, and regional library districts must be in the following
215.3form, except that the notice for a school district may include references to the current
215.4budget in regard to proposed property taxes.

215.5"NOTICE OF

215.6PROPOSED PROPERTY TAXES

215.7(School District/Metropolitan

215.8Special Taxing District/Regional
215.9Library District) of .........
215.10The governing body of ........ will soon hold budget hearings and vote on the property
215.11taxes for (metropolitan special taxing district/regional library district services that will be
215.12provided in (year)/school district services that will be provided in (year) and (year)).

215.13NOTICE OF PUBLIC HEARING:

215.14All concerned citizens are invited to attend a public hearing and express their opinions
215.15on the proposed (school district/metropolitan special taxing district/regional library
215.16district) budget and property taxes, or in the case of a school district, its current budget
215.17and proposed property taxes, payable in the following year. The hearing will be held on
215.18(Month/Day/Year) at (Time) at (Location, Address)."
215.19    (c) Subject to the provisions of paragraph (g), the advertisement for cities and
215.20counties must be in the following form.

215.21"NOTICE OF PROPOSED

215.22TOTAL BUDGET AND PROPERTY TAXES
215.23The (city/county) governing body or board of commissioners will hold a public hearing to
215.24discuss the budget and to vote on the amount of property taxes to collect for services the
215.25(city/county) will provide in (year).
215.26SPENDING: The total budget amounts below compare (city's/county's) (year) total actual
215.27budget with the amount the (city/county) proposes to spend in (year).

215.28 215.29	(Year) Total Actual Budget		Proposed (Year) Budget		Change from (Year)-(Year)
215.30	$...........		$...........		.....%

215.31TAXES: The property tax amounts below compare that portion of the current budget
215.32levied in property taxes in (city/county) for (year) with the property taxes the (city/county)
215.33proposes to collect in (year).

215.34 215.35	(Year) Property Taxes		Proposed (Year) Property Taxes		Change from (Year)-(Year)
215.36	$...........		$...........		.....%

216.1LOCAL TAX RATE COMPARISON: The current local tax rate, the local tax rate if no tax
216.2levy increase is adopted, and the proposed local tax rate if the proposed levy is adopted.

216.3 216.4	(Year) Tax Rate		(Year) Tax Rate if NO Levy Increase		(Year) Proposed Tax Rate
216.5	...........		...........		.....

216.6ATTEND THE PUBLIC HEARING

216.7All (city/county) residents are invited to attend the public hearing of the (city/county) to
216.8express your opinions on the budget and the proposed amount of (year) property taxes.
216.9The hearing will be held on:

216.10(Month/Day/Year/Time)

216.11(Location/Address)
216.12If the discussion of the budget cannot be completed, a time and place for continuing the
216.13discussion will be announced at the hearing. You are also invited to send your written
216.14comments to:

216.15(City/County)

216.16(Location/Address)"
216.17    (d) For purposes of this subdivision, the budget amounts listed on the advertisement
216.18mean:
216.19    (1) for cities, the total government fund expenditures, as defined by the state auditor
216.20under section 471.6965, less any expenditures for improvements or services that are
216.21specially assessed or charged under chapter 429, 430, 435, or the provisions of any other
216.22law or charter; and
216.23    (2) for counties, the total government fund expenditures, as defined by the state
216.24auditor under section 375.169, less any expenditures for direct payments to recipients or
216.25providers for the human service aids listed below:
216.26    (i) Minnesota family investment program under chapters 256J and 256K;
216.27    (ii) medical assistance under sections 256B.041, subdivision 5, and 256B.19,
216.28subdivision 1 ;
216.29    (iii) general assistance medical care under section 256D.03, subdivision 6;
216.30    (iv) general assistance under section 256D.03, subdivision 2;
216.31    (v) emergency assistance under section 256J.48;
216.32    (vi) Minnesota supplemental aid under section 256D.36, subdivision 1;
216.33    (vii) preadmission screening under section 256B.0911, and alternative care grants
216.34under section 256B.0913;
216.35    (viii) general assistance medical care claims processing, medical transportation and
216.36related costs under section 256D.03, subdivision 4;
217.1    (ix) medical transportation and related costs under section 256B.0625, subdivisions
217.217 to 18a ;
217.3    (x) group residential housing under section 256I.05, subdivision 8, transferred from
217.4programs in clauses (iv) and (vi); or
217.5    (xi) any successor programs to those listed in clauses (i) to (x).
217.6    (e) A city with a population of over 500 but not more than 2,500 that is required to
217.7hold a public hearing under subdivision 6 must advertise by posted notice as defined in
217.8section 645.12, subdivision 1. The advertisement must be posted at the time provided in
217.9paragraph (a). It must be in the form required in paragraph (b).
217.10    (f) For purposes of this subdivision, the population of a city is the most recent
217.11population as determined by the state demographer under section 4A.02.
217.12    (g) The commissioner of revenue, subject to the approval of the chairs of the house
217.13and senate tax committees, shall annually prescribe the specific form and format of the
217.14advertisements required under this subdivision, including such details as font size and
217.15style, and spacing for the required items. The commissioner may prescribe alternate and
217.16additional language for the advertisement for a taxing authority or for groups of taxing
217.17authorities. At least two weeks before November 29 each year, the commissioner shall
217.18provide a copy of the prescribed advertisements to the chairs of the committees of the
217.19house of representatives and the senate with jurisdiction over taxes.
217.20EFFECTIVE DATE.This section is effective for advertisements in 2008 and
217.21thereafter, for proposed taxes payable in 2009 and thereafter.

217.22    Sec. 40. Minnesota Statutes 2006, section 275.067, is amended to read:
217.23275.067 SPECIAL TAXING DISTRICTS; ORGANIZATION DATE;
217.24CERTIFICATION OF LEVY OR SPECIAL ASSESSMENTS.
217.25    Special taxing districts as defined in section 275.066 organized on or before July 1 in
217.26a the current calendar year may, and special taxing districts organized in a prior year that
217.27have not previously certified a levy to the county auditor, are allowed to certify a levy to
217.28the county auditor in that same the current year for property taxes or special assessments
217.29to be payable in the following calendar year to the extent that the special taxing district is
217.30authorized by statute or special act to levy taxes or special assessments, but only if the
217.31county auditor receives written notice from the district on or before July 1 of the current
217.32year that the district may be certifying a levy in the current year, and the notice includes a
217.33complete list or other description of the tax parcels in the district and a map showing the
217.34boundaries of the district. Special taxing districts organized after July 1 in a calendar year
218.1may not certify a levy of property taxes or special assessments to the county auditor under
218.2the powers granted to them by statute or special act and subject to the requirements of
218.3this section until the following calendar year. All special taxing districts must notify the
218.4county auditor by July 1 in order for its boundaries for the levy to be certified that year
218.5to be different than its boundaries for levies certified in prior years, and the notice must
218.6include a complete list or other description of the tax parcels within the new boundaries
218.7and a map showing the new boundaries of the district.
218.8EFFECTIVE DATE.This section is effective for taxes payable in 2009 and
218.9thereafter.

