Minnesota Legislature
HF 4127
as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am
KEY: stricken = removed, old language.
underscored = added, new language.
1.1 A bill for an act 1.2 relating to financing state and local government; 1.3 providing a sales tax rebate; extending the time to 1.4 qualify for and making certain other changes to the 1.5 1999 sales tax rebate; providing agricultural 1.6 assistance; reducing individual income tax rates; 1.7 making changes to income, franchise, withholding, 1.8 sales and use, property, motor vehicle sales and 1.9 registration, mortgage registry, health care provider, 1.10 motor fuels, cigarette and tobacco, liquor, insurance 1.11 premiums, lawful gambling, taconite production, solid 1.12 waste, estate, and special taxes; changing and 1.13 allowing tax credits, subtractions, and exemptions; 1.14 conforming with changes in federal income tax 1.15 provisions; providing for allocation and apportionment 1.16 of income; changing property tax valuation, 1.17 assessment, levy, classification, homestead, credit, 1.18 aid, exemption, deferral, review, appeal, abatement, 1.19 and distribution provisions; extending levy limits and 1.20 changing levy authority; reducing rates of health care 1.21 provider taxes; reducing rates on lawful gambling and 1.22 solid waste management taxes; changing tax increment 1.23 financing provisions; providing special authority for 1.24 certain political subdivisions; changing and 1.25 clarifying tax administration, collection, 1.26 enforcement, interest, and penalty provisions; 1.27 changing revenue recapture provisions; freezing the 1.28 taconite production tax; regulating state and local 1.29 business subsidies; modifying certain aids to local 1.30 units of government; recodifying sales and use taxes; 1.31 recodifying insurance tax laws; establishing a 1.32 legislative budget office; validating corporations 1.33 established by political subdivisions and regulating 1.34 their financing; changing county reporting 1.35 requirements; providing certain duties and powers to 1.36 the commissioner of revenue, the state auditor, and to 1.37 the attorney general; defining terms; classifying 1.38 data; requiring studies; appropriating money; amending 1.39 Minnesota Statutes 1998, sections 3.98, subdivision 3; 1.40 8.30; 16A.46; 37.13; 43A.316, subdivision 9; 43A.317, 1.41 subdivision 8; 60A.15, subdivision 1; 60A.19, 1.42 subdivision 8; 60A.198, subdivision 3; 60A.208, 1.43 subdivision 8; 60A.209, subdivision 3; 60C.17; 60E.04, 1.44 subdivision 4; 60E.095; 61B.30, subdivision 1; 62C.01, 1.45 subdivision 3; 62E.10, subdivision 1; 62E.13, 1.46 subdivision 10; 62L.13, subdivision 3; 62T.10; 64B.24; 2.1 71A.04, subdivision 1; 79.252, subdivision 4; 79.34, 2.2 subdivision 1a; 115A.55, subdivision 3; 115A.69, 2.3 subdivision 6; 116A.25; 126C.01, by adding a 2.4 subdivision; 126C.17, subdivision 10; 176A.08; 238.08, 2.5 subdivision 3; 270.063, by adding a subdivision; 2.6 270.072, subdivision 2, and by adding a subdivision; 2.7 270A.03, subdivision 7; 270A.07, subdivision 1; 2.8 273.111, subdivision 3; 273.124, by adding a 2.9 subdivision; 273.125, subdivision 8; 273.1398, by 2.10 adding a subdivision; 273.37, subdivision 3; 275.065, 2.11 subdivisions 3, 6, 8, and by adding a subdivision; 2.12 275.07, subdivision 1; 275.08, subdivision 1b; 275.70, 2.13 by adding a subdivision; 275.72, subdivisions 1 and 3; 2.14 276.19, subdivision 1; 289A.08, by adding a 2.15 subdivision; 289A.20, subdivision 2; 289A.26, 2.16 subdivision 1; 289A.31, subdivision 7; 289A.35; 2.17 289A.60, subdivisions 1 and 14; 290.01, subdivisions 2.18 19c and 19d; 290.015, subdivisions 1, 3, and 4; 2.19 290.06, subdivision 22, and by adding a subdivision; 2.20 290.0671, subdivision 6; 290.0672, subdivisions 1 and 2.21 2; 290.0673, subdivision 8; 290.17, subdivision 2; 2.22 290.35, subdivisions 2, 3, and 6; 290.92, subdivisions 2.23 3, 28, and 29; 290B.04, by adding a subdivision; 2.24 290B.05, subdivision 3; 290B.07; 290B.08, subdivisions 2.25 1 and 2; 290B.09, subdivision 2; 295.50, subdivision 2.26 9b; 295.58; 296A.03, subdivision 5; 296A.21, 2.27 subdivisions 2 and 3; 296A.22, subdivision 6; 297A.01, 2.28 subdivisions 13, 15, 16, and by adding a subdivision; 2.29 297A.15, by adding a subdivision; 297A.25, 2.30 subdivisions 5, 16, 34, 62, 76, and by adding 2.31 subdivisions; 297B.01, subdivision 7; 297B.03; 2.32 297E.02, subdivision 2; 297F.01, subdivisions 7, 14, 2.33 17, and by adding subdivisions; 297F.08, subdivisions 2.34 2, 5, 8, and 9; 297F.13, subdivision 4; 297F.21, 2.35 subdivisions 1 and 3; 297G.01, by adding a 2.36 subdivision; 297G.03, subdivision 1; 297H.02, 2.37 subdivision 2; 297H.03, subdivision 2; 297H.04, 2.38 subdivision 2; 297H.13, subdivisions 2, 4, and by 2.39 adding a subdivision; 360.035; 424.165; 429.011, 2.40 subdivisions 2a and 5; 429.021, subdivision 1; 2.41 429.031, subdivision 1; 458A.09; 458A.30; 458D.23; 2.42 469.040, by adding a subdivision; 469.115; 469.127; 2.43 469.1734, subdivision 4; 469.174, subdivisions 9, 10, 2.44 11, 12, 14, and 22; 469.175, subdivisions 1a, 2, 2a, 2.45 3, 4, 5, and 6; 469.176, subdivisions 1b and 4d; 2.46 469.1761, subdivision 4; 469.1763, subdivision 2, and 2.47 by adding a subdivision; 469.177, subdivision 1; 2.48 469.1813, subdivision 4; 473.388, subdivisions 4 and 2.49 7; 473.446, subdivision 1, and by adding a 2.50 subdivision; 473.448; 473.545; 473.608, subdivision 2; 2.51 and 477A.06, subdivision 3; Minnesota Statutes 1999 2.52 Supplement, sections 16D.09, subdivision 2; 43A.23, 2.53 subdivision 1; 60A.19, subdivision 6; 116J.993, 2.54 subdivision 3; 116J.994, subdivisions 1, 3, 4, 5, 6, 2.55 7, 8, and 9; 116J.995; 168.012, subdivision 1; 270.65; 2.56 270A.03, subdivision 2; 270A.07, subdivision 2; 2.57 272.02, subdivision 39, and by adding a subdivision; 2.58 273.11, subdivision 1a; 273.124, subdivisions 1, 8, 2.59 and 14; 273.13, subdivisions 22, 23, 24, 25, and 31; 2.60 273.1382, subdivisions 1, 1a, and 1b; 273.1398, 2.61 subdivision 1a; 275.065, subdivision 5a; 275.70, 2.62 subdivision 5; 275.71, subdivisions 2, 3, and 4; 2.63 287.01, subdivision 2; 289A.02, subdivision 7; 2.64 289A.20, subdivision 4; 289A.55, subdivision 9; 2.65 290.01, subdivisions 19, 19b, and 31; 290.06, 2.66 subdivisions 2c, 2d, and by adding a subdivision; 2.67 290.0671, subdivision 1; 290.0674, subdivision 2; 2.68 290.0675, subdivisions 1, 2, and 3; 290.091, 2.69 subdivisions 1, 2, and 6; 290.191, subdivisions 2 and 2.70 3; 290.9725; 290A.03, subdivision 15; 290B.03, 2.71 subdivision 1; 290B.05, subdivision 1; 291.005, 3.1 subdivision 1; 295.52, subdivision 7; 295.53, 3.2 subdivision 1; 297A.25, subdivisions 9 and 11; 3.3 297E.02, subdivisions 1, 4, and 6; 297F.08, 3.4 subdivision 8a; 297H.05; 298.24, subdivision 1; 3.5 383D.74, subdivision 2; 469.101, subdivision 2; 3.6 469.1771, subdivision 1; 469.1813, subdivisions 1 and 3.7 6; 477A.011, subdivision 36; 477A.03, subdivision 2; 3.8 477A.06, subdivision 1; and 505.08, subdivision 3; 3.9 Laws 1987, chapter 402, section 2, subdivisions 1, 4, 3.10 and 5; Laws 1988, chapter 645, section 3, as amended; 3.11 Laws 1995, First Special Session chapter 3, article 3.12 15, section 25; Laws 1997, chapter 231, article 1, 3.13 section 19, subdivisions 1, as amended, and 3; Laws 3.14 1999, chapter 112, section 1, subdivision 1; Laws 3.15 1999, chapter 243, article 1, section 2; article 6, 3.16 section 18; proposing coding for new law in Minnesota 3.17 Statutes, chapters 3; 273; 278; 297A; 465; and 473; 3.18 proposing coding for new law as Minnesota Statutes, 3.19 chapter 297I; repealing Minnesota Statutes 1998, 3.20 sections 60A.15; 60A.152; 60A.198, subdivision 6; 3.21 60A.199, subdivisions 2, 3, 4, 5, 6, 6a, 7, 8, 9, 10, 3.22 and 11; 60A.209, subdivisions 4 and 5; 69.54; 69.55; 3.23 69.56; 69.57; 69.58; 69.59; 69.60; 69.61; 71A.04, 3.24 subdivision 2; 270.072, subdivision 5; 270.075, 3.25 subdivisions 3 and 4; 273.127; 273.1316; 297A.01; 3.26 297A.02; 297A.022; 297A.023; 297A.03; 297A.04; 3.27 297A.041; 297A.06; 297A.065; 297A.07; 297A.09; 3.28 297A.10; 297A.11; 297A.12; 297A.13; 297A.135; 297A.14; 3.29 297A.141; 297A.15, subdivision 7; 297A.16; 297A.17; 3.30 297A.18; 297A.21; 297A.211; 297A.213; 297A.22; 3.31 297A.23; 297A.24; 297A.25; 297A.2531; 297A.2545; 3.32 297A.255; 297A.256; 297A.2571; 297A.2572; 297A.2573; 3.33 297A.259; 297A.26; 297A.28; 297A.33, subdivision 2; 3.34 297A.44, subdivision 1; 297A.46; 297A.47; 297A.48; 3.35 299F.21; 299F.22; 299F.23; 299F.24; 299F.25; 299F.26; 3.36 465.715, subdivisions 1, 2, and 3; 469.055, 3.37 subdivision 5; 469.101, subdivision 21; 469.135; 3.38 469.136; 469.137; 469.138; 469.139; 469.140; 469.174, 3.39 subdivision 13; 469.175, subdivision 6a; and 469.176, 3.40 subdivision 4a; Minnesota Statutes 1999 Supplement, 3.41 sections 290.06, subdivision 26; 290.9726, subdivision 3.42 7; and 465.715, subdivision 1a; Minnesota Rules, parts 3.43 2765.1500, subpart 6; and 8160.0300, subpart 4. 3.44 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 3.45 ARTICLE 1 3.46 2000 SALES TAX REBATE 3.47 Section 1. [STATEMENT OF PURPOSE.] 3.48 (a) The state of Minnesota derives revenues from a variety 3.49 of taxes, fees, and other sources, including the state sales tax. 3.50 (b) It is fair and reasonable to refund the existing state 3.51 budget surplus in the form of a rebate of nonbusiness consumer 3.52 sales taxes paid by individuals in calendar year 1998. 3.53 (c) Information concerning the amount of sales tax paid at 3.54 various income levels is contained in the Minnesota tax 3.55 incidence report, which is written by the commissioner of 3.56 revenue and presented to the legislature according to Minnesota 3.57 Statutes, section 270.0682. 4.1 (d) It is fair and reasonable to use information contained 4.2 in the Minnesota tax incidence report, updated to calendar year 4.3 1998, to determine the proportionate share of the sales tax 4.4 rebate due each eligible taxpayer since no effective or 4.5 practical mechanism exists for determining the amount of actual 4.6 sales tax paid by each eligible individual. 4.7 Sec. 2. [SALES TAX REBATE.] 4.8 (a) An individual who: 4.9 (1) was eligible for a credit under Laws 1998, chapter 389, 4.10 article 1, section 1, and who filed for or received that credit 4.11 on or before November 30, 2000; or 4.12 (2) was a resident of Minnesota for any part of 1998, and 4.13 filed a 1998 Minnesota income tax return on or before June 15, 4.14 2000, and had a tax liability before refundable credits on that 4.15 return of at least $1 but did not file the claim for credit 4.16 authorized under Laws 1998, chapter 389, article 1, section 1, 4.17 as amended, and who was not allowed to be claimed as a dependent 4.18 on a 1998 federal income tax return filed by another person; or 4.19 (3) had the property taxes payable on his or her homestead 4.20 abated to zero under Laws 1998, chapter 383, section 20, shall 4.21 receive a sales tax rebate. 4.22 (b) The sales tax rebate for taxpayers who qualify under 4.23 paragraph (a) as married filing joint or head of household must 4.24 be computed according to the following schedule: 4.25 Income Sales Tax Rebate 4.26 less than $2,500 $129 4.27 at least $2,500 but less than $5,000 $166 4.28 at least $5,000 but less than $10,000 $177 4.29 at least $10,000 but less than $15,000 $194 4.30 at least $15,000 but less than $20,000 $211 4.31 at least $20,000 but less than $25,000 $229 4.32 at least $25,000 but less than $30,000 $239 4.33 at least $30,000 but less than $35,000 $259 4.34 at least $35,000 but less than $40,000 $284 4.35 at least $40,000 but less than $45,000 $304 4.36 at least $45,000 but less than $50,000 $320 5.1 at least $50,000 but less than $60,000 $341 5.2 at least $60,000 but less than $70,000 $365 5.3 at least $70,000 but less than $80,000 $402 5.4 at least $80,000 but less than $90,000 $431 5.5 at least $90,000 but less than $100,000 $476 5.6 at least $100,000 but less than $120,000 $515 5.7 at least $120,000 but less than $140,000 $565 5.8 at least $140,000 but less than $160,000 $610 5.9 at least $160,000 but less than $180,000 $653 5.10 at least $180,000 but less than $200,000 $694 5.11 at least $200,000 but less than $400,000 $888 5.12 at least $400,000 but less than $600,000 $1,168 5.13 at least $600,000 but less than $800,000 $1,402 5.14 at least $800,000 but less than $1,000,000 $1,607 5.15 $1,000,000 and over $1,860 5.16 (c) The sales tax rebate for individuals who qualify under 5.17 paragraph (a) as single or married filing separately must be 5.18 computed according to the following schedule: 5.19 Income Sales Tax Rebate 5.20 less than $2,500 $73 5.21 at least $2,500 but less than $5,000 $89 5.22 at least $5,000 but less than $10,000 $105 5.23 at least $10,000 but less than $15,000 $141 5.24 at least $15,000 but less than $20,000 $161 5.25 at least $20,000 but less than $25,000 $175 5.26 at least $25,000 but less than $30,000 $182 5.27 at least $30,000 but less than $40,000 $199 5.28 at least $40,000 but less than $50,000 $223 5.29 at least $50,000 but less than $70,000 $263 5.30 at least $70,000 but less than $100,000 $334 5.31 at least $100,000 but less than $140,000 $402 5.32 at least $140,000 but less than $200,000 $485 5.33 at least $200,000 but less than $400,000 $658 5.34 at least $400,000 but less than $600,000 $866 5.35 $600,000 and over $930 5.36 (d) Individuals who were not residents of Minnesota for any 6.1 part of 1998 and who paid more than $10 in Minnesota sales tax 6.2 on nonbusiness consumer purchases in that year qualify for a 6.3 rebate under this paragraph only. Qualifying nonresidents must 6.4 file a claim for rebate on a form prescribed by the commissioner 6.5 before the later of November 30, 2000, or 30 days after the date 6.6 of enactment of this act. The claim must include receipts 6.7 showing the Minnesota sales tax paid and the date of the sale. 6.8 Taxes paid on purchases allowed in the computation of federal 6.9 taxable income or reimbursed by an employer are not eligible for 6.10 the rebate. The commissioner shall determine the qualifying 6.11 taxes paid and rebate the lesser of: 6.12 (1) 22.8 percent of that amount; or 6.13 (2) the maximum amount for which the claimant would have 6.14 been eligible as determined under paragraph (b) if the taxpayer 6.15 filed the 1998 federal income tax return as a married taxpayer 6.16 filing jointly or head of household, or as determined under 6.17 paragraph (c) for other taxpayers. 6.18 (e) "Income," for purposes of this section other than 6.19 paragraph (d), is taxable income as defined in section 63 of the 6.20 Internal Revenue Code of 1986, as amended through December 31, 6.21 1997, plus the sum of any additions to federal taxable income 6.22 for the taxpayer under Minnesota Statutes, section 290.01, 6.23 subdivision 19a, and reported on the original 1998 income tax 6.24 return, including subsequent adjustments to that return made 6.25 within the time limits specified in paragraph (k). For an 6.26 individual who was a resident of Minnesota for less than the 6.27 entire year, the sales tax rebate equals the sales tax rebate 6.28 calculated under paragraph (b) or (c) multiplied by the 6.29 percentage determined pursuant to Minnesota Statutes, section 6.30 290.06, subdivision 2c, paragraph (e), as calculated on the 6.31 original 1998 income tax return, including subsequent 6.32 adjustments to that return made within the time limits specified 6.33 in paragraph (k). For purposes of paragraph (d), "income" is 6.34 taxable income as defined in section 63 of the Internal Revenue 6.35 Code of 1986, as amended through December 31, 1997, and reported 6.36 on the taxpayer's original federal tax return for the first 7.1 taxable year beginning after December 31, 1997. 7.2 (f) Individuals who were residents of Minnesota for all of 7.3 1998, were not eligible for a rebate under paragraph (a), were 7.4 not claimed as a dependent on the 1998 federal income tax return 7.5 of another, and received in 1998 social security benefits as 7.6 defined in section 86(d)(1) of the Internal Revenue Code of 7.7 1986, as amended through December 31, 1999, are entitled to a 7.8 rebate of $73. If the Social Security Administration or 7.9 Railroad Retirement Board is paying benefits to a recipient by 7.10 electronic funds transfers in 2000, the rebate under this 7.11 paragraph must be paid by the commissioner through electronic 7.12 funds transfer to the same financial institution and into the 7.13 same account into which the Social Security Administration or 7.14 Railroad Retirement Board transfers social security benefits in 7.15 calendar year 2000. 7.16 (g) Individuals who claimed exemptions in 1998 under 7.17 section 152 of the Internal Revenue Code for one or more 7.18 qualifying dependents are eligible for an additional rebate. 7.19 The additional rebate equals the greater of (i) $20 for each 7.20 qualifying dependent or (ii) the difference between the rebate 7.21 allowed under the schedule in paragraph (b) based on the sum of 7.22 the individual's income and the income of all qualifying 7.23 dependents and the rebate allowed under the schedule in 7.24 paragraph (b) based solely on the individual's income. Rebates 7.25 paid to individuals who qualify for an additional rebate under 7.26 this paragraph must indicate the amount of additional rebate 7.27 paid for each qualifying dependent. For purposes of this 7.28 paragraph, "qualifying dependent" is a dependent who filed a 7.29 1998 Minnesota income tax return on or before June 15, 2000, and 7.30 had tax liability before refundable credits on that return of at 7.31 least $1, and "amount of additional rebate paid for each 7.32 qualifying dependent" is the total additional rebate multiplied 7.33 by the ratio of each qualifying dependent's income to the income 7.34 of all qualifying dependents but the total must be apportioned 7.35 among the qualified dependents so that the amount for each 7.36 dependent is not less than $20. 8.1 (h) For a fiscal year taxpayer, the June 15, 2000 dates in 8.2 paragraphs (a) through (d) are extended one month for each month 8.3 in calendar year 1998 that occurred prior to the start of the 8.4 individual's 1998 fiscal tax year. 8.5 (i) Before payment, the commissioner of revenue shall 8.6 adjust the rebate as follows: 8.7 the rebates calculated in paragraphs (b), (c), (d), (f), 8.8 and (g) must be proportionately reduced to account for (i) 8.9 additional rebates under paragraph (g) and (ii) 1998 income tax 8.10 returns that are filed on or after January 1, 2000, but before 8.11 July 1, 2000, so that the amount of sales tax rebates payable 8.12 under paragraphs (b), (c), (d), (f), and (g) does not exceed 8.13 $485,400,000. The adjustment under this paragraph is not a rule 8.14 subject to Minnesota Statutes, chapter 14. 8.15 (j) The commissioner of revenue may begin making sales tax 8.16 rebates by August 1, 2000. Sales tax rebates not paid by 8.17 October 1, 2000, bear interest at the rate specified in 8.18 Minnesota Statutes, section 270.75. Unpaid sales tax rebates 8.19 payable under paragraph (f) bear interest only beginning January 8.20 1, 2001. 8.21 (k) A sales tax rebate shall not be adjusted based on 8.22 changes to a 1998 income tax return that are made by order of 8.23 assessment after June 15, 2000, or made by the taxpayer that are 8.24 filed with the commissioner of revenue after June 15, 2000. 8.25 (l) Individuals who filed a joint income tax return for 8.26 1998 shall receive a joint sales tax rebate. After the sales 8.27 tax rebate has been issued, but before the check has been 8.28 cashed, either joint claimant may request a separate check for 8.29 one-half of the joint sales tax rebate. Notwithstanding 8.30 anything in this section to the contrary, if prior to payment, 8.31 the commissioner has been notified that persons who filed a 8.32 joint 1998 income tax return are living at separate addresses, 8.33 as indicated on their 1999 income tax return or otherwise, the 8.34 commissioner may issue separate checks to each person. The 8.35 amount payable to each person is one-half of the total joint 8.36 rebate. 9.1 (m) If a rebate is received by the estate of a deceased 9.2 individual after the probate estate has been closed, and if the 9.3 original rebate check is returned to the commissioner with a 9.4 copy of the decree of descent or final account of the estate, 9.5 social security numbers, and addresses of the beneficiaries, the 9.6 commissioner may issue separate checks in proportion to their 9.7 share in the residuary estate in the names of the residuary 9.8 beneficiaries of the estate. 9.9 (n) The sales tax rebate is a "Minnesota tax law" for 9.10 purposes of Minnesota Statutes, section 270B.01, subdivision 8. 9.11 (o) The sales tax rebate is "an overpayment of any tax 9.12 collected by the commissioner" for purposes of Minnesota 9.13 Statutes, section 270.07, subdivision 5. For purposes of this 9.14 paragraph, a joint sales tax rebate is payable to each spouse 9.15 equally. 9.16 (p) If the commissioner of revenue cannot locate an 9.17 individual entitled to a sales tax rebate by July 1, 2002, or if 9.18 an individual to whom a sales tax rebate was issued has not 9.19 cashed the check by July 1, 2002, the right to the sales tax 9.20 rebate lapses and the check must be deposited in the general 9.21 fund. 9.22 (q) Individuals entitled to a sales tax rebate pursuant to 9.23 paragraph (a) or (f), but who did not receive one, individuals 9.24 entitled to an additional rebate under paragraph (g), but who 9.25 did not receive one, and individuals who receive a sales tax 9.26 rebate that was not correctly computed, must file a claim with 9.27 the commissioner before July 1, 2001, in a form prescribed by 9.28 the commissioner. These claims must be treated as if they are a 9.29 claim for refund under Minnesota Statutes, section 289A.50, 9.30 subdivisions 4 and 7. 9.31 (r) The sales tax rebate is a refund subject to revenue 9.32 recapture under Minnesota Statutes, chapter 270A. The 9.33 commissioner of revenue shall remit the entire refund to the 9.34 claimant agency, which shall, upon the request of the spouse who 9.35 does not owe the debt, refund one-half of the joint sales tax 9.36 rebate to the spouse who does not owe the debt. 10.1 (s) The rebate is a reduction of fiscal year 2000 sales tax 10.2 revenues. The amount necessary to make the sales tax rebates 10.3 and interest provided in this section is appropriated from the 10.4 general fund to the commissioner of revenue in fiscal year 2000 10.5 and is available until June 30, 2002. 10.6 (t) If a sales tax rebate check is cashed by someone other 10.7 than the payee or payees of the check, and the commissioner of 10.8 revenue determines that the check has been forged or improperly 10.9 endorsed or the commissioner determines that a rebate was 10.10 overstated or erroneously issued, the commissioner may issue an 10.11 order of assessment for the amount of the check or the amount 10.12 the check is overstated against the person or persons cashing 10.13 it. The assessment must be made within two years after the 10.14 check is cashed, but if cashing the check constitutes theft 10.15 under Minnesota Statutes, section 609.52, or forgery under 10.16 Minnesota Statutes, section 609.631, the assessment can be made 10.17 at any time. The assessment may be appealed administratively 10.18 and judicially. The commissioner may take action to collect the 10.19 assessment in the same manner as provided by Minnesota Statutes, 10.20 chapter 289A, for any other order of the commissioner assessing 10.21 tax. 10.22 (u) Notwithstanding Minnesota Statutes, sections 9.031, 10.23 16A.40, 16B.49, 16B.50, and any other law to the contrary, the 10.24 commissioner of revenue may take whatever actions the 10.25 commissioner deems necessary to pay the rebates required by this 10.26 section, and may, in consultation with the commissioner of 10.27 finance and the state treasurer, contract with a private vendor 10.28 or vendors to process, print, and mail the rebate checks or 10.29 warrants required under this section and receive and disburse 10.30 state funds to pay those checks or warrants. 10.31 (v) The commissioner may pay rebates required by this 10.32 section by electronic funds transfer to individuals who 10.33 requested that their 1999 individual income tax refund be paid 10.34 through electronic funds transfer. The commissioner may make 10.35 the electronic funds transfer payments to the same financial 10.36 institution and into the same account as the 1999 individual 11.1 income tax refund. 11.2 Sec. 3. [APPROPRIATION.] 11.3 $1,659,000 is appropriated from the general fund to the 11.4 commissioner of revenue to administer the sales tax rebate for 11.5 fiscal year 2000. Any unencumbered balance remaining on June 11.6 30, 2000, does not cancel but is available for expenditure by 11.7 the commissioner of revenue until June 30, 2002. This is a 11.8 one-time appropriation and may not be added to the agency's 11.9 budget base. 11.10 Sec. 4. [EFFECTIVE DATE.] 11.11 Sections 1 to 3 are effective the day following final 11.12 enactment. 11.13 ARTICLE 2 11.14 AGRICULTURAL ASSISTANCE 11.15 Section 1. [AGRICULTURAL ASSISTANCE IN 2000.] 11.16 Subdivision 1. [DEFINITIONS.] (a) The definitions in this 11.17 subdivision apply to this section. 11.18 (b) "Acre" means an acre of effective agricultural use land 11.19 within a qualified county as reported to the Farm Service Agency 11.20 on form 156EZ. 11.21 (c) "Commissioner" means the commissioner of revenue. 11.22 (d) "Effective agricultural use land" means the land 11.23 suitable for growing an agricultural crop and excludes land 11.24 enrolled in the conservation reserve program established by 11.25 Minnesota Statutes, section 103F.515, or the water bank program 11.26 established by Minnesota Statutes, section 103F.601. 11.27 (e) "Farm" or "farm operation" means an agricultural 11.28 production operation with a unique farm number as reported on 11.29 form 156EZ to the Farm Service Agency, which includes at least 11.30 40 acres of effective agricultural use land. 11.31 (f) "Farm operator" means a person who is identified as the 11.32 operator of a farm on form 156EZ filed with the Farm Service 11.33 Agency. 11.34 (g) "Farm Service Agency" means the United States Farm 11.35 Service Agency. 11.36 (h) "Farmer" or "farmer at risk" means a person who 12.1 produces an agricultural crop and is reported to the Farm 12.2 Service Agency as bearing a percentage of the risk for the farm 12.3 operation. 12.4 (i) "Person" includes individuals, fiduciaries, estates, 12.5 trusts, partnerships, joint ventures, and corporations. 12.6 (j) "Qualified counties" means the counties of Kittson, 12.7 Marshall, Pennington, Polk, Red Lake, and Roseau, which were 12.8 declared as disaster counties in Minnesota by presidential 12.9 declaration on August 26, 1999. 12.10 Subd. 2. [PAYMENT TO FARMERS.] Every farm operator may 12.11 apply on a separate form for each farm that they operate in a 12.12 qualified county to the commissioner for payments as provided 12.13 under this subdivision. The payment must be made to each farmer 12.14 at risk for a farm operation and equals $4, multiplied by the 12.15 number of acres of the farm operation, multiplied by the 12.16 percentage of the risk borne by that farmer for that farm 12.17 operation. If total payments for a farm to all farmers at risk 12.18 for that farm would exceed $5,600, the payment to each farmer at 12.19 risk shall be prorated so that the total payments to all farmers 12.20 at risk for that farm do not exceed $5,600. 12.21 Applications must be based on information reported to the 12.22 Farm Service Agency for crop year 1999 by December 31, 1999. 12.23 The applications must include the social security number or 12.24 federal employer identification number or a producer number 12.25 assigned by the Farm Service Agency for each farmer and the Farm 12.26 Service Agency farm number from form 156EZ. The commissioner 12.27 shall prepare application forms for the payment and ensure that 12.28 they are available throughout the state. The commissioner shall 12.29 make payments by June 30, 2000, to each eligible farmer who 12.30 applies by May 31, 2000, or within 30 days of the application if 12.31 the application is received after May 31, 2000. In no case will 12.32 applications be accepted after September 30, 2000. 12.33 Subd. 3. [LIMIT.] No person may receive a payment under 12.34 subdivision 2 that exceeds $5,600. 12.35 Subd. 4. [APPLICATION OF OTHER LAWS.] The payments under 12.36 subdivision 2 are a "Minnesota tax law" for purposes of 13.1 Minnesota Statutes, section 270B.01, subdivision 8. 13.2 Subd. 5. [REMEDIES.] A farmer denied a refund may appeal 13.3 that denial under Minnesota Statutes, section 289A.50, 13.4 subdivision 7. 13.5 Subd. 6. [INTEREST.] Payments under subdivision 2 bear 13.6 interest at the rate specified in Minnesota Statutes, section 13.7 289A.55, subdivision 1, from the later of the payment dates 13.8 specified under subdivision 2 or 75 days after a complete 13.9 payment application was filed with the commissioner. 13.10 Subd. 7. [PENALTIES.] If the commissioner determines that 13.11 claims for payments under subdivision 2 are or were excessive 13.12 and were filed with fraudulent intent, the claim must be 13.13 disallowed in full. If the claim has been paid, the amount 13.14 disallowed must be recovered by assessment and collection under 13.15 Minnesota Statutes, chapter 289A. The assessment must be made 13.16 within two years after a check is cashed, but if cashing a check 13.17 constitutes theft under Minnesota Statutes, section 609.52, or 13.18 forgery under Minnesota Statutes, section 609.631, the 13.19 assessment may be made at any time. The assessment may be 13.20 appealed administratively and judicially. 13.21 EFFECTIVE DATE: This section is effective the day 13.22 following final enactment. 13.23 Sec. 2. Laws 1999, chapter 112, section 1, subdivision 1, 13.24 is amended to read: 13.25 Subdivision 1. [DEFINITIONS.] (a) The definitions in this 13.26 subdivision apply to this section. 13.27 (b) "Acre" means an acre of effective agricultural use land 13.28 within the state of Minnesota as reported to the farm service 13.29 agency on form 156EZ. 13.30 (c) "Commissioner" means the commissioner of revenue. 13.31 (d) "Effective agricultural use land" means the land 13.32 suitable for growing an agricultural crop and excludes land 13.33 enrolled in the conservation reserve program established by 13.34 Minnesota Statutes, section 103F.515, or the water bank program 13.35 established by Minnesota Statutes, section 103F.601. 13.36 (e) "Farm" or "farm operation" means an agricultural 14.1 production operation with a unique farm number as reported on 14.2 form 156EZ to the farm service agency, which includes at least 14.3 40 acres of effective agricultural use land. 14.4 (f) "Farm operator" means a person who is identified as the 14.5 operator of a farm on form 156EZ filed with the farm service 14.6 agency. 14.7 (g) "Farm service agency" means the United States Farm 14.8 Service Agency. 14.9 (h) "Farmer" or "farmer at risk" means a person who 14.10 produces an agricultural crop or livestock and is reported to 14.11 the farm service agency as bearing a percentage of the risk for 14.12 the farm operation. 14.13 (i) "Livestock" means cattle, hogs, poultry, and sheep. 14.14 (j) "Livestock production facility" means a farm that has 14.15 produced at least a total of $10,000 in sales of unprocessed 14.16 livestock or unprocessed dairy products or receipts from the 14.17 care of another farmer's livestock as reported on schedule F or 14.18 form 1065 or form 1120 or 1120S of the farmer's federal income 14.19 tax return for either taxable years beginning in calendar year 14.20 1997 or 1998. 14.21 (k) "Person" includes individuals, fiduciaries, estates, 14.22 trusts, partnerships, joint ventures, and corporations. 14.23 EFFECTIVE DATE: This section is effective retroactively to 14.24 April 23, 1999. 14.25 Sec. 3. [APPROPRIATION.] 14.26 The amount necessary to fund the payments required under 14.27 section 1, subdivision 2, is appropriated in fiscal year 2000 14.28 from the general fund to the commissioner of revenue. This 14.29 appropriation is available until June 30, 2001. 14.30 EFFECTIVE DATE: This section is effective the day 14.31 following final enactment. 14.32 ARTICLE 3 14.33 1999 SALES TAX REBATE 14.34 Section 1. Laws 1999, chapter 243, article 1, section 2, 14.35 is amended to read: 14.36 Sec. 2. [SALES TAX REBATE.] 15.1 (a) An individual who: 15.2 (1) was eligible for a credit under Laws 1997, chapter 231, 15.3 article 1, section 16, as amended by Laws 1997, First Special 15.4 Session chapter 5, section 35, and Laws 1997, Third Special 15.5 Session chapter 3, section 11, and Laws 1998, chapter 304, and 15.6 Laws 1998, chapter 389, article 1, section 3, and who filed for 15.7 or received that credit on or before June 15, 1999; or 15.8 (2) was a resident of Minnesota for any part of 1997, and 15.9 filed a 1997 Minnesota income tax return on or before June 15, 15.10 1999, and had a tax liability before refundable credits on that 15.11 return of at least $1 but did not file the claim for credit 15.12 authorized under Laws 1997, chapter 231, article 1, section 16, 15.13 as amended, and who was not allowed to be claimed as a dependent 15.14 on a 1997 federal income tax return filed by another person; or 15.15 (3) had the property taxes payable on his or her homestead 15.16 abated to zero under Laws 1997, chapter 231, article 2, section 15.17 64, 15.18 shall receive a sales tax rebate. 15.19 (b) The sales tax rebate for taxpayers who qualify under 15.20 paragraph (a) as married filing joint or head of household must 15.21 be computed according to the following schedule: 15.22 Income Sales Tax Rebate 15.23 less than $2,500 $ 358 15.24 at least $2,500 but less than $5,000 $ 469 15.25 at least $5,000 but less than $10,000 $ 502 15.26 at least $10,000 but less than $15,000 $ 549 15.27 at least $15,000 but less than $20,000 $ 604 15.28 at least $20,000 but less than $25,000 $ 641 15.29 at least $25,000 but less than $30,000 $ 690 15.30 at least $30,000 but less than $35,000 $ 762 15.31 at least $35,000 but less than $40,000 $ 820 15.32 at least $40,000 but less than $45,000 $ 874 15.33 at least $45,000 but less than $50,000 $ 921 15.34 at least $50,000 but less than $60,000 $ 969 15.35 at least $60,000 but less than $70,000 $1,071 15.36 at least $70,000 but less than $80,000 $1,162 16.1 at least $80,000 but less than $90,000 $1,276 16.2 at least $90,000 but less than $100,000 $1,417 16.3 at least $100,000 but less than $120,000 $1,535 16.4 at least $120,000 but less than $140,000 $1,682 16.5 at least $140,000 but less than $160,000 $1,818 16.6 at least $160,000 but less than $180,000 $1,946 16.7 at least $180,000 but less than $200,000 $2,067 16.8 at least $200,000 but less than $400,000 $2,644 16.9 at least $400,000 but less than $600,000 $3,479 16.10 at least $600,000 but less than $800,000 $4,175 16.11 at least $800,000 but less than $1,000,000 $4,785 16.12 $1,000,000 and over $5,000 16.13 (c) The sales tax rebate for individuals who qualify under 16.14 paragraph (a) as single or married filing separately must be 16.15 computed according to the following schedule: 16.16 Income Sales Tax Rebate 16.17 less than $2,500 $ 204 16.18 at least $2,500 but less than $5,000 $ 249 16.19 at least $5,000 but less than $10,000 $ 299 16.20 at least $10,000 but less than $15,000 $ 408 16.21 at least $15,000 but less than $20,000 $ 464 16.22 at least $20,000 but less than $25,000 $ 496 16.23 at least $25,000 but less than $30,000 $ 515 16.24 at least $30,000 but less than $40,000 $ 570 16.25 at least $40,000 but less than $50,000 $ 649 16.26 at least $50,000 but less than $70,000 $ 776 16.27 at least $70,000 but less than $100,000 $ 958 16.28 at least $100,000 but less than $140,000 $1,154 16.29 at least $140,000 but less than $200,000 $1,394 16.30 at least $200,000 but less than $400,000 $1,889 16.31 at least $400,000 but less than $600,000 $2,485 16.32 $600,000 and over $2,500 16.33 (d) Individuals who were not residents of Minnesota for any 16.34 part of 1997 and who paid more than $10 in Minnesota sales tax 16.35 on nonbusiness consumer purchases in that year qualify for a 16.36 rebate under this paragraph only. Qualifying nonresidents must 17.1 file a claim for rebate on a form prescribed by the commissioner 17.2 before the later of June 15, 1999, or 30 days after the date of 17.3 enactment of this act. The claim must include receipts showing 17.4 the Minnesota sales tax paid and the date of the sale. Taxes 17.5 paid on purchases allowed in the computation of federal taxable 17.6 income or reimbursed by an employer are not eligible for the 17.7 rebate. The commissioner shall determine the qualifying taxes 17.8 paid and rebate the lesser of: 17.9 (1) 69.0 percent of that amount; or 17.10 (2) the maximum amount for which the claimant would have 17.11 been eligible as determined under paragraph (b) if the taxpayer 17.12 filed the 1997 federal income tax return as a married taxpayer 17.13 filing jointly or head of household, or as determined under 17.14 paragraph (c) for other taxpayers. 17.15 (e) "Income," for purposes of this section other than 17.16 paragraph (d), is taxable income as defined in section 63 of the 17.17 Internal Revenue Code of 1986, as amended through December 31, 17.18 1996, plus the sum of any additions to federal taxable income 17.19 for the taxpayer under Minnesota Statutes, section 290.01, 17.20 subdivision 19a, and reported on the original 1997 income tax 17.21 return including subsequent adjustments to that return made 17.22 within the time limits specified in paragraph (h). For an 17.23 individual who was a resident of Minnesota for less than the 17.24 entire year, the sales tax rebate equals the sales tax rebate 17.25 calculated under paragraph (b) or (c) multiplied by the 17.26 percentage determined pursuant to Minnesota Statutes, section 17.27 290.06, subdivision 2c, paragraph (e), as calculated on the 17.28 original 1997 income tax return including subsequent adjustments 17.29 to that return made within the time limits specified in 17.30 paragraph (h). For purposes of paragraph (d), "income" is 17.31 taxable income as defined in section 63 of the Internal Revenue 17.32 Code of 1986, as amended through December 31, 1996, and reported 17.33 on the taxpayer's original federal tax return for the first 17.34 taxable year beginning after December 31, 1996. 17.35 (f) An individual who would have been eligible for a rebate 17.36 under paragraph (a), clause (1) or (2), or (d) had the 18.1 individual filed a 1997 Minnesota income tax return or claim 18.2 form by June 15, 1999, who files the return or claim form by 18.3 June 15, 2000, is eligible for the rebate, except the maximum 18.4 rebate is $212 if the individual is single or married filing 18.5 separately and the maximum rebate is $371 if the individuals are 18.6 married filing joint or head of household. 18.7 (g) For a fiscal year taxpayer, the June 15, 1999, dates in 18.8 paragraphs (a) through (d) are extended one month for each month 18.9 in calendar year 1997 that occurred prior to the start of the 18.10 individual's 1997 fiscal tax year. 18.11 (h) Before payment, the commissioner of revenue shall 18.12 adjust the rebate as follows: 18.13 (1) the rebates calculated in paragraphs (b), (c), and (d) 18.14 must be proportionately reduced to account for 1997 income tax 18.15 returns that are filed on or after January 1, 1999, but before 18.16 July 1, 1999, so that the amount of sales tax rebates payable 18.17 under paragraphs (b), (c), and (d) does not exceed 18.18 $1,250,000,000; and 18.19 (2) the commissioner of finance shall certify by July 15, 18.20 1999, preliminary fiscal year 1999 general fund net nondedicated 18.21 revenues. The certification shall exclude the impact of any 18.22 legislation enacted during the 1999 regular session. If 18.23 certified net nondedicated revenues exceed the amount forecast 18.24 in February 1999, up to $50,000,000 of the increase shall be 18.25 added to the total amount rebated. The commissioner of revenue 18.26 shall adjust all rebates proportionally to reflect any 18.27 increases. The total amount of the rebate shall not exceed 18.28 $1,300,000,000. 18.29 The adjustments under this paragraph are not rules subject to 18.30 Minnesota Statutes, chapter 14. 18.31(g)(i) The commissioner of revenue may begin making sales 18.32 tax rebates by August 1, 1999. Sales tax rebates not paid by 18.33 October 1, 1999, bear interest at the rate specified in 18.34 Minnesota Statutes, section 270.75. Sales tax rebates paid to 18.35 (1) taxpayers who file their original 1997 Minnesota income tax 18.36 return after June 15, 1999, and (2) qualifying nonresidents who 19.1 file a claim for rebate after June 15, 1999, 19.2 bear interest at the rate specified in Minnesota Statutes, 19.3 section 270.75, beginning October 1, 2000. 19.4(h)(j) A sales tax rebate shall not be adjusted based on 19.5 changes to a 1997 income tax return that are made by order of 19.6 assessment after June 15,19992000, or made by the taxpayer 19.7 that are filed with the commissioner of revenue after June 19.8 15,19992000. 19.9(i)(k) Individuals who filed a joint income tax return for 19.10 1997 shall receive a joint sales tax rebate. After the sales 19.11 tax rebate has been issued, but before the check has been 19.12 cashed, either joint claimant may request a separate check for 19.13 one-half of the joint sales tax rebate. Notwithstanding 19.14 anything in this section to the contrary, if prior to payment, 19.15 the commissioner has been notified that persons who filed a 19.16 joint 1997 income tax return are living at separate addresses, 19.17 as indicated on their 1998 income tax return or otherwise, the 19.18 commissioner may issue separate checks to each person. The 19.19 amount payable to each person is one-half of the total joint 19.20 rebate. If a rebate is received by the estate of a deceased 19.21 individual after the probate estate has been closed, and if the 19.22 original rebate check is returned to the commissioner with a 19.23 copy of the decree of descent or final account of the estate, 19.24 social security numbers, and addresses of the beneficiaries, the 19.25 commissioner may issue separate checks in proportion to their 19.26 share in the residuary estate in the names of the residuary 19.27 beneficiaries of the estate. 19.28(j)(l) The sales tax rebate is a "Minnesota tax law" for 19.29 purposes of Minnesota Statutes, section 270B.01, subdivision 8. 19.30(k)(m) The sales tax rebate is "an overpayment of any tax 19.31 collected by the commissioner" for purposes of Minnesota 19.32 Statutes, section 270.07, subdivision 5. For purposes of this 19.33 paragraph, a joint sales tax rebate is payable to each spouse 19.34 equally. 19.35(l)(n) If the commissioner of revenue cannot locate an 19.36 individual entitled to a sales tax rebate by July 1, 2001, or if 20.1 an individual to whom a sales tax rebate was issued has not 20.2 cashed the check by July 1, 2001, the right to the sales tax 20.3 rebate lapses and the check must be deposited in the general 20.4 fund. 20.5(m)(o) Individuals entitled to a sales tax rebate pursuant 20.6 to paragraph (a), but who did not receive one, and individuals 20.7 who receive a sales tax rebate that was not correctly computed, 20.8 must file a claim with the commissioner before July 1, 2000, in 20.9 a form prescribed by the commissioner. Taxpayers who file their 20.10 original 1997 Minnesota income tax return after June 15, 1999, 20.11 taxpayers who file an amended 1997 Minnesota income tax return 20.12 after June 15, 1999, and qualifying nonresidents who file a 20.13 claim for rebate after June 15, 1999, and who do not receive it 20.14 or who receive a sales tax rebate that was not correctly 20.15 computed, must file a claim with the commissioner before July 1, 20.16 2001, in a form prescribed by the commissioner. These claims 20.17 must be treated as if they are a claim for refund under 20.18 Minnesota Statutes, section 289A.50, subdivisions 4 and 7. 20.19(n)(p) The sales tax rebate is a refund subject to revenue 20.20 recapture under Minnesota Statutes, chapter 270A. The 20.21 commissioner of revenue shall remit the entire refund to the 20.22 claimant agency, which shall, upon the request of the spouse who 20.23 does not owe the debt, refund one-half of the joint sales tax 20.24 rebate to the spouse who does not owe the debt. 20.25(o)(q) The rebate is a reduction of fiscal year 1999 sales 20.26 tax revenues. The amount necessary to make the sales tax 20.27 rebates and interest provided in this section is appropriated 20.28 from the general fund to the commissioner of revenue in fiscal 20.29 year 1999 and is available until June 30, 2001. 20.30(p)(r) If a sales tax rebate check is cashed by someone 20.31 other than the payee or payees of the check, and the 20.32 commissioner of revenue determines that the check has been 20.33 forged or improperly endorsed or the commissioner determines 20.34 that a rebate was overstated or erroneously issued, the 20.35 commissioner may issue an order of assessment for the amount of 20.36 the check or the amount the check is overstated against the 21.1 person or persons cashing it. The assessment must be made 21.2 within two years after the check is cashed, but if cashing the 21.3 check constitutes theft under Minnesota Statutes, section 21.4 609.52, or forgery under Minnesota Statutes, section 609.631, 21.5 the assessment can be made at any time. The assessment may be 21.6 appealed administratively and judicially. The commissioner may 21.7 take action to collect the assessment in the same manner as 21.8 provided by Minnesota Statutes, chapter 289A, for any other 21.9 order of the commissioner assessing tax. 21.10(q)(s) Notwithstanding Minnesota Statutes, sections 9.031, 21.11 16A.40, 16B.49, 16B.50, and any other law to the contrary, the 21.12 commissioner of revenue may take whatever actions the 21.13 commissioner deems necessary to pay the rebates required by this 21.14 section, and may, in consultation with the commissioner of 21.15 finance and the state treasurer, contract with a private vendor 21.16 or vendors to process, print, and mail the rebate checks or 21.17 warrants required under this section and receive and disburse 21.18 state funds to pay those checks or warrants. 21.19(r)(t) The commissioner may pay rebates required by this 21.20 section by electronic funds transfer to individuals who 21.21 requested that their 1998 individual income tax refund be paid 21.22 through electronic funds transfer. The commissioner may make 21.23 the electronic funds transfer payments to the same financial 21.24 institution and into the same account as the 1998 individual 21.25 income tax refund. 21.26 EFFECTIVE DATE: This section is effective the day 21.27 following final enactment. 21.28 Sec. 2. [APPLICATION OF LAW.] 21.29 The limitation on the total amount of rebates in Laws 1999, 21.30 chapter 243, article 1, section 2, paragraph (f), does not apply 21.31 to rebates issued under section 1. To the extent applicable, 21.32 all other provisions of Laws 1999, chapter 243, article 1, 21.33 section 2, apply to the rebates paid under section 1. 21.34 EFFECTIVE DATE: This section is effective the day 21.35 following final enactment. 21.36 Sec. 3. [APPROPRIATION.] 22.1 The amount necessary to pay the rebates under section 1 is 22.2 appropriated from the general fund to the commissioner of 22.3 revenue for fiscal years 2000 and 2001. 22.4 EFFECTIVE DATE: This section is effective the day 22.5 following final enactment. 22.6 ARTICLE 4 22.7 INCOME AND FRANCHISE TAXES 22.8 Section 1. Minnesota Statutes 1998, section 289A.08, is 22.9 amended by adding a subdivision to read: 22.10 Subd. 16. [TAX REFUND OR RETURN PREPARERS.] (a) A "tax 22.11 refund or return preparer," as defined in section 289A.60, 22.12 subdivision 13, paragraph (g), who prepared more than 500 22.13 Minnesota individual income tax returns for the prior calendar 22.14 year must file all Minnesota individual income tax returns 22.15 prepared for the current calendar year by electronic means. 22.16 (b) For tax returns prepared for the tax year beginning in 22.17 2001, the "500" in paragraph (a) is reduced to 250. 22.18 (c) For tax returns prepared for tax years beginning after 22.19 December 31, 2001, the "500" in paragraph (a) is reduced to 100. 22.20 (d) Paragraph (a) does not apply to a return if the 22.21 taxpayer has indicated on the return that the taxpayer did not 22.22 want the return filed by electronic means. 22.23 EFFECTIVE DATE: This section is effective for tax returns 22.24 prepared for taxable years beginning after December 31, 1999. 22.25 Sec. 2. Minnesota Statutes 1998, section 289A.20, 22.26 subdivision 2, is amended to read: 22.27 Subd. 2. [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 22.28 WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 22.29 WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 22.30 (a) A tax required to be deducted and withheld during the 22.31 quarterly period must be paid on or before the last day of the 22.32 month following the close of the quarterly period, unless an 22.33 earlier time for payment is provided. A tax required to be 22.34 deducted and withheld from compensation of an entertainer and 22.35 from a payment to an out-of-state contractor must be paid on or 22.36 before the date the return for such tax must be filed under 23.1 section 289A.18, subdivision 2. Taxes required to be deducted 23.2 and withheld by partnerships and S corporations must be paid on 23.3 or before the date the return must be filed under section 23.4 289A.18, subdivision 2. 23.5 (b) An employer who, during the previous quarter, withheld 23.6 more than $1,500 of tax under section 290.92, subdivision 2a or 23.7 3, or 290.923, subdivision 2, must deposit tax withheld under 23.8 those sections with the commissioner within the time allowed to 23.9 deposit the employer's federal withheld employment taxes under 23.10 Treasury Regulation, section 31.6302-1, without regard to the 23.11 safe harbor or de minimis rules in subparagraph (f) or the 23.12 one-day rule in subsection (c), clause (3). Taxpayers must 23.13 submit a copy of their federal notice of deposit status to the 23.14 commissioner upon request by the commissioner. 23.15 (c) The commissioner may prescribe by rule other return 23.16 periods or deposit requirements. In prescribing the reporting 23.17 period, the commissioner may classify payors according to the 23.18 amount of their tax liability and may adopt an appropriate 23.19 reporting period for the class that the commissioner judges to 23.20 be consistent with efficient tax collection. In no event will 23.21 the duration of the reporting period be more than one year. 23.22 (d) If less than the correct amount of tax is paid to the 23.23 commissioner, proper adjustments with respect to both the tax 23.24 and the amount to be deducted must be made, without interest, in 23.25 the manner and at the times the commissioner prescribes. If the 23.26 underpayment cannot be adjusted, the amount of the underpayment 23.27 will be assessed and collected in the manner and at the times 23.28 the commissioner prescribes. 23.29 (e) If the aggregate amount of the tax withheld during a 23.30 fiscal year ending June 30 under section 290.92, subdivision 2a 23.31 or 3, is equal to or exceeds the amounts established for 23.32 remitting federal withheld taxes pursuant to the regulations 23.33 promulgated under section 6302(h) of the Internal Revenue Code, 23.34 the employer must remit each required deposit for wages paid in 23.35 the subsequent calendar year by means of a funds transfer as 23.36 defined in section 336.4A-104, paragraph (a). The funds 24.1 transfer payment date, as defined in section 336.4A-401, must be 24.2 on or before the date the deposit is due. If the date the 24.3 deposit is due is not a funds transfer business day, as defined 24.4 in section 336.4A-105, paragraph (a), clause (4), the payment 24.5 date must be on or before the funds transfer business day next 24.6 following the date the deposit is due. 24.7 (f) A third-party bulk filer as defined in section 290.92, 24.8 subdivision 30, paragraph (a), clause (2), who remits 24.9 withholding deposits must remit all deposits by means of a funds 24.10 transfer as provided in paragraph (e), regardless of the 24.11 aggregate amount of tax withheld during a fiscal year for all of 24.12 the employers. 24.13 EFFECTIVE DATE: This section is effective for wages paid 24.14 after December 31, 1999. 24.15 Sec. 3. Minnesota Statutes 1998, section 289A.26, 24.16 subdivision 1, is amended to read: 24.17 Subdivision 1. [MINIMUM LIABILITY.] A corporation subject 24.18 to taxation under chapter 290 (excluding section 290.92) or an 24.19 entity subject to taxation under section 290.05, subdivision 3, 24.20 must make payment of estimated tax for the taxable year if its 24.21 tax liability so computed can reasonably be expected to exceed 24.22 $500, or in accordance with rules prescribed by the commissioner 24.23 for an affiliated group of corporationselecting to filefiling 24.24 one returnas permittedunder section 289A.08, subdivision 3. 24.25 EFFECTIVE DATE: This section is effective the day 24.26 following final enactment. 24.27 Sec. 4. Minnesota Statutes 1998, section 289A.60, 24.28 subdivision 1, is amended to read: 24.29 Subdivision 1. [PENALTY FOR FAILURE TO PAY TAX.] (a) If a 24.30 tax other than a withholding or sales or use tax is not paid 24.31 within the time specified for payment, a penalty must be added 24.32 to the amount required to be shown as tax. The penalty is three 24.33 percent of the tax not paid on or before the date specified for 24.34 payment of the tax if the failure is for not more than 30 days, 24.35 with an additional penalty of three percent of the amount of tax 24.36 remaining unpaid during each additional 30 days or fraction of 25.1 30 days during which the failure continues, not exceeding 24 25.2 percent in the aggregate. 25.3 If an individual files a state individual income tax return 25.4 and pays all of the state individual income tax with the filing 25.5 of a return within six months of the date the return is due and 25.6 the amount paid by the due date of the return is at least 90 25.7 percent of the amount of tax due, as shown on the return, the 25.8 individual is presumed to have reasonable cause for the late 25.9 payment. 25.10 (b) If a withholding or sales or use tax is not paid within 25.11 the time specified for payment, a penalty must be added to the 25.12 amount required to be shown as tax. The penalty is five percent 25.13 of the tax not paid on or before the date specified for payment 25.14 of the tax if the failure is for not more than 30 days, with an 25.15 additional penalty of five percent of the amount of tax 25.16 remaining unpaid during each additional 30 days or fraction of 25.17 30 days during which the failure continues, not exceeding 15 25.18 percent in the aggregate. 25.19 EFFECTIVE DATE: This section is effective for taxable 25.20 years beginning after December 31, 1999. 25.21 Sec. 5. Minnesota Statutes 1999 Supplement, section 25.22 290.01, subdivision 19b, is amended to read: 25.23 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 25.24 individuals, estates, and trusts, there shall be subtracted from 25.25 federal taxable income: 25.26 (1) interest income on obligations of any authority, 25.27 commission, or instrumentality of the United States to the 25.28 extent includable in taxable income for federal income tax 25.29 purposes but exempt from state income tax under the laws of the 25.30 United States; 25.31 (2) if included in federal taxable income, the amount of 25.32 any overpayment of income tax to Minnesota or to any other 25.33 state, for any previous taxable year, whether the amount is 25.34 received as a refund or as a credit to another taxable year's 25.35 income tax liability; 25.36 (3) the amount paid to others, less the credit allowed 26.1 under section 290.0674, not to exceed $1,625 for each qualifying 26.2 child in grades kindergarten to 6 and $2,500 for each qualifying 26.3 child in grades 7 to 12, for tuition, textbooks, and 26.4 transportation of each qualifying child in attending an 26.5 elementary or secondary school situated in Minnesota, North 26.6 Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of 26.7 this state may legally fulfill the state's compulsory attendance 26.8 laws, which is not operated for profit, and which adheres to the 26.9 provisions of the Civil Rights Act of 1964 and chapter 363. For 26.10 the purposes of this clause, "tuition" includes fees or tuition 26.11 as defined in section 290.0674, subdivision 1, clause (1). As 26.12 used in this clause, "textbooks" includes books and other 26.13 instructional materials and equipment used in elementary and 26.14 secondary schools in teaching only those subjects legally and 26.15 commonly taught in public elementary and secondary schools in 26.16 this state. Equipment expenses qualifying for deduction 26.17 includes expenses as defined and limited in section 290.0674, 26.18 subdivision 1, clause (3). "Textbooks" does not include 26.19 instructional books and materials used in the teaching of 26.20 religious tenets, doctrines, or worship, the purpose of which is 26.21 to instill such tenets, doctrines, or worship, nor does it 26.22 include books or materials for, or transportation to, 26.23 extracurricular activities including sporting events, musical or 26.24 dramatic events, speech activities, driver's education, or 26.25 similar programs. For purposes of the subtraction provided by 26.26 this clause, "qualifying child" has the meaning given in section 26.27 32(c)(3) of the Internal Revenue Code; 26.28 (4) contributions made in taxable years beginning after 26.29 December 31, 1981, and before January 1, 1985, to a qualified 26.30 governmental pension plan, an individual retirement account, 26.31 simplified employee pension, or qualified plan covering a 26.32 self-employed person that were included in Minnesota gross 26.33 income in the taxable year for which the contributions were made 26.34 but were deducted or were not included in the computation of 26.35 federal adjusted gross income, less any amount allowed to be 26.36 subtracted as a distribution under this subdivision or a 27.1 predecessor provision in taxable years that began before January 27.2 1, 2000. This subtraction applies only for taxable years 27.3 beginning after December 31, 1999, and before January 1, 2001. 27.4 If an individual's subtraction under this clause exceeds the 27.5 individual's taxable income, the excess may be carried forward 27.6 to taxable years beginning after December 31, 2000, and before 27.7 January 1, 2002; 27.8 (5) income as provided under section 290.0802; 27.9 (6) the amount of unrecovered accelerated cost recovery 27.10 system deductions allowed under subdivision 19g; 27.11 (7) to the extent included in federal adjusted gross 27.12 income, income realized on disposition of property exempt from 27.13 tax under section 290.491; 27.14 (8) to the extent not deducted in determining federal 27.15 taxable income or used to claim the long-term care insurance 27.16 credit under section 290.0672, the amount paid by individuals 27.17 for health insuranceof self-employed individuals as determined27.18under section 162(l) of the Internal Revenue Code, except that27.19the percent limit does not applyas defined in section 213(d) of 27.20 the Internal Revenue Code. If thetaxpayerindividual deducted 27.21 insurance payments under section 213 of the Internal Revenue 27.22 Code of 1986, the subtraction under this clause must be reduced 27.23 by the lesser of: 27.24 (i) the total itemized deductions allowed under section 27.25 63(d) of the Internal Revenue Code, less state, local, and 27.26 foreign income taxes deductible under section 164 of the 27.27 Internal Revenue Code and the standard deduction under section 27.28 63(c) of the Internal Revenue Code; or 27.29 (ii) the lesser of (A) the amount of insurance qualifying 27.30 as "medical care" under section 213(d) of the Internal Revenue 27.31 Code to the extent not deducted under section 162(1) of the 27.32 Internal Revenue Code or excluded from income or (B) the total 27.33 amount deductible for medical care under section 213(a); 27.34 (9) the exemption amount allowed under Laws 1995, chapter 27.35 255, article 3, section 2, subdivision 3; 27.36 (10) to the extent included in federal taxable income, 28.1 postservice benefits for youth community service under section 28.2 124D.42 for volunteer service under United States Code, title 28.3 42, section 5011(d), as amended; 28.4 (11) to the extent not deducted in determining federal 28.5 taxable income by an individual who does not itemize deductions 28.6 for federal income tax purposes for the taxable year, an amount 28.7 equal to 50 percent of the excess of charitable contributions 28.8 allowable as a deduction for the taxable year under section 28.9 170(a) of the Internal Revenue Code over $500; and 28.10 (12) to the extent included in federal taxable income, 28.11 holocaust victims' settlement payments for any injury incurred 28.12 as a result of the holocaust, if received by an individual who 28.13 was persecuted for racial or religious reasons by Nazi Germany 28.14 or any other Axis regime or an heir of such a person; 28.15 (13) for taxable years beginning before January 1, 2008, 28.16 the amount of the federal small ethanol producer credit allowed 28.17 under section 40(a)(3) of the Internal Revenue Code which is 28.18 included in gross income under section 87 of the Internal 28.19 Revenue Code. 28.20 EFFECTIVE DATE: (a) Clause (8) of this section is 28.21 effective for taxable years beginning after December 31, 2000. 28.22 (b) Clauses (4) and (13) of this section are effective for 28.23 taxable years beginning after December 31, 1999. 28.24 Sec. 6. Minnesota Statutes 1998, section 290.01, 28.25 subdivision 19c, is amended to read: 28.26 Subd. 19c. [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 28.27 INCOME.] For corporations, there shall be added to federal 28.28 taxable income: 28.29 (1) the amount of any deduction taken for federal income 28.30 tax purposes for income, excise, or franchise taxes based on net 28.31 income or related minimum taxes, including but not limited to 28.32 the tax imposed under section 290.0922, paid by the corporation 28.33 to Minnesota, another state, a political subdivision of another 28.34 state, the District of Columbia, or any foreign country or 28.35 possession of the United States; 28.36 (2) interest not subject to federal tax upon obligations 29.1 of: the United States, its possessions, its agencies, or its 29.2 instrumentalities; the state of Minnesota or any other state, 29.3 any of its political or governmental subdivisions, any of its 29.4 municipalities, or any of its governmental agencies or 29.5 instrumentalities; the District of Columbia; or Indian tribal 29.6 governments; 29.7 (3) exempt-interest dividends received as defined in 29.8 section 852(b)(5) of the Internal Revenue Code; 29.9 (4) the amount of any net operating loss deduction taken 29.10 for federal income tax purposes under section 172 or 832(c)(10) 29.11 of the Internal Revenue Code or operations loss deduction under 29.12 section 810 of the Internal Revenue Code; 29.13 (5) the amount of any special deductions taken for federal 29.14 income tax purposes under sections 241 to 247 of the Internal 29.15 Revenue Code; 29.16 (6) losses from the business of mining, as defined in 29.17 section 290.05, subdivision 1, clause (a), that are not subject 29.18 to Minnesota income tax; 29.19 (7) the amount of any capital losses deducted for federal 29.20 income tax purposes under sections 1211 and 1212 of the Internal 29.21 Revenue Code; 29.22 (8) the amount of any charitable contributions deducted for 29.23 federal income tax purposes under section 170 of the Internal 29.24 Revenue Code; 29.25 (9) the exempt foreign trade income of a foreign sales 29.26 corporation under sections 921(a) and 291 of the Internal 29.27 Revenue Code; 29.28 (10) the amount of percentage depletion deducted under 29.29 sections 611 through 614 and 291 of the Internal Revenue Code; 29.30 (11) for certified pollution control facilities placed in 29.31 service in a taxable year beginning before December 31, 1986, 29.32 and for which amortization deductions were elected under section 29.33 169 of the Internal Revenue Code of 1954, as amended through 29.34 December 31, 1985, the amount of the amortization deduction 29.35 allowed in computing federal taxable income for those 29.36 facilities; 30.1 (12) the amount of any deemed dividend from a foreign 30.2 operating corporation determined pursuant to section 290.17, 30.3 subdivision 4, paragraph (g); 30.4 (13) the amount of any environmental tax paid under section 30.5 59(a) of the Internal Revenue Code; and 30.6 (14) the amount of a partner's pro rata share of net income 30.7 which does not flow through to the partner because the 30.8 partnership elected to pay the tax on the income under section 30.9 6242(a)(2) of the Internal Revenue Code. 30.10 EFFECTIVE DATE: This section is effective for taxable 30.11 years beginning after December 31, 1999. 30.12 Sec. 7. Minnesota Statutes 1998, section 290.01, 30.13 subdivision 19d, is amended to read: 30.14 Subd. 19d. [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 30.15 TAXABLE INCOME.] For corporations, there shall be subtracted 30.16 from federal taxable income after the increases provided in 30.17 subdivision 19c: 30.18 (1) the amount of foreign dividend gross-up added to gross 30.19 income for federal income tax purposes under section 78 of the 30.20 Internal Revenue Code; 30.21 (2) the amount of salary expense not allowed for federal 30.22 income tax purposes due to claiming the federal jobs credit 30.23 under section 51 of the Internal Revenue Code; 30.24 (3) any dividend (not including any distribution in 30.25 liquidation) paid within the taxable year by a national or state 30.26 bank to the United States, or to any instrumentality of the 30.27 United States exempt from federal income taxes, on the preferred 30.28 stock of the bank owned by the United States or the 30.29 instrumentality; 30.30 (4) amounts disallowed for intangible drilling costs due to 30.31 differences between this chapter and the Internal Revenue Code 30.32 in taxable years beginning before January 1, 1987, as follows: 30.33 (i) to the extent the disallowed costs are represented by 30.34 physical property, an amount equal to the allowance for 30.35 depreciation under Minnesota Statutes 1986, section 290.09, 30.36 subdivision 7, subject to the modifications contained in 31.1 subdivision 19e; and 31.2 (ii) to the extent the disallowed costs are not represented 31.3 by physical property, an amount equal to the allowance for cost 31.4 depletion under Minnesota Statutes 1986, section 290.09, 31.5 subdivision 8; 31.6 (5) the deduction for capital losses pursuant to sections 31.7 1211 and 1212 of the Internal Revenue Code, except that: 31.8 (i) for capital losses incurred in taxable years beginning 31.9 after December 31, 1986, capital loss carrybacks shall not be 31.10 allowed; 31.11 (ii) for capital losses incurred in taxable years beginning 31.12 after December 31, 1986, a capital loss carryover to each of the 31.13 15 taxable years succeeding the loss year shall be allowed; 31.14 (iii) for capital losses incurred in taxable years 31.15 beginning before January 1, 1987, a capital loss carryback to 31.16 each of the three taxable years preceding the loss year, subject 31.17 to the provisions of Minnesota Statutes 1986, section 290.16, 31.18 shall be allowed; and 31.19 (iv) for capital losses incurred in taxable years beginning 31.20 before January 1, 1987, a capital loss carryover to each of the 31.21 five taxable years succeeding the loss year to the extent such 31.22 loss was not used in a prior taxable year and subject to the 31.23 provisions of Minnesota Statutes 1986, section 290.16, shall be 31.24 allowed; 31.25 (6) an amount for interest and expenses relating to income 31.26 not taxable for federal income tax purposes, if (i) the income 31.27 is taxable under this chapter and (ii) the interest and expenses 31.28 were disallowed as deductions under the provisions of section 31.29 171(a)(2), 265 or 291 of the Internal Revenue Code in computing 31.30 federal taxable income; 31.31 (7) in the case of mines, oil and gas wells, other natural 31.32 deposits, and timber for which percentage depletion was 31.33 disallowed pursuant to subdivision 19c, clause (11), a 31.34 reasonable allowance for depletion based on actual cost. In the 31.35 case of leases the deduction must be apportioned between the 31.36 lessor and lessee in accordance with rules prescribed by the 32.1 commissioner. In the case of property held in trust, the 32.2 allowable deduction must be apportioned between the income 32.3 beneficiaries and the trustee in accordance with the pertinent 32.4 provisions of the trust, or if there is no provision in the 32.5 instrument, on the basis of the trust's income allocable to 32.6 each; 32.7 (8) for certified pollution control facilities placed in 32.8 service in a taxable year beginning before December 31, 1986, 32.9 and for which amortization deductions were elected under section 32.10 169 of the Internal Revenue Code of 1954, as amended through 32.11 December 31, 1985, an amount equal to the allowance for 32.12 depreciation under Minnesota Statutes 1986, section 290.09, 32.13 subdivision 7; 32.14 (9) the amount included in federal taxable income 32.15 attributable to the credits provided in Minnesota Statutes 1986, 32.16 section 273.1314, subdivision 9, or Minnesota Statutes, section 32.17 469.171, subdivision 6; 32.18 (10) amounts included in federal taxable income that are 32.19 due to refunds of income, excise, or franchise taxes based on 32.20 net income or related minimum taxes paid by the corporation to 32.21 Minnesota, another state, a political subdivision of another 32.22 state, the District of Columbia, or a foreign country or 32.23 possession of the United States to the extent that the taxes 32.24 were added to federal taxable income under section 290.01, 32.25 subdivision 19c, clause (1), in a prior taxable year; 32.26 (11) 80 percent of royalties, fees, or other like income 32.27 accrued or received from a foreign operating corporation or a 32.28 foreign corporation which is part of the same unitary business 32.29 as the receiving corporation; 32.30 (12) income or gains from the business of mining as defined 32.31 in section 290.05, subdivision 1, clause (a), that are not 32.32 subject to Minnesota franchise tax; 32.33 (13) the amount of handicap access expenditures in the 32.34 taxable year which are not allowed to be deducted or capitalized 32.35 under section 44(d)(7) of the Internal Revenue Code; 32.36 (14) the amount of qualified research expenses not allowed 33.1 for federal income tax purposes under section 280C(c) of the 33.2 Internal Revenue Code, but only to the extent that the amount 33.3 exceeds the amount of the credit allowed under section 290.068; 33.4 (15) the amount of salary expenses not allowed for federal 33.5 income tax purposes due to claiming the Indian employment credit 33.6 under section 45A(a) of the Internal Revenue Code;and33.7 (16) the amount of any refund of environmental taxes paid 33.8 under section 59A of the Internal Revenue Code; and 33.9 (17) for taxable years beginning before January 1, 2008, 33.10 the amount of the federal small ethanol producer credit allowed 33.11 under section 40(a)(3) of the Internal Revenue Code which is 33.12 included in gross income under section 87 of the Internal 33.13 Revenue Code. 33.14 EFFECTIVE DATE: This section is effective for taxable 33.15 years beginning after December 31, 1999. 33.16 Sec. 8. Minnesota Statutes 1998, section 290.015, 33.17 subdivision 1, is amended to read: 33.18 Subdivision 1. [GENERAL RULE.] (a) Except as provided in 33.19 subdivision 3, a person that conducts a trade or business that 33.20 has a place of business in this state, regularly has employees 33.21 or independent contractors conducting business activities on its 33.22 behalf in this state, or owns or leases real property that is 33.23 located in this state or tangible personal propertylocated, 33.24 including but not limited to mobile property, that is present in 33.25 this stateas defined in section 290.191, subdivision 6,33.26paragraph (e),is subject to the taxes imposed by this chapter. 33.27 (b) Except as provided in subdivision 3, a person that 33.28 conducts a trade or business not described in paragraph (a) is 33.29 subject to the taxes imposed by this chapter if the trade or 33.30 business obtains or regularly solicits business from within this 33.31 state, without regard to physical presence in this state. 33.32 (c) For purposes of paragraph (b), business from within 33.33 this state includes, but is not limited to: 33.34 (1) sales of products or services of any kind or nature to 33.35 customers in this state who receive the product or service in 33.36 this state; 34.1 (2) sales of services which are performed from outside this 34.2 state but the services are received in this state; 34.3 (3) transactions with customers in this state that involve 34.4 intangible property and result inincome flowing to the person34.5from withinreceipts attributed to this state as provided in 34.6 section 290.191, subdivision 5 or 6; 34.7 (4) leases of tangible personal property that is located in 34.8 this state as defined in section 290.191, subdivision 5, 34.9 paragraph (g), or 6, paragraph (e); and 34.10 (5) sales and leases of real property located in this 34.11 state; and34.12(6) if a financial institution, deposits received from34.13customers in this state. 34.14 (d) For purposes of paragraph (b), solicitation includes, 34.15 but is not limited to: 34.16 (1) the distribution, by mail or otherwise, without regard 34.17 to the state from which such distribution originated or in which 34.18 the materials were prepared, of catalogs, periodicals, 34.19 advertising flyers, or other written solicitations of business 34.20 to customers in this state; 34.21 (2) display of advertisements on billboards or other 34.22 outdoor advertising in this state; 34.23 (3) advertisements in newspapers published in this state; 34.24 (4) advertisements in trade journals or other periodicals, 34.25 the circulation of which is primarily within this state; 34.26 (5) advertisements in a Minnesota edition of a national or 34.27 regional publication or a limited regional edition of which this 34.28 state is included of a broader regional or national publication 34.29 which are not placed in other geographically defined editions of 34.30 the same issue of the same publication; 34.31 (6) advertisements in regional or national publications in 34.32 an edition which is not by its contents geographically targeted 34.33 to Minnesota, but which is sold over the counter in Minnesota or 34.34 by subscription to Minnesota residents; 34.35 (7) advertisements broadcast on a radio or television 34.36 station located in Minnesota; or 35.1 (8) any other solicitation by telegraph, telephone, 35.2 computer database, cable, optic, microwave, or other 35.3 communication system. 35.4 EFFECTIVE DATE: This section is effective for taxable 35.5 years beginning after December 31, 1999. 35.6 Sec. 9. Minnesota Statutes 1998, section 290.015, 35.7 subdivision 3, is amended to read: 35.8 Subd. 3. [EXCEPTIONS.] (a) A person is not subject to tax 35.9 under this chapter if the person is engaged in the business of 35.10 selling tangible personal property and taxation of that person 35.11 under this chapter is precluded by Public Law Number 86-272, 35.12 United States Code, title 15, sections 381 to 384, or would be 35.13 so precluded except for the fact that the person stored tangible 35.14 personal property in a state licensed facility under chapter 231. 35.15 (b) Ownership of an interest in the following types of 35.16 property (including those contacts with this state reasonably 35.17 required to evaluate and complete the acquisition or disposition 35.18 of the property, the servicing of the property or the income 35.19 from it, the collection of income from the property, or the 35.20 acquisition or liquidation of collateral relating to the 35.21 property) shall not be a factor in determining whether the owner 35.22 is subject to tax under this chapter: 35.23 (1) an interest in a real estate mortgage investment 35.24 conduit, a real estate investment trust, a financial asset 35.25 securitization investment trust, or a regulated investment 35.26 company or a fund of a regulated investment company, as those 35.27 terms are defined in the Internal Revenue Code; 35.28 (2) an interest in money market instruments or securities 35.29 as defined in section 290.191, subdivision 6, paragraphs (c) and 35.30 (d); 35.31 (3) an interest in a loan-backed, mortgage-backed, or 35.32 receivable-backed security representing either: (i) ownership 35.33 in a pool of promissory notes, mortgages, or receivables or 35.34 certificates of interest or participation in such notes, 35.35 mortgages, or receivables, or (ii) debt obligations or equity 35.36 interests which provide for payments in relation to payments or 36.1 reasonable projections of payments on the notes, mortgages, or 36.2 receivables; 36.3 (4) an interest acquired from a person in assets described 36.4 in section 290.191, subdivision 11, paragraphs (e) to (l), 36.5 subject to the provisions of paragraph (c), clause (2)(A); 36.6 (5) an interest acquired from a person in the right to 36.7 service, or collect income from any assets described in section 36.8 290.191, subdivision 11, paragraphs (e) to (l), subject to the 36.9 provisions of paragraph (c), clause (2)(A); 36.10 (6) an interest acquired from a person in a funded or 36.11 unfunded agreement to extend or guarantee credit whether 36.12 conditional, mandatory, temporary, standby, secured, or 36.13 otherwise, subject to the provisions of paragraph (c), clause 36.14 (2)(A); 36.15 (7) an interest of a person other than an individual, 36.16 estate, or trust, in any intangible, tangible, real, or personal 36.17 property acquired in satisfaction, whether in whole or in part, 36.18 of any asset embodying a payment obligation which is in default, 36.19 whether secured or unsecured, the ownership of an interest in 36.20 which would be exempt under the preceding provisions of this 36.21 subdivision, provided the property is disposed of within a 36.22 reasonable period of time; or 36.23 (8) amounts held in escrow or trust accounts, pursuant to 36.24 and in accordance with the terms of property described in this 36.25 subdivision. 36.26 (c)(1) For purposes of paragraph (b), clauses (4) to (6), 36.27 an interest in the type of assets or credit agreements described 36.28 is deemed to exist at the time the owner becomes legally 36.29 obligated, conditionally or unconditionally, to fund, acquire, 36.30 renew, extend, amend, or otherwise enter into the credit 36.31 arrangement. 36.32 (2)(A) An owner has acquired an interest from a person in 36.33 paragraph (b), clauses (4) to (6), assets if: 36.34 (i) the owner at the time of the acquisition of the asset 36.35 does not own, directly or indirectly, 15 percent or more of the 36.36 outstanding stock or in the case of a partnership 15 percent or 37.1 more of the capital or profit interests of the person from whom 37.2 it acquired the asset; 37.3 (ii) the person from whom the owner acquired the asset 37.4 regularly sells, assigns, or transfers interests in paragraph 37.5 (b), clauses (4) to (6), assets during the 12 calendar months 37.6 immediately preceding the month of acquisition to three or more 37.7 persons; and 37.8 (iii) the person from whom the owner acquired the asset 37.9 does not sell, assign, or transfer 75 percent or more of its 37.10 paragraph (b), clauses (4) to (6), assets during the 12 calendar 37.11 months immediately preceding the month of acquisition to the 37.12 owner. 37.13 For purposes of determining indirect ownership under item (i), 37.14 the owner is deemed to own all stock, capital, or profit 37.15 interests owned by another person if the owner directly owns 15 37.16 percent or more of the stock, capital, or profit interests in 37.17 the other person. The owner is also deemed to own through any 37.18 intermediary parties all stock, capital, and profit interests 37.19 directly owned by a person to the extent there exists a 15 37.20 percent or more chain of ownership of stock, capital, or profit 37.21 interests between the owner, intermediary parties and the person. 37.22 (B) If the owner of the asset is a member ofthea unitary 37.23groupbusiness, paragraph (b), clauses (4) to (8), do not apply 37.24 to an interest acquired from another member of the unitarygroup37.25 business. If the interest in the asset was originally acquired 37.26 from a nonunitary member and at that time qualified as a section 37.27 290.015, subdivision 3, paragraph (b), asset, the foregoing 37.28 limitation does not apply. 37.29 EFFECTIVE DATE: This section is effective for taxable 37.30 years beginning after December 31, 1999. 37.31 Sec. 10. Minnesota Statutes 1998, section 290.015, 37.32 subdivision 4, is amended to read: 37.33 Subd. 4. [LIMITATIONS.] (a) This section does not subject 37.34 a trade or business to any regulation, including any tax, of any 37.35 local unit of government or subdivision of this state if the 37.36 trade or business does not own or lease tangible or real 38.1 property located within this state and has no employees or 38.2 independent contractors present in this state to assist in the 38.3 carrying on of the business. 38.4 (b) The purchase of tangible personal property or 38.5 intangible property or services by a person that conducts a 38.6 trade or business with the principal place of business outside 38.7 of Minnesota, referred to as the "non-Minnesota person", from a 38.8 person within Minnesota shall not be taken into account in 38.9 determining whether the non-Minnesota person is subject to the 38.10 taxes imposed by this chapter, except for services involving 38.11 either the direct solicitation of Minnesota customers or 38.12 relationships with Minnesota customers after sales are made. 38.13 This paragraph is subject to the limitations contained in 38.14 subdivision 3, paragraph (b), clauses (4) to (6). 38.15 (c)NoContact with any Minnesota financial institution by 38.16 any financial institution with its principal place of business 38.17 outside Minnesota with respect to transactions described in 38.18 subdivision 3, or with respect to deposits received from or by a 38.19 Minnesota financial institution, shall not be taken into account 38.20 in determining whether such a financial institution is subject 38.21 to the taxes imposed by this chapter.The fact ofParticipation 38.22 by a Minnesota financial institution in a transaction which also 38.23 involves a borrower and a financial institution that conducts a 38.24 trade or business with its principal place of business outside 38.25 of Minnesota shall not be a factor in determining whether such 38.26 financial institution is subject to the taxes imposed by this 38.27 chapter. This paragraph does not apply to transactions between 38.28 or among members of the same unitarygroupbusiness. 38.29 EFFECTIVE DATE: This section is effective for taxable 38.30 years beginning after December 31, 1999. 38.31 Sec. 11. Minnesota Statutes 1999 Supplement, section 38.32 290.06, subdivision 2c, is amended to read: 38.33 Subd. 2c. [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 38.34 AND TRUSTS.] (a) The income taxes imposed by this chapter upon 38.35 married individuals filing joint returns and surviving spouses 38.36 as defined in section 2(a) of the Internal Revenue Code must be 39.1 computed by applying to their taxable net income the following 39.2 schedule of rates: 39.3 (1) On the first$25,220$25,680,5.55 percent; 39.4 (2) On all over$25,220$25,680, but not over 39.5$100,200$102,030,7.256.5 percent; 39.6 (3) On all over$100,200$102,030,87.5 percent. 39.7 Married individuals filing separate returns, estates, and 39.8 trusts must compute their income tax by applying the above rates 39.9 to their taxable income, except that the income brackets will be 39.10 one-half of the above amounts. 39.11 (b) The income taxes imposed by this chapter upon unmarried 39.12 individuals must be computed by applying to taxable net income 39.13 the following schedule of rates: 39.14 (1) On the first$17,250$17,570,5.55 percent; 39.15 (2) On all over$17,250$17,570, but not over 39.16$56,680$57,710,7.256.5 percent; 39.17 (3) On all over$56,680$57,710,87.5 percent. 39.18 (c) The income taxes imposed by this chapter upon unmarried 39.19 individuals qualifying as a head of household as defined in 39.20 section 2(b) of the Internal Revenue Code must be computed by 39.21 applying to taxable net income the following schedule of rates: 39.22 (1) On the first$21,240$21,630,5.55 percent; 39.23 (2) On all over$21,240$21,630, but not 39.24 over$85,350$86,910,7.256.5 percent; 39.25 (3) On all over$85,350$86,910,87.5 percent. 39.26 (d) In lieu of a tax computed according to the rates set 39.27 forth in this subdivision, the tax of any individual taxpayer 39.28 whose taxable net income for the taxable year is less than an 39.29 amount determined by the commissioner must be computed in 39.30 accordance with tables prepared and issued by the commissioner 39.31 of revenue based on income brackets of not more than $100. The 39.32 amount of tax for each bracket shall be computed at the rates 39.33 set forth in this subdivision, provided that the commissioner 39.34 may disregard a fractional part of a dollar unless it amounts to 39.35 50 cents or more, in which case it may be increased to $1. 39.36 (e) An individual who is not a Minnesota resident for the 40.1 entire year must compute the individual's Minnesota income tax 40.2 as provided in this subdivision. After the application of the 40.3 nonrefundable credits provided in this chapter, the tax 40.4 liability must then be multiplied by a fraction in which: 40.5 (1) the numerator is the individual's Minnesota source 40.6 federal adjusted gross income as defined in section 62 of the 40.7 Internal Revenue Code and increased by the additions required 40.8 under section 290.01, subdivision 19a, clauses (1) and (6), 40.9 after applying the allocation and assignability provisions of 40.10 section 290.081, clause (a), or 290.17; and 40.11 (2) the denominator is the individual's federal adjusted 40.12 gross income as defined in section 62 of the Internal Revenue 40.13 Code of 1986, increased by the amounts specified in section 40.14 290.01, subdivision 19a, clauses (1) and (6), and reduced by the 40.15 amounts specified in section 290.01, subdivision 19b, clause (1). 40.16 EFFECTIVE DATE: This section is effective for taxable 40.17 years beginning after December 31, 1999. 40.18 Sec. 12. Minnesota Statutes 1999 Supplement, section 40.19 290.06, subdivision 2d, is amended to read: 40.20 Subd. 2d. [INFLATION ADJUSTMENT OF BRACKETS.] (a) For 40.21 taxable years beginning after December 31,19992000, the 40.22 minimum and maximum dollar amounts for each rate bracket for 40.23 which a tax is imposed in subdivision 2c shall be adjusted for 40.24 inflation by the percentage determined under paragraph (b). For 40.25 the purpose of making the adjustment as provided in this 40.26 subdivision all of the rate brackets provided in subdivision 2c 40.27 shall be the rate brackets as they existed for taxable years 40.28 beginning after December 31,19981999, and before January 40.29 1,20002001. The rate applicable to any rate bracket must not 40.30 be changed. The dollar amounts setting forth the tax shall be 40.31 adjusted to reflect the changes in the rate brackets. The rate 40.32 brackets as adjusted must be rounded to the nearest $10 amount. 40.33 If the rate bracket ends in $5, it must be rounded up to the 40.34 nearest $10 amount. 40.35 (b) The commissioner shall adjust the rate brackets and by 40.36 the percentage determined pursuant to the provisions of section 41.1 1(f) of the Internal Revenue Code, except that in section 41.2 1(f)(3)(B) the word "19981999" shall be substituted for the 41.3 word "1992." For20002001, the commissioner shall then 41.4 determine the percent change from the 12 months ending on August 41.5 31,19981999, to the 12 months ending on August 31,19992000, 41.6 and in each subsequent year, from the 12 months ending on August 41.7 31,19981999, to the 12 months ending on August 31 of the year 41.8 preceding the taxable year. The determination of the 41.9 commissioner pursuant to this subdivision shall not be 41.10 considered a "rule" and shall not be subject to the 41.11 Administrative Procedure Act contained in chapter 14. 41.12 No later than December 15 of each year, the commissioner 41.13 shall announce the specific percentage that will be used to 41.14 adjust the tax rate brackets. 41.15 EFFECTIVE DATE: This section is effective for taxable 41.16 years beginning after December 31, 1999. 41.17 Sec. 13. Minnesota Statutes 1998, section 290.06, 41.18 subdivision 22, is amended to read: 41.19 Subd. 22. [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 41.20 taxpayer who is liable for taxes on or measured by net income to 41.21 another state or province or territory of Canada, as provided in 41.22 paragraphs (b) through (f), upon income allocated or apportioned 41.23 to Minnesota, is entitled to a credit for the tax paid to 41.24 another state or province or territory of Canada if the tax is 41.25 actually paid in the taxable year or a subsequent taxable year. 41.26 A taxpayer who is a resident of this state pursuant to section 41.27 290.01, subdivision 7, clause (2), and who is subject to income 41.28 tax as a resident in the state of the individual's domicile is 41.29 not allowed this credit unless the state of domicile does not 41.30 allow a similar credit. 41.31 (b) For an individual, estate, or trust, the credit is 41.32 determined by multiplying the tax payable under this chapter by 41.33 the ratio derived by dividing the income subject to tax in the 41.34 other state or province or territory of Canada that is also 41.35 subject to tax in Minnesota while a resident of Minnesota by the 41.36 taxpayer's federal adjusted gross income, as defined in section 42.1 62 of the Internal Revenue Code, modified by the addition 42.2 required by section 290.01, subdivision 19a, clause (1), and the 42.3 subtraction allowed by section 290.01, subdivision 19b, clause 42.4 (1), to the extent the income is allocated or assigned to 42.5 Minnesota under sections 290.081 and 290.17. 42.6 (c) If the taxpayer is an athletic team that apportions all 42.7 of its income under section 290.17, subdivision 5,paragraph42.8(c),the credit is determined by multiplying the tax payable 42.9 under this chapter by the ratio derived from dividing the total 42.10 net income subject to tax in the other state or province or 42.11 territory of Canada by the taxpayer's Minnesota taxable income. 42.12 (d) The credit determined under paragraph (b) or (c) shall 42.13 not exceed the amount of tax so paid to the other state or 42.14 province or territory of Canada on the gross income earned 42.15 within the other state or province or territory of Canada 42.16 subject to tax under this chapter, nor shall the allowance of 42.17 the credit reduce the taxes paid under this chapter to an amount 42.18 less than what would be assessed if such income amount was 42.19 excluded from taxable net income. 42.20 (e) In the case of the tax assessed on a lump sum 42.21 distribution under section 290.032, the credit allowed under 42.22 paragraph (a) is the tax assessed by the other state or province 42.23 or territory of Canada on the lump sum distribution that is also 42.24 subject to tax under section 290.032, and shall not exceed the 42.25 tax assessed under section 290.032. To the extent the total 42.26 lump sum distribution defined in section 290.032, subdivision 1, 42.27 includes lump sum distributions received in prior years or is 42.28 all or in part an annuity contract, the reduction to the tax on 42.29 the lump sum distribution allowed under section 290.032, 42.30 subdivision 2, includes tax paid to another state that is 42.31 properly apportioned to that distribution. 42.32 (f) If a Minnesota resident reported an item of income to 42.33 Minnesota and is assessed tax in such other state or province or 42.34 territory of Canada on that same income after the Minnesota 42.35 statute of limitations has expired, the taxpayer shall receive a 42.36 credit for that year under paragraph (a), notwithstanding any 43.1 statute of limitations to the contrary. The claim for the 43.2 credit must be submitted within one year from the date the taxes 43.3 were paid to the other state or province or territory of 43.4 Canada. The taxpayer must submit sufficient proof to show 43.5 entitlement to a credit. 43.6 (g) For the purposes of this subdivision, a resident 43.7 shareholder of a corporation treated as an "S" corporation under 43.8 section 290.9725, must be considered to have paid a tax imposed 43.9 on the shareholder in an amount equal to the shareholder's pro 43.10 rata share of any net income tax paid by the S corporation to 43.11 another state. For the purposes of the preceding sentence, the 43.12 term "net income tax" means any tax imposed on or measured by a 43.13 corporation's net income. 43.14 (h) For the purposes of this subdivision, a resident 43.15 partner of an entity taxed as a partnership under the Internal 43.16 Revenue Code must be considered to have paid a tax imposed on 43.17 the partner in an amount equal to the partner's pro rata share 43.18 of any net income tax paid by the partnership to another state. 43.19 For purposes of the preceding sentence, the term "net income" 43.20 tax means any tax imposed on or measured by a partnership's net 43.21 income. 43.22 (i) For the purposes of this subdivision, "another state" 43.23 includes the District of Columbia, but does not include Puerto 43.24 Rico or the several territories organized by Congress. 43.25 (j) The limitations on the credit in paragraphs (b), (c), 43.26 and (d), are imposed on a state by state basis. 43.27 EFFECTIVE DATE: This section is effective the day 43.28 following final enactment. 43.29 Sec. 14. Minnesota Statutes 1998, section 290.06, is 43.30 amended by adding a subdivision to read: 43.31 Subd. 22a. [NONRESIDENT'S CREDIT FOR TAXES PAID TO STATE 43.32 OF DOMICILE.] (a) Notwithstanding subdivision 22, a nonresident 43.33 who is subject to tax in this state on the gain on the sale of a 43.34 partnership interest, which is allocable to this state under 43.35 section 290.17, subdivision 2, paragraph (c), is allowed a 43.36 credit for the tax paid to the state of the individual's 44.1 domicile upon the gain in the taxable year or a subsequent 44.2 taxable year. This credit is only allowed if the state of 44.3 domicile does not allow a credit for the tax paid to Minnesota 44.4 on the gain. 44.5 (b) For purposes of this subdivision, the credit equals the 44.6 tax paid to the state of domicile multiplied by the ratio 44.7 derived by dividing the amount of gain on the sale of the 44.8 partnership interest subject to tax in the other state that is 44.9 also subject to tax in Minnesota by the taxpayer's federal 44.10 adjusted gross income, as defined in section 62 of the Internal 44.11 Revenue Code. The credit allowed may not reduce the taxes paid 44.12 under this chapter to an amount less than the tax that would 44.13 apply if the gain were excluded from taxable net income. 44.14 (c) If a nonresident taxpayer reported the gain to 44.15 Minnesota and is assessed tax in the state of domicile on that 44.16 same income after the Minnesota statute of limitations has 44.17 expired, the taxpayer is allowed a credit for that year, 44.18 notwithstanding any statute of limitations to the contrary. The 44.19 claim for the credit must be submitted within one year from the 44.20 date the taxes were paid to the state of domicile and the 44.21 taxpayer must submit sufficient proof to show entitlement to a 44.22 credit. 44.23 (d) For the purposes of this subdivision, "another state" 44.24 includes the District of Columbia, but does not include Puerto 44.25 Rico or the several territories organized by Congress. 44.26 EFFECTIVE DATE: This section is effective for taxable 44.27 years beginning after December 31, 1999. 44.28 Sec. 15. Minnesota Statutes 1999 Supplement, section 44.29 290.06, is amended by adding a subdivision to read: 44.30 Subd. 28. [CREDIT FOR TRANSIT PASSES.] A taxpayer may take 44.31 a credit against the tax due under this chapter equal to 30 44.32 percent of the expense incurred by the taxpayer to provide 44.33 transit passes to employees of the taxpayer. As used in this 44.34 subdivision, "transit pass" has the meaning given in section 44.35 132(f)(5)(A) of the Internal Revenue Code. If the taxpayer 44.36 purchases the transit passes from the transit system operator, 45.1 and resells them to the employees, the credit is based on the 45.2 amount of the difference between the price paid for the passes 45.3 by the employer and the amount charged to employees. 45.4 EFFECTIVE DATE: This section is effective for taxable 45.5 years beginning after December 31, 1999. 45.6 Sec. 16. Minnesota Statutes 1999 Supplement, section 45.7 290.0671, subdivision 1, is amended to read: 45.8 Subdivision 1. [CREDIT ALLOWED.] (a) An individual is 45.9 allowed a credit against the tax imposed by this chapter equal 45.10 to a percentage of earned income. To receive a credit, a 45.11 taxpayer must be eligible for a credit under section 32 of the 45.12 Internal Revenue Code. 45.13 (b) For individuals with no qualifying children, the credit 45.14 equals1.14751.9125 percent of the first $4,460 of earned 45.15 income. The credit is reduced by1.14751.9125 percent of 45.16 earned income or modified adjusted gross income, whichever is 45.17 greater, in excess of $5,570, but in no case is the credit less 45.18 than zero. 45.19 (c) For individuals with one qualifying child, the credit 45.20 equals7.458.5 percent of the first $6,680 of earned income and 45.21 8.5 percent of earned income over $11,650 but less than $12,990. 45.22 The credit is reduced by5.135.73 percent of earned income or 45.23 modified adjusted gross income, whichever is greater, in excess 45.24 of $14,560, but in no case is the credit less than zero. 45.25 (d) For individuals with two or more qualifying children, 45.26 the credit equals8.8ten percent of the first $9,390 of earned 45.27 income and 20 percent of earned income over $14,350 but less 45.28 than $16,230. The credit is reduced by9.3810.3 percent of 45.29 earned income or modified adjusted gross income, whichever is 45.30 greater, in excess of $17,280, but in no case is the credit less 45.31 than zero. 45.32 (e) For a nonresident or part-year resident, the credit 45.33 must be allocated based on the percentage calculated under 45.34 section 290.06, subdivision 2c, paragraph (e). 45.35 (f) For a person who was a resident for the entire tax year 45.36 and has earned income not subject to tax under this chapter, the 46.1 credit must be allocated based on the ratio of federal adjusted 46.2 gross income reduced by the earned income not subject to tax 46.3 under this chapter over federal adjusted gross income. 46.4 (g) The commissioner shall construct tables showing the 46.5 amount of the credit at various income levels and make them 46.6 available to taxpayers. The tables shall follow the schedule 46.7 contained in this subdivision, except that the commissioner may 46.8 graduate the transition between income brackets. 46.9 EFFECTIVE DATE: This section is effective for taxable 46.10 years beginning after December 31, 1999, and is not contingent 46.11 on the enactment of section 17. 46.12 Sec. 17. Minnesota Statutes 1998, section 290.0671, 46.13 subdivision 6, is amended to read: 46.14 Subd. 6. [APPROPRIATION.] An amount sufficient to pay the 46.15 refunds required by this section is appropriated to the 46.16 commissioner from the general fund. An amount sufficient to pay 46.17 the additional refunds to United States citizens and qualified 46.18 legal noncitizens entailed by the expansion of the credit rates 46.19 for individuals with qualifying children over the rates provided 46.20 in Laws 1999, chapter 243, article 2, section 12, is 46.21 appropriated to the commissioner of human services from the 46.22 federal Temporary Assistance for Needy Families (TANF) block 46.23 grant funds, as authorized under section 256J.02, subdivision 2, 46.24 clause (1), for transfer to the commissioner of revenue. 46.25 Sec. 18. Minnesota Statutes 1998, section 290.0672, 46.26 subdivision 1, is amended to read: 46.27 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 46.28 section, the following terms have the meanings given. 46.29 (b) "Long-term care insurance" means a policy that: 46.30 (1) qualifies for a deduction under section 213 of the 46.31 Internal Revenue Code, disregarding the 7.5 percent income test; 46.32 or meets the requirements given in section 62A.46; or provides 46.33 similar coverage issued under the laws of another jurisdiction; 46.34 and 46.35 (2)does not havehas a lifetime long-term care benefit 46.36 limit of not less than $100,000; and 47.1 (3)includes inflation protection that meets or exceedshas 47.2 been offered in compliance with the inflation protection 47.3 requirements ofthe long-term care insurance model regulation47.4cited under section 7702B(g)(2)(A)(i)(x) of the Internal Revenue47.5Codesection 62S.23. 47.6 (c) "Qualified beneficiary" means the taxpayer or the 47.7 taxpayer's spouse. 47.8 (d) "Premiums deducted in determining federal taxable 47.9 income" means the lesser of (1) long-term care insurance 47.10 premiums that qualify as deductions under section 213 of the 47.11 Internal Revenue Code; and (2) the total amount deductible for 47.12 medical care under section 213 of the Internal Revenue Code. 47.13 EFFECTIVE DATE: This section is effective for taxable 47.14 years beginning after December 31, 1999. 47.15 Sec. 19. Minnesota Statutes 1998, section 290.0672, 47.16 subdivision 2, is amended to read: 47.17 Subd. 2. [CREDIT.] A taxpayer is allowed a credit against 47.18 the tax imposed by this chapter for long-term care insurance 47.19 policy premiums paid during the tax year. The credit for each 47.20 policy equalsthe lesser of (1)25 percent of premiums paid to 47.21 the extent not deducted in determining federal taxable income;47.22or (2) $100. A taxpayer may claim a credit for only one policy 47.23 for each qualified beneficiary.Only one credit may be claimed47.24by any taxpayer for each policy.A maximum of $100 applies to 47.25 each qualified beneficiary. The maximum total credit allowed 47.26 per year is $200 for married couples filing joint returns and 47.27 $100 for all other filers. For a nonresident or part-year 47.28 resident, the credit determined under this section must be 47.29 allocated based on the percentage calculated under section 47.30 290.06, subdivision 2c, paragraph (e). 47.31 EFFECTIVE DATE: This section is effective for taxable 47.32 years beginning after December 31, 1999. 47.33 Sec. 20. Minnesota Statutes 1998, section 290.0673, 47.34 subdivision 8, is amended to read: 47.35 Subd. 8. [EXPIRATION.] This section expires effective for 47.36 taxable years beginning after December 31,20012002. 48.1 Sec. 21. Minnesota Statutes 1999 Supplement, section 48.2 290.0674, subdivision 2, is amended to read: 48.3 Subd. 2. [LIMITATIONS.] (a) For claimants with income not 48.4 greater than $33,500, the maximum credit allowed is $1,000 per 48.5 qualifying childand $2,000 per family.No credit is allowed for48.6education-related expenses for claimants with income greater48.7than $37,500.The maximum credit for each claimant is $1,000 48.8 multiplied by the number of qualifying children for which the 48.9 individual claims the credit. The maximum creditper childfor 48.10 a claimant is reduced by $1 for each $4 of household income over 48.11 $33,500, and the maximum credit per family is reduced by $2 for48.12each $4 of household income over $33,500for claimants with one 48.13 qualifying child, and by $2 for each $4 of household income over 48.14 $33,500 for all other claimants, but in no case is the credit 48.15 less than zero. 48.16 For purposes of this section "income" has the meaning given 48.17 in section 290.067, subdivision 2a. In the case of a married 48.18 claimant, a credit is not allowed unless a joint income tax 48.19 return is filed. 48.20 (b) For a nonresident or part-year resident, the credit 48.21 determined under subdivision 1 and the maximum credit amount in 48.22 paragraph (a) must be allocated using the percentage calculated 48.23 in section 290.06, subdivision 2c, paragraph (e). 48.24 EFFECTIVE DATE: This section is effective for taxable 48.25 years beginning after December 31, 1999. 48.26 Sec. 22. Minnesota Statutes 1999 Supplement, section 48.27 290.0675, subdivision 1, is amended to read: 48.28 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 48.29 section the following terms have the meanings given. 