218.10    Sec. 41. Minnesota Statutes 2006, section 276.04, is amended by adding a subdivision
218.11to read:
218.12    Subd. 5. Electronic tax statements. Upon written request by the owner of real
218.13property located in the county, or by the owner's agent, a county may send tax statements
218.14by electronic means instead of by mailing. For the purposes of the payment deadlines
218.15specified in section 279.01, the postmark date on the envelope containing these property
218.16tax statements is the date the statements were sent by electronic means.
218.17EFFECTIVE DATE.This section is effective for tax statements for taxes payable
218.18in 2009 and thereafter.

218.19    Sec. 42. Minnesota Statutes 2006, section 277.01, subdivision 2, is amended to read:
218.20    Subd. 2. Partial payments. The county treasurer may accept payments of more or
218.21less than the exact amount of a tax installment due. Payments must be applied first to the
218.22oldest installment that is due but which has not been fully paid. If the accepted payment is
218.23less than the amount due, payments must be the payment is applied first to the penalty
218.24accrued for the year the payment is made or the installment being paid. Acceptance of
218.25partial payment of tax does not constitute a waiver of the minimum payment required as a
218.26condition for filing an appeal under section 278.03 or any other law, nor does it affect the
218.27order of payment of delinquent taxes under section 280.39.
218.28EFFECTIVE DATE.This section is effective for payments made after the day
218.29of final enactment.

218.30    Sec. 43. Minnesota Statutes 2006, section 279.01, subdivision 1, is amended to read:
218.31    Subdivision 1. Due dates; penalties. Except as provided in subdivision 3 or 4, on
218.32May 16 or 21 days after the postmark date on the envelope containing the property tax
219.1statement, whichever is later, a penalty shall accrue accrues and thereafter be is charged
219.2upon all unpaid taxes on real estate on the current lists in the hands of the county treasurer.
219.3The penalty shall be is at a rate of two percent on homestead property until May 31 and
219.4four percent on June 1. The penalty on nonhomestead property shall be is at a rate of four
219.5percent until May 31 and eight percent on June 1. This penalty shall does not accrue until
219.6June 1 of each year, or 21 days after the postmark date on the envelope containing the
219.7property tax statements, whichever is later, on commercial use real property used for
219.8seasonal residential recreational purposes and classified as class 1c or 4c, and on other
219.9commercial use real property classified as class 3a, provided that over 60 percent of the
219.10gross income earned by the enterprise on the class 3a property is earned during the months
219.11of May, June, July, and August. Any property owner of such class 3a property who pays
219.12In order for the first half of the tax due on the class 3a property to be paid after May 15
219.13and before June 1, or 21 days after the postmark date on the envelope containing the
219.14property tax statement, whichever is later, shall without penalty, the owner of the property
219.15must attach an affidavit to the payment attesting to compliance with the income provision
219.16of this subdivision. Thereafter, for both homestead and nonhomestead property, on the
219.17first day of each month beginning July 1, up to and including October 1 following, an
219.18additional penalty of one percent for each month shall accrue accrues and be is charged on
219.19all such unpaid taxes provided that if the due date was extended beyond May 15 as the
219.20result of any delay in mailing property tax statements no additional penalty shall accrue
219.21if the tax is paid by the extended due date. If the tax is not paid by the extended due
219.22date, then all penalties that would have accrued if the due date had been May 15 shall be
219.23charged. When the taxes against any tract or lot exceed $50, one-half thereof may be paid
219.24prior to May 16 or 21 days after the postmark date on the envelope containing the property
219.25tax statement, whichever is later; and, if so paid, no penalty shall attach attaches; the
219.26remaining one-half shall may be paid at any time prior to October 16 following, without
219.27penalty; but, if not so paid, then a penalty of two percent shall accrue accrues thereon for
219.28homestead property and a penalty of four percent on nonhomestead property. Thereafter,
219.29for homestead property, on the first day of November an additional penalty of four percent
219.30shall accrue accrues and on the first day of December following, an additional penalty of
219.31two percent shall accrue accrues and be is charged on all such unpaid taxes. Thereafter,
219.32for nonhomestead property, on the first day of November and December following, an
219.33additional penalty of four percent for each month shall accrue accrues and be is charged
219.34on all such unpaid taxes. If one-half of such taxes shall are not be paid prior to May 16 or
219.3521 days after the postmark date on the envelope containing the property tax statement,
219.36whichever is later, the same may be paid at any time prior to October 16, with accrued
220.1penalties to the date of payment added, and thereupon no penalty shall attach attaches to
220.2the remaining one-half until October 16 following.
220.3    This section applies to payment of personal property taxes assessed against
220.4improvements to leased property, except as provided by section 277.01, subdivision 3.
220.5    A county may provide by resolution that in the case of a property owner that has
220.6multiple tracts or parcels with aggregate taxes exceeding $50, payments may be made in
220.7installments as provided in this subdivision.
220.8    The county treasurer may accept payments of more or less than the exact amount of
220.9a tax installment due. Payments must be applied first to the oldest installment that is due
220.10but which has not been fully paid. If the accepted payment is less than the amount due,
220.11payments must be applied first to the penalty accrued for the year the payment is made
220.12or the installment being paid. Acceptance of partial payment of tax does not constitute
220.13a waiver of the minimum payment required as a condition for filing an appeal under
220.14section 278.03 or any other law, nor does it affect the order of payment of delinquent
220.15taxes under section 280.39.
220.16EFFECTIVE DATE.This section is effective for payments made after the day
220.17of final enactment.

220.18    Sec. 44. Minnesota Statutes 2006, section 290B.03, subdivision 2, is amended to read:
220.19    Subd. 2. Qualifying homestead; defined. Qualifying homestead property is defined
220.20as the dwelling located in this state that is taxed as real property and that is occupied as the
220.21homeowner's principal residence and so much of the land surrounding it as is reasonably
220.22necessary for use of the dwelling as a home and any other property used for purposes of a
220.23homestead as defined in section 273.13, subdivisions 22 and 23, but not to exceed one
220.24acre. The homestead may be part of a multidwelling building and the land on which it is
220.25built. Property is not qualifying homestead property if a person or entity other than the
220.26applicant or the applicant's spouse holds an interest in the property as the vendor under a
220.27contract for deed or as a remainderperson.
220.28EFFECTIVE DATE.This section is effective retroactively for applications
220.29submitted after December 31, 2007.

220.30    Sec. 45. Minnesota Statutes 2006, section 290C.02, subdivision 3, is amended to read:
220.31    Subd. 3. Claimant. (a) "Claimant" means:
221.1    (1) a person, as that term is defined in section 290.01, subdivision 2, who owns
221.2forest land in Minnesota and files an application authorized by the Sustainable Forest
221.3Incentive Act. Claimant includes;
221.4    (2) a purchaser or grantee if property enrolled in the program was sold or transferred
221.5after the original application was filed and prior to the annual incentive payment being
221.6made.; or
221.7    (3) an owner of land previously covered by an auxiliary forest contract that
221.8automatically qualifies for inclusion in the Sustainable Forest Incentive Act program
221.9pursuant to section 88.49, subdivision 9a, or 88.491, subdivision 2.
221.10     The purchaser or grantee must notify the commissioner in writing of the sale or
221.11transfer of the property. Owners of land that qualifies for inclusion pursuant to section
221.1288.49, subdivision 9a, or 88.491, subdivision 2, must notify the commissioner in writing
221.13of the expiration of the auxiliary forest contract or land trade with a governmental unit and
221.14submit an application to the commissioner by August 15 in order to be eligible to receive a
221.15payment by October 1 of that same year. For purposes of section 290C.11, claimant also
221.16includes any person bound by the covenant required in section 290C.04.
221.17    (b) No more than one claimant is entitled to a payment under this chapter with
221.18respect to any tract, parcel, or piece of land enrolled under this chapter that has been
221.19assigned the same parcel identification number. When enrolled forest land is owned by
221.20two or more persons, the owners must determine between them which person is eligible to
221.21claim the payments provided under sections 290C.01 to 290C.11. In the case of property
221.22sold or transferred, the former owner and the purchaser or grantee must determine between
221.23them which person is eligible to claim the payments provided under sections 290C.01 to
221.24290C.11 . The owners, transferees, or grantees must notify the commissioner in writing
221.25which person is eligible to claim the payments.
221.26EFFECTIVE DATE.This section is effective the day following final enactment.

221.27    Sec. 46. Minnesota Statutes 2006, section 290C.04, is amended to read:
221.28290C.04 APPLICATIONS.
221.29    (a) A landowner may apply to enroll forest land for the sustainable forest incentive
221.30program under this chapter. The claimant must complete, sign, and submit an application
221.31to the commissioner by September 30 in order for the land to become eligible beginning
221.32in the next year. The application shall be on a form prescribed by the commissioner and
221.33must include the information the commissioner deems necessary. At a minimum, the
221.34application must show the following information for the land and the claimant: (i) the
222.1claimant's Social Security number or state or federal business tax registration number and
222.2date of birth, (ii) the claimant's address, (iii) the claimant's signature, (iv) the county's
222.3parcel identification numbers for the tax parcels that completely contain the claimant's
222.4forest land that is sought to be enrolled, (v) the number of acres eligible for enrollment
222.5in the program, (vi) the approved plan writer's signature and identification number, and
222.6(vii) proof, in a form specified by the commissioner, that the claimant has executed and
222.7acknowledged in the manner required by law for a deed, and recorded, a covenant that the
222.8land is not and shall not be developed in a manner inconsistent with the requirements and
222.9conditions of this chapter. The covenant shall state in writing that the covenant is binding
222.10on the claimant and the claimant's successor or assignee, and that it runs with the land
222.11for a period of not less than eight years. The commissioner shall specify the form of the
222.12covenant and provide copies upon request. The covenant must include a legal description
222.13that encompasses all the forest land that the claimant wishes to enroll under this section or
222.14the certificate of title number for that land if it is registered land.
222.15    (b) In all cases, the commissioner shall notify the claimant within 90 days after
222.16receipt of a completed application that either the land has or has not been approved for
222.17enrollment. A claimant whose application is denied may appeal the denial as provided in
222.18section 290C.11, paragraph (a) 290C.13.
222.19    (c) Within 90 days after the denial of an application, or within 90 days after the
222.20final resolution of any appeal related to the denial, the commissioner shall execute and
222.21acknowledge a document releasing the land from the covenant required under this chapter.
222.22The document must be mailed to the claimant and is entitled to be recorded.
222.23    (d) The Social Security numbers collected from individuals under this section are
222.24private data as provided in section 13.355. The federal business tax registration number
222.25and date of birth data collected under this section are also private data on individuals or
222.26nonpublic data, as defined in section 13.02, subdivisions 9 and 12, but may be shared
222.27with county assessors for purposes of tax administration and with county treasurers for
222.28purposes of the revenue recapture under chapter 270A.
222.29EFFECTIVE DATE.This section is effective the day following final enactment.

222.30    Sec. 47. Minnesota Statutes 2006, section 290C.05, is amended to read:
222.31290C.05 ANNUAL CERTIFICATION.
222.32    On or before July 1 of each year, beginning with the year after the original claimant
222.33has received an approved application, the commissioner shall send each claimant enrolled
222.34under the sustainable forest incentive program a certification form. For purposes of this
223.1section, the original claimant is the person that filed the first application under section
223.2290C.04 to enroll the land in the program. The claimant must sign the certification,
223.3attesting that the requirements and conditions for continued enrollment in the program are
223.4currently being met, and must return the signed certification form to the commissioner by
223.5August 15 of that same year. If the claimant does not return an annual certification form
223.6by the due date, the provisions in section 290C.11 apply.
223.7EFFECTIVE DATE.This section is effective the day following final enactment.

223.8    Sec. 48. Minnesota Statutes 2006, section 290C.11, is amended to read:
223.9290C.11 PENALTIES FOR REMOVAL.
223.10    (a) If the commissioner determines that land enrolled in the sustainable forest
223.11incentive program is in violation of the conditions for enrollment as specified in section
223.12290C.03 , the commissioner shall notify the claimant of the intent to remove all enrolled
223.13land from the sustainable forest incentive program. The claimant has 60 days to appeal
223.14this determination under the provisions of section 290C.13. The appeal must be made
223.15in writing to the commissioner, who shall, within 60 days, notify the claimant as to the
223.16outcome of the appeal. Within 60 days after the commissioner denies an appeal, or within
223.17120 days after the commissioner received a written appeal if the commissioner has not
223.18made a determination in that time, the owner may appeal to Tax Court under chapter 271
223.19as if the appeal is from an order of the commissioner.
223.20    (b) If the commissioner determines the land is to be removed from the sustainable
223.21forest incentive program, the claimant is liable for payment to the commissioner in the
223.22amount equal to the payments received under this chapter for the previous four-year
223.23period, plus interest. The claimant has 90 days to satisfy the payment for removal of land
223.24from the sustainable forest incentive program under this section. If the penalty is not paid
223.25within the 90-day period under this paragraph, the commissioner shall certify the amount
223.26to the county auditor for collection as a part of the general ad valorem real property taxes
223.27on the land in the following taxes payable year.
223.28EFFECTIVE DATE.This section is effective the day following final enactment.