48.30 (b) "Earned income" means the sum of the following: 48.31 (1) earned income as defined in section 32(c)(2) of the 48.32 Internal Revenue Code; 48.33 (2) to the extent included in the Minnesota taxable income, 48.34 income received from a retirement pension, profit-sharing, stock 48.35 bonus, or annuity plan; and 48.36 (3) to the extent included in Minnesota taxable income, 49.1 social security benefits as defined in section 86(d)(1) of the 49.2 Internal Revenue Code. 49.3 (c) "Taxable income" means net income as defined in section 49.4 290.01, subdivision 19. 49.5 (d) "Earned income of lesser-earning spouse" means the 49.6 earned income of the spouse with the lesser amount of earned 49.7 income as defined in paragraph (b) for the taxable year. 49.8 Sec. 23. Minnesota Statutes 1999 Supplement, section 49.9 290.0675, subdivision 2, is amended to read: 49.10 Subd. 2. [CREDIT ALLOWED.] A married couple filing a joint 49.11 return is allowed a credit against the tax imposed under section 49.12 290.06. 49.13 The minimum taxable income for the married couple to be 49.14 eligible for the credit is$25,000$25,680, and the minimum 49.15 earned income in order for the couple to be eligible for the 49.16 credit is$14,000$14,250 for each spouse. 49.17 Sec. 24. Minnesota Statutes 1999 Supplement, section 49.18 290.0675, subdivision 3, is amended to read: 49.19 Subd. 3. [CREDIT AMOUNT.] The credit amount is as shown in 49.20 the table in this subdivision, based on the couple's taxable 49.21 income for the tax year and on the earned income of the 49.22 lesser-earning spouse. 49.23Credit ForCredit For49.24Earned Income ofTaxable IncomeTaxable Income49.25Lesser Earning Spouse$25,000-$99,999$100,000-over49.26$14,000 - $14,999$9$049.27$15,000 - $15,999$27$049.28$16,000 - $16,999$44$049.29$17,000 - $17,999$62$049.30$18,000 - $18,999$79$049.31$19,000 - $19,999$97$049.32$20,000 - $20,999$114$049.33$21,000 - $21,999$132$049.34$22,000 - $22,999$149$049.35$23,000 - $23,999$162$049.36$24,000 - $24,999$162$050.1$25,000 - $25,999$162$050.2$26,000 - $26,999$162$050.3$27,000 - $27,999$162$050.4$28,000 - $28,999$162$950.5$29,000 - $29,999$162$1650.6$30,000 - $30,999$162$2450.7$31,000 - $31,999$162$3150.8$32,000 - $32,999$162$3950.9$33,000 - $33,999$162$4650.10$34,000 - $34,999$162$5450.11$35,000 - $35,999$162$6150.12$36,000 - $36,999$162$6950.13$37,000 - $37,999$162$7650.14$38,000 - $38,999$162$8450.15$39,000 - $39,999$162$9150.16$40,000 - $40,999$162$9950.17$41,000 - $41,999$162$10650.18$42,000 - $42,999$162$11450.19$43,000 - $43,999$162$12150.20$44,000 - $44,999$162$12950.21$45,000 - $45,999$162$13650.22$46,000 - $46,999$162$14450.23$47,000 - $47,999$162$15150.24$48,000 - $48,999$162$15950.25$49,000 - $49,999$162$16650.26$50,000 - $50,999$162$17450.27$51,000 - $51,999$162$18150.28$52,000 - $52,999$162$18950.29$53,000 - $53,999$162$19650.30$54,000 - $54,999$162$20450.31$55,000 - $55,999$162$21150.32$56,000 - $56,999$162$21950.33$57,000 - $57,999$162$22650.34$58,000 - $58,999$162$23450.35$59,000 - $59,999$162$24150.36$60,000 - $60,999$162$24951.1$61,000 - $61,999$162$25651.2$62,000 and over$162$26151.3 Credit For Credit For 51.4 Earned Income of Taxable Income Taxable Income 51.5 Lesser Earning Spouse $25,680-$102,029 $102,030-over 51.6 $14,250 - $15,249 $6 $0 51.7 $15,250 - $16,249 $21 $0 51.8 $16,250 - $17,249 $36 $0 51.9 $17,250 - $18,249 $51 $0 51.10 $18,250 - $19,249 $66 $0 51.11 $19,250 - $20,249 $81 $0 51.12 $20,250 - $21,249 $96 $0 51.13 $21,250 - $22,249 $111 $0 51.14 $22,250 - $23,249 $126 $0 51.15 $23,250 - $24,249 $141 $0 51.16 $24,250 - $25,249 $141 $0 51.17 $25,250 - $26,249 $141 $0 51.18 $26,250 - $27,249 $141 $0 51.19 $27,250 - $28,249 $141 $0 51.20 $28,250 - $29,249 $141 $0 51.21 $29,250 - $30,249 $141 $0 51.22 $30,250 - $31,249 $141 $0 51.23 $31,250 - $32,249 $141 $0 51.24 $32,250 - $33,249 $141 $0 51.25 $33,250 - $34,249 $141 $0 51.26 $34,250 - $35,249 $141 $0 51.27 $35,250 - $36,249 $141 $0 51.28 $36,250 - $37,249 $141 $4 51.29 $37,250 - $38,249 $141 $14 51.30 $38,250 - $39,249 $141 $24 51.31 $39,250 - $40,249 $141 $34 51.32 $40,250 - $41,249 $141 $44 51.33 $41,250 - $42,249 $141 $54 51.34 $42,250 - $43,249 $141 $64 51.35 $43,250 - $44,249 $141 $74 51.36 $44,250 - $45,249 $141 $84 52.1 $45,250 - $46,249 $141 $94 52.2 $46,250 - $47,249 $141 $104 52.3 $47,250 - $48,249 $141 $114 52.4 $48,250 - $49,249 $141 $124 52.5 $49,250 - $50,249 $141 $134 52.6 $50,250 - $51,249 $141 $144 52.7 $51,250 - $52,249 $141 $154 52.8 $52,250 - $53,249 $141 $164 52.9 $53,250 - $54,249 $141 $174 52.10 $54,250 - $55,249 $141 $184 52.11 $55,250 - $56,249 $141 $194 52.12 $56,250 - $57,249 $141 $204 52.13 $57,250 - $58,249 $141 $214 52.14 $58,250 - $59,249 $141 $224 52.15 $59,250 - $60,249 $141 $234 52.16 $60,250 - $61,249 $141 $244 52.17 $61,250 - $62,249 $141 $254 52.18 $62,250 - $63,249 $141 $264 52.19 $63,250 - $64,249 $141 $274 52.20 $64,250 and over $141 $276 52.21 For taxable years beginning after December 31, 2000, the 52.22 commissioner shall update the table as necessary to provide a 52.23 credit that reflects the relationship between the marginal tax 52.24 rates imposed under section 290.06, subdivision 2c. 52.25 EFFECTIVE DATE: This section is effective for taxable 52.26 years beginning after December 31, 1999. 52.27 Sec. 25. Minnesota Statutes 1999 Supplement, section 52.28 290.091, subdivision 1, is amended to read: 52.29 Subdivision 1. [IMPOSITION OF TAX.] In addition to all 52.30 other taxes imposed by this chapter a tax is imposed on 52.31 individuals, estates, and trusts equal to the excess (if any) of 52.32 (a) an amount equal to6.55.9 percent of alternative 52.33 minimum taxable income after subtracting the exemption amount, 52.34 over 52.35 (b) the regular tax for the taxable year. 52.36 EFFECTIVE DATE: This section is effective for taxable 53.1 years beginning after December 31, 1999. 53.2 Sec. 26. Minnesota Statutes 1999 Supplement, section 53.3 290.091, subdivision 2, is amended to read: 53.4 Subd. 2. [DEFINITIONS.] For purposes of the tax imposed by 53.5 this section, the following terms have the meanings given: 53.6 (a) "Alternative minimum taxable income" means the sum of 53.7 the following for the taxable year: 53.8 (1) the taxpayer's federal alternative minimum taxable 53.9 income as defined in section 55(b)(2) of the Internal Revenue 53.10 Code; 53.11 (2) the taxpayer's itemized deductions allowed in computing 53.12 federal alternative minimum taxable income, but excluding: 53.13 (i) the Minnesota charitable contribution deduction; 53.14 (ii) the medical expense deduction; 53.15 (iii) the casualty, theft, and disaster loss deduction; 53.16 (iv) the impairment-related work expenses of a disabled 53.17 person; and 53.18 (v) holocaust victims' settlement payments to the extent 53.19 allowed under section 290.01, subdivision 19b; 53.20 (3) for depletion allowances computed under section 613A(c) 53.21 of the Internal Revenue Code, with respect to each property (as 53.22 defined in section 614 of the Internal Revenue Code), to the 53.23 extent not included in federal alternative minimum taxable 53.24 income, the excess of the deduction for depletion allowable 53.25 under section 611 of the Internal Revenue Code for the taxable 53.26 year over the adjusted basis of the property at the end of the 53.27 taxable year (determined without regard to the depletion 53.28 deduction for the taxable year); 53.29 (4) to the extent not included in federal alternative 53.30 minimum taxable income, the amount of the tax preference for 53.31 intangible drilling cost under section 57(a)(2) of the Internal 53.32 Revenue Code determined without regard to subparagraph (E); and 53.33 (5) to the extent not included in federal alternative 53.34 minimum taxable income, the amount of interest income as 53.35 provided by section 290.01, subdivision 19a, clause (1); 53.36 less the sum of the amounts determined under the following: 54.1 (1) interest income as defined in section 290.01, 54.2 subdivision 19b, clause (1); 54.3 (2) an overpayment of state income tax as provided by 54.4 section 290.01, subdivision 19b, clause (2), to the extent 54.5 included in federal alternative minimum taxable income; and 54.6 (3) the amount of investment interest paid or accrued 54.7 within the taxable year on indebtedness to the extent that the 54.8 amount does not exceed net investment income, as defined in 54.9 section 163(d)(4) of the Internal Revenue Code. Interest does 54.10 not include amounts deducted in computing federal adjusted gross 54.11 income; and 54.12 (4) amounts subtracted from federal taxable income as 54.13 provided by section 290.01, subdivision 19b, clauses (4) and (6). 54.14 In the case of an estate or trust, alternative minimum 54.15 taxable income must be computed as provided in section 59(c) of 54.16 the Internal Revenue Code. 54.17 (b) "Investment interest" means investment interest as 54.18 defined in section 163(d)(3) of the Internal Revenue Code. 54.19 (c) "Tentative minimum tax" equals6.55.9 percent of 54.20 alternative minimum taxable income after subtracting the 54.21 exemption amount determined under subdivision 3. 54.22 (d) "Regular tax" means the tax that would be imposed under 54.23 this chapter (without regard to this section and section 54.24 290.032), reduced by the sum of the nonrefundable credits 54.25 allowed under this chapter. 54.26 (e) "Net minimum tax" means the minimum tax imposed by this 54.27 section. 54.28 (f) "Minnesota charitable contribution deduction" means a 54.29 charitable contribution deduction under section 170 of the 54.30 Internal Revenue Code to or for the use of an entity described 54.31 in section 290.21, subdivision 3, clauses (a) to (e). When the 54.32 federal deduction for charitable contributions is limited under 54.33 section 170(b) of the Internal Revenue Code, the allowable 54.34 contributions in the year of contribution are deemed to be first 54.35 contributions to entities described in section 290.21, 54.36 subdivision 3, clauses (a) to (e). 55.1 EFFECTIVE DATE: This section is effective for taxable 55.2 years beginning after December 31, 1999. 55.3 Sec. 27. Minnesota Statutes 1999 Supplement, section 55.4 290.091, subdivision 6, is amended to read: 55.5 Subd. 6. [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) A credit 55.6 is allowed against the tax imposed by this chapter on 55.7 individuals, trusts, and estates equal to the minimum tax credit 55.8 for the taxable year. The minimum tax credit equals the 55.9 adjusted net minimum tax for taxable years beginning after 55.10 December 31, 1988, reduced by the minimum tax credits allowed in 55.11 a prior taxable year. The credit may not exceed the excess (if 55.12 any) for the taxable year of 55.13 (1) the regular tax, over 55.14 (2) the greater of (i) the tentative alternative minimum 55.15 tax, or (ii) zero. 55.16 (b) The adjusted net minimum tax for a taxable year equals 55.17 the lesser of the net minimum tax or the excess (if any) of 55.18 (1) the tentative minimum tax, over 55.19 (2)6.55.9 percent of the sum of 55.20 (i) adjusted gross income as defined in section 62 of the 55.21 Internal Revenue Code, 55.22 (ii) interest income as defined in section 290.01, 55.23 subdivision 19a, clause (1), 55.24 (iii) interest on specified private activity bonds, as 55.25 defined in section 57(a)(5) of the Internal Revenue Code, to the 55.26 extent not included under clause (ii), 55.27 (iv) depletion as defined in section 57(a)(1), determined 55.28 without regard to the last sentence of paragraph (1), of the 55.29 Internal Revenue Code, less 55.30 (v) the deductions allowed in computing alternative minimum 55.31 taxable income provided in subdivision 2, paragraph (a), clause 55.32 (2) of the first series of clauses and clauses (1), (2), and (3) 55.33 of the second series of clauses, and 55.34 (vi) the exemption amount determined under subdivision 3. 55.35 In the case of an individual who is not a Minnesota 55.36 resident for the entire year, adjusted net minimum tax must be 56.1 multiplied by the fraction defined in section 290.06, 56.2 subdivision 2c, paragraph (e). In the case of a trust or 56.3 estate, adjusted net minimum tax must be multiplied by the 56.4 fraction defined under subdivision 4, paragraph (b). 56.5 EFFECTIVE DATE: This section is effective for taxable 56.6 years beginning after December 31, 1999. 56.7 Sec. 28. Minnesota Statutes 1998, section 290.17, 56.8 subdivision 2, is amended to read: 56.9 Subd. 2. [INCOME NOT DERIVED FROM CONDUCT OF A TRADE OR 56.10 BUSINESS.] The income of a taxpayer subject to the allocation 56.11 rules that is not derived from the conduct of a trade or 56.12 business must be assigned in accordance with paragraphs (a) to 56.13 (f): 56.14 (a)(1) Subject to paragraphs (a)(2)and, (a)(3), and 56.15 (a)(4), income fromlabor or personal or professional services56.16 wages as defined in section 3401(a) and (f) of the Internal 56.17 Revenue Code is assigned to this state if, and to the extent 56.18 that, thelabor or services arework of the employee is 56.19 performed within it; all other income from such sources is 56.20 treated as income from sources without this state. 56.21 Severance pay shall be considered income from labor or 56.22 personal or professional services. 56.23 (2) In the case of an individual who is a nonresident of 56.24 Minnesota and who is an athlete or entertainer, income from 56.25 compensation for labor or personal services performed within 56.26 this state shall be determined in the following manner: 56.27 (i) The amount of income to be assigned to Minnesota for an 56.28 individual who is a nonresident salaried athletic team employee 56.29 shall be determined by using a fraction in which the denominator 56.30 contains the total number of days in which the individual is 56.31 under a duty to perform for the employer, and the numerator is 56.32 the total number of those days spent in Minnesota. For purposes 56.33 of this paragraph, off-season training activities, unless 56.34 conducted at the team's facilities as part of a team imposed 56.35 program, are not included in the total number of duty days. 56.36 Bonuses earned as a result of play during the regular season or 57.1 for participation in championship, play-off, or all-star games 57.2 must be allocated under the formula. Signing bonuses are not 57.3 subject to allocation under the formula if they are not 57.4 conditional on playing any games for the team, are payable 57.5 separately from any other compensation, and are nonrefundable; 57.6 and 57.7 (ii) The amount of income to be assigned to Minnesota for 57.8 an individual who is a nonresident, and who is an athlete or 57.9 entertainer not listed in clause (i), for that person's athletic 57.10 or entertainment performance in Minnesota shall be determined by 57.11 assigning to this state all income from performances or athletic 57.12 contests in this state. 57.13 (3) For purposes of this section, amounts received by a 57.14 nonresident as "retirement income" as defined in section (b)(1) 57.15 of the State Income Taxation of Pension Income Act, Public Law 57.16 Number 104-95, are not considered income derived from carrying 57.17 on a trade or business or fromperforming personal or57.18professional serviceswages or other compensation for work an 57.19 employee performed in Minnesota, and are not taxable under this 57.20 chapter. 57.21 (4) Wages, otherwise assigned to this state under clause 57.22 (1) and not qualifying under clause (3), are not taxable under 57.23 this chapter if the following conditions are met: 57.24 (i) The recipient was not a resident of this state for any 57.25 part of the taxable year in which the wages were received or for 57.26 any part of one of the three immediately preceding taxable 57.27 years; and 57.28 (ii) The wages are for work performed while the recipient 57.29 was a resident or part year resident of this state. 57.30 (b) Income or gains from tangible property located in this 57.31 state that is not employed in the business of the recipient of 57.32 the income or gains must be assigned to this state. 57.33 (c) Income or gains from intangible personal property not 57.34 employed in the business of the recipient of the income or gains 57.35 must be assigned to this state if the recipient of the income or 57.36 gains is a resident of this state or is a resident trust or 58.1 estate. 58.2 Gain on the sale of a partnership interest is allocable to 58.3 this state in the ratio of the original cost of partnership 58.4 tangible property in this state to the original cost of 58.5 partnership tangible property everywhere, determined at the time 58.6 of the sale. If more than 50 percent of the value of the 58.7 partnership's assets consists of intangibles, gain or loss from 58.8 the sale of the partnership interest is allocated to this state 58.9 in accordance with the sales factor of the partnership for its 58.10 first full tax period immediately preceding the tax period of 58.11 the partnership during which the partnership interest was sold. 58.12 Gain on the sale of goodwill or income from a covenant not 58.13 to compete that is connected with a business operating all or 58.14 partially in Minnesota is allocated to this state to the extent 58.15 that the income from the business in the year preceding the year 58.16 of sale was assignable to Minnesota under subdivision 3. 58.17 When an employer pays an employee for a covenant not to 58.18 compete, the income allocated to this state is in the ratio of 58.19 the employee's service in Minnesota in the calendar year 58.20 preceding leaving the employment of the employer over the total 58.21 services performed by the employee for the employer in that year. 58.22 (d) Income from winnings on Minnesota pari-mutuel betting 58.23 tickets, the Minnesota state lottery, and lawful gambling as 58.24 defined in section 349.12, subdivision 24, conducted within the 58.25 boundaries of the state of Minnesota shall be assigned to this 58.26 state. 58.27 (e) All items of gross income not covered in paragraphs (a) 58.28 to (d) and not part of the taxpayer's income from a trade or 58.29 business shall be assigned to the taxpayer's domicile. 58.30 (f) For the purposes of this section, working as an 58.31 employee shall not be considered to be conducting a trade or 58.32 business. 58.33 EFFECTIVE DATE: This section is effective for wages earned 58.34 after the day following final enactment, except that to the 58.35 extent this section impacts an employer's requirement to 58.36 withhold Minnesota tax under section 290.92, subdivision 41, the 59.1 requirement to withhold is effective for wages paid after 59.2 December 31, 2000. 59.3 Sec. 29. Minnesota Statutes 1999 Supplement, section 59.4 290.191, subdivision 2, is amended to read: 59.5 Subd. 2. [APPORTIONMENT FORMULA OF GENERAL APPLICATION.] 59.6 Except for those trades or businesses required to use a 59.7 different formula under subdivision 3 or section 290.35 or 59.8 290.36, and for those trades or businesses that receive 59.9 permission to use some other method under section 290.20 or 59.10 under subdivision 4, a trade or business required to apportion 59.11 its net income must apportion its income to this state on the 59.12 basis of the percentage obtained by taking the sum of: 59.13 (1)75for taxable years beginning after December 31, 1999, 59.14 and before January 1, 2001, 80 percent of; for taxable years 59.15 beginning after December 31, 2000, 90 percent of the percentage 59.16 which the sales made within this state in connection with the 59.17 trade or business during the tax period are of the total sales 59.18 wherever made in connection with the trade or business during 59.19 the tax period; 59.20 (2)12.5for taxable years beginning after December 31, 59.21 1999, and before January 1, 2001, ten percent of; for taxable 59.22 years beginning after December 31, 2000, five percent of the 59.23 percentage which the total tangible property used by the 59.24 taxpayer in this state in connection with the trade or business 59.25 during the tax period is of the total tangible property, 59.26 wherever located, used by the taxpayer in connection with the 59.27 trade or business during the tax period; and 59.28 (3)12.5for taxable years beginning after December 31, 59.29 1999, and before January 1, 2001, ten percent of; for taxable 59.30 years beginning after December 31, 2000, five percent of the 59.31 percentage which the taxpayer's total payrolls paid or incurred 59.32 in this state or paid in respect to labor performed in this 59.33 state in connection with the trade or business during the tax 59.34 period are of the taxpayer's total payrolls paid or incurred in 59.35 connection with the trade or business during the tax period. 59.36 EFFECTIVE DATE: This section is effective for taxable 60.1 years beginning after December 31, 1999. This section 60.2 supersedes Laws 1999, chapter 243, article 2, sections 24 and 60.3 32, paragraph (g). 60.4 Sec. 30. Minnesota Statutes 1999 Supplement, section 60.5 290.191, subdivision 3, is amended to read: 60.6 Subd. 3. [APPORTIONMENT FORMULA FOR FINANCIAL 60.7 INSTITUTIONS.] Except for an investment company required to 60.8 apportion its income under section 290.36, a financial 60.9 institution that is required to apportion its net income must 60.10 apportion its net income to this state on the basis of the 60.11 percentage obtained by taking the sum of: 60.12 (1)75for taxable years beginning after December 31, 1999, 60.13 and before January 1, 2001, 80 percent of; for taxable years 60.14 beginning after December 31, 2000, 90 percent of the percentage 60.15 which the receipts from within this state in connection with the 60.16 trade or business during the tax period are of the total 60.17 receipts in connection with the trade or business during the tax 60.18 period, from wherever derived; 60.19 (2)12.5for taxable years beginning after December 31, 60.20 1999, and before January 1, 2001, ten percent of; for taxable 60.21 years beginning after December 31, 2000, five percent of the 60.22 percentage which the sum of the total tangible property used by 60.23 the taxpayer in this state and the intangible property owned by 60.24 the taxpayer and attributed to this state in connection with the 60.25 trade or business during the tax period is of the sum of the 60.26 total tangible property, wherever located, used by the taxpayer 60.27 and the intangible property owned by the taxpayer and attributed 60.28 to all states in connection with the trade or business during 60.29 the tax period; and 60.30 (3)12.5for taxable years beginning after December 31, 60.31 1999, and before January 1, 2001, ten percent of; for taxable 60.32 years beginning after December 31, 2000, five percent of the 60.33 percentage which the taxpayer's total payrolls paid or incurred 60.34 in this state or paid in respect to labor performed in this 60.35 state in connection with the trade or business during the tax 60.36 period are of the taxpayer's total payrolls paid or incurred in 61.1 connection with the trade or business during the tax period. 61.2 EFFECTIVE DATE: This section is effective for taxable 61.3 years beginning after December 31, 1999. This section 61.4 supersedes Laws 1999, chapter 243, article 2, sections 25 and 61.5 32, paragraph (g). 61.6 Sec. 31. Minnesota Statutes 1998, section 290.92, 61.7 subdivision 3, is amended to read: 61.8 Subd. 3. [WITHHOLDING, IRREGULAR PERIOD.] If payment of 61.9 wages is made to an employee by an employer 61.10 (a) With respect to a payroll period or other period, any 61.11 part of which is included in a payroll period or other period 61.12 with respect to which wages are also paid to such employees by 61.13 such employer, or 61.14 (b) Without regard to any payroll period or other period, 61.15 but on or prior to the expiration of a payroll period or other 61.16 period with respect to which wages are also paid to such 61.17 employee by such employer, or 61.18 (c) With respect to a period beginning in one and ending in 61.19 another calendar year, or 61.20 (d) Through an agent, fiduciary, or other person who also 61.21 has the control, receipt, custody, or disposal of or pays, the 61.22 wages payable by another employer to such employee. 61.23 The manner of withholding and the amount to be deducted and 61.24 withheld under subdivision 2a shall be determined in accordance 61.25 with rules prescribed by the commissioner under which the 61.26 withholding exemption allowed to the employee in any calendar 61.27 year shall approximate the withholding exemption allowable with 61.28 respect to an annual payroll period, except that if supplemental 61.29 wages are not paid concurrent with a payroll period the employer 61.30 shall withhold tax on the supplemental payment at the rate of 61.31 six percent as if no exemption had been claimed. 61.32 EFFECTIVE DATE: This section is effective for wages paid 61.33 after December 31, 2000. 61.34 Sec. 32. Minnesota Statutes 1998, section 290.92, 61.35 subdivision 28, is amended to read: 61.36 Subd. 28. [PAYMENTS TO HORSERACING LICENSE HOLDERS.] 62.1 Effective with payments made after April 1, 1988, any holder of 62.2 a license issued by the Minnesota racing commission who makes a 62.3 payment for personal or professional services to a holder of a 62.4 class C license issued by the commission, except an amount paid 62.5 as a purse, shall deduct from the payment and withholdsevensix 62.6 percent of the amount as Minnesota withholding tax when the 62.7 amount paid to that individual by the same person during the 62.8 calendar year exceeds $600. For purposes of the provisions of 62.9 this section, a payment to any person which is subject to 62.10 withholding under this subdivision must be treated as if the 62.11 payment was a wage paid by an employer to an employee. Every 62.12 individual who is to receive a payment which is subject to 62.13 withholding under this subdivision shall furnish the license 62.14 holder with a statement, made under the penalties of perjury, 62.15 containing the name, address, and social security account number 62.16 of the person receiving the payment. No withholding is required 62.17 if the individual presents a signed certificate from the 62.18 individual's employer which states that the individual is an 62.19 employee of that employer. A nonresident individual who holds a 62.20 class C license must be treated as an athlete for purposes of 62.21 applying the provisions of sections 290.17, subdivision 62.22 2(1)(b)(ii) and 290.92, subdivision 4a. 62.23 EFFECTIVE DATE: This section applies to payments made 62.24 after the date of final enactment. 62.25 Sec. 33. Minnesota Statutes 1998, section 290.92, 62.26 subdivision 29, is amended to read: 62.27 Subd. 29. [LOTTERY PRIZES.]Eightseven percent of the 62.28 payment of Minnesota state lottery winnings which are subject to 62.29 withholding must be withheld as Minnesota withholding tax. For 62.30 purposes of this subdivision, the term "winnings which are 62.31 subject to withholding" has the meaning given in section 62.32 3402(q)(3) of the Internal Revenue Code. For purposes of the 62.33 provisions of this section, a payment to any person of winnings 62.34 which are subject to withholding must be treated as if the 62.35 payment was a wage paid by an employer to an employee. Every 62.36 individual who is to receive a payment of winnings which are 63.1 subject to withholding shall furnish the state lottery with a 63.2 statement, made under the penalties of perjury, containing the 63.3 name, address, and social security account number of the person 63.4 receiving the payment. The Minnesota state lottery is liable 63.5 for the payment of the tax required to be withheld under this 63.6 subdivision but is not liable to any person for the amount of 63.7 the payment. 63.8 EFFECTIVE DATE: This section applies to winnings paid 63.9 after the date of final enactment. 63.10 Sec. 34. Minnesota Statutes 1999 Supplement, section 63.11 290.9725, is amended to read: 63.12 290.9725 [S CORPORATION.] 63.13 For purposes of this chapter, the term "S corporation" 63.14 means any corporation having a valid election in effect for the 63.15 taxable year under section 1362 of the Internal Revenue Code. 63.16 An S corporation shall not be subject to the taxes imposed by 63.17 this chapter, except:63.18(1)the taxes imposed under sections 290.0922, 290.92, 63.19 290.9727, 290.9728, and 290.9729; and63.20(2) the tax under sections 290.06, subdivision 1, and63.21290.0921 apply to a financial institution to which either63.22section 585 or 593 of the Internal Revenue Code applies or that63.23has a wholly owned subsidiary as described in section63.241361(b)(3)(B) of the Internal Revenue Code which is a financial63.25institution under section 585 or 593 of the Internal Revenue63.26Code. 63.27 EFFECTIVE DATE: This section is effective for taxable 63.28 years beginning after December 31, 1999. 63.29 Sec. 35. Minnesota Statutes 1998, section 469.1734, 63.30 subdivision 4, is amended to read: 63.31 Subd. 4. [INCOME TAX.] (a) Upon application by the 63.32 qualifying business to the city, and approval of the city, a 63.33 qualifying business shall receive a credit against taxes imposed 63.34 under chapter 290, other than the tax imposed under section 63.35 290.92, based on the taxable net income of the qualified 63.36 business attributable to the border city, but outside the border 64.1 city development zone, multiplied by 9.8 percent in the case of 64.2 a taxpayer under section 290.02, and8.57.5 percent in the case 64.3 of a taxpayer taxable under section 290.06, subdivision 2c. The 64.4 attributable net income of a qualified business in the border 64.5 city is determined by multiplying the taxable net income of the 64.6 business entity, determined as if the business were a C 64.7 corporation, by a fraction: 64.8 (1) the numerator of which is: 64.9 (i) the ratio of the taxpayer's property factor under 64.10 section 290.191 located in the border city, but outside of the 64.11 border city development zone, for the taxable year over the 64.12 property factor numerator determined under section 290.191, plus 64.13 (ii) the ratio of the taxpayer's payroll factor under 64.14 section 290.191 located in the border city, but outside of the 64.15 border city development zone, for the taxable year over the 64.16 payroll factor numerator determined under section 290.191; and 64.17 (2) the denominator of which is two. 64.18 (b) The credit under this subdivision applies after any 64.19 credit allowed under subdivision 5. 64.20 (c) After any notice period required by subdivision 7, the 64.21 city council must determine whether granting the credit is in 64.22 the best interest of the city, and if it so determines, must 64.23 approve the granting of the credit and determine its amount. 64.24 (d) The credit under this subdivision may not exceed the 64.25 amount of the tax credit certificates received by the taxpayer 64.26 from the city, less any tax credit certificates used under 64.27 section 469.1732, subdivision 2, and subdivisions 5 and 6. 64.28 (e) No taxpayer may receive the credit under this 64.29 subdivision for more than five taxable years. 64.30 Sec. 36. [TAX INFORMATION SAMPLE DATA STUDY.] 64.31 (a) One of the goals of a reengineered income tax system is 64.32 to reduce the administrative burden for both taxpayers and tax 64.33 administrators. In order to reduce the cost of handling paper 64.34 returns and to explore electronic options for taxpayer filing of 64.35 tax data, the department of revenue will explore eliminating the 64.36 requirement of Minnesota Statutes, section 289A.08, subdivision 65.1 11, that the federal return be attached in filing a Minnesota 65.2 individual income tax return. This federal return information 65.3 is used for the purposes of ensuring the accurate calculation of 65.4 individuals' Minnesota income tax liabilities and for the 65.5 purposes of preparing the microdata samples under Minnesota 65.6 Statutes, section 270.0681. 65.7 (b) To ensure the continued reliability of income tax data 65.8 samples and to evaluate ways in which the quality of samples may 65.9 be improved, the commissioner shall study and evaluate 65.10 alternatives to requiring taxpayers to attach a copy of their 65.11 federal return when filing Minnesota state income tax. The 65.12 study must be prepared in consultation with the coordinating 65.13 committee established in Minnesota Statutes, section 270.0681, 65.14 subdivision 2. The study must: 65.15 (1) evaluate the quality of federal electronic data 65.16 compared to sample data prepared from returns filed with the 65.17 department; 65.18 (2) evaluate alternative sampling methodology, including 65.19 preselection of sampled returns, panel data, and other sampling 65.20 methods; and 65.21 (3) evaluate and test whether alternative methods can 65.22 (i) provide a data sample that is as accurate and reliable 65.23 as one prepared from federal returns that are filed with or 65.24 attached to Minnesota individual income tax returns; and 65.25 (ii) result in a data sample that will continue to be 65.26 available to staff of both the department of finance and the 65.27 legislature on the same basis as one prepared from returns 65.28 required to be attached to or filed with the Minnesota tax 65.29 returns. 65.30 (c) The commissioner of revenue shall report the findings 65.31 of the study to the house tax committee chair, the senate tax 65.32 committee chair, and the commissioner of finance. 65.33 (d) The commissioner of revenue shall prepare a bill for 65.34 introduction in the 2001 legislative session that eliminates, 65.35 for some or all taxpayers, the requirement that a copy of the 65.36 federal return be filed with the individual income tax return, 66.1 if the commissioner determines as a result of the study that: 66.2 (1) an alternative method would provide a data sample that 66.3 is as accurate and reliable as one prepared from federal returns 66.4 required to be filed with the Minnesota return; and 66.5 (2) the sample will continue to be available to the staff 66.6 of both the department of finance and the legislature on the 66.7 same basis as one prepared from returns required to be filed 66.8 with Minnesota tax returns. 66.9 EFFECTIVE DATE: This section is effective the day 66.10 following final enactment. 66.11 Sec. 37. [COMMISSIONER OF REVENUE; TEMPORARY POWERS.] 66.12 Subdivision 1. [APPLICABILITY.] This section gives the 66.13 commissioner of revenue certain temporary powers. These powers 66.14 apply only to taxes imposed under Minnesota Statutes, sections 66.15 290.032, 290.06, and 290.091 administered by the commissioner 66.16 under Minnesota Statutes, chapters 289A and 290. 66.17 Subd. 2. [PAYMENT OF TAXES.] The commissioner may 66.18 establish additional due dates, applicable to certain groups of 66.19 taxpayers, for the payment of taxes. Unless the commissioner 66.20 has the written consent of the taxpayer, the additional payment 66.21 dates must not require the taxpayer to pay the tax earlier than 66.22 the payment dates provided by statute or rule. The commissioner 66.23 may accept various forms of payment, including, but not limited 66.24 to, financial transaction cards and electronic funds transfer. 66.25 Subd. 3. [FILING OF RETURN.] The commissioner may 66.26 establish additional due dates, applicable to certain groups of 66.27 taxpayers, for the filing of tax returns. Unless the 66.28 commissioner has the written consent of the taxpayer, the return 66.29 due date must not be earlier than the due date provided by 66.30 statute or rule. In conducting pilot studies, the commissioner 66.31 may use tax return forms with varying formats, accept electronic 66.32 filed returns, and waive the taxpayer signature requirements. 66.33 Subd. 4. [AGREEMENTS.] The commissioner may enter written 66.34 agreements with taxpayers that provide for the payment of taxes 66.35 or the filing of returns at dates earlier than provided by 66.36 statute or rule. The commissioner and the taxpayer may also 67.1 agree in writing to other changes from the statutory or rule 67.2 requirements related to the administration of these taxes. If 67.3 the taxpayer agrees to pay taxes at a date earlier than that 67.4 provided by statute, the commissioner may negotiate payments to 67.5 the taxpayer to compensate in part or in full for the loss 67.6 incurred as a result of the accelerated payment. 67.7 Subd. 5. [PROCEDURE; APPROVAL.] Pilot studies proposed 67.8 under these authorities must be presented to the chairs of the 67.9 house of representatives tax committee and the senate committee 67.10 on taxes and to the chairs of the committees on state government 67.11 finance of the house of representatives and the senate. No 67.12 study may be undertaken without the approval of both tax 67.13 committee chairs. If either chair fails to respond within 15 67.14 days after the proposal is presented, that chair is considered 67.15 to have approved the study. If the study is approved, the 67.16 commissioner shall initially seek participation on a voluntary 67.17 basis from within the targeted taxpayer group. 67.18 Subd. 6. [EXPIRATION DATE.] This section expires June 30, 67.19 2002, and all pilot projects under this section must be 67.20 completed by June 30, 2002. 67.21 EFFECTIVE DATE: This section is effective the day 67.22 following final enactment. 67.23 Sec. 38. [STUDY OF TAXPAYER ASSISTANCE SERVICES.] 67.24 The commissioner of revenue shall study the availability of 67.25 taxpayer assistance services throughout the state and provide a 67.26 written report to the legislature, in compliance with Minnesota 67.27 Statutes, sections 3.195 and 3.197, by January 15, 2001. 67.28 "Taxpayer assistance services" means accounting and tax 67.29 preparation services provided by volunteers to low-income and 67.30 disadvantaged Minnesota residents to help them file federal and 67.31 state income tax returns and Minnesota property tax refund 67.32 claims and to provide personal representation before the 67.33 department of revenue and the Internal Revenue Service. The 67.34 study must evaluate: 67.35 (1) ways of establishing a measure to evaluate the 67.36 effectiveness of volunteers in achieving the department's 68.1 mission of achieving compliance with the tax laws; 68.2 (2) the geographic distribution and number of volunteer tax 68.3 preparation sites throughout the state, in comparison to the 68.4 distribution of low-income, elderly, and nonnative English 68.5 speakers; 68.6 (3) the income, language skills, and age-related screening 68.7 criteria used at volunteer tax preparations sites in determining 68.8 Minnesota residents' eligibility for taxpayer assistance 68.9 services; 68.10 (4) the level of training, support, and coordination that 68.11 the department provides to volunteers and the optimal level of 68.12 training for volunteers to have an adequate understanding of 68.13 Minnesota's tax forms; 68.14 (5) the effectiveness of grants awarded under Laws 1999, 68.15 chapter 243, article 2, section 31; and 68.16 (6) the availability of volunteers to assist taxpayers in 68.17 preparing Minnesota property tax refund claims after April 15. 68.18 The commissioner must invite testimony from organizations 68.19 and government entities concerned with taxpayer assistance, both 68.20 paid and volunteer. Organizations receiving grants under Laws 68.21 1999, chapter 243, article 2, section 31, must provide 68.22 information necessary to the completion of the study to the 68.23 commissioner on request. 68.24 The study must consider the role of current economic 68.25 conditions, including the state unemployment rate, in training 68.26 and retaining qualified volunteers, the adequacy of current 68.27 taxpayer assistance services, the role of the department of 68.28 revenue in assisting low-income, elderly, and nonnative English 68.29 speakers, and must recommend ways for improving the availability 68.30 and the quality of taxpayer assistance services. 68.31 Sec. 39. [REPEALER.] 68.32 Minnesota Statutes 1999 Supplement, sections 290.06, 68.33 subdivision 26; and 290.9726, subdivision 7, are repealed. 68.34 EFFECTIVE DATE: This section is effective for taxable 68.35 years beginning after December 31, 1999. 68.36 ARTICLE 5 69.1 PROPERTY TAXES 69.2 Section 1. Minnesota Statutes 1998, section 126C.01, is 69.3 amended by adding a subdivision to read: 69.4 Subd. 3a. [NEW REFERENDUM MARKET VALUE.] "New referendum 69.5 market value" means the market value of all taxable property, 69.6 except that (i) any class of property, or any portion of a class 69.7 of property, with a class rate of less than one percent under 69.8 section 273.13 shall have a new referendum market value equal to 69.9 its net tax capacity multiplied by 100, and (ii) property 69.10 classified as noncommercial seasonal residential recreational 69.11 under section 273.13, subdivision 25, shall have a new 69.12 referendum market value equal to 50 percent of its taxable 69.13 market value. 69.14 EFFECTIVE DATE: This section is effective for taxes 69.15 payable in 2002 and thereafter. 69.16 Sec. 2. Minnesota Statutes 1998, section 126C.17, 69.17 subdivision 10, is amended to read: 69.18 Subd. 10. [SCHOOL REFERENDUM LEVY; MARKET VALUE.] 69.19 Notwithstanding the provisions of subdivision 9, a school 69.20 referendum levy approvedafter November 1, 1992, for taxes69.21payable in 1993 and thereafterbefore January 1, 2001, must be 69.22 levied against the referendum market value of all taxable 69.23 property as defined in section 126C.01, subdivision 69.24 3. Notwithstanding the provisions of subdivision 9, a school 69.25 referendum levy approved after December 31, 2000, must be levied 69.26 against the new referendum market value of all taxable property 69.27 as defined in section 126C.01, subdivision 3a. Any referendum 69.28 levy amount subject to the requirements of this subdivision must 69.29 be certified separately to the county auditor under section 69.30 275.07. 69.31 All other provisions of subdivision 9 that do not conflict 69.32 with this subdivision apply to referendum levies under this 69.33 subdivision. 69.34 EFFECTIVE DATE: This section is effective for taxes 69.35 payable in 2002 and thereafter. 69.36 Sec. 3. Minnesota Statutes 1998, section 270.072, 70.1 subdivision 2, is amended to read: 70.2 Subd. 2. [ASSESSMENT OF FLIGHT PROPERTY.] The flight 70.3 property of all airline companies operating in Minnesota shall 70.4 be assessed and appraised annually by the commissioner with 70.5 reference to its value on January 2 of the assessment year in 70.6 the manner prescribed by sections 270.071 to 270.079. Aircraft 70.7 with a gross weight of less than 30,000 pounds and used on 70.8 intermittent or irregularly timed flights shall be excluded from 70.9 the provisions of sections 270.071 to 270.079. 70.10 EFFECTIVE DATE: This section is effective for taxes 70.11 payable in 2001 and thereafter. 70.12 Sec. 4. Minnesota Statutes 1998, section 270.072, is 70.13 amended by adding a subdivision to read: 70.14 Subd. 6. [AIRFLIGHT PROPERTY TAX LIEN.] The tax imposed 70.15 under sections 270.071 to 270.079 is a lien on all real and 70.16 personal property within this state of the airline company in 70.17 whose name the property is assessed. For purposes of sections 70.18 270.65 and 270.69, the date of assessment for the tax imposed 70.19 under sections 270.071 to 270.079 is January 2 of each year for 70.20 the taxes payable in the following year. 70.21 EFFECTIVE DATE: This section is effective for taxes 70.22 payable in 2001 and thereafter. 70.23 Sec. 5. Minnesota Statutes 1999 Supplement, section 70.24 272.02, subdivision 39, is amended to read: 70.25 Subd. 39. [ECONOMIC DEVELOPMENT; PUBLIC PURPOSE.] The 70.26 holding of property by a political subdivision of the state for 70.27 later resale for economic development purposes shall be 70.28 considered a public purpose in accordance with subdivision 8 for 70.29 a period not to exceed eight years for political subdivisions 70.30 with a population of 10,000 and over, and ten years for 70.31 political subdivisions with a population of less than 10,000. 70.32 The holding of property by a political subdivision of the state 70.33 for later resale (1) which is purchased or held for housing 70.34 purposes, or (2) which meets the conditions described in section 70.35 469.174, subdivision 10, shall be considered a public purpose in 70.36 accordance with subdivision 8. The governing body of the 71.1 political subdivision which acquires property which is subject 71.2 to this subdivision shall after the purchase of the property 71.3 certify to the city or county assessor whether the property is 71.4 held for economic development purposes or housing purposes, or 71.5 whether it meets the conditions of section 469.174, subdivision 71.6 10. If the property is acquired for economic development 71.7 purposes and buildings or other improvements are constructed 71.8 after acquisition of the property, and if more than one-half of 71.9 the floor space of the buildings or improvements which is 71.10 available for lease to or use by a private individual, 71.11 corporation, or other entity is leased to or otherwise used by a 71.12 private individual, corporation, or other entity the provisions 71.13 of this subdivision shall not apply to the property. This 71.14 subdivision shall not create an exemption from section 272.01, 71.15 subdivision 2; 272.68; 273.19; or 469.040, subdivision 3; or 71.16 other provision of law providing for the taxation of or for 71.17 payments in lieu of taxes for publicly held property which is 71.18 leased, loaned, or otherwise made available and used by a 71.19 private person. For purposes of this section, "population" has 71.20 the meaning given in section 477A.011, subdivision 3. 71.21 EFFECTIVE DATE: This section is effective beginning with 71.22 assessment year 2000. 71.23 Sec. 6. Minnesota Statutes 1999 Supplement, section 71.24 272.02, is amended by adding a subdivision to read: 71.25 Subd. 44. [ELECTRIC GENERATION FACILITY PERSONAL 71.26 PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 71.27 machinery and other personal property which is part of a 71.28 simple-cycle combustion-turbine electric generation facility 71.29 that exceeds 250 megawatts of installed capacity and that meets 71.30 the requirements of this subdivision is exempt. At the time of 71.31 construction, the facility must: 71.32 (1) utilize natural gas as a primary fuel; 71.33 (2) be located within 20 miles of parallel existing 16-inch 71.34 and 12-inch (outside diameter) natural gas pipelines and a 71.35 345-kilovolt high-voltage electric transmission line; and 71.36 (3) be designed to provide peaking, emergency backup, or 72.1 contingency services, and have received a certificate of need 72.2 pursuant to section 216B.243 demonstrating demand for its 72.3 capacity. 72.4 Construction of the facility must be commenced after January 1, 72.5 2000, and before January 1, 2004. Property eligible for this 72.6 exemption does not include electric transmission lines and 72.7 interconnections or gas pipelines and interconnections 72.8 appurtenant to the property or the facility. 72.9 EFFECTIVE DATE: This section is effective for assessment 72.10 year 2001 and thereafter. 72.11 Sec. 7. Minnesota Statutes 1999 Supplement, section 72.12 273.11, subdivision 1a, is amended to read: 72.13 Subd. 1a. [LIMITED MARKET VALUE.] In the case of all 72.14 property classified as agricultural homestead or nonhomestead, 72.15 residential homestead or nonhomestead, or noncommercial seasonal 72.16 recreational residential, the assessor shall compare the value 72.17 with that determined in the preceding assessment. The amount of 72.18 the increase entered in the current assessment shall not exceed 72.19 the greater of (1)8.5seven percent of the value in the 72.20 preceding assessment, or (2) 15 percent of the difference 72.21 between the current assessment and the preceding assessment. 72.22 This limitation shall not apply to increases in value due to 72.23 improvements. For purposes of this subdivision, the term 72.24 "assessment" means the value prior to any exclusion under 72.25 subdivision 16. 72.26 The provisions of this subdivision shall be in effect only 72.27 through assessment year 2001. 72.28 For purposes of the assessment/sales ratio study conducted 72.29 under section 127A.48, and the computation of state aids paid 72.30 under chapters 122A, 123A, 123B, 124D, 125A, 126C, 127A, and 72.31 477A, estimated marketvalues and net tax capacitiesvalue 72.32 assessment/sales ratios and taxable market value net tax 72.33 capacitiesdetermined under this subdivision and subdivision 16,72.34 shall be used. 72.35 EFFECTIVE DATE: This section is effective for assessment 72.36 years 2000 and 2001. 73.1 Sec. 8. Minnesota Statutes 1998, section 273.111, 73.2 subdivision 3, is amended to read: 73.3 Subd. 3. [REQUIREMENTS.] (a) Real estate consisting of ten 73.4 acres or more or a nursery or greenhouse, and qualifying for 73.5 classification as class 1b, 2a, or 2b under section 273.13, 73.6 subdivision 23, paragraph (d), shall be entitled to valuation 73.7 and tax deferment under this section only if it is primarily 73.8 devoted to agricultural use, and meets the qualifications in 73.9 subdivision 6, and either: 73.10 (1) is the homestead of the owner, or of a surviving 73.11 spouse, child, or sibling of the owner or is real estate which 73.12 is farmed with the real estate which contains the homestead 73.13 property; or 73.14 (2) has been in possession of the applicant, the 73.15 applicant's spouse, parent, or sibling, or any combination 73.16 thereof, for a period of at least seven years prior to 73.17 application for benefits under the provisions of this section, 73.18 or is real estate which is farmed with the real estate which 73.19 qualifies under this clause and is withintwofour townships or 73.20 cities or combination thereof from the qualifying real estate; 73.21 or 73.22 (3) is the homestead of a shareholder in a family farm 73.23 corporation as defined in section 500.24, notwithstanding the 73.24 fact that legal title to the real estate may be held in the name 73.25 of the family farm corporation; or 73.26 (4) is in the possession of a nursery or greenhouse or an 73.27 entity owned by a proprietor, partnership, or corporation which 73.28 also owns the nursery or greenhouse operations on the parcel or 73.29 parcels. 73.30 (b) Valuation of real estate under this section is limited 73.31 to parcels the ownership of which is in noncorporate entities 73.32 except for: 73.33 (1) family farm corporations organized pursuant to section 73.34 500.24; and 73.35 (2) corporations that derive 80 percent or more of their 73.36 gross receipts from the wholesale or retail sale of 74.1 horticultural or nursery stock. 74.2 Corporate entities who previously qualified for tax 74.3 deferment pursuant to this section and who continue to otherwise 74.4 qualify under subdivisions 3 and 6 for a period of at least 74.5 three years following the effective date of Laws 1983, chapter 74.6 222, section 8, will not be required to make payment of the 74.7 previously deferred taxes, notwithstanding the provisions of 74.8 subdivision 9. Special assessments are payable at the end of 74.9 the three-year period or at time of sale, whichever comes first. 74.10 (c) Land that previously qualified for tax deferment under 74.11 this section and no longer qualifies because it is not primarily 74.12 used for agricultural purposes but would otherwise qualify under 74.13 subdivisions 3 and 6 for a period of at least three years will 74.14 not be required to make payment of the previously deferred 74.15 taxes, notwithstanding the provisions of subdivision 9. Sale of 74.16 the land prior to the expiration of the three-year period 74.17 requires payment of deferred taxes as follows: sale in the year 74.18 the land no longer qualifies requires payment of the current 74.19 year's deferred taxes plus payment of deferred taxes for the two 74.20 prior years; sale during the second year the land no longer 74.21 qualifies requires payment of the current year's deferred taxes 74.22 plus payment of the deferred taxes for the prior year; and sale 74.23 during the third year the land no longer qualifies requires 74.24 payment of the current year's deferred taxes. Deferred taxes 74.25 shall be paid even if the land qualifies pursuant to subdivision 74.26 11a. When such property is sold or no longer qualifies under 74.27 this paragraph, or at the end of the three-year period, 74.28 whichever comes first, all deferred special assessments plus 74.29 interest are payable in equal installments spread over the time 74.30 remaining until the last maturity date of the bonds issued to 74.31 finance the improvement for which the assessments were levied. 74.32 If the bonds have matured, the deferred special assessments plus 74.33 interest are payable within 90 days. The provisions of section 74.34 429.061, subdivision 2, apply to the collection of these 74.35 installments. Penalties are not imposed on any such special 74.36 assessments if timely paid. 75.1 EFFECTIVE DATE: This section is effective for taxes 75.2 payable in 2000 and thereafter. 75.3 Sec. 9. Minnesota Statutes 1999 Supplement, section 75.4 273.124, subdivision 1, is amended to read: 75.5 Subdivision 1. [GENERAL RULE.] (a) Residential real estate 75.6 that is occupied and used for the purposes of a homestead by its 75.7 owner, who must be a Minnesota resident, is a residential 75.8 homestead. 75.9 Agricultural land, as defined in section 273.13, 75.10 subdivision 23, that is occupied and used as a homestead by its 75.11 owner, who must be a Minnesota resident, is an agricultural 75.12 homestead. 75.13 Dates for establishment of a homestead and homestead 75.14 treatment provided to particular types of property are as 75.15 provided in this section. 75.16 Propertyofheld by a trustee, beneficiary, or grantor of75.17 under a trust isnot disqualified from receivingeligible for 75.18 homesteadbenefitsclassification if thehomesteadrequirements 75.19 under this chapter are satisfied. 75.20 The assessor shall require proof, as provided in 75.21 subdivision 13, of the facts upon which classification as a 75.22 homestead may be determined. Notwithstanding any other law, the 75.23 assessor may at any time require a homestead application to be 75.24 filed in order to verify that any property classified as a 75.25 homestead continues to be eligible for homestead status. 75.26 Notwithstanding any other law to the contrary, the department of 75.27 revenue may, upon request from an assessor, verify whether an 75.28 individual who is requesting or receiving homestead 75.29 classification has filed a Minnesota income tax return as a 75.30 resident for the most recent taxable year for which the 75.31 information is available. 75.32 When there is a name change or a transfer of homestead 75.33 property, the assessor may reclassify the property in the next 75.34 assessment unless a homestead application is filed to verify 75.35 that the property continues to qualify for homestead 75.36 classification. 76.1 (b) For purposes of this section, homestead property shall 76.2 include property which is used for purposes of the homestead but 76.3 is separated from the homestead by a road, street, lot, 76.4 waterway, or other similar intervening property. The term "used 76.5 for purposes of the homestead" shall include but not be limited 76.6 to uses for gardens, garages, or other outbuildings commonly 76.7 associated with a homestead, but shall not include vacant land 76.8 held primarily for future development. In order to receive 76.9 homestead treatment for the noncontiguous property, the owner 76.10 must use the property for the purposes of the homestead, and 76.11 must apply to the assessor, both by the deadlines given in 76.12 subdivision 9. After initial qualification for the homestead 76.13 treatment, additional applications for subsequent years are not 76.14 required. 76.15 (c) Residential real estate that is occupied and used for 76.16 purposes of a homestead by a relative of the owner is a 76.17 homestead but only to the extent of the homestead treatment that 76.18 would be provided if the related owner occupied the property. 76.19 For purposes of this paragraph and paragraph (g), "relative" 76.20 means a parent, stepparent, child, stepchild, grandparent, 76.21 grandchild, brother, sister, uncle, aunt, nephew, or niece. 76.22 This relationship may be by blood or marriage. Property that 76.23 has been classified as seasonal recreational residential 76.24 property at any time during which it has been owned by the 76.25 current owner or spouse of the current owner will not be 76.26 reclassified as a homestead unless it is occupied as a homestead 76.27 by the owner; this prohibition also applies to property that, in 76.28 the absence of this paragraph, would have been classified as 76.29 seasonal recreational residential property at the time when the 76.30 residence was constructed. Neither the related occupant nor the 76.31 owner of the property may claim a property tax refund under 76.32 chapter 290A for a homestead occupied by a relative. In the 76.33 case of a residence located on agricultural land, only the 76.34 house, garage, and immediately surrounding one acre of land 76.35 shall be classified as a homestead under this paragraph, except 76.36 as provided in paragraph (d). 77.1 (d) Agricultural property that is occupied and used for 77.2 purposes of a homestead by a relative of the owner, is a 77.3 homestead, only to the extent of the homestead treatment that 77.4 would be provided if the related owner occupied the property, 77.5 and only if all of the following criteria are met: 77.6 (1) the relative who is occupying the agricultural property 77.7 is a son, daughter, father, or mother of the owner of the 77.8 agricultural property or a son or daughter of the spouse of the 77.9 owner of the agricultural property; 77.10 (2) the owner of the agricultural property must be a 77.11 Minnesota resident; 77.12 (3) the owner of the agricultural property must not receive 77.13 homestead treatment on any other agricultural property in 77.14 Minnesota; and 77.15 (4) the owner of the agricultural property is limited to 77.16 only one agricultural homestead per family under this paragraph. 77.17 For purposes of this paragraph, a grandson or granddaughter 77.18 of the owner of the agricultural property may qualify instead of 77.19 the owner's son or daughter under clause (1), provided that the 77.20 owner's son or daughter is deceased or is permanently and 77.21 totally disabled and therefore cannot actively farm the 77.22 agricultural property, and that the grandson or granddaughter is 77.23 actively farming the owner's agricultural property. 77.24 Neither the related occupant nor the owner of the property 77.25 may claim a property tax refund under chapter 290A for a 77.26 homestead occupied by a relative qualifying under this 77.27 paragraph. For purposes of this paragraph, "agricultural 77.28 property" means the house, garage, other farm buildings and 77.29 structures, and agricultural land. 77.30 Application must be made to the assessor by the owner of 77.31 the agricultural property to receive homestead benefits under 77.32 this paragraph. The assessor may require the necessary proof 77.33 that the requirements under this paragraph have been met. 77.34 (e) In the case of property owned by a property owner who 77.35 is married, the assessor must not deny homestead treatment in 77.36 whole or in part if only one of the spouses occupies the 78.1 property and the other spouse is absent due to: (1) marriage 78.2 dissolution proceedings, (2) legal separation, (3) employment or 78.3 self-employment in another location, or (4) other personal 78.4 circumstances causing the spouses to live separately, not 78.5 including an intent to obtain two homestead classifications for 78.6 property tax purposes. To qualify under clause (3), the 78.7 spouse's place of employment or self-employment must be at least 78.8 50 miles distant from the other spouse's place of employment, 78.9 and the homesteads must be at least 50 miles distant from each 78.10 other. Homestead treatment, in whole or in part, shall not be 78.11 denied to the owner's spouse who previously occupied the 78.12 residence with the owner if the absence of the owner is due to 78.13 one of the exceptions provided in this paragraph. 78.14 (f) The assessor must not deny homestead treatment in whole 78.15 or in part if: 78.16 (1) in the case of a property owner who is not married, the 78.17 owner is absent due to residence in a nursing home or boarding 78.18 care facility and the property is not otherwise occupied; or 78.19 (2) in the case of a property owner who is married, the 78.20 owner or the owner's spouse or both are absent due to residence 78.21 in a nursing home or boarding care facility and the property is 78.22 not occupied or is occupied only by the owner's spouse. 78.23 (g) If an individual is purchasing property with the intent 78.24 of claiming it as a homestead and is required by the terms of 78.25 the financing agreement to have a relative shown on the deed as 78.26 a coowner, the assessor shall allow a full homestead 78.27 classification. This provision only applies to first-time 78.28 purchasers, whether married or single, or to a person who had 78.29 previously been married and is purchasing as a single individual 78.30 for the first time. The application for homestead benefits must 78.31 be on a form prescribed by the commissioner and must contain the 78.32 data necessary for the assessor to determine if full homestead 78.33 benefits are warranted. 78.34 (h) If residential or agricultural real estate is occupied 78.35 and used for purposes of a homestead by a child of a deceased 78.36 owner and the property is subject to jurisdiction of probate 79.1 court, the child shall receive relative homestead classification 79.2 under paragraph (c) or (d) to the same extent they would be 79.3 entitled to it if the owner was still living, until the probate 79.4 is completed. For purposes of this paragraph, "child" includes 79.5 a relationship by blood or by marriage. 79.6 EFFECTIVE DATE: This section is effective for taxes 79.7 payable in 2001 and thereafter. 79.8 Sec. 10. Minnesota Statutes 1999 Supplement, section 79.9 273.124, subdivision 8, is amended to read: 79.10 Subd. 8. [HOMESTEAD OWNED BY FAMILY FARM CORPORATION, 79.11 JOINT FARM VENTURE OR PARTNERSHIP OR LEASED TO FAMILY FARM 79.12 CORPORATION, JOINT FARM VENTURE OR PARTNERSHIP.] (a) Each family 79.13 farm corporation, each joint farm venture, and each partnership 79.14 operating a family farm is entitled to class 1b under section 79.15 273.13, subdivision 22, paragraph (b), or class 2a assessment 79.16 for one homestead occupied by a shareholder or partner thereof 79.17 who is residing on the land except as provided in subdivision 79.18 14, paragraph (g), and actively engaged in farming of the land 79.19 owned by the corporation, joint farm venture, or partnership. 79.20 Homestead treatment applies even if legal title to the property 79.21 is in the name of the corporation, joint farm venture, or 79.22 partnership and not in the name of the person residing on it. 79.23 "Family farm corporation" and "family farm" have the meanings 79.24 given in section 500.24, except that the number of allowable 79.25 shareholders or partners under this subdivision shall not exceed 79.26 12. 79.27 (b) In addition to property specified in paragraph (a), any 79.28 other residences owned by corporations, joint farm ventures, or 79.29 partnerships described in paragraph (a) which are located on 79.30 agricultural land and occupied as homesteads by shareholders or 79.31 partners who are actively engaged in farming on behalf of the 79.32 corporation, joint farm venture, or partnership must also be 79.33 assessed as class 2a property or as class 1b property under 79.34 section 273.13, subdivision 22, paragraph (b). 79.35 (c) Agricultural property owned by a shareholder of a 79.36 family farm corporation or joint farm venture, as defined in 80.1 paragraph (a), or by a partner in a partnership operating a 80.2 family farm and leased to the family farm corporation by the 80.3 shareholder or to the partnership by the partner, is eligible 80.4 for classification as class 1b under section 273.13, subdivision 80.5 22, paragraph (b), or class 2a under section 273.13, subdivision 80.6 23, paragraph (a), if the owner is actually residing on the 80.7 property except as provided in subdivision 14, paragraph (g), 80.8 and is actually engaged in farming the land on behalf of the 80.9 corporation, joint farm venture, or partnership. This paragraph 80.10 applies without regard to any legal possession rights of the 80.11 family farm corporation, joint farm venture, or partnership 80.12 operating a family farm under the lease. 80.13 EFFECTIVE DATE: This section is effective for taxes 80.14 payable in 2001 and thereafter. 80.15 Sec. 11. Minnesota Statutes 1999 Supplement, section 80.16 273.124, subdivision 14, is amended to read: 80.17 Subd. 14. [AGRICULTURAL HOMESTEADS; SPECIAL PROVISIONS.] 80.18 (a) Real estate of less than ten acres that is the homestead of 80.19 its owner must be classified as class 2a under section 273.13, 80.20 subdivision 23, paragraph (a), if: 80.21 (1) the parcel on which the house is located is contiguous 80.22 on at least two sides to (i) agricultural land, (ii) land owned 80.23 or administered by the United States Fish and Wildlife Service, 80.24 or (iii) land administered by the department of natural 80.25 resources on which in lieu taxes are paid under sections 477A.11 80.26 to 477A.14; 80.27 (2) its owner also owns a noncontiguous parcel of 80.28 agricultural land that is at least 20 acres; 80.29 (3) the noncontiguous land is located not farther than four 80.30 townships or cities, or a combination of townships or cities 80.31 from the homestead; and 80.32 (4) the agricultural use value of the noncontiguous land 80.33 and farm buildings is equal to at least 50 percent of the market 80.34 value of the house, garage, and one acre of land. 80.35 Homesteads initially classified as class 2a under the 80.36 provisions of this paragraph shall remain classified as class 81.1 2a, irrespective of subsequent changes in the use of adjoining 81.2 properties, as long as the homestead remains under the same 81.3 ownership, the owner owns a noncontiguous parcel of agricultural 81.4 land that is at least 20 acres, and the agricultural use value 81.5 qualifies under clause (4). Homestead classification under this 81.6 paragraph is limited to property that qualified under this 81.7 paragraph for the 1998 assessment. 81.8 (b) Agricultural property consisting of at least 40 acres 81.9 shall be classified homestead, to the same extent as other 81.10 agricultural homestead property, if all of the following 81.11 criteria are met: 81.12 (1) the owner, or the owner's son or daughter, is actively 81.13 farming the agricultural property; 81.14 (2) the owner of the agricultural property is a Minnesota 81.15 resident, and if the owner's son or daughter is actively farming 81.16 the agricultural property under clause (1), that person must 81.17 also be a Minnesota resident; 81.18 (3) neither the owner nor the spouse of the agricultural 81.19 property claims another agricultural homestead in Minnesota; and 81.20 (4) the owner does not live farther than four townships or 81.21 cities, or a combination of four townships or cities, from the 81.22 agricultural property, and if the owner's son or daughter is 81.23 actively farming the agricultural property under clause (1), 81.24 that person must also live within the four townships or cities, 81.25 or combination of four townships or cities from the agricultural 81.26 property. 81.27 The relationship under this paragraph may be either by 81.28 blood or marriage. 81.29 (c) Except as provided in paragraph (e), noncontiguous land 81.30 shall be included as part of a homestead under section 273.13, 81.31 subdivision 23, paragraph (a), only if the homestead is 81.32 classified as class 2a and the detached land is located in the 81.33 same township or city, or not farther than four townships or 81.34 cities or combination thereof from the homestead. Any taxpayer 81.35 of these noncontiguous lands must notify the county assessor 81.36 that the noncontiguous land is part of the taxpayer's homestead, 82.1 and, if the homestead is located in another county, the taxpayer 82.2 must also notify the assessor of the other county. 82.3 (d) Agricultural land used for purposes of a homestead and 82.4 actively farmed by a person holding a vested remainder interest 82.5 in it must be classified as a homestead under section 273.13, 82.6 subdivision 23, paragraph (a). If agricultural land is 82.7 classified class 2a, any other dwellings on the land used for 82.8 purposes of a homestead by persons holding vested remainder 82.9 interests who are actively engaged in farming the property, and 82.10 up to one acre of the land surrounding each homestead and 82.11 reasonably necessary for the use of the dwelling as a home, must 82.12 also be assessed class 2a. 82.13 (e) Agricultural land and buildings that were class 2a 82.14 homestead property under section 273.13, subdivision 23, 82.15 paragraph (a), for the 1997 assessment shall remain classified 82.16 as agricultural homesteads for subsequent assessments if: 82.17 (1) the property owner abandoned the homestead dwelling 82.18 located on the agricultural homestead as a result of the April 82.19 1997 floods; 82.20 (2) the property is located in the county of Polk, Clay, 82.21 Kittson, Marshall, Norman, or Wilkin; 82.22 (3) the agricultural land and buildings remain under the 82.23 same ownership for the current assessment year as existed for 82.24 the 1997 assessment year and continue to be used for 82.25 agricultural purposes; 82.26 (4) the dwelling occupied by the owner is located in 82.27 Minnesota and is within 30 miles of one of the parcels of 82.28 agricultural land that is owned by the taxpayer; and 82.29 (5) the owner notifies the county assessor that the 82.30 relocation was due to the 1997 floods, and the owner furnishes 82.31 the assessor any information deemed necessary by the assessor in 82.32 verifying the change in dwelling. Further notifications to the 82.33 assessor are not required if the property continues to meet all 82.34 the requirements in this paragraph and any dwellings on the 82.35 agricultural land remain uninhabited. 82.36 (f) Agricultural land and buildings that were class 2a 83.1 homestead property under section 273.13, subdivision 23, 83.2 paragraph (a), for the 1998 assessment shall remain classified 83.3 agricultural homesteads for subsequent assessments if: 83.4 (1) the property owner abandoned the homestead dwelling 83.5 located on the agricultural homestead as a result of damage 83.6 caused by a March 29, 1998, tornado; 83.7 (2) the property is located in the county of Blue Earth, 83.8 Brown, Cottonwood, LeSueur, Nicollet, Nobles, or Rice; 83.9 (3) the agricultural land and buildings remain under the 83.10 same ownership for the current assessment year as existed for 83.11 the 1998 assessment year; 83.12 (4) the dwelling occupied by the owner is located in this 83.13 state and is within 50 miles of one of the parcels of 83.14 agricultural land that is owned by the taxpayer; and 83.15 (5) the owner notifies the county assessor that the 83.16 relocation was due to a March 29, 1998, tornado, and the owner 83.17 furnishes the assessor any information deemed necessary by the 83.18 assessor in verifying the change in homestead dwelling. For 83.19 taxes payable in 1999, the owner must notify the assessor by 83.20 December 1, 1998. Further notifications to the assessor are not 83.21 required if the property continues to meet all the requirements 83.22 in this paragraph and any dwellings on the agricultural land 83.23 remain uninhabited. 83.24 (g) Agricultural property consisting of at least 40 acres 83.25 of a family farm corporation, partnership, or joint farm venture 83.26 as described under subdivision 8 shall be classified homestead, 83.27 to the same extent as other agricultural homestead property, if 83.28 all of the following criteria are met: 83.29 (1) the shareholder or the partner is actively farming the 83.30 agricultural property; 83.31 (2) the shareholder or the partner of the agricultural 83.32 property is a Minnesota resident; 83.33 (3) neither the shareholder nor the partner nor the 83.34 shareholder's or partner's spouse of the agricultural property 83.35 claims another agricultural homestead in Minnesota; and 83.36 (4) the shareholder or the partner does not live farther 84.1 than four townships or cities, or a combination of four 84.2 townships or cities, from the agricultural property. 84.3 EFFECTIVE DATE: This section is effective for taxes 84.4 payable in 2001 and thereafter. 84.5 Sec. 12. Minnesota Statutes 1998, section 273.124, is 84.6 amended by adding a subdivision to read: 84.7 Subd. 21. [TRUST PROPERTY; HOMESTEAD.] Real property held 84.8 by a trustee under a trust is eligible for classification as 84.9 homestead property if: 84.10 (1) the grantor or surviving spouse of the grantor of the 84.11 trust occupies and uses the property as a homestead; 84.12 (2) a relative or surviving relative of the grantor who 84.13 meets the requirements of subdivision 1, paragraph (c), in the 84.14 case of residential real estate; or subdivision 1, paragraph 84.15 (d), in the case of agricultural property, occupies and uses the 84.16 property as a homestead; 84.17 (3) a family farm corporation, a partnership operating a 84.18 family farm, or a joint farm venture operating a family farm 84.19 rents the property held by a trustee under a trust, and a 84.20 shareholder or partner of the corporation, partnership, or joint 84.21 farm venture occupies and uses the property as a homestead, and 84.22 is actively farming the property on behalf of the corporation, 84.23 partnership, or joint farm venture; or 84.24 (4) a person who has received homestead classification for 84.25 property taxes payable in 2000 on the basis of an unqualified 84.26 legal right under the terms of the trust agreement to occupy the 84.27 property as that person's homestead and who continues to use the 84.28 property as a homestead. 84.29 For purposes of this subdivision, "grantor" is defined as 84.30 the person creating or establishing a testamentary, inter Vivos, 84.31 revocable or irrevocable trust by written instrument or through 84.32 the exercise of a power of appointment. 84.33 EFFECTIVE DATE: This section is effective for taxes 84.34 payable in 2001 and thereafter. 84.35 Sec. 13. Minnesota Statutes 1998, section 273.125, 84.36 subdivision 8, is amended to read: 85.1 Subd. 8. [MANUFACTURED HOMES; SECTIONAL STRUCTURES.] (a) 85.2 In this section, "manufactured home" means a structure 85.3 transportable in one or more sections, which is built on a 85.4 permanent chassis, and designed to be used as a dwelling with or 85.5 without a permanent foundation when connected to the required 85.6 utilities, and contains the plumbing, heating, air conditioning, 85.7 and electrical systems in it. Manufactured home includes any 85.8 accessory structure that is an addition or supplement to the 85.9 manufactured home and, when installed, becomes a part of the 85.10 manufactured home. 85.11 (b) A manufactured home that meets each of the following 85.12 criteria must be valued and assessed as an improvement to real 85.13 property, the appropriate real property classification applies, 85.14 and the valuation is subject to review and the taxes payable in 85.15 the manner provided for real property: 85.16 (1) the owner of the unit holds title to the land on which 85.17 it is situated; 85.18 (2) the unit is affixed to the land by a permanent 85.19 foundation or is installed at its location in accordance with 85.20 the Manufactured Home Building Code in sections 327.31 to 85.21 327.34, and rules adopted under those sections, or is affixed to 85.22 the land like other real property in the taxing district; and 85.23 (3) the unit is connected to public utilities, has a well 85.24 and septic tank system, or is serviced by water and sewer 85.25 facilities comparable to other real property in the taxing 85.26 district. 85.27 (c) A manufactured home that meets each of the following 85.28 criteria must be assessed at the rate provided by the 85.29 appropriate real property classification but must be treated as 85.30 personal property, and the valuation is subject to review and 85.31 the taxes payable in the manner provided in this section: 85.32 (1) the owner of the unit is a lessee of the land under the 85.33 terms of a lease; 85.34 (2) the unit is affixed to the land by a permanent 85.35 foundation or is installed at its location in accordance with 85.36 the Manufactured Home Building Code contained in sections 327.31 86.1 to 327.34, and the rules adopted under those sections, or is 86.2 affixed to the land like other real property in the taxing 86.3 district; and 86.4 (3) the unit is connected to public utilities, has a well 86.5 and septic tank system, or is serviced by water and sewer 86.6 facilities comparable to other real property in the taxing 86.7 district. 86.8 (d) Sectional structures must be valued and assessed as an 86.9 improvement to real property if the owner of the structure holds 86.10 title to the land on which it is located or is a qualifying 86.11 lessee of the land under section 273.19. In this paragraph 86.12 "sectional structure" means a building or structural unit that 86.13 has been in whole or substantial part manufactured or 86.14 constructed at an off-site location to be wholly or partially 86.15 assembled on-site alone or with other units and attached to a 86.16 permanent foundation. 86.17 (e) The commissioner of revenue may adopt rules under the 86.18 Administrative Procedure Act to establish additional criteria 86.19 for the classification of manufactured homes and sectional 86.20 structures under this subdivision. 86.21 (f) A storage shed, deck, or similar improvement 86.22 constructed on property that is leased or rented as a site for a 86.23 manufactured home, sectional structure, park trailer, or travel 86.24 trailer is taxable as provided in this section. In the case of 86.25 property that is leased or rented as a site for a travel 86.26 trailer, a storage shed, deck, or similar improvement on the 86.27 site is taxable only if its estimated market value is $1,000 or 86.28 more. The property is taxable as personal property to the 86.29 lessee of the site if it is not owned by the owner of the site. 86.30 The property is taxable as real estate if it is owned by the 86.31 owner of the site. As a condition of permitting the owner of 86.32 the manufactured home, sectional structure, park trailer, or 86.33 travel trailer to construct improvements on the leased or rented 86.34 site, the owner of the site must obtain the permanent home 86.35 address of the lessee or user of the site. The site owner must 86.36 provide the name and address to the assessor upon request. 87.1 EFFECTIVE DATE: This section is effective for the 2000 87.2 assessment, for taxes payable in 2000 and thereafter. 87.3 Sec. 14. Minnesota Statutes 1999 Supplement, section 87.4 273.13, subdivision 22, is amended to read: 87.5 Subd. 22. [CLASS 1.] (a) Except as provided in subdivision 87.6 23, real estate which is residential and used for homestead 87.7 purposes is class 1. The market value of class 1a property must 87.8 be determined based upon the value of the house, garage, and 87.9 land. 87.10 The first$76,000tier of market value of class 1a property 87.11 has anetclass rate of one percent of its market value; and the 87.12 remaining market value of class 1a propertythat exceeds $76,00087.13 has a class rate of1.651.5 percent of its market value. For 87.14 the purposes of this subdivision, the first tier means the first 87.15 $76,000 of market value. 87.16 (b) Class 1b property includes homestead real estate or 87.17 homestead manufactured homes used for the purposes of a 87.18 homestead by 87.19 (1) any blind person, or the blind person and the blind 87.20 person's spouse; or 87.21 (2) any person, hereinafter referred to as "veteran," who: 87.22 (i) served in the active military or naval service of the 87.23 United States; and 87.24 (ii) is entitled to compensation under the laws and 87.25 regulations of the United States for permanent and total 87.26 service-connected disability due to the loss, or loss of use, by 87.27 reason of amputation, ankylosis, progressive muscular 87.28 dystrophies, or paralysis, of both lower extremities, such as to 87.29 preclude motion without the aid of braces, crutches, canes, or a 87.30 wheelchair; and 87.31 (iii) has acquired a special housing unit with special 87.32 fixtures or movable facilities made necessary by the nature of 87.33 the veteran's disability, or the surviving spouse of the 87.34 deceased veteran for as long as the surviving spouse retains the 87.35 special housing unit as a homestead; or 87.36 (3) any person who: 88.1 (i) is permanently and totally disabled and 88.2 (ii) receives 90 percent or more of total household income, 88.3 as defined in section 290A.03, subdivision 5, from 88.4 (A) aid from any state as a result of that disability; or 88.5 (B) supplemental security income for the disabled; or 88.6 (C) workers' compensation based on a finding of total and 88.7 permanent disability; or 88.8 (D) social security disability, including the amount of a 88.9 disability insurance benefit which is converted to an old age 88.10 insurance benefit and any subsequent cost of living increases; 88.11 or 88.12 (E) aid under the federal Railroad Retirement Act of 1937, 88.13 United States Code Annotated, title 45, section 228b(a)5; or 88.14 (F) a pension from any local government retirement fund 88.15 located in the state of Minnesota as a result of that 88.16 disability; or 88.17 (G) pension, annuity, or other income paid as a result of 88.18 that disability from a private pension or disability plan, 88.19 including employer, employee, union, and insurance plans and 88.20 (iii) has household income as defined in section 290A.03, 88.21 subdivision 5, of $50,000 or less; or 88.22 (4) any person who is permanently and totally disabled and 88.23 whose household income as defined in section 290A.03, 88.24 subdivision 5, is 275 percent or less of the federal poverty 88.25 level. 88.26 Property is classified and assessed under clause (4) only 88.27 if the government agency or income-providing source certifies, 88.28 upon the request of the homestead occupant, that the homestead 88.29 occupant satisfies the disability requirements of this paragraph. 88.30 Property is classified and assessed pursuant to clause (1) 88.31 only if the commissioner of economic security certifies to the 88.32 assessor that the homestead occupant satisfies the requirements 88.33 of this paragraph. 88.34 Permanently and totally disabled for the purpose of this 88.35 subdivision means a condition which is permanent in nature and 88.36 totally incapacitates the person from working at an occupation 89.1 which brings the person an income. The first$32,000$35,000 89.2 market value of class 1b property has a net class rate 89.3 of.450.5 percent of its market value. The remaining market 89.4 value of class 1b property has a net class rate using the rates 89.5 for class 1 or class 2a property, whichever is appropriate, of 89.6 similar market value. 89.7 (c) Class 1c property is commercial use real property that 89.8 abuts a lakeshore line and is devoted to temporary and seasonal 89.9 residential occupancy for recreational purposes but not devoted 89.10 to commercial purposes for more than 250 days in the year 89.11 preceding the year of assessment, and that includes a portion 89.12 used as a homestead by the owner, which includes a dwelling 89.13 occupied as a homestead by a shareholder of a corporation that 89.14 owns the resort or a partner in a partnership that owns the 89.15 resort, even if the title to the homestead is held by the 89.16 corporation or partnership. For purposes of this clause, 89.17 property is devoted to a commercial purpose on a specific day if 89.18 any portion of the property, excluding the portion used 89.19 exclusively as a homestead, is used for residential occupancy 89.20 and a fee is charged for residential occupancy. Class 1c 89.21 property has a class rate of one percent of total market value 89.22 with the following limitation: the area of the property must 89.23 not exceed 100 feet of lakeshore footage for each cabin or 89.24 campsite located on the property up to a total of 800 feet and 89.25 500 feet in depth, measured away from the lakeshore. If any 89.26 portion of the class 1c resort property is classified as class 89.27 4c under subdivision 25, the entire property must meet the 89.28 requirements of subdivision 25, paragraph (d), clause (1), to 89.29 qualify for class 1c treatment under this paragraph. 89.30 (d) Class 1d property includes structures that meet all of 89.31 the following criteria: 89.32 (1) the structure is located on property that is classified 89.33 as agricultural property under section 273.13, subdivision 23; 89.34 (2) the structure is occupied exclusively by seasonal farm 89.35 workers during the time when they work on that farm, and the 89.36 occupants are not charged rent for the privilege of occupying 90.1 the property, provided that use of the structure for storage of 90.2 farm equipment and produce does not disqualify the property from 90.3 classification under this paragraph; 90.4 (3) the structure meets all applicable health and safety 90.5 requirements for the appropriate season; and 90.6 (4) the structure is not salable as residential property 90.7 because it does not comply with local ordinances relating to 90.8 location in relation to streets or roads. 90.9 The market value of class 1d property has the same class 90.10 rates as class 1a property under paragraph (a). 90.11 EFFECTIVE DATE: This section is effective for taxes 90.12 payable in 2001 and thereafter. 90.13 Sec. 15. Minnesota Statutes 1999 Supplement, section 90.14 273.13, subdivision 23, is amended to read: 90.15 Subd. 23. [CLASS 2.] (a) Class 2a property is agricultural 90.16 land including any improvements that is homesteaded. The market 90.17 value of the house and garage and immediately surrounding one 90.18 acre of land has the same class rates as class 1a property under 90.19 subdivision 22. The value of the remaining land including 90.20 improvements up to$115,000 has a net class rate of 0.35 percent90.21of market value. The value of class 2a property over $115,00090.22of market value up toand including $600,000 market value has a 90.23netclass rate of0.80.5 percent of market value. The 90.24 remaining property over $600,000 market value has a class rate 90.25 of1.20one percent of market value. 90.26 (b) Class 2b property is (1) real estate, rural in 90.27 character and used exclusively for growing trees for timber, 90.28 lumber, and wood and wood products; (2) real estate that is not 90.29 improved with a structure and is used exclusively for growing 90.30 trees for timber, lumber, and wood and wood products, if the 90.31 owner has participated or is participating in a cost-sharing 90.32 program for afforestation, reforestation, or timber stand 90.33 improvement on that particular property, administered or 90.34 coordinated by the commissioner of natural resources; (3) real 90.35 estate that is nonhomestead agricultural land; or (4) a landing 90.36 area or public access area of a privately owned public use 91.1 airport. Class 2b property has a net class rate of1.20one 91.2 percent of market value. 91.3 (c) Agricultural land as used in this section means 91.4 contiguous acreage of ten acres or more, used during the 91.5 preceding year for agricultural purposes. "Agricultural 91.6 purposes" as used in this section means the raising or 91.7 cultivation of agricultural products or enrollment in the 91.8 Reinvest in Minnesota program under sections 103F.501 to 91.9 103F.535 or the federal Conservation Reserve Program as 91.10 contained in Public Law Number 99-198. Contiguous acreage on 91.11 the same parcel, or contiguous acreage on an immediately 91.12 adjacent parcel under the same ownership, may also qualify as 91.13 agricultural land, but only if it is pasture, timber, waste, 91.14 unusable wild land, or land included in state or federal farm 91.15 programs. Agricultural classification for property shall be 91.16 determined excluding the house, garage, and immediately 91.17 surrounding one acre of land, and shall not be based upon the 91.18 market value of any residential structures on the parcel or 91.19 contiguous parcels under the same ownership. 91.20 (d) Real estate, excluding the house, garage, and 91.21 immediately surrounding one acre of land, of less than ten acres 91.22 which is exclusively and intensively used for raising or 91.23 cultivating agricultural products, shall be considered as 91.24 agricultural land. 91.25 Land shall be classified as agricultural even if all or a 91.26 portion of the agricultural use of that property is the leasing 91.27 to, or use by another person for agricultural purposes. 91.28 Classification under this subdivision is not determinative 91.29 for qualifying under section 273.111. 91.30 The property classification under this section supersedes, 91.31 for property tax purposes only, any locally administered 91.32 agricultural policies or land use restrictions that define 91.33 minimum or maximum farm acreage. 91.34 (e) The term "agricultural products" as used in this 91.35 subdivision includes production for sale of: 91.36 (1) livestock, dairy animals, dairy products, poultry and 92.1 poultry products, fur-bearing animals, horticultural and nursery 92.2 stock described in sections 18.44 to 18.61, fruit of all kinds, 92.3 vegetables, forage, grains, bees, and apiary products by the 92.4 owner; 92.5 (2) fish bred for sale and consumption if the fish breeding 92.6 occurs on land zoned for agricultural use; 92.7 (3) the commercial boarding of horses if the boarding is 92.8 done in conjunction with raising or cultivating agricultural 92.9 products as defined in clause (1); 92.10 (4) property which is owned and operated by nonprofit 92.11 organizations used for equestrian activities, excluding racing; 92.12 (5) game birds and waterfowl bred and raised for use on a 92.13 shooting preserve licensed under section 97A.115; 92.14 (6) insects primarily bred to be used as food for animals; 92.15 and 92.16 (7) trees, grown for sale as a crop, and not sold for 92.17 timber, lumber, wood, or wood products. 92.18 (f) If a parcel used for agricultural purposes is also used 92.19 for commercial or industrial purposes, including but not limited 92.20 to: 92.21 (1) wholesale and retail sales; 92.22 (2) processing of raw agricultural products or other goods; 92.23 (3) warehousing or storage of processed goods; and 92.24 (4) office facilities for the support of the activities 92.25 enumerated in clauses (1), (2), and (3), 92.26 the assessor shall classify the part of the parcel used for 92.27 agricultural purposes as class 1b, 2a, or 2b, whichever is 92.28 appropriate, and the remainder in the class appropriate to its 92.29 use. The grading, sorting, and packaging of raw agricultural 92.30 products for first sale is considered an agricultural purpose. 92.31 A greenhouse or other building where horticultural or nursery 92.32 products are grown that is also used for the conduct of retail 92.33 sales must be classified as agricultural if it is primarily used 92.34 for the growing of horticultural or nursery products from seed, 92.35 cuttings, or roots and occasionally as a showroom for the retail 92.36 sale of those products. Use of a greenhouse or building only 93.1 for the display of already grown horticultural or nursery 93.2 products does not qualify as an agricultural purpose. 93.3 The assessor shall determine and list separately on the 93.4 records the market value of the homestead dwelling and the one 93.5 acre of land on which that dwelling is located. If any farm 93.6 buildings or structures are located on this homesteaded acre of 93.7 land, their market value shall not be included in this separate 93.8 determination. 93.9 (g) To qualify for classification under paragraph (b), 93.10 clause (4), a privately owned public use airport must be 93.11 licensed as a public airport under section 360.018. For 93.12 purposes of paragraph (b), clause (4), "landing area" means that 93.13 part of a privately owned public use airport properly cleared, 93.14 regularly maintained, and made available to the public for use 93.15 by aircraft and includes runways, taxiways, aprons, and sites 93.16 upon which are situated landing or navigational aids. A landing 93.17 area also includes land underlying both the primary surface and 93.18 the approach surfaces that comply with all of the following: 93.19 (i) the land is properly cleared and regularly maintained 93.20 for the primary purposes of the landing, taking off, and taxiing 93.21 of aircraft; but that portion of the land that contains 93.22 facilities for servicing, repair, or maintenance of aircraft is 93.23 not included as a landing area; 93.24 (ii) the land is part of the airport property; and 93.25 (iii) the land is not used for commercial or residential 93.26 purposes. 93.27 The land contained in a landing area under paragraph (b), clause 93.28 (4), must be described and certified by the commissioner of 93.29 transportation. The certification is effective until it is 93.30 modified, or until the airport or landing area no longer meets 93.31 the requirements of paragraph (b), clause (4). For purposes of 93.32 paragraph (b), clause (4), "public access area" means property 93.33 used as an aircraft parking ramp, apron, or storage hangar, or 93.34 an arrival and departure building in connection with the airport. 93.35 EFFECTIVE DATE: This section is effective for taxes 93.36 payable in 2001 and thereafter. 94.1 Sec. 16. Minnesota Statutes 1999 Supplement, section 94.2 273.13, subdivision 24, is amended to read: 94.3 Subd. 24. [CLASS 3.] (a) Commercial and industrial 94.4 property and utility real and personal property is class 3a. 94.5 (1) Except as otherwise provided, each parcel of 94.6 commercial, industrial, or utility real property has a class 94.7 rate of2.4two percent of the first tier of market value, and 94.83.4three percent of the remaining market value, except that. 94.9 In the case of contiguous parcels of property owned by the same 94.10 person or entity, only the value equal to the first-tier value 94.11 of the contiguous parcels qualifies for the reduced class rate, 94.12 except that contiguous parcels owned by the same person or 94.13 entity shall be eligible for the first-tier value class rate on 94.14 each separate business operated by the owner, provided the 94.15 business is housed in a separate structure. For the purposes of 94.16 this subdivision, the first tier means the first $150,000 of 94.17 market value. Real property owned in fee by a utility for 94.18 transmission line right-of-way shall be classified at the class 94.19 rate for the higher tier.All personal property shall be94.20classified at the class rate for the higher tier. For purposes94.21of this subdivision "personal property" means tools, implements,94.22and machinery of an electric generating, transmission, or94.23distribution system, or a pipeline system transporting or94.24distributing water, gas, crude oil, or petroleum products or94.25mains and pipes used in the distribution of steam or hot or94.26chilled water for heating or cooling buildings, which are94.27fixtures.94.28For purposes of this paragraph,Parcels are considered to 94.29 be contiguous even if they are separated from each other by a 94.30 road, street,vacant lot,waterway, or other similar intervening 94.31 type of property. Property owners who have contiguous parcels 94.32 of property that constitute separate businesses that may qualify 94.33 for the first-tier class rate shall notify the county assessor 94.34 by July 1, for treatment beginning in the following taxes 94.35 payable year. Connections between parcels that consist of power 94.36 lines or pipelines do not cause the parcels to be contiguous. 95.1 (2) Personal property that is: (i) part of an electric 95.2 generation, transmission, or distribution system; or (ii) part 95.3 of a pipeline system transporting or distributing water, gas, 95.4 crude oil, or petroleum products; and (iii) not described in 95.5 clause (3), has a class rate of 2.4 percent of the first tier of 95.6 market value and 3.4 percent of the remaining market value. In 95.7 the case of multiple parcels in one county that are owned by one 95.8 person or entity, only one first tier amount is eligible for the 95.9 reduced rate. 95.10 (3) Personal property that is: (i) tools, implements, and 95.11 machinery of an electric generation, transmission, or 95.12 distribution system; (ii) tools, implements, and machinery of a 95.13 pipeline system transporting or distributing water, gas, crude 95.14 oil, or petroleum products; or (iii) the mains and pipes used in 95.15 the distribution of steam or hot or chilled water for heating or 95.16 cooling buildings, has a class rate of 3.4 percent. 95.17 (b) Employment property defined in section 469.166, during 95.18 the period provided in section 469.170, shall constitute class 95.19 3b. The class rates for class 3b property are determined under 95.20 paragraph (a). 95.21 (c)(1) Subject to the limitations of clause (2), structures 95.22 which are (i) located on property classified as class 3a, (ii) 95.23 constructed under an initial building permit issued after 95.24 January 2, 1996, (iii) located in a transit zone as defined 95.25 under section 473.3915, subdivision 3, (iv) located within the 95.26 boundaries of a school district, and (v) not primarily used for 95.27 retail or transient lodging purposes, shall have a class rate 95.28 equal to the lesser of 2.975 percent or the class rate of the 95.29 second tier of the commercial property rate under paragraph (a) 95.30 on any portion of the market value that does not qualify for the 95.31 first tier class rate under paragraph (a). As used in item (v), 95.32 a structure is primarily used for retail or transient lodging 95.33 purposes if over 50 percent of its square footage is used for 95.34 those purposes. A class rate equal to the lesser of 2.975 95.35 percent or the class rate of the second tier of the commercial 95.36 property class rate under paragraph (a) shall also apply to 96.1 improvements to existing structures that meet the requirements 96.2 of items (i) to (v) if the improvements are constructed under an 96.3 initial building permit issued after January 2, 1996, even if 96.4 the remainder of the structure was constructed prior to January 96.5 2, 1996. For the purposes of this paragraph, a structure shall 96.6 be considered to be located in a transit zone if any portion of 96.7 the structure lies within the zone. If any property once 96.8 eligible for treatment under this paragraph ceases to remain 96.9 eligible due to revisions in transit zone boundaries, the 96.10 property shall continue to receive treatment under this 96.11 paragraph for a period of three years. 96.12 (2) This clause applies to any structure qualifying for the 96.13 transit zone reduced class rate under clause (1) on January 2, 96.14 1999, or any structure meeting any of the qualification criteria 96.15 in item (i) and otherwise qualifying for the transit zone 96.16 reduced class rate under clause (1). Such a structure continues 96.17 to receive the transit zone reduced class rate until the 96.18 occurrence of one of the events in item (ii). Property 96.19 qualifying under item (i)(D), that is located outside of a city 96.20 of the first class, qualifies for the transit zone reduced class 96.21 rate as provided in that item. Property qualifying under item 96.22 (i)(E) qualifies for the transit zone reduced class rate as 96.23 provided in that item. 96.24 (i) A structure qualifies for the rate in this clause if it 96.25 is: 96.26 (A) property for which a building permit was issued before 96.27 December 31, 1998; or 96.28 (B) property for which a building permit was issued before 96.29 June 30, 2001, if: 96.30 (I) at least 50 percent of the land on which the structure 96.31 is to be built has been acquired or is the subject of signed 96.32 purchase agreements or signed options as of March 15, 1998, by 96.33 the entity that proposes construction of the project or an 96.34 affiliate of the entity; 96.35 (II) signed agreements have been entered into with one 96.36 entity or with affiliated entities to lease for the account of 97.1 the entity or affiliated entities at least 50 percent of the 97.2 square footage of the structure or the owner of the structure 97.3 will occupy at least 50 percent of the square footage of the 97.4 structure; and 97.5 (III) one of the following requirements is met: 97.6 the project proposer has submitted the completed data 97.7 portions of an environmental assessment worksheet by December 97.8 31, 1998; or 97.9 a notice of determination of adequacy of an environmental 97.10 impact statement has been published by April 1, 1999; or 97.11 an alternative urban areawide review has been completed by 97.12 April 1, 1999; or 97.13 (C) property for which a building permit is issued before 97.14 July 30, 1999, if: 97.15 (I) at least 50 percent of the land on which the structure 97.16 is to be built has been acquired or is the subject of signed 97.17 purchase agreements as of March 31, 1998, by the entity that 97.18 proposes construction of the project or an affiliate of the 97.19 entity; 97.20 (II) a signed agreement has been entered into between the 97.21 building developer and a tenant to lease for its own account at 97.22 least 200,000 square feet of space in the building; 97.23 (III) a signed letter of intent is entered into by July 1, 97.24 1998, between the building developer and the tenant to lease the 97.25 space for its own account; and 97.26 (IV) the environmental review process required by state law 97.27 was commenced by December 31, 1998; 97.28 (D) property for which an irrevocable letter of credit with 97.29 a housing and redevelopment authority was signed before December 97.30 31, 1998. The structure shall receive the transit zone reduced 97.31 class rate during construction and for the duration of time that 97.32 the original tenants remain in the building. Any unoccupied net 97.33 leasable square footage that is not leased within 36 months 97.34 after the certificate of occupancy has been issued for the 97.35 building shall not be eligible to receive the reduced class 97.36 rate. This reduced class rate applies only ifthea qualifying 98.1 entitythat constructed the structurecontinues to own the 98.2 property; 98.3 (E) property, located in a city of the first class, and for 98.4 which the building permits for the excavation, the parking ramp, 98.5 and the office tower were issued prior to April 1, 1999, shall 98.6 receive the reduced class rate during construction and for the 98.7 first five assessment years immediately following its initial 98.8 occupancy provided that, when completed, at least 25 percent of 98.9 the net leasable square footage must be occupied bythea 98.10 qualifying entityor the parent entity constructing the98.11structureeach year during this time period. In order to 98.12 receive the reduced class rate on the structure in any 98.13 subsequent assessment years, at least 50 percent of the rentable 98.14 square footage must be occupied bythea qualifying entityor98.15the parent entity that constructed the structure. This reduced 98.16 class rate applies only if the entity or the parent entity that 98.17 constructed the structure continues to own the property. 98.18 (ii) A structure specified by this clause, other than a 98.19 structure qualifying under clause (i)(D) or (E), shall continue 98.20 to receive the transit zone reduced class rate until the 98.21 occurrence of one of the following events: 98.22 (A) if the structure upon initial occupancy will be owner 98.23 occupied by the entity initially constructing the structure or 98.24 an affiliated entity, the structure receives the reduced class 98.25 rate until the structure ceases to be at least 50 percent 98.26 occupied by the entity or an affiliated entity, provided, if the 98.27 portion of the structure occupied by that entity or an affiliate 98.28 of the entity is less than 85 percent, the transit zone class 98.29 rate reduction for the portion of structure not so occupied 98.30 terminates upon the leasing of such space to any nonaffiliated 98.31 entity; or 98.32 (B) if the structure is leased by a single entity or 98.33 affiliated entity at the time of initial occupancy, the 98.34 structure shall receive the reduced class rate until the 98.35 structure ceases to be at least 50 percent occupied by the 98.36 entity or an affiliated entity, provided, if the portion of the 99.1 structure occupied by that entity or an affiliate of the entity 99.2 is less than 85 percent, the transit zone class rate reduction 99.3 for the portion of structure not so occupied shall terminate 99.4 upon the leasing of such space to any nonaffiliated entity; or 99.5 (C) if the structure meets the criteria in item (i)(C), the 99.6 structure shall receive the reduced class rate until the 99.7 expiration of the initial lease term of the applicable tenants. 99.8 Percentages occupied or leased shall be determined based 99.9 upon net leasable square footage in the structure. The assessor 99.10 shall allocate the value of the structure in the same fashion as 99.11 provided in the general law for portions of any structure 99.12 receiving and not receiving the transit tax class reduction as a 99.13 result of this clause. 