223.29    Sec. 49. [290C.13] APPEALS.
223.30    Subdivision 1. Claimant right to reconsideration. A claimant may obtain
223.31reconsideration by the commissioner of a determination removing enrolled land from the
223.32sustainable forest incentive program, a determination denying an application to enroll land
223.33in the program, or a denial of part or all of an incentive payment by filing an administrative
224.1appeal under subdivision 4. A claimant cannot obtain reconsideration under this section if
224.2the action taken by the commissioner is the outcome of an administrative appeal.
224.3    Subd. 2. Appeal by claimant. A claimant who wishes to seek administrative review
224.4must follow the procedures in subdivision 4.
224.5    Subd. 3. Notice date. For purposes of this section, the term "notice date" means
224.6the date of the determination removing enrolled land or the date of the notice denying an
224.7application to enroll land or denying part or all of an incentive payment.
224.8    Subd. 4. Time and content for administrative appeal. Within 60 days after the
224.9notice date, the claimant must file a written appeal with the commissioner. The appeal
224.10need not be in any particular form but must contain the following information:
224.11    (1) name and address of the claimant;
224.12    (2) if a corporation, the state of incorporation of the claimant, and the principal
224.13place of business of the corporation;
224.14    (3) the Minnesota or federal business identification number or Social Security
224.15number of the claimant;
224.16    (4) the date;
224.17    (5) the periods involved and the amount of payment involved for each year or period;
224.18    (6) the findings in the notice that the claimant disputes;
224.19    (7) a summary statement that the claimant relies on for each exception; and
224.20    (8) the claimant's signature or signature of the claimant's duly authorized agent.
224.21    Subd. 5. Extensions. When requested in writing and within the time allowed for
224.22filing an administrative appeal, the commissioner may extend the time for filing an appeal
224.23for a period not more than 30 days from the expiration of the 60 days from the notice date.
224.24    Subd. 6. Determination of appeal. On the basis of applicable law and available
224.25information, the commissioner shall determine the validity, if any, in whole or in part,
224.26of the appeal and notify the claimant of the decision. This notice must be in writing
224.27and contain the basis for the determination.
224.28    Subd. 7. Agreement determining issues under appeal. When it appears to be in
224.29the best interests of the state, the commissioner may settle the amount of any incentive
224.30payments, payments owed by the claimant under section 290C.11, paragraph (b), penalties,
224.31or interest that the commissioner has under consideration by virtue of an appeal filed
224.32under this section. An agreement must be in writing and signed by the commissioner and
224.33the claimant, or the claimant's representative authorized by the claimant to enter into an
224.34agreement. The agreement is final and conclusive and, except upon a showing of fraud or
224.35malfeasance, or misrepresentation of a material fact, the case must not be reopened as to
224.36the matters agreed upon.
225.1    Subd. 8. Appeal to Tax Court. Within 60 days after the commissioner denies
225.2an appeal, or within 120 days after the commissioner received a written appeal if the
225.3commissioner has not made a determination in that time, the claimant may appeal to Tax
225.4Court under chapter 271 as if the appeal is from an order of the commissioner.
225.5    Subd. 9. Exemption from Administrative Procedure Act. This section is not
225.6subject to chapter 14.
225.7EFFECTIVE DATE.This section is effective the day following final enactment.

225.8    Sec. 50. REPEALER.
225.9(a) Minnesota Statutes 2006, section 270.073, is repealed.
225.10(b) Minnesota Statutes 2006, sections 270.41, subdivision 4; 270.43; 270.51; 270.52;
225.11and 270.53, are repealed.
225.12EFFECTIVE DATE.This section is effective the day following final enactment.

225.13ARTICLE 14

225.14DEPARTMENT SPECIAL TAXES

225.15    Section 1. Minnesota Statutes 2006, section 62I.06, subdivision 6, is amended to read:
225.16    Subd. 6. Deficits Deficit assessments. The association shall certify to the
225.17commissioner the estimated amount of any deficit remaining after the stabilization reserve
225.18fund has been exhausted and payment of the maximum final premium for all policyholders
225.19of the association. Within 60 days after the certification, the commissioner shall authorize
225.20the association to recover the members' respective shares of the deficit by assessing
225.21all members an amount sufficient to fully fund the obligations of the association. The
225.22assessment of each member shall be determined in the manner provided in section 62I.07.
225.23An assessment made pursuant to this section shall be deductible by the member from past
225.24or future premium taxes due the state as provided in section 297I.20, subdivision 2.
225.25EFFECTIVE DATE.This section is effective for tax returns due after December
225.2631, 2008.

225.27    Sec. 2. Minnesota Statutes 2006, section 71A.04, subdivision 1, is amended to read:
225.28    Subdivision 1. Premium tax. The attorney-in-fact, in lieu of all taxes, state, county,
225.29and municipal, shall file with the commissioner of revenue all returns and pay to the
225.30commissioner of revenue all amounts required under chapter 297I.
225.31EFFECTIVE DATE.This section is effective the day following final enactment.

226.1    Sec. 3. Minnesota Statutes 2006, section 287.22, is amended to read:
226.2287.22 EXEMPTIONS.
226.3    The tax imposed by section 287.21 does not apply to:
226.4    (1) An executory contract for the sale of real property under which the purchaser is
226.5entitled to or does take possession of the real property, or any assignment or cancellation
226.6of the contract;
226.7    (2) A mortgage or an amendment, assignment, extension, partial release, or
226.8satisfaction of a mortgage;
226.9    (3) A will;
226.10    (4) A plat;
226.11    (5) A lease, amendment of lease, assignment of lease, or memorandum of lease;
226.12    (6) A deed, instrument, or writing in which the United States or any agency or
226.13instrumentality thereof is the grantor, assignor, transferor, conveyor, grantee, or assignee;
226.14    (7) A deed for a cemetery lot or lots;
226.15    (8) A deed of distribution by a personal representative;
226.16    (9) A deed to or from a co-owner partitioning their undivided interest in the same
226.17piece of real property;
226.18    (10) A deed or other instrument of conveyance issued pursuant to a permanent
226.19school fund land exchange under section 92.121 and related laws;
226.20    (11) A referee's or sheriff's certificate of sale in a mortgage or lien foreclosure sale;
226.21    (12) A referee's, sheriff's, or certificate holder's certificate of redemption from a
226.22mortgage or lien foreclosure sale issued to the redeeming mortgagor or lienee under
226.23section 580.23 or other statute applicable to redemption by an owner of real property;
226.24    (13) A deed, instrument, or writing which grants, creates, modifies, or terminates an
226.25easement; and
226.26    (14) A decree of marriage dissolution, as defined in section 287.01, subdivision 4,
226.27or a deed or other instrument between the parties to the dissolution made pursuant to
226.28the terms of the decree.
226.29EFFECTIVE DATE.This section is effective the day following final enactment.

226.30    Sec. 4. Minnesota Statutes 2006, section 287.2205, is amended to read:
226.31287.2205 TAX-FORFEITED LAND.
226.32    Before a state deed for tax-forfeited land may be issued, the deed tax must be paid
226.33by the purchaser of tax-forfeited land whether the purchase is the result of a public
226.34auction or private sale or a repurchase of tax-forfeited land. State agencies and local
227.1units of government that acquire tax-forfeited land by purchase or any other means are
227.2subject to this section. The deed tax is $1.65 for a conveyance of tax-forfeited lands to a
227.3governmental subdivision for an authorized public use under section 282.01, subdivision
227.41a, or for redevelopment purposes under section 282.01, subdivision 1b.
227.5EFFECTIVE DATE.This section is effective the day following final enactment.

227.6    Sec. 5. Minnesota Statutes 2006, section 295.52, subdivision 4, is amended to read:
227.7    Subd. 4. Use tax; prescription drugs. (a) A person that receives prescription drugs
227.8for resale or use in Minnesota, other than from a wholesale drug distributor that is subject
227.9to tax under subdivision 3, is subject to a tax equal to the price paid to the wholesale drug
227.10distributor multiplied by the tax percentage specified in this section. Liability for the tax is
227.11incurred when prescription drugs are received or delivered in Minnesota by the person.
227.12    (b) A person that receives prescription drugs for use in Minnesota from a nonresident
227.13pharmacy required to be registered under section 151.19 is subject to a tax equal to
227.14the price paid by the nonresident pharmacy to the wholesale drug distributor or the
227.15price received by the nonresident pharmacy, whichever is lower, multiplied by the tax
227.16percentage specified in this section. Liability for the tax is incurred when prescription
227.17drugs are received in Minnesota by the person.
227.18    (c) (b) A tax imposed under this subdivision does not apply to purchases by an
227.19individual for personal consumption.
227.20EFFECTIVE DATE.This section is effective the day following final enactment.

227.21    Sec. 6. Minnesota Statutes 2006, section 295.52, subdivision 4a, is amended to read:
227.22    Subd. 4a. Tax collection. A wholesale drug distributor with nexus in Minnesota,
227.23who is not subject to tax under subdivision 3, on all or a particular transaction or a
227.24nonresident pharmacy with nexus in Minnesota, is required to collect the tax imposed
227.25under subdivision 4, from the purchaser of the drugs and give the purchaser a receipt
227.26for the tax paid. The tax collected shall be remitted to the commissioner in the manner
227.27prescribed by section 295.55, subdivision 3.
227.28EFFECTIVE DATE.This section is effective the day following final enactment.

227.29    Sec. 7. Minnesota Statutes 2006, section 295.54, subdivision 2, is amended to read:
227.30    Subd. 2. Pharmacy refund. A pharmacy may claim an annual refund against the
227.31total amount of tax, if any, the pharmacy owes during that calendar year under section
227.32295.52, subdivision 2 4. The refund shall equal the amount paid by the pharmacy to a
228.1wholesale drug distributor subject to tax under section 295.52, subdivision 3, for legend
228.2drugs delivered by the pharmacy outside of Minnesota, multiplied by the tax percentage
228.3specified in section 295.52, subdivision 3. If the amount of the refund exceeds the tax
228.4liability of the pharmacy under section 295.52, subdivision 1b 4, the commissioner
228.5shall provide the pharmacy with a refund equal to the excess amount. Each qualifying
228.6pharmacy must apply for the refund on the annual return as provided under section 295.55,
228.7subdivision 5 . The refund must be claimed within one year of the due date of the return 18
228.8months from the date the drugs were delivered outside of Minnesota. Interest on refunds
228.9paid under this subdivision will begin to accrue 60 days after the date a claim for refund is
228.10filed. For purposes of this subdivision, the date a claim is filed is the due date of the return
228.11if a return is due or the date of the actual claim for refund, whichever is later.
228.12EFFECTIVE DATE.This section is effective the day following final enactment.

228.13    Sec. 8. Minnesota Statutes 2006, section 297F.06, subdivision 4, is amended to read:
228.14    Subd. 4. Tobacco products use tax. The tobacco products use tax does not apply to
228.15the possession, use, or storage of tobacco products that if (1) the tobacco products have an
228.16aggregate cost in any calendar month to the consumer of $100 $50 or less, and (2) the
228.17tobacco products were carried into this state by that consumer.
228.18EFFECTIVE DATE.This section is effective for the possession, use, or storage
228.19of tobacco products after June 30, 2008.

228.20    Sec. 9. Minnesota Statutes 2006, section 297F.25, is amended by adding a subdivision
228.21to read:
228.22    Subd. 3a. Consumer use tax; use tax return; cigarette consumer. (a) On or before
228.23the 18th day of each calendar month, a consumer who, during the preceding calendar
228.24month, has acquired title to or possession of cigarettes for use or storage in this state, upon
228.25which the sales tax imposed by this section has not been paid, shall file a return with the
228.26commissioner showing the quantity of cigarettes so acquired or possessed. The return
228.27must be made in the form and manner prescribed by the commissioner, and must contain
228.28any other information required by the commissioner. The return must be accompanied by
228.29a remittance for the full unpaid sales tax liability shown by it.
228.30    (b) The tax imposed under paragraph (a) does not apply if (1) the consumer has
228.31acquired title to or possession of cigarettes for use or storage in this state in quantities
228.32of 200 or fewer in the month, and (2) the cigarettes were carried into this state by that
228.33consumer.
229.1EFFECTIVE DATE.This section is effective for cigarettes which a consumer has
229.2acquired title to or possession of after June 30, 2008.

229.3    Sec. 10. Minnesota Statutes 2006, section 297I.06, subdivision 1, is amended to read:
229.4    Subdivision 1. Insurance policies surcharge. (a) Except as otherwise provided in
229.5subdivision 2, each licensed insurer engaged in writing policies of homeowner's insurance
229.6authorized in section 60A.06, subdivision 1, clause (1)(c), or commercial fire policies or
229.7commercial nonliability policies shall collect a surcharge equal to 0.65 percent of the
229.8gross premiums and assessments, less return premiums, on direct business received by
229.9the company, or by its agents for it, for homeowner's insurance policies, commercial fire
229.10policies, and commercial nonliability insurance policies in this state.
229.11    (b) The surcharge amount collected under paragraph (a) or subdivision 2, paragraph
229.12(b), may not be considered premium for any other purpose. The surcharge amount
229.13under paragraph (a) must be separately stated on either a billing or policy declaration or
229.14document containing similar information sent to an insured.
229.15    (c) Amounts collected by the commissioner under this section must be deposited in
229.16the fire safety account established pursuant to subdivision 3.
229.17EFFECTIVE DATE.This section is effective retroactively from July 1, 2007, and
229.18applies to policies written or renewed on or after that date.