99.14 (3) For purposes of this paragraph, "qualifying entity" 99.15 means the entity owning the property on September 1, 2000, or an 99.16 affiliate of an entity that owned the property on September 1, 99.17 2000. 99.18 EFFECTIVE DATE: That portion of this section relating to 99.19 the description of real and personal utility property is 99.20 effective for taxes payable in 2000 and thereafter. The changes 99.21 in class rates, transit zones, and contiguous parcels are 99.22 effective for taxes payable in 2001 and thereafter. 99.23 Sec. 17. Minnesota Statutes 1999 Supplement, section 99.24 273.13, subdivision 25, is amended to read: 99.25 Subd. 25. [CLASS 4.] (a) Class 4a is residential real 99.26 estate containing four or more units and used or held for use by 99.27 the owner or by the tenants or lessees of the owner as a 99.28 residence for rental periods of 30 days or more. Class 4a also 99.29 includes hospitals licensed under sections 144.50 to 144.56, 99.30 other than hospitals exempt under section 272.02, and contiguous 99.31 property used for hospital purposes, without regard to whether 99.32 the property has been platted or subdivided. Class 4a property 99.33in a city with a population of 5,000 or less, that is (1)99.34located outside of the metropolitan area, as defined in section99.35473.121, subdivision 2, or outside any county contiguous to the99.36metropolitan area, and (2) whose city boundary is at least 15100.1miles from the boundary of any city with a population greater100.2than 5,000 has a class rate of 2.15 percent of market value.100.3All other class 4a propertyhas a class rate of2.4two percent 100.4 of market value.For purposes of this paragraph, population has100.5the same meaning given in section 477A.011, subdivision 3.100.6 (b) Class 4b includes: 100.7 (1) residential real estate containing less than four units 100.8 that does not qualify as class 4bb, other than seasonal 100.9 residential, and recreational; 100.10 (2) manufactured homes not classified under any other 100.11 provision; 100.12 (3) a dwelling, garage, and surrounding one acre of 100.13 property on a nonhomestead farm classified under subdivision 23, 100.14 paragraph (b) containing two or three units; 100.15 (4) unimproved property that is classified residential as 100.16 determined under subdivision 33. 100.17 Class 4b property has a class rate of1.651.5 percent of 100.18 market value. 100.19 (c) Class 4bb includes: 100.20 (1) nonhomestead residential real estate containing one 100.21 unit, other than seasonal residential, and recreational; and 100.22 (2) a single family dwelling, garage, and surrounding one 100.23 acre of property on a nonhomestead farm classified under 100.24 subdivision 23, paragraph (b). 100.25 Class 4bb has a class rate of1.2one percent on the first 100.26 $76,000 of market value and a class rate of1.651.5 percent of 100.27 its market value that exceeds $76,000. 100.28 Property that has been classified as seasonal recreational 100.29 residential property at any time during which it has been owned 100.30 by the current owner or spouse of the current owner does not 100.31 qualify for class 4bb. 100.32 (d) Class 4c property includes: 100.33 (1) except as provided in subdivision 22, paragraph (c), 100.34 real property devoted to temporary and seasonal residential 100.35 occupancy for recreation purposes, including real property 100.36 devoted to temporary and seasonal residential occupancy for 101.1 recreation purposes and not devoted to commercial purposes for 101.2 more than 250 days in the year preceding the year of 101.3 assessment. For purposes of this clause, property is devoted to 101.4 a commercial purpose on a specific day if any portion of the 101.5 property is used for residential occupancy, and a fee is charged 101.6 for residential occupancy. In order for a property to be 101.7 classified as class 4c, seasonal recreational residential for 101.8 commercial purposes, at least 40 percent of the annual gross 101.9 lodging receipts related to the property must be from business 101.10 conducted during 90 consecutive days and either (i) at least 60 101.11 percent of all paid bookings by lodging guests during the year 101.12 must be for periods of at least two consecutive nights; or (ii) 101.13 at least 20 percent of the annual gross receipts must be from 101.14 charges for rental of fish houses, boats and motors, 101.15 snowmobiles, downhill or cross-country ski equipment, or charges 101.16 for marina services, launch services, and guide services, or the 101.17 sale of bait and fishing tackle. For purposes of this 101.18 determination, a paid booking of five or more nights shall be 101.19 counted as two bookings. Class 4c also includes commercial use 101.20 real property used exclusively for recreational purposes in 101.21 conjunction with class 4c property devoted to temporary and 101.22 seasonal residential occupancy for recreational purposes, up to 101.23 a total of two acres, provided the property is not devoted to 101.24 commercial recreational use for more than 250 days in the year 101.25 preceding the year of assessment and is located within two miles 101.26 of the class 4c property with which it is used. Class 4c 101.27 property classified in this clause also includes the remainder 101.28 of class 1c resorts provided that the entire property including 101.29 that portion of the property classified as class 1c also meets 101.30 the requirements for class 4c under this clause; otherwise the 101.31 entire property is classified as class 3. Owners of real 101.32 property devoted to temporary and seasonal residential occupancy 101.33 for recreation purposes and all or a portion of which was 101.34 devoted to commercial purposes for not more than 250 days in the 101.35 year preceding the year of assessment desiring classification as 101.36 class 1c or 4c, must submit a declaration to the assessor 102.1 designating the cabins or units occupied for 250 days or less in 102.2 the year preceding the year of assessment by January 15 of the 102.3 assessment year. Those cabins or units and a proportionate 102.4 share of the land on which they are located will be designated 102.5 class 1c or 4c as otherwise provided. The remainder of the 102.6 cabins or units and a proportionate share of the land on which 102.7 they are located will be designated as class 3a. The owner of 102.8 property desiring designation as class 1c or 4c property must 102.9 provide guest registers or other records demonstrating that the 102.10 units for which class 1c or 4c designation is sought were not 102.11 occupied for more than 250 days in the year preceding the 102.12 assessment if so requested. The portion of a property operated 102.13 as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 102.14 nonresidential facility operated on a commercial basis not 102.15 directly related to temporary and seasonal residential occupancy 102.16 for recreation purposes shall not qualify for class 1c or 4c; 102.17 (2) qualified property used as a golf course if: 102.18 (i) it is open to the public on a daily fee basis. It may 102.19 charge membership fees or dues, but a membership fee may not be 102.20 required in order to use the property for golfing, and its green 102.21 fees for golfing must be comparable to green fees typically 102.22 charged by municipal courses; and 102.23 (ii) it meets the requirements of section 273.112, 102.24 subdivision 3, paragraph (d). 102.25 A structure used as a clubhouse, restaurant, or place of 102.26 refreshment in conjunction with the golf course is classified as 102.27 class 3a property; 102.28 (3) real property up to a maximum of one acre of land owned 102.29 by a nonprofit community service oriented organization; provided 102.30 that the property is not used for a revenue-producing activity 102.31 for more than six days in the calendar year preceding the year 102.32 of assessment and the property is not used for residential 102.33 purposes on either a temporary or permanent basis. For purposes 102.34 of this clause, a "nonprofit community service oriented 102.35 organization" means any corporation, society, association, 102.36 foundation, or institution organized and operated exclusively 103.1 for charitable, religious, fraternal, civic, or educational 103.2 purposes, and which is exempt from federal income taxation 103.3 pursuant to section 501(c)(3), (10), or (19) of the Internal 103.4 Revenue Code of 1986, as amended through December 31, 1990. For 103.5 purposes of this clause, "revenue-producing activities" shall 103.6 include but not be limited to property or that portion of the 103.7 property that is used as an on-sale intoxicating liquor or 3.2 103.8 percent malt liquor establishment licensed under chapter 340A, a 103.9 restaurant open to the public, bowling alley, a retail store, 103.10 gambling conducted by organizations licensed under chapter 349, 103.11 an insurance business, or office or other space leased or rented 103.12 to a lessee who conducts a for-profit enterprise on the 103.13 premises. Any portion of the property which is used for 103.14 revenue-producing activities for more than six days in the 103.15 calendar year preceding the year of assessment shall be assessed 103.16 as class 3a. The use of the property for social events open 103.17 exclusively to members and their guests for periods of less than 103.18 24 hours, when an admission is not charged nor any revenues are 103.19 received by the organization shall not be considered a 103.20 revenue-producing activity; 103.21 (4) post-secondary student housing of not more than one 103.22 acre of land that is owned by a nonprofit corporation organized 103.23 under chapter 317A and is used exclusively by a student 103.24 cooperative, sorority, or fraternity for on-campus housing or 103.25 housing located within two miles of the border of a college 103.26 campus; 103.27 (5) manufactured home parks as defined in section 327.14, 103.28 subdivision 3;and103.29 (6) real property that is actively and exclusively devoted 103.30 to indoor fitness, health, social, recreational, and related 103.31 uses, is owned and operated by a not-for-profit corporation, and 103.32 is located within the metropolitan area as defined in section 103.33 473.121, subdivision 2; and 103.34 (7) a leased or privately owned noncommercial aircraft 103.35 storage hangar and the land on which it is located, provided 103.36 that: 104.1 (i) the land is on an airport owned or operated by a city, 104.2 town, county, metropolitan airports commission, or group 104.3 thereof, and 104.4 (ii) the land lease, or any ordinance or other signed 104.5 agreement restricting the use of the leased premise, prohibits 104.6 commercial activity performed at the hangar. 104.7 If a hangar classified under this clause is sold after the 104.8 effective date of this act, a bill of sale must be filed by the 104.9 new owner with the county assessor of the county where the 104.10 property is located within 60 days of the sale. 104.11 Class 4c property has a class rate of1.651.5 percent of 104.12 market value, except that (i) each parcel of seasonal 104.13 residential recreational property not used for commercial 104.14 purposes has the same class rates as class 4bb property, (ii) 104.15 manufactured home parks assessed under clause (5) have the same 104.16 class rate as class 4b property, and (iii) property described in 104.17 paragraph (d), clause (4), has the same class rate as the rate 104.18 applicable to the first tier of class 4bb nonhomestead 104.19 residential real estate under paragraph (c). 104.20 (e) Class 4d property is qualifying low-income rental 104.21 housing certified to the assessor by the housing finance agency 104.22 under sections 273.126 and 462A.071. Class 4d includes land in 104.23 proportion to the total market value of the building that is 104.24 qualifying low-income rental housing. For all properties 104.25 qualifying as class 4d, the market value determined by the 104.26 assessor must be based on the normal approach to value using 104.27 normal unrestricted rents. 104.28 Class 4d property has a class rate of one percent of market 104.29 value. 104.30 EFFECTIVE DATE: This section is effective for taxes 104.31 payable in 2001 and thereafter. 104.32 Sec. 18. Minnesota Statutes 1999 Supplement, section 104.33 273.13, subdivision 31, is amended to read: 104.34 Subd. 31. [CLASS 5.] Class 5 property includes: 104.35 (1) unmined iron ore and low-grade iron-bearing formations 104.36 as defined in section 273.14; and 105.1 (2) all other property not otherwise classified. 105.2 Class 5 property has a class rate of3.4three percent of 105.3 market value. 105.4 EFFECTIVE DATE: This section is effective for taxes 105.5 payable in 2001 and thereafter. 105.6 Sec. 19. Minnesota Statutes 1999 Supplement, section 105.7 273.1382, subdivision 1, is amended to read: 105.8 Subdivision 1. [EDUCATION CREDIT TAX RATE.] Each year, the 105.9 respective county auditors shall determine the general education 105.10 credit tax rate for each school district as the sum of: (i) the 105.11 district's initial tax ratefor each school districtfor the 105.12 general education levy certified under section 126C.13, 105.13 subdivision 2 or 3. That rate plus; (ii) theschooldistrict's 105.14 education homestead credit tax rate adjustment under section 105.15 275.08, subdivision 1e, shall be the general education credit105.16tax rate for the district; and (iii) the rate obtained by 105.17 dividing an amount equal to 12 percent of the district's 105.18 adjusted net tax capacity by the district's taxable net tax 105.19 capacity plus its distribution net tax capacity, if any, under 105.20 chapter 276A or 473F. 105.21 EFFECTIVE DATE: This section is effective for taxes 105.22 payable in 2001 and thereafter. 105.23 Sec. 20. Minnesota Statutes 1999 Supplement, section 105.24 273.1382, subdivision 1a, is amended to read: 105.25 Subd. 1a. [EDUCATION HOMESTEAD CREDIT.] Each county 105.26 auditor shall determine a general education homestead credit for 105.27 each homestead within the county equal to66.2 percent for taxes105.28payable in 1999 and 8388 percentfor taxes payable in 2000 and105.29thereafterof the education credit tax rate times the net tax 105.30 capacity of the homestead for the taxes payable year. The 105.31 amount of general education homestead credit for a homestead may 105.32 not exceed$320 for taxes payable in 1999 and $390 for taxes105.33payable in 2000 and thereafter$535. In the case of an 105.34 agricultural homestead, only the net tax capacity of the house, 105.35 garage, and surrounding one acre of land shall be used in 105.36 determining the property's education homestead credit. 106.1 EFFECTIVE DATE: This section is effective for taxes 106.2 payable in 2001 and thereafter. 106.3 Sec. 21. Minnesota Statutes 1999 Supplement, section 106.4 273.1382, subdivision 1b, is amended to read: 106.5 Subd. 1b. [EDUCATION AGRICULTURAL CREDIT.] Property 106.6 classified as class 2a agricultural homestead or class 2b 106.7 agricultural nonhomestead or timberland is eligible for 106.8 education agricultural credit. The credit is equal to5466 106.9 percent, in the case of agricultural homestead property up to 106.10 $600,000 in market value, or 50 percent, in the case of all 106.11 other agriculturalnonhomesteadproperty or timberland, of the 106.12 property's net tax capacity times the education credit tax rate 106.13 determined in subdivision 1. The net tax capacity of class 2a 106.14 property attributable to the house, garage, and surrounding one 106.15 acre of land is not eligible for the credit under this 106.16 subdivision. 106.17 EFFECTIVE DATE: This section is effective for taxes 106.18 payable in 2001 and thereafter. 106.19 Sec. 22. Minnesota Statutes 1999 Supplement, section 106.20 273.1398, subdivision 1a, is amended to read: 106.21 Subd. 1a. [TAX BASE DIFFERENTIAL.] (a) For aids payable in 106.22 2000, the tax base differential is: 106.23 (1) 0.45 percent of the assessment year 1998 taxable market 106.24 value of class 2a agricultural homestead property, excluding the 106.25 house, garage, and surrounding one acre of land, between 106.26 $115,000 and $600,000 and over 320 acres, minus the value over 106.27 $600,000 that is less than 320 acres; plus 106.28 (2) 0.5 percent of the assessment year 1998 taxable market 106.29 value of noncommercial seasonal recreational residential 106.30 property over $75,000 in value; plus 106.31 (3) for purposes of computing the fiscal disparity 106.32 adjustment only, 0.2 percent of the assessment year 1998 taxable 106.33 market value of class 3 commercial-industrial property over 106.34 $150,000. 106.35 (b) For the purposes of the distribution of homestead and 106.36 agricultural credit aid for aids payable in 2000, the 107.1 commissioner of revenue shall use the best information available 107.2 as of June 30, 1999, to make an estimate of the value described 107.3 in paragraph (a), clause (1). The commissioner shall adjust the 107.4 distribution of homestead and agricultural credit aid for aids 107.5 payable in 2001 and subsequent years if new information 107.6 regarding the value described in paragraph (a), clause (1), 107.7 becomes available after June 30, 1999. 107.8 (c) For aids payable in 2001, the tax base differential is 107.9 0.2 percent of the assessment year 1999 taxable market value of 107.10 class 2a agricultural homestead property, excluding the house, 107.11 garage, and surrounding one acre of land, between $115,000 and 107.12 $600,000 of market value. 107.13 Sec. 23. Minnesota Statutes 1998, section 273.37, 107.14 subdivision 3, is amended to read: 107.15 Subd. 3. Taxable wind energy conversion systems, as 107.16 defined in section 216C.06, subdivision 12, which are not owned, 107.17 operated, and exclusively controlled by the owner of the land 107.18 upon which the system is situated, must be listed and assessed 107.19 by the commissioner of revenue as personal property in the name 107.20 of the owner of the system in the taxing district where it is 107.21 situated. 107.22 EFFECTIVE DATE: This section is effective for the 2000 107.23 assessment and thereafter. 107.24 Sec. 24. [273.372] [PROCEEDINGS AND APPEALS; UTILITY 107.25 VALUATIONS.] 107.26 An appeal by a utility company concerning the exemption, 107.27 valuation, or classification on property for which the 107.28 commissioner of revenue has provided the county with 107.29 commissioner's orders or recommended values must be brought 107.30 against the commissioner in tax court or in district court of 107.31 the county where the property is located, and not against the 107.32 county or taxing district where the property is located. If the 107.33 appeal to a court is of an order of the commissioner, it must be 107.34 brought under chapter 271. If the appeal is brought under 107.35 chapter 278, the procedures in that chapter apply. This 107.36 provision applies to the property contained under sections 108.1 273.33, 273.35, 273.36, and 273.37, but only if the appealed 108.2 values have remained unchanged from those provided to the county 108.3 by the commissioner. If the exemption, valuation, or 108.4 classification being appealed has been changed by the county, 108.5 then the action must be brought under chapter 278 in the county 108.6 where the property is located. 108.7 Upon filing of any appeal by a utility company against the 108.8 commissioner, the commissioner shall give notice by first class 108.9 mail to each county which would be affected by the appeal. 108.10 Companies that submit the reports under section 273.371 by 108.11 the date specified in that section, or by the date specified by 108.12 the commissioner in an extension, may appeal administratively to 108.13 the commissioner under the procedures in section 270.11, 108.14 subdivision 6, prior to bringing an action in tax court or in 108.15 district court, however, instituting an administrative appeal 108.16 with the commissioner does not change or modify the deadline in 108.17 section 278.01 for bringing an action in tax court or district 108.18 court. 108.19 EFFECTIVE DATE: This section is effective for appeals made 108.20 on property for assessment year 1999 and thereafter. 108.21 Sec. 25. Minnesota Statutes 1998, section 275.065, 108.22 subdivision 3, is amended to read: 108.23 Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 108.24 county auditor shall prepare and the county treasurer shall 108.25 deliver after November 10 and on or before November 24 each 108.26 year, by first class mail to each taxpayer at the address listed 108.27 on the county's current year's assessment roll, a notice of 108.28 proposed property taxes. 108.29 (b) The commissioner of revenue shall prescribe the form of 108.30 the notice. 108.31 (c) The notice must inform taxpayers that it contains the 108.32 amount of property taxes each taxing authority proposes to 108.33 collect for taxes payable the following year. In the case of a 108.34 town, or in the case of the state determined portion of the 108.35 school district levy, the final tax amount will be its proposed 108.36 tax. The notice must clearly state that each taxing authority, 109.1 including regional library districts established under section 109.2 134.201, and including the metropolitan taxing districts as 109.3 defined in paragraph (i), but excluding all other special taxing 109.4 districts and towns, will hold a public meeting to receive 109.5 public testimony on the proposed budget and proposed or final 109.6 property tax levy, or, in case of a school district, on the 109.7 current budget and proposed property tax levy. It must clearly 109.8 state the time and place of each taxing authority's meeting and 109.9 an address where comments will be received by mail. 109.10 (d) The notice must state for each parcel: 109.11 (1) the market value of the property as determined under 109.12 section 273.11, and used for computing property taxes payable in 109.13 the following year and for taxes payable in the current year as 109.14 each appears in the records of the county assessor on November 1 109.15 of the current year; and, in the case of residential property, 109.16 whether the property is classified as homestead or 109.17 nonhomestead. The notice must clearly inform taxpayers of the 109.18 years to which the market values apply and that the values are 109.19 final values; 109.20 (2) the items listed below, shown separately by county, 109.21 city or town, state determined school tax net of the education 109.22 homestead credit under section 273.1382, voter approved school 109.23 levy, other local school levy, and the sum of the special taxing 109.24 districts, and as a total of all taxing authorities: 109.25 (i) the actual tax for taxes payable in the current year; 109.26 (ii) the tax change due to spending factors, defined as the 109.27 proposed tax minus the constant spending tax amount; 109.28 (iii) the tax change due to other factors, defined as the 109.29 constant spending tax amount minus the actual current year tax; 109.30 and 109.31 (iv) the proposed tax amount. 109.32 In the case of a town or the state determined school tax, 109.33 the final tax shall also be its proposed tax unless the town 109.34 changes its levy at a special town meeting under section 109.35 365.52. If a school district has certified under section 109.36 126C.17, subdivision 9, that a referendum will be held in the 110.1 school district at the November general election, the county 110.2 auditor must note next to the school district's proposed amount 110.3 that a referendum is pending and that, if approved by the 110.4 voters, the tax amount may be higher than shown on the notice. 110.5 In the case of the city of Minneapolis, the levy for the 110.6 Minneapolis library board and the levy for Minneapolis park and 110.7 recreation shall be listed separately from the remaining amount 110.8 of the city's levy. In the case of a parcel where tax increment 110.9 or the fiscal disparities areawide tax under chapter 276A or 110.10 473F applies, the proposed tax levy on the captured value or the 110.11 proposed tax levy on the tax capacity subject to the areawide 110.12 tax must each be stated separately and not included in the sum 110.13 of the special taxing districts; and 110.14 (3) the increase or decrease between the total taxes 110.15 payable in the current year and the total proposed taxes, 110.16 expressed as a percentage. 110.17 For purposes of this section, the amount of the tax on 110.18 homesteads qualifying under the senior citizens' property tax 110.19 deferral program under chapter 290B is the total amount of 110.20 property tax before subtraction of the deferred property tax 110.21 amount. 110.22 (e) The notice must clearly state that the proposed or 110.23 final taxes do not include the following: 110.24 (1) special assessments; 110.25 (2) levies approved by the voters after the date the 110.26 proposed taxes are certified, including bond referenda, school 110.27 district levy referenda, and levy limit increase referenda; 110.28 (3) amounts necessary to pay cleanup or other costs due to 110.29 a natural disaster occurring after the date the proposed taxes 110.30 are certified; 110.31 (4) amounts necessary to pay tort judgments against the 110.32 taxing authority that become final after the date the proposed 110.33 taxes are certified; and 110.34 (5) the contamination tax imposed on properties which 110.35 received market value reductions for contamination. 110.36 (f) Except as provided in subdivision 7, failure of the 111.1 county auditor to prepare or the county treasurer to deliver the 111.2 notice as required in this section does not invalidate the 111.3 proposed or final tax levy or the taxes payable pursuant to the 111.4 tax levy. 111.5 (g) If the notice the taxpayer receives under this section 111.6 lists the property as nonhomestead, and satisfactory 111.7 documentation is provided to the county assessor by the 111.8 applicable deadline, and the property qualifies for the 111.9 homestead classification in that assessment year, the assessor 111.10 shall reclassify the property to homestead for taxes payable in 111.11 the following year. 111.12 (h) In the case of class 4 residential property used as a 111.13 residence for lease or rental periods of 30 days or more, the 111.14 taxpayer must either: 111.15 (1) mail or deliver a copy of the notice of proposed 111.16 property taxes to each tenant, renter, or lessee; or 111.17 (2) post a copy of the notice in a conspicuous place on the 111.18 premises of the property. 111.19 The notice must be mailed or posted by the taxpayer by 111.20 November 27 or within three days of receipt of the notice, 111.21 whichever is later. A taxpayer may notify the county treasurer 111.22 of the address of the taxpayer, agent, caretaker, or manager of 111.23 the premises to which the notice must be mailed in order to 111.24 fulfill the requirements of this paragraph. 111.25 (i) For purposes of this subdivision, subdivisions 5a and 111.26 6, "metropolitan special taxing districts" means the following 111.27 taxing districts in the seven-county metropolitan area that levy 111.28 a property tax for any of the specified purposes listed below: 111.29 (1) metropolitan council under section 473.132, 473.167, 111.30 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 111.31 (2) metropolitan airports commission under section 473.667, 111.32 473.671, or 473.672; and 111.33 (3) metropolitan mosquito control commission under section 111.34 473.711. 111.35 For purposes of this section, any levies made by the 111.36 regional rail authorities in the county of Anoka, Carver, 112.1 Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 112.2 398A shall be included with the appropriate county's levy and 112.3 shall be discussed at that county's public hearing. 112.4(j) If a statutory or home rule charter city or a town has112.5exercised the local levy option provided by section 473.388,112.6subdivision 7, it may include in the notice of its proposed112.7taxes the amount of its proposed taxes attributable to its112.8exercise of the option. In the first year of the city or town's112.9exercise of this option, the statement shall include an estimate112.10of the reduction of the metropolitan council's tax on the parcel112.11due to exercise of that option. The metropolitan council's levy112.12shall be adjusted accordingly.112.13 EFFECTIVE DATE: This section is effective for notices 112.14 prepared in 2000 for taxes payable in 2001 and thereafter. 112.15 Sec. 26. Minnesota Statutes 1998, section 275.08, 112.16 subdivision 1b, is amended to read: 112.17 Subd. 1b. [COMPUTATION OF TAX RATES.] (a) The amounts 112.18 certified to be levied against net tax capacity under section 112.19 275.07 by an individual local government unit shall be divided 112.20 by the total net tax capacity of all taxable properties within 112.21 the local government unit's taxing jurisdiction. The resulting 112.22 ratio, the local government's local tax rate, multiplied by each 112.23 property's net tax capacity shall be each property's net tax 112.24 capacity tax for that local government unit before reduction by 112.25 any credits. 112.26 (b) Anyamountreferendum levy certified to the county 112.27 auditor to be levied against market value for the first time 112.28 before January 1, 2001, shall be divided by the total referendum 112.29 market value of all taxable properties within the taxing 112.30 district. The resulting ratio, the taxing district'snewmarket 112.31 value referendum tax rate, multiplied by each property's 112.32 referendum market value shall be each property'snewmarket 112.33 value referendum tax before reduction by any credits. For the 112.34 purposes of this subdivision, "referendum market value" means 112.35 the market value as defined in section 126C.01, subdivision 3. 112.36 (c) Any new referendum levy certified to the county auditor 113.1 to be levied against market value for the first time after 113.2 December 31, 2000, shall be divided by the total new referendum 113.3 market value of all taxable properties within the taxing 113.4 district. The resulting ratio, the taxing district's new market 113.5 value referendum tax rate, multiplied by each property's new 113.6 referendum market value shall be each property's new market 113.7 value referendum tax before reduction by any credits. For the 113.8 purposes of this subdivision, "new referendum market value" 113.9 means the market value as defined in section 126C.01, 113.10 subdivision 3a. 113.11 EFFECTIVE DATE: This section is effective for taxes 113.12 payable in 2002 and thereafter. 113.13 Sec. 27. Minnesota Statutes 1998, section 276.19, 113.14 subdivision 1, is amended to read: 113.15 Subdivision 1. [NOTICE OF OVERPAYMENT.] If an overpayment 113.16 of property tax arises on a parcelfor any reasondue to receipt 113.17 of a payment that exceeds the total amount of the tax required 113.18 to be paid on the property tax statement, the responsible county 113.19 official shall promptly notify the payer by regular mail that 113.20 the overpayment has occurred. The notice must state the amount 113.21 of overpayment and identify the parcel on which the overpayment 113.22 occurred. The notice must also instruct the payer how to claim 113.23 the overpayment and advise that the overpayment is subject to 113.24 forfeiture under this section. If the name or address of the 113.25 payer is not known, the notice of unclaimed overpayment must be 113.26 mailed to the taxpayer of record in the office of the county 113.27 auditor. 113.28 EFFECTIVE DATE: This section is effective for overpayment 113.29 of taxes made the day following final enactment and thereafter, 113.30 and applies only to taxes levied in 1999, payable in 2000, and 113.31 thereafter. 113.32 Sec. 28. [278.14] [REFUNDS OF MISTAKENLY BILLED TAXES.] 113.33 Subdivision 1. [APPLICABILITY.] A county must pay a refund 113.34 of a mistakenly billed tax as provided in this section. As used 113.35 in this section, "mistakenly billed tax" means an amount of 113.36 property tax that was billed, to the extent the amount billed 114.1 exceeds the accurate tax amount due to a misclassification of 114.2 property or a mathematical error in the calculation of the tax, 114.3 together with any penalty or interest paid on that amount. This 114.4 section applies only to taxes payable in the current year and 114.5 the two prior years. As used in this section, "mathematical 114.6 error" is limited to an error in: 114.7 (1) converting the market value of a property to tax 114.8 capacity; 114.9 (2) application of the tax rate to the property's tax 114.10 capacity; or 114.11 (3) calculation of or eligibility for a credit. 114.12 Subd. 2. [PROCEDURE.] A refund of mistakenly billed tax 114.13 must be paid upon verification of a claim made in a written 114.14 application by the owner of the property or upon discovery of 114.15 the mistakenly billed tax by the county. Refunds of 114.16 overpayments will be made as provided in section 278.12. 114.17 Subd. 3. [APPEALS.] If the county rejects a claim by a 114.18 property owner under subdivision 2, it must notify the property 114.19 owner of that decision within 90 days of receipt of the claim. 114.20 The property owner may appeal that decision to the tax court 114.21 within 60 days after receipt of a notice from the county of the 114.22 decision. Relief granted by the tax court is limited to current 114.23 year taxes, and taxes in the two prior years. 114.24 EFFECTIVE DATE: This section is effective for overpayment 114.25 of taxes made the day following final enactment and thereafter, 114.26 and applies only to taxes levied in 1999, payable in 2000, and 114.27 thereafter. 114.28 Sec. 29. Minnesota Statutes 1999 Supplement, section 114.29 290B.03, subdivision 1, is amended to read: 114.30 Subdivision 1. [PROGRAM QUALIFICATIONS.] The 114.31 qualifications for the senior citizens' property tax deferral 114.32 program are as follows: 114.33 (1) the property must be owned and occupied as a homestead 114.34 by a person 65 years of age or older. In the case of a married 114.35 couple, both of the spouses must be at least 65 years old at the 114.36 time the first property tax deferral is granted, regardless of 115.1 whether the property is titled in the name of one spouse or both 115.2 spouses, or titled in another way that permits the property to 115.3 have homestead status; 115.4 (2) the total household income of the qualifying 115.5 homeowners, as defined in section 290A.03, subdivision 5, for 115.6 the calendar year preceding the year of the initial application 115.7 may not exceed $60,000; 115.8 (3) the homestead must have been owned and occupied as the 115.9 homestead of at least one of the qualifying homeowners for at 115.10 least 15 years prior to the year the initial application is 115.11 filed; 115.12 (4)there are no delinquent property taxes, penalties, or115.13interest on the homesteaded property;115.14(5) there are no delinquent special assessments on the115.15homesteaded property;115.16(6)there are no state or federal tax liens or judgment 115.17 liens on the homesteaded property; 115.18(7)(5) there are no mortgages or other liens on the 115.19 property that secure future advances, except for those subject 115.20 to credit limits that result in compliance with clause(8)(6); 115.21 and 115.22(8)(6) the total unpaid balances of debts secured by 115.23 mortgages and other liens on the property, including unpaid and 115.24 delinquent special assessments, and any delinquent property 115.25 taxes, penalties, and interest, but not including property taxes 115.26 payable during the year, does not exceed3075 percent of the 115.27 assessor's estimated market value for the year. 115.28 EFFECTIVE DATE: This section applies to all homeowners and 115.29 all property taxes deferred beginning in payable 2001, including 115.30 those homeowners who initially qualified under this program for 115.31 taxes payable in 1999 or 2000, except that if a homeowner did 115.32 not qualify for a property tax deferral for payable 2000 because 115.33 of the percentage threshold in Minnesota Statutes 1999 115.34 Supplement, section 290B.03, subdivision 1, paragraph (8), and 115.35 now qualifies for the program with the change in the percentage 115.36 threshold in paragraph (6) of this section, the homeowner may 116.1 apply to the commissioner by July 1, 2000, and request a 116.2 retroactive qualification into the program for taxes payable in 116.3 2000. The commissioner of revenue shall notify the county 116.4 auditor of such eligible taxpayers. The commissioner shall make 116.5 payment to the county for the appropriate amount due for taxes 116.6 payable in 2000, and the county treasurer shall refund the 116.7 taxpayer for any excess tax amount that the taxpayer has paid to 116.8 the county. 116.9 Sec. 30. Minnesota Statutes 1998, section 290B.04, is 116.10 amended by adding a subdivision to read: 116.11 Subd. 7. [DELINQUENT TAXES AND SPECIAL ASSESSMENTS.] Upon 116.12 approval of a senior citizen's initial application the 116.13 commissioner of revenue shall pay to the auditor of the 116.14 appropriate county the amount of any delinquent property taxes, 116.15 penalties, and interest, and delinquent special assessments on 116.16 the property, at the same time as the deferred taxes are paid. 116.17 EFFECTIVE DATE: This section applies to all homeowners and 116.18 all property taxes deferred beginning in payable 2001. 116.19 Sec. 31. Minnesota Statutes 1999 Supplement, section 116.20 290B.05, subdivision 1, is amended to read: 116.21 Subdivision 1. [DETERMINATION BY COMMISSIONER.] The 116.22 commissioner shall determine each qualifying homeowner's "annual 116.23 maximum property tax amount" following approval of the 116.24 homeowner's initial application and following the receipt of a 116.25 resumption of eligibility certification. The "annual maximum 116.26 property tax amount" equals three percent of the homeowner's 116.27 total household income for the year preceding either the initial 116.28 application or the resumption of eligibility certification, 116.29 whichever is applicable. Following approval of the initial 116.30 application, the commissioner shall determine the qualifying 116.31 homeowner's "maximum allowable deferral." No tax may be 116.32 deferred relative to the appropriate assessment year for any 116.33 homeowner whose total household income for the previous year 116.34 exceeds $60,000. No tax shall be deferred in any year in which 116.35 the homeowner does not meet the program qualifications in 116.36 section 290B.03. The maximum allowable total deferral is equal 117.1 to 75 percent of the assessor's estimated market value for the 117.2 year, less the balance of any mortgage loans and other amounts 117.3 secured by liens against the property at the time of 117.4 application, including any unpaid and delinquent special 117.5 assessments and any delinquent property taxes, penalties, and 117.6 interest, but not including property taxes payable during the 117.7 year. 117.8 EFFECTIVE DATE: This section applies to all homeowners and 117.9 all property taxes deferred beginning in payable 2001. 117.10 Sec. 32. Minnesota Statutes 1998, section 290B.05, 117.11 subdivision 3, is amended to read: 117.12 Subd. 3. [CALCULATION OF DEFERRED PROPERTY TAX AMOUNT.] 117.13 When final property tax amounts for the following year have been 117.14 determined, the county auditor shall calculate the "deferred 117.15 property tax amount." The deferred property tax amount is equal 117.16 to the lesser of (1) the maximum allowable deferral for the 117.17 year; or (2) the difference between the total amount of property 117.18 taxes levied upon the qualifying homestead by all taxing 117.19 jurisdictions and the maximum property tax amount. Any special 117.20 assessments levied by any local unit of government must not be 117.21 included in the total tax used to calculate the deferred tax 117.22 amount.No deferral of the current year's property taxes is117.23allowed if there are any delinquent property taxes or delinquent117.24special assessments for any previous year.Any tax attributable 117.25 to new improvements made to the property after the initial 117.26 application has been approved under section 290B.04, subdivision 117.27 2, must be excluded when determining any subsequent deferred 117.28 property tax amount. The county auditor shall annually, on or 117.29 before April 15, certify to the commissioner of revenue the 117.30 property tax deferral amounts determined under this subdivision 117.31 by property and by owner. 117.32 EFFECTIVE DATE: This section applies to all homeowners and 117.33 all property taxes deferred beginning in payable 2001. 117.34 Sec. 33. Minnesota Statutes 1998, section 290B.07, is 117.35 amended to read: 117.36 290B.07 [LIEN; DEFERRED PORTION.] 118.1 (a) Payment by the state to the county treasurer 118.2 of property taxes, penalties, interest, or special assessments 118.3 deferred under thissectionchapter is deemed a loan from the 118.4 state to the program participant. The commissioner must compute 118.5 the interest as provided in section 270.75, subdivision 5, but 118.6 not to exceed five percent, and maintain records of the total 118.7 deferred amount and interest for each participant. Interest 118.8 shall accrue beginning September 1 of the payable year for which 118.9 the taxes are deferred. Any deferral made under this chapter 118.10 shall not be construed as delinquent property taxes. 118.11 The lien created under section 272.31 continues to secure 118.12 payment by the taxpayer, or by the taxpayer's successors or 118.13 assigns, of the amount deferred, including interest, with 118.14 respect to all years for which amounts are deferred. The lien 118.15 for deferred taxes and interest has the same priority as any 118.16 other lien under section 272.31, except that liens, including 118.17 mortgages, recorded or filed prior to the recording or filing of 118.18 the notice under section 290B.04, subdivision 2, have priority 118.19 over the lien for deferred taxes and interest. A seller's 118.20 interest in a contract for deed, in which a qualifying homeowner 118.21 is the purchaser or an assignee of the purchaser, has priority 118.22 over deferred taxes and interest on deferred taxes, regardless 118.23 of whether the contract for deed is recorded or filed. The lien 118.24 for deferred taxes and interest for future years has the same 118.25 priority as the lien for deferred taxes and interest for the 118.26 first year, which is always higher in priority than any 118.27 mortgages or other liens filed, recorded, or created after the 118.28 notice recorded or filed under section 290B.04, subdivision 2. 118.29 The county treasurer or auditor shall maintain records of the 118.30 deferred portion and shall list the amount of deferred taxes for 118.31 the year and the cumulative deferral and interest for all 118.32 previous years as a lien against the property. In any 118.33 certification of unpaid taxes for a tax parcel, the county 118.34 auditor shall clearly distinguish between taxes payable in the 118.35 current year, deferred taxes and interest, and delinquent 118.36 taxes. Payment of the deferred portion becomes due and owing at 119.1 the time specified in section 290B.08. Upon receipt of the 119.2 payment, the commissioner shall issue a receipt for it to the 119.3 person making the payment upon request and shall notify the 119.4 auditor of the county in which the parcel is located, within ten 119.5 days, identifying the parcel to which the payment applies. Upon 119.6 receipt by the commissioner of revenue of collected funds in the 119.7 amount of the deferral, the state's loan to the program 119.8 participant is deemed paid in full. 119.9 (b) If property for which taxes have been deferred under 119.10 this chapter forfeits under chapter 281 for nonpayment of a 119.11 nondeferred property tax amount, or because of nonpayment of 119.12 amounts previously deferred following a termination under 119.13 section 290B.08, the lien for the taxes deferred under this 119.14 chapter, plus interest and costs, shall be canceled by the 119.15 county auditor as provided in section 282.07. However, 119.16 notwithstanding any other law to the contrary, any proceeds from 119.17 a subsequent sale of the property under chapter 282 or another 119.18 law, must be used to first reimburse the county's forfeited tax 119.19 sale fund for any direct costs of selling the property or any 119.20 costs directly related to preparing the property for sale, and 119.21 then to reimburse the state for the amount of the canceled 119.22 lien. Within 90 days of the receipt of any sale proceed to 119.23 which the state is entitled under these provisions, the county 119.24 auditor must pay those funds to the commissioner of revenue by 119.25 warrant for deposit in the general fund. No other deposit, use, 119.26 distribution, or release of gross sale proceeds or receipts may 119.27 be made by the county until payments sufficient to fully 119.28 reimburse the state for the canceled lien amount have been 119.29 transmitted to the commissioner. 119.30 EFFECTIVE DATE: This section applies to all homeowners and 119.31 all property taxes deferred beginning in payable 2001. 119.32 Sec. 34. Minnesota Statutes 1998, section 290B.08, 119.33 subdivision 1, is amended to read: 119.34 Subdivision 1. [TERMINATION.] (a) The deferral of taxes 119.35 granted under this chapter terminates when one of the following 119.36 occurs: 120.1 (1) the property is sold or transferred; 120.2 (2) the death oftheall qualifying 120.3homeowner(s)homeowners; 120.4 (3) the homeowner notifies the commissioner in writing that 120.5 the homeowner desires to discontinue the deferral; or 120.6 (4) the property no longer qualifies as a homestead. 120.7 (b) A property is not terminated from the program because 120.8 no deferred property tax amount is determined on the homestead 120.9 for any given year after the homestead's initial enrollment into 120.10 the program. 120.11 EFFECTIVE DATE: This section applies to all homeowners and 120.12 all property taxes deferred beginning in payable 2001, including 120.13 those homeowners who initially qualified under this program for 120.14 taxes payable in 1999 or 2000. 120.15 Sec. 35. Minnesota Statutes 1998, section 290B.08, 120.16 subdivision 2, is amended to read: 120.17 Subd. 2. [PAYMENT UPON TERMINATION.] Upon the termination 120.18 of the deferral under subdivision 1, the amount of deferred 120.19 taxesand, penalties, interest, and special assessments plus the 120.20 recording or filing fees under both section 290B.04, subdivision 120.21 2, and this subdivision becomes due and payable to the 120.22 commissioner within 90 days of termination of the deferral for 120.23 terminations under subdivision 1, paragraph (a), clauses (1) and 120.24 (2), and within one year of termination of the deferral for 120.25 terminations under subdivision 1, paragraph (a), clauses (3) and 120.26 (4). No additional interest is due on the deferral if timely 120.27 paid. On receipt of payment, the commissioner shall within ten 120.28 days notify the auditor of the county in which the parcel is 120.29 located, identifying the parcel to which the payment applies and 120.30 shall remit the recording or filing fees under section 290B.04, 120.31 subdivision 2, and this subdivision to the auditor. A notice of 120.32 termination of deferral, containing the legal description and 120.33 the recording or filing data for the notice of qualification for 120.34 deferral under section 290B.04, subdivision 2, shall be prepared 120.35 and recorded or filed by the county auditor in the same office 120.36 in which the notice of qualification for deferral under section 121.1 290B.04, subdivision 2, was recorded or filed, and the county 121.2 auditor shall mail a copy of the notice of termination to the 121.3 property owner. The property owner shall pay the recording or 121.4 filing fees. Upon recording or filing of the notice of 121.5 termination of deferral, the notice of qualification for 121.6 deferral under section 290B.04, subdivision 2, and the lien 121.7 created by it are discharged. If the deferral is not timely 121.8 paid, the penalty, interest, lien, forfeiture, and other rules 121.9 for the collection of ad valorem property taxes apply. 121.10 EFFECTIVE DATE: This section applies to all homeowners and 121.11 all property taxes deferred beginning in payable 2001. 121.12 Sec. 36. Minnesota Statutes 1998, section 290B.09, 121.13 subdivision 2, is amended to read: 121.14 Subd. 2. [APPROPRIATION.] An amount sufficient to pay the 121.15 total amount of property tax determined under subdivision 1, 121.16 plus any amounts paid under section 290B.04, subdivision 7, is 121.17 annually appropriated from the general fund to the commissioner 121.18 of revenue. 121.19 EFFECTIVE DATE: This section applies to all homeowners and 121.20 all property taxes deferred beginning in payable 2001. 121.21 Sec. 37. Minnesota Statutes 1999 Supplement, section 121.22 383D.74, subdivision 2, is amended to read: 121.23 Subd. 2. [EXPIRATION.] The authority to impose a penalty 121.24 under this section expires on December 31,20002005. 121.25 EFFECTIVE DATE: This section is effective the day 121.26 following final enactment. 121.27 Sec. 38. Minnesota Statutes 1998, section 429.011, 121.28 subdivision 2a, is amended to read: 121.29 Subd. 2a. [MUNICIPALITY.] "Municipality" also includes a 121.30 county in the case of construction, reconstruction, or 121.31 improvement of a county state-aid highway or county highway as 121.32 defined in section 160.02 including curbs and gutters and storm 121.33 sewersand includes; a county exercising its powers and duties 121.34 under section 444.075, subdivision 1; and a county for expenses 121.35 not paid for under section 403.113, subdivision 3, paragraph 121.36 (b), clause (3). 122.1 EFFECTIVE DATE: This section is effective the day 122.2 following final enactment. 122.3 Sec. 39. Minnesota Statutes 1998, section 429.011, 122.4 subdivision 5, is amended to read: 122.5 Subd. 5. [IMPROVEMENT.] "Improvement" means any type of 122.6 improvement made under authority granted by section 429.021, and 122.7 in the case of a county is limited to the construction, 122.8 reconstruction, or improvement of a county state-aid highway or 122.9 county highway including curbs and gutters and storm sewers, and 122.10 to the purchase, installation, or maintenance of signs, posts, 122.11 and markers for addressing related to the operation of enhanced 122.12 911 telephone service. 122.13 EFFECTIVE DATE: This section is effective the day 122.14 following final enactment. 122.15 Sec. 40. Minnesota Statutes 1998, section 429.021, 122.16 subdivision 1, is amended to read: 122.17 Subdivision 1. [IMPROVEMENTS AUTHORIZED.] The council of a 122.18 municipality shall have power to make the following improvements: 122.19 (1) To acquire, open, and widen any street, and to improve 122.20 the same by constructing, reconstructing, and maintaining 122.21 sidewalks, pavement, gutters, curbs, and vehicle parking strips 122.22 of any material, or by grading, graveling, oiling, or otherwise 122.23 improving the same, including the beautification thereof and 122.24 including storm sewers or other street drainage and connections 122.25 from sewer, water, or similar mains to curb lines. 122.26 (2) To acquire, develop, construct, reconstruct, extend, 122.27 and maintain storm and sanitary sewers and systems, including 122.28 outlets, holding areas and ponds, treatment plants, pumps, lift 122.29 stations, service connections, and other appurtenances of a 122.30 sewer system, within and without the corporate limits. 122.31 (3) To construct, reconstruct, extend, and maintain steam 122.32 heating mains. 122.33 (4) To install, replace, extend, and maintain street lights 122.34 and street lighting systems and special lighting systems. 122.35 (5) To acquire, improve, construct, reconstruct, extend, 122.36 and maintain water works systems, including mains, valves, 123.1 hydrants, service connections, wells, pumps, reservoirs, tanks, 123.2 treatment plants, and other appurtenances of a water works 123.3 system, within and without the corporate limits. 123.4 (6) To acquire, improve and equip parks, open space areas, 123.5 playgrounds, and recreational facilities within or without the 123.6 corporate limits. 123.7 (7) To plant trees on streets and provide for their 123.8 trimming, care, and removal. 123.9 (8) To abate nuisances and to drain swamps, marshes, and 123.10 ponds on public or private property and to fill the same. 123.11 (9) To construct, reconstruct, extend, and maintain dikes 123.12 and other flood control works. 123.13 (10) To construct, reconstruct, extend, and maintain 123.14 retaining walls and area walls. 123.15 (11) To acquire, construct, reconstruct, improve, alter, 123.16 extend, operate, maintain, and promote a pedestrian skyway 123.17 system. Such improvement may be made upon a petition pursuant 123.18 to section 429.031, subdivision 3. 123.19 (12) To acquire, construct, reconstruct, extend, operate, 123.20 maintain, and promote underground pedestrian concourses. 123.21 (13) To acquire, construct, improve, alter, extend, 123.22 operate, maintain, and promote public malls, plazas or 123.23 courtyards. 123.24 (14) To construct, reconstruct, extend, and maintain 123.25 district heating systems. 123.26 (15) To construct, reconstruct, alter, extend, operate, 123.27 maintain, and promote fire protection systems in existing 123.28 buildings, but only upon a petition pursuant to section 429.031, 123.29 subdivision 3. 123.30 (16) To acquire, construct, reconstruct, improve, alter, 123.31 extend, and maintain highway sound barriers. 123.32 (17) To improve, construct, reconstruct, extend, and 123.33 maintain gas and electric distribution facilities owned by a 123.34 municipal gas or electric utility. 123.35 (18) To purchase, install, and maintain signs, posts, and 123.36 other markers for addressing related to the operation of 124.1 enhanced 911 telephone service. 124.2 EFFECTIVE DATE: This section is effective the day 124.3 following final enactment. 124.4 Sec. 41. Minnesota Statutes 1998, section 429.031, 124.5 subdivision 1, is amended to read: 124.6 Subdivision 1. [PREPARATION OF PLANS, NOTICE OF HEARING.] 124.7 (a) Before the municipality awards a contract for an improvement 124.8 or orders it made by day labor, or before the municipality may 124.9 assess any portion of the cost of an improvement to be made 124.10 under a cooperative agreement with the state or another 124.11 political subdivision for sharing the cost of making the 124.12 improvement, the council shall hold a public hearing on the 124.13 proposed improvement following two publications in the newspaper 124.14 of a notice stating the time and place of the hearing, the 124.15 general nature of the improvement, the estimated cost, and the 124.16 area proposed to be assessed. The two publications must be a 124.17 week apart, and the hearing must be at least three days after 124.18 the second publication. Not less than ten days before the 124.19 hearing, notice of the hearing must also be mailed to the owner 124.20 of each parcel within the area proposed to be assessed and must 124.21 contain a statement that a reasonable estimate of the impact of 124.22 the assessment will be available at the hearing , but failure to 124.23 give mailed notice or any defects in the notice does not 124.24 invalidate the proceedings. For the purpose of giving mailed 124.25 notice, owners are those shown as owners on the records of the 124.26 county auditor or, in any county where tax statements are mailed 124.27 by the county treasurer, on the records of the county treasurer; 124.28 but other appropriate records may be used for this purpose. For 124.29 properties that are tax exempt or subject to taxation on a gross 124.30 earnings basis and are not listed on the records of the county 124.31 auditor or the county treasurer, the owners may be ascertained 124.32 by any practicable means, and mailed notice must be given them 124.33 as provided in this subdivision. 124.34 (b) Before the adoption of a resolution ordering the 124.35 improvement, the council shall secure from the city engineer or 124.36 some other competent person of its selection a report advising 125.1 it in a preliminary way as to whether the proposed improvement 125.2 is necessary, cost-effective, and feasible and as to whether it 125.3 should best be made as proposed or in connection with some other 125.4 improvement. The report must also include the estimated cost of 125.5 the improvement as recommended . A reasonable estimate of the 125.6 total amount to be assessed, and a description of the 125.7 methodology used to calculate individual assessments for 125.8 affected parcels must be available at the hearing. No error or 125.9 omission in the report invalidates the proceeding unless it 125.10 materially prejudices the interests of an owner. 125.11 (c) If the report is not prepared by an employee of a 125.12 municipality, the compensation for preparing the report under 125.13 this subdivision must be based on the following factors: 125.14 (1) the time and labor required; 125.15 (2) the experience and knowledge of the preparer; 125.16 (3) the complexity and novelty of the problems involved; 125.17 and 125.18 (4) the extent of the responsibilities assumed. 125.19 (d) The compensation must not be based primarily on a 125.20 percentage of the estimated cost of the improvement. 125.21 (e) The council may also take other steps prior to the 125.22 hearing, including, among other things, the preparation of plans 125.23 and specifications and the advertisement for bids that will in 125.24 its judgment provide helpful information in determining the 125.25 desirability and feasibility of the improvement. 125.26 (f) The hearing may be adjourned from time to time, and a 125.27 resolution ordering the improvement may be adopted at any time 125.28 within six months after the date of the hearing by vote of a 125.29 majority of all members of the council when the improvement has 125.30 been petitioned for by the owners of not less than 35 percent in 125.31 frontage of the real property abutting on the streets named in 125.32 the petition as the location of the improvement. When there has 125.33 been no such petition, the resolution may be adopted only by 125.34 vote of four-fifths of all members of the council; provided that 125.35 if the mayor of the municipality is a member of the council but 125.36 has no vote or votes only in case of a tie, the mayor is not 126.1 deemed to be a member for the purpose of determining a 126.2 four-fifths majority vote. 126.3 (g) The resolution ordering the improvement may reduce, but 126.4 not increase, the extent of the improvement as stated in the 126.5 notice of hearing. 126.6 EFFECTIVE DATE: This section is effective for mailed 126.7 notices and hearings held June 1, 2000, and thereafter. 126.8 Sec. 42. Minnesota Statutes 1998, section 469.040, is 126.9 amended by adding a subdivision to read: 126.10 Subd. 5. [DESIGNATED HOUSING CORPORATION.] Property 126.11 located within the exterior boundaries of the White Earth Indian 126.12 reservation that is owned by the tribe's designated housing 126.13 entity as defined in United States Code, title 25, section 126.14 4103(21), and that is a housing project or a housing development 126.15 project, as defined in section 469.002, subdivisions 13 and 15, 126.16 is exempt from all real and personal property taxes of the city, 126.17 the county, the state, or any political subdivision thereof, but 126.18 the property is subject to subdivision 3. A copy of those 126.19 portions of the annual reports submitted on behalf of the 126.20 housing entity to the Secretary of the United States Department 126.21 of Housing and Urban Development for the project that contain 126.22 information sufficient to determine the amount due under 126.23 subdivision 3 satisfies the reporting requirements of 126.24 subdivision 3 for the project. 126.25 EFFECTIVE DATE: This section is effective for the 2000 126.26 assessment, taxes payable in 2001 and thereafter. 126.27 Sec. 43. Minnesota Statutes 1998, section 473.388, 126.28 subdivision 4, is amended to read: 126.29 Subd. 4. [FINANCIAL ASSISTANCE.] The councilmaymust 126.30 grant the requested financial assistance if it determines that 126.31 the proposed service is intended to replace the service to the 126.32 applying city or town or combination thereof by the council and 126.33 that the proposed service will meet the needs of the applicant 126.34 at least as efficiently and effectively as the existing service. 126.35 The amount of assistance which the council may provide 126.36 under this section may notexceed the sum ofbe less than: 127.1 (a)the portion of the available local transit funds which127.2the applicant proposes to use to subsidize the proposed127.3servicethe grants received under this subdivision by the 127.4 applicant in calendar year 2000 and the tax revenues of the 127.5 applicant for transit services for taxes payable in 2000;and127.6 times 127.7 (b)an amount of financial assistance bearing an identical127.8proportional relationship to the amount under clause (a) as the127.9total amount of funds used by the council to fund its transit127.10operations bears tothe ratio of the total appropriation to the 127.11 council for nondebt transit operations for the current calendar 127.12 year, to the sum of the total appropriation to the council for 127.13 nondebt transit operations in calendar year 2000 and the total 127.14 amount of taxes collected by the council under section 127.15 473.446 in calendar year 2000, including the portion of the 127.16 council's homestead and agricultural credit aid under section 127.17 273.1398 attributable to the nondebt transit levy. The council 127.18 shall pay the amount to be provided to the recipient from the 127.19 funds the council would otherwise use to fund its transit 127.20 operations. 127.21For purposes of this section, "available local transit127.22funds" means 90 percent of the tax revenues which would accrue127.23to the council from the tax it levies under section 473.446 in127.24the applicant city or town or combination thereof.127.25 For purposes of this section, "tax revenues" in the city or 127.26 town means the sum of the following: 127.27 (1) the nondebt spread levy, which is the total of the 127.28 taxes extended by application of the local tax rate for nondebt 127.29 purposes on the taxable net tax capacity; 127.30 (2) the portion of the fiscal disparity distribution levy 127.31 under section 473F.08, subdivision 3, attributable to nondebt 127.32 purposes; and 127.33 (3) the portion of the homestead credit and agricultural 127.34 credit aid and disparity reduction aid amounts under section 127.35 273.1398, subdivisions 2 and 3, attributable to nondebt purposes. 127.36 Tax revenues do not include the state feathering 128.1 reimbursement under section 473.446. 128.2 EFFECTIVE DATE: This section is effective for calendar 128.3 year 2001. 128.4 Sec. 44. Minnesota Statutes 1998, section 473.388, 128.5 subdivision 7, is amended to read: 128.6 Subd. 7. [LOCAL LEVY OPTION.](a)A statutory or home rule 128.7 charter city or town that is eligible for assistance under this 128.8 section,in lieu of receiving the assistance,may levy a taxfor128.9payment of the operating and capital expenditures for transit128.10and other related activities and to providefor payment of 128.11 obligations issued by the municipality before May 1, 2000, 128.12 forsuch purposes, provided that the tax must be sufficient to128.13maintain the level of transit service provided in the128.14municipality in the previous yearcapital expenditures for 128.15 transit and other related activities, provided that property 128.16 taxes were pledged to satisfy the obligations, and provided that 128.17 legislative appropriations are insufficient to satisfy the 128.18 obligations. 128.19(b) The transit tax revenues derived by the municipality128.20may not exceed:128.21(1) for the first transit levy year and any subsequent128.22transit levy year immediately following a year in which the128.23municipality declines to make the levy, the maximum available128.24local transit funds for the municipality for taxes payable in128.25the current year under section 473.446, calculated as if the128.26percentage of transit tax revenues for the municipality were 88128.27percent instead of 90 percent, and multiplied by the128.28municipality's market value adjustment ratio; and128.29(2) for taxes levied in any year that immediately follows a128.30year in which the municipality elects to levy under this128.31subdivision, the maximum transit tax that the municipality may128.32have levied in the previous year under this subdivision,128.33multiplied by the municipality's market value adjustment ratio.128.34The commissioner of revenue shall certify the128.35municipality's levy limitation under this subdivision to the128.36municipality by June 1 of the levy year. The tax must be129.1accumulated and kept in a separate fund to be known as the129.2"replacement transit fund."129.3(c) To enable the municipality to receive revenues129.4described in clauses (2) and (3) of the definition of "tax129.5revenues" in subdivision 4, that would otherwise be lost if the129.6municipality's transit tax levy was not treated as a successor129.7levy to that made by the council under section 473.446:129.8(1) in the first transit levy year and any subsequent129.9transit levy year immediately following a year in which the129.10municipality declined to make the levy, 88 percent of the129.11council's nondebt spread levy for the current taxes payable year129.12shall be treated as levied by the municipality, and not the129.13council, for purposes of section 473F.08, subdivision 3, for the129.14purpose of determining its local tax rate for the preceding129.15year; and129.16(2) 88 percent of the revenues described in clause (3) of129.17the definition of "tax revenues" in subdivision 4, payable in129.18the first transit levy year, or payable in any subsequent129.19transit levy year following a year in which a municipality129.20declined to make the levy, shall be permanently transferred from129.21the council to the municipality. If a municipality levies a tax129.22under this subdivision in one year, but declines to levy in a129.23subsequent year, the aid transferred under this clause shall be129.24transferred back to the council.129.25(d) Any transit taxes levied under this subdivision are not129.26subject to, or counted towards, any limit hereafter imposed by129.27law on the levy of taxes upon taxable property within any129.28municipality unless the law specifically includes the transit129.29tax.129.30(e) This subdivision is consistent with the transit129.31redesign plan. Eligible municipalities opting to levy the129.32transit tax under this subdivision shall continue to meet the129.33regional performance standards established by the council.129.34(f) Within the designated Americans with Disabilities Act129.35area, metro mobility remains the obligation of the state.129.36(g) For purposes of this subdivision, "transit levy year"130.1is any year in which the municipality elects to levy under this130.2subdivision.130.3(h) A municipality may not levy taxes under this130.4subdivision in any year unless it notifies the council and the130.5commissioner of revenue of its intent to levy before July 1 of130.6the levy year. The notification must include the amount of the130.7municipality's proposed transit tax for the current levy year.130.8After June 30 in the levy year, a municipality's decision to130.9levy or not levy taxes under this subdivision is irrevocable for130.10that levy year.130.11 EFFECTIVE DATE: This section is effective for taxes 130.12 payable in 2001 and thereafter. 130.13 Sec. 45. [473.3992] [LIGHT RAIL TRANSIT; PROPERTY TAXES 130.14 PROHIBITED.] 130.15 Notwithstanding any other law to the contrary, a political 130.16 subdivision or a public corporation is prohibited from levying a 130.17 property tax for light rail transit, including, but not limited 130.18 to, any property tax levy for the planning or design of the 130.19 system, acquisition of property, construction and equipping of 130.20 the system, relocation of persons or property, or operation or 130.21 maintenance of the system, including any costs for management 130.22 contracts. A political subdivision or public corporation may 130.23 not transfer funds from any accounts, reserves, or funds 130.24 containing property tax revenues for any of the purposes for 130.25 which a property tax levy is prohibited under this section. 130.26 This prohibition also applies to a property tax levy to pay 130.27 bonds or other debt used to finance any costs or expenditures 130.28 enumerated in the section. 130.29 Nothing in this section prohibits a political subdivision 130.30 or public corporation from receiving and using federal or state 130.31 funds specifically designated for light rail transit purposes, 130.32 or from using fare or other operating revenues from a light rail 130.33 transit system. 130.34 This section applies only within the counties of Anoka, 130.35 Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 130.36 EFFECTIVE DATE: This section is effective for taxes 131.1 payable in 2001 and thereafter. 131.2 Sec. 46. [473.444] [PROPERTY TAX REPLACEMENT AID.] 131.3 Subdivision 1. [OPERATING EXPENSES.] There is annually 131.4 appropriated from the general fund to the metropolitan council 131.5 an amount to pay the operating expenses of providing transit 131.6 services under section 473.446. The sum of $93,360,000 is 131.7 appropriated in fiscal year 2002 for transit services in 131.8 calendar year 2001. For fiscal year 2003 and subsequent years, 131.9 the amount under this subdivision is increased annually by a 131.10 percentage equal to the lesser of (1) the percentage increase in 131.11 the implicit price deflator for government consumption 131.12 expenditures and gross investment for state and local 131.13 governments prepared by the Bureau of Economic Analysis of the 131.14 United States Department of Commerce for the 12-month period 131.15 ending March 31 of the second previous fiscal year or (2) 125 131.16 percent of the percentage increase in the consumer price index 131.17 for urban consumers as prepared by the United States Bureau of 131.18 Labor Statistics for the 12-month period ending March 31 of the 131.19 second previous fiscal year. 131.20 Subd. 2. [DEBT SERVICE.] For fiscal year 2002 and 131.21 subsequent years, the amount necessary to pay the costs of 131.22 principal and interest on bonds issued by the metropolitan 131.23 council related to the provision of transit services is annually 131.24 appropriated from the general fund to the commissioner of 131.25 finance. The commissioner shall make grant payments to the 131.26 metropolitan council for the payment of debt service on 131.27 transit-related bonds as necessary. 131.28 Sec. 47. Minnesota Statutes 1998, section 473.446, 131.29 subdivision 1, is amended to read: 131.30 Subdivision 1. [WITHIN TRANSIT TAXING DISTRICT.] For the 131.31 purposes of sections 473.405 to 473.449 and the metropolitan 131.32 transit system, except as otherwise provided in this subdivision 131.33 and subdivision 1b, the council shall levy each year upon all 131.34 taxable property within the metropolitan transit taxing 131.35 district, defined in subdivision 2, a transit tax consisting of: 131.36 (a)an amount which shall be used for payment of the132.1expenses of operating transit and paratransit service and to132.2provide for payment of obligations issued by the council under132.3section 473.436, subdivision 6;132.4(b)an additional amount, if any, the council determines to 132.5 be necessary to provide for the full and timely payment of its 132.6 certificates of indebtedness and other obligations outstanding 132.7 on July 1, 1985, to which property taxes under this section have 132.8 been pledged; and 132.9(c)(b) an additional amount necessary to provide full and 132.10 timely payment of certificates of indebtedness, bonds, including 132.11 refunding bonds or other obligations issuedor to be issued132.12 before May 1, 2000, under section 473.39 by the council for 132.13 purposes of acquisition and betterment of property and other 132.14 improvements of a capital nature and to which the council has 132.15 specifically pledged tax levies under this clause. 132.16The property tax levied by the council for general purposes132.17under paragraph (a) must not exceed the following amount for the132.18years specified:132.19(1) for taxes payable in 1995, the council's property tax132.20levy limitation for general transit purposes is equal to the132.21former regional transit board's property tax levy limitation for132.22general transit purposes under this subdivision, for taxes132.23payable in 1994, multiplied by an index for market valuation132.24changes equal to the total market valuation of all taxable132.25property located within the metropolitan transit taxing district132.26for the current taxes payable year divided by the total market132.27valuation of all taxable property located within the132.28metropolitan transit taxing district for the previous taxes132.29payable year; and132.30(2) for taxes payable in 1996 and subsequent years, the132.31product of (i) the council's property tax levy limitation for132.32general transit purposes for the previous year determined under132.33this subdivision before reduction by the amount levied by any132.34municipality in the previous year under section 473.388,132.35subdivision 7, multiplied by (ii) an index for market valuation132.36changes equal to the total market valuation of all taxable133.1property located within the metropolitan transit taxing district133.2for the current taxes payable year divided by the total market133.3valuation of all taxable property located within the133.4metropolitan transit taxing district for the previous taxes133.5payable year, minus the amount levied by any municipality in the133.6current levy year under section 473.388, subdivision 7.133.7The portion of the property tax levy for transit district133.8operating purposes attributable to a municipality that has133.9exercised a local levy option under section 473.388, subdivision133.10 7, is the amount as determined under subdivision 1b. The133.11portion of the property tax levy for transit district operating133.12purposes attributable to the remaining municipalities within the133.13transit district is found by subtracting the portions133.14attributable to the municipalities that have exercised a local133.15levy option under section 473.388, subdivision 7.133.16For the taxes payable year 1995, the index for market133.17valuation changes shall be multiplied by an amount equal to the133.18sum of the regional transit board's property tax levy limitation133.19for the taxes payable year 1994 and $160,665. The $160,665133.20increase shall be a permanent adjustment to the levy limit base133.21used in determining the regional transit board's property tax133.22levy limitation for general purposes for subsequent taxes133.23payable years.133.24For the purpose of determining the council's property tax133.25levy limitation for general transit purposes under this133.26subdivision, "total market valuation" means the total market133.27valuation of all taxable property within the metropolitan133.28transit taxing district without valuation adjustments for fiscal133.29disparities (chapter 473F), tax increment financing (sections133.30469.174 to 469.179), and high voltage transmission lines133.31(section 273.425).133.32The county auditor shall reduce the tax levied pursuant to133.33this section and section 473.388 on all property within133.34statutory and home rule charter cities and towns that receive133.35full-peak service and limited off-peak service by an amount133.36equal to the tax levy that would be produced by applying a rate134.1of 0.510 percent of net tax capacity on the property. The134.2county auditor shall reduce the tax levied pursuant to this134.3section and section 473.388 on all property within statutory and134.4home rule charter cities and towns that receive limited peak134.5service by an amount equal to the tax levy that would be134.6produced by applying a rate of 0.765 percent of net tax capacity134.7on the property. The amounts so computed by the county auditor134.8shall be submitted to the commissioner of revenue as part of the134.9abstracts of tax lists required to be filed with the134.10commissioner under section 275.29. Any prior year adjustments134.11shall also be certified in the abstracts of tax lists. The134.12commissioner shall review the certifications to determine their134.13accuracy and may make changes in the certification as necessary134.14or return a certification to the county auditor for134.15corrections. The commissioner shall pay to the council and to134.16the municipalities levying under section 473.388, subdivision 7,134.17the amounts certified by the county auditors on the dates134.18provided in section 273.1398, apportioned between the council134.19and the municipality in the same proportion as the total transit134.20levy is apportioned within the municipality. There is annually134.21appropriated from the general fund in the state treasury to the134.22department of revenue the amounts necessary to make these134.23payments.134.24For the purposes of this subdivision, "full-peak and134.25limited off-peak service" means peak period regular route134.26service, plus weekday midday regular route service at intervals134.27longer than 60 minutes on the route with the greatest frequency;134.28and "limited peak period service" means peak period regular134.29route service only.134.30For the purposes of property taxes payable in the following134.31year, the council shall annually determine which cities and134.32towns qualify for the 0.510 percent or 0.765 percent tax134.33capacity rate reduction and shall certify this list to the134.34county auditor of the county wherein such cities and towns are134.35located on or before September 15. No changes may be made to134.36the annual list after September 15.135.1 EFFECTIVE DATE: This section is effective beginning with 135.2 taxes payable in 2001. 135.3 Sec. 48. Minnesota Statutes 1998, section 473.446, is 135.4 amended by adding a subdivision to read: 135.5 Subd. 1c. [TRANSIT LEVY AFTER 2000.] Notwithstanding any 135.6 other provision, beginning with taxes payable in 2001, the 135.7 council may levy the transit tax authorized under subdivisions 1 135.8 or 1a only for the purpose of providing for the full and timely 135.9 payment of bonds, certificates of indebtedness, and other 135.10 obligations issued by the council before May 1, 2000, to which 135.11 property taxes under this section have been pledged, and for 135.12 which legislative appropriations are insufficient. 135.13 EFFECTIVE DATE: This section is effective beginning with 135.14 taxes payable in 2001. 135.15 Sec. 49. Laws 1987, chapter 402, section 2, subdivision 1, 135.16 is amended to read: 135.17 Subdivision 1. [AGREEMENT.] The city of Moose Lake and one 135.18 or more of the towns of Moose Lake, Silver, and Windemere may by 135.19 action of their city council and town boards establish the Moose 135.20 Lake fire protection district.The town of Silver may provide135.21that only a described part of its territory be included within135.22the district.The district shall provide fire protection 135.23 services throughout its territory and may exercise all the 135.24 powers of the city and towns that relate to fire protection 135.25 anywhere within its territory. Any other contiguous town or 135.26 home rule charter or statutory city may join the district with 135.27 the agreement of the cities and towns that comprise the district 135.28 at the time of its application to join. Action to join the 135.29 district may be taken by the city council or town board of the 135.30 city or town. 135.31 EFFECTIVE DATE: Pursuant to Minnesota Statutes, section 135.32 645.023, subdivision 1, clause (a), this section is effective 135.33 without local approval the day following final enactment. 135.34 Sec. 50. Laws 1987, chapter 402, section 2, subdivision 4, 135.35 is amended to read: 135.36 Subd. 4. [TAX.] The district may impose a property tax on 136.1 real property in the district in an amount sufficient to 136.2 discharge its operating expenses and debt payable in each year. 136.3 The tax shall be disregarded in the calculation of any levies or 136.4 limits on levies provided by Minnesota Statutes, chapter 275, or 136.5 other law. A city or town that joins the district may not incur 136.6 expenses or debt for fire protection services for territory 136.7 included in the district and may not impose taxes for that 136.8 purpose.The town of Silver may impose a property tax on136.9territory not included in the district to discharge costs or136.10debt incurred to provide fire protection services to that136.11territory.136.12 EFFECTIVE DATE: Pursuant to Minnesota Statutes, section 136.13 645.023, subdivision 1, clause (a), this section is effective 136.14 without local approval the day following final enactment. 136.15 Sec. 51. Laws 1987, chapter 402, section 2, subdivision 5, 136.16 is amended to read: 136.17 Subd. 5. [PUBLIC INDEBTEDNESS.] The district may incur 136.18 debt in the manner provided for a municipality by Minnesota 136.19 Statutes, chapter 475, when necessary to accomplish a duty 136.20 charged to it. The district may also issue certificates of 136.21 indebtedness subject to debt limits for the district to purchase 136.22 capital equipment having an expected useful life at least as 136.23 long as the terms of the certificates. The certificates must be 136.24 payable in not more than five years and must be issued on the 136.25 terms and in the manner as the board may determine. Before 136.26 issuing certificates in an amount exceeding .25 percent of the 136.27 taxable property of the district, the board shall publish a 136.28 resolution indicating its intent to issue the certificates in a 136.29 newspaper of general circulation in the district. The 136.30 certificates may be issued without an election unless within ten 136.31 days of the publication a petition signed by the sum of at least 136.32 ten percent of the voters in the member towns voting in the last 136.33 regular town election and ten percent of the voters of the city 136.34 voting in the last city general election requesting an election 136.35 on their issuance is filed with the board. If a petition is 136.36 filed, the certificates may not be issued unless their issuance 137.1 is approved by a majority of the voters at a general or special 137.2 election in which all the residents of the city and member towns 137.3 are eligible to vote. A tax levy shall be made against all 137.4 property in the district to pay the principal and interest on 137.5 the certificates, in accordance with Minnesota Statutes, section 137.6 475.61, as in the case of bonds. 137.7 EFFECTIVE DATE: Pursuant to Minnesota Statutes, section 137.8 645.023, subdivision 1, clause (a), this section is effective 137.9 without local approval the day following final enactment. 137.10 Sec. 52. Laws 1995, First Special Session chapter 3, 137.11 article 15, section 25, is amended to read: 137.12 Sec. 25. [HOMESTEAD AND AGRICULTURAL CREDIT ADJUSTMENT.] 137.13 (a) For the computation of homestead and agricultural aid 137.14 for taxes payable in 1996, the commissioner of revenue shall 137.15 reduce a school district's homestead and agricultural aid by an 137.16 amount equal to the lesser of: (1) 25 percent of the amount of 137.17 the district's homestead and agricultural aid for calendar year 137.18 1995; or (2) an amount equal to one percent times the district's 137.19 adjusted net tax capacity for assessment year 1994. 137.20 (b) Prior to the computation of homestead and agricultural 137.21 aid for taxes payable in 1997, the commissioner of revenue shall 137.22 reduce the school district's homestead and agricultural aid by 137.23 an amount equal to the lesser of: (1) 50 percent of the amount 137.24 of the district's homestead and agricultural aid for calendar 137.25 year 1995; or (2) an amount equal to one percent times the 137.26 district's adjusted net tax capacity for assessment year 1994. 137.27 (c) Prior to the computation of homestead and agricultural 137.28 aid for taxes payable in 1998, the commissioner of revenue shall 137.29 reduce a school district's homestead and agricultural aid by an 137.30 amount equal to the lesser of: (1) 75 percent of the amount of 137.31 the district's homestead and agricultural aid for calendar year 137.32 1995; or (2) an amount equal to one percent times the district's 137.33 adjusted net tax capacity for assessment year 1994. 137.34 (d) Prior to the computation of homestead and agricultural 137.35 aid for taxes payable in 1999, the commissioner of revenue shall 137.36 reduce a school district's homestead and agricultural aid by an 138.1 amount equal to the lesser of: (1) the amount of the district's 138.2 homestead and agricultural aid for calendar year 1995; or (2) an 138.3 amount equal to one percent times the district's adjusted net 138.4 tax capacity for assessment year 1994. 138.5 (e) Prior to the computation of homestead and agricultural 138.6 aid for taxes payable in 2000and later years, the commissioner 138.7 of revenue shall reduce a school district's homestead and 138.8 agricultural aid by an amount equal to the lesser of: (1) any 138.9 remaining amount of the district's homestead and agricultural 138.10 aid; or (2) an amount equal to one percent times the district's 138.11 adjusted net tax capacity for assessment year 1994. 138.12 (f) Prior to the computation of homestead and agricultural 138.13 credit aid for taxes payable in 2001 and later years, the 138.14 commissioner of revenue shall reduce that portion of a school 138.15 district's homestead and agricultural credit aid first paid to a 138.16 district in calendar year 2000 or an earlier calendar year by an 138.17 amount equal to the lesser of: (1) any remaining amount of the 138.18 portion of the district's homestead and agricultural credit aid 138.19 first paid to a district in calendar year 2000 or an earlier 138.20 calendar year; or (2) an amount equal to one percent times the 138.21 district's adjusted net tax capacity for assessment year 1994. 138.22 Sec. 53. Laws 1997, chapter 231, article 1, section 19, 138.23 subdivision 1, as amended by Laws 1999, chapter 243, article 10, 138.24 section 16, is amended to read: 138.25 Subdivision 1. [TIF GRANTS.] (a) The commissioner of 138.26 revenue shall pay grants to municipalities for deficits in tax 138.27 increment financing districts caused by the changes in class 138.28 rates under this act. Municipalities must submit applications 138.29 for the grants in a form prescribed by the commissioner by no 138.30 later than August 1 for grants payable during the calendar 138.31 year. The maximum grant equals the lesser of: 138.32 (1) for taxes payable in the year before the grant is paid, 138.33 the reduction in the tax increment financing district's revenues 138.34 derived from increment resulting from the class rate changes in 138.35 this article, Laws 1998, chapter 389, article 2, and those 138.36 enacted in the 1999 and 2000 regular legislativesession139.1 sessions; or 139.2 (2) the municipality's total tax increments, including 139.3 unspent increments from previous years, less the amount due 139.4 during the calendar year to pay (i) bonds issued and sold before 139.5 the day following final enactment of this act and (ii) binding 139.6 contracts entered into before the day following final enactment 139.7 of this act. 139.8 (b) The commissioner of revenue may require applicants for 139.9 grants under this section to provide any information the 139.10 commissioner deems appropriate. The commissioner shall 139.11 calculate the amount under paragraph (a), clause (2), based on 139.12 the reports for the tax increment financing district or 139.13 districts filed with the state auditor on or before August 1 of 139.14 the year before the year in which the grant is to be paid. 139.15 (c) This subdivision applies only to deficits in tax 139.16 increment financing districts for which: 139.17 (1) the request for certification was made before the 139.18 enactment date of this act; and 139.19 (2) all timely reports have been filed with the state 139.20 auditor, as required by Minnesota Statutes, section 469.175. 139.21 (d) The commissioner shall pay the grants under this 139.22 subdivision by December 26 of the year. 139.23 (e) $2,000,000 is appropriated to the commissioner of 139.24 revenue to make grants under this section. This appropriation 139.25 is available until expended or this section expires under 139.26 subdivision 3, whichever is earlier. If the amount of grant 139.27 entitlements for a year exceed the appropriation, the 139.28 commissioner shall reduce each grant proportionately so the 139.29 total equals the amount available. 139.30 Sec. 54. Laws 1997, chapter 231, article 1, section 19, 139.31 subdivision 3, as amended by Laws 1999, chapter 243, article 10, 139.32 section 17, is amended to read: 139.33 Subd. 3. [EXPIRATION.] This section expires on January 1, 139.3420022004. 139.35 Sec. 55. [HACA ADJUSTMENTS.] 139.36 (a) Homestead and agricultural credit aid (HACA) under 140.1 Minnesota Statutes, section 273.1398, is permanently reduced for 140.2 each city and town for aids payable in 2001 and subsequent years 140.3 by an amount equal to the tax rate levied within the 140.4 municipality under Minnesota Statutes, section 473.446, 140.5 subdivision 1 or 1a, or 473.388, subdivision 7, for taxes 140.6 payable in 2000, multiplied by the municipality's taxable net 140.7 tax capacity plus its fiscal disparities distribution net tax 140.8 capacity for taxes payable in 2000. 140.9 (b) HACA payments to the metropolitan council are 140.10 permanently reduced for 2001 and subsequent years by the HACA 140.11 attributable to transit levies for aids payable in 2000. 140.12 (c) HACA payments to opt-out municipalities levying under 140.13 Minnesota Statutes, section 473.388, subdivision 7, are 140.14 permanently reduced for 2001 and subsequent years by the amount 140.15 of the HACA attributable to the opt-out transit levy for aids 140.16 payable in 2000. 140.17 EFFECTIVE DATE: This section is effective for calendar 140.18 year 2001. 140.19 Sec. 56. [FISCAL DISPARITIES ADJUSTMENT.] 140.20 The fiscal disparities distribution levy attributable to 140.21 the metropolitan council's transit levy for taxes payable in 140.22 2001 shall be instead distributed to the municipalities within 140.23 the council's transit service district and area in proportion to 140.24 each municipality's share of the fiscal disparities distribution 140.25 net tax capacity times the metropolitan council transit tax rate 140.26 within the municipality for taxes payable in 2000. 140.27 EFFECTIVE DATE: This section is effective for taxes 140.28 payable in 2001 only. 140.29 Sec. 57. [SCHOOL DISTRICT LEVY ADJUSTMENTS.] 140.30 Subdivision 1. [REVENUE CONVERSION. ] The commissioner of 140.31 children, families, and learning shall adjust each school 140.32 district's revenue authority that is established as a rate times 140.33 net tax capacity or adjusted net tax capacity under Minnesota 140.34 Statutes, chapters 123B, 124D, and 126C, by multiplying each 140.35 revenue amount by the ratio of the statewide tax capacity as 140.36 calculated using the class rates in effect for taxes payable in 141.1 2000 to the statewide tax capacity using the class rates in 141.2 effect for taxes payable in 2001. 141.3 Subd. 2. [TAX RATE ADJUSTMENT.] The commissioner shall 141.4 adjust each tax rate established under Minnesota Statutes, 141.5 chapters 123B, 124D, and 126C, by multiplying the rate by the 141.6 ratio of the statewide tax capacity as calculated using the 141.7 class rates in effect for taxes payable in 2000 to the statewide 141.8 tax capacity using the class rates in effect for taxes payable 141.9 in 2001. 141.10 Subd. 3. [EQUALIZING FACTORS.] The commissioner shall 141.11 adjust each equalizing factor established using adjusted net tax 141.12 capacity per marginal cost pupil unit under Minnesota Statutes, 141.13 chapters 123B, 124D, and 126C, by dividing the equalizing factor 141.14 by the ratio of the statewide tax capacity as calculated using 141.15 the class rates in effect for taxes payable in 2000 to the 141.16 statewide tax capacity using the class rates in effect for taxes 141.17 payable in 2001. 141.18 Subd. 4. [QUALIFYING RATE.] The commissioner shall adjust 141.19 the qualifying rate under Minnesota Statutes, section 123B.53, 141.20 subdivision 4, by multiplying the qualifying rate times the 141.21 ratio of the statewide tax capacity as calculated using the 141.22 class rates in effect for taxes payable in 2000 to the statewide 141.23 tax capacity using the class rates in effect for taxes payable 141.24 in 2001. 141.25 Subd. 5. [TAXES PAYABLE IN 2001 AND LATER.] The 141.26 commissioner shall use these revenue amounts, tax rates, 141.27 equalizing factors, and qualifying rates for computing school 141.28 district taxes payable in 2001 and later. 141.29 Sec. 58. [EVELETH-GILBERT JOINT RECREATION BOARD TAX.] 141.30 The cities and towns who participate in the Eveleth-Gilbert 141.31 joint recreation board may levy a tax on the taxable property 141.32 within their taxing jurisdictions situated within the boundaries 141.33 of independent school district No. 2154, Eveleth-Gilbert, as 141.34 provided in this act. The maximum amount that may be levied by 141.35 all participating cities and towns combined shall not exceed a 141.36 total of $125,000 per year, for a maximum of eight years. 142.1 Property within the school district may be made subject to the 142.2 tax permitted by this act by the agreement of the governing body 142.3 or town board of the city or town where the property is located. 142.4 The agreement may be by resolution of a governing body or town 142.5 board or by a joint powers agreement under Minnesota Statutes, 142.6 section 471.59. If levied, this tax is in addition to all other 142.7 taxes permitted to be levied for park and recreation purposes by 142.8 the participating cities and towns and must be itemized 142.9 separately in the proposed property tax notice under Minnesota 142.10 Statutes, section 276.065, subdivision 3. It shall be 142.11 disregarded in the calculation of all tax levy limitations 142.12 imposed by charter and the levy limitations under Minnesota 142.13 Statutes, sections 275.70 through 275.74. A city or town may 142.14 withdraw its agreement to future taxes by notice to the 142.15 recreation board and the county auditor unless provided 142.16 otherwise by a joint powers agreement. The tax shall be 142.17 collected by the St. Louis county treasurer and paid directly to 142.18 the Eveleth-Gilbert joint recreation board. 142.19 This act applies in the cities of Eveleth, Gilbert, 142.20 Leonidas, McKinley, and Iron Junction, and in the towns of 142.21 Biwabik, Clinton, and Fayal, all located in St. Louis county. 142.22 EFFECTIVE DATE: This section is effective for taxes 142.23 payable in 2001 through taxes payable in 2008. 142.24 Sec. 59. [STUDY OF TAXATION OF FOREST LAND.] 142.25 The commissioner of revenue, in cooperation with the 142.26 Minnesota forest resources council, shall study the taxation of 142.27 forest land in this state. The study shall include a review of 142.28 the current application of property taxes to these lands and a 142.29 review and comparison with other forest land tax policies. It 142.30 shall also include recommendations for changes in tax policy: 142.31 (1) to encourage forest productivity; 142.32 (2) to maintain land in forest cover; 142.33 (3) to encourage the application of sustainable site level 142.34 forest management guidelines; 142.35 (4) to address impacts on local government revenues; and 142.36 (5) for changes in tax rates. 143.1 The study shall be completed and transmitted to the chairs of 143.2 the house and senate tax committees by December 1, 2000. 143.3 EFFECTIVE DATE: This section is effective the day 143.4 following final enactment. 143.5 Sec. 60. [APPROPRIATION.] 143.6 The sum of $755,840,000 is transferred from the property 143.7 tax reform account to the general fund on July 1, 2000. 143.8 Sec. 61. [REPEALER.] 143.9 (a) Minnesota Statutes 1998, sections 270.072, subdivision 143.10 5; 270.075, subdivisions 3 and 4; and 273.13, subdivision 24a, 143.11 are repealed. 143.12 (b) Minnesota Statutes 1998, section 273.127, is repealed. 143.13 (c) Minnesota Statutes 1998, section 273.1316, is repealed. 143.14 EFFECTIVE DATE: Paragraph (a) is effective for taxes 143.15 payable in 2001 and thereafter. Paragraph (b) is effective for 143.16 taxes payable in 2000 and thereafter. Paragraph (c) is 143.17 effective the day following final enactment. 143.18 ARTICLE 6 143.19 LEVY LIMITS AND 143.20 AIDS TO LOCAL GOVERNMENTS 143.21 Section 1. Minnesota Statutes 1999 Supplement, section 143.22 273.1398, subdivision 4a, is amended to read: 143.23 Subd. 4a. [AID OFFSET FOR COURT COSTS.] (a) By July 15, 143.24 1999, the supreme court shall determine and certify to the 143.25 commissioner of revenue for each county, other than counties 143.26 located in the eighth judicial district, the county's share of 143.27 the costs assumed under Laws 1999, chapter 216, article 7, 143.28 during the fiscal year beginning July 1, 2000, less an amount 143.29 equal to the county's share of transferred fines collected by 143.30 the district courts in the county during calendar year 1998. 143.31 (b) Payments to a county under subdivision 2 or section 143.32 273.166 for calendar year 2000 must be permanently reduced by an 143.33 amount equal to 75 percent of the net cost to the state for 143.34 assumption of district court costs as certified in paragraph (a). 143.35 (c) Payments to a county under subdivision 2 or section 143.36 273.166 for calendar year 2001 must be permanently reduced by an 144.1 amount equal to 25 percent of the net cost to the state for 144.2 assumption of district court costs as certified in paragraph (a). 144.3 (d) Payments to a county under subdivision 2 for calendar 144.4 year 2001 are permanently increased by an amount equal to 7.5 144.5 percent of the county's share of transferred fines collected by 144.6 the district courts in the county during calendar year 1998, as 144.7 determined under paragraph (a). If the amount determined in 144.8 paragraph (a) exceeds the amount of aid a county is scheduled to 144.9 be paid under subdivision 2 in 2000, then the county shall not 144.10 receive an aid increase under this paragraph. 144.11 EFFECTIVE DATE: This section is effective for aids payable 144.12 in 2001 and thereafter. 144.13 Sec. 2. Minnesota Statutes 1998, section 275.70, is 144.14 amended by adding a subdivision to read: 144.15 Subd. 2a. [CONSUMER PRICE INDEX.] "Consumer price index" 144.16 means the consumer price index for urban consumers as prepared 144.17 by the United States Bureau of Labor Statistics for the 12-month 144.18 period ending March 31 of the levy year. 144.19 Sec. 3. Minnesota Statutes 1999 Supplement, section 144.20 275.70, subdivision 5, is amended to read: 144.21 Subd. 5. [SPECIAL LEVIES.] "Special levies" means those 144.22 portions of ad valorem taxes levied by a local governmental unit 144.23 for the following purposes or in the following manner: 144.24 (1) to pay the costs of the principal and interest on 144.25 bonded indebtedness or to reimburse for the amount of liquor 144.26 store revenues used to pay the principal and interest due on 144.27 municipal liquor store bonds in the year preceding the year for 144.28 which the levy limit is calculated; 144.29 (2) to pay the costs of principal and interest on 144.30 certificates of indebtedness issued for any corporate purpose 144.31 except for the following: 144.32 (i) tax anticipation or aid anticipation certificates of 144.33 indebtedness; 144.34 (ii) certificates of indebtedness issued under sections 144.35 298.28 and 298.282; 144.36 (iii) certificates of indebtedness used to fund current 145.1 expenses or to pay the costs of extraordinary expenditures that 145.2 result from a public emergency; or 145.3 (iv) certificates of indebtedness used to fund an 145.4 insufficiency in tax receipts or an insufficiency in other 145.5 revenue sources; 145.6 (3) to provide for the bonded indebtedness portion of 145.7 payments made to another political subdivision of the state of 145.8 Minnesota; 145.9 (4) to fund payments made to the Minnesota state armory 145.10 building commission under section 193.145, subdivision 2, to 145.11 retire the principal and interest on armory construction bonds; 145.12 (5) for unreimbursed expenses related to flooding that 145.13 occurred during the first half of calendar year 1997, as allowed 145.14 by the commissioner of revenue under section 275.74, paragraph 145.15 (b); 145.16 (6) for local units of government located in an area 145.17 designated by the Federal Emergency Management Agency pursuant 145.18 to a major disaster declaration issued for Minnesota by 145.19 President Clinton after April 1, 1997, and before June 11, 1997, 145.20 for the amount of tax dollars lost due to abatements authorized 145.21 under section 273.123, subdivision 7, and Laws 1997, chapter 145.22 231, article 2, section 64, to the extent that they are related 145.23 to the major disaster and to the extent that neither the state 145.24 or federal government reimburses the local government for the 145.25 amount lost; 145.26 (7) property taxes approved by voters which are levied 145.27 against the referendum market value as provided under section 145.28 275.61; 145.29 (8) to fund matching requirements needed to qualify for 145.30 federal or state grants or programs to the extent that either 145.31 (i) the matching requirement exceeds the matching requirement in 145.32 calendar year 1997, or (ii) it is a new matching requirement 145.33 that didn't exist prior to 1998; 145.34 (9) to pay the expenses reasonably and necessarily incurred 145.35 in preparing for or repairing the effects of natural disaster 145.36 including the occurrence or threat of widespread or severe 146.1 damage, injury, or loss of life or property resulting from 146.2 natural causes, in accordance with standards formulated by the 146.3 emergency services division of the state department of public 146.4 safety, as allowed by the commissioner of revenue under section 146.5 275.74, paragraph (b); 146.6 (10) for the amount of tax revenue lost due to abatements 146.7 authorized under section 273.123, subdivision 7, for damage 146.8 related to the tornadoes of March 29, 1998, to the extent that 146.9 neither the state or federal government provides reimbursement 146.10 for the amount lost; 146.11 (11) pay amounts required to correct an error in the levy 146.12 certified to the county auditor by a city or county in a levy 146.13 year, but only to the extent that when added to the preceding 146.14 year's levy it is not in excess of an applicable statutory, 146.15 special law or charter limitation, or the limitation imposed on 146.16 the governmental subdivision by sections 275.70 to 275.74 in the 146.17 preceding levy year; 146.18 (12) to pay an abatement under section 469.1815; 146.19 (13) to pay the employer contribution to the local 146.20 government correctional service retirement plan under section 146.21 353E.03, subdivision 2, to the extent that the employer 146.22 contribution exceeds 5.49 percent of total salary; and 146.23 (14) to pay the operating or maintenance costs of a county 146.24 jail as authorized in section 641.01or 641.262,or of a 146.25 correctional facility as defined in section 241.021, subdivision 146.26 1, paragraph (5), to the extent that the county can demonstrate 146.27 to the commissioner of revenue that the amount has been included 146.28 in the county budget as a direct result of a rule, minimum 146.29 requirement, minimum standard, or directive of the department of 146.30 corrections, or to pay the operating or maintenance costs of a 146.31 regional jail as authorized in section 641.262. For purposes of 146.32 this clause, a district court order is not a rule, minimum 146.33 requirement, minimum standard, or directive of the department of 146.34 corrections. If the county utilizes this special levy, any 146.35 amount levied by the county in the previous levy year for the 146.36 purposes specified under this clause and included in the 147.1 county's previous year's levy limitation computed under section 147.2 275.71, shall be deducted from the levy limit base under section 147.3 275.71, subdivision 2, when determining the county's current 147.4 year levy limitation. The county shall provide the necessary 147.5 information to the commissioner of revenue for making this 147.6 determination; and 147.7 (15) for counties, to pay any increase in expenses due to 147.8 the county electing to provide assessment of all taxable 147.9 property in the county by the county assessor as provided in 147.10 sections 273.052 and 273.053. To use this special levy, the 147.11 county shall have first elected to use its power under sections 147.12 273.052 and 273.053 after December 31, 1999. The county shall 147.13 provide any information to the commissioner of revenue that the 147.14 commissioner considers necessary to determine the appropriate 147.15 amount to be levied under this clause. 147.16 EFFECTIVE DATE: Clause 14 of this section is effective for 147.17 taxes levied in 2000, payable in 2001 and thereafter. Clause 15 147.18 of this section is effective beginning with taxes levied in 147.19 2001, payable in 2002, provided that the provisions of sections 147.20 275.70 to 275.74 are also extended to taxes levied in 2001 or 147.21 beyond. 147.22 Sec. 4. Minnesota Statutes 1999 Supplement, section 147.23 275.71, subdivision 2, is amended to read: 147.24 Subd. 2. [LEVY LIMIT BASE.] (a)The levy limit base for a147.25local governmental unit for taxes levied in 1997 shall be equal147.26to the sum of:147.27(1) the amount the local governmental unit levied in 1996,147.28less any amount levied for debt, as reported to the department147.29of revenue under section 275.62, subdivision 1, clause (1), and147.30less any tax levied in 1996 against market value as provided for147.31in section 275.61;147.32(2) the amount of aids the local governmental unit was147.33certified to receive in calendar year 1997 under sections147.34477A.011 to 477A.03 before any reductions for state tax147.35increment financing aid under section 273.1399, subdivision 5;147.36(3) the amount of homestead and agricultural credit aid the148.1local governmental unit was certified to receive under section148.2273.1398 in calendar year 1997 before any reductions for tax148.3increment financing aid under section 273.1399, subdivision 5;148.4(4) the amount of local performance aid the local148.5governmental unit was certified to receive in calendar year 1997148.6under section 477A.05; and148.7(5) the amount of any payments certified to the local148.8government unit in 1997 under sections 298.28 and 298.282.148.9If a governmental unit was not required to report under148.10section 275.62 for taxes levied in 1997, the commissioner shall148.11request information on levies used for debt from the local148.12governmental unit and adjust its levy limit base accordingly.148.13(b) The levy limit base for a local governmental unit for148.14taxes levied in 1998 is equal to its adjusted levy limit base in148.15the previous year, subject to any adjustments under section148.16275.72 and multiplied by the increase that would have occurred148.17under subdivision 3, clause (3), if that clause had been in148.18effect for taxes levied in 1997.148.19(c)The levy limit base for a city with a population 148.20 greater than 2,500 for taxes levied in19992000 islimited148.21 equal to its adjusted levy limit base in the previous year, 148.22 subject to adjustments under section 275.72. 148.23(d)(b) The levy limit base for a county for taxes levied 148.24 in 1999 is limited to the difference between (1) its adjusted 148.25 levy limit base in the previous year subject to adjustments 148.26 under section 275.72, and (2) one-half of the county's share of 148.27 the net cost to the state for assumption of district court 148.28 costs, as reported by the supreme court to the commissioner of 148.29 revenue under section 273.1398, subdivision 4a, paragraph (a). 148.30 (c) The levy limit base for a county for taxes levied in 148.31 2000 is limited to the following amount: 148.32 (1) its adjusted levy limit base in the previous year, 148.33 subject to adjustments under section 275.72, minus 148.34 (2) one-half of the county's share of the net cost to the 148.35 state for assumption of district court costs, as reported by the 148.36 supreme court to the commissioner of revenue under section 149.1 273.1398, subdivision 4a, paragraph (a), plus 149.2 (3) the increase in its homestead and agricultural credit 149.3 aid under section 273.1398, subdivision 4a, paragraph (d). 149.4 EFFECTIVE DATE: This section is effective for taxes 149.5 payable in 2001 and subsequent years. 149.6 Sec. 5. Minnesota Statutes 1999 Supplement, section 149.7 275.71, subdivision 3, is amended to read: 149.8 Subd. 3. [ADJUSTED LEVY LIMIT BASE.] For taxes levied 149.9 in1998 and 19992000, the adjusted levy limit is equal to the 149.10 levy limit base computed under subdivision 2 or section 275.72, 149.11 multiplied by: 149.12 (1) one plus a percentage equal to the lesser of the 149.13 percentage growth in the implicit price deflator or 125 percent 149.14 of the percentage growth in the consumer price index; and 149.15 (2)for all cities and for counties outside of the149.16seven-county metropolitan area,one plus a percentage equal to 149.17 the percentage increase in number of households, if any, for the 149.18 most recent 12-month period for which data is available;and for149.19counties located in the seven-county metropolitan area, one plus149.20a percentage equal to the greater of the percentage increase in149.21the number of households in the county or the percentage149.22increase in the number of households in the entire seven-county149.23metropolitan area for the most recent 12-month period for which149.24data is available;and 149.25 (3) for all counties, cities of the first class, and cities 149.26 outside the seven-county metropolitan area, one plus a 149.27 percentage equal to the percentage increase in the taxable 149.28 market value of the jurisdiction due to new construction of 149.29 class 3 and class 5 property, as defined in section 273.13, 149.30 subdivisions 24 and 31, for the most recent year for which data 149.31 are available; and for all cities, except cities of the first 149.32 class, located in the seven-county metropolitan area one plus a 149.33 percentage equal to the greater of the percentage increase in 149.34 the city or in the county in which the city is located of the 149.35 taxable market value in the city or county due to new 149.36 construction of class 3 and class 5 property, as defined in 150.1 section 273.13, subdivisions 24 and 31, for the most recent year 150.2 for which data is available. 150.3 EFFECTIVE DATE: This section is effective for taxes 150.4 payable in 2001 and subsequent years. 150.5 Sec. 6. Minnesota Statutes 1999 Supplement, section 150.6 275.71, subdivision 4, is amended to read: 150.7 Subd. 4. [PROPERTY TAX LEVY LIMIT.] For taxes levied 150.8 in1998 and1999 and 2000, the property tax levy limit for a 150.9 local governmental unit is equal to its adjusted levy limit base 150.10 determined under subdivision 3 plus any additional levy 150.11 authorized under section 275.73, which is levied against net tax 150.12 capacity, reduced by the sum of (1) the total amount of aids 150.13 that the local governmental unit is certified to receive under 150.14 sections 477A.011 to 477A.014, (2) homestead and agricultural 150.15 aids it is certified to receive under section 273.1398, (3) 150.16 local performance aid it is certified to receive under section 150.17 477A.05, (4) taconite aids under sections 298.28 and 298.282 150.18 including any aid which was required to be placed in a special 150.19 fund for expenditure in the next succeeding year but excluding 150.20 amounts allocated under section 298.28, subdivision 2, paragraph 150.21 (b), (5) flood loss aid under section 273.1383, and (6) 150.22 low-income housing aid under sections 477A.06 and 477A.065. 150.23 EFFECTIVE DATE: This section is effective for taxes levied 150.24 in 1999, payable in 2000, and subsequent years. 150.25 Sec. 7. Minnesota Statutes 1998, section 275.72, 150.26 subdivision 1, is amended to read: 150.27 Subdivision 1. [ADJUSTMENTS FOR CONSOLIDATION.] If all of 150.28 the area included in two or more local governmental units is 150.29 consolidated, merged, or otherwise combined to constitute a 150.30 single governmental unit, the levy limit base for the resulting 150.31 governmental unit in the first levy year in which the 150.32 consolidation is effective shall be equal to (1) the 150.33 highest average tax rate in any of the merging governmental 150.34 unitsinfor thepreviouscurrent taxes payable year multiplied 150.35 by the net tax capacity of all the merging governmental unitsin150.36 for thepreviouscurrent taxes payable year, minus (2) the sum 151.1 of all levies in the merging governmental unitsinfor the 151.2previouscurrent taxes payable year that qualify as special 151.3 levies under section 275.70, subdivision 3. The average tax 151.4 rate of a governmental unit for the current taxes payable year 151.5 shall be determined by (1) adding the governmental subdivision's 151.6 final certified levy for the current taxes payable year and its 151.7 property tax aids described in section 275.71, subdivision 4, 151.8 for the current aid payment year, and dividing that result by 151.9 (2) the sum of the governmental subdivision's total taxable net 151.10 tax capacity and its total fiscal disparity distribution net tax 151.11 capacity, if any, for the current taxes payable year. The net 151.12 tax capacity of all the merging governmental units for the 151.13 purpose of this adjustment shall be the sum of their total 151.14 taxable net tax capacity plus their total fiscal disparity 151.15 distribution net tax capacity, if any, for the current taxes 151.16 payable year. 151.17 EFFECTIVE DATE: This section is effective for taxes 151.18 payable in 2000 and subsequent years. 151.19 Sec. 8. Minnesota Statutes 1998, section 275.72, 151.20 subdivision 3, is amended to read: 151.21 Subd. 3. [TRANSFER OF GOVERNMENTAL FUNCTIONS.] (a) If a 151.22 function or service of one local governmental unit is 151.23 transferred to another local governmental unit, the levy limits 151.24 established under section 275.71 shall be adjusted by the 151.25 commissioner of revenue in such manner so as to fairly and 151.26 equitably reflect the reduced or increased property tax burden 151.27 resulting from the transfer. The aggregate of the adjusted 151.28 limitations shall not exceed the aggregate of the limitations 151.29 prior to adjustment except as provided in paragraph (b). 151.30 (b) If a county elects to provide assessment of all taxable 151.31 property in the county by the county assessor as provided in 151.32 sections 273.052 and 273.053 the county may special levy for the 151.33 associated costs under section 275.70, subdivision 5, clause 151.34 (15). Any municipality subject to levy limits that is located 151.35 in that county shall have its levy limit established under 151.36 section 275.71 adjusted by the commissioner of revenue in such 152.1 manner so as to fairly and equitably reflect the reduced or 152.2 increased property tax burden resulting from the transfer. The 152.3 amounts by which the levy limits of the municipalities are 152.4 reduced do not have to equal the amount that the county levies 152.5 for this purpose. 152.6 EFFECTIVE DATE: This section is effective beginning with 152.7 taxes levied in 2001, payable in 2002, provided that the 152.8 provisions of sections 275.70 to 275.74 are also extended to 152.9 taxes levied in 2001 or beyond. 152.10 Sec. 9. Minnesota Statutes 1999 Supplement, section 152.11 477A.011, subdivision 36, is amended to read: 152.12 Subd. 36. [CITY AID BASE.] (a) Except as provided in 152.13 paragraphs (b) to(k)(m), "city aid base" means, for each city, 152.14 the sum of the local government aid and equalization aid it was 152.15 originally certified to receive in calendar year 1993 under 152.16 Minnesota Statutes 1992, section 477A.013, subdivisions 3 and 5, 152.17 and the amount of disparity reduction aid it received in 152.18 calendar year 1993 under Minnesota Statutes 1992, section 152.19 273.1398, subdivision 3. 152.20 (b) For aids payable in 1996 and thereafter, a city that in 152.21 1992 or 1993 transferred an amount from governmental funds to 152.22 its sewer and water fund, which amount exceeded its net levy for 152.23 taxes payable in the year in which the transfer occurred, has a 152.24 "city aid base" equal to the sum of (i) its city aid base, as 152.25 calculated under paragraph (a), and (ii) one-half of the 152.26 difference between its city aid distribution under section 152.27 477A.013, subdivision 9, for aids payable in 1995 and its city 152.28 aid base for aids payable in 1995. 152.29 (c) The city aid base for any city with a population less 152.30 than 500 is increased by $40,000 for aids payable in calendar 152.31 year 1995 and thereafter, and the maximum amount of total aid it 152.32 may receive under section 477A.013, subdivision 9, paragraph 152.33 (c), is also increased by $40,000 for aids payable in calendar 152.34 year 1995 only, provided that: 152.35 (i) the average total tax capacity rate for taxes payable 152.36 in 1995 exceeds 200 percent; 153.1 (ii) the city portion of the tax capacity rate exceeds 100 153.2 percent; and 153.3 (iii) its city aid base is less than $60 per capita. 153.4 (d) The city aid base for a city is increased by $20,000 in 153.5 1998 and thereafter and the maximum amount of total aid it may 153.6 receive under section 477A.013, subdivision 9, paragraph (c), is 153.7 also increased by $20,000 in calendar year 1998 only, provided 153.8 that: 153.9 (i) the city has a population in 1994 of 2,500 or more; 153.10 (ii) the city is located in a county, outside of the 153.11 metropolitan area, which contains a city of the first class; 153.12 (iii) the city's net tax capacity used in calculating its 153.13 1996 aid under section 477A.013 is less than $400 per capita; 153.14 and 153.15 (iv) at least four percent of the total net tax capacity, 153.16 for taxes payable in 1996, of property located in the city is 153.17 classified as railroad property. 153.18 (e) The city aid base for a city is increased by $200,000 153.19 in 1999 and thereafter and the maximum amount of total aid it 153.20 may receive under section 477A.013, subdivision 9, paragraph 153.21 (c), is also increased by $200,000 in calendar year 1999 only, 153.22 provided that: 153.23 (i) the city was incorporated as a statutory city after 153.24 December 1, 1993; 153.25 (ii) its city aid base does not exceed $5,600; and 153.26 (iii) the city had a population in 1996 of 5,000 or more. 153.27 (f) The city aid base for a city is increased by $450,000 153.28 in 1999 to 2008 and the maximum amount of total aid it may 153.29 receive under section 477A.013, subdivision 9, paragraph (c), is 153.30 also increased by $450,000 in calendar year 1999 only, provided 153.31 that: 153.32 (i) the city had a population in 1996 of at least 50,000; 153.33 (ii) its population had increased by at least 40 percent in 153.34 the ten-year period ending in 1996; and 153.35 (iii) its city's net tax capacity for aids payable in 1998 153.36 is less than $700 per capita. 154.1 (g) Beginning in 2002, the city aid base for a city is 154.2 equal to the sum of its city aid base in 2001 and the amount of 154.3 additional aid it was certified to receive under section 477A.06 154.4 in 2001. For 2002 only, the maximum amount of total aid a city 154.5 may receive under section 477A.013, subdivision 9, paragraph 154.6 (c), is also increased by the amount it was certified to receive 154.7 under section 477A.06 in 2001. 154.8 (h) The city aid base for a city is increased by $150,000 154.9 for aids payable in 2000 and thereafter, and the maximum amount 154.10 of total aid it may receive under section 477A.013, subdivision 154.11 9, paragraph (c), is also increased by $150,000 in calendar year 154.12 2000 only, provided that: 154.13 (1) the city has a population that is greater than 1,000 154.14 and less than 2,500; 154.15 (2) its commercial and industrial percentage for aids 154.16 payable in 1999 is greater than 45 percent; and 154.17 (3) the total market value of all commercial and industrial 154.18 property in the city for assessment year 1999 is at least 15 154.19 percent less than the total market value of all commercial and 154.20 industrial property in the city for assessment year 1998. 154.21 (i) The city aid base for a city is increased by $200,000 154.22 in 2000 and thereafter, and the maximum amount of total aid it 154.23 may receive under section 477A.013, subdivision 9, paragraph 154.24 (c), is also increased by $200,000 in calendar year 2000 only, 154.25 provided that: 154.26 (1) the city had a population in 1997 of 2,500 or more; 154.27 (2) the net tax capacity of the city used in calculating 154.28 its 1999 aid under section 477A.013 is less than $650 per 154.29 capita; 154.30 (3) the pre-1940 housing percentage of the city used in 154.31 calculating 1999 aid under section 477A.013 is greater than 12 154.32 percent; 154.33 (4) the 1999 local government aid of the city under section 154.34 477A.013 is less than 20 percent of the amount that the formula 154.35 aid of the city would have been if the need increase percentage 154.36 was 100 percent; and 155.1 (5) the city aid base of the city used in calculating aid 155.2 under section 477A.013 is less than $7 per capita. 155.3 (j) The city aid base for a city is increased by $225,000 155.4 in calendar years 2000 to 2002 and the maximum amount of total 155.5 aid it may receive under section 477A.013, subdivision 9, 155.6 paragraph (c), is also increased by $225,000 in calendar year 155.7 2000 only, provided that: 155.8 (1) the city had a population of at least 5,000; 155.9 (2) its population had increased by at least 50 percent in 155.10 the ten-year period ending in 1997; 155.11 (3) the city is located outside of the Minneapolis-St. Paul 155.12 metropolitan statistical area as defined by the United States 155.13 Bureau of the Census; and 155.14 (4) the city received less than $30 per capita in aid under 155.15 section 477A.013, subdivision 9, for aids payable in 1999. 155.16 (k) The city aid base for a city is increased by $102,000 155.17 in 2000 and thereafter, and the maximum amount of total aid it 155.18 may receive under section 477A.013, subdivision 9, paragraph 155.19 (c), is also increased by $102,000 in calendar year 2000 only, 155.20 provided that: 155.21 (1) the city has a population in 1997 of 2,000 or more; 155.22 (2) the net tax capacity of the city used in calculating 155.23 its 1999 aid under section 477A.013 is less than $455 per 155.24 capita; 155.25 (3) the net levy of the city used in calculating 1999 aid 155.26 under section 477A.013 is greater than $195 per capita; and 155.27 (4) the 1999 local government aid of the city under section 155.28 477A.013 is less than 38 percent of the amount that the formula 155.29 aid of the city would have been if the need increase percentage 155.30 was 100 percent. 155.31 (l) The city aid base for a city is increased by $32,000 in 155.32 2001 and thereafter, and the maximum amount of total aid it may 155.33 receive under section 477A.013, subdivision 9, paragraph (c), is 155.34 also increased by $32,000 in calendar year 2001 only, provided 155.35 that: 155.36 (1) the city has a population in 1998 that is greater than 156.1 200 but less than 500; 156.2 (2) the city's revenue need used in calculating aids 156.3 payable in 2000 was greater than $200 per capita; 156.4 (3) the city net tax capacity for the city used in 156.5 calculating aids available in 2000 was equal to or less than 156.6 $200 per capita; 156.7 (4) the city aid base of the city used in calculating aid 156.8 under section 477A.013 is less than $65 per capita; and 156.9 (5) the city's formula aid for aids payable in 2000 was 156.10 greater than zero. 156.11 (m) The city aid base for a city is increased by $7,200 in 156.12 2001 and thereafter, and the maximum amount of total aid it may 156.13 receive under section 477A.013, subdivision 9, paragraph (c), is 156.14 also increased by $7,200 in calendar year 2001 only, provided 156.15 that: 156.16 (1) the city had a population in 1998 that is greater than 156.17 200 but less than 500; 156.18 (2) the city's commercial industrial percentage used in 156.19 calculating aids payable in 2000 was less than ten percent; 156.20 (3) more than 25 percent of the city's population was 60 156.21 years old or older according to the 1990 census; 156.22 (4) the city aid base of the city used in calculating aid 156.23 under section 477A.013 is less than $15 per capita; and 156.24 (5) the city's formula aid for aids payable in 2000 was 156.25 greater than zero. 156.26 EFFECTIVE DATE: This section is effective beginning with 156.27 aids payable in 2001 and thereafter. 156.28 Sec. 10. Minnesota Statutes 1999 Supplement, section 156.29 477A.03, subdivision 2, is amended to read: 156.30 Subd. 2. [ANNUAL APPROPRIATION.] (a) A sum sufficient to 156.31 discharge the duties imposed by sections 477A.011 to 477A.014 is 156.32 annually appropriated from the general fund to the commissioner 156.33 of revenue. 156.34 (b) Aid payments to counties under section 477A.0121 are 156.35 limited to $20,265,000 in 1996. Aid payments to counties under 156.36 section 477A.0121 are limited to $27,571,625 in 1997. For aid 157.1 payable in 1998 and thereafter, the total aids paid under 157.2 section 477A.0121 are the amounts certified to be paid in the 157.3 previous year, adjusted for inflation as provided under 157.4 subdivision 3. 157.5 (c)(i) For aids payable in 1998 and thereafter, the total 157.6 aids paid to counties under section 477A.0122 are the amounts 157.7 certified to be paid in the previous year, adjusted for 157.8 inflation as provided under subdivision 3. 157.9 (ii) Aid payments to counties under section 477A.0122 in 157.10 2000 are further increased by an additional $20,000,000 in 2000. 157.11 (d) Aid payments to cities in 1999 under section 477A.013, 157.12 subdivision 9, are limited to $380,565,489. For aids payable in 157.13 2000and 2001, the total aids paid under section 477A.013, 157.14 subdivision 9, are the amounts paid in the previous year, 157.15 adjusted for inflation as provided in subdivision 3, and 157.16 increased by the amount necessary to effectuate Laws 1999, 157.17 chapter 243, article 5, section 48, paragraph (b). For aids 157.18 payable in 2001 through 2003, the total aids paid under section 157.19 477A.013, subdivision 9, are the amounts certified to be paid in 157.20 the previous year, adjusted for inflation as provided under 157.21 subdivision 3. For aids payable in20022004, the total aids 157.22 paid under section 477A.013, subdivision 9, are the amounts 157.23 certified to be paid in the previous year, adjusted for 157.24 inflation as provided under subdivision 3, and increased by the 157.25 amount certified to be paid in20012003 under section 477A.06. 157.26 For aids payable in20032005 and thereafter, the total aids 157.27 paid under section 477A.013, subdivision 9, are the amounts 157.28 certified to be paid in the previous year, adjusted for 157.29 inflation as provided under subdivision 3. The additional 157.30 amount authorized under subdivision 4 is not included when 157.31 calculating the appropriation limits under this paragraph. 157.32 EFFECTIVE DATE: This section is effective for aids payable 157.33 in 2000 and thereafter. 157.34 Sec. 11. Minnesota Statutes 1999 Supplement, section 157.35 477A.06, subdivision 1, is amended to read: 157.36 Subdivision 1. [ELIGIBILITY.] (a) For assessment years 158.11998, 1999, and2000, 2001, and 2002, for all class 4d property 158.2 on which construction was begun before January 1, 1999, the 158.3 assessor shall determine the difference between the actual net 158.4 tax capacity and the net tax capacity that would be determined 158.5 for the property if the class rates for assessment year 1997 158.6 were in effect. 158.7 (b) In calendar years1999, 2000, and2001, 2002, and 2003, 158.8 each city shall be eligible for aid equal to (i) the amount by 158.9 which the sum of the differences determined in clause (a) for 158.10 the corresponding assessment year exceeds two percent of the 158.11 city's total taxable net tax capacity for taxes payable in 1998, 158.12 multiplied by (ii) the city government's average local tax rate 158.13 for taxes payable in 1998. 158.14 Sec. 12. Minnesota Statutes 1998, section 477A.06, 158.15 subdivision 3, is amended to read: 158.16 Subd. 3. [APPROPRIATION; PAYMENT.] (a) The commissioner 158.17 shall pay each city its qualifying aid amount on or before July 158.18 20 of each year. An amount sufficient to pay the aid authorized 158.19 under this section is appropriated to the commissioner of 158.20 revenue from the property tax reform account in fiscal years 158.21 2000 and 2001, and from the general fund in fiscalyearyears 158.22 2002, 2003, and 2004. 158.23 (b) For fiscal years 2001and 2002through 2004, the amount 158.24 of aid appropriated under this section may not exceed $1,500,000 158.25 each year. 158.26 (c) If the total amount of aid that would otherwise be 158.27 payable under the formula in this section exceeds the maximum 158.28 allowed under paragraph (b), the amount of aid for each city is 158.29 reduced proportionately to equal the limit. 158.30 Sec. 13. Laws 1988, chapter 645, section 3, as amended by 158.31 Laws 1999, chapter 243, article 6, section 9, is amended to read: 158.32 Sec. 3. [TAX; PAYMENT OF EXPENSES.] 158.33 (a) The tax levied by the hospital district under Minnesota 158.34 Statutes, section 447.34, must not be levied at a rate that 158.35 exceeds.00630.063 percent of taxable market value. 158.36 (b).00480.048 percent of taxable market value of tax in 159.1 paragraph (a) may be used only for acquisition, betterment, and 159.2 maintenance of the district's hospital and nursing home 159.3 facilities and equipment, and not for administrative or salary 159.4 expenses. 159.5 (c).00150.015 percent of taxable market value of the tax 159.6 in paragraph (a) may be used solely for the purpose of capital 159.7 expenditures as it relates to ambulance acquisitions for the 159.8 Cook ambulance service and the Orr ambulance service and not for 159.9 administrative or salary expenses. 159.10 The part of the levy referred to in paragraph (c) must be 159.11 administered by the Cook Hospital and passed on directly to the 159.12 Cook area ambulance service board and the city of Orr to be held 159.13 in trust until funding for a new ambulance is needed by either 159.14 the Cook ambulance service or the Orr ambulance service. 159.15 EFFECTIVE DATE: This section is effective the day 159.16 following final enactment. 159.17 Sec. 14. Laws 1999, chapter 243, article 6, section 18, is 159.18 amended to read: 159.19 Sec. 18. [EFFECTIVE DATE.] 159.20 Sections 3 to 6 and 10 are effective for taxes levied in 159.21 1999, and payable in 2000. Section 7 is effective the day 159.22 following final enactment for taxes levied in 1999 and 159.23 thereafter. Sections 8 and 17 are effective for taxes levied in 159.24 1999, payable in 2000, and thereafter. 159.25 The.00150.063 percent of market value levy described in 159.26 section 9, paragraph (a), and the 0.015 percent of taxable 159.27 market value levy described in section 9, paragraph (c),isare 159.28 effective for the cities of Cook and Orr and the counties of St. 159.29 Louis and Koochiching for affected parts of those counties on 159.30 January 1, 2000, to be requestedfor levies certified in the 159.31 year 2000, with the first payment to be receivedand taxes 159.32 payable in 2001 and thereafter. The 0.048 percent market value 159.33 levy described in section 9, paragraph (b), is effective for the 159.34 cities of Cook and Orr and the counties of St. Louis and 159.35 Koochiching for the affected parts of those counties on January 159.36 1, 1999, for levies certified in 1999 and taxes payable in 2000 160.1 and thereafter. 160.2 EFFECTIVE DATE: This section is effective the day 160.3 following final enactment. 160.4 Sec. 15. [CAPITOL REGION WATERSHED DISTRICT LEVY LIMIT.] 160.5 The capitol region watershed district managers may levy an 160.6 annual ad valorem tax of 0.02418 percent of taxable market value 160.7 or $200,000, whichever is less, under Minnesota Statutes, 160.8 section 103D.905, subdivision 3, notwithstanding the maximum 160.9 dollar limit for the administrative fund in that subdivision. 160.10 EFFECTIVE DATE: This section is effective for taxes levied 160.11 in 2000, payable in 2001 and thereafter. 160.12 Sec. 16. [POLK COUNTY; LEVY LIMIT ADJUSTMENTS.] 160.13 Subdivision 1. [LEVY LIMIT BASE.] If property taxes remain 160.14 subject to general levy limitations under state law for taxes 160.15 levied in 2000, the levy limit base of Polk county for taxes 160.16 levied in 2000 under Minnesota Statutes, section 275.71, 160.17 subdivision 2, or a successor law, is increased by $500,000. If 160.18 property taxes remain subject to general levy limitations under 160.19 state law for taxes levied in 2001, the levy limit base of Polk 160.20 county for taxes levied in 2001 under Minnesota Statutes, 160.21 section 275.71, subdivision 2, or a successor law, is increased 160.22 by an additional $500,000. 160.23 EFFECTIVE DATE: This section is effective for taxes levied 160.24 in 2000 and 2001 upon compliance with the governing body of Polk 160.25 county with Minnesota Statutes, section 645.021, subdivision 3. 160.26 Sec. 17. [ADDITIONAL AID; LINCOLN COUNTY.] 160.27 Subdivision 1. [AID INCREASE.] For aids payable in 2000, 160.28 Lincoln county shall receive an aid payment of up to $150,000 160.29 under this section. The entire amount of this additional aid 160.30 shall be paid from the appropriation for reimbursement for 160.31 court-ordered counsel under section 477A.0121, subdivision 4, 160.32 with the December 26 payment of other aids paid under Minnesota 160.33 Statutes, section 477A.015, and shall be equal to the estimated 160.34 amount of the appropriation under Minnesota Statutes, section 160.35 477A.0121, subdivision 4, up to $150,000, that will not be spent 160.36 for public defender costs under Minnesota Statutes, section 161.1 611.27, in that calendar year. 161.2 For aids payable in 2001, Lincoln county shall receive an 161.3 additional payment under this section of up to the difference 161.4 between $150,000 and what the county received under this 161.5 provision in the previous year. The entire amount of this 161.6 additional aid shall be paid from the appropriation for 161.7 reimbursement for court-ordered counsel under section 477A.0121, 161.8 subdivision 4, with the December 26 payment of other aids paid 161.9 under Minnesota Statutes, section 477A.015, and shall be equal 161.10 to the estimated amount of the appropriation under Minnesota 161.11 Statutes, section 477A.0121, subdivision 4, up to the limit 161.12 determined in this paragraph, that will not be spent for public 161.13 defender costs under Minnesota Statutes, section 611.27, in that 161.14 calendar year. 161.15 The county is not limited to the purposes listed in 161.16 Minnesota Statutes, section 477A.015, for spending this aid and 161.17 may pay a portion of this aid to Lake Benson township to 161.18 reimburse the township for losses due to the Wind Tower lawsuit 161.19 settlement. The aid under this section must not be included in 161.20 calculating any aids or any limitations on levies or 161.21 expenditures under law. 161.22 EFFECTIVE DATE: This section is effective the day after 161.23 timely compliance by the governing body of Lincoln county and 161.24 its chief clerical officer with Minnesota Statutes, section 161.25 645.021, subdivisions 2 and 3. 161.26 Sec. 18. [LOCAL GOVERNMENT AID TO CITIES; THE CITY OF ST. 161.27 CLOUD AND ST. AUGUSTA TOWNSHIP (THE CITY OF VENTURA).] 161.28 Subdivision 1. [ADDITIONAL LOCAL GOVERNMENT AID.] For aids 161.29 payable in 2001 only, an additional payment of $32,000 shall be 161.30 paid to the city of St. Cloud and an additional aid payment of 161.31 $75,000 shall be paid to St. Augusta township or its succeeding 161.32 municipal government (the city of Ventura). This aid shall be 161.33 paid out of the city aid appropriation under Minnesota Statutes, 161.34 section 477A.03, subdivision 2, paragraph (d). The aid under 161.35 this section must not be included in calculating aid paid under 161.36 Minnesota Statutes, section 477A.013, subdivision 9, or any 162.1 other law, or of any limitations on levies or expenditures. 162.2 EFFECTIVE DATE: This section is effective for aids payable 162.3 in calendar year 2001 only for the city of St. Cloud, upon 162.4 timely compliance by its governing body and its chief clerical 162.5 officer with Minnesota Statutes, section 645.021, subdivisions 2 162.6 and 3. This section is effective for aids payable in calendar 162.7 year 2001 only for St. Augusta township (city of Ventura), upon 162.8 timely compliance by its governing body and its chief clerical 162.9 officer with Minnesota Statutes, section 645.021, subdivisions 2 162.10 and 3. 162.11 ARTICLE 7 162.12 TRUTH IN TAXATION; REVERSE REFERENDA 162.13 Section 1. Minnesota Statutes 1998, section 275.065, 162.14 subdivision 3, is amended to read: 162.15 Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 162.16 county auditor shall prepare and the county treasurer shall 162.17 deliver after November 10 and on or before November2417 each 162.18 year, by first class mail to each taxpayer at the address listed 162.19 on the county's current year's assessment roll, a notice of 162.20 proposed property taxes. 162.21 (b) The commissioner of revenue shall prescribe the form of 162.22 the notice. 162.23 (c) The notice must inform taxpayers that it contains the 162.24 amount of property taxes each taxing authority proposes to 162.25 collect for taxes payable the following year. In the case of a 162.26 town, or in the case of the state determined portion of the 162.27 school district levy, the final tax amount will be its proposed 162.28 tax. The notice must clearly state that each taxing authority, 162.29 including regional library districts established under section 162.30 134.201, and including the metropolitan taxing districts as 162.31 defined in paragraph (i), but excluding all other special taxing 162.32 districts, cities of 500 population or less, and towns,will162.33 must hold a public meeting to receive public testimony on the 162.34 proposed budget and proposed or final property tax levy, or, in 162.35 case of a school district, on the current budget and proposed 162.36 property tax levy.ItIn the case of a county or a city over 163.1 500 population, a public hearing is not required if the county's 163.2 or city's proposed property tax levy has not increased over the 163.3 levy amount certified by the county or city under section 163.4 275.07, subdivision 1, for the previous year. The notice must 163.5 clearly state the time and place of each taxing authority's 163.6 meetingandif one is to be held. It must also state an address 163.7 where comments will be received by mail, whether or not a public 163.8 hearing is held. 163.9 (d) The notice must state for each parcel: 163.10 (1) the market value of the property as determined under 163.11 section 273.11, and used for computing property taxes payable in 163.12 the following year and for taxes payable in the current year as 163.13 each appears in the records of the county assessor on November 1 163.14 of the current year; and, in the case of residential property, 163.15 whether the property is classified as homestead or 163.16 nonhomestead. The notice must clearly inform taxpayers of the 163.17 years to which the market values apply and that the values are 163.18 final values; 163.19 (2) the items listed below, shown separately by county, 163.20 city or town, state determined school tax net of the education 163.21 homestead credit under section 273.1382, voter approved school 163.22 levy, other local school levy, and the sum of the special taxing 163.23 districts, and as a total of all taxing authorities: 163.24 (i) the actual tax for taxes payable in the current year; 163.25 (ii) the tax change due to spending factors, defined as the 163.26 proposed tax minus the constant spending tax amount; 163.27 (iii) the tax change due to other factors, defined as the 163.28 constant spending tax amount minus the actual current year tax; 163.29 and 163.30 (iv) the proposed tax amount. 163.31 In the case of a town or the state determined school tax, 163.32 the final tax shall also be its proposed tax unless the town 163.33 changes its levy at a special town meeting under section 163.34 365.52. If a school district has certified under section 163.35 126C.17, subdivision 9, that a referendum will be held in the 163.36 school district at the November general election, the county 164.1 auditor must note next to the school district's proposed amount 164.2 that a referendum is pending and that, if approved by the 164.3 voters, the tax amount may be higher than shown on the notice. 164.4 In the case of the city of Minneapolis, the levy for the 164.5 Minneapolis library board and the levy for Minneapolis park and 164.6 recreation shall be listed separately from the remaining amount 164.7 of the city's levy. In the case of a parcel where tax increment 164.8 or the fiscal disparities areawide tax under chapter 276A or 164.9 473F applies, the proposed tax levy on the captured value or the 164.10 proposed tax levy on the tax capacity subject to the areawide 164.11 tax must each be stated separately and not included in the sum 164.12 of the special taxing districts; and 164.13 (3) the increase or decrease between the total taxes 164.14 payable in the current year and the total proposed taxes, 164.15 expressed as a percentage. 164.16 For purposes of this section, the amount of the tax on 164.17 homesteads qualifying under the senior citizens' property tax 164.18 deferral program under chapter 290B is the total amount of 164.19 property tax before subtraction of the deferred property tax 164.20 amount. 164.21 (e) The notice must clearly state that the proposed or 164.22 final taxes do not include the following: 164.23 (1) special assessments; 164.24 (2) levies approved by the voters after the date the 164.25 proposed taxes are certified, including bond referenda, school 164.26 district levy referenda, and levy limit increase referenda; 164.27 (3) amounts necessary to pay cleanup or other costs due to 164.28 a natural disaster occurring after the date the proposed taxes 164.29 are certified; 164.30 (4) amounts necessary to pay tort judgments against the 164.31 taxing authority that become final after the date the proposed 164.32 taxes are certified; and 164.33 (5) the contamination tax imposed on properties which 164.34 received market value reductions for contamination. 164.35 (f) Except as provided in subdivision 7, failure of the 164.36 county auditor to prepare or the county treasurer to deliver the 165.1 notice as required in this section does not invalidate the 165.2 proposed or final tax levy or the taxes payable pursuant to the 165.3 tax levy. 165.4 (g) If the notice the taxpayer receives under this section 165.5 lists the property as nonhomestead, and satisfactory 165.6 documentation is provided to the county assessor by the 165.7 applicable deadline, and the property qualifies for the 165.8 homestead classification in that assessment year, the assessor 165.9 shall reclassify the property to homestead for taxes payable in 165.10 the following year. 165.11 (h) In the case of class 4 residential property used as a 165.12 residence for lease or rental periods of 30 days or more, the 165.13 taxpayer must either: 165.14 (1) mail or deliver a copy of the notice of proposed 165.15 property taxes to each tenant, renter, or lessee; or 165.16 (2) post a copy of the notice in a conspicuous place on the 165.17 premises of the property. 165.18 The notice must be mailed or posted by the taxpayer by 165.19 November2720 or within three days of receipt of the notice, 165.20 whichever is later. A taxpayer may notify the county treasurer 165.21 of the address of the taxpayer, agent, caretaker, or manager of 165.22 the premises to which the notice must be mailed in order to 165.23 fulfill the requirements of this paragraph. 165.24 (i) For purposes of this subdivision, subdivisions 5a and 165.25 6, "metropolitan special taxing districts" means the following 165.26 taxing districts in the seven-county metropolitan area that levy 165.27 a property tax for any of the specified purposes listed below: 165.28 (1) metropolitan council under section 473.132, 473.167, 165.29 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 165.30 (2) metropolitan airports commission under section 473.667, 165.31 473.671, or 473.672; and 165.32 (3) metropolitan mosquito control commission under section 165.33 473.711. 165.34 For purposes of this section, any levies made by the 165.35 regional rail authorities in the county of Anoka, Carver, 165.36 Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 166.1 398A shall be included with the appropriate county's levy and 166.2 shall be discussed at that county's public hearing, if held. 166.3 (j) If a statutory or home rule charter city or a town has 166.4 exercised the local levy option provided by section 473.388, 166.5 subdivision 7, it may include in the notice of its proposed 166.6 taxes the amount of its proposed taxes attributable to its 166.7 exercise of the option. In the first year of the city or town's 166.8 exercise of this option, the statement shall include an estimate 166.9 of the reduction of the metropolitan council's tax on the parcel 166.10 due to exercise of that option. The metropolitan council's levy 166.11 shall be adjusted accordingly. 166.12 EFFECTIVE DATE: This section is effective for notices 166.13 prepared in 2000 and thereafter. 166.14 Sec. 2. Minnesota Statutes 1999 Supplement, section 166.15 275.065, subdivision 5a, is amended to read: 166.16 Subd. 5a. [PUBLIC ADVERTISEMENT.] (a) A city that has a 166.17 population of more than 2,500, county, a metropolitan special 166.18 taxing district as defined in subdivision 3, paragraph (i), a 166.19 regional library district established under section 134.201, or 166.20 school district shall advertise in a newspaper a notice of its 166.21 intent to adopt a budget and property tax levy or, in the case 166.22 of a school district, to review its current budget and proposed 166.23 property taxes payable in the following year, at a public 166.24 hearing. In the case of a county or a city that has a 166.25 population over 2,500, if its proposed property tax levy has not 166.26 increased over its levy amount certified under section 275.07, 166.27 subdivision 1, for the previous year, no public hearing is 166.28 required. The notice must be published not less than two 166.29 business days nor more than six business days before the 166.30 hearing, if required due to a levy increase. Even if a hearing 166.31 is not required, counties and cities must continue to place an 166.32 advertisement in the newspaper informing taxpayers of the 166.33 proposed budget and levy amounts. 166.34 The advertisement must be at least one-eighth page in size 166.35 of a standard-size or a tabloid-size newspaper. The 166.36 advertisement must not be placed in the part of the newspaper 167.1 where legal notices and classified advertisements appear. The 167.2 advertisement must be published in an official newspaper of 167.3 general circulation in the taxing authority. The newspaper 167.4 selected must be one of general interest and readership in the 167.5 community, and not one of limited subject matter. The 167.6 advertisement must appear in a newspaper that is published at 167.7 least once per week. 167.8 For purposes of this section, the metropolitan special 167.9 taxing district's advertisement must only be published in the 167.10 Minneapolis Star and Tribune and the Saint Paul Pioneer Press. 167.11 (b) The advertisement for school districts, metropolitan 167.12 special taxing districts, and regional library districts must be 167.13 in the following form, except that the notice for a school 167.14 district may include references to the current budget in regard 167.15 to proposed property taxes. 167.16 "NOTICE OF 167.17 PROPOSED PROPERTY TAXES 167.18 (School District/Metropolitan 167.19 Special Taxing District/Regional 167.20 Library District) of ......... 167.21 The governing body of ........ will soon hold budget hearings 167.22 and vote on the property taxes for (metropolitan special taxing 167.23 district/regional library district services that will be 167.24 provided in (year)/school district services that will be 167.25 provided in (year) and (year)). 167.26 NOTICE OF PUBLIC HEARING: 167.27 All concerned citizens are invited to attend a public hearing 167.28 and express their opinions on the proposed (school 167.29 district/metropolitan special taxing district/regional library 167.30 district) budget and property taxes, or in the case of a school 167.31 district, its current budget and proposed property taxes, 167.32 payable in the following year. The hearing will be held on 167.33 (Month/Day/Year) at (Time) at (Location, Address)." 167.34 (c)(i) If the city or county's proposed property tax levy 167.35 has increased over its previous year's certified levy, the 167.36 advertisementfor cities and countiesmust be in the following 168.1 form. 168.2 "NOTICE OF PROPOSED 168.3 TOTAL BUDGET AND PROPERTY TAXES 168.4 The (city/county) governing body or board of commissioners will 168.5 hold a public hearing to discuss the budget and to vote on the 168.6 amount of property taxes to collect for services the 168.7 (city/county) will provide in (year). 168.8 168.9 SPENDING: The total budget amounts below compare 168.10 (city's/county's) (year) total actual budget with the amount the 168.11 (city/county) proposes to spend in (year). 168.12 168.13 (Year) Total Proposed (Year) Change from 168.14 Actual Budget Budget (Year)-(Year) 168.15 168.16 $....... $....... ...% 168.17 168.18 TAXES: The property tax amounts below compare that portion of 168.19 the current budget levied in property taxes in (city/county) for 168.20 (year) with the property taxes the (city/county) proposes to 168.21 collect in (year). 168.22 168.23 (Year) Property Proposed (Year) Change from 168.24 Taxes Property Taxes (Year)-(Year) 168.25 168.26 $....... $....... ...% 168.27 168.28 ATTEND THE PUBLIC HEARING 168.29 All (city/county) residents are invited to attend the public 168.30 hearing of the (city/county) to express your opinions on the 168.31 budget and the proposed amount of (year) property taxes. The 168.32 hearing will be held on: 168.33 (Month/Day/Year/Time) 168.34 (Location/Address) 168.35 If the discussion of the budget cannot be completed, a time and 168.36 place for continuing the discussion will be announced at the 169.1 hearing. You are also invited to send your written comments to: 169.2 (City/County) 169.3 (Location/Address)" 169.4 (ii) If no hearing is required under this section for the 169.5 city or county, its advertisement must be in the following 169.6 form. The advertisement must clearly state that because the 169.7 proposed property tax levy amount is equal to or less than the 169.8 taxing authority's previous year's actual property tax levy, no 169.9 public hearing is required by law. 169.10 "NOTICE OF PROPOSED 169.11 TOTAL BUDGET AND PROPERTY TAXES 169.12 Although no public hearing will be held, the (city/county) 169.13 governing body or board of commissioners is planning to adopt 169.14 the following budget and property tax levy. 169.15 169.16 SPENDING: The total budget amounts below compare 169.17 (city's/county's) (year) total actual budget with the amount the 169.18 (city/county) proposes to spend in (year). 169.19 169.20 (Year) Total Proposed (Year) Change from 169.21 Actual Budget Budget (Year)-(Year) 169.22 169.23 $....... $....... ...% 169.24 169.25 TAXES: The property tax amounts below compare that portion of 169.26 the current budget levied in property taxes in (city/county) for 169.27 (year) with the property taxes the (city/county) proposes to 169.28 collect in (year). 169.29 169.30 (Year) Property Proposed (Year) Change from 169.31 Taxes Property Taxes (Year)-(Year) 169.32 169.33 $....... $....... ...% 169.34 Although no public hearing will be held, you are invited to 169.35 send any written comments to: 169.36 (City/County) 170.1 (Location/Address)" 170.2 (iii) If the city's governing body or county board of 170.3 commissioners decide to hold a public hearing on the proposed 170.4 budget and levy, even though the proposed levy is equal to or 170.5 less than the previous year's certified levy amount, the 170.6 advertisement format in clause (i) must be used. 170.7 (d) For purposes of this subdivision, the budget amounts 170.8 listed on the advertisement mean: 170.9 (1) for cities, the total government fund expenditures, as 170.10 defined by the state auditor under section 471.6965, less any 170.11 expenditures for improvements or services that are specially 170.12 assessed or charged under chapter 429, 430, 435, or the 170.13 provisions of any other law or charter; and 170.14 (2) for counties, the total government fund expenditures, 170.15 as defined by the state auditor under section 375.169, less any 170.16 expenditures for direct payments to recipients or providers for 170.17 the human service aids listed below: 170.18 (i) Minnesota family investment program under chapters 256J 170.19 and 256K; 170.20 (ii) medical assistance under sections 256B.041, 170.21 subdivision 5, and 256B.19, subdivision 1; 170.22 (iii) general assistance medical care under section 170.23 256D.03, subdivision 6; 170.24 (iv) general assistance under section 256D.03, subdivision 170.25 2; 170.26 (v) emergency assistance under section 256J.48; 170.27 (vi) Minnesota supplemental aid under section 256D.36, 170.28 subdivision 1; 170.29 (vii) preadmission screening under section 256B.0911, and 170.30 alternative care grants under section 256B.0913; 170.31 (viii) general assistance medical care claims processing, 170.32 medical transportation and related costs under section 256D.03, 170.33 subdivision 4; 170.34 (ix) medical transportation and related costs under section 170.35 256B.0625, subdivisions 17 to 18a; 170.36 (x) group residential housing under section 256I.05, 171.1 subdivision 8, transferred from programs in clauses (iv) and 171.2 (vi); or 171.3 (xi) any successor programs to those listed in clauses (i) 171.4 to (x). 171.5 (e) A city with a population of over 500 but not more than 171.6 2,500 must advertise by posted notice as defined in section 171.7 645.12, subdivision 1. The advertisement must be posted at the 171.8 time provided in paragraph (a). It must be in the form required 171.9 in paragraph (b). 171.10 (f) For purposes of this subdivision, the population of a 171.11 city is the most recent population as determined by the state 171.12 demographer under section 4A.02. 171.13 (g) The commissioner of revenue, subject to the approval of 171.14 the chairs of the house and senate tax committees, shall 171.15 prescribe the form and format of the advertisement. 171.16 EFFECTIVE DATE: This section is effective for newspaper 171.17 advertisements in 2000 and thereafter. 171.18 Sec. 3. Minnesota Statutes 1998, section 275.065, 171.19 subdivision 6, is amended to read: 171.20 Subd. 6. [PUBLIC HEARING; ADOPTION OF BUDGET AND LEVY.] 171.21 (a) For purposes of this section, the following terms shall have 171.22 the meanings given: 171.23 (1) "Initial hearing" means the first and primary hearing 171.24 held to discuss the taxing authority's proposed budget and 171.25 proposed property tax levy for taxes payable in the following 171.26 year, or, for school districts, the current budget and the 171.27 proposed property tax levy for taxes payable in the following 171.28 year. 171.29 (2) "Continuation hearing" means a hearing held to complete 171.30 the initial hearing, if the initial hearing is not completed on 171.31 its scheduled date. 171.32 (3) "Subsequent hearing" means the hearing held to adopt 171.33 the taxing authority's final property tax levy, and, in the case 171.34 of taxing authorities other than school districts, the final 171.35 budget, for taxes payable in the following year. 171.36 (b) Except as provided in paragraph (g), between 172.1 November2919 and December2010, the governing bodies of a 172.2 city that has a population over 500, county, metropolitan 172.3 special taxing districts as defined in subdivision 3, paragraph 172.4 (i), and regional library districts shall each hold an initial 172.5 public hearing to discuss and seek public comment on its final 172.6 budget and property tax levy for taxes payable in the following 172.7 year, and the governing body of the school district shall hold 172.8 an initial public hearing to review its current budget and 172.9 proposed property tax levy for taxes payable in the following 172.10 year. The metropolitan special taxing districts shall be 172.11 required to hold only a single joint initial public hearing, the 172.12 location of which will be determined by the affected 172.13 metropolitan agencies. 172.14 (c) The initial hearing must be held after 5:00 p.m. if 172.15 scheduled on a day other than Saturday. No initial hearing may 172.16 be held on a Sunday. 172.17 (d) At the initial hearing under this subdivision, the 172.18 percentage increase in property taxes proposed by the taxing 172.19 authority, if any, and the specific purposes for which property 172.20 tax revenues are being increased must be discussed. During the 172.21 discussion, the governing body shall hear comments regarding a 172.22 proposed increase and explain the reasons for the proposed 172.23 increase. The public shall be allowed to speak and to ask 172.24 questions. At the public hearing, the school district must also 172.25 provide and discuss information on the distribution of its 172.26 revenues by revenue source, and the distribution of its spending 172.27 by program area. 172.28 (e) If the initial hearing is not completed on its 172.29 scheduled date, the taxing authority must announce, prior to 172.30 adjournment of the hearing, the date, time, and place for the 172.31 continuation of the hearing. The continuation hearing must be 172.32 held at leastfivethree business days but no more than14seven 172.33 business days after the initial hearing. A continuation hearing 172.34 may not be held later than December2010 except as provided in 172.35 paragraphs (f) and (g). A continuation hearing must be held 172.36 after 5:00 p.m. if scheduled on a day other than Saturday. No 173.1 continuation hearing may be held on a Sunday. 173.2 (f) The governing body of a county shall hold its initial 173.3 hearing on thefirst Thursdaythird Tuesday inDecemberNovember 173.4 each year, and may hold additional initial hearings on other 173.5 dates before December2010 if necessary for the convenience of 173.6 county residents. If the county needs a continuation of its 173.7 hearing, the continuation hearing shall be held on thethird173.8Tuesdayfirst Thursday in December.If the third Tuesday in173.9December falls on December 21, the county's continuation hearing173.10shall be held on Monday, December 20.173.11 (g) The metropolitan special taxing districts shall hold a 173.12 joint initial public hearing on the first Wednesday of 173.13 December. A continuation hearing, if necessary, shall be held 173.14 on the second Wednesday of December even if that second 173.15 Wednesday is after December 10. 173.16 (h) The county auditor shall provide for the coordination 173.17 of initial and continuation hearing dates for all school 173.18 districts and cities within the county to prevent conflicts 173.19 under clauses (i) and (j). 173.20 (i) By August 10, each school board and the board of the 173.21 regional library district shall certify to the county auditors 173.22 of the counties in which the school district or regional library 173.23 district is located the dates on which it elects to hold its 173.24 initial hearing and any continuation hearing. If a school board 173.25 or regional library district does not certify these dates by 173.26 August 10, the auditor will assign the initial and continuation 173.27 hearing dates. The dates elected or assigned must not conflict 173.28 with the initial and continuation hearing dates of the county or 173.29 the metropolitan special taxing districts. 173.30 (j) By August 20, the county auditor shall notify the 173.31 clerks of the cities within the county of the dates on which 173.32 school districts and regional library districts have elected to 173.33 hold their initial and continuation hearings. At the time a 173.34 city certifies its proposed levy under subdivision 1 it shall 173.35 certify the dates on which it elects to hold its initial hearing 173.36 and any continuation hearing. Until September 15, thefirst and174.1second Mondaysfourth Monday of November and the first Monday of 174.2 December are reserved for the use of the cities. If a city does 174.3 not certify its hearing dates by September 15, the auditor shall 174.4 assign the initial and continuation hearing dates. The dates 174.5 elected or assigned for the initial hearing must not conflict 174.6 with the initial hearing dates of the county, metropolitan 174.7 special taxing districts, regional library districts, or school 174.8 districts within which the city is located. To the extent 174.9 possible, the dates of the city's continuation hearing should 174.10 not conflict with the continuation hearing dates of the county, 174.11 metropolitan special taxing districts, regional library 174.12 districts, or school districts within which the city is 174.13 located. This paragraph does not apply to cities of 500 174.14 population or less. 174.15 (k) The county initial hearing date and the city, 174.16 metropolitan special taxing district, regional library district, 174.17 and school district initial hearing dates must be designated on 174.18 the notices required under subdivision 3. The continuation 174.19 hearing dates need not be stated on the notices. 174.20 (l) At a subsequent hearing, each county, school district, 174.21 city over 500 population, and metropolitan special taxing 174.22 district may amend its proposed property tax levy and must adopt 174.23 a final property tax levy. Each county, city over 500 174.24 population, and metropolitan special taxing district may also 174.25 amend its proposed budget and must adopt a final budget at the 174.26 subsequent hearing. The final property tax levy must be adopted 174.27 prior to adopting the final budget. A school district is not 174.28 required to adopt its final budget at the subsequent hearing. 174.29 The subsequent hearing of a taxing authority must be held on a 174.30 date subsequent to the date of the taxing authority's initial 174.31 public hearing. If a continuation hearing is held, the 174.32 subsequent hearing must be held either immediately following the 174.33 continuation hearing or on a date subsequent to the continuation 174.34 hearing. The subsequent hearing may be held at a regularly 174.35 scheduled board or council meeting or at a special meeting 174.36 scheduled for the purposes of the subsequent hearing. The 175.1 subsequent hearing of a taxing authority does not have to be 175.2 coordinated by the county auditor to prevent a conflict with an 175.3 initial hearing, a continuation hearing, or a subsequent hearing 175.4 of any other taxing authority. All subsequent hearings must be 175.5 held prior to five working days after December 20 of the levy 175.6 year. The date, time, and place of the subsequent hearing must 175.7 be announced at the initial public hearing or at the 175.8 continuation hearing. 175.9 (m) The property tax levy certified under section 275.07 by 175.10 a city of any population, county, metropolitan special taxing 175.11 district, regional library district, or school district must not 175.12 exceed the proposed levy determined under subdivision 1, except 175.13 by an amount up to the sum of the following amounts: 175.14 (1) the amount of a school district levy whose voters 175.15 approved a referendum to increase taxes under section 123B.63, 175.16 subdivision 3, or 126C.17, subdivision 9, after the proposed 175.17 levy was certified; 175.18 (2) the amount of a city or county levy approved by the 175.19 voters after the proposed levy was certified; 175.20 (3) the amount of a levy to pay principal and interest on 175.21 bonds approved by the voters under section 475.58 after the 175.22 proposed levy was certified; 175.23 (4) the amount of a levy to pay costs due to a natural 175.24 disaster occurring after the proposed levy was certified, if 175.25 that amount is approved by the commissioner of revenue under 175.26 subdivision 6a; 175.27 (5) the amount of a levy to pay tort judgments against a 175.28 taxing authority that become final after the proposed levy was 175.29 certified, if the amount is approved by the commissioner of 175.30 revenue under subdivision 6a; 175.31 (6) the amount of an increase in levy limits certified to 175.32 the taxing authority by the commissioner of children, families, 175.33 and learning or the commissioner of revenue after the proposed 175.34 levy was certified; and 175.35 (7) the amount required under section 126C.55. 175.36 (n) This subdivision does not apply to townsand, special 176.1 taxing districts other than regional library districts and 176.2 metropolitan special taxing districts, cities under 500 176.3 population, and any counties or cities over 500 population whose 176.4 proposed property tax levy is less than or equal to its levy 176.5 certified under section 275.07, subdivision 1, for the previous 176.6 year. 176.7 (o) Notwithstanding the requirements of this section, the 176.8 employer is required to meet and negotiate over employee 176.9 compensation as provided for in chapter 179A. 176.10 EFFECTIVE DATE: This section is effective for public 176.11 hearings held in 2000 and thereafter, for levies payable in 2001 176.12 and thereafter. 176.13 Sec. 4. Minnesota Statutes 1998, section 275.065, 176.14 subdivision 8, is amended to read: 176.15 Subd. 8. [HEARING.] Notwithstanding any other provision of 176.16 law, Ramsey county, the city of St. Paul, and independent school 176.17 district No. 625 are authorized to and shall hold their initial 176.18 public hearing jointly. The hearing must be held on thesecond176.19 fourth Tuesday ofDecemberNovember each year. The 176.20 advertisement required in subdivision 5a may be a joint 176.21 advertisement. The hearing is otherwise subject to the 176.22 requirements of this section. 176.23 Ramsey county is authorized to hold an additional initial 176.24 hearing or hearings as provided under this section, provided 176.25 that any additional hearings must not conflict with the initial 176.26 or continuation hearing dates of the other taxing districts. 176.27 However, if Ramsey county elects not to hold such additional 176.28 initial hearing or hearings, the joint initial hearing required 176.29 by this subdivision must be held in a St. Paul location 176.30 convenient to residents of Ramsey county. 176.31 EFFECTIVE DATE: This section is effective for hearings 176.32 held in 2000 and thereafter, for taxes payable in 2001 and 176.33 thereafter. 176.34 Sec. 5. Minnesota Statutes 1998, section 275.065, is 176.35 amended by adding a subdivision to read: 176.36 Subd. 9. [REVERSE REFERENDUM.] (a) The reverse referendum 177.1 procedure in this subdivision applies only in the case of a 177.2 county, or a city that has a population of more than 2,500, that 177.3 has adopted a property tax levy increase over the levy amount 177.4 certified under section 275.07, subdivision 1, for the previous 177.5 year that exceeds the greater of (1) two percent, or (2) a 177.6 percentage increase equal to the sum of the percentage increase 177.7 in the implicit price deflator and the percentage increase in 177.8 the number of households for that county or city, as calculated 177.9 under section 275.71, subdivision 3, clauses (1) and (2), for 177.10 taxes levied in the current year. By September 1 the 177.11 commissioner of revenue shall certify to the county the 177.12 percentage increase allowed for each local government located in 177.13 the county that is subject to this subdivision. 177.14 (b) If within 14 calendar days after the public hearing and 177.15 adoption of a levy under subdivision 6, a petition signed by 177.16 voters equal in number to five percent of the registered voters 177.17 in the county or city in the last general election requesting a 177.18 referendum on the levy increase is filed with the county 177.19 auditor, or the city clerk, the levy increase shall not be 177.20 effective until it has been submitted to the voters at a special 177.21 election to be held on the last Tuesday in January, and a 177.22 majority of votes cast on the question of approving the levy 177.23 increase are in the affirmative. The commissioner of revenue 177.24 shall prepare the form of the question to be presented at the 177.25 referendum, which shall reference only the amount of the 177.26 property tax levy increase over the previous year. 177.27 (c) The county or city shall notify the county auditor of 177.28 the results of the referendum. If the majority of the votes 177.29 cast on the question are in the affirmative, the levy adopted 177.30 under subdivision 6 shall be certified to the county auditor 177.31 under section 275.07, subdivision 1. If the majority of the 177.32 votes cast on the question are in the negative, an amount equal 177.33 to the preceding year's levy multiplied by one plus the 177.34 percentage increase allowed under paragraph (a) shall be 177.35 certified to the county auditor for purposes of section 275.07, 177.36 subdivision 1. 178.1 (d) For purposes of this subdivision, "property tax levy" 178.2 does not include a levy to pay general obligation bonds, as 178.3 certified to the county under section 475.61 or other applicable 178.4 law. 178.5 EFFECTIVE DATE: This section is effective for taxes 178.6 payable in 2001 and thereafter. 178.7 Sec. 6. Minnesota Statutes 1998, section 275.07, 178.8 subdivision 1, is amended to read: 178.9 Subdivision 1. [CERTIFICATION OF LEVY.] Except as 178.10 otherwise provided in this subdivision, the taxes voted by 178.11 cities, counties, school districts, and special districts shall 178.12 be certified by the proper authorities to the county auditor on 178.13 or before five working days after December 20 in each year. A 178.14 county or city to which the reverse referendum provisions under 178.15 section 275.065, subdivision 9, apply shall certify the taxes to 178.16 the county auditor by January 5, except that any county or city 178.17 for which a petition has been filed under section 275.065, 178.18 subdivision 9, must certify the day immediately following the 178.19 election under that section. A town must certify the levy 178.20 adopted by the town board to the county auditor by September 15 178.21 each year. If the town board modifies the levy at a special 178.22 town meeting after September 15, the town board must recertify 178.23 its levy to the county auditor on or before five working days 178.24 after December 20. The taxes certified shall not be reduced by 178.25 the county auditor by the aid received under section 273.1398, 178.26 subdivision 2, but shall be reduced by the county auditor by the 178.27 aid received under section 273.1398, subdivision 3. If a city, 178.28 town, county, school district, or special district fails to 178.29 certify its levy by that date, its levy shall be the amount 178.30 levied by it for the preceding year. 178.31 EFFECTIVE DATE: This section is effective for property 178.32 taxes payable in 2001 and thereafter. 178.33 Sec. 7. [DEFINITION OF A PROPERTY TAX LEVY INCREASE FOR 178.34 TAXES LEVIED IN 2000.] 178.35 For taxes levied in 2000, payable in 2001 only, an increase 178.36 in a proposed or certified property tax levy for a city shall 179.1 not be considered an increase under sections 1 to 6 provided 179.2 that the increase in levy does not exceed the reduction in the 179.3 city's homestead and agricultural credit aid for aids payable in 179.4 2001 under article 5, section 55, paragraph (a). 179.5 ARTICLE 8 179.6 SALES AND USE TAXES 179.7 Section 1. Minnesota Statutes 1999 Supplement, section 179.8 289A.20, subdivision 4, is amended to read: 179.9 Subd. 4. [SALES AND USE TAX.] (a) The taxes imposed by 179.10 chapter 297A are due and payable to the commissioner monthly on 179.11 or before the 20th day of the month following the month in which 179.12 the taxable event occurred, or following another reporting 179.13 period as the commissioner prescribes or as allowed under 179.14 section 289A.18, subdivision 4, paragraph (f), except that use 179.15 taxes due on an annual use tax return as provided under section 179.16 289A.11, subdivision 1, are payable by April 15 following the 179.17 close of the calendar year. 179.18 (b) A vendor having a liability of $120,000 or more during 179.19 a fiscal year ending June 30 must remit the June liability for 179.20 the next year in the following manner: 179.21 (1) Two business days before June 30 of the year, the 179.22 vendor must remit 75 percent of the estimated June liability to 179.23 the commissioner. 179.24 (2) On or before August 14 of the year, the vendor must pay 179.25 any additional amount of tax not remitted in June. 179.26 (c) A vendor having a liability of $120,000 or more during 179.27 a fiscal year ending June 30 must remit all liabilities on 179.28 returns due for periods beginning in the subsequent calendar 179.29 year by means of a funds transfer as defined in section 179.30 336.4A-104, paragraph (a). The funds transfer payment date, as 179.31 defined in section 336.4A-401, must be on or before the 14th day 179.32 of the month following the month in which the taxable event 179.33 occurred, or on or before the 14th day of the month following 179.34 the month in which the sale is reported under section 289A.18, 179.35 subdivision 4, except for 75 percent of the estimated June 179.36 liability, which is due two business days before June 30. The 180.1 remaining amount of the June liability is due on August 14. If 180.2 the date the tax is due is not a funds transfer business day, as 180.3 defined in section 336.4A-105, paragraph (a), clause (4), the 180.4 payment date must be on or before the funds transfer business 180.5 day next following the date the tax is due. 180.6 (d) If the vendor required to remit by electronic funds 180.7 transfer as provided in paragraph (c) is unable due to 180.8 reasonable cause to determine the actual sales and use tax due 180.9 on or before the due date for payment, the vendor may remit an 180.10 estimate of the tax owed using one of the following options: 180.11 (1) 100 percent of the tax reported on the previous month's 180.12 sales and use tax return; 180.13 (2) 100 percent of the tax reported on the sales and use 180.14 tax return for the same month in the previous calendar year; or 180.15 (3) 95 percent of the actual tax due. 180.16 Any additional amount of tax that is not remitted on or 180.17 before the due date for payment, must be remitted with the 180.18 return. If a vendor fails to remit the actual liability or does 180.19 not remit using one of the estimate options by the due date for 180.20 payment, the vendor must remit actual liability as provided in 180.21 paragraph (c) in all subsequent periods. This paragraph does 180.22 not apply to the June sales and use tax liability. 180.23 EFFECTIVE DATE: This section is effective the day 180.24 following final enactment. 180.25 Sec. 2. Minnesota Statutes 1998, section 289A.60, 180.26 subdivision 14, is amended to read: 180.27 Subd. 14. [PENALTY FOR USE OF SALES TAX EXEMPTION 180.28 CERTIFICATES TO EVADE TAX.] A person who uses an exemption 180.29 certificate to buy property or purchase services that will be 180.30 used for purposes other than the exemption claimed, with the 180.31 intent to evade payment of sales tax to the seller, is subject 180.32 to a penalty of $100 for each transaction where that use of an 180.33 exemption certificate has occurred. 180.34 EFFECTIVE DATE: This section is effective for exemption 180.35 certificates used on or after July 1, 2000. 180.36 Sec. 3. Minnesota Statutes 1998, section 297A.01, 181.1 subdivision 13, is amended to read: 181.2 Subd. 13. "Agricultural production," as used in section 181.3 297A.25, subdivision 9, includes, but is not limited to, 181.4 horticulture; floriculture; maple syrup harvesting; raising of 181.5 pets, fur bearing animals, research animals, farmed cervidae, as 181.6 defined in section 17.451, subdivision 2, llamas, as defined in 181.7 section 17.455, subdivision 2, ratitae, as defined in section 181.8 17.453, subdivision 3, and horses. 181.9 EFFECTIVE DATE: This section is effective for sales and 181.10 purchases made after June 30, 2000. 181.11 Sec. 4. Minnesota Statutes 1998, section 297A.01, 181.12 subdivision 15, is amended to read: 181.13 Subd. 15. "Farm machinery" means new or used machinery, 181.14 equipment, implements, accessories, and contrivances used 181.15 directly and principally in the production for sale, but not 181.16 including the processing, of livestock, dairy animals, dairy 181.17 products, poultry and poultry products, fruits, 181.18 vegetables, trees and shrubs including nursery stock, forage, 181.19 grains and bees and apiary products. "Farm machinery" includes: 181.20 (1) machinery for the preparation, seeding or cultivation 181.21 of soil for growing agricultural crops and sod, harvesting and 181.22 threshing of agricultural products, harvesting or mowing of sod, 181.23 and certain machinery for dairy, livestock and poultry farms; 181.24 (2) barn cleaners, milking systems, grain dryers, automatic 181.25 feeding systems and similar installations, whether or not the 181.26 equipment is installed by the seller and becomes part of the 181.27 real property; 181.28 (3) irrigation equipment sold for exclusively agricultural 181.29 use, including pumps, pipe fittings, valves, sprinklers and 181.30 other equipment necessary to the operation of an irrigation 181.31 system when sold as part of an irrigation system, whether or not 181.32 the equipment is installed by the seller and becomes part of the 181.33 real property; 181.34 (4) logging equipment, including chain saws used for 181.35 commercial logging; 181.36 (5) fencing used for the containment of farmed cervidae, as 182.1 defined in section 17.451, subdivision 2; 182.2 (6) primary and backup generator units used to generate 182.3 electricity for the purpose of operating farm machinery, as 182.4 defined in this subdivision, or providing light or space heating 182.5 necessary for the production of livestock, dairy animals, dairy 182.6 products, or poultry and poultry products;and182.7 (7) aquaculture production equipment as defined in 182.8 subdivision 19; and 182.9 (8) equipment used for maple syrup harvesting. 182.10 Repair or replacement parts for farm machinery shall not be 182.11 included in the definition of farm machinery. 182.12 Tools, shop equipment, grain bins, feed bunks, fencing 182.13 material except fencing material covered by clause (5), 182.14 communication equipment and other farm supplies shall not be 182.15 considered to be farm machinery. "Farm machinery" does not 182.16 include motor vehicles taxed under chapter 297B, snowmobiles, 182.17 snow blowers, lawn mowers except those used in the production of 182.18 sod for sale, garden-type tractors or garden tillers and the 182.19 repair and replacement parts for those vehicles and machines. 182.20 EFFECTIVE DATE: This section is effective for sales and 182.21 purchases made after June 30, 2000. 182.22 Sec. 5. Minnesota Statutes 1998, section 297A.01, 182.23 subdivision 16, is amended to read: 182.24 Subd. 16. [CAPITAL EQUIPMENT.] (a) Capital equipment means 182.25 machinery and equipment purchased or leased for use in this 182.26 state and used by the purchaser or lessee primarily for 182.27 manufacturing, fabricating, mining, or refining tangible 182.28 personal property to be sold ultimately at retail and for 182.29 electronically transmitting results retrieved by a customer of 182.30 an on-line computerized data retrieval system. Capital 182.31 equipment also means equipment used by health clubs, as defined 182.32 in subdivision 23, to the extent they are used directly in 182.33 providing opportunities for exercise. 182.34 (b) Capital equipment includes all machinery and equipment 182.35 that is essential to the integrated production process. Capital 182.36 equipment includes, but is not limited to: 183.1 (1) machinery and equipment used or required to operate, 183.2 control, or regulate the production equipment; 183.3 (2) machinery and equipment used for research and 183.4 development, design, quality control, and testing activities; 183.5 (3) environmental control devices that are used to maintain 183.6 conditions such as temperature, humidity, light, or air pressure 183.7 when those conditions are essential to and are part of the 183.8 production process; 183.9 (4) materials and supplies necessary to construct and 183.10 install machinery or equipment; 183.11 (5) repair and replacement parts, including accessories, 183.12 whether purchased as spare parts, repair parts, or as upgrades 183.13 or modifications to machinery or equipment; 183.14 (6) materials used for foundations that support machinery 183.15 or equipment; 183.16 (7) materials used to construct and install special purpose 183.17 buildings used in the production process; or 183.18 (8) ready-mixed concrete trucks in which the ready-mixed 183.19 concrete is mixed as part of the delivery process. 183.20 (c) Capital equipment does not include the following: 183.21 (1) motor vehicles taxed under chapter 297B; 183.22 (2) machinery or equipment used to receive or store raw 183.23 materials; 183.24 (3) building materials; 183.25 (4) machinery or equipment used for nonproduction purposes, 183.26 including, but not limited to, the following: machinery and 183.27 equipment used for plant security, fire prevention, first aid, 183.28 and hospital stations; machinery and equipment used in support 183.29 operations or for administrative purposes; machinery and 183.30 equipment used solely for pollution control, prevention, or 183.31 abatement; and machinery and equipment used in plant cleaning, 183.32 disposal of scrap and waste, plant communications, space 183.33 heating, lighting, or safety; 183.34 (5) "farm machinery" as defined by subdivision 15, and 183.35 "aquaculture production equipment" as defined by subdivision 19; 183.36 or 184.1 (6) any other item that is not essential to the integrated 184.2 process of manufacturing, fabricating, mining, or refining. 184.3 (d) For purposes of this subdivision: 184.4 (1) "Equipment" means independent devices or tools separate 184.5 from machinery but essential to an integrated production 184.6 process, including computers and software, used in operating, 184.7 controlling, or regulating machinery and equipment; and any 184.8 subunit or assembly comprising a component of any machinery or 184.9 accessory or attachment parts of machinery, such as tools, dies, 184.10 jigs, patterns, and molds. 184.11 (2) "Fabricating" means to make, build, create, produce, or 184.12 assemble components or property to work in a new or different 184.13 manner. 184.14 (3) "Machinery" means mechanical, electronic, or electrical 184.15 devices, including computers and software, that are purchased or 184.16 constructed to be used for the activities set forth in paragraph 184.17 (a), beginning with the removal of raw materials from inventory 184.18 through the completion of the product, including packaging of 184.19 the product. 184.20 (4) "Manufacturing" means an operation or series of 184.21 operations where raw materials are changed in form, composition, 184.22 or condition by machinery and equipment and which results in the 184.23 production of a new article of tangible personal property. For 184.24 purposes of this subdivision, "manufacturing" includes the 184.25 generation of electricity or steam to be sold at retail. 184.26 (5) "Mining" means the extraction of minerals, ores, stone, 184.27 and peat. 184.28 (6) "On-line data retrieval system" means a system whose 184.29 cumulation of information is equally available and accessible to 184.30 all its customers. 184.31 (7) "Pollution control equipment" means machinery and 184.32 equipment used to eliminate, prevent, or reduce pollution 184.33 resulting from an activity described in paragraph (a). 184.34 (8) "Primarily" means machinery and equipment used 50 184.35 percent or more of the time in an activity described in 184.36 paragraph (a). 185.1 (9) "Refining" means the process of converting a natural 185.2 resource to a product, including the treatment of water to be 185.3 sold at retail. 185.4 (e) For purposes of this subdivision the requirement that 185.5 the machinery or equipment "must be used by the purchaser or 185.6 lessee" means that the person who purchases or leases the 185.7 machinery or equipment must be the one who uses it for the 185.8 qualifying purpose. When a contractor buys and installs 185.9 machinery or equipment as part of an improvement to real 185.10 property, only the contractor is considered the purchaser. 185.11 EFFECTIVE DATE: This section is effective for sales and 185.12 purchases made after June 30, 2000. 185.13 Sec. 6. Minnesota Statutes 1998, section 297A.01, is 185.14 amended by adding a subdivision to read: 185.15 Subd. 23. [HEALTH CLUB.] "Health club" means an 185.16 organization, whether or not incorporated, whose primary 185.17 business purpose is to provide access to equipment and services 185.18 for aerobic and anaerobic exercise for the promotion of health 185.19 and fitness which is not member governed or member controlled. 185.20 EFFECTIVE DATE: This section is effective for sales and 185.21 purchases made after June 30, 2000. 185.22 Sec. 7. Minnesota Statutes 1998, section 297A.15, is 185.23 amended by adding a subdivision to read: 185.24 Subd. 8. [REFUND; APPROPRIATION; AGRICULTURAL PROCESSING 185.25 FACILITIES.] The tax on the gross receipts from the sale of 185.26 items exempt under section 297A.25, subdivision 90 or 91, must 185.27 be imposed and collected as if the sale were taxable and the 185.28 rate under section 297A.02, subdivision 1, applied. 185.29 Upon application by the owner of the property on forms 185.30 prescribed by the commissioner, a refund equal to the tax paid 185.31 on the gross receipts of the building materials and equipment 185.32 must be paid to the owner. In the case of materials and 185.33 equipment in which the tax was paid by a contractor, application 185.34 must be made by the owner for the sales tax paid by the 185.35 contractor. The application must include sufficient information 185.36 to permit the commissioner to verify the sales tax paid for the 186.1 project. The contractor must furnish to the owner a statement 186.2 of the cost of building materials and equipment and the sales 186.3 taxes paid on these items. The amount required to make the 186.4 refunds is annually appropriated to the commissioner. Interest 186.5 must be paid on the refund at the rate in section 270.76 from 60 186.6 days after the date the refund claim is filed with the 186.7 commissioner. 186.8 EFFECTIVE DATE: This section is effective for applications 186.9 for refund made after June 30, 2000. 186.10 Sec. 8. Minnesota Statutes 1998, section 297A.25, 186.11 subdivision 5, is amended to read: 186.12 Subd. 5. [OUTSTATE TRANSPORT OR DELIVERY.] The gross 186.13 receipts from the following sales of, and storage, use, or 186.14 consumption of, tangible personal property are exempt: 186.15 (1) property which, without intermediate use, is shipped or 186.16 transported outside Minnesota by the purchaser and thereafter 186.17 used in a trade or business or is stored, processed, fabricated 186.18 or manufactured into, attached to or incorporated into other 186.19 tangible personal property transported or shipped outside 186.20 Minnesota and thereafter used in a trade or business outside 186.21 Minnesota, and which is not thereafter returned to a point 186.22 within Minnesota, except in the course of interstate commerce 186.23 (storage shall not constitute intermediate use); provided that 186.24 the property is not subject to tax in that state or country to 186.25 which it is transported for storage or use and provided further 186.26 that sales of tangible personal property to be used in other 186.27 states or countries as part of a maintenance contract shall be 186.28 specifically exempt;or186.29 (2) property which the seller delivers to a common carrier 186.30 for delivery outside Minnesota, places in the United States mail 186.31 or parcel post directed to the purchaser outside Minnesota, or 186.32 delivers to the purchaser outside Minnesota by means of the 186.33 seller's own delivery vehicles, and which is not thereafter 186.34 returned to a point within Minnesota, except in the course of 186.35 interstate commerce; or 186.36 (3) aircraft, as defined in section 360.511 and approved by 187.1 the Federal Aviation Administration, and which the seller 187.2 delivers to a purchaser outside Minnesota or which, without 187.3 intermediate use, is shipped or transported outside Minnesota by 187.4 the purchaser, but only if the purchaser is not a resident of 187.5 Minnesota and provided that the aircraft is not thereafter 187.6 returned to a point within Minnesota, except in the course of 187.7 interstate commerce or isolated and occasional use and will be 187.8 registered in another state or country upon its removal from 187.9 Minnesota; this exemption applies even if the purchaser takes 187.10 possession of the aircraft in Minnesota and uses the aircraft in 187.11 the state exclusively for training purposes for a period not to 187.12 exceed ten days prior to removing the aircraft from this state. 187.13 EFFECTIVE DATE: This section is effective for purchases 187.14 made after the date of final enactment. 187.15 Sec. 9. Minnesota Statutes 1999 Supplement, section 187.16 297A.25, subdivision 9, is amended to read: 187.17 Subd. 9. [MATERIALS CONSUMED IN PRODUCTION.] The gross 187.18 receipts from the sale of and the storage, use, or consumption 187.19 of all materials, including chemicals, fuels, petroleum 187.20 products, lubricants, packaging materials, including returnable 187.21 containers used in packaging food and beverage products, feeds, 187.22 seeds, fertilizers, electricity, gas and steam, used or consumed 187.23 in agricultural or industrial production of personal property 187.24 intended to be sold ultimately at retail, whether or not the 187.25 item so used becomes an ingredient or constituent part of the 187.26 property produced are exempt. Seeds, trees, fertilizers, and 187.27 herbicides purchased for use by farmers in the Conservation 187.28 Reserve Program under United States Code, title 16, section 187.29 590h, as amended through December 31, 1991, the Integrated Farm 187.30 Management Program under section 1627 of Public Law Number 187.31 101-624, the Wheat and Feed Grain Programs under sections 301 to 187.32 305 and 401 to 405 of Public Law Number 101-624, and the 187.33 conservation reserve program under sections 103F.505 to 187.34 103F.531, are included in this exemption. Sales to a 187.35 veterinarian of materials used or consumed in the care, 187.36 medication, and treatment of horses and agricultural production 188.1 animals are exempt under this subdivision. Chemicals used for 188.2 cleaning food processing machinery and equipment are included in 188.3 this exemption. Materials, including chemicals, fuels, and 188.4 electricity purchased by persons engaged in agricultural or 188.5 industrial production to treat waste generated as a result of 188.6 the production process are included in this exemption. Such 188.7 production shall include, but is not limited to, research, 188.8 development, design or production of any tangible personal 188.9 property, manufacturing, processing (other than by restaurants 188.10 and consumers) of agricultural products whether vegetable or 188.11 animal, commercial fishing, refining, smelting, reducing, 188.12 brewing, distilling, printing, mining, quarrying, lumbering, 188.13 generating electricity and the production of road building 188.14 materials. Such production shall not include painting, 188.15 cleaning, repairing or similar processing of property except as 188.16 part of the original manufacturing process. Machinery, 188.17 equipment, implements, tools, accessories, appliances, 188.18 contrivances, furniture and fixtures, used in such production 188.19 and fuel, electricity, gas or steam used for space heating or 188.20 lighting, are not included within this exemption; however, 188.21 accessory tools, equipment and other short lived items, which 188.22 are separate detachable units used in producing a direct effect 188.23 upon the product, where such items have an ordinary useful life 188.24 of less than 12 months, are included within the exemption 188.25 provided herein. The following materials, tools, and equipment 188.26 used in metalcasting are exempt under this subdivision: 188.27 crucibles, thermocouple protection sheaths and tubes, stalk 188.28 tubes, refractory materials, molten metal filters and filter 188.29 boxes,anddegassing lances, and base blocks. Electricity used 188.30 to make snow for outdoor use for ski hills, ski slopes, or ski 188.31 trails is included in this exemption. Petroleum and special 188.32 fuels used in producing or generating power for propelling 188.33 ready-mixed concrete trucks on the public highways of this state 188.34 are not included in this exemption. 188.35 EFFECTIVE DATE: This section is effective for sales and 188.36 purchases made after June 30, 2000. 189.1 Sec. 10. Minnesota Statutes 1999 Supplement, section 189.2 297A.25, subdivision 11, is amended to read: 189.3 Subd. 11. [SALES TO GOVERNMENT.] The gross receipts from 189.4 all sales, including sales in which title is retained by a 189.5 seller or a vendor or is assigned to a third party under an 189.6 installment sale or lease purchase agreement under section 189.7 465.71, of tangible personal property to, and all storage, use 189.8 or consumption of such property by, the United States and its 189.9 agencies and instrumentalities, the University of Minnesota, 189.10 state universities, community colleges, technical colleges, 189.11 state academies, the Perpich center for arts education, an 189.12 instrumentality of a political subdivision that is accredited as 189.13 an optional/special function school by the North Central 189.14 Association of Colleges and Schools, school districts, public 189.15 libraries, public library systems, multicounty, multitype 189.16 library systems as defined in section 134.001, county law 189.17 libraries under chapter 134A, state agency libraries, the state 189.18 library under section 480.09, and the legislative reference 189.19 library are exempt. 189.20 As used in this subdivision, "school districts" means 189.21 public school entities and districts of every kind and nature 189.22 organized under the laws of the state of Minnesota, including, 189.23 without limitation, school districts, intermediate school 189.24 districts, education districts, service cooperatives, secondary 189.25 vocational cooperative centers, special education cooperatives, 189.26 joint purchasing cooperatives, telecommunication cooperatives, 189.27 regional management information centers, and any instrumentality 189.28 of a school district, as defined in section 471.59. 189.29 Sales exempted by this subdivision include sales under 189.30 section 297A.01, subdivision 3, paragraph (f). 189.31 Sales to hospitals and nursing homes owned and operated by 189.32 political subdivisions of the state are exempt under this 189.33 subdivision. 189.34 Sales of supplies and equipment used in the operation of an 189.35 ambulance service owned and operated by a political subdivision 189.36 of the state are exempt under this subdivision provided that the 190.1 supplies and equipment are used in the course of providing 190.2 medical care. Sales to a political subdivision of repair and 190.3 replacement parts for emergency rescue vehicles and fire trucks 190.4 and apparatus are exempt under this subdivision. 190.5 Sales to a political subdivision of machinery and 190.6 equipment, except for motor vehicles, used directly for mixed 190.7 municipal solid waste management services at a solid waste 190.8 disposal facility as defined in section 115A.03, subdivision 10, 190.9 are exempt under this subdivision. 190.10 Sales to political subdivisions of chore and homemaking 190.11 services to be provided to elderly or disabled individuals are 190.12 exempt. 190.13 Sales to a county or town of gravel and of machinery, 190.14 equipment, and accessories, except motor vehicles, used 190.15 exclusively for road and bridge maintenance, and leases of motor 190.16 vehicles exempt from tax under section 297B.03, clause (10), are 190.17 exempt. 190.18 Sales of telephone services to the department of 190.19 administration that are used to provide telecommunications 190.20 services through the intertechnologies revolving fund are exempt 190.21 under this subdivision. 190.22 This exemption shall not apply to building, construction or 190.23 reconstruction materials purchased by a contractor or a 190.24 subcontractor as a part of a lump-sum contract or similar type 190.25 of contract with a guaranteed maximum price covering both labor 190.26 and materials for use in the construction, alteration, or repair 190.27 of a building or facility except for facilities the construction 190.28 materials of which are exempt under subdivision 65. This 190.29 exemption does not apply to construction materials purchased by 190.30 tax exempt entities or their contractors to be used in 190.31 constructing buildings or facilities which will not be used 190.32 principally by the tax exempt entities. 190.33 This exemption does not apply to the leasing of a motor 190.34 vehicle as defined in section 297B.01, subdivision 5, except for 190.35 leases entered into by the United States or its agencies or 190.36 instrumentalities. 191.1 The tax imposed on sales to political subdivisions of the 191.2 state under this section applies to all political subdivisions 191.3 other than those explicitly exempted under this subdivision, 191.4 notwithstanding section 115A.69, subdivision 6, 116A.25, 191.5 360.035, 458A.09, 458A.30, 458D.23, 469.101, subdivision 2, 191.6 469.127, 473.448, 473.545, or 473.608 or any other law to the 191.7 contrary enacted before 1992. 191.8 Sales exempted by this subdivision include sales made to 191.9 other states or political subdivisions of other states, if the 191.10 sale would be exempt from taxation if it occurred in that state, 191.11 but do not include sales under section 297A.01, subdivision 3, 191.12 paragraphs (c) and (e). 191.13 EFFECTIVE DATE: This section is effective for sales and 191.14 purchases occurring after June 30, 2000. 191.15 Sec. 11. Minnesota Statutes 1998, section 297A.25, 191.16 subdivision 16, is amended to read: 191.17 Subd. 16. [SALES TO NONPROFIT GROUPS.] The gross receipts 191.18 from the sale of tangible personal property to, and the storage, 191.19 use or other consumption of such property by, any corporation, 191.20 society, association, foundation, or institution organized and 191.21 operated exclusively for charitable, religious, or educational 191.22 purposes if the property purchased is to be used in the 191.23 performance of charitable, religious, or educational functions, 191.24 or any senior citizen group or association of groups that in 191.25 general limits membership to persons who are either (1) age 55 191.26 or older, or (2) physically disabled, and is organized and 191.27 operated exclusively for pleasure, recreation, and other 191.28 nonprofit purposes, no part of the net earnings of which inures 191.29 to the benefit of any private shareholders, are exempt. For 191.30 purposes of this subdivision, charitable purpose includes the 191.31 maintenance of a cemetery owned by a religious organization. 191.32 Sales exempted by this subdivision include sales pursuant to 191.33 section 297A.01, subdivision 3, paragraphs (d) and (f). This 191.34 exemption shall not apply to building, construction, or 191.35 reconstruction materials purchased by a contractor or a 191.36 subcontractor as a part of a lump-sum contract or similar type 192.1 of contract with a guaranteed maximum price covering both labor 192.2 and materials for use in the construction, alteration, or repair 192.3 of a building or facility. This exemption does not apply to 192.4 construction materials purchased by tax exempt entities or their 192.5 contractors to be used in constructing buildings or facilities 192.6 which will not be used principally by the tax exempt entities. 192.7 This exemptiondoes not applyapplies to the leasing of a motor 192.8 vehicle as defined in section 297B.01, subdivision 5, only if 192.9 the vehicle is: 192.10 (1) a truck, as defined in section 168.011, a bus, as 192.11 defined in section 168.011, or a passenger automobile, as 192.12 defined in section 168.011, if the automobile is designed and 192.13 used for carrying more than nine persons including the driver; 192.14 and 192.15 (2) intended to be used primarily to transport tangible 192.16 personal property or individuals, other than employees, to whom 192.17 the organization provides service in performing its charitable, 192.18 religious, or educational purpose. 192.19 EFFECTIVE DATE: This section is effective for sales and 192.20 purchases occurring after June 30, 2000. 192.21 Sec. 12. Minnesota Statutes 1998, section 297A.25, 192.22 subdivision 34, is amended to read: 192.23 Subd. 34. [MOTOR VEHICLES.] The gross receipts from the 192.24 sale or use of any motor vehicle taxable under the provisions of 192.25 the sales tax on motor vehicles laws of Minnesota shall be 192.26 exempt from taxation under this chapter. Notwithstanding 192.27 subdivision 11, the exemption provided under this subdivision 192.28 remains in effect for motor vehicles purchased or leased by 192.29 political subdivisions of the state if the vehicles are exempt 192.30 from registration under section 168.012, subdivision 1, 192.31 paragraph (b), or exempt from taxation under section 473.448. 192.32 EFFECTIVE DATE: This section is retroactively effective 192.33 July 1, 1997. 192.34 Sec. 13. Minnesota Statutes 1998, section 297A.25, 192.35 subdivision 62, is amended to read: 192.36 Subd. 62. [MATERIALS USED IN PROVIDING TAXABLE SERVICES.] 193.1 (a) The gross receipts from the sale of and the storage, use, or 193.2 consumption of all materials used or consumed in providing a 193.3 taxable service intended to be sold ultimately at retail are 193.4 exempt. 193.5 (b) This exemption includes, but is not limited to: 193.6 (1) chemicals, lubricants, packaging materials, seeds, 193.7 trees, fertilizers, and herbicides, used or consumed in 193.8 providing the taxable service; 193.9 (2) chemicals used to treat waste generated as a result of 193.10 providing the taxable service; and 193.11 (3) accessory tools, equipment, and other items that are 193.12 separate detachable units used in providing the service and that 193.13 have an ordinary useful life of less than 12 months. 193.14 (c) This exemption does not include: 193.15 (1) machinery, equipment, implements, tools, accessories, 193.16 appliances, contrivances, furniture, and fixtures used in 193.17 providing the taxable service; and 193.18 (2) fuel, electricity, gas, and steam used for space 193.19 heating or lighting. 193.20 (d) For purposes of this subdivision, "taxable services" 193.21 means the services listed in section 297A.01, subdivision 3, 193.22 paragraph (i), and services provided by health clubs as defined 193.23 in section 297A.01, subdivision 23. 193.24 EFFECTIVE DATE: This section is effective for sales and 193.25 purchases made after June 30, 2000. 193.26 Sec. 14. Minnesota Statutes 1998, section 297A.25, 193.27 subdivision 76, is amended to read: 193.28 Subd. 76. [CONSTRUCTION MATERIALS FOR AN ENVIRONMENTAL 193.29 LEARNING CENTER.] Construction materials and supplies are exempt 193.30 from the tax imposed under this section, regardless of whether 193.31 purchased by the owner or a contractor, subcontractor, or 193.32 builder, if they are used or consumed in constructing or 193.33 improving the Long Lake Conservation Center pursuant to the 193.34 funding provided under Laws 1994, chapter 643, section 23, 193.35 subdivision 28, as amended by Laws 1995, First Special Session 193.36 chapter 2, article 1, section 48; and Laws 1996, chapter 463, 194.1 section 7, subdivision 26. The tax shall be calculated and paid 194.2 as if the rate in section 297A.02, subdivision 1, was in effect 194.3 and a refund applied for in the manner prescribed in Minnesota 194.4 Statutes 1998, section 297A.15, subdivision 7. 194.5 Sec. 15. Minnesota Statutes 1998, section 297A.25, is 194.6 amended by adding a subdivision to read: 194.7 Subd. 84. [MATERIALS USED TO MAKE RESIDENTIAL PROPERTY 194.8 HANDICAPPED ACCESSIBLE.] The gross receipts from the sale to, 194.9 and the storage, use, or consumption of building materials and 194.10 equipment to a nonprofit organization is exempt if: 194.11 (1) the materials and equipment are used or incorporated 194.12 into modifying an existing residential structure to make it 194.13 handicapped accessible; and 194.14 (2) the materials and equipment used in the modification 194.15 would qualify for an exemption under either subdivision 20 or 43 194.16 if made by the current owner of the residence. 194.17 For purposes of this subdivision, "nonprofit organization" 194.18 means any nonprofit corporation, society, association, 194.19 foundation, or institution organized and operated exclusively 194.20 for charitable, religious, educational, or civic purposes; or a 194.21 veterans' group exempt from federal taxation under section 194.22 501(c), clause (19), of the Internal Revenue Code. 194.23 EFFECTIVE DATE: This section is effective for sales and 194.24 purchases occurring after June 30, 2000. 194.25 Sec. 16. Minnesota Statutes 1998, section 297A.25, is 194.26 amended by adding a subdivision to read: 194.27 Subd. 85. [MAINTENANCE OF CEMETERY GROUNDS.] Lawn care and 194.28 related services used in the maintenance of cemetery grounds are 194.29 exempt. For purposes of this subdivision, "lawn care and 194.30 related services" means the services listed in section 297A.01, 194.31 subdivision 3, paragraph (i), clause (vi), and "cemetery" means 194.32 a cemetery for human burial. 194.33 EFFECTIVE DATE: This section is effective for sales and 194.34 purchases occurring after June 30, 2000. 194.35 Sec. 17. Minnesota Statutes 1998, section 297A.25, is 194.36 amended by adding a subdivision to read: 195.1 Subd. 86. [PATENT, TRADEMARK, AND COPYRIGHT DRAWINGS AND 195.2 DOCUMENTS.] The gross receipts from the sale of, and use, 195.3 storage, distribution, or consumption of a drawing, diagram, or 195.4 similar or related document or a copy of such a document are 195.5 exempt if the document: 195.6 (1) is produced and sold by a patent drafter; and 195.7 (2) is for use in: 195.8 (i) a patent, trademark, or copyright application to be 195.9 filed with government agencies; 195.10 (ii) an application to the federal Food and Drug 195.11 Administration for approval of a medical device; or 195.12 (iii) a judicial or quasi-judicial proceeding, including 195.13 mediation and arbitration, relating to the validity of or legal 195.14 rights under a patent, trademark, or copyright. 195.15 For purposes of this subdivision, a "patent drafter" is a 195.16 person who prepares illustrative documents required in the 195.17 preparation of intellectual property applications. 195.18 EFFECTIVE DATE: This section is effective for sales, use, 195.19 storage, distribution, or consumption occurring after June 30, 195.20 2000. 195.21 Sec. 18. Minnesota Statutes 1998, section 297A.25, is 195.22 amended by adding a subdivision to read: 195.23 Subd. 87. [SMOKING CESSATION DEVICES.] The gross receipts 195.24 from the sale of and the storage, use, or consumption of items 195.25 of personal property that are approved by the Federal Drug 195.26 Administration for use exclusively to assist individuals to 195.27 refrain from using tobacco, such as nicotine patches and 195.28 nicotine gum, are exempt. 195.29 EFFECTIVE DATE: This section is effective for sales and 195.30 purchases occurring after June 30, 2000. 195.31 Sec. 19. Minnesota Statutes 1998, section 297A.25, is 195.32 amended by adding a subdivision to read: 195.33 Subd. 88. [MACHINERY AND EQUIPMENT FOR SKI AREAS.] The 195.34 gross receipts from the sale, storage, use, or consumption of 195.35 tangible personal property used or consumed primarily and 195.36 directly for tramways or in snowmaking and snow-grooming 196.1 operations at ski hills, ski slopes, or ski trails, including 196.2 machinery, equipment, fuel, electricity, and water additives 196.3 used in the production and maintenance of machine-made snow, are 196.4 exempt. 196.5 EFFECTIVE DATE: This section is effective for sales and 196.6 purchases made after June 30, 2000. 196.7 Sec. 20. Minnesota Statutes 1998, section 297A.25, is 196.8 amended by adding a subdivision to read: 196.9 Subd. 89. [FEED FOR POULTRY RAISED FOR HUMAN CONSUMPTION.] 196.10 The gross receipts from the sale of, and storage, use, or 196.11 consumption of poultry feed is exempt if the poultry is raised 196.12 for human consumption. 196.13 EFFECTIVE DATE: This section is effective for sales and 196.14 purchases made after June 30, 2000. 