229.19    Sec. 11. Minnesota Statutes 2006, section 297I.06, subdivision 2, is amended to read:
229.20    Subd. 2. Exemptions. (a) This section does not apply to a farmers' mutual fire
229.21insurance company or township mutual fire insurance company in Minnesota organized
229.22under chapter 67A.
229.23    (b) An insurer described in section 297I.05, subdivisions 3 and 4, authorized to
229.24transact business in Minnesota shall elect to remit to the Department of Revenue for
229.25deposit in the fire safety account either (1) the surcharge amount collected imposed under
229.26this section subdivision 1 on all premiums subject to that surcharge, or (2) a surcharge of
229.27one-half of one percent on the gross fire premiums and assessments, less return premiums,
229.28on all direct business received by the insurer or agents of the insurer in Minnesota, in
229.29cash or otherwise, during the year.
229.30    (c) The election must be made by December 31 of each year for insurance policies
229.31written or renewed in the succeeding calendar year. An insurer who elects to remit the
229.32one-half of one percent surcharge on gross fire premiums and assessments must not charge
229.33the insured the surcharge imposed under subdivision 1.
230.1    (c) (d) For purposes of this subdivision, "gross fire premiums and assessments"
230.2includes premiums on policies covering fire risks only on automobiles, whether written or
230.3under floater form or otherwise.
230.4EFFECTIVE DATE.This section is effective retroactively from July 1, 2007, and
230.5applies to insurance policies written or renewed on or after that date.

230.6    Sec. 12. Minnesota Statutes 2006, section 297I.20, subdivision 2, is amended to read:
230.7    Subd. 2. Joint Underwriting Association offset. An insurance company may offset
230.8against its premium tax liability to this state any amount paid for an assessment made
230.9pursuant to section 62I.06, subdivision 6, shall be deductible by the member from past
230.10or future premium taxes due the state. The offset against premium tax liability must be
230.11claimed beginning with the taxable year that the assessment is paid. To the extent that the
230.12allowable offset exceeds the tax liability, the remaining offset must be carried forward to
230.13succeeding taxable years until the entire offset has been credited against the insurance
230.14company's liability for premium tax under this chapter.
230.15EFFECTIVE DATE.This section is effective for tax returns due after December
230.1631, 2008.

230.17    Sec. 13. Minnesota Statutes 2006, section 297I.40, subdivision 5, is amended to read:
230.18    Subd. 5. Definition of tax. The term "tax" as used in this section means the tax
230.19imposed by section 297I.05, subdivisions 1 to 6, 11, and 12, paragraphs (a), clauses (1)
230.20to (5), (b), and (e) (d), without regard to the retaliatory provisions of section 297I.05,
230.21subdivision 11 , and the less any offset in section 297I.20.
230.22EFFECTIVE DATE.This section is effective for tax returns due after December
230.2331, 2008.

230.24ARTICLE 15

230.25DEPARTMENT MISCELLANEOUS

230.26    Section 1. Minnesota Statutes 2006, section 16D.04, subdivision 1, is amended to read:
230.27    Subdivision 1. Duties. The commissioner shall provide services to the state and its
230.28referring agencies to collect debts owed the state referred for collection under this chapter.
230.29The commissioner is not a collection agency as defined by section 332.31, subdivision 3,
230.30and is not licensed, bonded, or regulated by the commissioner of commerce under sections
230.31332.31 to 332.35 or 332.38 to 332.45. The commissioner is subject to section 332.37,
231.1except clause (9), (10), (12), or (19). Debts referred to the commissioner for collection
231.2under section 256.9792 may in turn be referred by the commissioner to the enterprise.
231.3An audited financial statement may not be required as a condition of debt placement with
231.4a private agency if the private agency: (1) has errors and omissions coverage under a
231.5professional liability policy in an amount of at least $1,000,000; or (2) has a fidelity bond
231.6to cover actions of its employees, in an amount of at least $100,000. In cases of debts
231.7referred under section 256.9792, the provisions of this chapter and section 256.9792 apply
231.8to the extent they are not in conflict. If they are in conflict, the provisions of section
231.9256.9792 control. For purposes of this chapter, the referring agency for such debts remains
231.10the Department of Human Services.
231.11EFFECTIVE DATE.This section is effective the day following final enactment.

231.12    Sec. 2. Minnesota Statutes 2006, section 16D.04, subdivision 2, is amended to read:
231.13    Subd. 2. Agency participation. (a) A referring agency may, at its option, must
231.14refer, by electronic means, debts to the commissioner for collection. The ultimate
231.15Responsibility for the debt, including the reporting of the debt to the commissioner of
231.16finance and the decision with regard to the continuing collection and uncollectibility of the
231.17debt, remains with the referring agency.
231.18    (b) Before a debt becomes 121 days past due, a referring agency may refer the
231.19debt to the commissioner for collection at any time after a debt becomes delinquent and
231.20uncontested and the debtor has no further administrative appeal of the amount of the
231.21debt. When a debt owed to a state referring agency becomes 121 days past due, the state
231.22referring agency must refer the debt to the commissioner for collection. This requirement
231.23does not apply if there is a dispute over the amount or validity of the debt, if the debt is the
231.24subject of legal action or administrative proceedings, or the agency determines that the
231.25debtor is adhering to acceptable payment arrangements. The commissioner, in consultation
231.26with the commissioner of finance, may provide that certain types of debt need not be
231.27referred to the commissioner for collection under this paragraph. Methods and procedures
231.28for referral must follow internal guidelines prepared by the commissioner of finance.
231.29    (c) If the referring agency is a court, the court must furnish a debtor's Social Security
231.30number to the commissioner when the court refers the debt.
231.31EFFECTIVE DATE.This section is effective for debts referred after December
231.3231, 2008.

231.33    Sec. 3. Minnesota Statutes 2006, section 16D.11, subdivision 2, is amended to read:
232.1    Subd. 2. Computation. At the time a debt is referred, the amount of collection
232.2costs is equal to 15 17 percent of the debt, or 25 percent of the debt remaining unpaid if
232.3the commissioner or private collection agency has to take enforced collection action
232.4by serving a summons and complaint on or entering judgment against the debtor, or by
232.5utilizing any of the remedies authorized under section 16D.08, subdivision 2, except for
232.6the remedies in sections 270C.32 and 270C.65 or when referred by the commissioner for
232.7additional collection activity by a private collection agency. If, after referral of a debt to
232.8a private collection agency, the debtor requests cancellation of collection costs under
232.9subdivision 3, the debt must be returned to the commissioner for resolution of the request.
232.10EFFECTIVE DATE.This section is effective for debts referred after December
232.1131, 2008.

232.12    Sec. 4. Minnesota Statutes 2006, section 16D.11, subdivision 7, is amended to read:
232.13    Subd. 7. Adjustment of rate. By June 1 of each year, the commissioner of finance
232.14shall determine the rate of collection costs for debts referred to the enterprise during
232.15the next fiscal year. The rate is a percentage of the debts in an amount that most nearly
232.16equals the costs of the enterprise necessary to process and collect referred debts under this
232.17chapter. In no event shall the rate of collection costs when a debt is first referred exceed
232.18three-fifths of the maximum collection costs, and in no event shall the rate of the maximum
232.19collection costs exceed 25 percent of the debt. Determination of the rate of collection costs
232.20under this section is not subject to the fee setting requirements of section 16A.1285.
232.21EFFECTIVE DATE.This section is effective January 1, 2009.

232.22    Sec. 5. [270C.435] REFUNDS NOT SUBJECT TO ATTACHMENT OR
232.23GARNISHMENT.
232.24    No amount of a tax refund or other payment payable by the commissioner to
232.25a taxpayer is assignable or subject to execution, levy, attachment, garnishment, lien
232.26foreclosure, or other legal process, except as specifically provided by law.
232.27EFFECTIVE DATE.This section is effective the day following final enactment.

232.28    Sec. 6. Minnesota Statutes 2006, section 270C.446, subdivision 2, is amended to read:
232.29    Subd. 2. Required and excluded tax preparers. (a) Subject to the limitations
232.30of paragraph (b), the commissioner must publish lists of tax preparers as defined in
232.31section 289A.60, subdivision 13, paragraph (f), who have been convicted under section
233.1289A.63 or assessed penalties in excess of $1,000 under section 289A.60, subdivision
233.213, paragraph (a).
233.3    (b) For the purposes of this section, tax preparers are not subject to publication if:
233.4    (1) an administrative or court action contesting the penalty has been filed or served
233.5and is unresolved at the time when notice would be given under subdivision 3;
233.6    (2) an appeal period to contest the penalty has not expired; or
233.7    (3) the commissioner has been notified that the tax preparer is deceased.
233.8EFFECTIVE DATE.This section is effective for penalties on returns filed after
233.9December 31, 2008.

233.10    Sec. 7. Minnesota Statutes 2006, section 270C.56, subdivision 1, is amended to read:
233.11    Subdivision 1. Liability imposed. A person who, either singly or jointly with
233.12others, has the control of, supervision of, or responsibility for filing returns or reports,
233.13paying taxes, or collecting or withholding and remitting taxes and who fails to do so, or
233.14a person who is liable under any other law, is liable for the payment of taxes, penalties,
233.15and interest arising under chapters 295, 296A, 297A, 297F, and 297G, or sections 290.92
233.16and 297E.02, and, for the taxes listed in this subdivision, the applicable penalties for
233.17nonpayment under section 289A.60.
233.18EFFECTIVE DATE.This section is effective for personal liability assessments
233.19made after the day of final enactment.

233.20    Sec. 8. Minnesota Statutes 2006, section 270C.63, subdivision 9, is amended to read:
233.21    Subd. 9. Period of limitations. The lien imposed by this section shall,
233.22notwithstanding any other provision of law to the contrary, be enforceable from the time
233.23the lien arises and for ten years from the date of filing the notice of lien, which must be
233.24filed by the commissioner within five years after the date of assessment of the tax or final
233.25administrative or judicial determination of the assessment. A notice of lien filed at the
233.26Office of the Secretary of State may be transcribed to any county within ten years after the
233.27date of its filing, but the transcription does not extend the period during which the lien is
233.28enforceable. A notice of lien filed in one county may be transcribed to the secretary of
233.29state or to any other county within ten years after the date of its filing, but the transcription
233.30shall not extend the period during which the lien is enforceable. A notice of lien may be
233.31renewed by the commissioner before the expiration of the ten-year period for an additional
233.32ten years. The taxpayer must receive written notice of the renewal.
234.1EFFECTIVE DATE.This section is effective for liens transcribed after the day
234.2of final enactment.

234.3    Sec. 9. Minnesota Statutes 2007 Supplement, section 424A.10, subdivision 3, is
234.4amended to read:
234.5    Subd. 3. State reimbursement. (a) By February 15 of each year, the treasurer of
234.6the relief association shall apply to the commissioner of revenue Each year, to be eligible
234.7for state reimbursement of the amount of supplemental benefits paid under subdivision 2
234.8during the preceding calendar year, the relief association must apply to the commissioner
234.9of revenue by February 15. By March 15, the commissioner shall reimburse the relief
234.10association for the amount of the supplemental benefits paid to qualified recipients and to
234.11survivors of deceased active or deferred volunteer firefighters.
234.12    (b) The commissioner of revenue shall prescribe the form of and supporting
234.13information that must be supplied as part of the application for state reimbursement.
234.14The commissioner of revenue shall reimburse the relief association by paying the
234.15reimbursement amount to the treasurer of the municipality where the association is located.
234.16Within 30 days after receipt, the municipal treasurer shall transmit the state reimbursement
234.17to the treasurer of the association if the association has filed a financial report with the
234.18municipality. If the relief association has not filed a financial report with the municipality,
234.19the municipal treasurer shall delay transmission of the reimbursement payment to the
234.20association until the complete financial report is filed. If the association has dissolved or
234.21has been removed as a trustee of state aid, the treasurer shall deposit the money in a
234.22special account in the municipal treasury, and the money may be disbursed only for the
234.23purposes and in the manner provided in section 424A.08. When paid to the association,
234.24    (c) the reimbursement payment must be deposited in the special fund of the relief
234.25association.
234.26    (d) (c) A sum sufficient to make the payments is appropriated from the general fund
234.27to the commissioner of revenue.
234.28EFFECTIVE DATE.This section is effective the day following final enactment.

234.29ARTICLE 16

234.30MISCELLANEOUS

234.31    Section 1. Minnesota Statutes 2006, section 3.987, subdivision 1, is amended to read:
234.32    Subdivision 1. Local impact notes. The commissioner of finance shall coordinate
234.33the development of a local impact note for any proposed legislation introduced after June
235.130, 1997, or any rule proposed after December 31, 1999, upon request of the chair or the
235.2ranking minority member of either legislative Tax Committee. Upon receipt of a request
235.3to prepare a local impact note, the commissioner must notify the authors of the proposed
235.4legislation or, for an administrative rule, the head of the relevant executive agency or
235.5department, that the request has been made. The local impact note must be made available
235.6to the public upon request. If the action is among the exceptions listed in section 3.988,
235.7a local impact note need not be requested nor prepared. The commissioner shall make
235.8a reasonable and timely estimate of the local fiscal impact on each type of political
235.9subdivision that would result from the proposed legislation. The commissioner of finance
235.10may require any political subdivision or the commissioner of an administrative agency
235.11of the state to supply in a timely manner any information determined to be necessary to
235.12determine local fiscal impact. The political subdivision, its representative association, or
235.13commissioner shall convey the requested information to the commissioner of finance with
235.14a signed statement to the effect that the information is accurate and complete to the best
235.15of its ability. The political subdivision, its representative association, or commissioner,
235.16when requested, shall update its determination of local fiscal impact based on actual
235.17cost or revenue figures, improved estimates, or both. Upon completion of the note, the
235.18commissioner must provide a copy to the authors of the proposed legislation or, for an
235.19administrative rule, to the head of the relevant executive agency or department.