196.15 Sec. 21. Minnesota Statutes 1998, section 297A.25, is 196.16 amended by adding a subdivision to read: 196.17 Subd. 90. [CONSTRUCTION MATERIALS AND EQUIPMENT; 196.18 AGRICULTURAL PROCESSING FACILITY.] Materials, supplies, and 196.19 equipment used or consumed in the construction and initial 196.20 equipping of an agricultural pork processing facility are exempt 196.21 from the tax imposed under this chapter provided that the 196.22 following conditions are met: 196.23 (1) the construction and equipping of the facility will be 196.24 at least $4,000,000; 196.25 (2) the facility is owned and operated by a cooperative 196.26 organized under chapter 308A; and 196.27 (3) the facility will have a maximum daily processing 196.28 capacity of at least 400 hogs. 196.29 The exemption applies regardless of whether the materials, 196.30 supplies, and equipment are purchased by the owner or by a 196.31 contractor, subcontractor, or builder. The tax must be 196.32 calculated and paid at the time of purchase and a refund applied 196.33 for in the manner prescribed in section 297A.15, subdivision 8. 196.34 EFFECTIVE DATE: This section is effective for sales and 196.35 purchases made after January 1, 2000, and before December 31, 196.36 2000. 197.1 Sec. 22. Minnesota Statutes 1998, section 297A.25, is 197.2 amended by adding a subdivision to read: 197.3 Subd. 91. [CONSTRUCTION MATERIALS AND EQUIPMENT; PORK AND 197.4 BEEF AGRICULTURAL PROCESSING FACILITY.] Materials, supplies, and 197.5 equipment used or consumed in the construction and initial 197.6 equipping of an agricultural processing facility are exempt from 197.7 the tax imposed under this chapter provided that the following 197.8 conditions are met: 197.9 (1) the construction and equipping of the facility will be 197.10 at least $1,500,000; 197.11 (2) the facility is owned and operated by a C corporation, 197.12 as defined in section 1361(a)(2) of the Internal Revenue Code of 197.13 1986, with fewer than 20 shareholders of which at least one-half 197.14 of them are full-time or part-time farmers; 197.15 (3) the facility will have a weekly processing capacity of 197.16 at least 50 hogs and 30 beef animals. The exemption applies 197.17 regardless of whether the materials, supplies, and equipment are 197.18 purchased by the owner or by a contractor, subcontractor, or 197.19 builder. The tax must be calculated and paid at the time of 197.20 purchase and a refund applied for in the manner prescribed in 197.21 section 297A.15, subdivision 8. 197.22 EFFECTIVE DATE: This section is effective for sales and 197.23 purchases made after December 1, 1999, and before December 31, 197.24 2000. 197.25 Sec. 23. Minnesota Statutes 1998, section 297B.01, 197.26 subdivision 7, is amended to read: 197.27 Subd. 7. [SALE, SELLS, SELLING, PURCHASE, PURCHASED, OR 197.28 ACQUIRED.] "Sale," "sells," "selling," "purchase," "purchased," 197.29 or "acquired" means any transfer of title of any motor vehicle, 197.30 whether absolutely or conditionally, for a consideration in 197.31 money or by exchange or barter for any purpose other than resale 197.32 in the regular course of business. Any motor vehicle utilized 197.33 by the owner only by leasing such vehicle to others or by 197.34 holding it in an effort to so lease it, and which is put to no 197.35 other use by the owner other than resale after such lease or 197.36 effort to lease, shall be considered property purchased for 198.1 resale. The terms also shall include any transfer of title or 198.2 ownership of a motor vehicle byway of gift or by any other198.3manner or by anyother meanswhatsoever, for or without 198.4 consideration, except that these terms shall not include: 198.5 (a) the acquisition of a motor vehicle by inheritance from 198.6 or by bequest of, a decedent who owned it; 198.7 (b) the transfer of a motor vehicle which was previously 198.8 licensed in the names of two or more joint tenants and 198.9 subsequently transferred without monetary consideration to one 198.10 or more of the joint tenants; 198.11 (c) the transfer of a motor vehicle by way of gift between 198.12a husband and wife or parent and childindividuals, when the 198.13 transfer is with no monetary or other consideration or 198.14 expectation of consideration and the parties to the transfer 198.15 submit an affidavit to that effect at the time the title 198.16 transfer is recorded; 198.17 (d) the voluntary or involuntary transfer of a motor 198.18 vehicle between a husband and wife in a divorce proceeding; or 198.19 (e) the transfer of a motor vehicle by way of a gift to an 198.20 organization that is exempt from federal income taxation under 198.21 section 501(c)(3) of the Internal Revenue Code, as amended 198.22 through December 31, 1996, when the motor vehicle will be used 198.23 exclusively for religious, charitable, or educational purposes. 198.24 EFFECTIVE DATE: This section is effective July 1, 2000. 198.25 Sec. 24. Minnesota Statutes 1998, section 297B.03, is 198.26 amended to read: 198.27 297B.03 [EXEMPTIONS.] 198.28 There is specifically exempted from the provisions of this 198.29 chapter and from computation of the amount of tax imposed by it 198.30 the following: 198.31 (1) Purchase or use, including use under a lease purchase 198.32 agreement or installment sales contract made pursuant to section 198.33 465.71, of any motor vehicle by the United States and its 198.34 agencies and instrumentalities and by any person described in 198.35 and subject to the conditions provided in section 297A.25, 198.36 subdivision 18. 199.1 (2) Purchase or use of any motor vehicle by any person who 199.2 was a resident of another state at the time of the purchase and 199.3 who subsequently becomes a resident of Minnesota, provided the 199.4 purchase occurred more than 60 days prior to the date such 199.5 person began residing in the state of Minnesota. 199.6 (3) Purchase or use of any motor vehicle by any person 199.7 making a valid election to be taxed under the provisions of 199.8 section 297A.211. 199.9 (4) Purchase or use of any motor vehicle previously 199.10 registered in the state of Minnesota when such transfer 199.11 constitutes a transfer within the meaning of section 118, 331, 199.12 332, 336, 337, 338, 351or, 355, 368, 721, 731, 1031, 1033, or 199.13 1563(a) of the Internal Revenue Code of 1986, as amended through 199.14 December 31,19881999. 199.15 (5) Purchase or use of any vehicle owned by a resident of 199.16 another state and leased to a Minnesota based private or for 199.17 hire carrier for regular use in the transportation of persons or 199.18 property in interstate commerce provided the vehicle is titled 199.19 in the state of the owner or secured party, and that state does 199.20 not impose a sales tax or sales tax on motor vehicles used in 199.21 interstate commerce. 199.22 (6) Purchase or use of a motor vehicle by a private 199.23 nonprofit or public educational institution for use as an 199.24 instructional aid in automotive training programs operated by 199.25 the institution. "Automotive training programs" includes motor 199.26 vehicle body and mechanical repair courses but does not include 199.27 driver education programs. 199.28 (7) Purchase of a motor vehicle for use as an ambulance by 199.29 an ambulance service licensed under section 144E.10. 199.30 (8) Purchase of a motor vehicle by or for a public library, 199.31 as defined in section 134.001, subdivision 2, as a bookmobile or 199.32 library delivery vehicle. 199.33 (9) Purchase of a ready-mixed concrete truck. 199.34 (10) Purchase or use of a motor vehicle by a county or town 199.35 for use exclusively for road maintenance, including snowplows 199.36 and dump trucks, but not including automobiles, vans, or pickup 200.1 trucks. 200.2 (11) Purchase or use of a motor vehicle by a corporation, 200.3 society, association, foundation, or institution organized and 200.4 operated exclusively for charitable, religious, or educational 200.5 purposes, but only if the vehicle is: 200.6 (i) a truck, as defined in section 168.011, or a passenger 200.7 automobile, as defined in section 168.011, if the automobile is 200.8 designed and used for carrying more than nine persons including 200.9 the driver; and 200.10 (ii) intended to be used primarily to transport tangible 200.11 personal property or individuals, other than employees, to whom 200.12 the organization provides service in performing its charitable, 200.13 religious, or educational purpose. 200.14 EFFECTIVE DATE: This section is effective for sales and 200.15 purchases occurring after June 30, 2000, except that the new 200.16 language in clause (4) is effective the day following final 200.17 enactment. 200.18 Sec. 25. [LOCAL TAXES ON MOTOR VEHICLES.] 200.19 Subdivision 1. [SALES TAX PROHIBITED; PHASE-OUT.] (a) 200.20 Except as provided in paragraph (b), after June 30, 2000, no 200.21 home rule charter or statutory city, county, or other political 200.22 subdivision may impose a tax on the sale, transfer, or use of a 200.23 motor vehicle that exceeds the tax authorized under subdivision 200.24 2. 200.25 (b) If, on March 8, 2000, a tax was in effect in a home 200.26 rule charter or statutory city, county, or other political 200.27 subdivision that exceeded the limit imposed under subdivision 2, 200.28 the rate of that tax is reduced as follows: 200.29 (1) for sales or transfers after December 31, 2000, and 200.30 before January 1, 2002, the tax rate in effect on March 8, 2000, 200.31 is reduced by 25 percent; 200.32 (2) for sales or transfers after December 31, 2001, and 200.33 before January 1, 2003, the tax rate in effect on March 8, 2000, 200.34 is reduced by 50 percent; and 200.35 (3) for sales or transfers after December 31, 2002, and 200.36 before January 1, 2004, the tax rate in effect on March 8, 2000, 201.1 is reduced by 75 percent. 201.2 For sales or transfers after December 31, 2003, the political 201.3 subdivision may impose no tax except as authorized under 201.4 subdivision 2. 201.5 Subd. 2. [EXCISE TAX ON MOTOR VEHICLES AUTHORIZED.] 201.6 Notwithstanding Minnesota Statutes, section 477A.016, or any 201.7 other provision of law, ordinance, or city charter, if a sales 201.8 and use tax on motor vehicles that was imposed by a political 201.9 subdivision is terminated under subdivision 1, the political 201.10 subdivision may impose by ordinance an excise tax of up to $20 201.11 per motor vehicle, as defined by ordinance, that was purchased 201.12 or acquired from any person engaged within the territory of the 201.13 political subdivision in the business of selling motor vehicles 201.14 at retail. The proceeds of the tax must be used for the 201.15 purposes for which the tax terminated under subdivision 1 was 201.16 used. 201.17 EFFECTIVE DATE: This section is effective July 1, 2000. 201.18 Sec. 26. [DEVELOPMENT OF SALES AND USE TAX COLLECTION 201.19 SYSTEM.] 201.20 Subdivision 1. [AUTHORIZATION TO ENTER INTO MULTISTATE 201.21 DISCUSSIONS.] The commissioner of revenue may enter into 201.22 discussions with states regarding development of a multistate, 201.23 voluntary, streamlined system for sales and use tax collection 201.24 and administration. These discussions will focus on development 201.25 of a system that is capable of determining whether a transaction 201.26 is taxable or exempt, the appropriate tax rate applied to the 201.27 transaction, and the total tax due on the transaction, and shall 201.28 provide a method for collecting and remitting sales and use 201.29 taxes to the state. The system may provide compensation for the 201.30 costs of collecting and remitting sales and use taxes. 201.31 Discussions between the department and other states may result 201.32 in developing and issuing a joint request for information from 201.33 public and private potential parties. The commissioner must 201.34 publish the notices in the State Register. 201.35 Subd. 2. [LIMITED TEST AUTHORIZATION.] (a) The 201.36 commissioner may participate in a sales tax pilot project with 202.1 other states and selected businesses to test a means for 202.2 simplifying sales and use tax administration, and may enter into 202.3 joint agreements for that purpose. 202.4 (b) Agreements to participate in the test will establish 202.5 provisions for the administration, imposition, and collection of 202.6 sales and use taxes resulting in revenues paid by the taxpayer 202.7 that are the same as would be paid under existing law. 202.8 (c) Parties to the agreements are excused from complying 202.9 with the provisions of Minnesota Statutes, chapters 289A and 202.10 297A, except for provisions setting tax rates and providing for 202.11 tax exemptions, to the extent a different procedure is required 202.12 by the agreements. 202.13 (d) Agreements authorized under this section terminate no 202.14 later than December 31, 2001. 202.15 Subd. 3. [DISCLOSURE.] Any agreements entered into under 202.16 subdivision 1 or 2 are subject to the provisions of Minnesota 202.17 Statutes, chapter 270B. 202.18 Subd. 4. [REPORT ON PROJECT.] By March 1, 2002, the 202.19 commissioner shall report to the chairs of the house of 202.20 representatives tax committee and the senate committee on 202.21 taxes. The report must describe the status of multistate 202.22 discussions conducted under subdivision 1 and, if a proposed 202.23 system has been agreed upon by participating states, must also 202.24 recommend whether the state should participate in the system. 202.25 EFFECTIVE DATE: This section is effective the day 202.26 following final enactment. 202.27 Sec. 27. [REPEALER.] 202.28 Minnesota Statutes 1998, section 297A.15, subdivision 7, is 202.29 repealed. 202.30 EFFECTIVE DATE: This section is effective for sales and 202.31 purchases occurring after June 30, 2000. 202.32 ARTICLE 9 202.33 HEALTH CARE TAXES 202.34 Section 1. Minnesota Statutes 1998, section 60A.15, 202.35 subdivision 1, is amended to read: 202.36 Subdivision 1. [DOMESTIC AND FOREIGN COMPANIES.] (a) On or 203.1 before April 1, June 1, and December 1 of each year, every 203.2 domestic and foreign company, including town and farmers' mutual 203.3 insurance companies, domestic mutual insurance companies, marine 203.4 insurance companies, health maintenance organizations, community 203.5 integrated service networks, and nonprofit health service plan 203.6 corporations, shall pay to the commissioner of revenue 203.7 installments equal to one-third of the insurer's total estimated 203.8 tax for the current year. Except as provided in paragraphs (d), 203.9 (e), (h), and (i), installments must be based on a sum equal to 203.10 two percent of the premiums described in paragraph (b). 203.11 (b) Installments under paragraph (a), (d), or (e) are 203.12 percentages of gross premiums less return premiums on all direct 203.13 business received by the insurer in this state, or by its agents 203.14 for it, in cash or otherwise, during such year. 203.15 (c) Failure of a company to make payments of at least 203.16 one-third of either (1) the total tax paid during the previous 203.17 calendar year or (2) 80 percent of the actual tax for the 203.18 current calendar year shall subject the company to the penalty 203.19 and interest provided in this section, unless the total tax for 203.20 the current tax year is $500 or less. 203.21 (d) For health maintenance organizations, nonprofit health 203.22 service plan corporations, and community integrated service 203.23 networks, the installments must be based on an amount determined 203.24 under paragraph (h) or (i). 203.25 (e) For purposes of computing installments for town and 203.26 farmers' mutual insurance companies and for mutual property 203.27 casualty companies with total assets on December 31, 1989, of 203.28 $1,600,000,000 or less, the following rates apply: 203.29 (1) for all life insurance, two percent; 203.30 (2) for town and farmers' mutual insurance companies and 203.31 for mutual property and casualty companies with total assets of 203.32 $5,000,000 or less, on all other coverages, one percent; and 203.33 (3) for mutual property and casualty companies with total 203.34 assets on December 31, 1989, of $1,600,000,000 or less, on all 203.35 other coverages, 1.26 percent. 203.36 (f) If the aggregate amount of premium tax payments under 204.1 this section and the fire marshal tax payments under section 204.2 299F.21 made during a calendar year is equal to or exceeds 204.3 $120,000, all tax payments in the subsequent calendar year must 204.4 be paid by means of a funds transfer as defined in section 204.5 336.4A-104, paragraph (a). The funds transfer payment date, as 204.6 defined in section 336.4A-401, must be on or before the date the 204.7 payment is due. If the date the payment is due is not a funds 204.8 transfer business day, as defined in section 336.4A-105, 204.9 paragraph (a), clause (4), the payment date must be on or before 204.10 the funds transfer business day next following the date the 204.11 payment is due. 204.12 (g) Premiums under medical assistance, general assistance 204.13 medical care, the MinnesotaCare program, and the Minnesota 204.14 comprehensive health insurance plan and all payments, revenues, 204.15 and reimbursements received from the federal government for 204.16 Medicare-related coverage as defined in section 62A.31, 204.17 subdivision 3, paragraph (e), are not subject to tax under this 204.18 section. 204.19 (h)For calendar years 1997, 1998, and 1999, the204.20installments for health maintenance organizations, community204.21integrated service networks, and nonprofit health service plan204.22corporations must be based on an amount equal to one percent of204.23premiums described under paragraph (b). Health maintenance204.24organizations, community integrated service networks, and204.25nonprofit health service plan corporations that have met the204.26cost containment goals established under section 62J.04 in the204.27individual and small employer market for calendar year 1996 are204.28exempt from payment of the tax imposed under this section for204.29premiums paid after March 30, 1997, and before April 1, 1998.204.30Health maintenance organizations, community integrated service204.31networks, and nonprofit health service plan corporations that204.32have met the cost containment goals established under section204.3362J.04 in the individual and small employer market for calendar204.34year 1997 are exempt from payment of the tax imposed under this204.35section for premiums paid after March 30, 1998, and before April204.361, 1999. Health maintenance organizations, community integrated205.1service networks, and nonprofit health service plan corporations205.2that have met the cost containment goals established under205.3section 62J.04 in the individual and small employer market for205.4calendar year 1998 are exempt from payment of the tax imposed205.5under this section for premiums paid after March 30, 1999, and205.6before January 1, 2000Health maintenance organizations, 205.7 community integrated service networks, and nonprofit health 205.8 service plan corporations are exempt from the tax imposed under 205.9 this section on premiums received in calendar years 2001 and 205.10 2002. 205.11 (i) For calendar years after19992002,the commissioner of205.12finance shall determine the balance of the health care access205.13fund on September 1 of each year beginning September 1, 1999.205.14If the commissioner determines that there is no structural205.15deficit for the next fiscal year, no tax shall be imposed under205.16paragraph (d) for the following calendar year. If the205.17commissioner determines that there will be a structural deficit205.18in the fund for the following fiscal year, then the205.19commissioner, in consultation with the commissioner of revenue,205.20shall determine the amount needed to eliminate the structural205.21deficit and a tax shall be imposed under paragraph (d) for the205.22following calendar year. The commissioner shall determine the205.23rate of the tax as either one-quarter of one percent, one-half205.24of one percent, three-quarters of one percent, or one percent of205.25premiums described in paragraph (b), whichever is the lowest of205.26those rates that the commissioner determines will produce205.27sufficient revenue to eliminate the projected structural205.28deficit. The commissioner of finance shall publish in the State205.29Register by October 1 of each year the amount of tax to be205.30imposed for the following calendar year. In determining the205.31structural balance of the health care access fund for fiscal205.32years 2000 and 2001, the commissioner shall disregard the205.33transfer amount from the health care access fund to the general205.34fund for expenditures associated with the services provided to205.35pregnant women and children under the age of two enrolled in the205.36MinnesotaCare programa rate of one percent applies to premiums 206.1 of health maintenance organizations, community-integrated 206.2 service networks, and nonprofit health service plan corporations. 206.3 (j) In approving the premium rates as required in sections 206.4 62L.08, subdivision 8, and 62A.65, subdivision 3, the 206.5 commissioners of health and commerce shall ensure that any 206.6 exemption from the tax as described in paragraphs (h) and (i) is 206.7 reflected in the premium rate. 206.8 EFFECTIVE DATE: This section is effective for taxes on 206.9 premiums received after December 31, 2000. 206.10 Sec. 2. Minnesota Statutes 1998, section 295.50, 206.11 subdivision 9b, is amended to read: 206.12 Subd. 9b. [PATIENT SERVICES.] (a) "Patient services" means 206.13 inpatient and outpatient services and other goods and services 206.14 provided by hospitals, surgical centers, or health care 206.15 providers. They include the following health care goods and 206.16 services provided to a patient or consumer: 206.17 (1) bed and board; 206.18 (2) nursing services and other related services; 206.19 (3) use of hospitals, surgical centers, or health care 206.20 provider facilities; 206.21 (4) medical social services; 206.22 (5) drugs, biologicals, supplies, appliances, and 206.23 equipment; 206.24 (6) other diagnostic or therapeutic items or services; 206.25 (7) medical or surgical services; 206.26 (8) items and services furnished to ambulatory patients not 206.27 requiring emergency care; 206.28 (9) emergency services; and 206.29 (10) covered services listed in section 256B.0625 and in 206.30 Minnesota Rules, parts 9505.0170 to 9505.0475. 206.31 (b) "Patient services" does not include: 206.32 (1) services provided to nursing homes licensed under 206.33 chapter 144A; and 206.34 (2) examinations for purposes of utilization reviews, 206.35 insurance claims or eligibility, litigation, and employment, 206.36 including reviews of medical records for those purposes. 207.1 EFFECTIVE DATE: This section is effective for payments 207.2 received on or after January 1, 2000. 207.3 Sec. 3. Minnesota Statutes 1999 Supplement, section 207.4 295.52, subdivision 7, is amended to read: 207.5 Subd. 7. [TAX REDUCTION.] Notwithstanding subdivisions 1, 207.6 1a, 2, 3, and 4, the tax imposed under this section equals for 207.7 calendar years 1998, 1999, 2000,and2001, and 2002, 1.5 percent 207.8 of the gross revenues received on or after January 1, 1998, and 207.9 before January 1,20022003. 207.10 EFFECTIVE DATE: This section is effective the day 207.11 following final enactment. 207.12 Sec. 4. Minnesota Statutes 1999 Supplement, section 207.13 295.53, subdivision 1, is amended to read: 207.14 Subdivision 1. [EXEMPTIONS.] (a) The following payments 207.15 are excluded from the gross revenues subject to the hospital, 207.16 surgical center, or health care provider taxes under sections 207.17 295.50 to 295.57: 207.18 (1) payments received for services provided under the 207.19 Medicare program, including payments received from the 207.20 government, and organizations governed by sections 1833 and 1876 207.21 of title XVIII of the federal Social Security Act, United States 207.22 Code, title 42, section 1395, and enrollee deductibles, 207.23 coinsurance, and copayments, whether paid by the Medicare 207.24 enrollee or by a Medicare supplemental coverage as defined in 207.25 section 62A.011, subdivision 3, clause (10). Payments for 207.26 services not covered by Medicare are taxable; 207.27 (2) medical assistance payments including payments received 207.28 directly from the government or from a prepaid plan; 207.29 (3) payments received for home health care services; 207.30 (4) payments received from hospitals or surgical centers 207.31 for goods and services on which liability for tax is imposed 207.32 under section 295.52 or the source of funds for the payment is 207.33 exempt under clause (1), (2), (7), (8), (10),or(13), or (20); 207.34 (5) payments received from health care providers for goods 207.35 and services on which liability for tax is imposed under this 207.36 chapter or the source of funds for the payment is exempt under 208.1 clause (1), (2), (7), (8), (10),or(13), or (20); 208.2 (6) amounts paid for legend drugs, other than nutritional 208.3 products, to a wholesale drug distributor who is subject to tax 208.4 under section 295.52, subdivision 3, reduced by reimbursements 208.5 received for legend drugs under clauses (1), (2), (7), and (8); 208.6 (7) payments received under the general assistance medical 208.7 care program including payments received directly from the 208.8 government or from a prepaid plan; 208.9 (8) payments received for providing services under the 208.10 MinnesotaCare program including payments received directly from 208.11 the government or from a prepaid plan and enrollee deductibles, 208.12 coinsurance, and copayments. For purposes of this clause, 208.13 coinsurance means the portion of payment that the enrollee is 208.14 required to pay for the covered service; 208.15 (9) payments received by a health care provider or the 208.16 wholly owned subsidiary of a health care provider for care 208.17 provided outside Minnesota; 208.18 (10) payments received from the chemical dependency fund 208.19 under chapter 254B; 208.20 (11) payments received in the nature of charitable 208.21 donations that are not designated for providing patient services 208.22 to a specific individual or group; 208.23 (12) payments received for providing patient services 208.24 incurred through a formal program of health care research 208.25 conducted in conformity with federal regulations governing 208.26 research on human subjects. Payments received from patients or 208.27 from other persons paying on behalf of the patients are subject 208.28 to tax; 208.29 (13) payments received from any governmental agency for 208.30 services benefiting the public, not including payments made by 208.31 the government in its capacity as an employer or insurer; 208.32 (14) payments received for services provided by community 208.33 residential mental health facilities licensed under Minnesota 208.34 Rules, parts 9520.0500 to 9520.0690, community support programs 208.35 and family community support programs approved under Minnesota 208.36 Rules, parts 9535.1700 to 9535.1760, and community mental health 209.1 centers as defined in section 245.62, subdivision 2; 209.2 (15) government payments received by a regional treatment 209.3 center; 209.4 (16) payments received for hospice care services; 209.5 (17) payments received by a health care provider for 209.6 hearing aids and related equipment or prescription eyewear 209.7 delivered outside of Minnesota; 209.8 (18) payments received by an educational institution from 209.9 student tuition, student activity fees, health care service 209.10 fees, government appropriations, donations, or grants. Fee for 209.11 service payments and payments for extended coverage are taxable; 209.12 (19) payments received for services provided by: assisted 209.13 living programs and congregate housing programs; and 209.14(20) payments received from nursing homes licensed under209.15chapter 144A for services provided to a nursing home; and209.16(21) payments received for examinations for purposes of209.17utilization reviews, insurance claims or eligibility,209.18litigation, and employment, including reviews of medical records209.19for those purposes.209.20 (20) payments received under the federal Employees Health 209.21 Benefits Act, United States Code, title 5, section 8909(f), as 209.22 amended by the Omnibus Reconciliation Act of 1990. 209.23 (b) Payments received by wholesale drug distributors for 209.24 legend drugs sold directly to veterinarians or veterinary bulk 209.25 purchasing organizations are excluded from the gross revenues 209.26 subject to the wholesale drug distributor tax under sections 209.27 295.50 to 295.59. 209.28 EFFECTIVE DATE: This section is effective for payments 209.29 received on or after January 1, 2000. 209.30 Sec. 5. Minnesota Statutes 1998, section 295.58, is 209.31 amended to read: 209.32 295.58 [DEPOSIT OF REVENUES AND PAYMENT OF REFUNDS.] 209.33 The commissioner shall deposit all revenues, including 209.34 penalties and interest, derived from the taxes imposed by 209.35 sections 295.50 to 295.57 and from the insurance premiums tax on 209.36 health maintenance organizations, community integrated service 210.1 networks, and nonprofit health service plan corporations in the 210.2 health care access fund in the state treasury.Refunds of210.3overpayments must be paid from the health care access fund in210.4the state treasury.There is annually appropriated from the 210.5 health care access fund to the commissioner of revenue the 210.6 amount necessary to make any refunds required undersection210.7295.54this chapter. 210.8 EFFECTIVE DATE: This section is effective for refunds made 210.9 on or after January 1, 1999. 210.10 ARTICLE 10 210.11 SPECIAL TAXES 210.12 Section 1. Minnesota Statutes 1998, section 115A.557, 210.13 subdivision 3, is amended to read: 210.14 Subd. 3. [ELIGIBILITY TO RECEIVE MONEY.] (a) To be 210.15 eligible to receive money distributed by the director under this 210.16 section, a county shall within one year of October 4, 1989: 210.17 (1) create a separate account in its general fund to credit 210.18 the money; and 210.19 (2) set up accounting procedures to ensure that money in 210.20 the separate account is spent only for the purposes in 210.21 subdivision 2. 210.22 (b) In each following year, each county shall also: 210.23 (1) have in place an approved solid waste management plan 210.24 or master plan including a recycling implementation strategy 210.25 under section 115A.551, subdivision 7, and a household hazardous 210.26 waste management plan under section 115A.96, subdivision 6, by 210.27 the dates specified in those provisions; 210.28 (2) submit a report by April 1 of each year to the director 210.29 detailing for the previous calendar year: 210.30 (i) how the money was spent including, but not limited to, 210.31 specific information on the number of employees performing SCORE 210.32 planning, oversight, and administration; the percentage of those 210.33 employees' total work time allocated to SCORE planning, 210.34 oversight, and administration; the specific duties and 210.35 responsibilities of those employees; and the amount of staff 210.36 salary for these SCORE duties and responsibilities of the 211.1 employees; and (ii) the resulting gains achieved in solid waste 211.2 management practicesduring the previous calendar year; and 211.3 (3) provide evidence to the director that local revenue 211.4 equal to 25 percent of the money sought for distribution under 211.5 this section will be spent for the purposes in subdivision 2. 211.6 (c) The director shall withhold all or part of the funds to 211.7 be distributed to a county under this section if the county 211.8 fails to comply with this subdivision and subdivision 2. 211.9 Sec. 2. Minnesota Statutes 1999 Supplement, section 211.10 287.01, subdivision 2, is amended to read: 211.11 Subd. 2. [AMENDMENT.] "Amendment" means generally a 211.12 document that alters an existing mortgage without securing a new 211.13 debt, or increasing the amount of an existing debt; and, that 211.14 does not, in the case of a multistate mortgage described in 211.15 section 287.05, subdivision 1, paragraph (b), result in an 211.16 increased percentage of the real property encumbered by the 211.17 mortgage being located in this state.Specifically,A document 211.18 isconsideredan amendmentto the extent it merely doesif it 211.19 meets the definition in this subdivision, including documents 211.20 that do any one orany combinationmore of the following: 211.21 (i) extends the time for payment of the unpaid portion of 211.22 the original debt; 211.23 (ii) changes the rate of interest applicable to the unpaid 211.24 portion of the original debt; 211.25 (iii) adds additional real property as security for the 211.26 unpaid portion of the original debt; 211.27 (iv) releases some but not all of the real property serving 211.28 as security for the unpaid portion of the debt; 211.29 (v) replaces all the real property serving as security for 211.30 the unpaid portion of the debt with other real property 211.31 regardless of value; 211.32 (vi) replaces a party previously bound by the mortgage with 211.33 a new party who becomes bound by the same amended mortgage; or 211.34 (vii) reduces the amount of the debt secured by real 211.35 property located in this state, or in the case of a multistate 211.36 mortgage described in section 287.05, subdivision 1, paragraph 212.1 (b), reduces the percentage of real property encumbered by the 212.2 mortgage that is located in this state. 212.3 EFFECTIVE DATE: This section is effective the day 212.4 following final enactment. 212.5 Sec. 3. Minnesota Statutes 1999 Supplement, section 212.6 297E.02, subdivision 1, is amended to read: 212.7 Subdivision 1. [IMPOSITION.] A tax is imposed on all 212.8 lawful gambling other than (1) pull-tab deals or games; (2) 212.9 tipboard deals or games; and (3) items listed in section 212.10 297E.01, subdivision 8, clauses (4) and (5), at the rate of9212.11 8.25 percent on the gross receipts as defined in section 212.12 297E.01, subdivision 8, less prizes actually paid. The tax 212.13 imposed by this subdivision is in lieu of the tax imposed by 212.14 section 297A.02 and all local taxes and license fees except a 212.15 fee authorized under section 349.16, subdivision 8, or a tax 212.16 authorized under subdivision 5. 212.17 The tax imposed under this subdivision is payable by the 212.18 organization or party conducting, directly or indirectly, the 212.19 gambling. 212.20 EFFECTIVE DATE: This section is effective July 1, 2000. 212.21 Sec. 4. Minnesota Statutes 1998, section 297E.02, 212.22 subdivision 2, is amended to read: 212.23 Subd. 2. [TAX-EXEMPT GAMBLING.]An organization's receipts212.24from lawful gambling that are excluded or exempt from licensing212.25under section 349.166, are not subject to the tax imposed by212.26this section or section 297A.02. This exclusion from tax is212.27only valid if at the time of the event giving rise to the tax212.28the organization either has an exclusion under section 349.166,212.29subdivision 1, or has applied for and received a valid exemption212.30from the lawful gambling control board.An organization's 212.31 receipts from lawful gambling are not subject to the tax imposed 212.32 by this section or section 297A.02 if: 212.33 (1) the organization is excluded or exempt from licensing 212.34 under section 349.166. This exclusion from tax is only valid if 212.35 at the time of the event giving rise to the tax the organization 212.36 either has an exclusion under section 349.166, subdivision 1, or 213.1 has applied for and received a valid exemption from the lawful 213.2 gambling control board; or 213.3 (2) the organization holds a raffle for the purpose of 213.4 donating the net profits as defined in section 349.12, 213.5 subdivision 27, to benefit the victims of illness, crime, 213.6 accident, fire, or natural disaster. 213.7 EFFECTIVE DATE: This section is effective August 1, 2000. 213.8 Sec. 5. Minnesota Statutes 1999 Supplement, section 213.9 297E.02, subdivision 4, is amended to read: 213.10 Subd. 4. [PULL-TAB AND TIPBOARD TAX.] (a) A tax is imposed 213.11 on the sale of each deal of pull-tabs and tipboards sold by a 213.12 distributor. The rate of the tax is1.81.65 percent of the 213.13 ideal gross of the pull-tab or tipboard deal. The sales tax 213.14 imposed by chapter 297A on the sale of the pull-tabs and 213.15 tipboards by the distributor is imposed on the retail sales 213.16 price less the tax imposed by this subdivision. The retail sale 213.17 of pull-tabs or tipboards by the organization is exempt from 213.18 taxes imposed by chapter 297A and is exempt from all local taxes 213.19 and license fees except a fee authorized under section 349.16, 213.20 subdivision 8. 213.21 (b) The liability for the tax imposed by this section is 213.22 incurred when the pull-tabs and tipboards are delivered by the 213.23 distributor to the customer or to a common or contract carrier 213.24 for delivery to the customer, or when received by the customer's 213.25 authorized representative at the distributor's place of 213.26 business, regardless of the distributor's method of accounting 213.27 or the terms of the sale. 213.28 The tax imposed by this subdivision is imposed on all sales 213.29 of pull-tabs and tipboards, except the following: 213.30 (1) sales to the governing body of an Indian tribal 213.31 organization for use on an Indian reservation; 213.32 (2) sales to distributors licensed under the laws of 213.33 another state or of a province of Canada, as long as all 213.34 statutory and regulatory requirements are met in the other state 213.35 or province; 213.36 (3) sales of promotional tickets as defined in section 214.1 349.12; and 214.2 (4) pull-tabs and tipboards sold to an organization that 214.3 sells pull-tabs and tipboards under the exemption from licensing 214.4 in section 349.166, subdivision 2. A distributor shall require 214.5 an organization conducting exempt gambling to show proof of its 214.6 exempt status before making a tax-exempt sale of pull-tabs or 214.7 tipboards to the organization. A distributor shall identify, on 214.8 all reports submitted to the commissioner, all sales of 214.9 pull-tabs and tipboards that are exempt from tax under this 214.10 subdivision. 214.11 (c) A distributor having a liability of $120,000 or more 214.12 during a fiscal year ending June 30 must remit all liabilities 214.13 in the subsequent calendar year by a funds transfer as defined 214.14 in section 336.4A-104, paragraph (a). The funds transfer 214.15 payment date, as defined in section 336.4A-401, must be on or 214.16 before the date the tax is due. If the date the tax is due is 214.17 not a funds transfer business day, as defined in section 214.18 336.4A-105, paragraph (a), clause (4), the payment date must be 214.19 on or before the funds transfer business day next following the 214.20 date the tax is due. 214.21 (d) Any customer who purchases deals of pull-tabs or 214.22 tipboards from a distributor may file an annual claim for a 214.23 refund or credit of taxes paid pursuant to this subdivision for 214.24 unsold pull-tab and tipboard tickets. The claim must be filed 214.25 with the commissioner on a form prescribed by the commissioner 214.26 by March 20 of the year following the calendar year for which 214.27 the refund is claimed. The refund must be filed as part of the 214.28 customer's February monthly return. The refund or credit is 214.29 equal to1.81.65 percent of the face value of the unsold 214.30 pull-tab or tipboard tickets, provided that the refund or credit 214.31 will be1.851.725 percent of the face value of the unsold 214.32 pull-tab or tipboard tickets for claims for a refund or credit 214.33 of taxes filed on the February20002001 monthly return. The 214.34 refund claimed will be applied as a credit against tax owing 214.35 under this chapter on the February monthly return. If the 214.36 refund claimed exceeds the tax owing on the February monthly 215.1 return, that amount will be refunded. The amount refunded will 215.2 bear interest pursuant to section 270.76 from 90 days after the 215.3 claim is filed. 215.4 EFFECTIVE DATE: This section is effective July 1, 2000. 215.5 Sec. 6. Minnesota Statutes 1999 Supplement, section 215.6 297E.02, subdivision 6, is amended to read: 215.7 Subd. 6. [COMBINED RECEIPTS TAX.] In addition to the taxes 215.8 imposed under subdivisions 1 and 4, a tax is imposed on the 215.9 combined receipts of the organization. As used in this section, 215.10 "combined receipts" is the sum of the organization's gross 215.11 receipts from lawful gambling less gross receipts directly 215.12 derived from the conduct of bingo, raffles, and paddlewheels, as 215.13 defined in section 297E.01, subdivision 8, for the fiscal year. 215.14 The combined receipts of an organization are subject to a tax 215.15 computed according to the following schedule: 215.16 If the combined receipts for the The tax is: 215.17 fiscal year are: 215.18 Not over $500,000 zero 215.19 Over $500,000, but not over 215.20 $700,0001.81.65 percent of the 215.21 amount over $500,000, but 215.22 not over $700,000 215.23 Over $700,000, but not over 215.24 $900,000$3,600$3,300 plus3.6215.25 3.3 percent of the amount 215.26 over $700,000, but 215.27 not over $900,000 215.28 Over $900,000$10,800$9,900 plus5.4215.29 4.95 percent of the 215.30 amount over $900,000 215.31 EFFECTIVE DATE: This section is effective July 1, 2000. 215.32 Sec. 7. Minnesota Statutes 1998, section 297F.01, 215.33 subdivision 7, is amended to read: 215.34 Subd. 7. [CONSUMER.] "Consumer" meansany personan 215.35 individual who has title to or possession of cigarettes or 215.36 tobacco productsin storage,foruse or otherpersonal 216.1 consumptionin this staterather than for sale. 216.2 EFFECTIVE DATE: This section is effective the day 216.3 following final enactment. 216.4 Sec. 8. Minnesota Statutes 1998, section 297F.01, is 216.5 amended by adding a subdivision to read: 216.6 Subd. 9a. [INVOICE.] "Invoice" means a detailed list of 216.7 cigarettes and tobacco products purchased or sold in this state 216.8 that contains the following information: 216.9 (1) name of seller; 216.10 (2) name of purchaser; 216.11 (3) date of sale; 216.12 (4) invoice number; 216.13 (5) itemized list of goods sold including brands of 216.14 cigarettes and number of cartons of each brand, unit price, and 216.15 identification of tobacco products by name, quantity, and unit 216.16 price; and 216.17 (6) any rebates, discounts, or other reductions. 216.18 EFFECTIVE DATE: This section is effective July 1, 2000. 216.19 Sec. 9. Minnesota Statutes 1998, section 297F.01, 216.20 subdivision 14, is amended to read: 216.21 Subd. 14. [RETAILER.] "Retailer" means a person required 216.22 to be licensed under chapter 461 engaged in this state in the 216.23 business of selling, or offering to sell, cigarettes or tobacco 216.24 products to consumers. 216.25 EFFECTIVE DATE: This section is effective the day 216.26 following final enactment. 216.27 Sec. 10. Minnesota Statutes 1998, section 297F.01, 216.28 subdivision 17, is amended to read: 216.29 Subd. 17. [STAMP.] "Stamp" means the adhesive stamp 216.30 supplied by the commissioner of revenue for use on cigarette 216.31 packages or any other indicia adopted by the commissioner to 216.32 indicate that the tax has been paid. 216.33 EFFECTIVE DATE: This section is effective the day 216.34 following final enactment. 216.35 Sec. 11. Minnesota Statutes 1998, section 297F.01, is 216.36 amended by adding a subdivision to read: 217.1 Subd. 21a. [UNLICENSED SELLER.] "Unlicensed seller" means 217.2 anyone who is not licensed under section 297F.03 or 461.12 to 217.3 sell the particular product to the purchaser or possessor of the 217.4 product. 217.5 EFFECTIVE DATE: This section is effective the day 217.6 following final enactment. 217.7 Sec. 12. Minnesota Statutes 1998, section 297F.13, 217.8 subdivision 4, is amended to read: 217.9 Subd. 4. [RETAILER AND SUBJOBBER TO PRESERVE PURCHASE 217.10 INVOICES.] Every retailer and subjobber shall procure itemized 217.11 invoices of all cigarettes or tobacco products purchased.The217.12invoices shall show the name and address of the seller and the217.13date of purchase.217.14 The retailer and subjobber shall preserve a legible copy of 217.15 each invoice for one year from the date ofpurchasethe invoice. 217.16 The retailer and subjobber shall preserve copies of the invoices 217.17 at each retail location or at a central location provided that 217.18 the invoice must be produced and made available at a retail 217.19 location within one hour when requested by the commissioner or 217.20 duly authorized agents and employees. Copies should be numbered 217.21 and kept in chronological order. 217.22 To determine whether the business is in compliance with the 217.23 provisions of this chapter and sections 325D.30 to 325D.42, at 217.24 any time during usual business hours, the commissioner, or duly 217.25 authorized agents and employees, may enter any place of business 217.26 of a retailer or subjobber without a search warrant and inspect 217.27 the premises, the records required to be kept under this 217.28 chapter, and the packages of cigarettes, tobacco products, and 217.29 vending devices contained on the premises. 217.30 EFFECTIVE DATE: This section is effective July 1, 2000. 217.31 Sec. 13. Minnesota Statutes 1998, section 297F.08, 217.32 subdivision 2, is amended to read: 217.33 Subd. 2. [TAX DUE; CIGARETTES.] Notwithstanding any other 217.34 provisions of this chapter, the tax due on the return is based 217.35 upon actualheat-appliedstamps purchased during the reporting 217.36 period. 218.1 EFFECTIVE DATE: This section is effective the day 218.2 following final enactment. 218.3 Sec. 14. Minnesota Statutes 1998, section 297F.08, 218.4 subdivision 5, is amended to read: 218.5 Subd. 5. [DEPOSIT OF PROCEEDS.] The commissioner shall use 218.6 the amounts appropriated by law to purchaseheat-appliedstamps 218.7 for resale. The commissioner shall charge the purchasers for 218.8 the costs of the stamps along with the tax value plus shipping 218.9 costs. The costs recovered along with shipping costs must be 218.10 deposited into the general fund. 218.11 EFFECTIVE DATE: This section is effective the day 218.12 following final enactment. 218.13 Sec. 15. Minnesota Statutes 1998, section 297F.08, 218.14 subdivision 8, is amended to read: 218.15 Subd. 8. [SALE OF STAMPS.] The commissioner may sell 218.16heat-appliedstamps on a credit basis under conditions 218.17 prescribed by the commissioner. The commissioner shall sell the 218.18 stamps at a price which includes the tax after giving effect to 218.19 the discount provided in subdivision 7. The commissioner shall 218.20 recover the actual costs of the stamps from the distributor. 218.21 The commissioner shall annually establish the maximum amount of 218.22heat-appliedstamps that may be purchased each month. 218.23 EFFECTIVE DATE: This section is effective the day 218.24 following final enactment. 218.25 Sec. 16. Minnesota Statutes 1999 Supplement, section 218.26 297F.08, subdivision 8a, is amended to read: 218.27 Subd. 8a. [REVOLVING ACCOUNT.] Aheat-appliedcigarette 218.28 tax stamp revolving account is created. The commissioner shall 218.29 use the amounts in this fund to purchaseheat-appliedstamps for 218.30 resale. The commissioner shall charge distributors for the tax 218.31 value of the stamps they receive along with the commissioner's 218.32 cost to purchase the stamps and ship them to the distributor. 218.33 The stamp purchase and shipping costs recovered must be credited 218.34 to the revolving account and are appropriated to the 218.35 commissioner for the further purchases and shipping costs. The 218.36 revolving account is initially funded by a $40,000 transfer from 219.1 the department of revenue. 219.2 EFFECTIVE DATE: This section is effective the day 219.3 following final enactment. 219.4 Sec. 17. Minnesota Statutes 1998, section 297F.08, 219.5 subdivision 9, is amended to read: 219.6 Subd. 9. [TAX STAMPING MACHINES.] The commissioner shall 219.7 require any person licensed as a distributor to stamp packages 219.8 with aheat-appliedtax stamping machine, approved by the 219.9 commissioner, which shall be provided by the distributor. The 219.10 commissioner shall also supervise and check the operation of the 219.11 machines and shall provide for the payment of the tax on any 219.12 package so stamped, subject to the discount provided in 219.13 subdivision 7. If the commissioner finds that a stamping 219.14 machine is not affixing a legible stamp on the package, the 219.15 commissioner may order the distributor to immediately cease the 219.16 stamping process until the machine is functioning properly. 219.17 EFFECTIVE DATE: This section is effective the day 219.18 following final enactment. 219.19 Sec. 18. Minnesota Statutes 1998, section 297F.21, 219.20 subdivision 1, is amended to read: 219.21 Subdivision 1. [CONTRABAND DEFINED.] The following are 219.22 declared to be contraband and therefore subject to civil and 219.23 criminal penalties under this chapter: 219.24 (a) Cigarette packages which do not have stamps affixed to 219.25 them as provided in this chapter, including but not limited to 219.26 (i) packages with illegible stamps and packages with stamps that 219.27 are not complete or whole even if the stamps are legible, and 219.28 (ii) all devices for the vending of cigarettes in which packages 219.29 as defined in item (i) are found, including all contents 219.30 contained within the devices. 219.31 (b) A device for the vending of cigarettes and all packages 219.32 of cigarettes, where the device does not afford at least partial 219.33 visibility of contents. Where any package exposed to view does 219.34 not carry the stamp required by this chapter, it shall be 219.35 presumed that all packages contained in the device are unstamped 219.36 and contraband. 220.1 (c) A device for the vending of cigarettes to which the 220.2 commissioner or authorized agents have been denied access for 220.3 the inspection of contents. In lieu of seizure, the 220.4 commissioner or an agent may seal the device to prevent its use 220.5 until inspection of contents is permitted. 220.6 (d) A device for the vending of cigarettes which does not 220.7 carry the name and address of the owner, plainly marked and 220.8 visible from the front of the machine. 220.9 (e) A device including, but not limited to, motor vehicles, 220.10 trailers, snowmobiles, airplanes, and boats used with the 220.11 knowledge of the owner or of a person operating with the consent 220.12 of the owner for the storage or transportation of more than 220.13 5,000 cigarettes which are contraband under this subdivision. 220.14 When cigarettes are being transported in the course of 220.15 interstate commerce, or are in movement from either a public 220.16 warehouse to a distributor upon orders from a manufacturer or 220.17 distributor, or from one distributor to another, the cigarettes 220.18 are not contraband, notwithstanding the provisions of clause (a). 220.19 (f) Cigarette packages or tobacco products obtained from an 220.20 unlicensed seller. 220.21 (g) Cigarette packages offered for sale or held as 220.22 inventory in violation of section 297F.20, subdivision 7. 220.23 (h) Tobacco products on which the tax has not been paid by 220.24 a licensed distributor. 220.25 (i) Any cigarette packages or tobacco products offered for 220.26 sale or held as inventory for which there is not an invoice from 220.27 a licensed seller as required under section 297F.13, subdivision 220.28 4. 220.29 (j) Cigarette packages which have been imported into the 220.30 United States in violation of United States Code, title 26, 220.31 section 5754. All cigarettes held in violation of that section 220.32 shall be presumed to have entered the United States after 220.33 December 31, 1999, in the absence of proof to the contrary. 220.34 EFFECTIVE DATE: This section, paragraph (i), is effective 220.35 July 1, 2000. This section, paragraph (j), is effective the day 220.36 following final enactment. 221.1 Sec. 19. Minnesota Statutes 1998, section 297F.21, 221.2 subdivision 3, is amended to read: 221.3 Subd. 3. [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 221.4 DISPOSITION OF SEIZED PROPERTY.] (a) Within ten days after the 221.5 seizure of any alleged contraband, the person making the seizure 221.6 shall make available an inventory of the property seized to the 221.7 person from whom the seizure was made, if known, and file a copy 221.8 with the commissioner. Within ten days after the date of 221.9 service of the inventory, the person from whom the property was 221.10 seized or any person claiming an interest in the property may 221.11 file with the commissioner a demand for a judicial determination 221.12 of the question as to whether the property was lawfully subject 221.13 to seizure and forfeiture. The commissioner, within 60 days, 221.14 shall institute an action in the district court of the county 221.15 where the seizure was made to determine the issue of 221.16 forfeiture. The court shall decide whether the alleged 221.17 contraband is contraband, as defined in subdivision 1. 221.18 (b) The action must be brought in the name of the state and 221.19 must be prosecuted by the county attorney or by the attorney 221.20 general. The court shall hear the action without a jury and 221.21 shall try and determine the issues of fact and law involved. 221.22 (c) When a judgment of forfeiture is entered, the 221.23 commissioner may, unless the judgment is stayed pending an 221.24 appeal, either: 221.25 (1) deliver the forfeited property to the commissioner of 221.26 human services for use by patients in state institutions; 221.27 (2) cause it to be destroyed; or 221.28 (3) cause it to be sold at public auction as provided by 221.29 law. 221.30 (d) If a demand for judicial determination is made and no 221.31 action commenced as provided in this subdivision, the property 221.32 must be released by the commissioner and returned to the person 221.33 entitled to it. If no demand is made, the property seized is 221.34 considered forfeited to the state by operation of law and may be 221.35 disposed of by the commissioner as provided in the case of a 221.36 judgment of forfeiture.When the commissioner is satisfied that222.1a person from whom property is seized was acting in good faith222.2and without intent to evade the tax imposed by this chapter, the222.3commissioner shall release the property seized without further222.4legal proceedings.222.5 EFFECTIVE DATE: This section is effective for alleged 222.6 contraband seized on or after the day following final enactment. 222.7 Sec. 20. Minnesota Statutes 1998, section 297G.01, is 222.8 amended by adding a subdivision to read: 222.9 Subd. 21. [LOW ALCOHOL DAIRY COCKTAILS.] "Low alcohol 222.10 dairy cocktails" means premixed cocktails or any other products, 222.11 other than liqueur-filled candy, that: 222.12 (1) consist primarily of milk products; 222.13 (2) are drinkable as a beverage or are promoted as an 222.14 alcoholic product; and 222.15 (3) contain not less than 0.5 percent alcohol by volume nor 222.16 more than 3.2 percent alcohol by weight. 222.17 EFFECTIVE DATE: This section is effective for sales made 222.18 after June 30, 2000. 222.19 Sec. 21. Minnesota Statutes 1998, section 297G.03, 222.20 subdivision 1, is amended to read: 222.21 Subdivision 1. [GENERAL RATE; DISTILLED SPIRITS AND WINE.] 222.22 The following excise tax is imposed on all distilled spirits and 222.23 wine manufactured, imported, sold, or possessed in this state: 222.24 Standard Metric 222.25 (a) Distilled spirits, $5.03 per gallon $1.33 per liter 222.26 liqueurs, cordials, 222.27 and specialties regardless 222.28 of alcohol content 222.29 (excluding ethyl alcohol) 222.30 (b) Low alcohol dairy $ .08 per gallon $ .02 per liter 222.31 cocktails 222.32(b)(c) Wine containing $ .30 per gallon $ .08 per liter 222.33 14 percent or less 222.34 alcohol by volume 222.35 (except cider as defined 222.36 in section 297G.01, 223.1 subdivision 3a) 223.2(c)(d) Wine containing $ .95 per gallon $ .25 per liter 223.3 more than 14 percent 223.4 but not more than 21 223.5 percent alcohol by volume 223.6(d)(e) Wine containing $1.82 per gallon $ .48 per liter 223.7 more than 21 percent but 223.8 not more than 24 percent 223.9 alcohol by volume 223.10(e)(f) Wine containing $3.52 per gallon $ .93 per liter 223.11 more than 24 percent 223.12 alcohol by volume 223.13(f)(g) Natural and $1.82 per gallon $ .48 per liter 223.14 artificial sparkling wines 223.15 containing alcohol 223.16(g)(h) Cider as defined $ .15 per gallon $ .04 per liter 223.17 in section 297G.01, 223.18 subdivision 3a 223.19 In computing the tax on a package of distilled spirits or 223.20 wine, a proportional tax at a like rate on all fractional parts 223.21 of a gallon or liter must be paid, except that the tax on a 223.22 fractional part of a gallon less than 1/16 of a gallon is the 223.23 same as for 1/16 of a gallon. 223.24 EFFECTIVE DATE: This section is effective for sales made 223.25 after June 30, 2000. 223.26 Sec. 22. Minnesota Statutes 1998, section 297H.02, 223.27 subdivision 2, is amended to read: 223.28 Subd. 2. [RATES.] The rate of tax under this section is 223.299.758.4 percent. 223.30 EFFECTIVE DATE: This section is effective July 1, 2000, 223.31 and thereafter. 223.32 Sec. 23. Minnesota Statutes 1998, section 297H.03, 223.33 subdivision 2, is amended to read: 223.34 Subd. 2. [RATE.] The rate of the tax under this section is 223.351714.7 percent. 223.36 EFFECTIVE DATE: This section is effective July 1, 2000, 224.1 and thereafter. 224.2 Sec. 24. Minnesota Statutes 1998, section 297H.04, 224.3 subdivision 2, is amended to read: 224.4 Subd. 2. [RATE.] (a) Commercial generators that generate 224.5 non-mixed-municipal solid waste shall pay a solid waste 224.6 management tax of6052 cents per noncompacted cubic yard of 224.7 periodic waste collection capacity purchased by the generator, 224.8 based on the size of the container for the non-mixed-municipal 224.9 solid waste, the actual volume, or the weight-to-volume 224.10 conversion schedule in paragraph (c). However, the tax must be 224.11 calculated by the waste management service provider using the 224.12 same method for calculating the waste management service fee so 224.13 that both are calculated according to container capacity, actual 224.14 volume, or weight. 224.15 (b) Notwithstanding section 297H.02, a residential 224.16 generator that generates non-mixed-municipal solid waste shall 224.17 pay a solid waste management tax in the same manner as provided 224.18 in paragraph (a). 224.19 (c) The weight-to-volume conversion schedule for: 224.20 (1) construction debris as defined in section 115A.03, 224.21 subdivision 7, is one ton equals 3.33 cubic yards, or$2$1.73 224.22 per ton; 224.23 (2) industrial waste as defined in section 115A.03, 224.24 subdivision 13a, is equal to6052 cents per cubic yard. The 224.25 commissioner of revenue after consultation with the commissioner 224.26 of the pollution control agency, shall determine, and may 224.27 publish by notice, a conversion schedule for various industrial 224.28 wastes; and 224.29 (3) infectious waste as defined in section 116.76, 224.30 subdivision 12, and pathological waste as defined in section 224.31 116.76, subdivision 14, is 150 pounds equals one cubic yard, or 224.326052 cents per 150 pounds. 224.33 EFFECTIVE DATE: This section is effective July 1, 2000, 224.34 and thereafter. 224.35 Sec. 25. Minnesota Statutes 1999 Supplement, section 224.36 297H.05, is amended to read: 225.1 297H.05 [SELF-HAULERS.] 225.2 (a) A self-hauler of mixed municipal solid waste shall pay 225.3 the tax to the operator of the waste management facility to 225.4 which the waste is delivered at the rate imposed under section 225.5 297H.03, based on the sales price of the waste management 225.6 services. 225.7 (b) A self-hauler of non-mixed-municipal solid waste shall 225.8 pay the tax to the operator of the waste management facility to 225.9 which the waste is delivered at the rate imposed under section 225.10 297H.04. 225.11 (c) The tax imposed on the self-hauler of 225.12 non-mixed-municipal solid waste may be based either on the 225.13 capacity of the container, the actual volume, or the 225.14 weight-to-volume conversion schedule in paragraph (d). However, 225.15 the tax must be calculated by the operator using the same method 225.16 for calculating the tipping fee so that both are calculated 225.17 according to container capacity, actual volume, or weight. 225.18 (d) The weight-to-volume conversion schedule for: 225.19 (1) construction debris as defined in section 115A.03, 225.20 subdivision 7, is one ton equals 3.33 cubic yards, or$2$1.73 225.21 per ton; 225.22 (2) industrial waste as defined in section 115A.03, 225.23 subdivision 13a, is equal to6052 cents per cubic yard. The 225.24 commissioner of revenue, after consultation with the 225.25 commissioner of the pollution control agency, shall determine, 225.26 and may publish by notice, a conversion schedule for various 225.27 industrial wastes; and 225.28 (3) infectious waste as defined in section 116.76, 225.29 subdivision 12, and pathological waste as defined in section 225.30 116.76, subdivision 14, is 150 pounds equals one cubic yard, or 225.316052 cents per 150 pounds. 225.32 (e) For mixed municipal solid waste the tax is imposed upon 225.33 the difference between the market price and the tip fee at a 225.34 processing or disposal facility if the tip fee is less than the 225.35 market price and the political subdivision subsidizes the cost 225.36 of service at the facility. The political subdivision is liable 226.1 for the tax. 226.2 EFFECTIVE DATE: This section is effective July 1, 2000, 226.3 and thereafter. 226.4 Sec. 26. Minnesota Statutes 1998, section 297H.13, 226.5 subdivision 2, is amended to read: 226.6 Subd. 2. [ALLOCATION OF REVENUES.] (a) $22,000,000, or 50226.7percent, whichever is greater,of the amounts remitted under 226.8 this chapter must be credited to the solid waste fund 226.9 established in section 115B.42. 226.10 (b) The remainder must be deposited into the general fund. 226.11 EFFECTIVE DATE: This section is effective July 1, 2000, 226.12 and thereafter. 226.13 Sec. 27. Minnesota Statutes 1998, section 297H.13, 226.14 subdivision 4, is amended to read: 226.15 Subd. 4. [EXCESS REVENUE ADJUSTMENT.] Beginning in 226.16 calendar year 2001, if the total tax revenues collected from the 226.17 taxes imposed under this chapter infiscalthe previous calendar 226.18 year1999 is projected to exceed $44,500,000exceed $45,000,000, 226.19 the commissioner of revenue shall decrease proportionately the 226.20 amount of the tax under sections 297H.02, 297H.03, 297H.04, and 226.21 297H.05, by an amount sufficient to eliminate the excess 226.22effective October 1, 1999,amount over $44,500,000 and shall 226.23 provide notice of the decreased tax by August 1, 1999,of that 226.24 year to waste management service providers. The rate of tax 226.25 determined by the commissioner shall be effective for waste 226.26 management services provided after September 30 of that year. 226.27 In determining whether an adjustment is necessary under 226.28 this subdivision, the commissioner shall calculate the 226.29 collections of the taxes imposed under this chapter in the 226.30 preceding calendar year as if the most recent tax rates had been 226.31 in effect for the entire calendar year. 226.32 EFFECTIVE DATE: This section is effective the day 226.33 following final enactment. 226.34 Sec. 28. Minnesota Statutes 1998, section 297H.13, is 226.35 amended by adding a subdivision to read: 226.36 Subd. 7. [NOTICE OF RATE CHANGE.] Waste management service 227.1 providers shall provide notice to each customer of the rate 227.2 decreases provided in this section no later than 90 days after 227.3 the rate decreases take effect. 227.4 EFFECTIVE DATE: This section is effective July 1, 2000, 227.5 and thereafter. 227.6 ARTICLE 11 227.7 TAX INCREMENT FINANCING 227.8 Section 1. Minnesota Statutes 1998, section 469.115, is 227.9 amended to read: 227.10 469.115 [POWERS OF AGENCIES.] 227.11 A local agency shall have all the powers necessary or 227.12 convenient to carry out the purposes of sections 469.109 to 227.13 469.123; except that the agencies shall not levy and collect 227.14 taxes or special assessments, nor exercise the power of eminent 227.15 domain unless the governing body of the municipality or 227.16 municipalities, in the case of a joint exercise of power, shall 227.17 by resolution have expressly conferred that power on the 227.18 agency. A local agency shall also have the following powers in 227.19 addition to others granted in sections 469.109 to 469.123: 227.20 (1) to sue and be sued, to have a seal, which shall be 227.21 judicially noticed, and to alter the same at pleasure; to have 227.22 perpetual succession; and to make, amend, and repeal rules and 227.23 regulations not inconsistent with these sections; 227.24 (2) to employ an executive director, technical experts, and 227.25 officers, agents and employees, permanent and temporary, that it 227.26 requires, and determine their qualifications, duties, and 227.27 compensation; for legal service it may require, to call upon the 227.28 chief law officer of the municipality or to employ its own 227.29 counsel and legal staff; so far as practical, to use the 227.30 services of local public bodies, in its area of operation. 227.31 Those local bodies, if requested, shall make the services 227.32 available; 227.33 (3) to delegate to one or more of its agents or employees 227.34 the powers or duties it deems proper; 227.35 (4) upon proper application by a public body or private 227.36 applicant, and after determining that the purpose of sections 228.1 469.109 to 469.123 will be accomplished by the establishment of 228.2 the project in the redevelopment area to approve a redevelopment 228.3 project; 228.4 (5) to sell, transfer, convey, or otherwise dispose of real 228.5 or personal property or any interest therein, and to execute 228.6 leases, deeds, conveyances, negotiable instruments, purchase 228.7 agreements, and other contracts or instruments, and take action 228.8 that is necessary or convenient to carry out the purposes of 228.9 these sections; 228.10 (6) within its area of operation to acquire real or 228.11 personal property or any interest therein by gift, grant, 228.12 purchase, exchange, lease, transfer, bequest, devise, or 228.13 otherwise. An agency may acquire real property which it deems 228.14 necessary for its purposes by exercise of the power of eminent 228.15 domain in the manner provided in chapter 117, after adoption of 228.16 a resolution declaring that the acquisition of the real property 228.17 is necessary to eliminate one or more of the conditions found to 228.18 exist in the resolution adopted pursuant to section 469.111, 228.19 subdivision 1; 228.20 (7) to designate redevelopment areas; 228.21 (8) to cooperate with industrial development corporations, 228.22 state and federal agencies, and private persons or corporations 228.23 in efforts to promote the expansion of recreational, commercial, 228.24 industrial, and manufacturing activity in a redevelopment area; 228.25 (9) upon proper application by any public body or private 228.26 applicant, to determine whether the declared public purpose of 228.27 these sections has been accomplished or will be accomplished by 228.28 the establishment of a redevelopment project in a redevelopment 228.29 area; 228.30 (10) to obtain information necessary to the designation of 228.31 a redevelopment area and the establishment of a redevelopment 228.32 project therein; 228.33 (11) to cooperate with or act as agent for the federal 228.34 government, the state, or any state public body or any agency or 228.35 instrumentality thereof in carrying out the provisions of these 228.36 sections or of any other related federal, state, or local 229.1 legislation; 229.2 (12) to borrow money or other property and accept 229.3 contributions, grants, gifts, services, or other assistance from 229.4 the federal or state government to accomplish the purposes of 229.5 sections 469.109 to 469.123; 229.6 (13)to conduct mined underground space development229.7pursuant to sections 469.135 to 469.141;229.8(14)to include in any contract for financial assistance 229.9 with the federal government any conditions which the federal 229.10 government may attach to its financial aid of a redevelopment 229.11 project; 229.12(15)(14) to issue bonds, notes, or other evidences of 229.13 indebtedness as hereinafter provided, for any of its purposes 229.14 and to secure them by mortgages upon property held or to be held 229.15 by it, or by pledge of its revenues, including grants or 229.16 contributions; and 229.17(16)(15) to invest any funds held in reserve or sinking 229.18 funds, or any funds not required for immediate disbursement, in 229.19 property or securities in which savings banks may legally invest 229.20 funds subject to their control. 229.21 EFFECTIVE DATE: This section is effective the day 229.22 following final enactment. 229.23 Sec. 2. Minnesota Statutes 1998, section 469.174, 229.24 subdivision 9, is amended to read: 229.25 Subd. 9. [TAX INCREMENT FINANCING DISTRICT.] "Tax 229.26 increment financing district" or "district" means a contiguous 229.27 or noncontiguous geographic area within a project delineated in 229.28 the tax increment financing plan, as provided by section 229.29 469.175, subdivision 1, for the purpose of financing 229.30 redevelopment,mined underground space development,housing or 229.31 economic development in municipalities through the use of tax 229.32 increment generated from the captured net tax capacity in the 229.33 tax increment financing district. 229.34 EFFECTIVE DATE: This section is effective the day 229.35 following final enactment. 229.36 Sec. 3. Minnesota Statutes 1998, section 469.174, 230.1 subdivision 10, is amended to read: 230.2 Subd. 10. [REDEVELOPMENT DISTRICT.] (a) "Redevelopment 230.3 district" means a type of tax increment financing district 230.4 consisting of a project, or portions of a project, within which 230.5 the authority finds by resolution that one or more of the 230.6 following conditions, reasonably distributed throughout the 230.7 district, exists: 230.8 (1) parcels consisting of 70 percent of the area of the 230.9 district are occupied by buildings, streets, utilities, or other 230.10 improvements and more than 50 percent of the buildings, not 230.11 including outbuildings, are structurally substandard to a degree 230.12 requiring substantial renovation or clearance; or 230.13 (2) the property consists of vacant, unused, underused, 230.14 inappropriately used, or infrequently used railyards, rail 230.15 storage facilities, or excessive or vacated railroad 230.16 rights-of-way; or 230.17 (3) tank facilities, or property whose immediately previous 230.18 use was for tank facilities, as defined in section 115C.02, 230.19 subdivision 15, if the tank facilities: 230.20 (i) have or had a capacity of more than 1,000,000 gallons; 230.21 (ii) are located adjacent to rail facilities; and 230.22 (iii) have been removed or are unused, underused, 230.23 inappropriately used, or infrequently used. 230.24 (b) For purposes of this subdivision, "structurally 230.25 substandard" shall mean containing defects in structural 230.26 elements or a combination of deficiencies in essential utilities 230.27 and facilities, light and ventilation, fire protection including 230.28 adequate egress, layout and condition of interior partitions, or 230.29 similar factors, which defects or deficiencies are of sufficient 230.30 total significance to justify substantial renovation or 230.31 clearance. 230.32 (c) A building is not structurally substandard if it is in 230.33 compliance with the building code applicable to new buildings or 230.34 could be modified to satisfy the building code at a cost of less 230.35 than 15 percent of the cost of constructing a new structure of 230.36 the same square footage and type on the site. The municipality 231.1 may find that a building is not disqualified as structurally 231.2 substandard under the preceding sentence on the basis of 231.3 reasonably available evidence, such as the size, type, and age 231.4 of the building, the average cost of plumbing, electrical, or 231.5 structural repairs, or other similar reliable evidence. The 231.6 municipality may not make such a determination without an 231.7 interior inspection of the property, but need not have an 231.8 independent, expert appraisal prepared of the cost of repair and 231.9 rehabilitation of the building. An interior inspection of the 231.10 property is not required, if the municipality finds that (1) the 231.11 municipality or authority is unable to gain access to the 231.12 property after using its best efforts to obtain permission from 231.13 the party that owns or controls the property; and (2) the 231.14 evidence otherwise supports a reasonable conclusion that the 231.15 building is structurally substandard. Items of evidence that 231.16 support such a conclusion include recent fire or police 231.17 inspections, on-site property tax appraisals or housing 231.18 inspections, exterior evidence of deterioration, or other 231.19 similar reliable evidence. Written documentation of the 231.20 findings and reasons why an interior inspection was not 231.21 conducted must be made and retained under section 469.175, 231.22 subdivision 3, clause (1). 231.23 (d) A parcel is deemed to be occupied by a structurally 231.24 substandard building for purposes of the finding under paragraph 231.25 (a) if all of the following conditions are met: 231.26 (1) the parcel was occupied by a substandard building 231.27 within three years of the filing of the request for 231.28 certification of the parcel as part of the district with the 231.29 county auditor; 231.30 (2) the substandard building was demolished or removed by 231.31 the authority or the demolition or removal was financed by the 231.32 authority or was done by a developer under a development 231.33 agreement with the authority; 231.34 (3) the authority found by resolution before the demolition 231.35 or removal that the parcel was occupied by a structurally 231.36 substandard building and that after demolition and clearance the 232.1 authority intended to include the parcel within a district; and 232.2 (4) upon filing the request for certification of the tax 232.3 capacity of the parcel as part of a district, the authority 232.4 notifies the county auditor that the original tax capacity of 232.5 the parcel must be adjusted as provided by section 469.177, 232.6 subdivision 1, paragraph (h). 232.7 (e) For purposes of this subdivision, a parcel is not 232.8 occupied by buildings, streets, utilities, or other improvements 232.9 unless 15 percent of the area of the parcel contains 232.10 improvements. 232.11 (f) For districts consisting of two or more noncontiguous 232.12 areas, each area must qualify as a redevelopment district under 232.13 paragraph (a) to be included in the district, and the entire 232.14 area of the district must satisfy paragraph (a). 232.15 EFFECTIVE DATE: This section is effective for districts or 232.16 additions to the geographic area of an existing district for 232.17 which the request for certification was received by the county 232.18 auditor after June 30, 2000. 232.19 Sec. 4. Minnesota Statutes 1998, section 469.174, 232.20 subdivision 11, is amended to read: 232.21 Subd. 11. [HOUSING DISTRICT.] "Housing district" means a 232.22 type of tax increment financing district which consists of a 232.23 project, or a portion of a project, intended for occupancy, in 232.24 part, by persons or families of low and moderate income, as232.25defined in chapter 462A, Title II of the National Housing Act of232.261934, the National Housing Act of 1959, the United States232.27Housing Act of 1937, as amended, Title V of the Housing Act of232.281949, as amended, any other similar present or future federal,232.29state, or municipal legislation, or the regulations promulgated232.30under any of those acts. A project does not qualify under this232.31subdivision if the fair market value of the improvements which232.32are constructed for commercial uses or for uses other than low232.33and moderate income housing consists of more than 20 percent of232.34the total fair market value of the planned improvements in the232.35development plan or agreement. The fair market value of the232.36improvements may be determined using the cost of construction,233.1capitalized income, or other appropriate method of estimating233.2market value. 233.3 EFFECTIVE DATE: This section is effective for districts 233.4 and amendments adding geographic area to an existing district 233.5 for which the request for certification was filed with the 233.6 county after May 1, 1988. 233.7 Sec. 5. Minnesota Statutes 1998, section 469.174, 233.8 subdivision 12, is amended to read: 233.9 Subd. 12. [ECONOMIC DEVELOPMENT DISTRICT.] "Economic 233.10 development district" means a type of tax increment financing 233.11 district which consists of any project, or portions of a 233.12 project, not meeting the requirements found in the definition of 233.13 redevelopment district, renewal and renovation district, soils 233.14 condition district,mined underground space development233.15district,or housing district, but which the authority finds to 233.16 be in the public interest because: 233.17 (1) it will discourage commerce, industry, or manufacturing 233.18 from moving their operations to another state or municipality; 233.19 or 233.20 (2) it will result in increased employment in the state; or 233.21 (3) it will result in preservation and enhancement of the 233.22 tax base of the state. 233.23 EFFECTIVE DATE: This section is effective the day 233.24 following final enactment. 233.25 Sec. 6. Minnesota Statutes 1998, section 469.174, 233.26 subdivision 14, is amended to read: 233.27 Subd. 14. [ADMINISTRATIVE EXPENSES.] "Administrative 233.28 expenses" means all expenditures of an authority other than: 233.29 (1) amounts paid for the purchase of landor; 233.30 (2) amounts paid to contractors or others providing 233.31 materials and services, including architectural and engineering 233.32 services, directly connected with the physical development of 233.33 the real property in thedistrict,project; 233.34 (3) relocation benefits paid to or services provided for 233.35 persons residing or businesses located in thedistrict,233.36orproject; 234.1 (4) amounts used to pay principal or interest on, fund a 234.2 reserve for, or sell at a discount bonds issued pursuant to 234.3 section 469.178; or 234.4 (5) amounts used to pay other financial obligations to the 234.5 extent those obligations were used to finance costs described in 234.6 clauses (1) to (3). 234.7 For districts for which the requests for certifications 234.8 were made before August 1, 1979, or after June 30, 1982, 234.9 "administrative expenses" includes amounts paid for services 234.10 provided by bond counsel, fiscal consultants, and planning or 234.11 economic development consultants. 234.12 EFFECTIVE DATE: This section is effective for all tax 234.13 increment financing districts, regardless of when the request 234.14 for certification was made. 234.15 Sec. 7. Minnesota Statutes 1998, section 469.174, 234.16 subdivision 22, is amended to read: 234.17 Subd. 22. [TOURISM FACILITY.] "Tourism facility" means 234.18 property that: 234.19 (1) is located in a county where the median income is no 234.20 more than 85 percent of the state median income; 234.21 (2) is located in a county inwhich, excluding the cities234.22of the first class in that county, the earnings on234.23tourism-related activities are 15 percent or more of the total234.24earnings in the countydevelopment region 2, 3, 4, or 5, as 234.25 defined in section 462.385; 234.26 (3)is located outside the metropolitan area defined in234.27section 473.121, subdivision 2;234.28(4)is not located in a city with a population in excess of 234.29 20,000; and 234.30(5)(4) is acquired, constructed, or rehabilitated for use 234.31 as a convention and meeting facility that is privately 234.32 owned,amusement park, recreation facility, cultural facility,234.33 marina,park,hotel, motel, lodging facility, or nonhomestead 234.34 dwelling unit that in each case is intended to serve primarily 234.35 individuals from outside the county. 234.36 EFFECTIVE DATE: The amendment to clauses (2) and (3) in 235.1 this section is effective for districts for which the request 235.2 for certification is made after May 1, 1993. 235.3 The amendment to clause (5) by this section is effective 235.4 for all economic development tax increment financing districts, 235.5 regardless of when the request for certification was made, but 235.6 does not apply to (1) expenditures made before January 1, 2000; 235.7 (2) expenditures made under a binding contract entered before 235.8 January 1, 2000; or (3) expenditures made under a binding 235.9 contract entered pursuant to a letter of intent with the 235.10 developer or contractor if the letter of intent was entered 235.11 before January 1, 2000. 235.12 Sec. 8. Minnesota Statutes 1998, section 469.175, 235.13 subdivision 1a, is amended to read: 235.14 Subd. 1a. [INCLUSION OF COUNTY ROAD COSTS.] (a) The county 235.15 board may require the authority to pay all or a portion of the 235.16 cost of county road improvements out of increment revenues, if 235.17 the following conditions occur: 235.18 (1) the proposed tax increment financing plan or an 235.19 amendment to the plan contemplates construction of a development 235.20 that will, in the judgment of the county, substantially increase 235.21 the use of county roads requiring construction of road 235.22 improvements or other road costs; and 235.23 (2) the road improvements or other road costs are not 235.24 scheduled for construction within five years under the county 235.25 capital improvement plan or other formally adopted county plan, 235.26 and in the opinion of the county, would not reasonably be 235.27 expected to be needed within the reasonably foreseeable future 235.28 if the tax increment financing plan were not implemented. 235.29 (b) If the county elects to use increments to finance the 235.30 road improvements, the county must notify the authority and 235.31 municipality within3060 days after receipt of theinformation235.32on theproposed tax incrementdistrictfinancing plan under 235.33 subdivision 2. The notice must include the estimated cost of 235.34 the road improvements and schedule for construction and payment 235.35 of the cost. The authority must include the improvements in the 235.36 tax increment financing plan. The improvements may be financed 236.1 with the proceeds of tax increment bonds or the authority and 236.2 the county may agree that the county will finance the 236.3 improvements with county funds to be repaid in installments, 236.4 with or without interest, out of increment revenues. If the 236.5 cost of the road improvements and other project costs exceed the 236.6 projected amount of the increment revenues, the county and 236.7 authority shall negotiate an agreement, modifying the 236.8 development plan or proposed road improvements that will permit 236.9 financing of the costs before the tax increment financing plan 236.10 may be approved. 236.11 EFFECTIVE DATE: This section is effective for tax 236.12 increment financing plans approved after July 1, 2000. 236.13 Sec. 9. Minnesota Statutes 1998, section 469.175, 236.14 subdivision 2, is amended to read: 236.15 Subd. 2. [CONSULTATIONS; COMMENT AND FILING.] Before 236.16 formation of a tax increment financing district, the authority 236.17 shall providean opportunity to the members of the county boards236.18of commissioners of any county in which any portion of the236.19proposed district is located and the members of the school board236.20of any school district in which any portion of the proposed236.21district is located to meet with the authority. The authority236.22shall present to the members of the county boards of236.23commissioners and the school boards itsthe county auditor and 236.24 clerk of the school board with the proposed tax increment 236.25 financing plan for the district and the authority's estimate of 236.26 the fiscal and economic implications of the proposed tax 236.27 increment financing district. The authority must provide the 236.28 proposed tax increment financing plan and the information on the 236.29 fiscal and economic implications of the planmust be providedto 236.30 the county auditor and the clerk of the school districtboards236.31 board at least 30 days before the public hearing required by 236.32 subdivision 3. The information on the fiscal and economic 236.33 implications may be included in or as part of the tax increment 236.34 financing plan. The county auditor and clerk of the school 236.35 board shall provide copies to the members of the boards, as 236.36 directed by their respective boards. The 30-day requirement is 237.1 waived if the boards of the county and school district submit 237.2 written comments on the proposal and any modification of the 237.3 proposal to the authority after receipt of the information.The237.4members of the county boards of commissioners and the school237.5boards may present their comments at the public hearing on the237.6tax increment financing plan required by subdivision 3. Upon237.7adoption of the tax increment financing plan, the authority237.8shall file a copy of the plan with the commissioner of revenue.237.9The authority must also file with the commissioner a copy of the237.10development plan for the project area.237.11 EFFECTIVE DATE: This section is effective for tax 237.12 increment financing plans approved after July 1, 2000. 237.13 Sec. 10. Minnesota Statutes 1998, section 469.175, 237.14 subdivision 2a, is amended to read: 237.15 Subd. 2a. [HOUSING DISTRICTS; REDEVELOPMENT DISTRICTS.] In 237.16 the case of a proposed housing district or redevelopment 237.17 district, in addition to the requirements of subdivision 2, at 237.18 least 30 days before the publication of the notice for public 237.19 hearing under subdivision 3, the authority shall deliver written 237.20 notice of the proposed district to each county commissioner who 237.21 represents part of the area proposed to be included in the 237.22 district. The notice must contain a general description of the 237.23 boundaries of the proposed district and the proposed activities 237.24 to be financed by the district, an offer by the authority to 237.25 meet and discuss the proposed district with the county 237.26 commissioner, and a solicitation of the commissioner's comments 237.27 with respect to the district. The commissioner may waive the 237.28 30-day requirement by submitting written comments on the 237.29 proposal and any modification of the proposal to the authority 237.30 after receipt of the information. 237.31 EFFECTIVE DATE: This section is effective for tax 237.32 increment financing districts for which the requests for 237.33 certification is made after May 31, 1993. 237.34 Sec. 11. Minnesota Statutes 1998, section 469.175, 237.35 subdivision 3, is amended to read: 237.36 Subd. 3. [MUNICIPALITY APPROVAL.] A county auditor shall 238.1 not certify the original net tax capacity of a tax increment 238.2 financing district until the tax increment financing plan 238.3 proposed for that district has been approved by the municipality 238.4 in which the district is located. If an authority that proposes 238.5 to establish a tax increment financing district and the 238.6 municipality are not the same, the authority shall apply to the 238.7 municipality in which the district is proposed to be located and 238.8 shall obtain the approval of its tax increment financing plan by 238.9 the municipality before the authority may use tax increment 238.10 financing. The municipality shall approve the tax increment 238.11 financing plan only after a public hearing thereon after 238.12 published notice in a newspaper of general circulation in the 238.13 municipality at least once not less than ten days nor more than 238.14 30 days prior to the date of the hearing. The published notice 238.15 must include a map of the area of the district from which 238.16 increments may be collected and, if the project area includes 238.17 additional area, a map of the project area in which the 238.18 increments may be expended. The hearing may be held before or 238.19 after the approval or creation of the project or it may be held 238.20 in conjunction with a hearing to approve the project. Before or 238.21 at the time of approval of the tax increment financing plan, the 238.22 municipality shall make the following findings, and shall set 238.23 forth in writing the reasons and supporting facts for each 238.24 determination: 238.25 (1) that the proposed tax increment financing district is a 238.26 redevelopment district, a renewal or renovation district,a238.27mined underground space development district,a housing 238.28 district, a soils condition district, or an economic development 238.29 district; if the proposed district is a redevelopment district 238.30 or a renewal or renovation district, the reasons and supporting 238.31 facts for the determination that the district meets the criteria 238.32 of section 469.174, subdivision 10, paragraph (a), clauses (1) 238.33 and (2), or subdivision 10a, must be documented in writing and 238.34 retained and made available to the public by the authority until 238.35 the district has been terminated. 238.36 (2) that the proposed development or redevelopment, in the 239.1 opinion of the municipality, would not reasonably be expected to 239.2 occur solely through private investment within the reasonably 239.3 foreseeable future and that the increased market value of the 239.4 site that could reasonably be expected to occur without the use 239.5 of tax increment financing would be less than the increase in 239.6 the market value estimated to result from the proposed 239.7 development after subtracting the present value of the projected 239.8 tax increments for the maximum duration of the district 239.9 permitted by the plan. The requirements of this clause do not 239.10 apply if the district is a qualified housing district, as 239.11 defined in section 273.1399, subdivision 1. 239.12 (3) that the tax increment financing plan conforms to the 239.13 general plan for the development or redevelopment of the 239.14 municipality as a whole. 239.15 (4) that the tax increment financing plan will afford 239.16 maximum opportunity, consistent with the sound needs of the 239.17 municipality as a whole, for the development or redevelopment of 239.18 the project by private enterprise. 239.19 (5) that the municipality elects the method of tax 239.20 increment computation set forth in section 469.177, subdivision 239.21 3, clause (b), if applicable. 239.22 When the municipality and the authority are not the same, 239.23 the municipality shall approve or disapprove the tax increment 239.24 financing plan within 60 days of submission by the authority, or239.25the plan shall be deemed approved. When the municipality and 239.26 the authority are not the same, the municipality may not amend 239.27 or modify a tax increment financing plan except as proposed by 239.28 the authority pursuant to subdivision 4. Once approved, the 239.29 determination of the authority to undertake the project through 239.30 the use of tax increment financing and the resolution of the 239.31 governing body shall be conclusive of the findings therein and 239.32 of the public need for the financing. 239.33 EFFECTIVE DATE: This section is effective for tax 239.34 increment financing plans approved after June 30, 2000. 239.35 Sec. 12. Minnesota Statutes 1998, section 469.175, 239.36 subdivision 4, is amended to read: 240.1 Subd. 4. [MODIFICATION OF PLAN.] (a) A tax increment 240.2 financing plan may be modified by an authority,provided thatby 240.3 resolution. The geographic area of a tax increment financing 240.4 district may be reduced, but may not be enlarged after five 240.5 years following the date of certification of the original net 240.6 tax capacity by the county auditor. 240.7 (b) The following modifications may only be approved after 240.8 the discussion, public hearing, and findings required for 240.9 approval of the original plan: 240.10 (1) any reduction or enlargement of geographic area of the 240.11 project or tax increment financing district, unless the 240.12 reduction meets the requirements of paragraph (e); 240.13 (2) an increase in the amount of bonded indebtedness to be 240.14 incurred, including a determination to capitalize interest on 240.15 the debt if that determination was not a part of the original 240.16 plan, or to increase or decrease the amount of interest on the 240.17 debt to be capitalized,; 240.18 (3) an increase in the portion of the captured net tax 240.19 capacity to be retained by the authority,; 240.20 (4) an increase in total estimated tax increment 240.21 expenditures, unless the increase is made to include the cost of 240.22 road improvements submitted by the county under subdivision 1a 240.23 after approval of the original tax increment financing plan; or 240.24 (5) designation of additional property to be acquired by 240.25 the authorityshall be approved upon the notice and after the240.26discussion, public hearing, and findings required for approval240.27of the original plan; provided that. 240.28 (c) If an authority changes the type of district from 240.29 housing, redevelopment, or economic development to another type 240.30 of district, this changeshallis notbe considereda 240.31 modification butshall requirerequires the authority to follow 240.32 the procedure set forth in sections 469.174 to 469.179 for 240.33 adoption of a new plan, including certification of the net tax 240.34 capacity of the district by the county auditor. 240.35 (d) If a redevelopment district or a renewal and renovation 240.36 district is enlarged, the reasons and supporting facts for the 241.1 determination that the addition to the district meets the 241.2 criteria of section 469.174, subdivision 10, paragraph (a), 241.3 clauses (1) and (2), or subdivision 10a, must be documented. 241.4 (e) The requirements ofthisparagraph (b) do not apply to 241.5 a reduction in the geographic area of a tax increment district 241.6 if: 241.7 (1) the only modification is elimination of parcels from 241.8 theproject ordistrict; and 241.9 (2)(A) the current net tax capacity of the parcels 241.10 eliminated from the district equals or exceeds the net tax 241.11 capacity of those parcels in the district's original net tax 241.12 capacity or (B) the authority agrees that, notwithstanding 241.13 section 469.177, subdivision 1, the original net tax capacity 241.14 will be reduced by no more than the current net tax capacity of 241.15 the parcels eliminated from the district. 241.16 (f) The authority must notify the county auditor of any 241.17 modification that reduces or enlarges the geographic area of a 241.18 district or a project area. 241.19(b) The geographic area of a tax increment financing241.20district may be reduced, but shall not be enlarged after five241.21years following the date of certification of the original net241.22tax capacity by the county auditor or after August 1, 1984, for241.23tax increment financing districts authorized prior to August 1,241.241979.241.25 EFFECTIVE DATE: This section is effective for 241.26 modifications of tax increment financing plans adopted by the 241.27 authority after June 30, 2000. 241.28 Sec. 13. Minnesota Statutes 1998, section 469.175, 241.29 subdivision 5, is amended to read: 241.30 Subd. 5. [ANNUAL DISCLOSURE.](a) The authority shall241.31annually submit to the county board, the county auditor, the241.32school board, state auditor and, if the authority is other than241.33the municipality, the governing body of the municipality, a241.34report of the status of the district. The report shall include241.35the following information: the amount and the source of revenue241.36in the account, the amount and purpose of expenditures from the242.1account, the amount of any pledge of revenues, including242.2principal and interest on any outstanding bonded indebtedness,242.3the original net tax capacity of the district and any242.4subdistrict, the captured net tax capacity retained by the242.5authority, the captured net tax capacity shared with other242.6taxing districts, the tax increment received, and any additional242.7information necessary to demonstrate compliance with any242.8applicable tax increment financing plan. The authority must242.9submit the annual report for a year on or before August 1 of the242.10next year.242.11(b)An annual statement showingthe tax increment received242.12and expended in that year, the original net tax capacity,242.13captured net tax capacity, amount of outstanding bonded242.14indebtedness, the amount of the district's and any subdistrict's242.15increments paid to other governmental bodies, the amount paid242.16for administrative costs, the sum of increments paid, directly242.17or indirectly, for activities and improvements located outside242.18of the district,for each district the information required to 242.19 be reported under subdivision 6, paragraph (c), clauses (1), 242.20 (2), (3), (11), (12), (21), and (22); the amounts of tax 242.21 increment received and expended in the reporting period; and any 242.22 additional information the authority deems necessaryshallmust 242.23 be published in a newspaper of general circulation in the 242.24 municipality that approved the tax increment financing plan.If242.25the fiscal disparities contribution under chapter 276A or 473F242.26for the district is computed under section 469.177, subdivision242.273, paragraph (a), the annual statement must disclose that fact242.28and indicate the amount of increased property tax imposed on242.29other properties in the municipality as a result of the fiscal242.30disparities contribution. The commissioner of revenue shall242.31prescribe the form of this statement and the method for242.32calculating the increased property taxes.The annual statement 242.33 must inform readers that additional information regarding each 242.34 district may be obtained from the authority, and must explain 242.35 how the additional information may be requested. The authority 242.36 must publish the annual statement for a year no later than 243.1 August 15 of the next year. The authority must identify the 243.2 newspaper of general circulation in the municipality to which 243.3 the annual statement has been or will be submitted for 243.4 publication and provide a copy of the annual statement to 243.5 the county board, the county auditor, the school board, the 243.6 state auditor, and, if the authority is other than the 243.7 municipality, the governing body of the municipality on or 243.8 before August 1 of the year in which the statement must be 243.9 published. 243.10 (c) The disclosureand reportingrequirements imposed by 243.11 this subdivision apply to districts certified before, on, or 243.12 after August 1, 1979. 243.13 EFFECTIVE DATE: This section is effective for reports due 243.14 beginning in 2001. 243.15 Sec. 14. Minnesota Statutes 1998, section 469.175, 243.16 subdivision 6, is amended to read: 243.17 Subd. 6. [ANNUAL FINANCIAL REPORTING.] (a) The state 243.18 auditor shall develop a uniform system of accounting and 243.19 financial reporting for tax increment financing districts. The 243.20 system of accounting and financial reporting shall, as nearly as 243.21 possible: 243.22 (1) provide for full disclosure of the sources and uses of 243.23 public funds in the district; 243.24 (2) permit comparison and reconciliation with the affected 243.25 local government's accounts and financial reports; 243.26 (3) permit auditing of the funds expended on behalf of a 243.27 district, including a single district that is part of a 243.28 multidistrict project or that is funded in part or whole through 243.29 the use of a development account funded with tax increments from 243.30 other districts or with other public money; 243.31 (4) be consistent with generally accepted accounting 243.32 principles. 243.33 (b) The authority must annually submit to the state auditor 243.34 a financial report in compliance with paragraph (a). Copies of 243.35 the report must also be provided to the countyand school243.36district boardsauditor and to the governing body of the 244.1 municipality, if the authority is not the municipality. To the 244.2 extent necessary to permit compliance with the requirement of 244.3 financial reporting, the county and any other appropriate local 244.4 government unit or private entity must provide the necessary 244.5 records or information to the authority or the state auditor as 244.6 provided by the system of accounting and financial reporting 244.7 developed pursuant to paragraph (a). The authority must submit 244.8 the annual report for a year on or before August 1 of the next 244.9 year. 244.10 (c) The annual financial report must also include the 244.11 following items: 244.12 (1) the original net tax capacity of the district and any 244.13 subdistrict under section 469.177, subdivision 1; 244.14 (2) the net tax capacity for the reporting period of the 244.15 district and any subdistrict; 244.16 (3) the captured net tax capacity of the district,244.17including the amount of any captured net tax capacity shared244.18with other taxing districts; 244.19(3)(4) any fiscal disparity deduction from the captured 244.20 net tax capacity under section 469.177, subdivision 3; 244.21 (5) the captured net tax capacity retained for tax 244.22 increment financing under section 469.177, subdivision 2, 244.23 paragraph (a), clause (1); 244.24 (6) any captured net tax capacity distributed among 244.25 affected taxing districts under section 469.177, subdivision 2, 244.26 paragraph (a), clause (2); 244.27 (7) the type of district; 244.28 (8) the date the municipality approved the tax increment 244.29 financing plan and the date of approval of any modification of 244.30 the tax increment financing plan, the approval of which requires 244.31 notice, discussion, a public hearing, and findings under 244.32 subdivision 4, paragraph (a); 244.33 (9) the date the authority first requested certification of 244.34 the original net tax capacity of the district and the date of 244.35 the request for certification regarding any parcel added to the 244.36 district; 245.1 (10) the date the county auditor first certified the 245.2 original net tax capacity of the district and the date of 245.3 certification of the original net tax capacity of any parcel 245.4 added to the district; 245.5 (11) the month and year in which the authority has received 245.6 or anticipates it will receive the first increment from the 245.7 district; 245.8 (12) the date the district must be decertified; 245.9 (13) for the reporting period and prior years of the 245.10 district, the actual amount received from, at least, the 245.11 following categories: 245.12 (i) tax increments paid by the captured net tax capacity 245.13 retained for tax increment financing under section 469.177, 245.14 subdivision 2, paragraph (a), clause (1), but excluding any 245.15 excess taxes; 245.16 (ii) tax increments that are interest or other investment 245.17 earnings on or from tax increments; 245.18 (iii) tax increments that are proceeds from the sale or 245.19 lease of property, tangible or intangible, purchased by the 245.20 authority with tax increments; 245.21 (iv) tax increments that are repayments of loans or other 245.22 advances made by the authority with tax increments; 245.23 (v) bond or loan proceeds; 245.24 (vi) special assessments; 245.25 (vii) grants; and 245.26 (viii) transfers from funds not exclusively associated with 245.27 the district; 245.28 (14) for the reporting period and for thedurationprior 245.29 years of the district, the amount budgeted under the tax 245.30 increment financing plan, and the actual amount expended for, at 245.31 least, the following categories: 245.32 (i) acquisition of land and buildings through condemnation 245.33 or purchase; 245.34 (ii) site improvements or preparation costs; 245.35 (iii) installation of public utilities, parking facilities, 245.36 streets, roads, sidewalks, or other similar public improvements; 246.1 (iv) administrative costs, including the allocated cost of 246.2 the authority; 246.3 (v) public park facilities, facilities for social, 246.4 recreational, or conference purposes, or other similar public 246.5 improvements; and 246.6 (vi) transfers to funds not exclusively associated with the 246.7 district; 246.8(4)(15) for properties sold to developers, the total cost 246.9 of the property to the authority and the price paid by the 246.10 developer;and246.11(5) the amount of increments rebated or paid to developers246.12or property owners for privately financed improvements or other246.13qualifying costs.246.14 (16) the amount of any payments and the value of any 246.15 in-kind benefits, such as physical improvements and the use of 246.16 building space, that are paid or financed with tax increments 246.17 and are provided to another governmental unit other than the 246.18 municipality during the reporting period; 246.19 (17) the amount of any payments for activities and 246.20 improvements located outside of the district that are paid for 246.21 or financed with tax increments; 246.22 (18) the amount of payments of principal and interest that 246.23 are made during the reporting period on any nondefeased: 246.24 (i) general obligation tax increment financing bonds; 246.25 (ii) other tax increment financing bonds; and 246.26 (iii) notes and pay-as-you-go contracts; 246.27 (19) the principal amount, at the end of the reporting 246.28 period, of any nondefeased: 246.29 (i) general obligation tax increment financing bonds; 246.30 (ii) other tax increment financing bonds; and 246.31 (iii) notes and pay-as-you-go contracts; 246.32 (20) the amount of principal and interest payments that are 246.33 due for the current calendar year on any nondefeased: 246.34 (i) general obligation tax increment financing bonds; 246.35 (ii) other tax increment financing bonds; and 246.36 (iii) notes and pay-as-you-go contracts; 247.1 (21) if the fiscal disparities contribution under chapter 247.2 276A or 473F for the district is computed under section 469.177, 247.3 subdivision 3, paragraph (a), the amount of increased property 247.4 taxes imposed on other properties in the municipality that 247.5 approved the tax increment financing plan as a result of the 247.6 fiscal disparities contribution; 247.7 (22) whether the tax increment financing plan or other 247.8 governing document permits increment revenues to be expended: 247.9 (i) to pay bonds, the proceeds of which were or may be 247.10 expended on activities outside of the district; 247.11 (ii) for deposit into a common bond fund from which money 247.12 may be expended on activities located outside of the district; 247.13 or 247.14 (iii) to otherwise finance activities located outside of 247.15 the tax increment financing district; and 247.16 (23) any additional information the state auditor may 247.17 require. 247.18 (d) The commissioner of revenue shall prescribe the method 247.19 of calculating the increased property taxes under paragraph (c), 247.20 clause (21), and the form of the statement disclosing this 247.21 information on the annual statement under subdivision 5. 247.22 (e) The reporting requirements imposed by this subdivision 247.23 apply to districts certified before, on, and after August 1, 247.24 1979. 247.25 EFFECTIVE DATE: This section is effective for reports due 247.26 beginning in 2001. 247.27 Sec. 15. Minnesota Statutes 1998, section 469.176, 247.28 subdivision 1b, is amended to read: 247.29 Subd. 1b. [DURATION LIMITS; TERMS.] (a) No tax increment 247.30 shall in any event be paid to the authority 247.31 (1)after 25 years from date of receipt by the authority of247.32the first tax increment for a mined underground space247.33development district,247.34(2)after 15 years after receipt by the authority of the 247.35 first increment for a renewal and renovation district, 247.36(3)(2) after 20 years after receipt by the authority of 248.1 the first increment for a soils condition district, 248.2(4)(3) afternineeight yearsfrom the date of the248.3 after receipt, or 11 years from approval of the tax increment248.4financing plan, whichever is less,by the authority of the first 248.5 increment for an economic development district, 248.6(5)(4) for a housing district or a redevelopment district, 248.7 after 20 years from the date of receipt by the authority of the 248.8 first tax increment by the authority pursuant to section 248.9 469.175, subdivision 1, paragraph (b); or, if no provision is 248.10 made under section 469.175, subdivision 1, paragraph (b), after 248.11 25 years from the date of receipt by the authority of the first 248.12 increment. 248.13 (b) For purposes of determining a duration limit under this 248.14 subdivision or subdivision 1e that is based on the receipt of an 248.15 increment, any increments from taxes payable in the year in 248.16 which the district terminates shall be paid to the authority. 248.17 This paragraph does not affect a duration limit calculated from 248.18 the date of approval of the tax increment financing plan or 248.19 based on the recovery of costs or to a duration limit under 248.20 subdivision 1c. This paragraph does not supersede the 248.21 restrictions on payment of delinquent taxes in subdivision 1f. 248.22 (c) Except as authorized by section 469.175, subdivision 1, 248.23 paragraph (b), an action by the authority to waive or decline to 248.24 accept an increment has no effect for purposes of computing a 248.25 duration limit based on the receipt of increment under this 248.26 subdivision or any other provision of law. The authority is 248.27 deemed to have received an increment for any year in which it 248.28 waived or declined to accept an increment, regardless of whether 248.29 the increment was paid to the authority. 248.30 EFFECTIVE DATE: This section is effective for districts 248.31 for which the request for certification was received by the 248.32 county auditor after June 30, 2000, and does not apply to 248.33 amendments adding geographic area to a district for which the 248.34 request for certification was received before July 1, 2000. 248.35 Sec. 16. Minnesota Statutes 1998, section 469.176, 248.36 subdivision 4d, is amended to read: 249.1 Subd. 4d. [HOUSING DISTRICTS.] (a) Revenue derived from 249.2 tax increment from a housing district must be used solely to 249.3 finance the cost of: 249.4 (1) housingprojects as defined in section 469.174,249.5subdivision 11intended for occupancy by persons or families of 249.6 low and moderate income, as defined in chapter 462A, Title II of 249.7 the National Housing Act of 1934, the National Housing Act of 249.8 1959, the United States Housing Act of 1937, as amended, Title V 249.9 of the Housing Act of 1949, as amended, any other similar 249.10 present or future federal, state, or municipal legislation, or 249.11 the regulations promulgated under any of those acts; and 249.12 (2) commercial uses or other facilities that do not satisfy 249.13 the requirements of clause (1), but that meet the applicable 249.14 percentage restrictions under paragraph (b) or (c) and that are 249.15 part of or related to the housing qualifying under clause (1). 249.16 (b) For housing districts with certification request dates 249.17 after April 30, 1990, the percentage permitted to be used for 249.18 facilities under paragraph (a), clause (2), may not exceed 20 249.19 percent of the total fair market value of the planned 249.20 improvements in the development plan or agreement. 249.21 (c) For housing districts with certification request dates 249.22 after May 1, 1988, and before May 1, 1990, the portion permitted 249.23 to be used for facilities under paragraph (a), clause (2), may 249.24 not exceed one-third of the total fair market value of the 249.25 planned improvements in the development plan or agreement. 249.26 (d) Under paragraphs (b) and (c), the fair market value of 249.27 the improvements may be determined using the cost of 249.28 construction, capitalized income, or other appropriate method of 249.29 estimating market value. The fair market value of improvements 249.30 that serve both housing under paragraph (a), clause (1), and 249.31 facilities under paragraph (a), clause (2), must be allocated 249.32 between clause (1) housing and clause (2) facilities in 249.33 proportion to their respective shares of total fair market value 249.34 of planned improvements. 249.35 (e) The cost of public improvements directly related to the 249.36 housing projects and other uses permitted under paragraph (a) 250.1 and the allocated administrative expenses of the authority may 250.2 be included in the cost of a housing project. 250.3 EFFECTIVE DATE: This section is effective for districts 250.4 and amendments adding geographic area to an existing district 250.5 for which the request for certification was filed with the 250.6 county after May 1, 1988. 250.7 Sec. 17. Minnesota Statutes 1998, section 469.1761, 250.8 subdivision 4, is amended to read: 250.9 Subd. 4. [NONCOMPLIANCE; ENFORCEMENT.] Failure to comply 250.10 with the requirements of this sectionresults in application of250.11the duration limits for economic development districts to the250.12district. If at the time of the noncompliance the district has250.13exceeded the duration limits for an economic development250.14district, the district must be decertified effective for taxes250.15assessed in the next calendar year. The commissioner of revenue250.16shall enforce the provisions of this sectionis subject to 250.17 section 469.1771.The commissioner may waive insubstantial250.18violations. Appeal of the commissioner's orders of250.19noncompliance must be made to the tax court in the manner250.20provided in section 271.06.250.21 EFFECTIVE DATE: This section is effective for violations 250.22 occurring after July 1, 2000. 250.23 Sec. 18. Minnesota Statutes 1998, section 469.1763, 250.24 subdivision 2, is amended to read: 250.25 Subd. 2. [EXPENDITURES OUTSIDE DISTRICT.] (a) For each tax 250.26 increment financing district, an amount equal to at least 75 250.27 percent of the revenue derived from tax increments paid by 250.28 properties in the district must be expended on activities in the 250.29 district or to pay bonds, to the extent that the proceeds of the 250.30 bonds were used to finance activities in the district or to pay, 250.31 or secure payment of, debt service on credit enhanced bonds. 250.32 For districts, other than redevelopment districts for which the 250.33 request for certification was made after June 30, 1995, the 250.34 in-district percentage for purposes of the preceding sentence is 250.35 80 percent. Not more than 25 percent of the revenue derived 250.36 from tax increments paid by properties in the district may be 251.1 expended, through a development fund or otherwise, on activities 251.2 outside of the district but within the defined geographic area 251.3 of the project except to pay, or secure payment of, debt service 251.4 on credit enhanced bonds. For districts, other than 251.5 redevelopment districts for which the request for certification 251.6 was made after June 30, 1995, the pooling percentage for 251.7 purposes of the preceding sentence is 20 percent. The revenue 251.8 derived from tax increments for the district that are expended 251.9 on costs under section 469.176, subdivision 4h, paragraph (b), 251.10 may be deducted first before calculating the percentages that 251.11 must be expended within and without the district. 251.12 (b) In the case of a housing district,a housing project,251.13as defined in section 469.174, subdivision 11, isexpenditures 251.14 meeting the requirements of section 469.176, subdivision 4d, are 251.15 deemed to be for an activity in the district. 251.16 (c) All administrative expenses are for activities outside 251.17 of the district. 251.18 EFFECTIVE DATE: This section is effective for districts 251.19 for which the request for certification was made after April 30, 251.20 1990. 251.21 Sec. 19. Minnesota Statutes 1998, section 469.1763, is 251.22 amended by adding a subdivision to read: 251.23 Subd. 6. [HOUSING DEVELOPMENTS.] (a) The restrictions in 251.24 subdivisions 2 through 4 do not apply to increments spent 251.25 exclusively to assist a housing development. The authority 251.26 under this subdivision is limited to no more than ten percent of 251.27 the increments collected from a tax increment financing district. 251.28 (b) For purposes of this subdivision, the following terms 251.29 have the meanings given. 251.30 (1) "Housing development" or "development" means housing 251.31 that meets the requirements for a qualified low-income building 251.32 as that term is used in section 42 of the Internal Revenue Code. 251.33 (2) "To assist" means amounts spent to: 251.34 (i) acquire and prepare the site; 251.35 (ii) acquire, construct, or rehabilitate buildings or other 251.36 improvements; and 252.1 (iii) make public improvements directly related to the 252.2 development. 252.3 (c) For a development, the amount of the tax increments 252.4 that qualifies under this subdivision are limited to the 252.5 qualified basis for the development, as defined under section 252.6 42(c) of the Internal Revenue Code, less the amount of any tax 252.7 credit the development is allowed under section 42 of the 252.8 Internal Revenue Code. 252.9 EFFECTIVE DATE: This section applies to increments spent 252.10 after July 1, 2000. 252.11 Sec. 20. Minnesota Statutes 1998, section 469.177, 252.12 subdivision 1, is amended to read: 252.13 Subdivision 1. [ORIGINAL NET TAX CAPACITY.] (a) Upon or 252.14 after adoption of a tax increment financing plan, the auditor of 252.15 any county in which the district is situated shall, upon request 252.16 of the authority, certify the original net tax capacity of the 252.17 tax increment financing district and that portion of the 252.18 district overlying any subdistrict as described in the tax 252.19 increment financing plan and shall certify in each year 252.20 thereafter the amount by which the original net tax capacity has 252.21 increased or decreased as a result of a change in tax exempt 252.22 status of property within the district and any subdistrict, 252.23 reduction or enlargement of the district or changes pursuant to 252.24 subdivision 4. 252.25 (b)In the case of a mined underground space development252.26district the county auditor shall certify the original net tax252.27capacity as zero, plus the net tax capacity, if any, previously252.28assigned to any subsurface area included in the mined252.29underground space development district pursuant to section252.30272.04.252.31(c)For districts approved under section 469.175, 252.32 subdivision 3, or parcels added to existing districts after May 252.33 1, 1988, if the classification under section 273.13 of property 252.34 located in a district changes to a classification that has a 252.35 different assessment ratio, the original net tax capacity of 252.36 that property must be redetermined at the time when its use is 253.1 changed as if the property had originally been classified in the 253.2 same class in which it is classified after its use is changed. 253.3(d)(c) The amount to be added to the original net tax 253.4 capacity of the district as a result of previously tax exempt 253.5 real property within the district becoming taxable equals the 253.6 net tax capacity of the real property as most recently assessed 253.7 pursuant to section 273.18 or, if that assessment was made more 253.8 than one year prior to the date of title transfer rendering the 253.9 property taxable, the net tax capacity assessed by the assessor 253.10 at the time of the transfer. If substantial taxable 253.11 improvements were made to a parcel after certification of the 253.12 district and if the property later becomes tax exempt, in whole 253.13 or part, as a result of the authority acquiring the property 253.14 through foreclosure or exercise of remedies under a lease or 253.15 other revenue agreement or as a result of tax forfeiture, the 253.16 amount to be added to the original net tax capacity of the 253.17 district as a result of the property again becoming taxable is 253.18 the amount of the parcel's value that was included in original 253.19 net tax capacity when the parcel was first certified. The 253.20 amount to be added to the original net tax capacity of the 253.21 district as a result of enlargements equals the net tax capacity 253.22 of the added real property as most recently certified by the 253.23 commissioner of revenue as of the date of modification of the 253.24 tax increment financing plan pursuant to section 469.175, 253.25 subdivision 4. 253.26(e)(d) For districts approved under section 469.175, 253.27 subdivision 3, or parcels added to existing districts after May 253.28 1, 1988, if the net tax capacity of a property increases because 253.29 the property no longer qualifies under the Minnesota 253.30 Agricultural Property Tax Law, section 273.111; the Minnesota 253.31 Open Space Property Tax Law, section 273.112; or the 253.32 Metropolitan Agricultural Preserves Act, chapter 473H, or 253.33 because platted, unimproved property is improved or three years 253.34 pass after approval of the plat under section 273.11, 253.35 subdivision 1, the increase in net tax capacity must be added to 253.36 the original net tax capacity. 254.1(f) Each year the auditor shall also add to the original254.2net tax capacity of each economic development district an amount254.3equal to the original net tax capacity for the preceding year254.4multiplied by the average percentage increase in the market254.5value of all property included in the economic development254.6district during the five years prior to certification of the254.7district. In computing the average percentage increase in254.8market value, the auditor shall exclude the market value, as254.9estimated by the assessor, that is attributable to new254.10construction; extension of sewer, water, roads, or other public254.11utilities; or platting of the land.254.12(g)(e) The amount to be subtracted from the original net 254.13 tax capacity of the district as a result of previously taxable 254.14 real property within the district becoming tax exempt, or a 254.15 reduction in the geographic area of the district, shall be the 254.16 amount of original net tax capacity initially attributed to the 254.17 property becoming tax exempt or being removed from the 254.18 district. If the net tax capacity of property located within 254.19 the tax increment financing district is reduced by reason of a 254.20 court-ordered abatement, stipulation agreement, voluntary 254.21 abatement made by the assessor or auditor or by order of the 254.22 commissioner of revenue, the reduction shall be applied to the 254.23 original net tax capacity of the district when the property upon 254.24 which the abatement is made has not been improved since the date 254.25 of certification of the district and to the captured net tax 254.26 capacity of the district in each year thereafter when the 254.27 abatement relates to improvements made after the date of 254.28 certification. The county auditor may specify reasonable form 254.29 and content of the request for certification of the authority 254.30 and any modification thereof pursuant to section 469.175, 254.31 subdivision 4. 254.32(h)(f) If a parcel of property contained a substandard 254.33 building that was demolished or removed and if the authority 254.34 elects to treat the parcel as occupied by a substandard building 254.35 under section 469.174, subdivision 10, paragraph (b), the 254.36 auditor shall certify the original net tax capacity of the 255.1 parcel using the greater of (1) the current net tax capacity of 255.2 the parcel, or (2) the estimated market value of the parcel for 255.3 the year in which the building was demolished or removed, but 255.4 applying the class rates for the current year. 255.5 EFFECTIVE DATE: This section is effective for districts 255.6 for which the request for certification was received by the 255.7 county auditor after June 30, 2000, and does not apply to 255.8 amendments adding geographic area to a district for which the 255.9 request for certification was received before July 1, 2000. 255.10 Sec. 21. Minnesota Statutes 1999 Supplement, section 255.11 469.1771, subdivision 1, is amended to read: 255.12 Subdivision 1. [ENFORCEMENT.] (a) The owner of taxable 255.13 property located in the city, town, school district, or county 255.14 in which the tax increment financing district is located may 255.15 bring suit for equitable relief or for damages, as provided in 255.16 subdivisions 2, 3, and 4, arising out of a failure of a 255.17 municipality or authority to comply with the provisions of 255.18 sections 469.174 to 469.179, or related provisions of this 255.19 chapter. The prevailing party in a suit filed under the 255.20 preceding sentence is entitled to costs, including reasonable 255.21 attorney fees. 255.22 (b) The state auditor may examine and audit political 255.23 subdivisions' use of tax increment financing. Without previous 255.24 notice, the state auditor may examine or audit accounts and 255.25 records on a random basis as the auditor deems to be in the 255.26 public interest. If the state auditor finds evidence that an 255.27 authority or municipality has violated a provision of the law 255.28 for which a remedy is provided under this section, the state 255.29 auditor shall forward the relevant information to the county 255.30 attorney. The county attorney may bring an action to enforce 255.31 the provisions of sections 469.174 to 469.179 or related 255.32 provisions of this chapter, for matters referred by the state 255.33 auditor or on behalf of the county. If the county attorney 255.34 determines not to bring an action or if the county attorney has 255.35 not brought an action within 12 months after receipt of the 255.36 initial notification by the state auditor of the violation, the 256.1 county attorney shall notify the state auditor in writing. 256.2 (c) If the state auditor finds an authority is not in 256.3 compliance with sections 469.174 to 469.179 or related 256.4 provisions of law, the auditor shall notify the governing body 256.5 of the municipality that approved the tax increment financing 256.6 district of its findings. The governing body of the 256.7 municipality must respond in writing to the state auditor within 256.8 60 days after receiving the notification. Its written response 256.9 must state whether the municipality accepts, in whole or part, 256.10 the auditor's findings. If the municipality does not accept the 256.11 findings, the statement must indicate the basis for its 256.12 disagreement. The state auditor shall annually summarize the 256.13 responses it receives under this section and send the summary 256.14 and copies of the responses to the chairs of the committees of 256.15 the legislature with jurisdiction over tax increment financing. 256.16 (d) The state auditor shall notify the attorney general in 256.17 writing and provide supporting materials for a violation found 256.18 by the auditor, if the: 256.19 (1) auditor receives notification from the county attorney 256.20 under paragraph (b) or receives no notification for a 12-month 256.21 period after initially notifying the county attorney and the 256.22 state auditor confirms with the county attorney or the 256.23 municipality that no action has been brought regarding the 256.24 matter; and 256.25 (2) municipality or development authority have not 256.26 eliminated or resolved the violation to the satisfaction of the 256.27 state auditor. 256.28 The auditor shall provide the municipality and development 256.29 authority a copy of the notification sent to the attorney 256.30 general. 256.31 EFFECTIVE DATE: This section is effective for violations 256.32 occurring after December 31, 1990, but does not apply to pending 256.33 litigation. 256.34 Sec. 22. Minnesota Statutes 1999 Supplement, section 256.35 469.1813, subdivision 1, is amended to read: 256.36 Subdivision 1. [AUTHORITY.] The governing body of a 257.1 political subdivision may grant an abatement of the taxes 257.2 imposed by the political subdivision on a parcel of property, or 257.3 defer the payments of the taxes and abate the interest and 257.4 penalty that otherwise would apply, if: 257.5 (a) it expects the benefits to the political subdivision of 257.6 the proposed abatement agreement to at least equal the costs to 257.7 the political subdivision of the proposed agreement or intends 257.8 the abatement to phase in a property tax increase, as provided 257.9 in clause (b)(7); and 257.10 (b) it finds that doing so is in the public interest 257.11 because it will: 257.12 (1) increase or preserve tax base; 257.13 (2) provide employment opportunities in the political 257.14 subdivision; 257.15 (3) provide or help acquire or construct public facilities; 257.16 (4) help redevelop or renew blighted areas; 257.17 (5) help provide access to services for residents of the 257.18 political subdivision;or257.19 (6) finance or provide public infrastructure; or 257.20 (7) phase in a property tax increase on the parcel 257.21 resulting from an increase of 50 percent or more in one year on 257.22 the estimated market value of the parcel, other than increase 257.23 attributable to improvement of the parcel. 257.24 EFFECTIVE DATE: This section is effective for taxes 257.25 payable in 2001. 257.26 Sec. 23. Minnesota Statutes 1998, section 469.1813, 257.27 subdivision 4, is amended to read: 257.28 Subd. 4. [PROPERTY LOCATED IN TAX INCREMENT FINANCING 257.29 DISTRICTS.] The governing body of agovernmentalpolitical 257.30 subdivision may not enter into a property tax abatement 257.31 agreement under sections 469.1812 to 469.1815if the property257.32 that provides for abatement of taxes on a parcel, if the 257.33 abatement will occur while the parcel is located in a tax 257.34 increment financing district. 257.35 EFFECTIVE DATE: This section is effective for taxes 257.36 payable in 2001 and later years. 258.1 Sec. 24. Minnesota Statutes 1999 Supplement, section 258.2 469.1813, subdivision 6, is amended to read: 258.3 Subd. 6. [DURATION LIMIT.] (a) A political subdivision may 258.4 grant an abatement for a period no longer than ten years, except 258.5 as provided under paragraph (b). The subdivision may specify in 258.6 the abatement resolution a shorter duration. If the resolution 258.7 does not specify a period of time, the abatement is for eight 258.8 years. If an abatement has been granted to a parcel of property 258.9 and the period of the abatement has expired, the political 258.10 subdivision that granted the abatement may not grant another 258.11 abatement for eight years after the expiration of the first 258.12 abatement. This prohibition does not apply to improvements 258.13 added after and not subject to the first abatement. 258.14 (b) A political subdivision proposing to abate taxes for a 258.15 parcel may request, in writing, that the other political 258.16 subdivisions in which the parcel is located grant an abatement 258.17 for the property. If one of the other political subdivisions 258.18 declines, in writing, to grant an abatement or if 90 days pass 258.19 after receipt of the request to grant an abatement without a 258.20 written response from one of the political subdivisions, the 258.21 duration limit for an abatement for the parcel is increased to 258.22 15 years. If the political subdivision which declined to grant 258.23 an abatement later grants an abatement for the parcel, the 258.24 15-year duration limit is reduced by one year for each year that 258.25 the declining political subdivision grants an abatement for the 258.26 parcel during the period of the abatement granted by the 258.27 requesting political subdivision. The duration limit may not be 258.28 reduced below the limit under paragraph (a). 258.29 EFFECTIVE DATE: This section is effective for taxes 258.30 payable in 2001 and thereafter. 258.31 Sec. 25. [BROOKLYN PARK EDA; TIF DISTRICT NO. 18.] 258.32 The 1998 amendments to Minnesota Statutes, section 469.176, 258.33 subdivision 7, as set forth in Laws 1998, chapter 389, article 258.34 11, section 6, apply to the Brooklyn Park economic development 258.35 authority's tax increment financing district No. 18, 258.36 notwithstanding the effective date of the amendments. 259.1 EFFECTIVE DATE: This section is effective the day after 259.2 the governing body of the city of Brooklyn Park and its chief 259.3 clerical officer timely complete their compliance with Minnesota 259.4 Statutes, section 645.021, subdivisions 2 and 3. 259.5 Sec. 26. [CITY OF FOUNTAIN; TIF DURATION EXTENSION.] 259.6 The governing body of the city of Fountain may extend the 259.7 duration of tax increment financing district 1-1 through 259.8 December 31, 2008, notwithstanding the provision of Minnesota 259.9 Statutes, section 469.176, subdivision 1b. The extension under 259.10 this section is intended to correct an error in calculation of 259.11 the increment after a division of a parcel in the tax increment 259.12 financing district. As a result, the provisions of Minnesota 259.13 Statutes, section 469.1782, subdivision 1, do not apply to the 259.14 district. 259.15 EFFECTIVE DATE: This section is effective the day after 259.16 the governing bodies of the city, county, and school district, 259.17 and their chief clerical officers, timely complete their 259.18 compliance with Minnesota Statutes, sections 469.1782, 259.19 subdivision 2; and 645.021, subdivisions 2 and 3. 259.20 Sec. 27. [REPEALER.] 259.21 (a) Minnesota Statutes 1998, sections 469.055, subdivision 259.22 5; 469.101, subdivision 21; 469.135; 469.136; 469.137; 469.138; 259.23 469.139; 469.140; 469.174, subdivision 13; and 469.176, 259.24 subdivision 4a, are repealed. 259.25 (b) Minnesota Statutes 1998, section 469.175, subdivision 259.26 6a, is repealed. 259.27 EFFECTIVE DATE: Paragraph (a) is effective the day 259.28 following final enactment. Paragraph (b) is effective for 259.29 reports due beginning in 2001. 259.30 ARTICLE 12 259.31 FEDERAL UPDATE 259.32 Section 1. Minnesota Statutes 1999 Supplement, section 259.33 289A.02, subdivision 7, is amended to read: 259.34 Subd. 7. [INTERNAL REVENUE CODE.] Unless specifically 259.35 defined otherwise, "Internal Revenue Code" means the Internal 259.36 Revenue Code of 1986, as amended through December 31,19981999. 260.1 EFFECTIVE DATE: This section is effective the day 260.2 following final enactment. 260.3 Sec. 2. Minnesota Statutes 1999 Supplement, section 260.4 290.01, subdivision 19, is amended to read: 260.5 Subd. 19. [NET INCOME.] The term "net income" means the 260.6 federal taxable income, as defined in section 63 of the Internal 260.7 Revenue Code of 1986, as amended through the date named in this 260.8 subdivision, incorporating any elections made by the taxpayer in 260.9 accordance with the Internal Revenue Code in determining federal 260.10 taxable income for federal income tax purposes, and with the 260.11 modifications provided in subdivisions 19a to 19f. 260.12 In the case of a regulated investment company or a fund 260.13 thereof, as defined in section 851(a) or 851(g) of the Internal 260.14 Revenue Code, federal taxable income means investment company 260.15 taxable income as defined in section 852(b)(2) of the Internal 260.16 Revenue Code, except that: 260.17 (1) the exclusion of net capital gain provided in section 260.18 852(b)(2)(A) of the Internal Revenue Code does not apply; 260.19 (2) the deduction for dividends paid under section 260.20 852(b)(2)(D) of the Internal Revenue Code must be applied by 260.21 allowing a deduction for capital gain dividends and 260.22 exempt-interest dividends as defined in sections 852(b)(3)(C) 260.23 and 852(b)(5) of the Internal Revenue Code; and 260.24 (3) the deduction for dividends paid must also be applied 260.25 in the amount of any undistributed capital gains which the 260.26 regulated investment company elects to have treated as provided 260.27 in section 852(b)(3)(D) of the Internal Revenue Code. 260.28 The net income of a real estate investment trust as defined 260.29 and limited by section 856(a), (b), and (c) of the Internal 260.30 Revenue Code means the real estate investment trust taxable 260.31 income as defined in section 857(b)(2) of the Internal Revenue 260.32 Code. 260.33 The net income of a designated settlement fund as defined 260.34 in section 468B(d) of the Internal Revenue Code means the gross 260.35 income as defined in section 468B(b) of the Internal Revenue 260.36 Code. 261.1The Internal Revenue Code of 1986, as amended through261.2December 31, 1986, shall be in effect for taxable years261.3beginning after December 31, 1986. The provisions of sections261.410104, 10202, 10203, 10204, 10206, 10212, 10221, 10222, 10223,261.510226, 10227, 10228, 10611, 10631, 10632, and 10711 of the261.6Omnibus Budget Reconciliation Act of 1987, Public Law Number261.7100-203, the provisions of sections 1001, 1002, 1003, 1004,261.81005, 1006, 1008, 1009, 1010, 1011, 1011A, 1011B, 1012, 1013,261.91014, 1015, 1018, 2004, 3041, 4009, 6007, 6026, 6032, 6137,261.106277, and 6282 of the Technical and Miscellaneous Revenue Act of261.111988, Public Law Number 100-647, the provisions of sections261.127811, 7816, and 7831 of the Omnibus Budget Reconciliation Act of261.131989, Public Law Number 101-239, the provisions of sections261.141305, 1704(r), and 1704(e)(1) of the Small Business Job261.15Protection Act, Public Law Number 104-188, and the provisions of261.16sections 975 and 1604(d)(2) and (e) of the Taxpayer Relief Act261.17of 1997, Public Law Number 105-34, and the provisions of section261.184004 of the Omnibus Consolidated and Emergency Supplemental261.19Appropriations Act, 1999, Public Law Number 105-277 shall be261.20effective at the time they become effective for federal income261.21tax purposes.261.22The Internal Revenue Code of 1986, as amended through261.23December 31, 1987, shall be in effect for taxable years261.24beginning after December 31, 1987. The provisions of sections261.254001, 4002, 4011, 5021, 5041, 5053, 5075, 6003, 6008, 6011,261.266030, 6031, 6033, 6057, 6064, 6066, 6079, 6130, 6176, 6180,261.276182, 6280, and 6281 of the Technical and Miscellaneous Revenue261.28Act of 1988, Public Law Number 100-647, the provisions of261.29sections 7815 and 7821 of the Omnibus Budget Reconciliation Act261.30of 1989, Public Law Number 101-239, and the provisions of261.31section 11702 of the Revenue Reconciliation Act of 1990, Public261.32Law Number 101-508, shall become effective at the time they261.33become effective for federal tax purposes.261.34The Internal Revenue Code of 1986, as amended through261.35December 31, 1988, shall be in effect for taxable years261.36beginning after December 31, 1988. The provisions of sections262.17101, 7102, 7104, 7105, 7201, 7202, 7203, 7204, 7205, 7206,262.27207, 7210, 7211, 7301, 7302, 7303, 7304, 7601, 7621, 7622,262.37641, 7642, 7645, 7647, 7651, and 7652 of the Omnibus Budget262.4Reconciliation Act of 1989, Public Law Number 101-239, the262.5provision of section 1401 of the Financial Institutions Reform,262.6Recovery, and Enforcement Act of 1989, Public Law Number 101-73,262.7the provisions of sections 11701 and 11703 of the Revenue262.8Reconciliation Act of 1990, Public Law Number 101-508, and the262.9provisions of sections 1702(g) and 1704(f)(2)(A) and (B) of the262.10Small Business Job Protection Act, Public Law Number 104-188,262.11shall become effective at the time they become effective for262.12federal tax purposes.262.13The Internal Revenue Code of 1986, as amended through262.14December 31, 1989, shall be in effect for taxable years262.15beginning after December 31, 1989. The provisions of sections262.1611321, 11322, 11324, 11325, 11403, 11404, 11410, and 11521 of262.17the Revenue Reconciliation Act of 1990, Public Law Number262.18101-508, and the provisions of sections 13224 and 13261 of the262.19Omnibus Budget Reconciliation Act of 1993, Public Law Number262.20103-66, shall become effective at the time they become effective262.21for federal purposes.262.22The Internal Revenue Code of 1986, as amended through262.23December 31, 1990, shall be in effect for taxable years262.24beginning after December 31, 1990.262.25The provisions of section 13431 of the Omnibus Budget262.26Reconciliation Act of 1993, Public Law Number 103-66, shall262.27become effective at the time they became effective for federal262.28purposes.262.29The Internal Revenue Code of 1986, as amended through262.30December 31, 1991, shall be in effect for taxable years262.31beginning after December 31, 1991.262.32The provisions of sections 1936 and 1937 of the262.33Comprehensive National Energy Policy Act of 1992, Public Law262.34Number 102-486, the provisions of sections 13101, 13114, 13122,262.3513141, 13150, 13151, 13174, 13239, 13301, and 13442 of the262.36Omnibus Budget Reconciliation Act of 1993, Public Law Number263.1103-66, and the provisions of section 1604(a)(1), (2), and (3)263.2of the Taxpayer Relief Act of 1997, Public Law Number 105-34,263.3shall become effective at the time they become effective for263.4federal purposes.263.5The Internal Revenue Code of 1986, as amended through263.6December 31, 1992, shall be in effect for taxable years263.7beginning after December 31, 1992.263.8The provisions of sections 13116, 13121, 13206, 13210,263.913222, 13223, 13231, 13232, 13233, 13239, 13262, and 13321 of263.10the Omnibus Budget Reconciliation Act of 1993, Public Law Number263.11103-66, the provisions of sections 1703(a), 1703(d), 1703(i),263.121703(l), and 1703(m) of the Small Business Job Protection Act,263.13Public Law Number 104-188, and the provision of section 1604(c)263.14of the Taxpayer Relief Act of 1997, Public Law Number 105-34,263.15shall become effective at the time they become effective for263.16federal purposes.263.17The Internal Revenue Code of 1986, as amended through263.18December 31, 1993, shall be in effect for taxable years263.19beginning after December 31, 1993.263.20The provision of section 741 of Legislation to Implement263.21Uruguay Round of General Agreement on Tariffs and Trade, Public263.22Law Number 103-465, the provisions of sections 1, 2, and 3, of263.23the Self-Employed Health Insurance Act of 1995, Public Law263.24Number 104-7, the provision of section 501(b)(2) of the Health263.25Insurance Portability and Accountability Act, Public Law Number263.26104-191, the provisions of sections 1604 and 1704(p)(1) and (2)263.27of the Small Business Job Protection Act, Public Law Number263.28104-188, and the provisions of sections 1011, 1211(b)(1), and263.291602(f) of the Taxpayer Relief Act of 1997, Public Law Number263.30105-34, shall become effective at the time they become effective263.31for federal purposes.263.32The Internal Revenue Code of 1986, as amended through263.33December 31, 1994, shall be in effect for taxable years263.34beginning after December 31, 1994.263.35The provisions of sections 1119(a), 1120, 1121, 1202(a),263.361444, 1449(b), 1602(a), 1610(a), 1613, and 1805 of the Small264.1Business Job Protection Act, Public Law Number 104-188, the264.2provision of section 511 of the Health Insurance Portability and264.3Accountability Act, Public Law Number 104-191, and the264.4provisions of sections 1174 and 1601(i)(2) of the Taxpayer264.5Relief Act of 1997, Public Law Number 105-34, shall become264.6effective at the time they become effective for federal purposes.264.7The Internal Revenue Code of 1986, as amended through March264.822, 1996, is in effect for taxable years beginning after264.9December 31, 1995.264.10 The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 264.11 1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 264.12 1616, 1617, 1704(l), and 1704(m) of the Small Business Job 264.13 Protection Act, Public Law Number 104-188, the provisions of 264.14 Public Law Number 104-117, the provisions of sections 313(a) and 264.15 (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 1002, 264.16 1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 264.17 1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) 264.18 and (h), and 1604(d)(1) of the Taxpayer Relief Act of 1997, 264.19 Public Law Number 105-34, the provisions of section 6010 of the 264.20 Internal Revenue Service Restructuring and Reform Act of 1998, 264.21 Public Law Number 105-206, and the provisions of section 4003 of 264.22 the Omnibus Consolidated and Emergency Supplemental 264.23 Appropriations Act, 1999, Public Law Number 105-277, shall 264.24 become effective at the time they become effective for federal 264.25 purposes. 264.26 The Internal Revenue Code of 1986, as amended through 264.27 December 31, 1996, shall be in effect for taxable years 264.28 beginning after December 31, 1996. 264.29 The provisions of sections 202(a) and (b), 221(a), 225, 264.30 312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 264.31 (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 264.32 1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 264.33 1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 264.34 of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 264.35 the provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 264.36 7002, and 7003 of the Internal Revenue Service Restructuring and 265.1 Reform Act of 1998, Public Law Number 105-206,andthe 265.2 provisions of section 3001 of the Omnibus Consolidated and 265.3 Emergency Supplemental Appropriations Act, 1999, Public Law 265.4 Number 105-277, and the provisions of section 3001 of the 265.5 Miscellaneous Trade and Technical Corrections Act of 1999, 265.6 Public Law Number 106-36, shall become effective at the time 265.7 they become effective for federal purposes. 265.8 The Internal Revenue Code of 1986, as amended through 265.9 December 31, 1997, shall be in effect for taxable years 265.10 beginning after December 31, 1997. 265.11 The provisions of sections 5002, 6009, 6011, and 7001 of 265.12 the Internal Revenue Service Restructuring and Reform Act of 265.13 1998, Public Law Number 105-206, the provisions of section 9010 265.14 of the Transportation Equity Act for the 21st Century, Public 265.15 Law Number 105-178, the provisions of sections 1004, 4002, and 265.16 5301 of the Omnibus Consolidation and Emergency Supplemental 265.17 Appropriations Act, 1999, Public Law Number 105-277,andthe 265.18 provision of section 303 of the Ricky Ray Hemophilia Relief Fund 265.19 Act of 1998, Public Law Number 105-369, and the provisions of 265.20 sections 532, 534, 536, 537, and 538 of the Ticket to Work and 265.21 Work Incentives Improvement Act of 1999, Public Law Number 265.22 160-170, shall become effective at the time they become 265.23 effective for federal purposes. 265.24 The Internal Revenue Code of 1986, as amended through 265.25 December 31, 1998, shall be in effect for taxable years 265.26 beginning after December 31, 1998. 265.27 The Internal Revenue Code of 1986, as amended through 265.28 December 31, 1999, shall be in effect for taxable years 265.29 beginning after December 31, 1999. 265.30 Except as otherwise provided, references to the Internal 265.31 Revenue Code in subdivisions 19a to 19g mean the code in effect 265.32 for purposes of determining net income for the applicable year. 265.33 EFFECTIVE DATE: This section is effective the day 265.34 following final enactment except that the striking of text is 265.35 effective for taxable years beginning after December 31, 1999. 265.36 Sec. 3. Minnesota Statutes 1999 Supplement, section 266.1 290.01, subdivision 31, is amended to read: 266.2 Subd. 31. [INTERNAL REVENUE CODE.] Unless specifically 266.3 defined otherwise, "Internal Revenue Code" means the Internal 266.4 Revenue Code of 1986, as amended through December 31,19981999. 266.5 EFFECTIVE DATE: This section is effective for tax years 266.6 beginning after December 31, 1999. 266.7 Sec. 4. Minnesota Statutes 1999 Supplement, section 266.8 290A.03, subdivision 15, is amended to read: 266.9 Subd. 15. [INTERNAL REVENUE CODE.] "Internal Revenue Code" 266.10 means the Internal Revenue Code of 1986, as amended through 266.11 December 31,19981999. 266.12 EFFECTIVE DATE: This section is effective the day 266.13 following final enactment. 266.14 Sec. 5. Minnesota Statutes 1999 Supplement, section 266.15 291.005, subdivision 1, is amended to read: 266.16 Subdivision 1. Unless the context otherwise clearly 266.17 requires, the following terms used in this chapter shall have 266.18 the following meanings: 266.19 (1) "Federal gross estate" means the gross estate of a 266.20 decedent as valued and otherwise determined for federal estate 266.21 tax purposes by federal taxing authorities pursuant to the 266.22 provisions of the Internal Revenue Code. 266.23 (2) "Minnesota gross estate" means the federal gross estate 266.24 of a decedent after (a) excluding therefrom any property 266.25 included therein which has its situs outside Minnesota and (b) 266.26 including therein any property omitted from the federal gross 266.27 estate which is includable therein, has its situs in Minnesota, 266.28 and was not disclosed to federal taxing authorities. 266.29 (3) "Personal representative" means the executor, 266.30 administrator or other person appointed by the court to 266.31 administer and dispose of the property of the decedent. If 266.32 there is no executor, administrator or other person appointed, 266.33 qualified, and acting within this state, then any person in 266.34 actual or constructive possession of any property having a situs 266.35 in this state which is included in the federal gross estate of 266.36 the decedent shall be deemed to be a personal representative to 267.1 the extent of the property and the Minnesota estate tax due with 267.2 respect to the property. 267.3 (4) "Resident decedent" means an individual whose domicile 267.4 at the time of death was in Minnesota. 267.5 (5) "Nonresident decedent" means an individual whose 267.6 domicile at the time of death was not in Minnesota. 267.7 (6) "Situs of property" means, with respect to real 267.8 property, the state or country in which it is located; with 267.9 respect to tangible personal property, the state or country in 267.10 which it was normally kept or located at the time of the 267.11 decedent's death; and with respect to intangible personal 267.12 property, the state or country in which the decedent was 267.13 domiciled at death. 267.14 (7) "Commissioner" means the commissioner of revenue or any 267.15 person to whom the commissioner has delegated functions under 267.16 this chapter. 267.17 (8) "Internal Revenue Code" means the United States 267.18 Internal Revenue Code of 1986, as amended through December 31, 267.1919981999. 267.20 EFFECTIVE DATE: This section is effective the day 267.21 following final enactment. 267.22 ARTICLE 13 267.23 BUSINESS SUBSIDIES 267.24 Section 1. Minnesota Statutes 1999 Supplement, section 267.25 116J.993, subdivision 3, is amended to read: 267.26 Subd. 3. [BUSINESS SUBSIDY.] "Business subsidy" or 267.27 "subsidy" means a state or local government agency grant, 267.28 contribution of personal property, real property, 267.29 infrastructure, the principal amount of a loan at rates below 267.30 those commercially available to the recipient, any reduction or 267.31 deferral of any tax or any fee, any guarantee of any payment 267.32 under any loan, lease, or other obligation, or any preferential 267.33 use of government facilities given to a business. 267.34 The following forms of financial assistance are not a 267.35 business subsidy: 267.36 (1) a business subsidy of less than$25,000$100,000; 268.1 (2) assistance that is generally available to all 268.2 businesses or to a general class of similar businesses, such as 268.3 a line of business, size, location, or similar general criteria; 268.4 (3) public improvements to buildings or lands owned by the 268.5 state or local government that serve a public purpose and do not 268.6 principally benefit a single business or defined group of 268.7 businesses at the time the improvements are made; 268.8 (4) redevelopment property polluted by contaminants as 268.9 defined in section 116J.552, subdivision 3; 268.10 (5) assistance provided for the sole purpose of renovating 268.11 old or decaying building stock or bringing it up to code and 268.12 assistance provided for designated historic preservation 268.13 districts, provided that the assistance is equal to or less than 268.14 50 percent of the total cost; 268.15 (6) assistanceprovided to organizations whose primary268.16mission isto provide job readiness and training services if the 268.17 sole purpose of the assistance is to provide those services; 268.18 (7) assistance for housing; 268.19 (8) assistance for pollution control or abatement, 268.20 including assistance for a tax increment financing hazardous 268.21 substance subdistrict as defined under section 469.174, 268.22 subdivision 23; 268.23 (9) assistance for energy conservation; 268.24 (10) tax reductions resulting from conformity with federal 268.25 tax law; 268.26 (11) workers' compensation and unemployment compensation; 268.27 (12) benefits derived from regulation; 268.28 (13) indirect benefits derived from assistance to 268.29 educational institutions; 268.30 (14) funds from bondsallocated under chapter 474Aissued 268.31 by government agencies on behalf of entities without actual 268.32 direct financial assistance being provided by the issuing 268.33 authority; 268.34 (15) assistance for a collaboration between a Minnesota 268.35 higher education institution and a business; 268.36 (16) assistance for a tax increment financing soils 269.1 condition district as defined under section 469.174, subdivision 269.2 19; 269.3 (17) redevelopment when the recipient's investment in the 269.4 purchase of the site and in site preparation is 70 percent or 269.5 more of the assessor's current year's estimated market 269.6 value;and269.7 (18) general changes in tax increment financing law and 269.8 other general tax law changes of a principally technical nature; 269.9 (19) federal assistance until the assistance has been 269.10 repaid to, and reinvested by, the state or local government 269.11 agency; and 269.12 (20) funds from dock and wharf bonds issued by a seaway 269.13 port authority. 269.14 Sec. 2. Minnesota Statutes 1999 Supplement, section 269.15 116J.994, subdivision 1, is amended to read: 269.16 Subdivision 1. [PUBLIC PURPOSE.] A business subsidy must 269.17 meet a public purposeother thanwhich may include, but may not 269.18 be limited to, increasing the tax base. Job retention may only 269.19 be used as a public purpose in cases where job loss isimminent269.20 specific and demonstrable. 269.21 Sec. 3. Minnesota Statutes 1999 Supplement, section 269.22 116J.994, subdivision 3, is amended to read: 269.23 Subd. 3. [SUBSIDY AGREEMENT.] (a) A recipient must enter 269.24 into a subsidy agreement with the grantor of the subsidy that 269.25 includes: 269.26 (1) a description of the subsidy, including the amount and 269.27 type of subsidy, and type of district if the subsidy is tax 269.28 increment financing; 269.29 (2) a statement of the public purposes for the subsidy; 269.30 (3) measurable, specific, and tangible goals for the 269.31 subsidy; 269.32 (4) a description of the financial obligation of the 269.33 recipient if the goals are not met; 269.34 (5) a statement of why the subsidy is needed; 269.35 (6) a commitment to continue operations at the site where 269.36 the subsidy is used for at least five years after the benefit 270.1 date; 270.2 (7) the name and address of the parent corporation of the 270.3 recipient, if any; and 270.4 (8) a list of all financial assistance by all grantors for 270.5 the project. 270.6 (b) Business subsidies in the form of grants must be 270.7 structured as forgivable loans.If a business subsidy is not270.8structured as a forgivable loanFor other types of business 270.9 subsidies, the agreement must state the fair market value of the 270.10 subsidy to the recipient, including the value of conveying 270.11 property at less than a fair market price, or other in-kind 270.12 benefits to the recipient. 270.13 (c) If a business subsidy benefits more than one recipient, 270.14 the grantor must assign a proportion of the business subsidy to 270.15 each recipient that signs a subsidy agreement. The proportion 270.16 assessed to each recipient must reflect a reasonable estimate of 270.17 the recipient's share of the total benefits of the project. 270.18 (d) The state or local government agency and the recipient 270.19 must both sign the subsidy agreement and, if the grantor is a 270.20 local government agency, the agreement must be approved by the 270.21 local elected governing body, except for the St. Paul Port 270.22 Authority and a seaway port authority. 270.23 (e) Notwithstanding the provision in subdivision 6, a 270.24 recipient may be authorized to move from the site where the 270.25 subsidy is used within the five-year period after the benefit 270.26 date if, after a public hearing, the grantor approves the 270.27 recipient's request to move. 270.28 Sec. 4. Minnesota Statutes 1999 Supplement, section 270.29 116J.994, subdivision 4, is amended to read: 270.30 Subd. 4. [WAGE AND JOB GOALS.] The subsidy agreement, in 270.31 addition to any other goals, must include: (1) goals for the 270.32 number of jobs created, which may include separate goals for the 270.33 number of part-time or full-time jobs, or, in cases where job 270.34 loss isimminentspecific and demonstrable, goals for the number 270.35 of jobs retained; and (2) wage goals for the jobs created or 270.36 retained. After a public hearing, if the creation or retention 271.1 of jobs is determined not to be a goal, the wage and job goals 271.2 may be set at zero. 271.3 In addition to other specific goal time frames, the wage 271.4 and job goals must contain specific goals to be attained within 271.5 two years of the benefit date. 271.6 Sec. 5. Minnesota Statutes 1999 Supplement, section 271.7 116J.994, subdivision 5, is amended to read: 271.8 Subd. 5. [PUBLIC NOTICE AND HEARING.] (a) Before granting 271.9 a business subsidy that exceeds $500,000 for a state government 271.10 grantor and $100,000 for a local government grantor, the grantor 271.11 must provide public notice and a hearing on the subsidy. A 271.12 public hearing and notice under this subdivision is not required 271.13 if a hearing and notice on the subsidy is otherwise required by 271.14 law. 271.15 (b) Public notice of a proposed business subsidy under this 271.16 subdivision by a state government grantor, other than the iron 271.17 range resources and rehabilitation board, must be published in 271.18 the State Register. Public notice of a proposed business 271.19 subsidy under this subdivision by a local government grantor or 271.20 the iron range resources and rehabilitation board must be 271.21 published in a local newspaper of general circulation. The 271.22 public notice must identify the location at which information 271.23 about the business subsidy, including acopysummary of 271.24 the terms of the subsidyagreement, is available. Published 271.25 notice should be sufficiently conspicuous in size and placement 271.26 to distinguish the notice from the surrounding text. The 271.27 grantor must make the information available in printed paper 271.28 copies and, if possible, on the Internet. The government agency 271.29 must provide at least a ten-day notice for the public hearing. 271.30 (c) The public notice must include the date, time, and 271.31 place of the hearing. 271.32 (d) The public hearing by a state government grantor other 271.33 than the iron range resources and rehabilitation board must be 271.34 held in St. Paul. 271.35 (e) If more than one nonstate grantor provides a business 271.36 subsidy to the same recipient, the nonstate grantors may 272.1 designate one nonstate grantor to hold a single public hearing 272.2 regarding the business subsidies provided by all nonstate 272.3 grantors. For the purposes of this paragraph, "nonstate 272.4 grantor" includes the iron range resources and rehabilitation 272.5 board. 272.6 Sec. 6. Minnesota Statutes 1999 Supplement, section 272.7 116J.994, subdivision 6, is amended to read: 272.8 Subd. 6. [FAILURE TO MEET GOALS.] The subsidy agreement 272.9 must specify the recipient's obligation if the recipient does 272.10 not fulfill the agreement. At a minimum, the agreement must 272.11 require a recipient failing to meet subsidy agreement goals to 272.12 pay back the assistance plus interest to the grantor or, at the 272.13 grantor's option, to the account created under section 116J.551 272.14 provided that repayment may be prorated to reflect partial 272.15 fulfillment of goals. The interest rate must be set at no less 272.16 than the implicit price deflator as defined under section 272.17 275.70, subdivision 2. The grantor, after a public hearing, may 272.18 extend for up to one year the period for meeting the goals 272.19 provided in a subsidy agreement. 272.20 A recipient that fails to meet the terms of a subsidy 272.21 agreement may not receive a business subsidy from any grantor 272.22 for a period of five years from the date of failure or until a 272.23 recipient satisfies its repayment obligation under this 272.24 subdivision, whichever occurs first. 272.25 Before a grantor signs a business subsidy agreement, the 272.26 grantor must check with the compilation and summary report 272.27 required by this section to determine if the recipient is 272.28 eligible to receive a business subsidy. 272.29 Sec. 7. Minnesota Statutes 1999 Supplement, section 272.30 116J.994, subdivision 7, is amended to read: 272.31 Subd. 7. [REPORTS BY RECIPIENTS TO GRANTORS.] (a) A 272.32 business subsidy grantor must monitor the progress by the 272.33 recipient in achieving agreement goals. 272.34 (b) A recipient must provide information regarding goals 272.35 and results for two years after the benefit date or until the 272.36 goals are met, whichever is later. If the goals are not met, 273.1 the recipient must continue to provide information on the 273.2 subsidy until the subsidy is repaid. The information must be 273.3 filed on forms developed by the commissioner in cooperation with 273.4 representatives of local government. Copies of the completed 273.5 forms must be sentto the commissioner and the local government273.6agency that provided the business subsidyto the local 273.7 government agency that provided the subsidy or to the 273.8 commissioner if the grantor is a state agency. The report must 273.9 include: 273.10 (1) the type, public purpose, and amount of subsidies and 273.11 type of district, if the subsidy is tax increment financing; 273.12 (2) the hourly wage of each job created with separate bands 273.13 of wages; 273.14 (3) the sum of the hourly wages and cost of health 273.15 insurance provided by the employer with separate bands of wages; 273.16 (4) the date the job and wage goals will be reached; 273.17 (5) a statement of goals identified in the subsidy 273.18 agreement and an update on achievement of those goals; 273.19 (6) the location of the recipient prior to receiving the 273.20 business subsidy; 273.21 (7) why the recipient did not complete the project outlined 273.22 in the subsidy agreement at their previous location, if the 273.23 recipient was previously located at another site in Minnesota; 273.24 (8) the name and address of the parent corporation of the 273.25 recipient, if any; 273.26 (9) a list of all financial assistance by all grantors for 273.27 the project; and 273.28 (10) other information the commissioner may request. 273.29 A report must be filed no later than March 1 of each year for 273.30 the previous yearand within 30 days after the deadline for273.31meeting the job and wage goals. The local agency must forward 273.32 copies of the reports received by recipients to the commissioner 273.33 by April 1. 273.34 (c) Financial assistance that is excluded from the 273.35 definition of "business subsidy" by section 116J.993, 273.36 subdivision 3, clauses (4), (5), (8), and (16) is subject to the 274.1 reporting requirements of this subdivision, except that the 274.2 report of the recipient must include instead: 274.3 (1) the type, public purpose, and amount of the financial 274.4 assistance, and type of district if thesubsidyassistance is 274.5 tax increment financing; 274.6 (2) progress towards meeting goals stated in thesubsidy274.7 assistance agreement and the public purpose of the assistance; 274.8 (3) if the agreement includes job creation, the hourly wage 274.9 of each job created with separate bands of wages; 274.10 (4) if the agreement includes job creation, the sum of the 274.11 hourly wages and cost of health insurance provided by the 274.12 employer with separate bands of wages; 274.13 (5) the location of the recipient prior to receiving the 274.14 assistance; and 274.15 (6) other information the grantor requests. 274.16 (d) If the recipient does not submit its report, the local 274.17 government agency must mail the recipient a warning within one 274.18 week of the required filing date. If, after 14 days of the 274.19 postmarked date of the warning, the recipient fails to provide a 274.20 report, the recipient must pay to the grantor a penalty of $100 274.21 for each subsequent day until the report is filed. The maximum 274.22 penalty shall not exceed $1,000. 274.23 Sec. 8. Minnesota Statutes 1999 Supplement, section 274.24 116J.994, subdivision 8, is amended to read: 274.25 Subd. 8. [REPORTS BY GRANTORS.] (a) Local government 274.26 agencies of a local government with a population of more than 274.27 2,500 and state government agencies, regardless of whether or 274.28 not they have awarded any business subsidies, must file a report 274.29 by April 1 of each year with the commissioner. Local government 274.30 agencies of a local government with a population of 2,500 or 274.31 less are exempt from filing this report if they have not awarded 274.32 a business subsidy in the past five years. Thelocal government274.33agencyreport must include a list of recipients that did not 274.34 complete the recipient report required under subdivision 7 and a 274.35 list of recipients that have not met their job and wage goals 274.36 within two years and the steps being taken to bring them into 275.1 compliance or to recoup the subsidy. 275.2 If the commissioner has not received the report by April 1 275.3 from an entity required to report, the commissioner shall issue 275.4 a warning to the government agency. If the commissioner has 275.5 still not received the report by June 1 of that same year from 275.6 an entity required to report, then that government agency may 275.7 not award any business subsidies until the report has been filed. 275.8 (b) The commissioner of trade and economic development must 275.9 provide information on reporting requirements to state and local 275.10 government agencies. 275.11 Sec. 9. Minnesota Statutes 1999 Supplement, section 275.12 116J.994, subdivision 9, is amended to read: 275.13 Subd. 9. [COMPILATION AND SUMMARY REPORT.] The department 275.14 of trade and economic development must publish a compilation and 275.15 summary of the results of the reports for the previous calendar 275.16 year byJulyAugust 1 of each year. The reports of the 275.17 government agencies to the department and the compilation and 275.18 summary report of the department must be made available to the 275.19 public. 275.20 The commissioner must coordinate the production of reports 275.21 so that useful comparisons across time periods and across 275.22 grantors can be made. The commissioner may add other 275.23 information to the report as the commissioner deems necessary to 275.24 evaluate business subsidies. Among the information in the 275.25 summary and compilation report, the commissioner must include: 275.26 (1) total amount of subsidies awarded in each development 275.27 region of the state; 275.28 (2) distribution of business subsidy amounts by size of the 275.29 business subsidy; 275.30 (3) distribution of business subsidy amounts by time 275.31 category, such as monthly or quarterly; 275.32 (4) distribution of subsidies by type and by public 275.33 purpose; 275.34 (5) percent of all business subsidies that reached their 275.35 goals; 275.36 (6) percent of business subsidies that did not reach their 276.1 goals by two years from the benefit date; 276.2 (7) total dollar amount of business subsidies that did not 276.3 meet their goals after two years from the benefit date; 276.4 (8) percent of subsidies that did not meet their goals and 276.5 that did not receive repayment; 276.6 (9) list of recipients that have failed to meet the terms 276.7 of a subsidy agreement in the past five years and have not 276.8 satisfied their repayment obligations; 276.9 (10) number of part-time and full-time jobs within separate 276.10 bands of wages; and 276.11 (11) benefits paid within separate bands of wages. 276.12 Sec. 10. Minnesota Statutes 1999 Supplement, section 276.13 116J.995, is amended to read: 276.14 116J.995 [ECONOMIC GRANTS.] 276.15 An appropriation rider in an appropriation to the 276.16 department of trade and economic development that specifies that 276.17 the appropriation be granted to a particular business or class 276.18 of businesses must contain a statement of the expected benefits 276.19 associated with the grant. At a minimum, the statement must 276.20 include goals for the number of jobs created, wages paid, and 276.21 the tax revenue increases due to the grant. The wage and job 276.22 goals must contain specific goals to be attained within two 276.23 years of the benefit date. The statement must specify the 276.24 recipient's obligation if the recipient does not attain the 276.25 goals. At a minimum, the statement must require a recipient 276.26 failing to meet the job and wage goals to pay back the 276.27 assistance plus interest to the department of trade and economic 276.28 development provided that repayment may be prorated to reflect 276.29 partial fulfillment of goals. The interest rate must be set at 276.30 the implicit price deflator defined under section 275.70, 276.31 subdivision 2. The legislature, after a public hearing, may 276.32 extend for up to one year the period for meeting the goals 276.33 provided in the statement. 276.34 ARTICLE 14 276.35 INSURANCE TAX RECODIFICATION 276.36 Section 1. [297I.01] [DEFINITIONS.] 277.1 Subdivision 1. [TERMS.] Unless the language or context 277.2 clearly indicates that a different meaning is intended, for the 277.3 purposes of this chapter, the following terms have the meanings 277.4 given them. 277.5 Subd. 2. [ASSOCIATION OR ASSOCIATIONS.] "Association" or 277.6 "associations" has the meaning given in section 60A.02, 277.7 subdivision 1a. 277.8 Subd. 3. [COMMISSIONER.] "Commissioner" means the 277.9 commissioner of revenue of the state of Minnesota. 277.10 Subd. 4. [COMMUNITY INTEGRATED SERVICE NETWORK.] 277.11 "Community integrated service network" has the meaning given in 277.12 section 62N.02, subdivision 4a. 277.13 Subd. 5. [COMPANY OR INSURANCE COMPANY.] "Company" or 277.14 "insurance company" has the meaning given in section 60A.02, 277.15 subdivision 4. 277.16 Subd. 6. [DEPARTMENT OF REVENUE.] "Department of revenue" 277.17 means the Minnesota department of revenue or commissioner of 277.18 revenue. 277.19 Subd. 7. [DOMESTIC.] "Domestic" has the meaning given in 277.20 section 60A.02, subdivision 5. 277.21 Subd. 8. [FOREIGN.] "Foreign" has the meaning given in 277.22 section 60A.02, subdivision 6. 277.23 Subd. 9. [GROSS PREMIUMS.] "Gross premiums" means total 277.24 premiums paid by policyholders and applicants of policies, 277.25 whether received in the form of money or other valuable 277.26 consideration, on property, persons, lives, interests and other 277.27 risks located, resident, or to be performed in this state, but 277.28 excluding consideration and premiums for reinsurance assumed 277.29 from other insurance companies. The term "gross premiums" 277.30 includes the total consideration paid to bail bond agents for 277.31 bail bonds. For title insurance companies, "gross premiums" 277.32 means the charge for title insurance made by a title insurance 277.33 company or its agents according to the company's rate filing 277.34 approved by the commissioner of commerce without a deduction for 277.35 commissions paid to or retained by the agent. Gross premiums of 277.36 a title insurance company does not include any other charge or 278.1 fee for abstracting, searching, or examining the title, or 278.2 escrow, closing, or other related services. 278.3 Subd. 10. [HEALTH MAINTENANCE ORGANIZATION.] "Health 278.4 maintenance organization" has the meaning given in section 278.5 62D.02, subdivision 4. 278.6 Subd. 11. [NONPROFIT HEALTH SERVICE PLAN CORPORATION.] 278.7 "Nonprofit health service plan corporation" has the meaning 278.8 given in section 62C.02, subdivision 6. 278.9 Subd. 12. [INSURANCE.] "Insurance" means the same as that 278.10 term is defined in section 60A.02, subdivision 3. 278.11 Subd. 13. [INSURANCE AGENT OR INSURANCE 278.12 AGENCY.] "Insurance agent or insurance agency" has the meaning 278.13 given in section 60A.02, subdivision 7. 278.14 Subd. 14. [RETURN PREMIUMS DEFINED.] "Return premiums" 278.15 means any dividend or any unused or unabsorbed portion of 278.16 premium deposit or assessment that is applied toward the payment 278.17 of any premium, premium deposit, or assessment due from the 278.18 policyholder or member upon a continuance or renewal of the 278.19 insurance on account of which the dividend was earned or premium 278.20 deposit or assessment paid. Return premiums also includes any 278.21 portion of premium returned by the company upon cancellation or 278.22 termination of a policy or membership, except surrender values 278.23 paid upon the cancellation and surrender of policies or 278.24 certificates of life insurance. 278.25 Subd. 15. [STATE.] "State" has the meaning given in 278.26 section 60A.02, subdivision 18. 278.27 Subd. 16. [TAXPAYER.] "Taxpayer" means any insurance 278.28 company, association, surplus lines licensee, automobile risk 278.29 self-insurer, or insured or any other person or entity required 278.30 to pay any amount due under this chapter. 278.31 Sec. 2. [297I.05] [TAX IMPOSED.] 278.32 Subdivision 1. [DOMESTIC AND FOREIGN COMPANIES.] Except as 278.33 otherwise provided in this section, a tax is imposed on every 278.34 domestic and foreign insurance company. The rate of tax is 278.35 equal to two percent of all gross premiums less return premiums 278.36 on all direct business received by the insurer or agents of the 279.1 insurer in Minnesota, in cash or otherwise, during the year. 279.2 Subd. 2. [TOWN AND FARMERS' MUTUAL INSURANCE.] A tax is 279.3 imposed on town and farmers' mutual insurance companies. The 279.4 rate of tax is equal to one percent of gross premiums less 279.5 return premiums on all direct business received by the insurer 279.6 or agents of the insurer in Minnesota, in cash or otherwise, 279.7 during the year. 279.8 Subd. 3. [MUTUAL PROPERTY AND CASUALTY COMPANIES WITH 279.9 ASSETS OF $5,000,000 OR LESS AT THE END OF THE CALENDAR YEAR.] A 279.10 tax is imposed on mutual property and casualty companies with 279.11 assets of $5,000,000 or less at the end of the calendar year. 279.12 The rate of tax is equal to one percent of gross premiums less 279.13 return premiums on all direct business received by the insurer 279.14 or agents of the insurer in Minnesota, in cash or otherwise, 279.15 during the year. 279.16 Subd. 4. [MUTUAL PROPERTY AND CASUALTY COMPANIES WITH 279.17 TOTAL ASSETS LESS THAN $1,600,000,000 ON DECEMBER 31, 1989.] A 279.18 tax is imposed on mutual property and casualty companies that 279.19 had total assets greater than $5,000,000 at the end of the 279.20 calendar year but that had total assets less than $1,600,000,000 279.21 on December 31, 1989. The rate of tax is equal to: 279.22 (1) two percent of gross premiums less return premiums on 279.23 all direct business received by the insurer or agents of the 279.24 insurer in Minnesota for life insurance, in cash or otherwise, 279.25 during the year; and 279.26 (2) 1.26 percent of gross premiums less return premiums on 279.27 all other direct business received by the insurer or agents of 279.28 the insurer in Minnesota, in cash or otherwise, during the year. 279.29 Subd. 5. [HEALTH MAINTENANCE ORGANIZATIONS, NONPROFIT 279.30 HEALTH SERVICE PLAN CORPORATIONS, AND COMMUNITY INTEGRATED 279.31 SERVICE NETWORKS.] (a) The commissioner of finance shall 279.32 determine the balance of the health care access fund on 279.33 September 1 of each year. 279.34 (b) If the commissioner of finance determines that there 279.35 will not be a structural deficit for the next state fiscal year, 279.36 no tax is imposed under this chapter on health maintenance 280.1 organizations, nonprofit health service plan corporations, and 280.2 community integrated service networks for the following calendar 280.3 year. 280.4 (c) If the commissioner of finance determines that there 280.5 will be a structural deficit in the fund for the next state 280.6 fiscal year, then the commissioner of finance, in consultation 280.7 with the commissioner of revenue, shall determine the amount 280.8 needed to eliminate the structural deficit, and a tax is imposed 280.9 for the next calendar year. The rate of tax is a percentage of 280.10 gross premiums less return premiums on all direct business 280.11 received by the insurer or agents of the insurer in Minnesota, 280.12 in cash or otherwise, during the year. The percentage rate is 280.13 one-quarter of one percent, one-half of one percent, 280.14 three-quarters of one percent, or one percent of the premiums, 280.15 whichever is the lowest rate that will produce sufficient 280.16 revenue to eliminate the projected structural deficit. 280.17 (d) The commissioner of finance shall publish in the State 280.18 Register by October 1 of each year the rate of tax to be imposed 280.19 for the following calendar year. 280.20 (e) In determining the structural balance of the health 280.21 care access fund for fiscal year 2001, the commissioner of 280.22 finance shall disregard the transfer amount from the health care 280.23 access fund to the general fund for expenditures associated with 280.24 the services provided to pregnant women and children under the 280.25 age of two enrolled in the MinnesotaCare program. 280.26 (f) In approving the premium rates as required in sections 280.27 62L.08, subdivision 8, and 62A.65, subdivision 3, the 280.28 commissioners of health and commerce shall ensure that to the 280.29 extent that the tax imposed under this subdivision is less than 280.30 one percent of gross premiums less return premiums, the premium 280.31 rate reflects the difference between the amount of tax imposed 280.32 and the amount that would have been collected if the rate was 280.33 one percent. 280.34 (g) The commissioner shall deposit all revenues, including 280.35 penalties and interest, collected under this chapter from health 280.36 maintenance organizations, community integrated service 281.1 networks, and nonprofit health service plan corporations in the 281.2 health care access fund. Refunds of overpayments of tax imposed 281.3 by this subdivision must be paid from the health care access 281.4 fund. There is annually appropriated from the health care 281.5 access fund to the commissioner the amount necessary to make any 281.6 refunds of the tax imposed under this subdivision. 281.7 Subd. 6. [FIRE MARSHAL TAX.] A tax is imposed on every 281.8 licensed company, including reciprocals or interinsurance 281.9 exchanges, doing business in this state, except farmers' mutual 281.10 fire insurance companies and township fire insurance companies. 281.11 The rate of tax is equal to one-half of one percent of the gross 281.12 fire premiums and assessments, less return premiums, on all 281.13 direct business received by the company in this state, or by its 281.14 agents for it, in cash or otherwise, during the year. "Gross 281.15 fire premiums and assessments" includes premiums on policies 281.16 covering fire risks only on automobiles, whether written under 281.17 floater form or otherwise. 281.18 Subd. 7. [SURPLUS LINES TAX.] (a) A tax is imposed on 281.19 surplus lines licensees. The rate of tax is equal to three 281.20 percent of the gross premiums less return premiums received by 281.21 the licensee minus any licensee association operating 281.22 assessments paid under section 60A.208. 281.23 (b) If surplus lines insurance placed by a surplus lines 281.24 licensee and taxed under this subdivision covers a subject of 281.25 insurance residing, located, or to be performed outside this 281.26 state, a proper pro rata portion of the entire premium payable 281.27 for all of that insurance must be allocated according to the 281.28 subjects of insurance residing, located, or to be performed in 281.29 this state. 281.30 Subd. 8. [INSURANCE PREMIUM TAX EQUIVALENT PAYMENT BY 281.31 AUTOMOBILE RISK SELF-INSURERS.] (a) The following terms, for the 281.32 purposes of this subdivision, have the meanings given them. 281.33 (1) "Automobile risks" means the risk of providing no-fault 281.34 insurance under sections 65B.41 to 65B.71. 281.35 (2) "Motor vehicle" has the meaning given in section 281.36 65B.43, subdivision 2. 282.1 (3) "Person" means an owner, as defined in section 65B.43, 282.2 subdivision 4, but does not include the state or a political 282.3 subdivision as defined in section 65B.43, subdivision 20. 282.4 (4) "Self-insurance" means the condition of qualifying as a 282.5 self-insurer by complying with section 65B.48, subdivisions 3 282.6 and 3a. 282.7 (5) "Self-insurer" means a person who has arranged 282.8 self-insurance for the automobile risks associated with the 282.9 person's motor vehicle. 282.10 (b) Every self-insurer who owns, leases, or operates a 282.11 motor vehicle required to be registered or licensed in this 282.12 state or principally garaged in this state for at least two 282.13 months in the calendar year shall pay an annual amount for each 282.14 vehicle of: 282.15 (1) $15 for a private passenger vehicle as defined in 282.16 section 65B.001, subdivision 3, or a utility vehicle as defined 282.17 in section 65B.001, subdivision 4, not including a taxi; or 282.18 (2) $25 for a taxi or any other self-insured vehicle not 282.19 covered by clause (1). 282.20 (c) A self-insurer who is more than six months delinquent 282.21 in paying the amount due under this subdivision must be referred 282.22 by the commissioner to the commissioner of commerce for action. 282.23 That action may include revocation of the self-insured's 282.24 self-insurer status. 282.25 (d) The amount paid under this subdivision must be 282.26 deposited into the general fund to the credit of the account 282.27 from which the police state aid provided for in sections 69.011 282.28 to 69.051 is payable. 282.29 Subd. 9. [TAX ON PERSONS, FIRMS, OR CORPORATIONS LICENSED 282.30 TO PROCURE INSURANCE FROM UNLICENSED FOREIGN COMPANIES.] (a) A 282.31 tax is imposed on any person, firm, or corporation licensed 282.32 under section 60A.19, subdivision 8. The rate of tax is equal 282.33 to two percent of gross premiums paid in the year less return 282.34 premiums received in the year. 282.35 (b)(1) Money collected under this subdivision must be paid 282.36 to a municipality or a fire department relief association if: 283.1 (i) the money is attributable to fire, lightning, or 283.2 sprinkler insurance premiums paid by an owner to insure 283.3 property; and 283.4 (ii) the property is in a municipality that has an 283.5 organized fire department, a partly paid fire department, or a 283.6 volunteer fire department. 283.7 The money must be paid to the municipality where the insured 283.8 property is located, or to the municipality's fire department 283.9 relief association. The money to be paid includes penalties and 283.10 interest collected because a property owner failed to pay on 283.11 time the taxes due under this subdivision. 283.12 (2) This paragraph does not apply to taxes paid under this 283.13 subdivision that are attributable to premiums paid on property 283.14 if: 283.15 (i) the property is owned and occupied exclusively as a 283.16 homestead, and the owner carries insurance on the property; or 283.17 (ii) the property is exempt under section 550.37 and the 283.18 owner carries insurance on the property. 283.19 Subd. 10. [TAX ON PERSONS, FIRMS, OR CORPORATIONS 283.20 PROCURING INSURANCE FROM AN INELIGIBLE COMPANY.] (a) A tax is 283.21 imposed on each insured in this state who procures, causes to be 283.22 procured, or continues or renews insurance with an ineligible 283.23 surplus lines insurer or any self-insurer in this state who 283.24 procures or continues excess of loss, catastrophe, or other 283.25 insurance upon a subject of insurance resident, located, or to 283.26 be performed within this state, other than insurance procured 283.27 pursuant to section 60A.201 or 60A.209, subdivision 1, equal to 283.28 two percent of gross premiums less return premiums paid for such 283.29 insurance. 283.30 (b) If the insurance described in paragraph (a) also covers 283.31 a subject of insurance residing, located, or to be performed 283.32 outside this state, for the purposes of this subdivision, a 283.33 proper pro rata portion of the entire premium payable for all of 283.34 that insurance must be allocated according to the subjects of 283.35 insurance residing, located, or to be performed in this state. 283.36 (c) For the purposes of this subdivision, insurance placed 284.1 with an ineligible surplus lines insurer is considered to be 284.2 procured, continued, or renewed in this state if: 284.3 (1) it was procured through negotiations occurring in whole 284.4 or in part within or from outside this state; 284.5 (2) it was procured by an application made in whole or in 284.6 part within or from outside this state; or 284.7 (3) premiums for it are paid from within this state 284.8 directly or indirectly, in whole or in part. 284.9 Subd. 11. [RETALIATORY PROVISIONS.] (a) If any other state 284.10 or country imposes any taxes, fines, deposits, penalties, 284.11 licenses, or fees upon any insurance companies of this state and 284.12 their agents doing business in another state or country that are 284.13 in addition to or in excess of those imposed by the laws of this 284.14 state upon foreign insurance companies and their agents doing 284.15 business in this state, the same taxes, fines, deposits, 284.16 penalties, licenses, and fees are imposed upon every similar 284.17 insurance company of that state or country and their agents 284.18 doing or applying to do business in this state. 284.19 (b) If any conditions precedent to the right to do business 284.20 in any other state or country are imposed by the laws of that 284.21 state or country, beyond those imposed upon foreign companies by 284.22 the laws of this state, the same conditions precedent are 284.23 imposed upon every similar insurance company of that state or 284.24 country and their agents doing or applying to do business in 284.25 that state. 284.26 (c) For purposes of this subdivision, "taxes, fines, 284.27 deposits, penalties, licenses, or fees" means an amount of money 284.28 that is deposited in the general revenue fund of the state or 284.29 other similar fund in another state or country and is not 284.30 dedicated to a special purpose or use or money deposited in the 284.31 general revenue fund of the state or other similar fund in 284.32 another state or country and appropriated to the commissioner of 284.33 commerce or insurance for the operation of the department of 284.34 commerce or other similar agency with jurisdiction over 284.35 insurance. Taxes, fines, deposits, penalties, licenses, or fees 284.36 do not include: 285.1 (1) special purpose obligations or assessments imposed in 285.2 connection with particular kinds of insurance, including but not 285.3 limited to assessments imposed in connection with residual 285.4 market mechanisms; or 285.5 (2) assessments made by the insurance guaranty association, 285.6 life and health guarantee association, or similar association. 285.7 (d) This subdivision applies to taxes imposed under 285.8 subdivisions 1, 3, 4, 6, and 12, paragraph (a), clauses (1) and 285.9 (3). 285.10 (e) This subdivision does not apply to insurance companies 285.11 organized or domiciled in a state or country, the laws of which 285.12 do not impose retaliatory taxes, fines, deposits, penalties, 285.13 licenses, or fees or which grant, on a reciprocal basis, 285.14 exemptions from retaliatory taxes, fines, deposits, penalties, 285.15 licenses, or fees to insurance companies domiciled in this state. 285.16 Subd. 12. [OTHER ENTITIES.] (a) A tax is imposed equal to 285.17 two percent of: 285.18 (1) gross premiums less return premiums written for risks 285.19 resident or located in Minnesota by a risk retention group; 285.20 (2) gross premiums less return premiums received by an 285.21 attorney in fact acting in accordance with chapter 71A; 285.22 (3) gross premiums less return premiums received pursuant 285.23 to assigned risk policies and contracts of coverage under 285.24 chapter 79; 285.25 (4) the direct funded premium received by the reinsurance 285.26 association under section 79.34 from self-insurers approved 285.27 under section 176.181 and political subdivisions that 285.28 self-insure; 285.29 (5) gross premiums less return premiums received by a 285.30 nonprofit health service plan corporation authorized under 285.31 chapter 62C; and 285.32 (6) gross premiums less return premiums paid to an insurer 285.33 other than a licensed insurance company or a surplus lines 285.34 licensee for coverage of risks resident or located in Minnesota 285.35 by a purchasing group or any members of the purchasing group to 285.36 a broker or agent for the purchasing group. 286.1 (b) A tax is imposed on the state fund mutual insurance 286.2 company established under chapter 176A. The tax must be 286.3 computed in the same manner as mutual insurance companies under 286.4 subdivisions 1, 3, and 4. 286.5 (c) A tax is imposed on a joint self-insurance plan 286.6 operating under chapter 60F. The rate of tax is equal to two 286.7 percent of the total amount of claims paid during the fund year, 286.8 with no deduction for claims wholly or partially reimbursed 286.9 through stop-loss insurance. 286.10 (d) A tax is imposed on a joint self-insurance plan 286.11 operating under chapter 62H. The rate of tax is equal to two 286.12 percent of the total amount of claims paid during the fund's 286.13 fiscal year, with no deduction for claims wholly or partially 286.14 reimbursed through stop-loss insurance. 286.15 (e) A tax is imposed equal to the tax imposed under section 286.16 297I.05, subdivision 5, on the gross premiums less return 286.17 premiums on all coverages received by an accountable provider 286.18 network or agents of an accountable provider network in 286.19 Minnesota, in cash or otherwise, during the year. 286.20 Subd. 13. [FUNDS DEPOSITED INTO GENERAL FUND.] Unless 286.21 otherwise specified in this chapter, all amounts collected by 286.22 the commissioner under this chapter must be deposited in the 286.23 general fund. 286.24 Sec. 3. [297I.10] [SURCHARGE ON PREMIUMS TO RESTORE 286.25 DEFICIENCY IN SPECIAL FUND.] 286.26 Subdivision 1. [CITIES OF THE FIRST CLASS.] (a) The 286.27 commissioner shall order and direct a surcharge to be collected 286.28 of two percent of the fire, lightning, and sprinkler leakage 286.29 gross premiums, less return premiums, on all direct business 286.30 received by any licensed foreign or domestic fire insurance 286.31 company on property in a city of the first class, or by its 286.32 agents for it, in cash or otherwise. 286.33 (b) By July 31 and December 31 of each year the 286.34 commissioner of finance shall pay to the relief association in 286.35 each city a warrant for an amount equal to the total amount of 286.36 the surcharge on the premiums collected within the city since 287.1 the previous payment. 287.2 (c) The treasurer of the relief association shall place the 287.3 money received under this subdivision in the special fund of the 287.4 relief association. 287.5 Subd. 2. [CITY OF THE SECOND CLASS.] (a) Upon receiving 287.6 certification from a city of the second class pursuant to 287.7 section 424.165, the commissioner shall direct a surcharge to be 287.8 collected of two percent of the fire, lightning, and sprinkler 287.9 leakage gross premiums, less return premiums, on all direct 287.10 business received by any foreign or domestic fire insurance 287.11 company on property in such city of the second class, or by its 287.12 agents for it, in cash or otherwise. 287.13 (b) The board of trustees of a firefighter's relief 287.14 association of the city of the second class that has sent 287.15 certification to the commissioner under paragraph (a) must 287.16 notify the commissioner as soon as the balance in their special 287.17 fund equals $50,000. Upon receiving notice from the 287.18 association, the commissioner shall notify the insurers subject 287.19 to the surcharge that the surcharge is discontinued effective 15 287.20 days after the balance reached $50,000. 287.21 (c) By September 1 and March 1 of each year, the 287.22 commissioner of finance shall pay to the firefighter's relief 287.23 association of each city of the second class a warrant for an 287.24 amount equal to the total amount of the surcharge on the 287.25 premiums collected within the city since the previous payment. 287.26 (d) The treasurer of the firefighter's relief association 287.27 shall place the money received under this subdivision in the 287.28 special fund of the relief association. 287.29 Subd. 3. [APPROPRIATION.] The amount necessary to make the 287.30 payments required under this section is appropriated to the 287.31 commissioner of finance from the general fund. 287.32 Sec. 4. [297I.15] [EXEMPTIONS FROM TAX] 287.33 Subdivision 1. [GOVERNMENT PAYMENTS.] Premiums under 287.34 medical assistance, general assistance medical care, the 287.35 MinnesotaCare program, and the Minnesota comprehensive health 287.36 insurance plan and all payments, revenues, and reimbursements 288.1 received from the federal government for medicare-related 288.2 coverage as defined in section 62A.31, subdivision 3, are not 288.3 subject to tax under this chapter. 288.4 Subd. 2. [MINNESOTA EMPLOYEES INSURANCE PROGRAM.] To the 288.5 extent that the Minnesota employees insurance program under 288.6 section 43A.317 operates as a self-insured group, the premiums 288.7 paid to the program are exempt from the taxes imposed under this 288.8 chapter, but are subject to a Minnesota comprehensive health 288.9 association assessment under section 62E.11. 288.10 Subd. 3. [PUBLIC EMPLOYEES INSURANCE PROGRAM.] Premiums 288.11 paid to the public employees insurance program under section 288.12 43A.316 are exempt from the taxes imposed under this chapter. 288.13 Subd. 4. [PREMIUMS PAID TO HEALTH CARRIERS BY STATE.] A 288.14 health carrier as defined in section 62A.011 is exempt from the 288.15 taxes imposed under this chapter on premiums paid to it by the 288.16 state. 288.17 Subd. 5. [MINNESOTA INSURANCE GUARANTY ASSOCIATION.] The 288.18 Minnesota insurance guaranty association under chapter 60C is 288.19 exempt from the taxes imposed under this chapter. 288.20 Subd. 6. [MINNESOTA LIFE AND HEALTH GUARANTY ASSOCIATION.] 288.21 The Minnesota life and health guaranty association under chapter 288.22 61B is exempt from the taxes imposed under this chapter. 288.23 Subd. 7. [MINNESOTA COMPREHENSIVE HEALTH ASSOCIATION.] The 288.24 Minnesota comprehensive health association under chapter 62E is 288.25 exempt from the taxes imposed under this chapter. 288.26 Subd. 8. [WRITING CARRIER FOR THE COMPREHENSIVE HEALTH 288.27 INSURANCE PLAN.] Premiums received by the writing carrier for 288.28 the comprehensive health insurance plan established under 288.29 section 62E.10 are exempt from the taxes imposed under this 288.30 chapter. 288.31 Subd. 9. [HEALTH COVERAGE REINSURANCE ASSOCIATION.] The 288.32 health coverage reinsurance association under chapter 62L is 288.33 exempt from the taxes imposed under this chapter. 288.34 Subd. 10. [PREMIUMS PAID TO FRATERNAL BENEFITS SOCIETIES.] 288.35 Premiums paid to fraternal benefits societies pursuant to 288.36 chapter 64B are exempt from the taxes imposed under this chapter. 289.1 Sec. 5. [297I.20] [GUARANTY ASSOCIATION ASSESSMENT 289.2 OFFSET.] 289.3 (a) An insurance company may offset against its premium tax 289.4 liability to this state any amount paid for assessments made for 289.5 insolvencies which occur after July 31, 1994, under sections 289.6 60C.01 to 60C.22, and any amount paid for assessments made after 289.7 July 31, 1994, under Minnesota Statutes 1992, sections 61B.01 to 289.8 61B.16, or 61B.18 to 61B.32 as follows: 289.9 (1) Each such assessment shall give rise to an amount of 289.10 offset equal to 20 percent of the amount of the assessment for 289.11 each of the five calendar years following the year in which the 289.12 assessment was paid. 289.13 (2) The amount of offset initially determined for each 289.14 taxable year is the sum of the amounts determined under clause 289.15 (1) for that taxable year. 289.16 (b)(1) Each year the commissioner shall compare total 289.17 guaranty association assessments levied over the preceding five 289.18 calendar years to the sum of all premium tax and corporate 289.19 franchise tax revenues collected from insurance companies, 289.20 without reduction for any guaranty association assessment offset 289.21 in the preceding calendar year, referred to in this subdivision 289.22 as "preceding year insurance tax revenues." 289.23 (2) If total guaranty association assessments levied over 289.24 the preceding five years exceed the preceding year insurance tax 289.25 revenues, insurance companies must be allowed only a 289.26 proportionate part of the premium tax offset calculated under 289.27 paragraph (a) for the current calendar year. 289.28 (3) The proportionate part of the premium tax offset 289.29 allowed in the current calendar year is determined by 289.30 multiplying the amount calculated under paragraph (a) by a 289.31 fraction. The numerator of the fraction equals the preceding 289.32 year insurance tax revenues, and its denominator equals total 289.33 guaranty association assessments levied over the preceding 289.34 five-year period. 289.35 (4) The proportionate part of the premium tax offset that 289.36 is not allowed must be carried forward to subsequent tax years 290.1 and added to the amount of premium tax offset calculated under 290.2 paragraph (a) prior to application of the limitation imposed by 290.3 this paragraph. 290.4 (5) Any amount carried forward from prior years must be 290.5 allowed before allowance of the offset for the current year 290.6 calculated under paragraph (a). 290.7 (6) The premium tax offset limitation must be calculated 290.8 separately for (i) insurance companies subject to assessment 290.9 under sections 60C.01 to 60C.22, and (ii) insurance companies 290.10 subject to assessment under Minnesota Statutes 1992, sections 290.11 61B.01 to 61B.16, or 61B.18 to 61B.32. 290.12 (7) When the premium tax offset is limited by this 290.13 provision, the commissioner shall notify affected insurance 290.14 companies on a timely basis for purposes of completing premium 290.15 and corporate franchise tax returns. 290.16 (8) The guaranty associations created under sections 60C.01 290.17 to 60C.22, Minnesota Statutes 1992, sections 61B.01 to 61B.16, 290.18 and 61B.18 to 61B.32, shall provide the commissioner with the 290.19 necessary information on guaranty association assessments. 290.20 (c)(1) If the offset determined by the application of 290.21 paragraphs (a) and (b) exceeds the greater of the insurance 290.22 company's premium tax liability under this section or its 290.23 corporate franchise tax liability under chapter 290 prior to 290.24 allowance of the credit for premium taxes, then the insurance 290.25 company may carry forward the excess, referred to in this 290.26 subdivision as the "carryforward credit" to subsequent taxable 290.27 years. 290.28 (2) The carryforward credit is allowed as an offset against 290.29 premium tax liability for the first succeeding year to the 290.30 extent that the premium tax liability for that year exceeds the 290.31 amount of the allowable offset for the year determined under 290.32 paragraphs (a) and (b). 290.33 (3) The carryforward credit must be reduced, but not below 290.34 zero, by the greater of the amount of the carryforward credit 290.35 allowed as an offset against the premium tax under this 290.36 paragraph or the amount of the carryforward credit allowed as an 291.1 offset against the insurance company's corporate franchise tax 291.2 liability under section 290.35, subdivision 6, paragraph (d). 291.3 The remainder, if any, of the carryforward credit must be 291.4 carried forward to succeeding taxable years until the entire 291.5 carryforward credit has been credited against the insurance 291.6 company's liability for premium tax under this chapter and 291.7 corporate franchise tax under chapter 290 if applicable for that 291.8 taxable year. 291.9 (d) When an insurer has offset against taxes its payment of 291.10 an assessment of the Minnesota life and health guaranty 291.11 association, and the association pays the insurer a refund with 291.12 respect to the assessment under Minnesota Statutes 1992, section 291.13 61B.07, subdivision 6, or 61B.24, subdivision 6, then the refund 291.14 reduces the insurer's carryforward credit under paragraph (c). 291.15 If the refund exceeds the amount of the carryforward credit, the 291.16 excess amount must be repaid to the state by the insurers to the 291.17 extent of the offset in the manner the commissioner requires. 291.18 Sec. 6. [297I.25] [INFORMATION RETURNS.] 291.19 Subdivision 1. [LICENSED BROKERS OR AGENTS OF RISK 291.20 RETENTION GROUPS.] To the extent licensed agents or brokers are 291.21 utilized in accordance with section 60E.12, they shall report to 291.22 the commissioner the premiums received for direct business for 291.23 risks resident or located within this state which the licensees 291.24 have placed with or on behalf of a risk retention group not 291.25 chartered in this state. 291.26 Subd. 2. [FIRETOWN AND POLICE PREMIUM REPORTS.] To the 291.27 extent required by section 69.021, each insurer shall file with 291.28 the commissioner a Minnesota firetown premium report and 291.29 Minnesota aid to police premium report. 291.30 Sec. 7. [297I.30] [DUE DATES FOR FILING RETURNS.] 291.31 Subdivision 1. [GENERAL RULE.] On or before March 1, every 291.32 insurer subject to taxation under section 297I.05, subdivisions 291.33 1 to 6, and 12, paragraphs (a), clauses (1) to (5), (b), and 291.34 (e), shall file an annual return for the preceding calendar year 291.35 setting forth such information as the commissioner may 291.36 reasonably require on forms prescribed by the commissioner. 292.1 Subd. 2. [SURPLUS LINES LICENSEES AND PURCHASING 292.2 GROUPS.] On or before February 15 and August 15 of each year, 292.3 every surplus lines licensee subject to taxation under section 292.4 297I.05, subdivision 7, and every purchasing group or member of 292.5 a purchasing group subject to tax under section 297I.05, 292.6 subdivision 12, paragraph (a), clause (6), shall file a return 292.7 with the commissioner for the preceding six-month period ending 292.8 December 31, or June 30, setting forth any information the 292.9 commissioner reasonably prescribes on forms prescribed by the 292.10 commissioner. 292.11 Subd. 3. [AUTOMOBILE RISK SELF-INSURERS.] On or before 292.12 July 1 of each year, every self-insurer subject to taxation 292.13 under section 297I.05, subdivision 8, shall file a return with 292.14 the commissioner for the preceding calendar year setting forth 292.15 any information the commissioner reasonably requires on forms 292.16 prescribed by the commissioner. 292.17 Subd. 4. [PERSONS, FIRMS, OR CORPORATIONS LICENSED TO 292.18 PROCURE INSURANCE FROM UNLICENSED FOREIGN COMPANIES.] On or 292.19 before 30 days following the expiration date of a license issued 292.20 under section 297I.05, subdivision 9, a person, firm, or 292.21 corporation licensed to obtain insurance from a company not 292.22 authorized to do business in Minnesota shall file a return with 292.23 the commissioner for the preceding 12-month period setting forth 292.24 any information the commissioner reasonably requires on forms 292.25 prescribed by the commissioner. 292.26 Subd. 5. [JOINT SELF-INSURANCE PLANS.] On or before 60 292.27 days following the conclusion of their fiscal year, a plan 292.28 subject to tax under 297I.05, subdivision 12, paragraph (c) or 292.29 (d), shall file a return with the commissioner for the preceding 292.30 fiscal year setting forth any information the commissioner 292.31 reasonably requires on forms prescribed by the commissioner. 292.32 Subd. 6. [PERSONS, FIRMS, OR CORPORATIONS PROCURING 292.33 INSURANCE FROM AN UNLICENSED FOREIGN COMPANY.] Within 30 days 292.34 after the date the insurance was procured, continued, or 292.35 renewed, a taxpayer required to pay the tax under section 292.36 297I.05, subdivision 10, shall file a return setting forth any 293.1 information the commissioner reasonably requires on forms 293.2 prescribed by the commissioner. 293.3 Subd. 7. [SURCHARGE.] (a)(1) By April 30 of each year, 293.4 every company required to pay the surcharge under section 293.5 297I.10, subdivision 1, shall file a return for the five-month 293.6 period ending March 31 setting forth any information the 293.7 commissioner reasonably requires on forms prescribed by the 293.8 commissioner. 293.9 (2) By June 30 of each year, every company required to pay 293.10 the surcharge under section 297I.10, subdivision 1, shall file a 293.11 return for the two-month period ending May 31 setting forth any 293.12 information the commissioner reasonably requires on forms 293.13 prescribed by the commissioner. 293.14 (3) By November 30 of each year, every company required to 293.15 pay the surcharge under section 297I.10, subdivision 1, shall 293.16 file a return for the five-month period ending October 31 293.17 setting forth any information the commissioner reasonably 293.18 requires on forms prescribed by the commissioner. 293.19 (b) By February 15 and August 15 of each year, every 293.20 company required to pay a surcharge under section 297I.10, 293.21 subdivision 2, must file a return for the preceding six-month 293.22 period ending December 31 and June 30. 293.23 Sec. 8. [297I.35] [PAYMENT OF TAX.] 293.24 Subdivision 1. [GENERAL RULE.] All taxes and surcharges 293.25 imposed under this chapter must be paid to the commissioner by 293.26 the date that the return must be filed under section 297I.30. 293.27 Subd. 2. [ELECTRONIC FUNDS TRANSFER.] If the aggregate 293.28 amount of tax and surcharges due under this chapter during a 293.29 calendar year is equal to or exceeds $120,000, or if the 293.30 taxpayer is required to make payment of any other tax to the 293.31 commissioner by means of electronic funds transfer as defined in 293.32 section 336.4A-104, paragraph (a), then all tax and surcharge 293.33 payments in the subsequent calendar year must be paid by means 293.34 of a funds transfer as defined in section 336.4A-104, paragraph 293.35 (a). The funds transfer payment date, as defined in section 293.36 336.4A-104, must be on or before the date the payment is due. 294.1 If the date the payment is due is not a funds transfer business 294.2 day, as defined in section 336.4A-105, paragraph (a), clause 294.3 (4), the payment date must be on or before the funds transfer 294.4 business day next following the date the payment is due. 294.5 Sec. 9. [297I.40] [ESTIMATED TAX.] 294.6 Subdivision 1. [REQUIREMENT TO PAY.] On or before April 1, 294.7 June 1, and December 1 of each year, every taxpayer subject to 294.8 tax under section 297I.05, subdivisions 1 to 6, and 12, 294.9 paragraphs (a), clauses (1) to (5), (b), and (e), must pay to 294.10 the commissioner an installment equal to one-third of the 294.11 insurer's total estimated tax for the current year. 294.12 Subd. 2. [AMOUNT OF REQUIRED INSTALLMENT.] The amount of 294.13 any required installment is one-third of the lesser of 294.14 (1) 80 percent of the tax imposed for the current year, or 294.15 (2) 100 percent of the tax paid for the previous year. 294.16 Subd. 3. [NO ADDITION TO TAX WHERE THE TAX IS SMALL.] No 294.17 addition to tax is imposed if the total tax for the current tax 294.18 year is $500 or less. 294.19 Subd. 4. [ADDITION TO TAX.] (a) In case of any 294.20 underpayment of installments by an insurer, there is added to, 294.21 and collected as part of, the tax for the taxable year an amount 294.22 determined at the rate specified in section 270.75 upon the 294.23 amount of underpayment. 294.24 (b) The amount of the underpayment is the excess of: (1) 294.25 the amount of the installment; over (2) the amount, if any, of 294.26 the installment paid on or before the last date prescribed for 294.27 payment. 294.28 (c) The period of the underpayment runs from the date the 294.29 installment was required to be paid to the earlier of: 294.30 (1) March 1 of the year following the close of the taxable 294.31 year; or 294.32 (2) with respect to any portion of the underpayment, the 294.33 date on which that portion is paid. For purposes of this 294.34 clause, a payment of estimated tax on any installment date is 294.35 considered a payment of any previous underpayment only to the 294.36 extent the payment exceeds the amount of the installment 295.1 required to be made on that date. 295.2 Subd. 5. [DEFINITION OF TAX.] The term "tax" as used in 295.3 this section means the tax imposed by section 297I.05, 295.4 subdivisions 1 to 6, and 12, paragraphs (a), clauses (1) to (5), 295.5 (b), and (e), without regard to the retaliatory provisions of 295.6 section 297I.05, subdivision 11, and the offset in section 295.7 297I.20. 295.8 Subd. 6. [FAILURE TO PAY ESTIMATED TAX.] When an insurer 295.9 does not make any payments, the period of the underpayment runs 295.10 from the three installment dates set forth in subdivision 1 to 295.11 whichever of the periods in subdivision 4, paragraph (c), is the 295.12 earlier. 295.13 Subd. 7. [APRIL ESTIMATED PAYMENT.] A taxpayer who claims 295.14 a refund of an overpayment on an original return may elect to 295.15 have all or any portion of the overpayment applied as a credit 295.16 to the April 1 estimated tax payment for the year following the 295.17 year of the return. The credit is considered applied on April 295.18 1. Notwithstanding section 297I.80, the amount credited does 295.19 not bear interest. 295.20 Sec. 10. [297I.45] [ASSESSMENTS.] 