235.20    Sec. 2. Minnesota Statutes 2006, section 3.988, subdivision 3, is amended to read:
235.21    Subd. 3. Miscellaneous exceptions. A local impact note or an attachment as
235.22provided in section 3.987, subdivision 2, need not be prepared for the cost of a mandated
235.23action if the law, including a rulemaking, containing the mandate:
235.24    (1) accommodates a specific local request;
235.25    (2) results in no new local government duties;
235.26    (3) leads to revenue losses from exemptions to taxes;
235.27    (4) provided only clarifying or conforming, nonsubstantive charges on local
235.28government;
235.29    (5) imposes additional net local costs that are minor (an amount less than or equal
235.30to one-half of one percent of the local revenue base as defined in section 477A.011,
235.31subdivision 27 , or $50,000, whichever is less for any single local government if the
235.32mandate does not apply statewide or less than $1,000,000 if the mandate is statewide);
235.33    (6) is a law or executive order enacted before July 1, 1997, or a rule initially
235.34implementing a law enacted before July 1, 1997;
236.1    (7) implements something other than a law or executive order, such as a federal,
236.2court, or voter-approved mandate;
236.3    (8) results in savings that equal or exceed costs;
236.4    (9) requires the holding of elections;
236.5    (10) ensures due process or equal protection;
236.6    (11) provides for the notification and conduct of public meetings;
236.7    (12) establishes the procedures for administrative and judicial review of actions
236.8taken by political subdivisions;
236.9    (13) protects the public from malfeasance, misfeasance, or nonfeasance by officials
236.10of political subdivisions;
236.11    (14) relates directly to financial administration, including the levy, assessment,
236.12and collection of taxes;
236.13    (15) relates directly to the preparation and submission of financial audits necessary
236.14to the administration of state laws; or
236.15    (16) requires uniform standards to apply to public and private institutions without
236.16differentiation.

236.17    Sec. 3. Minnesota Statutes 2006, section 3.989, subdivision 2, is amended to read:
236.18    Subd. 2. Report Compilation of local impact notes. The commissioner of finance
236.19shall prepare by September 1, 2000, and by September 1 of each even-numbered year
236.20thereafter, a report compilation of the costs of local mandates established after June 30,
236.211997 key impact notes requested by the legislature during the previous biennial session
236.22as provided in section 3.987. The commissioner may consult with local government
236.23representatives and legislative fiscal staff to determine which local impact notes were key.
236.24    The commissioner shall include the statewide total of the statement of costs of local
236.25mandates after June 30, 1997, as a notation in the state biennial budget.

236.26    Sec. 4. Minnesota Statutes 2006, section 3.989, subdivision 3, is amended to read:
236.27    Subd. 3. Certain political subdivisions; report. The political subdivisions that
236.28have opted to administer class B state mandates shall report to the commissioner of
236.29finance by September 1, 1998, and by September 1 of each year thereafter, identifying
236.30each instance when revenue for a class B state mandate has fallen below 85 percent of
236.31the total cost of the program and the political subdivision intends to cease administration
236.32of the program.
237.1    The commissioner shall forward a copy of the report to the chairs of the appropriate
237.2funding committees of the senate and the house for proposed inclusion of the shortfall as a
237.3line item appropriation in the state budget for the next fiscal year.
237.4    The political subdivision may exercise its option to cease administration only if the
237.5legislature has failed to include the shortfall as an appropriation in the state budget for
237.6the next fiscal year.

237.7    Sec. 5. Minnesota Statutes 2006, section 16A.103, subdivision 2, is amended to read:
237.8    Subd. 2. Local revenue. In February and November of each year, the commissioner
237.9of revenue shall prepare and deliver to the governor and the legislature forecasts of
237.10revenue to be received by school districts as a group, counties as a group, and the group of
237.11cities and towns that have a population of more than 2,500. The forecasts must assume
237.12the continuation of current laws, projections of valuation changes in real property, and
237.13reasonable estimates of projected growth in the national and state economies and affected
237.14populations. Revenue must be estimated for property taxes, state and federal aids, local
237.15sales taxes, if any, and a single projection for all other revenue for each group of affected
237.16local governmental units. As part of the February forecast, the commissioner of revenue
237.17shall report to the governor and legislature on which groups of local government units
237.18exceeded the revenue targets of the governor and legislature in the most recent biennium.

237.19    Sec. 6. Minnesota Statutes 2006, section 270A.03, subdivision 2, is amended to read:
237.20    Subd. 2. Claimant agency. "Claimant agency" means any state agency, as defined
237.21by section 14.02, subdivision 2, the regents of the University of Minnesota, any district
237.22court of the state, any county, any statutory or home rule charter city, including a city that
237.23is presenting a claim for a municipal hospital or a public library or a municipal ambulance
237.24service, a hospital district, a private nonprofit hospital that leases its building from the
237.25county or city in which it is located, any public agency responsible for child support
237.26enforcement, any public agency responsible for the collection of court-ordered restitution,
237.27and any public agency established by general or special law that is responsible for the
237.28administration of a low-income housing program, and the Minnesota collection enterprise
237.29as defined in section 16D.02, subdivision 8, for the purpose of collecting the costs imposed
237.30under section 16D.11. A county may act as a claimant agency on behalf of an ambulance
237.31service licensed under chapter 144E if the ambulance service's primary service area is
237.32located at least in part within the county, but more than one county may not act as a
237.33claimant agency for a licensed ambulance service with respect to the same debt.

238.1    Sec. 7. Minnesota Statutes 2006, section 270A.10, is amended to read:
238.2270A.10 PRIORITY OF CLAIMS.
238.3    If two or more debts, in a total amount exceeding the debtor's refund, are submitted
238.4for setoff, the priority of payment shall be as follows: First, any
238.5    (1) delinquent tax obligations of the debtor which are owed to the department shall
238.6be satisfied. Secondly, the refund shall be applied to;
238.7    (2) debts for child support based on the order in time in which the commissioner
238.8received the debts. Thirdly, the refund shall be applied to;
238.9    (3) payment of restitution obligations. Fourthly, the refund shall be applied to;
238.10    (4) claims brought for a hospital or an ambulance service;
238.11    (5) the remaining debts based on the order in time in which the commissioner
238.12received the debts.

238.13    Sec. 8. Minnesota Statutes 2006, section 298.75, is amended by adding a subdivision
238.14to read:
238.15    Subd. 11. Tax may be imposed; Otter Tail County. (a) If Otter Tail County
238.16does not impose a tax under this section and approves imposition of the tax under this
238.17subdivision, the town of Scambler in Otter Tail County may impose the aggregate
238.18materials tax under this section.
238.19    (b) For purposes of exercising the powers contained in this section, the "town" is
238.20deemed to be the "county."
238.21    (c) All provisions in this section apply to the town of Scambler, except that all
238.22proceeds of the tax must be retained by the town and used for the purposes described in
238.23subdivision 7.
238.24    (d) If Otter Tail County imposes an aggregate materials tax under this section, the
238.25tax imposed by the town of Scambler under this subdivision is repealed on the effective
238.26date of the Otter Tail County tax.
238.27EFFECTIVE DATE.This section is effective the day after the governing body
238.28of the town of Scambler and its chief clerical officer comply with section 645.021,
238.29subdivisions 2 and 3.

238.30    Sec. 9. REPEALER.
238.31Minnesota Statutes 2006, section 16A.1522, is repealed.