295.21 The commissioner shall make determinations, corrections, 295.22 and assessments with respect to taxes and surcharges, including 295.23 interest, additions to tax, and penalties. To determine the 295.24 accuracy of a return, or in fixing liability for a tax or 295.25 surcharge, the commissioner may make reasonable examinations or 295.26 investigations of the taxpayer's records and accounts. If a 295.27 taxpayer fails to file a required return, the commissioner, from 295.28 information in the commissioner's possession or obtainable by 295.29 the commissioner, may make a return for the taxpayer. 295.30 Sec. 11. [297I.50] [ORDER OF ASSESSMENT.] 295.31 Subdivision 1. [ORDER OF ASSESSMENT; NOTICE AND DEMAND TO 295.32 TAXPAYER.] (a) When a return has been filed and the commissioner 295.33 determines that the tax or surcharge disclosed by the return is 295.34 different than the tax or surcharge determined by the 295.35 examination, the commissioner shall send an order of assessment 295.36 to the taxpayer. When no return has been filed, the 296.1 commissioner may make a return for the taxpayer under section 296.2 297I.45 or may send an order of assessment under this 296.3 subdivision. The order must explain the basis for the 296.4 assessment and must explain the taxpayer's appeal rights. An 296.5 order of assessment is final when made but may be reconsidered 296.6 by the commissioner under section 297I.95. 296.7 (b) If a tax payment meets the requirements of this 296.8 paragraph, the penalty under section 297I.85, subdivision 2, is 296.9 not imposed, and the commissioner may not take any collection 296.10 action, including the filing of liens under section 270.69. 296.11 To meet the requirements, the taxpayer must first file a 296.12 return for the tax or surcharge type on which the order is based 296.13 and then pay the amount shown on the order within the following 296.14 time limits: 296.15 (1) If the taxpayer files an administrative appeal under 296.16 section 297I.95 or a tax court appeal under chapter 271, and if 296.17 the appeal is based on a constitutional challenge to the tax, 296.18 the payment must be made within 60 days after final 296.19 determination of the appeal. 296.20 (2) If the appeal is not based on a constitutional 296.21 challenge, the payment must be made when the decision of the tax 296.22 court is made. 296.23 (3) If the taxpayer does not file an appeal, the payment 296.24 must be made within 60 days after the date the order is mailed 296.25 to the taxpayer by the commissioner. 296.26 Subd. 2. [ERRONEOUS REFUNDS.] An erroneous refund is 296.27 considered an underpayment of tax or surcharge on the date 296.28 made. An assessment of a deficiency arising out of an erroneous 296.29 refund may be made at any time within two years from the making 296.30 of the refund. If part of the refund was induced by fraud or 296.31 misrepresentation of a material fact, the assessment may be made 296.32 at any time. 296.33 Subd. 3. [ASSESSMENT PRESUMED VALID.] A return or 296.34 assessment of tax or surcharge made by the commissioner is prima 296.35 facie correct and valid. The taxpayer has the burden of 296.36 establishing its incorrectness or invalidity in any related 297.1 action or proceeding. 297.2 Subd. 4. [AGGREGATE REFUND OR ASSESSMENT.] The 297.3 commissioner, on examining returns of a taxpayer for more than 297.4 one year or period, may issue one order covering the period 297.5 under examination that reflects the aggregate refund or 297.6 additional tax or surcharge due. 297.7 Subd. 5. [SUFFICIENCY OF NOTICE.] An order of assessment, 297.8 sent postage prepaid by United States mail to the taxpayer at 297.9 the taxpayer's last known address, is sufficient even if a 297.10 corporation has terminated its existence, unless the department 297.11 has been provided with a new address by a party authorized to 297.12 received notices of assessment. 297.13 Sec. 12. [297I.55] [EXAMINATIONS; AUDITS AND COLLECTIONS.] 297.14 Subdivision 1. [EXAMINATION OF TAXPAYER.] To determine the 297.15 accuracy of a return or report, or in fixing liability under 297.16 this chapter, or for the purpose of collection, the commissioner 297.17 may make reasonable examinations or investigations of a 297.18 taxpayer's place of business; tangible personal property; 297.19 equipment, computer systems and facilities; and pertinent books, 297.20 records, papers, vouchers, computer printouts, accounts, and 297.21 documents. 297.22 Subd. 2. [ACCESS TO RECORDS OF OTHER PERSONS IN CONNECTION 297.23 WITH EXAMINATION OF TAXPAYER.] When conducting an investigation 297.24 or an audit of a taxpayer, or for the purpose of collection, the 297.25 commissioner may, except where privileged by law, examine the 297.26 relevant records and files of any state agency as well as any 297.27 person, business, institution, financial institution, agency of 297.28 the United States government, or agency of any other state where 297.29 permitted by statute, agreement, or reciprocity. The 297.30 commissioner may compel production of these records by subpoena. 297.31 A subpoena may be served directly by the commissioner. 297.32 Subd. 3. [POWER TO COMPEL TESTIMONY.] In the 297.33 administration of this chapter, the commissioner may: 297.34 (1) administer oaths or affirmations and compel by subpoena 297.35 the attendance of witnesses, testimony, and the production of a 297.36 person's pertinent books, records, papers, or other data for 298.1 inspection and copying; and 298.2 (2) examine under oath or affirmation any person regarding 298.3 the business of any taxpayer concerning any relevant matter 298.4 incident to the administration of this chapter. The fees of 298.5 witnesses required by the commissioner to attend a hearing are 298.6 equal to those allowed to witnesses appearing before courts of 298.7 this state. The fees must be paid in the manner provided for 298.8 the payment of other expenses incident to the administration of 298.9 state tax law. 298.10 Subd. 4. [THIRD-PARTY SUBPOENA WHERE TAXPAYER'S IDENTITY 298.11 IS KNOWN.] An investigation may extend to a person that the 298.12 commissioner determines has access to information that may be 298.13 relevant to the examination or investigation. When a subpoena 298.14 requiring the production of records as described in subdivision 298.15 2 is served on a third-party recordkeeper, written notice of the 298.16 subpoena must be mailed to the taxpayer and to any other person 298.17 who is identified in the subpoena. The notices must be given 298.18 within three days of the day on which the subpoena is served. 298.19 Notice to the taxpayer required by this section is sufficient if 298.20 it is mailed to the last address on record with the commissioner. 298.21 The provisions of this subdivision relating to notice to 298.22 the taxpayer or other parties identified in the subpoena do not 298.23 apply if there is reasonable cause to believe that the giving of 298.24 notice may lead to attempts to conceal, destroy, or alter 298.25 records or assets relevant to the examination, to prevent the 298.26 communication of information from other persons through 298.27 intimidation, bribery, or collusion, or to flee to avoid 298.28 prosecution, testifying, or production of records. 298.29 Subd. 5. [THIRD-PARTY SUBPOENA WHERE TAXPAYER'S IDENTITY 298.30 IS NOT KNOWN.] A subpoena that does not identify the person or 298.31 persons whose tax or surcharge liability is being investigated 298.32 may be served only if: 298.33 (1) the subpoena relates to the investigation of a 298.34 particular person or ascertainable group or class of persons; 298.35 (2) there is a reasonable basis for believing that the 298.36 person or group or class of persons may fail or may have failed 299.1 to comply with laws administered by the commissioner; 299.2 (3) the information sought to be obtained from the 299.3 examination of the records, and the identity of the person or 299.4 persons with respect to whose liability the subpoena is issued, 299.5 is not readily available from other sources; 299.6 (4) the subpoena is clear and specific concerning the 299.7 information sought to be obtained; and 299.8 (5) the information sought to be obtained is limited solely 299.9 to the scope of the investigation. 299.10 When a subpoena does not identify the person or persons 299.11 with respect to whose tax or surcharge liability the subpoena is 299.12 issued, the party served with the subpoena may petition for a 299.13 determination concerning whether the commissioner has complied 299.14 with clauses (1) to (5) and thus whether the subpoena is 299.15 enforceable. The petitions must be to the district court in 299.16 which the party is located. The petition must be filed within 299.17 20 days after service of the subpoena. If the party served does 299.18 not petition within the time prescribed, the subpoena has the 299.19 effect of a court order. 299.20 Subd. 6. [REQUEST BY TAXPAYER FOR SUBPOENA.] When the 299.21 commissioner has the power to issue a subpoena for investigative 299.22 or auditing purposes, the commissioner shall honor a reasonable 299.23 request by the taxpayer to issue a subpoena on the taxpayer's 299.24 behalf, if in connection with the investigation or audit. 299.25 Subd. 7. [APPLICATION TO COURT FOR ENFORCEMENT OF 299.26 SUBPOENA.] Disobedience of subpoenas issued under this section 299.27 is punishable by the district court of the district in which the 299.28 party served with the subpoena is located, in the same manner as 299.29 contempt of the district court. 299.30 Subd. 8. [COST OF PRODUCTION OF RECORDS.] The cost of 299.31 producing records of a third party required by a subpoena must 299.32 be paid by the taxpayer, if the taxpayer requests the subpoena 299.33 to be issued, or if the taxpayer has the records available but 299.34 has refused to provide them to the commissioner. In other cases 299.35 where the taxpayer cannot produce records and the commissioner 299.36 then initiates a subpoena for third-party records, the 300.1 commissioner shall pay the reasonable cost of producing the 300.2 records. The commissioner may later assess the reasonable costs 300.3 against the taxpayer if the records contribute to the 300.4 determination of an assessment of tax or surcharge against the 300.5 taxpayer. 300.6 Sec. 13. [297I.60] [CLAIMS FOR REFUND.] 300.7 Subdivision 1. [GENERAL RIGHT TO REFUND.] (a) Subject to 300.8 the requirements of this section and section 297I.70, if a 300.9 taxpayer has paid a tax or surcharge in excess of the amount due 300.10 and files a written claim for refund, the commissioner shall 300.11 refund or credit the overpayment determined by the commissioner 300.12 to be erroneously paid. 300.13 (b) The claim must specify the name of the taxpayer, the 300.14 date when and the period for which the tax or surcharge was 300.15 paid, the kind of tax or surcharge paid, the amount that the 300.16 taxpayer claims was erroneously paid, the grounds on which a 300.17 refund is claimed, and other information relative to the payment. 300.18 The claim must be in the form required by the commissioner. A 300.19 return or amended return claiming an overpayment constitutes a 300.20 claim for refund. 300.21 (c) The commissioner shall determine the amount of refund, 300.22 if any, that is due, and notify the taxpayer of the 300.23 determination as soon as practicable after a claim has been 300.24 filed. Notice must be mailed to the taxpayer at the address 300.25 stated upon the return or claim for refund. 300.26 (d) If the amount of tax or surcharge paid by the taxpayer 300.27 exceeds the amount of tax or surcharge imposed on the taxpayer, 300.28 the amount of excess is considered an overpayment even if in 300.29 fact there was no liability with respect to which the amount was 300.30 paid. 300.31 (e) When in the course of an examination and within the 300.32 time for requesting a refund, the commissioner determines that 300.33 there has been an overpayment of tax or surcharge, the 300.34 commissioner shall refund or credit the amount of the 300.35 overpayment to the taxpayer and no return is necessary. 300.36 (f) Notwithstanding any law to the contrary, the 301.1 commissioner is not required to refund or credit any overpayment 301.2 of less than one dollar. 301.3 (g) There is appropriated to the commissioner the amounts 301.4 necessary to make refunds required by this section. The funds 301.5 are appropriated from the same fund to which the tax or 301.6 surcharge being refunded was originally deposited. 301.7 Subd. 2. [REMEDIES.] (a) If the taxpayer is notified that 301.8 the refund claim is denied in whole or in part, the taxpayer may 301.9 contest the denial by: 301.10 (1) filing an administrative appeal with the commissioner 301.11 under section 297I.95; 301.12 (2) filing an appeal in tax court within 60 days of the 301.13 date of the notice of denial; or 301.14 (3) filing an action in the district court to recover the 301.15 refund. 301.16 (b) An action in the district court must be brought with 18 301.17 months following the date of the notice of denial. An action 301.18 for refund of tax or surcharge must be brought in the district 301.19 court of the district in which lies the taxpayer's principal 301.20 place of business or in the district court for Ramsey county. 301.21 If a taxpayer files a claim for refund and the commissioner has 301.22 not issued a denial of the claim, the taxpayer may bring an 301.23 action in the district court or the tax court at any time after 301.24 the expiration of six months of the time the claim was filed. 301.25 Sec. 14. [297I.65] [LIMITATIONS OF TIME FOR ASSESSMENT OF 301.26 TAX.] 301.27 Subdivision 1. [GENERAL RULE.] Except as otherwise 301.28 provided, the amount of taxes or surcharges assessable must be 301.29 assessed within three and one-half years after the date the 301.30 return is filed. 301.31 Subd. 2. [FILING DATE.] For purposes of this section, a 301.32 return filed before the last day prescribed by law for filing 301.33 the return is considered to be filed on the last day. 301.34 Subd. 3. [FALSE OR FRAUDULENT RETURN.] Notwithstanding the 301.35 limitation under subdivision 1, the tax or surcharge may be 301.36 assessed at any time if a false or fraudulent return is filed or 302.1 when a taxpayer fails to file a return. 302.2 Sec. 15. [297I.70] [LIMITATION ON CLAIMS FOR REFUND.] 302.3 Except as provided in section 297I.75, a claim for refund 302.4 of an overpayment must be filed within 3-1/2 years from the date 302.5 prescribed for filing the return, or one year from the date of 302.6 an order assessing tax or surcharge, or one year from the date 302.7 of a return filed by the commissioner, upon payment in full of 302.8 the tax, surcharge, penalties, and interest shown on the order 302.9 or return made by the commissioner, whichever period expires 302.10 later. Claims for refund filed after the 3-1/2-year period but 302.11 within the one-year period are limited to the amount of tax, 302.12 surcharge, penalties, and interest on the order or return made 302.13 by the commissioner and to issues determined by the order or 302.14 return made by the commissioner. 302.15 Sec. 16. [297I.75] [CONSENT TO EXTEND TIME.] 302.16 If before the expiration of the time prescribed in sections 302.17 297I.65 and 297I.70 for the assessment of tax or surcharge or 302.18 the filing of a claim for refund, the commissioner and the 302.19 taxpayer have consented in writing to the assessment or filing 302.20 of a claim for refund after that time, the tax or surcharge may 302.21 be assessed at any time before the expiration of the agreed-upon 302.22 period and a claim for refund may be paid at any time before the 302.23 expiration of the agreed-upon period plus six months. The 302.24 period may be extended by later agreements in writing before the 302.25 expiration of the period previously agreed upon. 302.26 Sec. 17. [297I.80] [INTEREST.] 302.27 Subdivision 1. [PAYABLE TO THE COMMISSIONER.] (a) When 302.28 interest is required under this section, interest is computed at 302.29 the rate specified in section 270.75. 302.30 (b) If a tax or surcharge is not paid within the time named 302.31 by law for payment, the unpaid tax or surcharge bears interest 302.32 from the date the tax or surcharge should have been paid until 302.33 the date the tax or surcharge is paid. 302.34 (c) Whenever a taxpayer is liable for additional tax or 302.35 surcharge because of a redetermination by the commissioner or 302.36 other reason, the additional tax or surcharge bears interest 303.1 from the time the tax or surcharge should have been paid until 303.2 the date the tax or surcharge is paid. 303.3 (d) A penalty bears interest from the date the return or 303.4 payment was required to be filed or paid to the date of payment 303.5 of the penalty. 303.6 Subd. 2. [ON OVERPAYMENTS.] (a) When interest is required 303.7 under this section, interest is computed at the rate specified 303.8 in section 270.76. 303.9 (b) Interest on an overpayment is computed from the date of 303.10 the payment of the tax or surcharge until the date the refund is 303.11 made. For purposes of this subdivision, any payment made before 303.12 the last day prescribed by law to make the payment, including 303.13 any estimated tax payments, is considered paid on the last day 303.14 prescribed by law for the payment. A return filed before the 303.15 due date is considered as filed on the due date. 303.16 Sec. 18. [297I.85] [CIVIL PENALTIES.] 303.17 Subdivision 1. [LATE FILING PENALTY.] If a taxpayer fails 303.18 to file a return within the time prescribed, a penalty of five 303.19 percent of the amount of tax or surcharge not timely paid is 303.20 added to the tax or surcharge. 303.21 Subd. 2. [LATE PAYMENT PENALTY.] If a taxpayer fails to 303.22 pay a tax or surcharge within the time specified for payment a 303.23 penalty must be added to the amount required to be shown as tax 303.24 or surcharge. The penalty is five percent of the tax or 303.25 surcharge not paid on or before the date specified for payment 303.26 of the tax or surcharge if the failure is for not more than 30 303.27 days, with an additional penalty of five percent of the amount 303.28 of tax or surcharge remaining unpaid during each additional 30 303.29 days or fraction of 30 days during which the failure continues, 303.30 not exceeding 15 percent in the aggregate. 303.31 Subd. 3. [INTENT TO EVADE.] If a taxpayer, with intent to 303.32 evade the tax or surcharge imposed by this chapter fails to file 303.33 any return required by this chapter, or with such intent files a 303.34 false or fraudulent return, a penalty is imposed on the 303.35 taxpayer. The penalty is equal to 50 percent of the tax or 303.36 surcharge, less amounts paid by the taxpayer on the basis of the 304.1 false or fraudulent return and is due for the period to which 304.2 the return related. 304.3 Subd. 4. [NEGLIGENCE OR INTENTIONAL DISREGARD; 304.4 PENALTY.] If any part of an additional assessment is due to 304.5 negligence or intentional disregard of the statute or a rule but 304.6 without intent to defraud, there is added to the tax or 304.7 surcharge a penalty equal to ten percent of the additional 304.8 assessment. 304.9 Subd. 5. [PAYMENT OF PENALTIES.] The penalties imposed by 304.10 this section must be collected and paid in the same manner as 304.11 taxes. 304.12 Subd. 6. [PENALTIES ARE ADDITIONAL.] The civil penalties 304.13 imposed by this section are in addition to the criminal 304.14 penalties imposed by this chapter. 304.15 Subd. 7. [PENALTY FOR FAILURE TO MAKE PAYMENT BY 304.16 ELECTRONIC FUNDS TRANSFER.] In addition to other applicable 304.17 penalties imposed by this section, if the commissioner notifies 304.18 the taxpayer that payments are required to be made by means of 304.19 electronic funds transfer, and the payments are made by some 304.20 other means, a penalty is imposed. The amount of the penalty is 304.21 equal to five percent of each payment that should have been paid 304.22 electronically. The penalty may be abated under the abatement 304.23 procedures prescribed in section 270.07, subdivision 6, if the 304.24 failure to pay electronically is due to reasonable cause. 304.25 Sec. 19. [297I.90] [CRIMINAL PENALTIES.] 304.26 Subdivision 1. [PENALTIES FOR KNOWING FAILURE TO FILE OR 304.27 PAY; WILLFUL EVASION.] (a) If a person is required to file with 304.28 the commissioner a return, report, or other document, and that 304.29 person fails to file it when required and does so knowingly, 304.30 rather than accidentally, inadvertently, or negligently, that 304.31 person is guilty of a gross misdemeanor. 304.32 (b) If a person is required to file with the commissioner a 304.33 return, report, or other document, and that person willfully 304.34 attempts in any manner to evade or defeat a tax or surcharge by 304.35 failing to file it when required, that person is guilty of a 304.36 felony. 305.1 (c) If a person is required to pay or to collect and remit 305.2 a tax or surcharge, and that person knowingly, rather than 305.3 accidentally, inadvertently, or negligently fails to do so when 305.4 required, that person is guilty of a gross misdemeanor. 305.5 (d) If a person is required to pay or to collect and remit 305.6 a tax or surcharge, and that person willfully attempts to evade 305.7 or defeat a tax or surcharge by failing to do so when required, 305.8 that person is guilty of a felony. 305.9 Subd. 2. [FALSE OR FRAUDULENT RETURNS; PENALTIES.] (a) A 305.10 person who files with the commissioner a return, report, or 305.11 other document known by the person to be fraudulent or false 305.12 concerning a material matter is guilty of a felony. 305.13 (b) A person who knowingly aids or assists in, or advises 305.14 in the preparation or presentation of a return, report, or other 305.15 document that is fraudulent or false concerning a material 305.16 matter, whether or not the falsity or fraud committed is with 305.17 the knowledge or consent of the person authorized or required to 305.18 present the return, report, or other document, is guilty of a 305.19 felony. 305.20 Sec. 20. [297I.95] [ADMINISTRATIVE APPEALS.] 305.21 Subdivision 1. [TAXPAYER RIGHT TO RECONSIDERATION.] A 305.22 taxpayer may obtain the commissioner's reconsideration of an 305.23 order assessing tax or surcharge, a denial of a request for 305.24 abatement of penalty or interest, or a denial of a claim for 305.25 refund by filing an administrative appeal under subdivision 4. 305.26 No reconsideration is allowed under this section if the action 305.27 taken by the commissioner is the outcome of an administrative 305.28 appeal. 305.29 Subd. 2. [APPEAL BY TAXPAYER.] A taxpayer who wishes to 305.30 seek administrative review must follow the procedures in 305.31 subdivision 4. 305.32 Subd. 3. [NOTICE DATE.] For purposes of this section, the 305.33 term "notice date" means the date of the order adjusting the tax 305.34 or surcharge or order denying a request for abatement, or, in 305.35 the case of a denied refund, the date of the notice of denial. 305.36 Subd. 4. [TIME AND CONTENT FOR ADMINISTRATIVE 306.1 APPEAL.] Within 60 days after the notice date, the taxpayer must 306.2 file a written appeal with the commissioner. The appeal need 306.3 not be in any particular form but must contain the following 306.4 information: 306.5 (1) name and address of the taxpayer; 306.6 (2) if a corporation, the state of incorporation of the 306.7 taxpayer, and the principal place of business of the 306.8 corporation; 306.9 (3) the Minnesota identification number or social security 306.10 number of the taxpayer; 306.11 (4) the type of tax or surcharge involved; 306.12 (5) the date; 306.13 (6) the tax years or periods involved and the amount of tax 306.14 or surcharge involved for each year or period; 306.15 (7) the findings in the notice that the taxpayer disputes; 306.16 (8) a summary statement that the taxpayer relies on for 306.17 each exception; and 306.18 (9) the taxpayer's signature or signature of the taxpayer's 306.19 duly authorized agent. 306.20 Subd. 5. [EXTENSIONS.] When requested in writing and 306.21 within the time allowed for filing an administrative appeal, the 306.22 commissioner may extend the time for filing an appeal for a 306.23 period not more than 30 days after the expiration of the 60 days 306.24 after the notice date. 306.25 Subd. 6. [DETERMINATION OF APPEAL.] Based on applicable 306.26 law and available information, the commissioner shall determine 306.27 whether the appeal is valid. The commissioner shall find the 306.28 appeal valid in whole, valid in part, or invalid, and shall 306.29 notify the taxpayer of the decision. This notice must be in 306.30 writing and must state the reasons for the determination. 306.31 Subd. 7. [AGREEMENT DETERMINING TAX LIABILITY.] When it 306.32 appears to be in the best interests of the state, the 306.33 commissioner may settle any taxes, surcharges, penalties, or 306.34 interest that the commissioner has under consideration by virtue 306.35 of an appeal filed under this section. An agreement must be in 306.36 writing and signed by the commissioner and the taxpayer, or by 307.1 the taxpayer's representative authorized by the taxpayer to 307.2 enter into an agreement. The agreement is final and, except 307.3 upon a showing of fraud, malfeasance, or misrepresentation of a 307.4 material fact, the case must not be reopened as to the matters 307.5 agreed upon. 307.6 Subd. 8. [APPEAL OF AN ADMINISTRATIVE DETERMINATION.] 307.7 After deciding an appeal, the commissioner shall issue an order 307.8 reflecting that decision. The order must be issued 307.9 notwithstanding any statute of limitations for making 307.10 assessments or other determinations. If the statute of 307.11 limitations for making assessments or other determinations would 307.12 have expired before the issuance of this order, except for this 307.13 section, the order is limited to issues or matters contained in 307.14 the appealed determination. The order is appealable to the 307.15 Minnesota tax court under section 271.06. 307.16 Subd. 9. [APPEAL WHERE NO DETERMINATION.] If the 307.17 commissioner does not make a determination within six months 307.18 after the filing of an administrative appeal, the taxpayer may 307.19 appeal to tax court. 307.20 Subd. 10. [EXEMPTION FROM ADMINISTRATIVE PROCEDURE 307.21 ACT.] This section is not subject to the contested case 307.22 procedures of chapter 14. 307.23 Sec. 21. [PURPOSE.] 307.24 It is the intent of the legislature to simplify Minnesota's 307.25 insurance tax laws by consolidating and recodifying tax 307.26 administration and compliance provisions now contained 307.27 throughout Minnesota Statutes, chapter 60A, and elsewhere. Due 307.28 to the complexity of the recodification, prior provisions are 307.29 repealed on the effective date of the new provisions. The 307.30 repealed provisions, however, remain in effect until superseded 307.31 by the analogous provision in the new law. 307.32 Sec. 22. [EFFECTIVE DATES.] 307.33 Sections 1 and 16 are effective January 1, 2001. 307.34 Sections 2 to 9 and 18 are effective for returns, taxes, 307.35 surcharges, and estimated payments required to be filed or paid 307.36 for tax years beginning on or after January 1, 2001. 308.1 Sections 10 to 12 are effective for assessments made and 308.2 examinations and audits commenced on or after January 1, 2001. 308.3 Section 13 is effective for claims for refunds filed on or 308.4 after January 1, 2001. 308.5 Section 14 is effective for assessments that have not been 308.6 made as of the day following final enactment. The time period 308.7 for making such assessments is the time period prescribed in the 308.8 enacted section or one year after the day following final 308.9 enactment, whichever is greater. 308.10 Section 15 is effective for claims for refund which have 308.11 not been filed as of the day following final enactment and in 308.12 which the time period for filing the claim has not expired under 308.13 the provisions in effect prior to the day following final 308.14 enactment. The time period for filing such claims is the time 308.15 period prescribed in the enacted sections, or one year after the 308.16 day following final enactment, whichever is greater. 308.17 Section 17 is effective for all amounts due on or after 308.18 January 1, 2001. 308.19 Section 19 is effective for crimes committed on or after 308.20 January 1, 2001. 308.21 Section 20 is effective for assessments made or refund 308.22 claims or abatements denied on or after January 1, 2001. 308.23 ARTICLE 15 308.24 INSURANCE TAX RECODIFICATION 308.25 TECHNICAL CHANGES 308.26 Section 1. Minnesota Statutes 1999 Supplement, section 308.27 43A.23, subdivision 1, is amended to read: 308.28 Subdivision 1. [GENERAL.] The commissioner is authorized 308.29 to request bids from carriers or to negotiate with carriers and 308.30 to enter into contracts with carriers which in the judgment of 308.31 the commissioner are best qualified to underwrite and service 308.32 the benefit plans. Contracts entered into with carriers are not 308.33 subject to the requirements of sections 16C.16 to 16C.19. The 308.34 commissioner may negotiate premium rates and coverage provisions 308.35 with all carriers licensed under chapters 62A, 62C, and 62D. 308.36 The commissioner may also negotiate reasonable restrictions to 309.1 be applied to all carriers under chapters 62A, 62C, and 62D. 309.2 Contracts to underwrite the benefit plans must be bid or 309.3 negotiated separately from contracts to service the benefit 309.4 plans, which may be awarded only on the basis of competitive 309.5 bids. The commissioner shall consider the cost of the plans, 309.6 conversion options relating to the contracts, service 309.7 capabilities, character, financial position, and reputation of 309.8 the carriers, and any other factors which the commissioner deems 309.9 appropriate. Each benefit contract must be for a uniform term 309.10 of at least one year, but may be made automatically renewable 309.11 from term to term in the absence of notice of termination by 309.12 either party. The commissioner shall, to the extent feasible, 309.13 make hospital and medical benefits available from at least one 309.14 carrier licensed to do business pursuant to each of chapters 309.15 62A, 62C, and 62D. The commissioner need not provide health 309.16 maintenance organization services to an employee who resides in 309.17 an area which is not served by a licensed health maintenance 309.18 organization. The commissioner may refuse to allow a health 309.19 maintenance organization to continue as a carrier. The 309.20 commissioner may elect not to offer all three types of carriers 309.21 if there are no bids or no acceptable bids by that type of 309.22 carrier or if the offering of additional carriers would result 309.23 in substantial additional administrative costs. A carrier 309.24 licensed under chapter 62A is exempt from thetaxtaxes imposed 309.25 bysection 60A.15chapter 297I on premiums paid to it by the 309.26 state. 309.27 All self-insured hospital and medical service products must 309.28 comply with coverage mandates, data reporting, and consumer 309.29 protection requirements applicable to the licensed carrier 309.30 administering the product, had the product been insured, 309.31 including chapters 62J, 62M, and 62Q. Any self-insured products 309.32 that limit coverage to a network of providers or provide 309.33 different levels of coverage between network and nonnetwork 309.34 providers shall comply with section 62D.123 and geographic 309.35 access standards for health maintenance organizations adopted by 309.36 the commissioner of health in rule under chapter 62D. 310.1 Sec. 2. Minnesota Statutes 1998, section 43A.316, 310.2 subdivision 9, is amended to read: 310.3 Subd. 9. [INSURANCE TRUST FUND.] The insurance trust fund 310.4 in the state treasury consists of deposits of the premiums 310.5 received from employers participating in the program and 310.6 transfers before July 1, 1994, from the excess contributions 310.7 holding account established by section 353.65, subdivision 7. 310.8 All money in the fund is appropriated to the commissioner to pay 310.9 insurance premiums, approved claims, refunds, administrative 310.10 costs, and other related service costs. Premiums paid by 310.11 employers to the fund are exempt from thetaxtaxes imposed by 310.12sections 60A.15 and 60A.198chapter 297I. The commissioner 310.13 shall reserve an amount of money to cover the estimated costs of 310.14 claims incurred but unpaid. The state board of investment shall 310.15 invest the money according to section 11A.24. Investment income 310.16 and losses attributable to the fund must be credited to the fund. 310.17 Sec. 3. Minnesota Statutes 1998, section 43A.317, 310.18 subdivision 8, is amended to read: 310.19 Subd. 8. [PREMIUMS.] (a) [PAYMENTS.] Employers enrolled in 310.20 the program shall pay premiums according to terms established by 310.21 the commissioner. If an employer fails to make the required 310.22 payments, the commissioner may cancel coverage and pursue other 310.23 civil remedies. 310.24 (b) [RATING METHOD.] The commissioner shall determine the 310.25 premium rates and rating method for the program. The rating 310.26 method for eligible small employers must meet or exceed the 310.27 requirements of chapter 62L. The rating methods must recover in 310.28 premiums all of the ongoing costs for state administration and 310.29 for maintenance of a premium stability and claim fluctuation 310.30 reserve. On June 30, 1999, after paying all necessary and 310.31 reasonable expenses, the commissioner must apply up to 310.32 $2,075,000 of any remaining balance in the Minnesota employees' 310.33 insurance trust fund to repayment of any amounts drawn or 310.34 expended for this program from the health care access fund. 310.35 (c) [TAXES AND ASSESSMENTS.] To the extent that the program 310.36 operates as a self-insured group, the premiums paid to the 311.1 program are not subject to thepremiumtaxes imposed bysections311.260A.15 and 60A.198chapter 297I, but the program is subject to a 311.3 Minnesota comprehensive health association assessment under 311.4 section 62E.11. 311.5 Sec. 4. Minnesota Statutes 1999 Supplement, section 311.6 60A.19, subdivision 6, is amended to read: 311.7 Subd. 6. [RETALIATORY PROVISIONS.] (1)When by the laws of311.8any other state or country any taxes, fines, deposits,311.9penalties, licenses, or fees, in addition to or in excess of311.10those imposed by the laws of this state upon foreign insurance311.11companies and their agents doing business in this state, are311.12imposed on insurance companies of this state and their agents311.13doing business in that state or country, or when any conditions311.14precedent to the right to do business in that state are imposed311.15by the laws thereof, beyond those imposed upon these foreign311.16companies by the laws of this state, the same taxes, fines,311.17deposits, penalties, licenses, fees, and conditions precedent311.18shall be imposed upon every similar insurance company of that311.19state or country and their agents doing or applying to do311.20business in this state so long as these foreign laws remain in311.21force. Special purpose obligations or assessments, including311.22assessments by an insurance guaranty association, joint311.23underwriting association or similar organization, or assessments311.24imposed in connection with particular kinds of insurance, are311.25not taxes, licenses, or fees as these terms are used in this311.26section.311.27(2)In the event that a domestic insurance company, after 311.28 complying with all reasonable laws and rulings of any other 311.29 state or country, is refused permission by that state or country 311.30 to transact business therein after the commissioner of commerce 311.31 of Minnesota has determined that that company is solvent and 311.32 properly managed and after the commissioner has so certified to 311.33 the proper authority of that other state or country, then, and 311.34 in every such case, the commissioner may forthwith suspend or 311.35 cancel the certificate of authority of every insurance company 311.36 organized under the laws of that other state or country to the 312.1 extent that it insures, or seeks to insure, in this state 312.2 against any of the risks or hazards which that domestic company 312.3 seeks to insure against in that other state or country. Without 312.4 limiting the application of the foregoing provision, it is 312.5 hereby determined that any law or ruling of any other state or 312.6 country which prescribes to a Minnesota domestic insurance 312.7 company the premium rate or rates for life insurance issued or 312.8 to be issued outside that other state or country shall not be 312.9 reasonable. 312.10(3)(2) This section does not apply to insurance companies 312.11 organized or domiciled in a state or country, the laws of which 312.12 do not impose retaliatory taxes, fines, deposits, penalties, 312.13 licenses, or fees or which grant, on a reciprocal basis, 312.14 exemptions from retaliatory taxes, fines, deposits, penalties, 312.15 licenses, or fees to insurance companies domiciled in this state. 312.16 Sec. 5. Minnesota Statutes 1998, section 60A.19, 312.17 subdivision 8, is amended to read: 312.18 Subd. 8. [INSURANCE FROM UNLICENSED FOREIGN COMPANIES.] 312.19 Any person, firm, or corporation desiring to obtain insurance 312.20 upon any property, interests, or risks of any nature other than 312.21 life insurance in this state in companies not authorized to do 312.22 businesstherein shall give bond to the commissioner of commerce312.23in such sum as the commissioner shall deem reasonable, with312.24satisfactory resident sureties, conditioned that the obligors,312.25on the expiration of a license to obtain such insurance, shall312.26pay to the commissioner of revenue, for the use of the state, a312.27tax of two percent upon the gross premiums paid by the312.28licenseein the state must agree to file with the commissioner 312.29 of revenue all returns required under chapter 297I and pay to 312.30 the commissioner of revenue any amounts required to be paid 312.31 under chapter 297I.ThereuponUpon that agreement, the 312.32 commissioner of commerce shall issuesucha license, good for 312.33 one year, and all. Insurance procuredthereunder shall be312.34lawful andunder the license is valid and the provisions ofall312.35 the policiesthereof shall be deemedare considered to be in 312.36 accordance, and construed as if identical in effect, with the 313.1 standard policy prescribed by the laws of this stateand. The 313.2 insurers may enter the state to perform any act necessary or 313.3 proper in the conduct of the business.This bond may be313.4enforced by the commissioner of commerce in the commissioner's313.5name in any district court. The licensee shall file with the313.6commissioner of commerce on June 30 and December 31 annually a313.7verified statement of the aggregate premiums paid and returned313.8premiums received on account of such insurance.313.9The commissioner of revenue, or duly authorized agents, may313.10conduct investigations, inquiries, and hearings to enforce the313.11tax imposed by this subdivision and, in connection with those313.12investigations, inquiries, and hearings, the commissioner and313.13duly authorized agents have all the powers conferred by section313.14270.06.313.15 Sec. 6. Minnesota Statutes 1998, section 60A.198, 313.16 subdivision 3, is amended to read: 313.17 Subd. 3. [PROCEDURE FOR OBTAINING LICENSE.] A person 313.18 licensed as an agent in this state pursuant to other law may 313.19 obtain a surplus lines license by doing the following: 313.20 (a) filing an application in the form and with the 313.21 information the commissioner may reasonably require to determine 313.22 the ability of the applicant to act in accordance with sections 313.23 60A.195 to 60A.209; 313.24 (b) maintaining an agent's license in this state; 313.25 (c)delivering to the commissioner a financial guarantee313.26bond from a surety acceptable to the commissioner for the313.27greater of the following:313.28(1) $5,000; or313.29(2) the largest semiannual surplus lines premium tax313.30liability incurred by the applicant in the immediately preceding313.31five years;313.32(d)agreeing to file with the commissioner of revenueno313.33later than February 15 and August 15 annually, a sworn statement313.34of the charges for insurance procured or placed and the amounts313.35returned on the insurance canceled under the license for the313.36preceding six-month period ending December 31 and June 30314.1respectively, and at the time of the filing of this statement,314.2paying the commissioner a tax on premiums equal to three percent314.3of the total written premiums less cancellations;all returns 314.4 required by chapter 297I and paying to the commissioner of 314.5 revenue all amounts required under chapter 297I; and 314.6(e)(d) paying a fee as prescribed by section 60K.06, 314.7 subdivision 2, paragraph (a), clause (4); and. 314.8(f) paying penalties imposed under section 289A.60,314.9subdivision 1, as it relates to withholding and sales or use314.10taxes, if the tax due under clause (d) is not timely paid.314.11 Sec. 7. Minnesota Statutes 1998, section 60A.208, 314.12 subdivision 8, is amended to read: 314.13 Subd. 8. [OPERATING ASSESSMENT.] (a) Upon request from the 314.14 association, the commissioner may approve the levy of an 314.15 assessment of not more than one-half of one percent of premiums 314.16 charged pursuant to sections 60A.195 to 60A.209 for operation of 314.17 the association to the extent that the operation relieves the 314.18 commissioner of duties otherwise required of the commissioner 314.19 pursuant to sections 60A.195 to 60A.209. Any assessment so 314.20 approved may be subtracted from the premium tax owed by the 314.21 licensee under chapter 297I. 314.22 (b) The association may revoke the membership and the 314.23 commissioner may revoke the license in this state, of any 314.24 licensee who fails to pay an assessment when due, if the 314.25 assessment has been approved by the commissioner. 314.26 Sec. 8. Minnesota Statutes 1998, section 60A.209, 314.27 subdivision 3, is amended to read: 314.28 Subd. 3. [DUTY TO REPORT.] Each insured in this state who 314.29 procures, causes to be procured, or continues or renews 314.30 insurance with an ineligible surplus lines insurer or any 314.31 self-insurer in this state who procures or continues excess of 314.32 loss, catastrophe, or other insurance upon a subject of 314.33 insurance resident, located, or to be performed within this 314.34 state, other than insurance procured pursuant to section 60A.201 314.35 or subdivision 1shall file a written report regarding the314.36insurance with the commissioner of revenue on forms prescribed315.1by the commissioner of revenue and furnished to the insured upon315.2request. The report shall be filed within 30 days after the315.3date the insurance was procured, continued, or renewed and shall315.4be accompanied by the tax on the premiums of two percent. The315.5report shall show all of the following:315.6(a) The name and address of the insured;315.7(b) The name and address of the insurer;315.8(c) The subject of the insurance;315.9(d) A general description of the coverage;315.10(e) The amount of premium currently charged for the315.11insurance; and315.12(f) Any additional pertinent information reasonably315.13requested by the commissioner of revenuemust file with the 315.14 commissioner of revenue all returns and pay to the commissioner 315.15 of revenue all amounts required under chapter 297I. 315.16 Sec. 9. Minnesota Statutes 1998, section 60C.17, is 315.17 amended to read: 315.18 60C.17 [TAX EXEMPTION.] 315.19 The association is exempt from payment of all taxes imposed 315.20 under chapter 297I and all fees and all other taxes levied by 315.21 this state or any of its subdivisions except taxes levied on 315.22 real or personal property. 315.23 Sec. 10. Minnesota Statutes 1998, section 60E.04, 315.24 subdivision 4, is amended to read: 315.25 Subd. 4. [TAXATION.] (a) Each risk retention groupis315.26liable for the payment of premium taxes and taxes on premiums of315.27direct business for risks resident or located within this state,315.28and shall report to the commissioner of revenue the net premiums315.29written for risks resident or located within this state. The315.30risk retention group shall be subject to taxation, and any315.31applicable taxation-related fines and penalties, on the same315.32basis as a foreign admitted insurermust file with the 315.33 commissioner of revenue all returns and pay to the commissioner 315.34 of revenue all amounts required under chapter 297I. 315.35 (b) To the extent licensed agents or brokers are utilized 315.36pursuant toin accordance with section 60E.12, they shall report 316.1 to the commissioner of revenue the premiums for direct business 316.2 for risks resident or located within this state which the 316.3 licensees have placed with or on behalf of a risk retention 316.4 group not chartered in this state. 316.5 (c) To the extent that insurance agents or brokers are 316.6 utilizedpursuant toin accordance with section 60E.12, each 316.7 agent or broker shall keep a complete and separate record of all 316.8 policies procured from each risk retention group, whichshall316.9 must be open to examination by the commissioner, as provided in 316.10 section 60A.031 and by the commissioner of revenue. These 316.11 recordsshallmust, for each policy and each kind of insurance 316.12 provided, include the following: 316.13 (1) the limit of liability; 316.14 (2) the time period covered; 316.15 (3) the effective date; 316.16 (4) the name of the risk retention group which issued the 316.17 policy; 316.18 (5) the gross premium charged; and 316.19 (6) the amount of return premiums, if any. 316.20 Sec. 11. Minnesota Statutes 1998, section 60E.095, is 316.21 amended to read: 316.22 60E.095 [PURCHASING GROUP TAXATION.] 316.23 Premium taxesand taxes on premiumspaid for coverage of 316.24 risks resident or located in this state by a purchasing group or 316.25 any members of the purchasinggroups shall be:316.26(1) imposed at the same rate and subject to the same316.27interest, fines, and penalties as that applicable to premium316.28taxes and taxes on premiums paid for similar coverage from a316.29similar insurance source by other insureds; and316.30(2) paid first by the insurance source, and if not by the316.31source by the agent or broker for the purchasing group, and if316.32not by the agent or broker then by the purchasing group, and if316.33not by the purchasing group then by each of its membersgroup 316.34 must be paid to the commissioner of revenue as provided in 316.35 chapter 297I. 316.36 Sec. 12. Minnesota Statutes 1998, section 61B.30, 317.1 subdivision 1, is amended to read: 317.2 Subdivision 1. [STATE FEES AND TAXES.] The association is 317.3 exempt from payment of all taxes imposed under chapter 297I and 317.4 all fees and all other taxes levied by this state or its 317.5 subdivisions, except taxes levied on real property. 317.6 Sec. 13. Minnesota Statutes 1998, section 62C.01, 317.7 subdivision 3, is amended to read: 317.8 Subd. 3. [SCOPE.] Every foreign or domestic nonprofit 317.9 corporation organized for the purpose of establishing or 317.10 operating a health service plan in Minnesota whereby health 317.11 services are provided to subscribers to the plan under a 317.12 contract with the corporation shall be subject to and governed 317.13 by Laws 1971, chapter 568, and shall not be subject to the laws 317.14 of this state relating to insurance, exceptsection 60A.15the 317.15 gross premiums tax provisions contained in chapter 297I and as 317.16 otherwise specifically provided. Laws 1971, chapter 568 shall 317.17 apply to all health service plan corporations incorporated after 317.18 August 1, 1971, and to all existing health service plan 317.19 corporations, except as otherwise provided. Nothing in sections 317.20 62C.01 to 62C.23 shall apply to prepaid group practice plans. A 317.21 prepaid group practice plan is any plan or arrangement other 317.22 than a service plan, whereby health services are rendered to 317.23 certain patients by providers who devote their professional 317.24 effort primarily to members or patients of the plan, and whereby 317.25 the recipients of health services pay for the services on a 317.26 regular, periodic basis, not on a fee for service basis. 317.27 Sec. 14. Minnesota Statutes 1998, section 62E.10, 317.28 subdivision 1, is amended to read: 317.29 Subdivision 1. [CREATION; TAX EXEMPTION.] There is 317.30 established a comprehensive health association to promote the 317.31 public health and welfare of the state of Minnesota with 317.32 membership consisting of all insurers; self-insurers; 317.33 fraternals; joint self-insurance plans regulated under chapter 317.34 62H; the Minnesota employees insurance program established in 317.35 section 43A.317, effective July 1, 1993; health maintenance 317.36 organizations; and community integrated service networks 318.1 licensed or authorized to do business in this state. The 318.2 comprehensive health associationshall beis exempt from 318.3taxationthe taxes imposed underthechapter 297I and any other 318.4 laws of this state and all property owned by the 318.5 associationshall beis exempt from taxation. 318.6 Sec. 15. Minnesota Statutes 1998, section 62E.13, 318.7 subdivision 10, is amended to read: 318.8 Subd. 10. [PREMIUMS NOT SUBJECT TO TAX.] Premiums received 318.9 by the writing carrier for the comprehensive health insurance 318.10 plan are exempt from theprovisions of section 60A.15taxes 318.11 imposed under chapter 297I. 318.12 Sec. 16. Minnesota Statutes 1998, section 62L.13, 318.13 subdivision 3, is amended to read: 318.14 Subd. 3. [EXEMPTIONS.] The association, its transactions, 318.15 and all property owned by it are exempt from taxation under the 318.16 laws of this state or any of its subdivisions, including, but 318.17 not limited to, premiums taxes imposed under chapter 297I, 318.18 income tax, sales tax, use tax, and property tax. The 318.19 association may seek exemption from payment of all fees and 318.20 taxes levied by the federal government. Except as otherwise 318.21 provided in this chapter, the association is not subject to the 318.22 provisions of chapters 13, 60A, 62A to 62H, and section 318.23 471.705. The association is not a public employer and is not 318.24 subject to the provisions of chapters 179A and 353. The board 318.25 of directors and health carriers who are members of the 318.26 association are exempt from sections 325D.49 to 325D.66 in the 318.27 performance of their duties as directors and members of the 318.28 association. 318.29 Sec. 17. Minnesota Statutes 1998, section 62T.10, is 318.30 amended to read: 318.31 62T.10 [MINNESOTACARE TAX.] 318.32 An accountable provider networkis subject to the premium318.33tax established in section 60A.15 and must pay installments as318.34described in section 60A.15, subdivision 1, paragraph (d)shall 318.35 file with the commissioner of revenue all returns and pay to the 318.36 commissioner of revenue all amounts required under chapter 297I. 319.1 Sec. 18. Minnesota Statutes 1998, section 64B.24, is 319.2 amended to read: 319.3 64B.24 [TAXATION.] 319.4 Fraternal benefit societies are declared to be charitable 319.5 institutions, and the property held and used for lodge purposes, 319.6 and the funds of these societies shall be exempt from taxation 319.7 under the general tax or revenue laws of this state, except that 319.8 the real estate of the society shall be taxable. Insurance 319.9 premiums paid to a fraternal benefit society are exempt from the 319.10 taxes imposed under chapter 297I. 319.11 Sec. 19. Minnesota Statutes 1998, section 71A.04, 319.12 subdivision 1, is amended to read: 319.13 Subdivision 1. [PREMIUM TAX.] The attorney-in-fact, in 319.14 lieu of all taxes, state, county, and municipal,shall pay to319.15the state with the filing of each annual report on or before319.16March 1 as an annual license fee two percent of the gross319.17premiums or deposits for the preceding calendar year, deducting319.18all amounts returned to subscribers or credited to their319.19accounts; and the attorney shall pay a filing fee of $2shall 319.20 file with the commissioner of revenue all returns and pay to the 319.21 commissioner of revenue all amounts required under chapter 297I. 319.22 Sec. 20. Minnesota Statutes 1998, section 79.252, 319.23 subdivision 4, is amended to read: 319.24 Subd. 4. [RESPONSIBILITIES.] Assigned risk policies and 319.25 contracts of coverageshall beare subject topremium tax319.26pursuant to section 60A.15taxation under chapter 297I, and 319.27 special compensation fund assessmentspursuant tounder 319.28 Minnesota Statutes 1990, section 176.131, subdivision 10. The 319.29 assigned risk plan shall be a member of the reinsurance 319.30 association for the purposes of sections 79.34 to 79.40 and may 319.31 select either retention limit provided in section 79.34, 319.32 subdivision 2. 319.33 Sec. 21. Minnesota Statutes 1998, section 79.34, 319.34 subdivision 1a, is amended to read: 319.35 Subd. 1a. [GROSS PREMIUMS TAX.] The direct fundedpremium319.36 premiums received by the reinsurance associationisfrom 320.1 self-insurers approved under section 176.181 and political 320.2 subdivisions that self-insure are subject tothe gross premium320.3tax imposed by section 60A.15taxation under chapter 297I.Only320.4direct funded premium payments made to the reinsurance320.5association by self-insurers approved pursuant to section320.6176.181 and each political subdivision that self-insures shall320.7be subject to the gross premiums tax.320.8 Sec. 22. Minnesota Statutes 1998, section 176A.08, is 320.9 amended to read: 320.10 176A.08 [EXEMPTION FROM AND APPLICABILITY OF CERTAIN LAWS.] 320.11 The fund shall not be considered a state agency for any 320.12 purpose including, but not limited to, chapters 13, 15, 15A, and 320.13 43A. However, the fund shall be subject to sections 179A.01 to 320.14 179A.25. The insurance operations of the fund are subject to 320.15 all of the provisions of chapters 60A and 60B. The commissioner 320.16 of commerce has the same powers with respect to the board as the 320.17 commissioner has with respect to a private workers' compensation 320.18 insurer under chapters 60A and 60B. The fund is considered an 320.19 insurer for the purposes of chapters 60C, 72A, 79, and 176. The 320.20 fund is subject to the same tax liability as a mutual insurance 320.21 company in this statepursuant to section 60A.15under chapter 320.22 297I. As a condition of its authority to transact business in 320.23 this state the fund shall be a member of the workers' 320.24 compensation reinsurance association and is bound by its plan of 320.25 operation. 320.26 Sec. 23. Minnesota Statutes 1998, section 290.35, 320.27 subdivision 2, is amended to read: 320.28 Subd. 2. [APPORTIONMENT OF TAXABLE NET INCOME.] The 320.29 commissioner shall compute therefrom the taxable net income of 320.30 such companies by assigning to this state that proportion 320.31 thereof which the gross premiums collected by them during the 320.32 taxable year from old and new business within this state bears 320.33 to the total gross premiums collected by them during that year 320.34 from their entire old and new business, including reinsurance 320.35 premiums; provided, the commissioner shall add to the taxable 320.36 net income so apportioned to this state the amount of any taxes 321.1 on premiums paid by the company by virtue of any law of this 321.2 state (other than the surcharge on premiums imposed bysections321.369.54 to 69.56section 297I.10 and the surcharge imposed by 321.4 section 168A.40, subdivision 3) which shall have been deducted 321.5 from gross income by the company in arriving at its total net 321.6 incomeunder the provisions of such act of Congress. 321.7 (a) For purposes of determining the Minnesota apportionment 321.8 percentage, premiums from reinsurance contracts in connection 321.9 with property in or liability arising out of activity in, or in 321.10 connection with the lives or health of Minnesota residents shall 321.11 be assigned to Minnesota and premiums from reinsurance contracts 321.12 in connection with property in or liability arising out of 321.13 activity in, or in connection with the lives or health of 321.14 non-Minnesota residents shall be assigned outside of Minnesota. 321.15 Reinsurance premiums are presumed to be received for a Minnesota 321.16 risk and are assigned to Minnesota, if: 321.17 (1) the reinsurance contract is assumed for a company 321.18 domiciled in Minnesota; and 321.19 (2) the taxpayer, upon request of the commissioner, fails 321.20 to provide reliable records indicating the reinsured contract 321.21 covered non-Minnesota risks. 321.22 For purposes of this paragraph, "Minnesota risk" means coverage 321.23 in connection with property in or liability arising out of 321.24 activity in Minnesota, or in connection with the lives or health 321.25 of Minnesota residents. 321.26 (b) The apportionment method prescribed by paragraph (a) 321.27 shall be presumed to fairly and correctly determine the 321.28 taxpayer's taxable net income. If the method prescribed in 321.29 paragraph (a) does not fairly reflect all or any part of taxable 321.30 net income, the taxpayer may petition for or the commissioner 321.31 may require the determination of taxable net income by use of 321.32 another method if that method fairly reflects taxable net 321.33 income. A petition within the meaning of this section must be 321.34 filed by the taxpayer on such form as the commissioner shall 321.35 require. 321.36 Sec. 24. Minnesota Statutes 1998, section 290.35, 322.1 subdivision 3, is amended to read: 322.2 Subd. 3. [CREDIT.] An insurance company shall receive a 322.3 credit against the tax computed under sections 290.06, 322.4 subdivision 1, and 290.0921, equal to any taxes based on 322.5 premiums paid by it that are attributable to the period for 322.6 which the tax under this chapter is imposed by virtue of any law 322.7 of this state, other than the surcharge on premiums imposed by 322.8sections 69.54 to 69.56section 297I.10. 322.9 Sec. 25. Minnesota Statutes 1998, section 290.35, 322.10 subdivision 6, is amended to read: 322.11 Subd. 6. [GUARANTY ASSOCIATION ASSESSMENT OFFSET.] (a) An 322.12 insurance company may offset against its corporate franchise tax 322.13 liability under this chapter any amount paid pursuant to 322.14 assessments made for insolvencies which occur after July 31, 322.15 1994, under sections 60C.01 to 60C.22, and any amount paid 322.16 pursuant to assessments made after July 31, 1994, under 322.17 Minnesota Statutes 1992, sections 61B.01 to 61B.16, or sections 322.18 61B.18 to 61B.32, as follows: 322.19(a)(1) Each such assessment shall give rise to an amount 322.20 of offset equal to 20 percent of the amount of the assessment 322.21 for each of the five calendar years following the year in which 322.22 the assessment was paid. 322.23(b)(2) The amount of offset initially determined for each 322.24 taxable year is the sum of the amounts determined under 322.25paragraph (a)clause (1) for that taxable year. 322.26(c)(b)(1) Each year the commissionerof revenueshall 322.27 compare total guaranty association assessments levied over the 322.28 preceding five calendar years to the sum of all premium tax and 322.29 corporate franchise tax revenues collected from insurance 322.30 companies without reduction for any guaranty association 322.31 assessment offset, in the preceding calendar year, referred to 322.32 in this subdivision as "preceding year insurance tax revenues." 322.33 (2) If total guaranty association assessments levied over 322.34 the preceding five years exceed the preceding year insurance tax 322.35 revenues, insurance companiesshall beare allowed only a 322.36 proportionate part of the corporate franchise tax offset 323.1 calculated under paragraph(b)(a) for the current calendar year. 323.2 (3) The proportionate part of the corporate franchise tax 323.3 offset allowed in the current calendar year is determined by 323.4 multiplying the amount calculated under paragraph(b)(a) by a 323.5 fraction, the numerator of which equals the preceding year 323.6 insurance tax revenues and the denominator of which equals total 323.7 guaranty association assessments levied over the preceding 323.8 five-year period. 323.9 (4) The proportionate part of the premium tax offset that 323.10 is not allowedshallmust be carried forward to subsequent tax 323.11 years and added to the amount of corporate franchise tax offset 323.12 calculated under paragraph(b)(a) before application of the 323.13 limitation imposed by this paragraph. 323.14 (5) Any amount carried forward from prior years must be 323.15 allowed before allowance of the offset for the current year 323.16 calculated under paragraph(b)(a). 323.17 (6) The corporate franchise tax offset limitation must be 323.18 calculated separately for (1) insurance companies subject to 323.19 assessment under sections 60C.01 to 60C.22, and (2) insurance 323.20 companies subject to assessment under Minnesota Statutes 1992, 323.21 sections 61B.01 to 61B.16, or sections 61B.18 to 61B.32. 323.22 (7) When the corporate franchise tax offset is limited by 323.23 this provision, the commissioner of revenue will notify affected 323.24 insurance companies on a timely basis for purposes of completing 323.25 premium and corporate franchise tax returns. 323.26 (8) The guaranty associations created under sections 60C.01 323.27 to 60C.22, Minnesota Statutes 1992, sections 61B.01 to 61B.16, 323.28 and sections 61B.18 to 61B.32, shall provide the commissioner of 323.29 revenue with the necessary information on guaranty association 323.30 assessments.The limitation in this paragraph is effective for323.31offsets allowable in 1999 and thereafter.323.32(d)(c)(1) If the offset determined by the application of 323.33 paragraphs (a)to (c)and (b) exceeds the greater of the 323.34 insurance company's corporate franchise tax liability under this 323.35 chapter prior to allowance of the credit provided by subdivision 323.36 3 or its premium tax liability under chapter60A297I, then the 324.1 insurance company may carry forward the excess, referred to in 324.2 this subdivision as the "carryforward credit," to subsequent 324.3 taxable years. 324.4 (2) The carryforward credit must be allowed as an offset 324.5 against corporate franchise tax liability for the first 324.6 succeeding year to the extent that the corporate franchise tax 324.7 liability for that year exceeds the amount of the allowable 324.8 offset for the year determined under paragraphs (a)to (c)and 324.9 (b). 324.10 (3) The carryforward creditshallmust be reduced, but not 324.11 below zero, by the greater of the amount of the carryforward 324.12 credit allowed as an offset against the corporate franchise tax 324.13 pursuant to this paragraph or the amount of the carryforward 324.14 credit allowed as an offset against the insurance company's 324.15 premium tax liability under chapter60A297I pursuant to section 324.1660A.15, subdivision 15, paragraph (d)297I.20, paragraph (c). 324.17 The remainder, if any, of the carryforward credit must be 324.18 carried forward to succeeding taxable years until the entire 324.19 carryforward credit has been credited against the insurance 324.20 company's liability for corporate franchise tax under this 324.21 chapter and premium tax under chapter60A297I. 324.22(e)(d)A refund paid by the Minnesota Life and Health324.23Insurance Guaranty Association to member insurers under324.24Minnesota Statutes 1992, section 61B.07, subdivision 6, or324.25section 61B.24, subdivision 6, with respect to an assessment324.26payment which has been offset against taxes shall reduce the324.27carryforward credit determined under paragraph (d) and, if the324.28refund exceeds the amount of the carryforward credit, shall be324.29repaid by the insurers to the extent of the offset to the state324.30in the manner the commissioner of revenue requires.When an 324.31 insurer has offset against taxes its payment of an assessment of 324.32 the Minnesota life and health guaranty association, and the 324.33 association pays the insurer a refund with respect to the 324.34 assessment under Minnesota Statutes 1992, section 61B.07, 324.35 subdivision 6, or 61B.24, subdivision 6, then the refund reduces 324.36 the insurer's carryforward credit under paragraph (c). If the 325.1 refund exceeds the amount of the carryforward credit, the excess 325.2 amount must be repaid to the state by the insurers to the extent 325.3 of the offset in the manner the commissioner requires. 325.4 Sec. 26. Minnesota Statutes 1998, section 295.58, is 325.5 amended to read: 325.6 295.58 [DEPOSIT OF REVENUES AND PAYMENT OF REFUNDS.] 325.7 The commissioner shall deposit all revenues, including 325.8 penalties and interest, derived from the taxes imposed by 325.9 sections 295.50 to 295.57 and from the insurance premiums 325.10 tax imposed by section 297I.05, subdivision 5, on health 325.11 maintenance organizations, community integrated service 325.12 networks, and nonprofit health service plan corporations in the 325.13 health care access fundin the state treasury. Refunds of 325.14 overpayments must be paid from the health care access fundin325.15the state treasury. There is annually appropriated from the 325.16 health care access fund to the commissioner of revenue the 325.17 amount necessary to makeanyrefundsrequiredunder section 325.18 295.54. 325.19 Sec. 27. Minnesota Statutes 1998, section 424.165, is 325.20 amended to read: 325.21 424.165 [SPECIAL FUND, MAINTENANCE.] 325.22Subdivision 1. [SURCHARGE.] When the balance in the325.23special fund of any firefighter's relief association in any city325.24of the second class is less than $50,000 as determined by any325.25such association's board of trustees, which fact shall be duly325.26certified to by the state auditor, such board of trustees may325.27thereupon file its duly verified petition for relief,325.28accompanied by such certificate, with the commissioner of325.29revenue. The commissioner of revenue shall thereupon order and325.30direct a surcharge to be collected of two percent of the fire,325.31lightning and sprinkler leakage gross premiums, less return325.32premiums, on all direct business received by any foreign or325.33domestic fire insurance company on property in such city of the325.34second class, or by its agents for it, in cash or otherwise,325.35until the balance in the special funds of such relief325.36association amounts to $50,000 and for a period of 15 days326.1thereafter. As soon as the balance in said special fund amounts326.2to $50,000 the board of trustees of such relief association326.3shall certify that fact to the commissioner of revenue and the326.4commissioner of revenue shall forthwith issue an order ordering326.5and directing that the collection of such surcharge shall be326.6discontinued after the expiration of said 15-day period and326.7shall forthwith mail a copy of the order last mentioned to each326.8insurance company affected thereby. Said surcharge shall be due326.9and payable from such companies to the state treasurer in326.10semiannual installments on June 30 and December 31 of each326.11calendar year to be kept by the state treasurer in a separate326.12fund and if not paid within 30 days after such dates a penalty326.13of three percent shall accrue thereon and thereafter such sum326.14and penalty shall draw interest at the rate of one percent per326.15month until paid.326.16Subd. 2. [ISSUANCE OF WARRANT.] The commissioner of326.17finance on July 31, 1938, and semiannually thereafter, shall326.18issue and deliver to the treasurer of such relief association in326.19such city a warrant upon the state treasurer for an amount equal326.20to the total amount of said surcharge on said premiums within326.21such city theretofore so collected and transmitted to the state326.22treasurer by such insurance companies. Said warrants shall be326.23paid out of said separate fund hereinbefore provided for, and326.24the payment in each case shall be made to the treasurer of the326.25relief association presenting the warrant.326.26There is hereby appropriated to such firefighter's relief326.27association, from such fund or account in the state treasury to326.28which the money was credited, such sums as may, from time to326.29time, be necessary to pay these warrants.326.30Subd. 3. [FUNDS TO BE KEPT IN SPECIAL FUND.] The treasurer326.31of such relief association shall place the money received in326.32payment of any such warrant in the special fund of such relief326.33association.326.34Subd. 4. [EMERGENCY DECLARED TO EXIST.] An emergency326.35exists and this section shall be construed as a relief measure326.36for firefighter's relief associations in any city of the second327.1class.327.2 When the balance in the special fund of any firefighter's 327.3 relief association in any city of the second class is less than 327.4 $50,000 as determined by the board of trustees of the 327.5 association, and as certified by the state auditor, the board of 327.6 trustees may file with the commissioner a request to impose the 327.7 surcharge on fire, lightning, and sprinkler leakage insurance 327.8 premiums authorized under section 297I.10, subdivision 2. 327.9 Sec. 28. [REPEALER.] 327.10 Minnesota Statutes 1998, sections 60A.15; 60A.152; 60A.198, 327.11 subdivision 6; 60A.199, subdivisions 2, 3, 4, 5, 6, 6a, 7, 8, 9, 327.12 10, and 11; 60A.209, subdivisions 4 and 5; 69.54; 69.55; 69.56; 327.13 69.57; 69.58; 69.59; 69.60; 69.61; 71A.04, subdivision 2; 327.14 299F.21; 299F.22; 299F.23; 299F.24; 299F.25; and 299F.26; and 327.15 Minnesota Rules, part 2765.1500, subpart 6, are repealed. 327.16 Sec. 29. [EFFECTIVE DATE.] 327.17 This article is effective January 1, 2001. 327.18 ARTICLE 16 327.19 SALES AND USE TAX RECODIFICATION 327.20 Section 1. [PURPOSE AND EFFECT.] 327.21 Subdivision 1. [PURPOSE.] It is the intent of the 327.22 legislature to recodify Minnesota Statutes, chapter 297A, by 327.23 removing archaic, obsolete, and redundant language, and by 327.24 improving the organization and readability of the chapter. The 327.25 provisions of this act may not be used to determine the law in 327.26 effect prior to this act's effective date. 327.27 Subd. 2. [EFFECT.] Due to the complexity of the 327.28 recodification, prior provisions are repealed on the effective 327.29 date of the new provisions. The repealed provisions, however, 327.30 continue to remain in effect until superseded by the analogous 327.31 provision in the new law. 327.32 Sec. 2. Minnesota Statutes 1998, section 37.13, is amended 327.33 to read: 327.34 37.13 [TITLE TO PROPERTY VESTED IN STATE.] 327.35 Subdivision 1. [USE OF MONEY.] The state owns all money 327.36 and other property of the society in the name of the society and 328.1 there may be no division of its assets among society members. 328.2 Money received by the society must be used for holding its 328.3 annual fair and for other exhibitions or expositions the society 328.4 holds, for the improvement of the fairgrounds, for the payment 328.5 of expenses, premiums, and purses, for the acquisition of real 328.6 and personal property, for the use and benefit of the society, 328.7 and for furnishing attractions and amusements the board of 328.8 managers considers necessary for the success of its fairs and 328.9 other exhibitions and expositions. 328.10 Subd. 2. [CAPITAL IMPROVEMENTS.] The society shall spend 328.11 the amount of sales tax retained under section 289A.31, 328.12 subdivision 7, paragraph (f), exclusively to make capital 328.13 improvements to state-owned buildings and facilities on the 328.14 state fairgrounds. The society shall match the amount retained 328.15 with an equal amount from proceeds from special assessments 328.16 levied against commercial exhibits, concessions and rentals, and 328.17 from other special user fees specifically designated for capital 328.18 improvements. 328.19 Sec. 3. Minnesota Statutes 1998, section 289A.31, 328.20 subdivision 7, is amended to read: 328.21 Subd. 7. [SALES AND USE TAX.] (a) The sales and use tax 328.22 required to be collected by the retailer under chapter 297A 328.23 constitutes a debt owed by the retailer to Minnesota, and the 328.24 sums collected must be held as a special fund in trust for the 328.25 state of Minnesota. 328.26 A retailer who does not maintain a place of business within 328.27 this state as defined by section 297A.21, subdivision 1, shall 328.28 not be indebted to Minnesota for amounts of tax that it was 328.29 required to collect but did not collect unless the retailer knew 328.30 or had been advised by the commissioner of its obligation to 328.31 collect the tax. 328.32 (b) The use tax required to be paid by a purchaser is a 328.33 debt owed by the purchaser to Minnesota. 328.34 (c) The tax imposed bysections 297A.01 to 297A.44chapter 328.35 297A, and interest and penalties, is a personal debt of the 328.36 individual required to file a return from the time the liability 329.1 arises, irrespective of when the time for payment of that 329.2 liability occurs. The debt is, in the case of the executor or 329.3 administrator of the estate of a decedent and in the case of a 329.4 fiduciary, that of the individual in an official or fiduciary 329.5 capacity unless the individual has voluntarily distributed the 329.6 assets held in that capacity without reserving sufficient assets 329.7 to pay the tax, interest, and penalties, in which case the 329.8 individual is personally liable for the deficiency. 329.9 (d) Liability for payment of sales and use taxes includes 329.10 any responsible person or entity described in the personal 329.11 liability provisions of section 270.101. 329.12 (e) Any amounts collected, even if erroneously or illegally 329.13 collected, from a purchaser under a representation that they are 329.14 taxes imposed under chapter 297A are state funds from the time 329.15 of collection and must be reported on a return filed with the 329.16 commissioner. The amounts collected are not subject to refund 329.17 unless the seller submits written evidence to the commissioner 329.18 that the tax and any interest earned on the tax has been or will 329.19 be refunded or credited to the purchaser by the seller. 329.20 (f) The tax imposed under chapter 297A on sales of tickets 329.21 to the premises of or events sponsored by the state agricultural 329.22 society and conducted on the state fairgrounds during the period 329.23 of the annual state fair may be retained by the state 329.24 agricultural society if the funds are used and matched as 329.25 required under section 37.13, subdivision 2. 329.26 DEFINITIONS 329.27 Sec. 4. [297A.61] [DEFINITIONS.] 329.28 Subdivision 1. [APPLICABILITY.] The following words, 329.29 terms, and phrases when used in this chapter have the meanings 329.30 given them in this section, unless the context clearly indicates 329.31 a different meaning. 329.32 Subd. 2. [PERSON.] "Person" includes any individual, and 329.33 any group or combination of individuals acting as a unit, and 329.34 the plural as well as the singular number. Person includes a 329.35 firm, partnership, joint venture, limited liability company, 329.36 association, cooperative, social club, fraternal organization, 330.1 municipal or private corporation whether or not organized for 330.2 profit, estates, trusts, business trusts, receiver, trustee, 330.3 syndicate, the United States, and a state and its political 330.4 subdivisions. Person includes, but is not limited to, directors 330.5 and officers of corporations, governors and managers of a 330.6 limited liability company, or members of partnerships who, 330.7 either individually or jointly with others, have the control, 330.8 supervision, or responsibility of filing returns and making 330.9 payment of the amount of tax imposed by this chapter. Person 330.10 also includes any agent or consignee of any individual or 330.11 organization enumerated in this subdivision. 330.12 Subd. 3. [SALE AND PURCHASE.] (a) "Sale" and "purchase" 330.13 include, but are not limited to, each of the transactions listed 330.14 in this subdivision. 330.15 (b) Sale and purchase include any transfer of title or 330.16 possession, or both, of tangible personal property, whether 330.17 absolutely or conditionally, and the leasing of or the granting 330.18 of a license to use or consume, for a consideration, tangible 330.19 personal property, other than a manufactured home used for 330.20 residential purposes for a continuous period of 30 days or more. 330.21 (c) Sale and purchase include the production, fabrication, 330.22 printing, or processing of tangible personal property for a 330.23 consideration for consumers who furnish either directly or 330.24 indirectly the materials used in the production, fabrication, 330.25 printing, or processing. 330.26 (d) Sale and purchase include the furnishing, preparing, or 330.27 serving for a consideration of food or drinks. Notwithstanding 330.28 section 297A.67, subdivision 2, taxable food or drinks include, 330.29 but are not limited to, the following: 330.30 (1) food or drinks sold by the retailer for immediate 330.31 consumption on the retailer's premises. Food and drinks sold 330.32 within a building or grounds that require an admission charge 330.33 for entrance are presumed to be sold for consumption on the 330.34 premises; 330.35 (2) food or drinks prepared by the retailer for immediate 330.36 consumption either on or off the retailer's premises. For 331.1 purposes of this subdivision, "food or drinks prepared for 331.2 immediate consumption" means any food product upon which an act 331.3 of preparation including, but not limited to, cooking, mixing, 331.4 sandwich making, blending, heating, or pouring has been 331.5 performed by the retailer so the food product may be immediately 331.6 consumed by the purchaser; 331.7 (3) ice cream, ice milk, frozen yogurt products, or frozen 331.8 novelties sold in single or individual servings including, but 331.9 not limited to, cones, sundaes, and snow cones; 331.10 (4) soft drinks and other beverages, including all 331.11 carbonated and noncarbonated beverages or drinks sold in liquid 331.12 form, but not including beverages or drinks which contain milk 331.13 or milk products, beverages or drinks containing 15 or more 331.14 percent fruit juice, and noncarbonated and noneffervescent 331.15 bottled water sold in individual containers of one-half gallon 331.16 or more in size; 331.17 (5) gum, candy, and candy products; 331.18 (6) ice; 331.19 (7) all food sold from vending machines; 331.20 (8) all food for immediate consumption sold from concession 331.21 stands and vehicles; 331.22 (9) party trays; 331.23 (10) all meals and single servings of packaged snack food 331.24 sold in restaurants and bars; and 331.25 (11) bakery products that are: 331.26 (i) prepared by the retailer for consumption on the 331.27 retailer's premises; 331.28 (ii) sold at a place that charges admission; 331.29 (iii) sold from vending machines; or 331.30 (iv) sold in single or individual servings from concession 331.31 stands, vehicles, bars, and restaurants. 331.32 For purposes of this paragraph, "single or individual 331.33 servings" does not include products when sold in bulk containers 331.34 or bulk packaging. 331.35 For purposes of this paragraph, "premises" means the total 331.36 space and facilities, including buildings, grounds, and parking 332.1 lots that are made available or that are available for use by 332.2 the retailer or customer for the purpose of sale or consumption 332.3 of prepared food and drinks. The premises of a caterer is the 332.4 place where the catered food or drinks are served. 332.5 (e) A sale and a purchase includes the furnishing for a 332.6 consideration of electricity, gas, water, or steam for use or 332.7 consumption within this state or local exchange telephone 332.8 service, intrastate toll service, and interstate toll service, 332.9 if that service originates from and is charged to a telephone 332.10 located in this state. Telephone service includes (1) paging 332.11 services, and (2) private communication service, as defined in 332.12 United States Code, title 26, section 4252(d), except for 332.13 private communication service purchased by an agent acting on 332.14 behalf of the state lottery. Telephone service does not include 332.15 services purchased with a prepaid telephone calling card. The 332.16 furnishing for a consideration of access to telephone services 332.17 by a hotel to its guests is a sale. The furnishing for a 332.18 consideration of items listed in this paragraph by a municipal 332.19 corporation is a sale. 332.20 (f) A sale and a purchase includes the transfer for a 332.21 consideration of computer software. 332.22 (g) A sale and a purchase includes the furnishing for a 332.23 consideration of taxable services as defined in subdivision 16. 332.24 (h) A sale and a purchase includes the furnishing for a 332.25 consideration of tangible personal property or taxable services 332.26 by the United States or any of its agencies or 332.27 instrumentalities, or the state of Minnesota, its agencies, 332.28 instrumentalities, or political subdivisions. 332.29 Subd. 4. [RETAIL SALE.] (a) A "retail sale" means a sale 332.30 for any purpose other than resale in the regular course of 332.31 business. 332.32 (b) A sale of property used by the owner only by leasing it 332.33 to others or by holding it in an effort to lease it, and put to 332.34 no use by the owner other than resale after the lease or effort 332.35 to lease, is a sale of property for resale. 332.36 (c) A sale of master computer software that is purchased 333.1 and used to make copies for sale or lease is a sale of property 333.2 for resale. 333.3 (d) A sale of building materials, supplies and equipment to 333.4 owners, contractors, subcontractors or builders for the erection 333.5 of buildings or the alteration, repair, or improvement of real 333.6 property is a retail sale in whatever quantity sold, whether the 333.7 sale is for purposes of resale in the form of real property or 333.8 otherwise. 333.9 (e) A sale of carpeting, linoleum, or similar floor 333.10 covering to a person who provides for installation of the floor 333.11 covering is a retail sale and not a sale for resale since a sale 333.12 of floor covering which includes installation is a contract for 333.13 the improvement of real property. 333.14 (f) A sale of shrubbery, plants, sod, trees, and similar 333.15 items to a person who provides for installation of the items is 333.16 a retail sale and not a sale for resale since a sale of 333.17 shrubbery, plants, sod, trees, and similar items that includes 333.18 installation is a contract for the improvement of real property. 333.19 (g) A sale of tangible personal property that is awarded as 333.20 prizes is a retail sale and is not considered a sale of property 333.21 for resale. 333.22 (h) A sale of tangible personal property utilized or 333.23 employed in the furnishing or providing of services under 333.24 subdivision 16, paragraph (b), including, but not limited to, 333.25 property given as promotional items, is a retail sale and is not 333.26 considered a sale of property for resale. 333.27 (i) A sale of tangible personal property used in conducting 333.28 lawful gambling under chapter 349 or the state lottery under 333.29 chapter 349A, including, but not limited to, property given as 333.30 promotional items, is a retail sale and is not considered a sale 333.31 of property for resale. 333.32 (j) A sale of machines, equipment, or devices that are used 333.33 to furnish, provide, or dispense goods or services, including, 333.34 but not limited to, coin-operated devices, is a retail sale and 333.35 is not considered a sale of property for resale. 333.36 (k) In the case of a lease, a retail sale occurs when an 334.1 obligation to make a lease payment becomes due under the terms 334.2 of the agreement or the trade practices of the lessor. 334.3 (l) In the case of a conditional sales contract, a retail 334.4 sale occurs upon the transfer of title or possession of the 334.5 tangible personal property. 334.6 Subd. 5. [STORAGE.] "Storage" includes keeping or 334.7 retaining tangible personal property in Minnesota for any 334.8 purpose except sale in the regular course of business or 334.9 subsequent use solely outside Minnesota of tangible personal 334.10 property. 334.11 Subd. 6. [USE.] (a) "Use" includes the exercise of a right 334.12 or power incident to the ownership of any interest in tangible 334.13 personal property, or taxable services, purchased from a 334.14 retailer, other than the sale of that property in the regular 334.15 course of business. 334.16 (b) Use includes the consumption of printed materials in 334.17 the creation of nontaxable advertising that is distributed, 334.18 either directly or indirectly, within Minnesota. 334.19 Subd. 7. [SALES PRICE.] (a) "Sales price" means the total 334.20 consideration for a retail sale, valued in money, whether paid 334.21 in money or by barter or exchange. 334.22 (b) Sales price includes: 334.23 (1) the cost of the property sold, cost of materials used, 334.24 labor or service cost, interest, or discount allowed after the 334.25 sale is consummated; 334.26 (2) the cost of transportation incurred prior to the time 334.27 of sale; 334.28 (3) any amount for which credit is given by the seller to 334.29 the purchaser; 334.30 (4) charges for services that are part of a sale; or 334.31 (5) any other expense whatsoever. 334.32 (c) Sales price does not include the following: 334.33 (1) an amount allowed as credit for tangible personal 334.34 property taken in trade for resale; 334.35 (2) charges of up to 15 percent in lieu of tips if the 334.36 charges are separately stated; 335.1 (3) interest, financing, or carrying charges if the charges 335.2 are separately stated; 335.3 (4) charges for labor or services used in installing or 335.4 applying the property sold if the charges are separately stated; 335.5 (5) transportation charges if the transportation occurs 335.6 after the retail sale of the property if the charges are 335.7 separately stated; 335.8 (6) cash discounts allowed and taken on sales or the amount 335.9 refunded either in cash or in credit for property returned by 335.10 purchasers; 335.11 (7) the rental motor vehicle tax imposed under section 335.12 297A.64; or 335.13 (8) the amount of any tax imposed by the United States on 335.14 communications services under United States Code, title 26, 335.15 section 4251(a). 335.16 (d) Notwithstanding paragraph (c), "sales price," for 335.17 purposes of sales of ready-mixed concrete sold from a 335.18 ready-mixed concrete truck, includes any transportation, 335.19 delivery, or other service charges, and no deduction is allowed 335.20 for those charges, whether or not the charges are separately 335.21 stated. 335.22 Subd. 8. [GROSS RECEIPTS.] "Gross receipts" means the 335.23 total amount received, in money or by barter or exchange, for 335.24 all sales at retail as measured by the sales price. 335.25 Subd. 9. [RETAILER.] "Retailer" means every person engaged 335.26 in making retail sales. 335.27 Subd. 10. [TANGIBLE PERSONAL PROPERTY.] (a) "Tangible 335.28 personal property" means corporeal personal property of any 335.29 kind, including property that is to become real property as a 335.30 result of incorporation, attachment, or installation following 335.31 its acquisition. 335.32 (b) Tangible personal property includes, but is not limited 335.33 to: 335.34 (1) computer software, whether contained on tape, discs, 335.35 cards, or other devices; and 335.36 (2) prepaid telephone calling cards. 336.1 (c) Personal property does not include: 336.2 (1) large ponderous machinery and equipment used in a 336.3 business or production activity which at common law would be 336.4 considered to be real property; 336.5 (2) property which is subject to an ad valorem property 336.6 tax; 336.7 (3) property described in section 272.02, subdivision 9, 336.8 clauses (a) to (d); and 336.9 (4) property described in section 272.03, subdivision 2, 336.10 clauses (3) and (5). 336.11 Subd. 11. [COMMISSIONER.] "Commissioner" means the 336.12 commissioner of revenue of the state of Minnesota. 336.13 Subd. 12. [FARM MACHINERY.] (a) "Farm machinery" means new 336.14 or used machinery, equipment, implements, accessories, and 336.15 contrivances used directly and principally in the production for 336.16 sale, but not including the processing, of livestock, dairy 336.17 animals, dairy products, poultry and poultry products, fruits, 336.18 vegetables, forage, grains, and bees and apiary products. 336.19 (b) Farm machinery includes: 336.20 (1) machinery for the preparation, seeding, or cultivation 336.21 of soil for growing agricultural crops and sod, for the 336.22 harvesting and threshing of agricultural products, or for the 336.23 harvesting or mowing of sod; 336.24 (2) barn cleaners, milking systems, grain dryers, automatic 336.25 feeding systems, and similar installations, whether or not the 336.26 equipment is installed by the seller and becomes part of the 336.27 real property; 336.28 (3) irrigation equipment sold for exclusively agricultural 336.29 use, including pumps, pipe fittings, valves, sprinklers, and 336.30 other equipment necessary to the operation of an irrigation 336.31 system when sold as part of an irrigation system, whether or not 336.32 the equipment is installed by the seller and becomes part of the 336.33 real property; 336.34 (4) logging equipment, including chain saws used for 336.35 commercial logging; 336.36 (5) fencing used for the containment of farmed cervidae, as 337.1 defined in section 17.451, subdivision 2; 337.2 (6) primary and backup generator units used to generate 337.3 electricity for the purpose of operating farm machinery, as 337.4 defined in this subdivision, or providing light or space heating 337.5 necessary for the production of livestock, dairy animals, dairy 337.6 products, or poultry and poultry products; and 337.7 (7) aquaculture production equipment as defined in 337.8 subdivision 13. 337.9 (c) Farm machinery does not include: 337.10 (1) repair or replacement parts; 337.11 (2) tools, shop equipment, grain bins, feed bunks, fencing 337.12 material except fencing material covered by paragraph (b), 337.13 clause (5), communication equipment and other farm supplies; 337.14 (3) motor vehicles taxed under chapter 297B; 337.15 (4) snowmobiles or snow blowers; or 337.16 (5) lawn mowers except those used in the production of sod 337.17 for sale, or garden-type tractors or garden tillers. 337.18 Subd. 13. [AQUACULTURE PRODUCTION EQUIPMENT.] (a) 337.19 "Aquaculture production equipment" means new or used machinery, 337.20 equipment, implements, accessories, and contrivances used 337.21 directly and principally in aquaculture production. 337.22 (b) Aquaculture production equipment includes augers and 337.23 blowers, automatic feed systems, manual feeding equipment, 337.24 shockers, gill nets, trap nets, seines, box traps, round nets 337.25 and traps, net pens, dip nets, net washers, floating net 337.26 supports, floating access walkways, net supports and walkways, 337.27 growing tanks, holding tanks, troughs, raceways, transport 337.28 tanks, egg taking equipment, egg hatcheries, egg incubators, egg 337.29 baskets and troughs, egg graders, egg counting equipment, fish 337.30 counting equipment, fish graders, fish pumps and loaders, fish 337.31 elevators, air blowers, air compressors, oxygen generators, 337.32 oxygen regulators, diffusers and injectors, air supply 337.33 equipment, oxygenation columns, water coolers and heaters, heat 337.34 exchangers, water filter systems, water purification systems, 337.35 waste collection equipment, feed mills, portable scales, feed 337.36 grinders, feed mixers, feed carts and trucks, power feed wagons, 338.1 fertilizer spreaders, fertilizer tanks, forage collection 338.2 equipment, land levelers, loaders, post hole diggers, disc, 338.3 harrow, plow, and water diversion devices. 338.4 (c) Aquaculture production equipment does not include 338.5 repair or replacement parts for aquaculture production equipment. 338.6 Subd. 14. [LEASING; LEASE.] "Leasing" includes all 338.7 transfers of possession or the use of tangible personal property 338.8 by the lessee for a consideration, if title remains with the 338.9 lessor at the end of the lease. For purposes of this chapter, a 338.10 lease of tangible personal property is a series of sales 338.11 transactions that impose upon the lessee multiple payment 338.12 obligations. "Leasing" does not include a transaction defined 338.13 under subdivision 15. 338.14 Subd. 15. [CONDITIONAL SALES CONTRACT.] A "conditional 338.15 sales contract" means a contract, whether or not the contract is 338.16 designated as a lease, that provides that the purchaser or 338.17 lessee is to obtain title to the property at the end of the term 338.18 of the contract or has the option to purchase the property at 338.19 the end of the term of the contract for a nominal amount. For 338.20 purposes of this paragraph, "nominal amount" means an amount so 338.21 small, slight, or negligible that it is not economically 338.22 significant and bears no relation to the real value of the item 338.23 being purchased. 338.24 Subd. 16. [TAXABLE SERVICES.] (a) "Taxable services" means 338.25 the services listed in this subdivision and other services 338.26 listed in subdivision 3. 338.27 (b) Taxable services includes the granting of the privilege 338.28 of admission to places of amusement, recreational areas, or 338.29 athletic events, and the making available of amusement devices, 338.30 tanning facilities, reducing salons, steam baths, turkish baths, 338.31 health clubs, and spas or athletic facilities. 338.32 (c) Taxable services includes the furnishing of lodging and 338.33 related services by a hotel, rooming house, resort, campground, 338.34 motel, or trailer camp and the granting of any similar license 338.35 to use real property other than the renting or leasing thereof 338.36 for a continuous period of 30 days or more. 339.1 (d) Taxable services includes the furnishing of cable 339.2 television services or similar television services, including, 339.3 but not limited to, charges for basic, premium, pay-per-view, 339.4 and any other similar service. 339.5 (e) Taxable services includes the furnishing of parking 339.6 services, whether on a contractual, hourly, or other periodic 339.7 basis, except for parking at a meter. 339.8 (f) Taxable services includes the granting of membership in 339.9 a club, association, or other organization if: 339.10 (1) the club, association, or other organization makes 339.11 available for the use of its members sports and athletic 339.12 facilities, without regard to whether a separate charge is 339.13 assessed for use of the facilities; and 339.14 (2) use of the sports and athletic facility is not made 339.15 available to the general public on the same basis as it is made 339.16 available to members. 339.17 Granting of membership means both one-time initiation fees and 339.18 periodic membership dues. Sports and athletic facilities 339.19 include golf courses; tennis, racquetball, handball, and squash 339.20 courts; basketball and volleyball facilities; running tracks; 339.21 exercise equipment; swimming pools; and other similar athletic 339.22 or sports facilities. 339.23 (g) Taxable services includes the furnishing of the 339.24 following services as provided in this paragraph: 339.25 (1) laundry and dry cleaning services including cleaning, 339.26 pressing, repairing, altering, and storing clothes, linen 339.27 services and supply, cleaning and blocking hats, and carpet, 339.28 drapery, upholstery, and industrial cleaning. Laundry and dry 339.29 cleaning services do not include services provided by coin 339.30 operated facilities operated by the customer; 339.31 (2) motor vehicle washing, waxing, and cleaning services, 339.32 including services provided by coin operated facilities operated 339.33 by the customer, and rustproofing, undercoating, and towing of 339.34 motor vehicles; 339.35 (3) building and residential cleaning, maintenance, and 339.36 disinfecting and exterminating services; 340.1 (4) detective, security, burglar, fire alarm, and armored 340.2 car services; but not including services performed within the 340.3 jurisdiction they serve by off-duty licensed peace officers as 340.4 defined in section 626.84, subdivision 1, or services provided 340.5 by a nonprofit organization for monitoring and electronic 340.6 surveillance of persons placed on in-home detention pursuant to 340.7 court order or under the direction of the Minnesota department 340.8 of corrections; 340.9 (5) pet grooming services; 340.10 (6) lawn care, fertilizing, mowing, spraying and sprigging 340.11 services; garden planting and maintenance; tree, bush, and shrub 340.12 pruning, bracing, spraying, and surgery; indoor plant care; 340.13 tree, bush, shrub, and stump removal; and tree trimming for 340.14 public utility lines. Services performed under a construction 340.15 contract for the installation of shrubbery, plants, sod, trees, 340.16 bushes, and similar items are not taxable; 340.17 (7) massages, except when provided by a licensed health 340.18 care facility or professional or upon written referral from a 340.19 licensed health care facility or professional for treatment of 340.20 illness, injury, or disease; and 340.21 (8) the furnishing of lodging, board, and care services for 340.22 animals in kennels and other similar arrangements, but excluding 340.23 veterinary and horse boarding services. 340.24 The services listed in this paragraph are taxable under 340.25 section 297A.62 if the service is performed wholly within 340.26 Minnesota or if the service is performed partly within and 340.27 partly outside Minnesota and the greater proportion of the 340.28 service is performed in Minnesota, based on the cost of 340.29 performance. In applying the provisions of this chapter, the 340.30 terms "tangible personal property" and "sales at retail" include 340.31 taxable services and the provision of taxable services, unless 340.32 specifically provided otherwise. Services performed by an 340.33 employee for an employer are not taxable. Services performed by 340.34 a partnership or association for another partnership or 340.35 association are not taxable if one of the entities owns or 340.36 controls more than 80 percent of the voting power of the equity 341.1 interest in the other entity. Services performed between 341.2 members of an affiliated group of corporations are not taxable. 341.3 For purposes of this section, "affiliated group of corporations" 341.4 includes those entities that would be classified as members of 341.5 an affiliated group under United States Code, title 26, section 341.6 1504, and that are eligible to file a consolidated tax return 341.7 for federal income tax purposes. 341.8 Subd. 17. [COMPUTER SOFTWARE.] "Computer software" means a 341.9 computer program, either in the form of written procedures or in 341.10 the form of storage media on which, or in which, the program is 341.11 recorded, or any required documentation or manuals designed to 341.12 facilitate the use of the computer program. For purposes of 341.13 this subdivision: 341.14 (1) "Storage media" includes punched cards, tapes, discs, 341.15 diskettes, or drums on which computer programs may be embodied 341.16 or stored; 341.17 (2) "Computer" does not include tape-controlled automatic 341.18 drilling, milling, or other manufacturing machinery or 341.19 equipment; and 341.20 (3) "Computer program" means information and directions 341.21 that dictate the function performed by data processing 341.22 equipment. It includes the complete plan for the solution of a 341.23 problem, such as the complete sequence of automatic data 341.24 processing equipment instructions necessary to solve a problem 341.25 and includes both systems and application programs and 341.26 subdivisions, such as assemblers, compilers, routines, 341.27 generators, and utility programs. Computer program includes a 341.28 "canned" or prewritten computer program that is held or existing 341.29 for general or repeated sale or lease, even if the prewritten or 341.30 "canned" program was initially developed on a custom basis or 341.31 for in-house use. 341.32 Subd. 18. [HANDICAPPED.] "Handicapped" means an individual 341.33 who has a permanent and total disability as defined in section 341.34 273.13, subdivision 22. 341.35 Subd. 19. [COMMON CARRIER.] "Common carrier" means a 341.36 person engaged in transportation for hire of tangible personal 342.1 property by motor vehicle, if the person: 342.2 (1) has a certificate or permit or has completed a 342.3 registration process that authorizes for-hire transportation of 342.4 property from the United States Department of Transportation, 342.5 the transportation regulation board, or the department of 342.6 transportation; 342.7 (2) is transporting commodities defined as "exempt" in 342.8 for-hire transportation; or 342.9 (3) transports tangible personal property pursuant to a 342.10 contract with a person described in clause (1) or (2). 342.11 Subd. 20. [PREPAID TELEPHONE CALLING CARD.] "Prepaid 342.12 telephone calling card" means any card or other similar 342.13 arrangement, including a prepaid authorization number, that 342.14 permits its holder to obtain telephone services and pay for such 342.15 services in advance. 342.16 Subd. 21. [NORMAL COURSE OF BUSINESS.] "Normal course of 342.17 business" means activities that demonstrate a commercial 342.18 continuity or consistency of making sales or performing services 342.19 for the purposes of attaining profit or producing income. 342.20 Factors that indicate that a person is acting in the normal 342.21 course of business include: 342.22 (1) systematic solicitation of sales through advertising 342.23 media; 342.24 (2) entering into contracts to perform services or provide 342.25 tangible personal property; 342.26 (3) maintaining a place of business; or 342.27 (4) use of exemption certificates to purchase items exempt 342.28 from the sales tax. 342.29 Subd. 22. [INTERNAL REVENUE CODE.] Unless specifically 342.30 provided otherwise, "Internal Revenue Code" means the Internal 342.31 Revenue Code of 1986, as amended through December 31, 1999. 342.32 Subd. 23. [UNITED STATES CODE.] Unless specifically 342.33 provided otherwise, "United States Code" means the United States 342.34 Code as amended through December 31, 1999. 342.35 TAXES; RATES 342.36 Sec. 5. [297A.62] [SALES TAX IMPOSED; RATES.] 343.1 Subdivision 1. [GENERALLY.] Except as otherwise provided 343.2 in subdivision 2 or 3 or in this chapter, a sales tax of 6.5 343.3 percent is imposed on the gross receipts from retail sales as 343.4 defined in section 297A.61, subdivision 4, made in this state or 343.5 to a destination in this state by a person who is required to 343.6 have or voluntarily obtains a permit under section 297A.83, 343.7 subdivision 1. 343.8 Subd. 2. [LIQUOR AND BEER SALES.] The rate of the sales 343.9 tax imposed is nine percent on the gross receipts from retail 343.10 sales of: 343.11 (1) intoxicating liquor, as defined in section 340A.101, 343.12 subdivision 14; and 343.13 (2) 3.2 percent malt liquor, as defined in section 343.14 340A.101, subdivision 19, when sold at an on-sale or off-sale 343.15 municipal liquor store or other establishment licensed to sell 343.16 any type of intoxicating liquor. 343.17 Subd. 3. [MANUFACTURED HOUSING AND PARK TRAILERS.] For 343.18 retail sales of manufactured homes as defined in section 327.31, 343.19 subdivision 6, for residential uses, the sales tax under 343.20 subdivision 1 is imposed on 65 percent of the dealer's cost of 343.21 the manufactured home. For retail sales of new or used park 343.22 trailers, as defined in section 168.011, subdivision 8, 343.23 paragraph (b), the sales tax under subdivision 1 is imposed on 343.24 65 percent of the sales price of the park trailer. 343.25 Sec. 6. [297A.63] [USE TAXES IMPOSED; RATES.] 343.26 Subdivision 1. [USE OF TANGIBLE PERSONAL PROPERTY OR 343.27 TAXABLE SERVICES.] (a) For the privilege of using, storing, 343.28 distributing, or consuming in Minnesota tangible personal 343.29 property or taxable services purchased for use, storage, 343.30 distribution, or consumption in this state, a use tax is imposed 343.31 on a person in Minnesota. The tax is imposed on the sales price 343.32 of retail sales of the tangible personal property or taxable 343.33 services at the rate of tax imposed under section 297A.62. 343.34 (b) No tax is imposed under paragraph (a) if the tax 343.35 imposed by section 297A.62 was paid on the sales price of the 343.36 tangible personal property or taxable services. 344.1 (c) No tax is imposed under paragraph (a) if the purchase 344.2 meets the requirements for exemption under section 297A.67, 344.3 subdivision 21. 344.4 Subd. 2. [USE OF TANGIBLE PERSONAL PROPERTY MADE FROM 344.5 MATERIALS.] (a) A use tax is imposed on a person who 344.6 manufactures, fabricates, or assembles tangible personal 344.7 property from materials, either within or outside this state and 344.8 who uses, stores, distributes, or consumes the tangible personal 344.9 property in Minnesota. The tax is imposed on the sales price of 344.10 retail sales of the materials contained in the tangible personal 344.11 property at the rate of tax imposed under section 297A.62. 344.12 (b) No tax is imposed under paragraph (a) if the tax 344.13 imposed by section 297A.62 was paid on the sales price of 344.14 materials contained in the tangible personal property. 344.15 Sec. 7. [297A.64] [RENTAL MOTOR VEHICLE TAX IMPOSED; 344.16 RATE.] 344.17 Subdivision 1. [TAX IMPOSED.] A tax is imposed on the 344.18 lease or rental in this state for not more than 28 days of a 344.19 passenger automobile as defined in section 168.011, subdivision 344.20 7, a van as defined in section 168.011, subdivision 28, or a 344.21 pickup truck as defined in section 168.011, subdivision 29. The 344.22 rate of tax is 6.2 percent of the sales price. The tax applies 344.23 whether or not the vehicle is licensed in the state. 344.24 Subd. 2. [FEE IMPOSED.] A fee equal to three percent of 344.25 the sales price is imposed on leases or rentals of vehicles 344.26 subject to the tax under subdivision 1. The lessor on the 344.27 invoice to the customer may designate the fee as "a fee imposed 344.28 by the State of Minnesota for the registration of rental cars." 344.29 Subd. 3. [ADMINISTRATION.] The retailer shall report and 344.30 pay the tax imposed in subdivision 1 to the commissioner of 344.31 revenue with the taxes imposed in this chapter. The tax imposed 344.32 in subdivision 1 and the fee imposed in subdivision 2 are 344.33 subject to the same interest, penalty, and other provisions 344.34 provided for sales and use taxes under chapter 289A and this 344.35 chapter. The commissioner has the same powers to assess and 344.36 collect the tax and fee that are given the commissioner in 345.1 chapters 270 and 289A and this chapter to assess and collect 345.2 sales and use tax. 345.3 Subd. 4. [EXEMPTIONS.] (a) The tax and the fee imposed by 345.4 this section do not apply to a lease or rental of (1) a vehicle 345.5 to be used by the lessee to provide a licensed taxi service; (2) 345.6 a hearse or limousine used in connection with a burial or 345.7 funeral service; or (3) a van designed or adapted primarily for 345.8 transporting property rather than passengers. 345.9 (b) The lessor may elect not to charge the fee imposed in 345.10 subdivision 2 if in the previous calendar year the lessor had no 345.11 more than 20 vehicles available for lease that would have been 345.12 subject to tax under this section, or no more than $50,000 in 345.13 gross receipts that would have been subject to tax under this 345.14 section. 345.15 Subd. 5. [PAYMENT OF EXCESS FEES.] On the first sales tax 345.16 return due following the end of a calendar year during which a 345.17 lessor has imposed a fee under subdivision 2, the lessor shall 345.18 report to the commissioner of revenue, in the form required by 345.19 the commissioner, the amount of the fee collected during the 345.20 previous year and the amount of motor vehicle registration taxes 345.21 paid during the previous year by the lessor under chapter 168 on 345.22 vehicles subject to the fee under this section. If the amount 345.23 of the fees collected exceeds the amount of motor vehicle 345.24 registration taxes paid, the lessor shall remit the excess to 345.25 the commissioner of revenue at the time the report is submitted. 345.26 Sec. 8. [297A.65] [LOTTERY TICKETS; IN-LIEU TAX.] 345.27 Sales of state lottery tickets are exempt from the tax 345.28 imposed under section 297A.62. The state lottery must on or 345.29 before the 20th day of each month transmit to the commissioner 345.30 of revenue an amount equal to the gross receipts from the sale 345.31 of lottery tickets for the previous month multiplied by the tax 345.32 rate under section 297A.62, subdivision 1. The resulting 345.33 payment is in lieu of the sales tax that otherwise would be 345.34 imposed by this chapter. The commissioner shall deposit the 345.35 money transmitted as provided by section 297A.94 and the money 345.36 must be treated as other proceeds of the sales tax. For 346.1 purposes of this section, "gross receipts" means the proceeds of 346.2 the sale of tickets before deduction of a commission or other 346.3 compensation paid to the vendor or retailer for selling tickets. 346.4 REQUIREMENT TO COLLECT AND REMIT 346.5 Sec. 9. [297A.66] [JURISDICTION TO REQUIRE COLLECTION AND 346.6 REMITTANCE OF TAX BY RETAILER.] 346.7 Subdivision 1. [DEFINITIONS.] (a) "Retailer maintaining a 346.8 place of business in this state," or a similar term, means a 346.9 retailer: 346.10 (1) having or maintaining within this state, directly or by 346.11 a subsidiary, an office, place of distribution, sales or sample 346.12 room or place, warehouse, or other place of business; or 346.13 (2) having a representative, agent, salesperson, canvasser, 346.14 or solicitor operating in this state under the authority of the 346.15 retailer or its subsidiary, for any purpose, including the 346.16 repairing, selling, delivering, installing, or soliciting of 346.17 orders for the retailer's goods or services, or the leasing of 346.18 tangible personal property located in this state, whether the 346.19 place of business or agent, representative, salesperson, 346.20 canvasser, or solicitor is located in the state permanently or 346.21 temporarily, or whether or not the retailer or subsidiary is 346.22 authorized to do business in this state. 346.23 (b) "Destination of a sale" means the location to which the 346.24 retailer makes delivery of the property sold, or causes the 346.25 property to be delivered, to the purchaser of the property, or 346.26 to the agent or designee of the purchaser. The delivery may be 346.27 made by any means, including the United States Postal Service, a 346.28 common carrier, or a contract carrier. 346.29 Subd. 2. [RETAILER MAINTAINING A PLACE OF BUSINESS IN THIS 346.30 STATE.] (a) A retailer maintaining a place of business in this 346.31 state who makes retail sales in Minnesota or to a destination in 346.32 Minnesota shall collect sales and use taxes and remit them to 346.33 the commissioner under section 297A.77. 346.34 Subd. 3. [RETAILER NOT MAINTAINING A PLACE OF BUSINESS IN 346.35 THIS STATE.] (a) To the extent allowed by the United States 346.36 Constitution and the laws of the United States, a retailer 347.1 making retail sales from outside this state to a destination 347.2 within this state and not maintaining a place of business in 347.3 this state shall collect sales and use taxes and remit them to 347.4 the commissioner under section 297A.77, if the retailer engages 347.5 in the regular or systematic soliciting of sales from potential 347.6 customers in this state by: 347.7 (1) distribution, by mail or otherwise, of catalogs, 347.8 periodicals, advertising flyers, or other written solicitations 347.9 of business to customers in this state; 347.10 (2) display of advertisements on billboards or other 347.11 outdoor advertising in this state; 347.12 (3) advertisements in newspapers published in this state; 347.13 (4) advertisements in trade journals or other periodicals 347.14 the circulation of which is primarily within this state; 347.15 (5) advertisements in a Minnesota edition of a national or 347.16 regional publication or a limited regional edition in which this 347.17 state is included as part of a broader regional or national 347.18 publication which are not placed in other geographically defined 347.19 editions of the same issue of the same publication; 347.20 (6) advertisements in regional or national publications in 347.21 an edition which is not by its contents geographically targeted 347.22 to Minnesota but which is sold over the counter in Minnesota or 347.23 by subscription to Minnesota residents; 347.24 (7) advertisements broadcast on a radio or television 347.25 station located in Minnesota; or 347.26 (8) any other solicitation by telegraphy, telephone, 347.27 computer database, cable, optic, microwave, or other 347.28 communication system. 347.29 This paragraph (a) must be construed without regard to the 347.30 state from which distribution of the materials originated or in 347.31 which they were prepared. 347.32 (b) The location of vendors independent of the retailer 347.33 that provide products or services to the retailer in connection 347.34 with its solicitation of customers within this state, including 347.35 such products and services as creation of copy, printing, 347.36 distribution, and recording, is not considered in determining 348.1 whether the retailer is required to collect tax. 348.2 (c) A retailer not maintaining a place of business in this 348.3 state is presumed, subject to rebuttal, to be engaged in regular 348.4 solicitation within this state if it engages in any of the 348.5 activities in paragraph (a) and: 348.6 (1) makes 100 or more retail sales from outside this state 348.7 to destinations in this state during a period of 12 consecutive 348.8 months; or 348.9 (2) makes ten or more retail sales totaling more than 348.10 $100,000 from outside this state to destinations in this state 348.11 during a period of 12 consecutive months. 348.12 Sec. 10. [297A.665] [PRESUMPTION OF TAX; BURDEN OF PROOF.] 348.13 (a) For the purpose of the proper administration of this 348.14 chapter and to prevent evasion of the tax, until the contrary is 348.15 established, it is presumed that: 348.16 (1) all gross receipts are subject to the tax; and 348.17 (2) all retail sales for delivery in Minnesota are for 348.18 storage, use, or other consumption in Minnesota. 348.19 (b) The burden of proving that a sale is not a retail sale 348.20 is on the seller. However, the seller may take from the 348.21 purchaser at the time of the sale an exemption certificate 348.22 claiming that the property purchased is for resale or that the 348.23 sale is otherwise exempt from the tax imposed by this chapter. 348.24 A seller claiming that certain sales are exempt, who does not 348.25 possess the required exemption certificates, must acquire the 348.26 certificates within 60 days after receiving written notice from 348.27 the commissioner that the certificates are required. If the 348.28 certificates are not obtained within the 60-day period, the 348.29 sales are considered taxable sales under this chapter. 348.30 (c) A purchaser of tangible personal property or any items 348.31 listed in section 297A.63 that are shipped or brought to 348.32 Minnesota by the purchaser has the burden of proving that the 348.33 property was not purchased from a retailer for storage, use, or 348.34 consumption in Minnesota. 348.35 EXEMPTIONS 348.36 Sec. 11. [297A.67] [GENERAL EXEMPTIONS.] 349.1 Subdivision 1. [SCOPE.] The gross receipts from the sale 349.2 and purchase of, and storage, distribution, use, or consumption 349.3 of the items contained in this section are specifically exempted 349.4 from the taxes imposed by this chapter. 349.5 Subd. 2. [FOOD PRODUCTS.] Food products including, but not 349.6 limited to, cereal and cereal products, butter, cheese, milk and 349.7 milk products, oleomargarine, meat and meat products, fish and 349.8 fish products, eggs and egg products, vegetables and vegetable 349.9 products, fruit and fruit products, spices and salt, sugar and 349.10 sugar products, coffee and coffee substitutes, tea, and cocoa 349.11 and cocoa products are exempt. 349.12 Subd. 3. [FOOD STAMPS.] Tangible personal property 349.13 purchased with food stamps, coupons, or vouchers issued by the 349.14 federal government under the Food Stamp Program is exempt. This 349.15 exemption also applies to food purchased under the Special 349.16 Supplemental Food Program for Women, Infants, and Children. The 349.17 exemption provided by this subdivision is effective and applies 349.18 only to the extent required by federal law. 349.19 Subd. 4. [EXEMPT MEALS AT RESIDENTIAL FACILITIES.] Meals 349.20 or drinks served to patients, inmates, or persons residing at 349.21 hospitals, sanitariums, nursing homes, senior citizen homes, and 349.22 correctional, detention, and detoxification facilities are 349.23 exempt. 349.24 Subd. 5. [EXEMPT MEALS AT SCHOOLS.] Meals and lunches 349.25 served at public and private schools, universities, or colleges 349.26 are exempt. 349.27 Subd. 6. [OTHER EXEMPT MEALS.] Meals or drinks purchased 349.28 for and served exclusively to individuals who are 60 years of 349.29 age or over and their spouses or to handicapped persons and 349.30 their spouses by governmental agencies, nonprofit organizations, 349.31 or churches, or pursuant to any program funded in whole or in 349.32 part through United States Code, title 42, sections 3001 through 349.33 3045, wherever delivered, prepared, or served, are exempt. 349.34 Subd. 7. [MEDICINES; MEDICAL DEVICES.] (a) Prescribed 349.35 drugs and medicine, and insulin, intended for internal or 349.36 external use, in the cure, mitigation, treatment, or prevention 350.1 of illness or disease in human beings are exempt. "Prescribed 350.2 drugs and medicine" includes over-the-counter drugs or medicine 350.3 prescribed by a licensed physician. 350.4 (b) Nonprescription medicines consisting principally 350.5 (determined by the weight of all ingredients) of analgesics that 350.6 are approved by the United States Food and Drug Administration 350.7 for internal use by human beings are exempt. For purposes of 350.8 this subdivision, "principally" means greater than 50 percent 350.9 analgesics by weight. 350.10 (c) Prescription glasses, hospital beds, fever 350.11 thermometers, reusable finger-pricking devices for the 350.12 extraction of blood, blood glucose monitoring machines, and 350.13 other diagnostic agents used in diagnosing, monitoring, or 350.14 treating diabetes, and therapeutic and prosthetic devices are 350.15 exempt. "Therapeutic devices" means devices that are attached 350.16 or applied to the human body to cure, heal, or alleviate injury, 350.17 illness, or disease, either directly or by administering a 350.18 curative agent. "Prosthetic devices" means devices that replace 350.19 injured, diseased, or missing parts of the human body, either 350.20 temporarily or permanently. 350.21 Subd. 8. [CLOTHING.] Clothing and wearing apparel, 350.22 including sewing materials to be directly incorporated into 350.23 wearing apparel, are exempt. For purposes of this subdivision, 350.24 clothing and wearing apparel do not include the following: 350.25 (1) articles designed primarily for use while engaging in a 350.26 specific sport or recreational activity that are not also worn 350.27 for general use; 350.28 (2) articles designed primarily to provide safety or 350.29 protection against injury while the user is engaged in 350.30 industrial or general job activities; 350.31 (3) all articles commonly or commercially known as jewelry 350.32 including, but not limited to, watches; 350.33 (4) nonprescription optical glasses of any sort; 350.34 (5) articles made entirely of fur on the hide or pelt, or 350.35 partially of such fur if the value of the fur is more than three 350.36 times the value of the next most valuable component material; 351.1 (6) perfume, lotions, creams, dyes, or other substances 351.2 that are applied to the skin or the hair; and 351.3 (7) luggage, bags, purses, wallets, or cases of any sort. 351.4 Subd. 9. [BABY PRODUCTS.] (a) Products, such as lotion, 351.5 creams, ointments, oil, powder, or shampoo, and other articles 351.6 designed for application to the hair or skin of babies are 351.7 exempt. 351.8 (b) Baby bottles and nipples, pacifiers, teething rings, 351.9 thumb sucking preventatives, and infant syringes are exempt. 351.10 Subd. 10. [CASKETS; VAULTS.] Caskets and burial vaults for 351.11 human burial are exempt. 351.12 Subd. 11. [AUTOMOBILES; DISABLED VETERANS.] Automobiles or 351.13 other conveyances are exempt if the purchaser is assisted by a 351.14 grant from the United States in accordance with United States 351.15 Code, title 38, section 3902. 351.16 Subd. 12. [PARTS AND ACCESSORIES USED TO MAKE A MOTOR 351.17 VEHICLE HANDICAPPED ACCESSIBLE.] Parts, accessories, and labor 351.18 charges that are used solely to modify a motor vehicle to make 351.19 it handicapped accessible are exempt. 351.20 Subd. 13. [TEXTBOOKS.] Textbooks that are prescribed for 351.21 use in conjunction with a course of study in a school, college, 351.22 university, and private career school to students who are 351.23 regularly enrolled at such institutions are exempt. For 351.24 purposes of this subdivision (1) a "school" is as defined in 351.25 section 120A.22, subdivision 4; and (2) "private career school" 351.26 means a school licensed under section 141.25. 351.27 Subd. 14. [PERSONAL COMPUTERS PRESCRIBED FOR USE BY 351.28 SCHOOL.] Personal computers and related computer software sold 351.29 by a school, college, university, or private career school to 351.30 students who are enrolled at the institutions are exempt if: 351.31 (1) the use of the personal computer, or of a substantially 351.32 similar model of computer, and the related computer software is 351.33 prescribed by the institution in conjunction with a course of 351.34 study; and 351.35 (2) each student of the institution, or of a unit of the 351.36 institution in which the student is enrolled, is required by the 352.1 institution to have such a personal computer and related 352.2 software as a condition of enrollment. 352.3 For the purposes of this subdivision, "school" and "private 352.4 career school" have the meanings given in subdivision 13. 352.5 Subd. 15. [RESIDENTIAL HEATING FUELS.] Residential heating 352.6 fuels are exempt as follows: 352.7 (1) all fuel oil, coal, wood, steam, hot water, propane 352.8 gas, and L.P. gas sold to residential customers for residential 352.9 use; 352.10 (2) for the billing months of November, December, January, 352.11 February, March, and April, natural gas sold for residential use 352.12 to customers who are metered and billed as residential users and 352.13 who use natural gas for their primary source of residential 352.14 heat; and 352.15 (3) for the billing months of November, December, January, 352.16 February, March, and April, electricity sold for residential use 352.17 to customers who are metered and billed as residential users and 352.18 who use electricity for their primary source of residential heat. 352.19 Subd. 16. [RESIDENTIAL WATER SERVICES.] Water services for 352.20 residential use are exempt regardless of how the services are 352.21 billed. 352.22 Subd. 17. [FEMININE HYGIENE PRODUCTS.] Sanitary napkins, 352.23 tampons, or similar items used for feminine hygiene are exempt. 352.24 Subd. 18. [USED MOTOR OILS.] Used motor oils are exempt. 352.25 Subd. 19. [CROSS-COUNTRY SKI PASSES.] Cross-country ski 352.26 passes issued under sections 85.40 to 85.43 are exempt. 352.27 Subd. 20. [MANUFACTURED HOMES.] Manufactured homes, as 352.28 defined in section 327.31, subdivision 6, to be used by the 352.29 purchaser for residential purposes are exempt, unless the sale 352.30 is the first retail sale of the manufactured home in this state. 352.31 Subd. 21. [DE MINIMIS EXEMPTION.] A purchase subject to 352.32 use tax under section 297A.63 is exempt if (1) the purchase is 352.33 made by an individual for personal use, and (2) the total 352.34 purchases that are subject to the use tax do not exceed $770 in 352.35 the calendar year. For purposes of this subdivision, "personal 352.36 use" includes purchases for gifts. If an individual makes 353.1 purchases subject to use tax of more than $770 in the calendar 353.2 year, the individual must pay the use tax on the entire amount. 353.3 This exemption does not apply to purchases made from retailers 353.4 who are required or registered to collect taxes under this 353.5 chapter. 353.6 Subd. 22. [PROPERTY BROUGHT INTO MINNESOTA BY 353.7 NONRESIDENT.] All articles of tangible personal property brought 353.8 into Minnesota by a person who was a nonresident of this state 353.9 immediately prior to bringing such property into this state for 353.10 the person's use, storage, or consumption are exempt from the 353.11 use tax imposed by section 297A.63. 353.12 Subd. 23. [OCCASIONAL SALES.] Isolated and occasional 353.13 sales in Minnesota not made in the normal course of business, 353.14 and the storage, use, or consumption of property or services 353.15 resulting from such sales, are exempt. 353.16 Subd. 24. [CONSTITUTIONAL PROHIBITIONS.] The gross 353.17 receipts from the sale of and the storage, use, or other 353.18 consumption in Minnesota of tangible personal property, tickets, 353.19 or admissions, electricity, gas, or local exchange telephone 353.20 service, that the state of Minnesota is prohibited from taxing 353.21 under the Constitution or laws of the United States or under the 353.22 Constitution of Minnesota, are exempt. 353.23 Sec. 12. [297A.68] [BUSINESS EXEMPTIONS.] 353.24 Subdivision 1. [SCOPE.] The gross receipts from the sale 353.25 of, and storage, distribution, use, or consumption of the items 353.26 contained in this section are specifically exempted from the 353.27 taxes imposed by this chapter. 353.28 Subd. 2. [MATERIALS CONSUMED IN PRODUCTION.] (a) Materials 353.29 stored, used, or consumed in industrial production of personal 353.30 property intended to be sold ultimately at retail are exempt, 353.31 whether or not the item so used becomes an ingredient or 353.32 constituent part of the property produced. Materials that 353.33 qualify for this exemption include, but are not limited to, the 353.34 following: 353.35 (1) chemicals, including chemicals used for cleaning food 353.36 processing machinery and equipment; 354.1 (2) materials, including chemicals, fuels, and electricity 354.2 purchased by persons engaged in industrial production to treat 354.3 waste generated as a result of the production process; 354.4 (3) fuels, electricity, gas, and steam used or consumed in 354.5 the production process, except that electricity, gas, or steam 354.6 used for space heating or lighting is exempt only if it is 354.7 necessary to produce that particular industrial product; 354.8 (4) petroleum products and lubricants; 354.9 (5) packaging materials, including returnable containers 354.10 used in packaging food and beverage products; 354.11 (6) accessory tools, equipment, and other items that are 354.12 separate detachable units with an ordinary useful life of less 354.13 than 12 months used in producing a direct effect upon the 354.14 product; and 354.15 (7) the following materials, tools, and equipment used in 354.16 metalcasting: crucibles, thermocouple protection sheaths and 354.17 tubes, stalk tubes, refractory materials, molten metal filters 354.18 and filter boxes, and degassing lances. 354.19 (b) This exemption does not include: 354.20 (1) machinery, equipment, implements, tools, accessories, 354.21 appliances, contrivances and furniture and fixtures, except 354.22 those listed in paragraph (a), clause (6); and 354.23 (2) petroleum and special fuels used in producing or 354.24 generating power for propelling ready-mixed concrete trucks on 354.25 the public highways of this state. 354.26 (c) Industrial production includes, but is not limited to, 354.27 research, development, design or production of any tangible 354.28 personal property, manufacturing, processing (other than by 354.29 restaurants and consumers) of agricultural products (whether 354.30 vegetable or animal), commercial fishing, refining, smelting, 354.31 reducing, brewing, distilling, printing, mining, quarrying, 354.32 lumbering, generating electricity and the production of road 354.33 building materials. Industrial production does not include 354.34 painting, cleaning, repairing or similar processing of property 354.35 except as part of the original manufacturing process. 354.36 Subd. 3. [MATERIALS USED IN PROVIDING CERTAIN TAXABLE 355.1 SERVICES.] (a) Materials stored, used, or consumed in providing 355.2 a taxable service listed in section 297A.61, subdivision 16, 355.3 paragraph (g), intended to be sold ultimately at retail are 355.4 exempt. 355.5 (b) This exemption includes, but is not limited to: 355.6 (1) chemicals, lubricants, packaging materials, seeds, 355.7 trees, fertilizers, and herbicides, if these items are used or 355.8 consumed in providing the taxable service; 355.9 (2) chemicals used to treat waste generated as a result of 355.10 providing the taxable service; 355.11 (3) accessory tools, equipment, and other items that are 355.12 separate detachable units used in providing the service and that 355.13 have an ordinary useful life of less than 12 months; and 355.14 (4) fuel, electricity, gas, and steam used or consumed in 355.15 the production process, except that electricity, gas, or steam 355.16 used for space heating or lighting is exempt only if it is 355.17 necessary to produce that particular taxable service. 355.18 (c) This exemption does not include machinery, equipment, 355.19 implements, tools, accessories, appliances, contrivances, 355.20 furniture, and fixtures used in providing the taxable service. 355.21 Subd. 4. [TACONITE PRODUCTION MATERIALS.] Mill liners, 355.22 grinding rods, and grinding balls that are substantially 355.23 consumed in the production of taconite are exempt when sold to 355.24 or stored, used, or consumed by persons taxed under the in-lieu 355.25 provisions of chapter 298. 355.26 Subd. 5. [CAPITAL EQUIPMENT.] (a) Capital equipment is 355.27 exempt. The tax must be imposed and collected as if the rate 355.28 under section 297A.62, subdivision 1, applied, and then refunded 355.29 in the manner provided in section 297A.75. 355.30 "Capital equipment" means machinery and equipment purchased 355.31 or leased and used in this state by the purchaser or lessee 355.32 primarily for manufacturing, fabricating, mining, or refining 355.33 tangible personal property to be sold ultimately at retail. 355.34 Capital equipment means machinery and equipment essential 355.35 to the integrated production process. Capital equipment also 355.36 includes machinery and equipment used to electronically transmit 356.1 results retrieved by a customer of an online computerized data 356.2 retrieval system. 356.3 (b) Capital equipment includes, but is not limited to: 356.4 (1) machinery and equipment used to operate, control, or 356.5 regulate the production equipment; 356.6 (2) machinery and equipment used for research and 356.7 development, design, quality control, and testing activities; 356.8 (3) environmental control devices that are used to maintain 356.9 conditions such as temperature, humidity, light, or air pressure 356.10 when those conditions are essential to and are part of the 356.11 production process; 356.12 (4) materials and supplies used to construct and install 356.13 machinery or equipment; 356.14 (5) repair and replacement parts, including accessories, 356.15 whether purchased as spare parts, repair parts, or as upgrades 356.16 or modifications to machinery or equipment; 356.17 (6) materials used for foundations that support machinery 356.18 or equipment; 356.19 (7) materials used to construct and install special purpose 356.20 buildings used in the production process; and 356.21 (8) ready-mixed concrete trucks in which the ready-mixed 356.22 concrete is mixed as part of the delivery process. 356.23 (c) Capital equipment does not include the following: 356.24 (1) motor vehicles taxed under chapter 297B; 356.25 (2) machinery or equipment used to receive or store raw 356.26 materials; 356.27 (3) building materials, except for materials included in 356.28 paragraph (b), clauses (6) and (7); 356.29 (4) machinery or equipment used for nonproduction purposes, 356.30 including, but not limited to, the following: plant security, 356.31 fire prevention, first aid, and hospital stations; support 356.32 operations or administration; pollution control; and plant 356.33 cleaning, disposal of scrap and waste, plant communications, 356.34 space heating, lighting, or safety; 356.35 (5) farm machinery and aquaculture production equipment as 356.36 defined by section 297A.61, subdivisions 12 and 13; 357.1 (6) machinery or equipment purchased and installed by a 357.2 contractor as part of an improvement to real property; or 357.3 (7) any other item that is not essential to the integrated 357.4 process of manufacturing, fabricating, mining, or refining. 357.5 (d) For purposes of this subdivision: 357.6 (1) "Machinery" means mechanical, electronic, or electrical 357.7 devices, including computers and computer software, that are 357.8 purchased or constructed to be used for the activities set forth 357.9 in paragraph (a). 357.10 (2) "Equipment" means independent devices or tools separate 357.11 from machinery, including computers and computer software, used 357.12 in operating, controlling, or regulating machinery and 357.13 equipment; and any subunit or assembly comprising a component of 357.14 any machinery or accessory or attachment parts of machinery, 357.15 such as tools, dies, jigs, patterns, and molds. 357.16 (3) "Primarily" means machinery and equipment used 50 357.17 percent or more of the time in an activity described in 357.18 paragraph (a). 357.19 (4) "Manufacturing" means an operation or series of 357.20 operations where raw materials are changed in form, composition, 357.21 or condition by machinery and equipment and which results in the 357.22 production of a new article of tangible personal property. For 357.23 purposes of this subdivision, "manufacturing" includes the 357.24 generation of electricity or steam to be sold at retail. 357.25 (5) "Fabricating" means to make, build, create, produce, or 357.26 assemble components or property to work in a new or different 357.27 manner. 357.28 (6) "Mining" means the extraction of minerals, ores, stone, 357.29 or peat. 357.30 (7) "Refining" means the process of converting a natural 357.31 resource to a product, including the treatment of water to be 357.32 sold at retail. 357.33 (8) "Integrated production process" means a process 357.34 beginning with the removal of raw materials from inventory 357.35 through the completion of the product, including packaging of 357.36 the product. 358.1 (9) "Online data retrieval system" means a system whose 358.2 cumulation of information is equally available and accessible to 358.3 all its customers. 358.4 (10) "Machinery and equipment used for pollution control" 358.5 means machinery and equipment used solely to eliminate, prevent, 358.6 or reduce pollution resulting from an activity described in 358.7 paragraph (a). 358.8 Subd. 6. [SPECIAL TOOLING.] Special tooling is exempt. 358.9 "Special tooling" means tools, dies, jigs, patterns, gauges, and 358.10 other special tools that have value and use only for the buyer 358.11 and for the use for which they are made. An item has value and 358.12 use only to the buyer if the item is not standard enough to be 358.13 stocked or ordered from a catalog or other sales literature, but 358.14 must be produced in accordance with special requirements 358.15 peculiar to the buyer and not common to someone else whose 358.16 conditions for possible use of the material are reasonably 358.17 similar to the buyer's. 358.18 Subd. 7. [AIR COOLING EQUIPMENT.] Equipment used for air 358.19 cooling is exempt, if the equipment is purchased for conversion 358.20 or replacement of an existing groundwater-based once-through 358.21 cooling system as required under section 103G.271, subdivision 5. 358.22 Subd. 8. [POLLUTION CONTROL EQUIPMENT.] Pollution control 358.23 equipment purchased by a steel reprocessing firm is exempt if 358.24 the equipment is necessary to meet state or federal emission 358.25 standards. For purposes of this subdivision: 358.26 (1) "pollution control equipment" means equipment used for 358.27 the purpose of eliminating, preventing, or reducing air, land, 358.28 or water pollution during or as a result of the manufacturing 358.29 process; and 358.30 (2) "steel reprocessing firm" means a firm whose primary 358.31 business is the recovery of steel from automobiles, appliances, 358.32 and other steel products and the rerefining of this recovered 358.33 metal into new steel products. 358.34 Subd. 9. [SUPER BOWL ADMISSIONS.] The granting of the 358.35 privilege of admission to a world championship football game 358.36 sponsored by the national football league is exempt. 359.1 Subd. 10. [PUBLICATIONS; PUBLICATION MATERIALS.] Tangible 359.2 personal property that is used or consumed in producing any 359.3 publication regularly issued at average intervals not exceeding 359.4 three months is exempt, and any such publication is exempt. 359.5 "Publication" includes, but is not limited to, a qualified 359.6 newspaper as defined by section 331A.02, together with any 359.7 supplements or enclosures. "Publication" does not include 359.8 magazines and periodicals sold over the counter. Tangible 359.9 personal property that is used or consumed in producing a 359.10 publication does not include machinery, equipment, implements, 359.11 tools, accessories, appliances, contrivances, furniture, and 359.12 fixtures used in the publication, or fuel, electricity, gas, or 359.13 steam used for space heating or lighting. 359.14 Advertising contained in a publication is a nontaxable 359.15 service and is exempt. Persons who publish or sell newspapers 359.16 are engaging in a nontaxable service with respect to gross 359.17 receipts realized from such news-gathering or news-publishing 359.18 activities, including the sale of advertising. 359.19 Subd. 11. [ADVERTISING MATERIALS.] Material designed to 359.20 advertise and promote the sale of merchandise or services is 359.21 exempt if the material is purchased and stored for the purpose 359.22 of subsequently shipping or otherwise transferring outside the 359.23 state by the purchaser for later use solely outside the state of 359.24 Minnesota. Mailing and reply envelopes and cards used 359.25 exclusively in connection with these advertising and promotional 359.26 materials are included in this exemption regardless of where the 359.27 mailing occurs. 359.28 Subd. 12. [WIND ENERGY CONVERSION SYSTEMS.] Wind energy 359.29 conversion systems, as defined in section 216C.06, subdivision 359.30 12, that are used as an electric power source are exempt, and 359.31 the materials used to manufacture, install, construct, repair, 359.32 or replace them are exempt. 359.33 Subd. 13. [OUTSTATE TRANSPORT OR DELIVERY.] (a) Tangible 359.34 personal property is exempt if the property, without 359.35 intermediate use, is: 359.36 (1) shipped or transported outside Minnesota by the 360.1 purchaser or is stored, processed, fabricated or manufactured 360.2 into, attached to or incorporated into other tangible personal 360.3 property that is transported or shipped outside Minnesota; and 360.4 (2) used in a trade or business outside Minnesota after 360.5 being shipped or transported outside of Minnesota, and is not 360.6 returned to Minnesota, except in the course of interstate 360.7 commerce; and 360.8 (3) either (i) not subject to tax in the state or country 360.9 to which it is transported for storage or use, or (ii) to be 360.10 used in other states or countries as part of a maintenance 360.11 contract. 360.12 (b) For purposes of this subdivision, storage or 360.13 processing, fabricating, manufacturing, attaching to, or 360.14 incorporating into other property is not intermediate use. 360.15 Subd. 14. [TEMPORARY STORAGE.] Tangible personal property 360.16 is exempt if all of the following conditions are met: 360.17 (1) it is shipped or brought into Minnesota by a common 360.18 carrier; 360.19 (2) without intermediate use, it is kept in a public 360.20 warehouse; 360.21 (3) it is kept for the purpose of being later transported 360.22 outside Minnesota; and 360.23 (4) after storage, it is used solely outside Minnesota, 360.24 except in the course of interstate commerce. 360.25 Subd. 15. [OUTSTATE DELIVERY BY SELLER.] Property is 360.26 exempt if: 360.27 (1) it is delivered in one of the following ways: 360.28 (i) delivery by the seller to a common carrier for delivery 360.29 outside Minnesota; 360.30 (ii) placement in the United States mail or parcel post 360.31 directed to the purchaser outside Minnesota; or 360.32 (iii) delivery to the purchaser outside Minnesota by means 360.33 of the seller's own delivery vehicles; and 360.34 (2) it is not later returned to a point within Minnesota, 360.35 except in the course of interstate commerce. 360.36 Subd. 16. [PACKING MATERIALS.] Packing materials used to 361.1 pack and ship household goods are exempt if the ultimate 361.2 destination of the goods is outside Minnesota and if the goods 361.3 are not later returned to a point within Minnesota, except in 361.4 the course of interstate commerce. 361.5 Subd. 17. [SHIPS USED IN INTERSTATE COMMERCE.] Repair, 361.6 replacement, and rebuilding parts and materials, and lubricants, 361.7 for ships or vessels used or to be used principally in 361.8 interstate or foreign commerce are exempt. Vessels with a gross 361.9 registered tonnage of at least 3,000 tons are exempt. 361.10 Subd. 18. [CUSTOM COMPUTER SOFTWARE.] The design, 361.11 development, writing, translation, fabrication, lease, or 361.12 transfer for a consideration of title or possession of a custom 361.13 computer program is exempt. "Custom computer program" means a 361.14 computer program prepared to the special order of the customer, 361.15 either in the form of written procedures or in the form of 361.16 storage media on which, or in which, the program is recorded, or 361.17 any required documentation or manuals designed to facilitate the 361.18 use of the custom computer program transferred. It includes 361.19 those services represented by separately stated charges for 361.20 modifications to an existing prewritten program that are 361.21 prepared to the special order of the customer. It does not 361.22 include a "canned" or prewritten computer program that is held 361.23 or existing for general or repeated sale or lease, even if the 361.24 prewritten or "canned" program was initially developed on a 361.25 custom basis or for in-house use. Modification to an existing 361.26 prewritten program to meet the customer's needs is custom 361.27 computer programming only to the extent of the modification. 361.28 Subd. 19. [PETROLEUM PRODUCTS.] The following petroleum 361.29 products are exempt: 361.30 (1) products upon which a tax has been imposed and paid 361.31 under chapter 296A, and for which no refund has been or will be 361.32 allowed because the buyer used the fuel for nonhighway use; 361.33 (2) products that are used in the improvement of 361.34 agricultural land by constructing, maintaining, and repairing 361.35 drainage ditches, tile drainage systems, grass waterways, water 361.36 impoundment, and other erosion control structures; 362.1 (3) products purchased by a transit system receiving 362.2 financial assistance under section 174.24 or 473.384; 362.3 (4) products used in a passenger snowmobile, as defined in 362.4 section 296A.01, subdivision 39, for off-highway business use as 362.5 part of the operations of a resort as provided under section 362.6 296A.16, subdivision 2, clause (2); or 362.7 (5) products purchased by a state or a political 362.8 subdivision of a state for use in motor vehicles exempt from 362.9 registration under section 168.012, subdivision 1, paragraph (b). 362.10 Subd. 20. [NATURAL GAS IN VEHICLES.] Natural gas to be 362.11 used as a fuel in vehicles propelled by natural gas is exempt. 362.12 Subd. 21. [SNOWMAKING.] Electricity used to make snow for 362.13 outdoor use for ski hills, ski slopes, or ski trails is exempt. 362.14 Subd. 22. [COPIES OF COURT REPORTER DOCUMENTS.] 362.15 Transcripts or copies of transcripts of verbatim testimony are 362.16 exempt if produced and sold by court reporters or other 362.17 transcribers of legal proceedings to individuals or entities 362.18 that are parties to or representatives of parties to the 362.19 proceeding to which the transcript relates. 362.20 Subd. 23. [AUTOMATIC FIRE-SAFETY SPRINKLER SYSTEMS.] 362.21 Automatic fire-safety sprinkler systems described in section 362.22 273.11, subdivision 6a, are exempt. 362.23 Subd. 24. [WASTE PROCESSING EQUIPMENT.] Equipment used for 362.24 processing solid or hazardous waste at a resource recovery 362.25 facility, as defined in section 115A.03, subdivision 28, is 362.26 exempt, including pollution control equipment at a resource 362.27 recovery facility that burns refuse-derived fuel or mixed 362.28 municipal solid waste as its primary fuel. 362.29 Subd. 25. [OCCASIONAL SALES.] (a) Isolated or occasional 362.30 sales of tangible personal property in Minnesota not made in the 362.31 normal course of business of selling that kind of property are 362.32 exempt. The storage, use, or consumption of property acquired 362.33 as a result of such a sale is exempt. 362.34 (b) This exemption applies to a sale of tangible personal 362.35 property primarily used in a trade or business only if one of 362.36 the following conditions are satisfied: (1) the sale occurs in 363.1 a transaction subject to or described in section 118, 331, 332, 363.2 336, 337, 338, 351, 355, 368, 721, 731, 1031, or 1033 of the 363.3 Internal Revenue Code; (2) the sale is between members of a 363.4 controlled group as defined in section 1563(a) of the Internal 363.5 Revenue Code; (3) the sale is a sale of farm machinery; (4) the 363.6 sale is a farm auction sale; (5) the sale is a sale of 363.7 substantially all of the assets of a trade or business; or (6) 363.8 the total amount of gross receipts from the sale of trade or 363.9 business property made during the calendar month of the sale and 363.10 the preceding 11 calendar months does not exceed $1,000. 363.11 (c) For purposes of this subdivision, the following terms 363.12 have the meanings given. 363.13 (1) A "farm auction" is a public auction conducted by a 363.14 licensed auctioneer if substantially all of the property sold 363.15 consists of property used in the trade or business of farming 363.16 and property not used primarily in a trade or business. 363.17 (2) "Trade or business" includes the assets of a separate 363.18 division, branch, or identifiable segment of a trade or business 363.19 if, before the sale, the income and expenses attributable to the 363.20 separate division, branch, or identifiable segment could be 363.21 separately ascertained from the books of account or record (the 363.22 lease or rental of an identifiable segment does not qualify for 363.23 the exemption). 363.24 (3) A "sale of substantially all of the assets of a trade 363.25 or business" must occur as a single transaction or a series of 363.26 related transactions within the 12-month period beginning on the 363.27 date of the first sale of assets intended to qualify for the 363.28 exemption provided in paragraph (b), clause (5). 363.29 Subd. 26. [INTERSTATE WATS LINES.] Long distance telephone 363.30 services are exempt if the service (1) consists of a wide area 363.31 telephone line that permits a long distance call to an 363.32 individual or business located in Minnesota to be made from a 363.33 location outside of Minnesota at no toll charge to the person 363.34 placing the call; or (2) entitles a customer, upon payment of a 363.35 periodic charge that is determined either as a flat amount or 363.36 upon the basis of total elapsed transmission time, to the 364.1 privilege of an unlimited number of long distance calls made 364.2 from a location in Minnesota to a location outside of Minnesota 364.3 if the customer is a qualified provider of telemarketing 364.4 services. As used in this subdivision, a "qualified provider of 364.5 telemarketing services" is a telemarketing firm that derives at 364.6 least 80 percent of its revenues from one or more of the 364.7 following activities: soliciting or providing information, 364.8 soliciting sales or receiving orders, and conducting research by 364.9 means of telegraph, telephone, computer database, fiber optic, 364.10 microwave, or other communication system. 364.11 Subd. 27. [MOTOR VEHICLES.] Motor vehicles taxable under 364.12 the provisions of chapter 297B are exempt. 364.13 Subd. 28. [MEDICAL SUPPLIES.] Medical supplies purchased 364.14 by a licensed health care facility or licensed health care 364.15 professional to provide medical treatment to residents or 364.16 patients are exempt. The exemption does not apply to medical 364.17 equipment or components of medical equipment, laboratory 364.18 supplies, radiological supplies, and other items used in 364.19 providing medical services. For purposes of this subdivision, 364.20 "medical supplies" means adhesive and nonadhesive bandages, 364.21 gauze pads and strips, cotton applicators, antiseptics, 364.22 nonprescription drugs, eye solution, and other similar supplies 364.23 used directly on the resident or patient in providing medical 364.24 services. 364.25 Subd. 29. [PRIZES.] Tangible personal property that will 364.26 be given as prizes to players in games of skill or chance is 364.27 exempt if the games are conducted at events such as community 364.28 festivals, fairs, and carnivals and if the events last less than 364.29 six days. This exemption does not apply to property awarded as 364.30 prizes in connection with lawful gambling as defined in section 364.31 349.12 or the state lottery. 364.32 Subd. 30. [TELEVISION COMMERCIALS.] Tangible personal 364.33 property primarily used or consumed in the preproduction, 364.34 production, or postproduction of a television commercial is 364.35 exempt. Any such commercial, regardless of the medium in which 364.36 it is transferred, is exempt. "Preproduction" and "production" 365.1 include, but are not limited to, all activities related to the 365.2 preparation for shooting and the shooting of television 365.3 commercials, including film processing. Equipment rented for 365.4 the preproduction and production activities is exempt. 365.5 "Postproduction" includes, but is not limited to, all activities 365.6 related to the finishing and duplication of television 365.7 commercials. This exemption does not apply to tangible personal 365.8 property used primarily in administration, general management, 365.9 or marketing. Machinery and equipment purchased for use in 365.10 producing such commercials and fuel, electricity, gas, or steam 365.11 used for space heating or lighting are not exempt under this 365.12 subdivision. 365.13 Subd. 31. [WASTE MANAGEMENT CONTAINERS AND 365.14 COMPACTORS.] Compactors and waste collection containers are 365.15 exempt if they are purchased by a waste management service 365.16 provider and are used in providing waste management services as 365.17 defined in section 297H.01, subdivision 12. A waste management 365.18 service provider that does not remit tax on customer charges or 365.19 lease or rental payments for compactors and waste collection 365.20 containers under chapter 297H is ineligible for this exemption. 365.21 Subd. 32. [EVENTS LOCATED OUTSIDE MINNESOTA.] Tickets or 365.22 admissions to places of amusement located outside Minnesota or 365.23 to athletic events to be held outside Minnesota are exempt. 365.24 Sec. 13. [297A.69] [AGRICULTURAL EXEMPTIONS.] 365.25 Subdivision 1. [SCOPE.] The gross receipts from the sale 365.26 of, and storage, distribution, use, or consumption of the items 365.27 contained in this section are specifically exempted from the 365.28 taxes imposed by this chapter. 365.29 Subd. 2. [MATERIALS CONSUMED IN AGRICULTURAL PRODUCTION.] 365.30 (a) Materials stored, used, or consumed in agricultural 365.31 production of personal property intended to be sold ultimately 365.32 at retail are exempt, whether or not the item becomes an 365.33 ingredient or constituent part of the property produced. 365.34 Materials that qualify for this exemption include, but are not 365.35 limited to, the following: 365.36 (1) feeds, seeds, trees, fertilizers, and herbicides, 366.1 including when purchased for use by farmers in a federal or 366.2 state farm or conservation program; 366.3 (2) materials sold to a veterinarian to be used or consumed 366.4 in the care, medication, and treatment of agricultural 366.5 production animals and horses; 366.6 (3) chemicals, including chemicals used for cleaning food 366.7 processing machinery and equipment; 366.8 (4) materials, including chemicals, fuels, and electricity 366.9 purchased by persons engaged in agricultural production to treat 366.10 waste generated as a result of the production process; 366.11 (5) fuels, electricity, gas, and steam used or consumed in 366.12 the production process, except that electricity, gas, or steam 366.13 used for space heating or lighting is exempt only if it is 366.14 necessary to produce that particular agricultural product; 366.15 (6) petroleum products and lubricants; 366.16 (7) packaging materials, including returnable containers 366.17 used in packaging food and beverage products; and 366.18 (8) accessory tools and equipment that are separate 366.19 detachable units with an ordinary useful life of less than 12 366.20 months used in producing a direct effect upon the product. 366.21 Machinery, equipment, implements, tools, accessories, 366.22 appliances, contrivances, and furniture and fixtures, except 366.23 those listed in this clause are not included within this 366.24 exemption. 366.25 (b) For purposes of this subdivision, "agricultural 366.26 production" includes, but is not limited to, horticulture, 366.27 floriculture, and the raising of pets, fur-bearing animals, 366.28 research animals, horses, farmed cervidae as defined in section 366.29 17.451, subdivision 2, llamas as defined in section 17.455, 366.30 subdivision 2, and ratitae as defined in section 17.453, 366.31 subdivision 3. 366.32 Subd. 3. [FARM MACHINERY REPAIR PARTS.] Repair and 366.33 replacement parts, except tires, used for maintenance or repair 366.34 of farm machinery are exempt, if the part replaces a farm 366.35 machinery part assigned a specific or generic part number by the 366.36 manufacturer of the farm machinery. 367.1 Subd. 4. [FARM MACHINERY.] Farm machinery is exempt. 367.2 Subd. 5. [USED FARM TIRES.] The first $5,000 of gross 367.3 receipts from the sales of used, remanufactured, or repaired 367.4 tires for farm machinery, by a sole proprietor, in a calendar 367.5 year are exempt if: 367.6 (1) the seller had gross receipts from all sales of less 367.7 than $10,000 in the previous year; and 367.8 (2) the tires are not retreaded. 367.9 Subd. 6. [HORSES; RELATED MATERIALS.] (a) Horses, 367.10 including racehorses, are exempt. 367.11 (b) Materials, including feed and bedding, used or consumed 367.12 in the breeding, raising, owning, boarding, and keeping of 367.13 horses are exempt. Machinery, equipment, implements, tools, 367.14 appliances, furniture, and fixtures used in the breeding, 367.15 raising, owning, boarding, and keeping of horses are not 367.16 included within this exemption. 367.17 Sec. 14. [297A.70] [EXEMPTIONS FOR GOVERNMENTS AND 367.18 NONPROFIT GROUPS.] 367.19 Subdivision 1. [SCOPE.] (a) The gross receipts from sales 367.20 of items to or by, and storage, distribution, use, or 367.21 consumption of items by the organizations listed in this section 367.22 are specifically exempted from the taxes imposed by this chapter. 367.23 (b) Notwithstanding any law to the contrary enacted before 367.24 1992, only sales to governments and political subdivisions 367.25 listed in this section are exempt from the taxes imposed by this 367.26 chapter. 367.27 (c) "Sales" includes purchases under an installment 367.28 contract or lease purchase agreement under section 465.71. 367.29 Subd. 2. [SALES TO GOVERNMENT.] (a) All sales, except 367.30 those listed in paragraph (b), to the following governments and 367.31 political subdivisions, or to the listed agencies or 367.32 instrumentalities of governments and political subdivisions, are 367.33 exempt: 367.34 (1) the United States and its agencies and 367.35 instrumentalities; 367.36 (2) school districts, the University of Minnesota, state 368.1 universities, community colleges, technical colleges, state 368.2 academies, the Perpich Minnesota center for arts education, and 368.3 an instrumentality of a political subdivision that is accredited 368.4 as an optional/special function school by the North Central 368.5 Association of Colleges and Schools; 368.6 (3) hospitals and nursing homes owned and operated by 368.7 political subdivisions of the state; 368.8 (4) other states or political subdivisions of other states, 368.9 if the sale would be exempt from taxation if it occurred in that 368.10 state; and 368.11 (5) sales to public libraries, public library systems, 368.12 multicounty, multitype library systems as defined in section 368.13 134.001, county law libraries under chapter 134A, the state 368.14 library under section 480.09, and the legislative reference 368.15 library. 368.16 (b) This exemption does not apply to the sales of the 368.17 following products and services: 368.18 (1) building, construction, or reconstruction materials 368.19 purchased by a contractor or a subcontractor as a part of a 368.20 lump-sum contract or similar type of contract with a guaranteed 368.21 maximum price covering both labor and materials for use in the 368.22 construction, alteration, or repair of a building or facility; 368.23 (2) construction materials purchased by tax exempt entities 368.24 or their contractors to be used in constructing buildings or 368.25 facilities which will not be used principally by the tax exempt 368.26 entities; 368.27 (3) the leasing of a motor vehicle as defined in section 368.28 297B.01, subdivision 5, except for leases entered into by the 368.29 United States or its agencies or instrumentalities; or 368.30 (4) meals and lodging as defined under section 297A.61, 368.31 subdivisions 3, paragraph (d), and 15, paragraph (c), except for 368.32 meals and lodging purchased directly by the United States or its 368.33 agencies or instrumentalities. 368.34 (c) As used in this subdivision, "school districts" means 368.35 public school entities and districts of every kind and nature 368.36 organized under the laws of the state of Minnesota, and any 369.1 instrumentality of a school district, as defined in section 369.2 471.59. 369.3 Subd. 3. [SALES OF CERTAIN GOODS AND SERVICES TO 369.4 GOVERNMENT.] (a) The following sales to or use by the specified 369.5 governments and political subdivisions of the state are exempt: 369.6 (1) supplies and equipment used to provide medical care in 369.7 the operation of an ambulance service owned and operated by a 369.8 political subdivision of the state; 369.9 (2) repair and replacement parts for emergency rescue 369.10 vehicles, fire trucks, and fire apparatus to a political 369.11 subdivision; 369.12 (3) machinery and equipment, except for motor vehicles, 369.13 used directly for mixed municipal solid waste management 369.14 services at a solid waste disposal facility as defined in 369.15 section 115A.03, subdivision 10; 369.16 (4) chore and homemaking services to a political 369.17 subdivision of the state to be provided to elderly or disabled 369.18 individuals; 369.19 (5) telephone services to the department of administration 369.20 that are used to provide telecommunications services through the 369.21 intertechnologies revolving fund; 369.22 (6) firefighter personal protective equipment as defined in 369.23 paragraph (b), if purchased or authorized by and for the use of 369.24 an organized fire department, fire protection district, or fire 369.25 company regularly charged with the responsibility of providing 369.26 fire protection to the state or a political subdivision; 369.27 (7) bullet-resistant body armor that provides the wearer 369.28 with ballistic and trauma protection, if purchased by a law 369.29 enforcement agency of the state or a political subdivision of 369.30 the state, or a licensed peace officer, as defined in section 369.31 626.84, subdivision 1; 369.32 (8) motor vehicles purchased or leased by political 369.33 subdivisions of the state if the vehicles are exempt from 369.34 registration under section 168.012, subdivision 1, paragraph 369.35 (b); 369.36 (9) equipment designed to process, dewater, and recycle 370.1 biosolids for wastewater treatment facilities of political 370.2 subdivisions, and materials incidental to installation of that 370.3 equipment; and materials used to construct buildings to house 370.4 the equipment, if the materials are purchased after June 30, 370.5 1998, and before July 1, 2001; and 370.6 (10) sales to a town of gravel and of machinery, equipment, 370.7 and accessories, except motor vehicles, used exclusively for 370.8 road and bridge maintenance, and leases by a town of motor 370.9 vehicles exempt from tax under section 297B.03, clause (10). 370.10 (b) For purposes of this subdivision, "firefighters 370.11 personal protective equipment" means helmets, including face 370.12 shields, chin straps, and neck liners; bunker coats and pants, 370.13 including pant suspenders; boots; gloves; head covers or hoods; 370.14 wildfire jackets; protective coveralls; goggles; self-contained 370.15 breathing apparatus; canister filter masks; personal alert 370.16 safety systems; spanner belts; optical or thermal imaging search 370.17 devices; and all safety equipment required by the Occupational 370.18 Safety and Health Administration. 370.19 Subd. 4. [SALES TO NONPROFIT GROUPS.] (a) All sales, 370.20 except those listed in paragraph (b), to the following 370.21 "nonprofit organizations" are exempt: 370.22 (1) an entity organized and operated exclusively for 370.23 charitable, religious, or educational purposes if the item 370.24 purchased is used in the performance of charitable, religious, 370.25 or educational functions; 370.26 (2) any senior citizen group or association of groups that: 370.27 (i) in general limits membership to persons who are either 370.28 age 55 or older, or physically disabled; and 370.29 (ii) is organized and operated exclusively for pleasure, 370.30 recreation, and other nonprofit purposes, no part of the net 370.31 earnings of which inures to the benefit of any private 370.32 shareholders; and 370.33 (3) an entity organized and operated exclusively to 370.34 maintain a cemetery owned by a religious organization. 370.35 (b) This exemption does not apply to the following sales: 370.36 (1) building, construction, or reconstruction materials 371.1 purchased by a contractor or a subcontractor as a part of a 371.2 lump-sum contract or similar type of contract with a guaranteed 371.3 maximum price covering both labor and materials for use in the 371.4 construction, alteration, or repair of a building or facility; 371.5 (2) construction materials purchased by tax-exempt entities 371.6 or their contractors to be used in constructing buildings or 371.7 facilities that will not be used principally by the tax-exempt 371.8 entities; and 371.9 (3) meals and lodging as defined under section 297A.61, 371.10 subdivisions 3, paragraph (d), and 15, paragraph (c); and 371.11 (4) leasing of a motor vehicle as defined in section 371.12 297B.01, subdivision 5. 371.13 Subd. 5. [VETERANS GROUPS.] Sales to an organization of 371.14 military service veterans or an auxiliary unit of an 371.15 organization of military service veterans are exempt if: 371.16 (1) the organization or auxiliary unit is organized within 371.17 the state of Minnesota and is exempt from federal taxation under 371.18 section 501(c), clause (19), of the Internal Revenue Code; and 371.19 (2) the tangible personal property is for charitable, 371.20 civic, educational, or nonprofit uses and not for social, 371.21 recreational, pleasure, or profit uses. 371.22 Subd. 6. [AMBULANCES.] The lease of a motor vehicle for 371.23 use as an ambulance by an ambulance service licensed under 371.24 section 144E.10 is exempt. 371.25 Subd. 7. [HOSPITALS AND OUTPATIENT SURGICAL CENTERS.] (a) 371.26 Sales, except for those listed in paragraph (c), to a hospital 371.27 are exempt, if the items purchased are used in providing 371.28 hospital services. For purposes of this subdivision, "hospital" 371.29 means a hospital organized and operated for charitable purposes 371.30 within the meaning of section 501(c)(3) of the Internal Revenue 371.31 Code, and licensed under chapter 144 or by any other 371.32 jurisdiction, and "hospital services" are services authorized or 371.33 required to be performed by a "hospital" under chapter 144. 371.34 (b) Sales, except for those listed in paragraph (c), to an 371.35 outpatient surgical center are exempt, if the items purchased 371.36 are used in providing outpatient surgical services. For 372.1 purposes of this subdivision, "outpatient surgical center" means 372.2 an outpatient surgical center organized and operated for 372.3 charitable purposes within the meaning or section 501(c)(3) of 372.4 the Internal Revenue Code, and licensed under chapter 144 or by 372.5 any other jurisdiction. For the purposes of this subdivision, 372.6 "outpatient surgical services" means: (1) services authorized 372.7 or required to be performed by an outpatient surgical center 372.8 under chapter 144 or under the applicable licensure law of any 372.9 other jurisdiction; and (2) urgent care. For purposes of this 372.10 subdivision, "urgent care" means health services furnished to a 372.11 person whose medical condition is sufficiently acute to require 372.12 treatment unavailable through, or inappropriate to be provided 372.13 by, a clinic or physician's office, but not so acute as to 372.14 require treatment in a hospital emergency room. 372.15 (c) This exemption does not apply to the following products 372.16 and services: 372.17 (1) purchases made by a clinic, physician's office, or any 372.18 other medical facility not operating as a hospital or outpatient 372.19 surgical center, even though the clinic, office, or facility may 372.20 be owned and operated by a hospital or outpatient surgical 372.21 center; 372.22 (2) sales under section 297A.61, subdivisions 3, paragraph 372.23 (d), and 15, paragraph (c); 372.24 (3) building and construction materials used in 372.25 constructing buildings or facilities that will not be used 372.26 principally by the hospital or outpatient surgical center; 372.27 (4) building, construction, or reconstruction materials 372.28 purchased by a contractor or a subcontractor as a part of a 372.29 lump-sum contract or similar type of contract with a guaranteed 372.30 maximum price covering both labor and materials for use in the 372.31 construction, alteration, or repair of a hospital or outpatient 372.32 surgical center; or 372.33 (5) the leasing of a motor vehicle as defined in section 372.34 297B.01, subdivision 5. 372.35 Subd. 8. [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION 372.36 SYSTEM; PRODUCT AND SERVICES.] Products and services including, 373.1 but not limited to, end user equipment used for construction, 373.2 ownership, operation, maintenance, and enhancement of the 373.3 backbone system of the regionwide public safety radio 373.4 communication system established under sections 473.891 to 373.5 473.905, are exempt. For purposes of this subdivision, backbone 373.6 system is defined in section 473.891, subdivision 9. This 373.7 subdivision is effective for purchases, sales, storage, use, or 373.8 consumption occurring before August 1, 2003. 373.9 Subd. 9. [SACRAMENTAL WINE.] Wine for sacramental purposes 373.10 in religious ceremonies, as described in section 340A.316, is 373.11 exempt if the wine is purchased from a nonprofit religious 373.12 organization meeting the requirements of subdivision 4 or from a 373.13 person authorized to import sacramental wine without a license 373.14 as provided in section 340A.316. 373.15 Subd. 10. [NONPROFIT TICKETS OR ADMISSIONS.] Tickets or 373.16 admissions to the premises of or events sponsored by an 373.17 organization that provides an opportunity for citizens of the 373.18 state to participate in the creation, performance, or 373.19 appreciation of the arts are exempt if the organization is 373.20 either (1) a tax-exempt organization within the meaning of 373.21 Minnesota Statutes 1980, section 290.05, subdivision 1, clause 373.22 (i), or (2) a municipal board that promotes cultural and arts 373.23 activities. The exemption provided with respect to a municipal 373.24 board applies only to tickets and admissions to events sponsored 373.25 by the board. 373.26 Subd. 11. [SCHOOL TICKETS OR ADMISSIONS.] Tickets or 373.27 admissions to regular season school games, events, and 373.28 activities are exempt. For purposes of this subdivision, 373.29 "school" has the meaning given it in section 120A.22, 373.30 subdivision 4. 373.31 Subd. 12. [YMCA, YWCA, AND JCC MEMBERSHIPS.] The sale of 373.32 memberships, meaning both one-time initiation fees and periodic 373.33 membership dues, to an association incorporated under section 373.34 315.44 or an organization defined under section 315.51, are 373.35 exempt. However, all separate charges made for the privilege of 373.36 having access to and the use of the association's sports and 374.1 athletic facilities are taxable. 374.2 Subd. 13. [FUNDRAISING SALES BY OR FOR NONPROFIT 374.3 GROUPS.] (a) The following sales by the specified organizations 374.4 for fundraising purposes are exempt, subject to the limitations 374.5 listed in paragraph (b): 374.6 (1) all sales made by an organization that exists solely 374.7 for the purpose of providing educational or social activities 374.8 for young people primarily age 18 and under; 374.9 (2) all sales made by an organization that is a senior 374.10 citizen group or association of groups if (i) in general it 374.11 limits membership to persons age 55 or older; (ii) it is 374.12 organized and operated exclusively for pleasure, recreation, and 374.13 other nonprofit purposes; and (iii) no part of its net earnings 374.14 inures to the benefit of any private shareholders; 374.15 (3) the sale or use of tickets or admissions to a golf 374.16 tournament held in Minnesota if the beneficiary of the 374.17 tournament's net proceeds qualifies as a tax-exempt organization 374.18 under section 501(c)(3) of the Internal Revenue Code; and 374.19 (4) sales of gum, candy, and candy products sold for 374.20 fundraising purposes by a nonprofit organization that provides 374.21 educational and social activities primarily for young people 18 374.22 years of age and under. 374.23 (b) The exemptions listed in paragraph (a) are limited in 374.24 the following manner: 374.25 (1) the exemption under paragraph (a), clauses (1) and (2), 374.26 applies only if the gross annual receipts of the organization 374.27 from fundraising do not exceed $10,000; and 374.28 (2) the exemption under paragraph (a), clause (1), does not 374.29 apply if the sales are derived from admission charges or from 374.30 activities for which the money must be deposited with the school 374.31 district treasurer under section 123B.49, subdivision 2, or be 374.32 recorded in the same manner as other revenues or expenditures of 374.33 the school district under section 123B.49, subdivision 4. 374.34 (c) For purposes of this subdivision, a club, association, 374.35 or other organization of elementary or secondary school students 374.36 organized for the purpose of carrying on sports, educational, or 375.1 other extracurricular activities is a separate organization from 375.2 the school district or school for purposes of applying the 375.3 $10,000 limit. 375.4 Subd. 14. [FUNDRAISING EVENTS SPONSORED BY NONPROFIT 375.5 GROUPS.] (a) Sales of tangible personal property at, and 375.6 admission charges for fundraising events sponsored by, a 375.7 nonprofit organization are exempt if the entire proceeds, less 375.8 the necessary expenses for the event, will be used solely and 375.9 exclusively for charitable, religious, or educational purposes. 375.10 Exempt sales include the sale of food, meals, drinks, and 375.11 taxable services at the fundraising event. 375.12 (b) This exemption is limited in the following manner: 375.13 (1) it does not apply to admission charges for events 375.14 involving bingo or other gambling activities or to charges for 375.15 use of amusement devices involving bingo or other gambling 375.16 activities; 375.17 (2) all gross receipts are taxable if the profits are not 375.18 used solely and exclusively for charitable, religious, or 375.19 educational purposes; 375.20 (3) it does not apply unless the organization keeps a 375.21 separate accounting record, including receipts and disbursements 375.22 from each fundraising event that documents all deductions from 375.23 gross receipts with receipts and other records; 375.24 (4) it does not apply to any sale made by or in the name of 375.25 a nonprofit corporation as the active or passive agent of a 375.26 person that is not a nonprofit corporation; 375.27 (5) all gross receipts are taxable if fundraising events 375.28 exceed 24 days per year; and 375.29 (6) it does not apply to fundraising events conducted on 375.30 premises leased for more than five days but less than 30 days. 375.31 (c) For purposes of this subdivision, a "nonprofit 375.32 organization" means any unit of government, corporation, 375.33 society, association, foundation, or institution organized and 375.34 operated for charitable, religious, educational, civic, 375.35 fraternal, and senior citizens' or veterans' purposes, no part 375.36 of the net earnings of which inures to the benefit of a private 376.1 individual. 376.2 Subd. 15. [STATEWIDE AMATEUR ATHLETIC GAMES.] 376.3 Notwithstanding section 297A.61, subdivision 3, or any other 376.4 provision of this chapter, the gross receipts from the following 376.5 sales made to or by a nonprofit corporation designated by the 376.6 Minnesota amateur sports commission to conduct a series of 376.7 statewide amateur athletic games and related events, workshops, 376.8 and clinics are exempt: 376.9 (1) sales of tangible personal property to or the storage, 376.10 use, or other consumption of tangible personal property by the 376.11 nonprofit corporation; and 376.12 (2) sales of tangible personal property, admission charges, 376.13 and sales of food, meals, and drinks by the nonprofit 376.14 corporation at fundraising events, athletic events, or athletic 376.15 facilities. 376.16 Subd. 16. [CAMP FEES.] Camp fees to camps or other 376.17 recreation facilities owned and operated by an exempt 376.18 organization under section 501(c)(3) of the Internal Revenue 376.19 Code are exempt if the camps or facilities provide educational 376.20 and social activities for young people primarily age 18 and 376.21 under. 376.22 Sec. 15. [297A.71] [CONSTRUCTION EXEMPTIONS.] 376.23 Subdivision 1. [SCOPE.] The gross receipts from the sale 376.24 of, and storage, distribution, use, or consumption of the 376.25 tangible personal property contained in this section are 376.26 specifically exempted from the taxes imposed by this chapter. 376.27 Building materials, equipment, and supplies and other items 376.28 exempt under this section are exempt regardless of whether 376.29 purchased by the owner or a contractor, subcontractor, or 376.30 builder. 376.31 Subd. 2. [STATE CONVENTION CENTER.] Building materials and 376.32 supplies for constructing improvements to a state convention 376.33 center located in a city located outside the metropolitan area 376.34 as defined in section 473.121, subdivision 2, and governed by an 376.35 11-person board of which four are appointed by the governor are 376.36 exempt if the improvements are financed in whole or in part by 377.1 nonstate resources including, but not limited to, revenue or 377.2 general obligations issued by the state convention center board 377.3 of the city in which the center is located. 377.4 Subd. 3. [CORRECTIONAL FACILITIES.] Building materials and 377.5 supplies for constructing or improving an adult or juvenile 377.6 correctional facility by a county, home rule charter city, or 377.7 statutory city are exempt if the project is mandated by state or 377.8 federal law, rule, or regulation. The tax must be imposed and 377.9 collected as if the rate under section 297A.62, subdivision 1, 377.10 applied and then refunded in the manner provided in section 377.11 297A.75. 377.12 Subd. 4. [LAKE SUPERIOR CENTER.] Building materials and 377.13 supplies for construction of the Lake Superior Center are exempt. 377.14 Subd. 5. [SCIENCE MUSEUM.] Building materials and supplies 377.15 for construction of the Science Museum of Minnesota are exempt. 377.16 Subd. 6. [BUSINESS INCUBATOR AND INDUSTRIAL PARK.] 377.17 Building materials and supplies for construction of a facility 377.18 that includes a business incubator and industrial park are 377.19 exempt if the facility: 377.20 (1) is owned and operated by a nonprofit charitable 377.21 organization that qualifies for tax exemption under section 377.22 501(c)(3) of the Internal Revenue Code; 377.23 (2) is used for the development of nonretail businesses, 377.24 offering access to equipment, space, services, and advice to the 377.25 tenant businesses, for the purpose of encouraging economic 377.26 development and job creation in the area served by the 377.27 organization, and emphasizes development of businesses that 377.28 manufacture products from materials found in the waste stream, 377.29 or manufacture alternative energy and conservation systems, or 377.30 make use of emerging environmental technologies; 377.31 (3) includes in its structure systems of material and 377.32 energy exchanges that use waste products from one industrial 377.33 process as sources of energy and material for other processes; 377.34 and 377.35 (4) makes use of solar and wind energy technology and 377.36 incorporates salvaged materials in its construction. 378.1 Subd. 7. [ALFALFA PROCESSING FACILITY.] Building materials 378.2 and supplies for constructing a facility that either develops 378.3 market-value agricultural products made from alfalfa leaf 378.4 material, or produces biomass energy fuel or electricity from 378.5 alfalfa stems in accordance with the biomass mandate imposed 378.6 under section 216B.2424 are exempt if the total capital 378.7 investment made in the value-added agricultural products and 378.8 biomass electric generation facilities is at least $50,000,000. 378.9 Subd. 8. [WOOD WASTE COGENERATION FACILITY.] Building 378.10 materials and supplies for constructing, equipping, or modifying 378.11 a district heating and cooling system cogeneration facility are 378.12 exempt if the facility: 378.13 (1) utilizes wood waste as a primary fuel source; and 378.14 (2) satisfies the requirements of the biomass mandate in 378.15 section 216B.2424, subdivision 5. 378.16 Subd. 9. [DIRECT SATELLITE BROADCASTING FACILITY.] 378.17 Building materials and supplies for constructing a new facility 378.18 in Minnesota for providing federal communications commission 378.19 licensed direct satellite broadcasting services using direct 378.20 broadcast satellites operating in the 12-GHz. band or fixed 378.21 satellite regional or national program services, as defined in 378.22 section 272.02, subdivision 16, are exempt if construction of 378.23 the facility was commenced after June 30, 1993. All machinery, 378.24 equipment, tools, accessories, appliances, contrivances, 378.25 furniture, fixtures, and all technical equipment or tangible 378.26 personal property of any other nature or description necessary 378.27 to the construction and equipping of that facility in order to 378.28 provide those services are also exempt. 378.29 Subd. 10. [AIRCRAFT HEAVY MAINTENANCE FACILITY.] 378.30 Materials, equipment, and supplies used or consumed in 378.31 constructing a heavy maintenance facility for aircraft that is 378.32 to be owned by the state of Minnesota or one of its political 378.33 subdivisions and leased by an airline company, or an aircraft 378.34 engine repair facility described in section 116R.02, subdivision 378.35 6, are exempt. Except for equipment owned or leased by a 378.36 contractor, all machinery, equipment, and tools necessary to the 379.1 construction and equipping of that facility in order to provide 379.2 those services are also exempt. 379.3 Subd. 11. [BUILDING MATERIALS; DISABLED VETERANS.] 379.4 Building materials to be used in the construction or remodeling 379.5 of a residence are exempt when the construction or remodeling is 379.6 financed in whole or in part by the United States in accordance 379.7 with United States Code, title 38, sections 2101 to 2105. The 379.8 tax must be imposed and collected as if the rate under section 379.9 297A.62, subdivision 1, applied and then refunded in the manner 379.10 provided in section 297A.75. 379.11 Subd. 12. [CHAIR LIFTS, RAMPS, ELEVATORS.] Chair lifts, 379.12 ramps, and elevators and building materials used to install or 379.13 construct them are exempt, if they are authorized by a physician 379.14 and installed in or attached to the owner's homestead. The tax 379.15 must be imposed and collected as if the rate under section 379.16 297A.62, subdivision 1, applied and then refunded in the manner 379.17 provided in section 297A.75. 379.18 Subd. 13. [AGRICULTURE PROCESSING FACILITY MATERIALS.] 379.19 Building materials and supplies for constructing an agriculture 379.20 processing facility as defined in section 469.1811 in which the 379.21 total capital investment in the processing facility is expected 379.22 to exceed $100,000,000 are exempt. The tax must be imposed and 379.23 collected as if the rate under section 297A.62, subdivision 1, 379.24 applied, and then refunded in the manner provided in section 379.25 297A.75. 379.26 Subd. 14. [MINERAL PRODUCTION FACILITIES.] Building 379.27 materials, equipment, and supplies used for the construction of 379.28 the following mineral production facilities are exempt. 379.29 The mineral production facilities that qualify for this 379.30 exemption are: 379.31 (1) a value added iron products plant, which may be either 379.32 a new plant or a facility incorporated into an existing plant 379.33 that produces iron upgraded to a minimum of 75 percent iron 379.34 content or any iron alloy with a total minimum metallic content 379.35 of 90 percent; 379.36 (2) a facility used for the manufacture of fluxed taconite 380.1 pellets as defined in section 298.24; 380.2 (3) a new capital project that has a total cost of over 380.3 $40,000,000 that is directly related to production, cost, or 380.4 quality at an existing taconite facility that does not qualify 380.5 under clause (1) or (2); and 380.6 (4) a new mine or minerals processing plant for any mineral 380.7 subject to the net proceeds tax imposed under section 298.015. 380.8 The tax must be imposed and collected as if the rate under 380.9 section 297A.62, subdivision 1, applied, and then refunded in 380.10 the manner provided in section 297A.75. 380.11 Subd. 15. [MINNEAPOLIS CONVENTION CENTER.] Materials, 380.12 supplies, or equipment used or consumed in the construction, 380.13 equipment, improvement, or expansion of the Minneapolis 380.14 convention center are exempt. 380.15 Subd. 16. [RIVERCENTRE ARENA.] Materials, supplies, or 380.16 equipment used or consumed in the construction, equipment, 380.17 improvement, or expansion of the RiverCentre arena complex in 380.18 the city of St. Paul are exempt. 380.19 Subd. 17. [ENVIRONMENTAL LEARNING CENTER.] Construction 380.20 materials and supplies are exempt if they are used or consumed 380.21 in constructing or improving the Long Lake Conservation Center 380.22 pursuant to the funding provided under Laws 1994, chapter 643, 380.23 section 23, subdivision 28, as amended by Laws 1995, First 380.24 Special Session chapter 2, article 1, section 48; Laws 1996, 380.25 chapter 463, section 7, subdivision 26; and Laws 1997, chapter 380.26 246, section 24. The tax must be calculated and paid as if the 380.27 rate in section 297A.62, subdivision 1, was in effect and a 380.28 refund applied for in the manner prescribed in section 297A.75. 380.29 Subd. 18. [SOYBEAN OILSEED PROCESSING AND REFINING 380.30 FACILITY.] Construction materials and supplies are exempt if: 380.31 (1) the materials and supplies are used or consumed in 380.32 constructing a facility for soybean oilseed processing and 380.33 refining; 380.34 (2) the total capital investment made in the facility is at 380.35 least $60,000,000; and 380.36 (3) the facility is constructed by a Minnesota-based 381.1 cooperative, organized under chapter 308A. 381.2 Subd. 19. [EARLE BROWN HERITAGE CENTER.] Materials and 381.3 supplies used or consumed in and equipment incorporated into the 381.4 construction, improvement, or expansion of the Earle Brown 381.5 Heritage Center in Brooklyn Center are exempt. This subdivision 381.6 is effective for purchases made before July 1, 2003. 381.7 Subd. 20. [CONSTRUCTION MATERIALS AND SUPPLIES; BEEF 381.8 PROCESSING FACILITY.] Materials and supplies used or consumed 381.9 in, and equipment incorporated into, the expansion, remodeling, 381.10 or improvement of a facility used for cattle slaughtering are 381.11 exempt if: 381.12 (1) the cost of the project is expected to exceed 381.13 $15,000,000; 381.14 (2) the expansion, remodeling, or improvement of the 381.15 facility will be used to fabricate beef; 381.16 (3) the number of jobs at the facility is expected to 381.17 increase by at least 150 when the project is completed; and 381.18 (4) the project is expected to be completed by December 31, 381.19 2001. 381.20 Subd. 21. [CONSTRUCTION MATERIALS AND EQUIPMENT; BIOMASS 381.21 ELECTRICAL GENERATING FACILITY.] Materials and supplies used or 381.22 consumed in, and equipment incorporated into, the construction, 381.23 improvement, or expansion of a facility using biomass to 381.24 generate electricity are exempt if: 381.25 (1) the facility exclusively utilizes residue wood, 381.26 sawdust, bark, chipped wood, or brush to generate electricity; 381.27 (2) the facility utilizes a reciprocated grate combination 381.28 system; and 381.29 (3) the total gross capacity of the facility is 15 to 21 381.30 megawatts. 381.31 EXEMPTION CERTIFICATES 381.32 Sec. 16. [297A.72] [EXEMPTION CERTIFICATES.] 381.33 Subdivision 1. [DUTY OF RETAILER.] An exemption 381.34 certificate conclusively relieves the retailer from collecting 381.35 and remitting the tax only if taken in good faith from the 381.36 purchaser. 382.1 Subd. 2. [CONTENT AND FORM OF EXEMPTION CERTIFICATE.] An 382.2 exemption certificate must be substantially in the form 382.3 prescribed by the commissioner and: 382.4 (1) be signed by the purchaser or meet the requirements of 382.5 section 289A.07; 382.6 (2) bear the name and address of the purchaser; 382.7 (3) indicate the sales tax account number, if any, issued 382.8 to the purchaser; 382.9 (4) indicate the general character of the property sold by 382.10 the purchaser in the regular course of business or the 382.11 activities carried on by the organization; and 382.12 (5) identify the property purchased. 382.13 Sec. 17. [297A.73] [IMPROPER USE OF ITEM OBTAINED WITH 382.14 EXEMPTION CERTIFICATE.] 382.15 If a purchaser who gives an exemption certificate makes any 382.16 use of the item that is not for a purpose exempted under this 382.17 chapter, that use is considered a retail sale by the purchaser 382.18 and the sales price to the purchaser is considered the gross 382.19 receipts. If the sole use is rental while holding for sale, the 382.20 purchaser shall include in the purchaser's gross receipts the 382.21 amount of the rental charged. Upon subsequent sale of the item, 382.22 the seller shall include the entire amount of gross receipts 382.23 received from the sale without deduction of amounts previously 382.24 received as rentals. 382.25 Sec. 18. [297A.74] [COMMINGLING EXEMPTION CERTIFICATE 382.26 ITEMS.] 382.27 If a purchaser gives an exemption certificate for the 382.28 purchase of fungible items and later commingles the items with 382.29 similar fungible items not purchased exempt, sales from the 382.30 commingled items are considered sales of items purchased exempt 382.31 until a quantity has been sold that equals the quantity 382.32 purchased exempt. 382.33 EXEMPTION REFUNDS 382.34 Sec. 19. [297A.75] [REFUND; APPROPRIATION.] 382.35 Subdivision 1. [TAX COLLECTED.] The tax on the gross 382.36 receipts from the sale of following exempt items must be imposed 383.1 and collected as if the sale were taxable and the rate under 383.2 section 297A.62, subdivision 1, applied. The exempt items 383.3 include: 383.4 (1) capital equipment exempt under section 297A.68, 383.5 subdivision 5; 383.6 (2) building materials for an agricultural processing 383.7 facility exempt under section 297A.71, subdivision 13; 383.8 (3) building materials for mineral production facilities 383.9 exempt under section 297A.71, subdivision 14; 383.10 (4) building materials for correctional facilities under 383.11 section 297A.71, subdivision 3; 383.12 (5) building materials used in a residence for disabled 383.13 veterans exempt under section 297A.71, subdivision 11; and 383.14 (6) chair lifts, ramps, elevators, and associated building 383.15 materials exempt under section 297A.71, subdivision 12. 383.16 Subd. 2. [REFUND; ELIGIBLE PERSONS.] Upon application on 383.17 forms prescribed by the commissioner, a refund equal to the tax 383.18 paid on the gross receipts of the exempt items must be paid to 383.19 the applicant. Only the following persons may apply for the 383.20 refund: 383.21 (1) for subdivision 1, clauses (1) to (3), the applicant 383.22 must be the purchaser; 383.23 (2) for subdivision 1, clause (4), the applicant must be 383.24 the governmental subdivision; 383.25 (3) for subdivision 1, clause (5), the applicant must be 383.26 the recipient of the benefits provided in United States Code, 383.27 title 38, chapter 21; and 383.28 (4) for subdivision 1, clause (6), the applicant must be 383.29 the owner of the homestead property. 383.30 Subd. 3. [APPLICATION.] (a) The application must include 383.31 sufficient information to permit the commissioner to verify the 383.32 tax paid. If the tax was paid by a contractor, subcontractor, 383.33 or builder, under subdivision 1, clause (4), (5), or (6), the 383.34 contractor, subcontractor, or builder must furnish to the refund 383.35 applicant a statement including the cost of the exempt items and 383.36 the taxes paid on the items unless otherwise specifically 384.1 provided by this subdivision. The provisions of sections 384.2 289A.40 and 289A.50 apply to refunds under this section. 384.3 (b) An applicant may not file more than two applications 384.4 per calendar year for refunds for taxes paid on capital 384.5 equipment exempt under section 297A.68, subdivision 5. 384.6 Subd. 4. [INTEREST.] Interest must be paid on the refund 384.7 at the rate in section 270.76 from the date the refund claim is 384.8 filed for taxes paid under subdivision 1, clauses (1) to (3), 384.9 and (5), and from 60 days after the date the refund claim is 384.10 filed with the commissioner for claims filed under subdivision 384.11 1, clauses (4) and (6). 384.12 Subd. 5. [APPROPRIATION.] The amount required to make the 384.13 refunds is annually appropriated to the commissioner. 384.14 COMPUTATION AND COLLECTION OF TAXES 384.15 Sec. 20. [297A.76] [COMPUTATION OF SALES AND USE TAXES.] 384.16 Subdivision 1. [ROUNDING UP OR DOWN.] In computing the 384.17 sales or use tax to be collected or remitted as the result of a 384.18 transaction, amounts of tax less than one-half of one cent must 384.19 be disregarded and amounts of tax of one-half cent or more must 384.20 be considered an additional cent. 384.21 Subd. 2. [UNIFORM TAX COLLECTION METHODS; RULES.] 384.22 Agreements between competitive retailers or the adoption of 384.23 appropriate rules or regulations by organizations or 384.24 associations of retailers to provide uniform methods for adding 384.25 the sales tax or its average equivalent, which do not involve 384.26 otherwise unlawful price fixing agreements, are expressly 384.27 authorized and are not in violation of any Minnesota laws 384.28 prohibiting such agreements. The commissioner may prescribe 384.29 rules for such agreements. 384.30 Sec. 21. [297A.77] [COLLECTION OF SALES AND USE TAXES.] 384.31 Subdivision 1. [COLLECTION OF TAX AT TIME OF SALE.] The 384.32 tax must be stated and charged separately from the sales price 384.33 or charge for service insofar as practicable and must be 384.34 collected by the seller from the purchaser. 384.35 Subd. 2. [RECEIPT.] For use tax, the retailer shall give 384.36 the purchaser a tax receipt. The receipt must indicate the tax 385.1 in the form of a notation on the sales slip or receipt for the 385.2 sales price or in another form as prescribed by the commissioner. 385.3 Subd. 3. [TAX MUST BE REMITTED.] The tax collected by a 385.4 retailer under this section must be remitted to the commissioner 385.5 as provided in chapter 289A and this chapter. 385.6 Subd. 4. [STATUS OF SALES AND USE TAXES AS DEBT.] Sales 385.7 and use taxes that are required to be collected by a retailer 385.8 are debts from the purchaser to the retailer recoverable at law 385.9 in the same manner as other debts. 385.10 Sec. 22. [297A.78] [LIABILITY FOR USE TAX; RECEIPT AS 385.11 EVIDENCE.] 385.12 Liability for the payment of the use tax is not 385.13 extinguished until the tax has been paid to Minnesota. However, 385.14 a receipt from a retailer given to the purchaser under section 385.15 297A.77, subdivision 2, relieves the purchaser of further 385.16 liability for the tax to which the receipt refers, unless the 385.17 purchaser knows or has reason to know that the retailer did not 385.18 have a permit to collect the tax. 385.19 Sec. 23. [297A.79] [REPORTING OF GROSS RECEIPTS.] 385.20 At the option of the taxpayer, gross receipts from sales 385.21 may be reported on the cash basis as the consideration is 385.22 received or on the accrual basis as sales are made. 385.23 Sec. 24. [297A.80] [TAXES IN OTHER STATES; OFFSET AGAINST 385.24 USE TAX.] 385.25 If an article of tangible personal property or an item 385.26 listed in section 297A.63 has already been taxed by another 385.27 state for its sale, storage, use, or other consumption in an 385.28 amount less than the tax imposed by this chapter, then as to the 385.29 person who paid the tax in the other state, section 297A.63 385.30 applies only at a rate measured by the difference between the 385.31 rate imposed under section 297A.62 and the rate by which the 385.32 previous tax was computed. If the tax imposed in the other 385.33 state is equal to or greater than the tax imposed in this state, 385.34 then no tax is due from that person under section 297A.63. 385.35 Sec. 25. [297A.81] [UNCOLLECTIBLE DEBTS; OFFSET AGAINST 385.36 OTHER TAXES.] 386.1 The taxpayer may offset against the taxes payable for any 386.2 reporting period the amount of taxes imposed by this chapter 386.3 previously paid as a result of any transaction the consideration 386.4 for which became a debt owed to the taxpayer that became 386.5 uncollectible during the reporting period, but only in 386.6 proportion to the portion of the debt that became 386.7 uncollectible. Section 289A.40, subdivision 2, applies to an 386.8 offset under this section. 386.9 Sec. 26. [297A.82] [AIRCRAFT; FLIGHT EQUIPMENT; PAYMENT OF 386.10 TAXES; EXEMPTIONS.] 386.11 Subdivision 1. [REQUIREMENTS FOR REGISTRATION.] An 386.12 aircraft must not be registered or licensed in this state unless 386.13 the applicant presents proof that the sales or use tax imposed 386.14 by this chapter has been paid or that the transaction is exempt 386.15 from the sales and use tax. The exemption for an occasional 386.16 sale under section 297A.67, subdivision 23, or 297A.68, 386.17 subdivision 25, does not apply to the sale or purchase of an 386.18 aircraft. 386.19 Subd. 2. [PAYMENT OF TAX TO DEALER.] If an aircraft is 386.20 purchased from a dealer holding a valid sales and use tax permit 386.21 under this chapter, the applicant shall present proof that the 386.22 tax has been paid to the dealer. 386.23 Subd. 3. [PAYMENT OF TAX TO COMMISSIONER.] If the aircraft 386.24 is purchased from a person who is not the holder of a valid 386.25 sales and use tax permit under this chapter, the purchaser shall 386.26 pay the tax to the commissioner of revenue prior to registering 386.27 or licensing the aircraft in this state. The commissioner of 386.28 revenue shall issue a certificate stating that the sales and use 386.29 tax in respect to the transaction has been paid. 386.30 Subd. 4. [EXEMPTIONS.] (a) The following transactions are 386.31 exempt from the tax imposed in this chapter to the extent 386.32 provided. 386.33 (b) The purchase or use of aircraft previously registered 386.34 in Minnesota by a corporation or partnership is exempt if the 386.35 transfer constitutes a transfer within the meaning of section 386.36 351 or 721 of the Internal Revenue Code. 387.1 (c) The sale to or purchase, storage, use, or consumption 387.2 by a licensed aircraft dealer of an aircraft for which a 387.3 commercial use permit has been issued pursuant to section 387.4 360.654 is exempt, if the aircraft is resold while the permit is 387.5 in effect. 387.6 (d) Airflight equipment when sold to, or purchased, stored, 387.7 used, or consumed by airline companies, as defined in section 387.8 270.071, subdivision 4, is exempt. For purposes of this 387.9 subdivision, "airflight equipment" includes airplanes and parts 387.10 necessary for the repair and maintenance of such airflight 387.11 equipment, and flight simulators, but does not include airplanes 387.12 with a gross weight of less than 30,000 pounds that are used on 387.13 intermittent or irregularly timed flights. 387.14 Subd. 5. [EXEMPT PURCHASE CERTIFICATE.] If the purchase of 387.15 an aircraft is exempt under this chapter, the commissioner shall 387.16 issue a certificate that no sales or use tax is due and owing in 387.17 respect to the transaction. 387.18 Subd. 6. [SALES AND LEASES; TAX TREATMENT.] (a) A sale of 387.19 aircraft and parts for the repair of aircraft purchased by a 387.20 nonprofit, incorporated flying club or association utilized 387.21 solely by the corporation by leasing the aircraft to 387.22 shareholders of the corporation is exempt as property purchased 387.23 for resale. The leasing of the aircraft to the shareholders by 387.24 the flying club or association is taxable as a retail sale. 387.25 (b) A lease of aircraft utilized by a lessee for leasing to 387.26 others, whether or not the lessee also utilizes the aircraft for 387.27 charter service or for flight instruction if no separate charge 387.28 is made for aircraft rental, is exempt as a purchase for resale. 387.29 However, a proportionate share of the lease payment reflecting 387.30 use for flight instruction or charter service is taxable under 387.31 section 297A.63. 387.32 PERMITS 387.33 Sec. 27. [297A.83] [APPLICATION FOR PERMIT.] 387.34 Subdivision 1. [PERSONS APPLYING.] (a) A retailer required 387.35 to collect and remit sales taxes under section 297A.66 shall 387.36 file with the commissioner an application for a permit. 388.1 (b) A retailer making retail sales from outside this state 388.2 to a destination within this state who is not required to obtain 388.3 a permit under paragraph (a) may nevertheless voluntarily file 388.4 an application for a permit. 388.5 (c) The commissioner may require any person or class of 388.6 persons obligated to file a use tax return under section 388.7 289A.11, subdivision 3, to file an application for a permit. 388.8 Subd. 2. [APPLICATION REQUIREMENTS.] The application must 388.9 be made on a form prescribed by the commissioner and indicate 388.10 the name under which the applicant intends to transact business, 388.11 the location of the applicant's place or places of business, and 388.12 other information the commissioner may require. The application 388.13 must be filed by the owner, if a natural person; by a member or 388.14 partner, if the owner is an association or partnership; or by a 388.15 person authorized to file the application, if the owner is a 388.16 corporation. 388.17 Subd. 3. [COMMISSIONER'S DISCRETION.] (a) The commissioner 388.18 may decline to issue a permit to a retailer not maintaining a 388.19 place of business in this state, or may cancel a permit 388.20 previously issued to the retailer, if the commissioner believes 388.21 that the tax can be collected more effectively from the persons 388.22 using the property in this state. A refusal to issue or 388.23 cancellation of a permit on such grounds does not affect the 388.24 retailer's right to make retail sales from outside this state to 388.25 destinations within this state. 388.26 (b) If the commissioner considers it necessary for the 388.27 efficient administration of the tax to regard a salesperson, 388.28 representative, trucker, peddler, or canvasser as the agent of 388.29 the dealer, distributor, supervisor, employer, or other person 388.30 under whom that person operates or from whom the person obtains 388.31 the tangible personal property sold, whether making sales 388.32 personally or in behalf of that dealer, distributor, supervisor, 388.33 employer, or other person, the commissioner may regard the 388.34 salesperson, representative, trucker, peddler, or canvasser as 388.35 such agent, and may regard the dealer, distributor, supervisor, 388.36 employer, or other person as a retailer for the purposes of 389.1 collecting the tax. 389.2 Sec. 28. [297A.84] [PERMITS ISSUED.] 389.3 The commissioner shall issue a permit to each applicant who 389.4 has complied with section 297A.83, and with section 297A.92 if 389.5 security is required. A person is considered to have a permit 389.6 if the person has a Minnesota tax identification number issued 389.7 by the department that is currently active for taxes imposed by 389.8 this chapter. A permit is valid until canceled or revoked. It 389.9 is not assignable and is valid only for the person in whose name 389.10 it is granted and for the transaction of business at the places 389.11 designated on the permit. 389.12 Sec. 29. [297A.85] [CANCELLATION OF PERMITS.] 389.13 The commissioner may cancel a permit if one of the 389.14 following conditions occurs: 389.15 (1) the permit holder has not filed a sales or use tax 389.16 return for at least one year; 389.17 (2) the permit holder has not reported any sales or use tax 389.18 liability on the permit holder's returns for at least two years; 389.19 or 389.20 (3) the permit holder requests cancellation of the permit. 389.21 Sec. 30. [297A.86] [REVOCATION OF PERMITS.] 389.22 Subdivision 1. [NOTICE OF REVOCATION; HEARINGS.] (a) If a 389.23 person fails to comply with this chapter or the sales and use 389.24 tax provisions of chapter 289A or the rules adopted under either 389.25 chapter, without reasonable cause, the commissioner may give the 389.26 person 30 days' notice in writing, specifying the violations, 389.27 and stating that based on the violations the commissioner 389.28 intends to revoke the person's permit. The notice must also 389.29 advise the person of the right to contest the revocation under 389.30 this subdivision. It must also explain the general procedures 389.31 for a contested case hearing under chapter 14. The notice may 389.32 be served personally or by mail in the manner prescribed for 389.33 service of an order of assessment. 389.34 (b) If the person does not request a hearing within 30 days 389.35 after the date of the notice of intent, the commissioner may 389.36 serve a notice of revocation of permit upon the person, and the 390.1 permit is revoked. If a hearing is timely requested, and held, 390.2 the permit is revoked after the commissioner serves an order of 390.3 revocation of permit under section 14.62, subdivision 1. 390.4 Subd. 2. [NEW PERMITS AFTER REVOCATION.] (a) The 390.5 commissioner shall not issue a new permit after revocation or 390.6 reinstate a revoked permit unless the taxpayer applies for a 390.7 permit and provides reasonable evidence of intention to comply 390.8 with the sales and use tax laws and rules. The commissioner may 390.9 require the applicant to provide security, in addition to that 390.10 authorized by section 297A.92, in an amount reasonably necessary 390.11 to ensure compliance with the sales and use tax laws and rules. 390.12 (b) If a taxpayer has had a permit or permits revoked three 390.13 times in a five-year period, the commissioner shall not issue a 390.14 new permit or reinstate the revoked permit until 24 months have 390.15 elapsed after revocation and the taxpayer has satisfied the 390.16 conditions for reinstatement of a revoked permit or issuance of 390.17 a new permit imposed by this section and rules adopted under 390.18 this section. 390.19 (c) For purposes of this subdivision, "taxpayer" means: 390.20 (1) an individual, if a revoked permit was issued to or in 390.21 the name of an individual, or a corporation or partnership, if a 390.22 revoked permit was issued to or in the name of a corporation or 390.23 partnership; and 390.24 (2) an officer of a corporation, a member of a partnership, 390.25 or an individual who is liable for delinquent sales taxes, 390.26 either for the entity for which the new or reinstated permit is 390.27 at issue, or for another entity for which a permit was 390.28 previously revoked, or personally as a permit holder. 390.29 Sec. 31. [297A.87] [FLEA MARKETS, SHOWS, AND OTHER SELLING 390.30 EVENTS.] 390.31 Subdivision 1. [EVENTS AFFECTED.] (a) This section applies 390.32 to a flea market, craft show, antique show, coin show, stamp 390.33 show, comic book show, convention exhibit area, or similar 390.34 selling event. 390.35 (b) To be subject to this section, the operator of an event 390.36 described in paragraph (a) must rent or lease space on the sale 391.1 premises to the seller, charge the seller a registration or 391.2 participation fee, or receive a percentage of sales or other 391.3 consideration from a seller as a condition to participation by a 391.4 seller in the event. 391.5 Subd. 2. [SELLER'S PERMIT OR ALTERNATE STATEMENT.] (a) The 391.6 operator of an event under subdivision 1 shall obtain one of the 391.7 following from a person who wishes to do business as a seller at 391.8 the event: 391.9 (1) evidence that the person holds a valid seller's permit 391.10 under section 297A.84; or 391.11 (2) a written statement that the person is not offering for 391.12 sale any item that is taxable under this chapter. 391.13 (b) The operator shall require the evidence or statement as 391.14 a prerequisite to participating in the event as a seller. 391.15 Subd. 3. [OCCASIONAL SALE PROVISIONS NOT APPLICABLE.] The 391.16 isolated and occasional sale provisions under section 297A.67, 391.17 subdivision 23, or under section 297A.68, subdivision 25, do not 391.18 apply to a seller at an event under this section. 391.19 DIRECT PAY 391.20 Sec. 32. [297A.89] [DIRECT PAYMENT BY PURCHASERS 391.21 PERMITTED.] 391.22 Subdivision 1. [COMMISSIONER MAY PERMIT.] The commissioner 391.23 may permit purchasers to pay taxes imposed by this chapter 391.24 directly to the commissioner. Any taxes paid by purchasers 391.25 under this section are considered use taxes, except for local 391.26 sales taxes when no corresponding local use tax is imposed. 391.27 Subd. 2. [RETAILER DOES NOT COLLECT.] The retailer shall 391.28 not collect the tax from a purchaser who furnishes to the 391.29 retailer a copy of a certificate issued by the commissioner 391.30 authorizing the purchaser to pay any sales or use tax due on 391.31 purchases made by the purchaser directly to the commissioner 391.32 under subdivision 1. 391.33 Sec. 33. [297A.90] [INTERSTATE MOTOR CARRIERS AS 391.34 RETAILERS.] 391.35 Subdivision 1. [REGISTRATION; RECORDS.] (a) A person who 391.36 is engaged in interstate for-hire transportation of tangible 392.1 personal property or passengers by motor vehicle may, under 392.2 rules prescribed by the commissioner, register as a retailer and 392.3 pay the taxes imposed by this chapter in accordance with this 392.4 section. Any taxes paid under this section are use taxes, 392.5 except local sales taxes when no corresponding local use tax is 392.6 imposed. 392.7 (b) As used in this section, "person" means: (1) one who 392.8 possesses a certificate or permit or has completed a 392.9 registration process that authorizes for-hire transportation of 392.10 property or passengers from the United States Department of 392.11 Transportation, the transportation regulation board, or the 392.12 department of transportation; (2) one who transports commodities 392.13 defined as "exempt" in for-hire transportation in interstate 392.14 commerce; or (3) one who transports tangible personal property 392.15 in interstate commerce, pursuant to contracts with persons 392.16 described in clause (1) or (2). Persons qualifying under clause 392.17 (2) or (3) must maintain on a current basis the same type of 392.18 mileage records that are required by persons specified in clause 392.19 (1) by the United States Department of Transportation. 392.20 (c) Persons who in the course of their business are 392.21 transporting solely their own goods in interstate commerce may 392.22 also register as retailers under rules prescribed by the 392.23 commissioner and pay the taxes imposed by this chapter in 392.24 accordance with this section. 392.25 Subd. 2. [PAYMENT OF TAX.] (a) Persons who are registered 392.26 as retailers may make purchases in this state or import property 392.27 into this state without payment of the sales or use taxes 392.28 imposed by this chapter at the time of purchase or importation, 392.29 if the purchases or importations come within the provisions of 392.30 this section and are made in strict compliance with the rules of 392.31 the commissioner. 392.32 (b) A person described in subdivision 1 may elect to pay 392.33 directly to the commissioner any sales or use tax that may be 392.34 due under this chapter for the acquisition of mobile 392.35 transportation equipment and parts and accessories attached or 392.36 to be attached to such equipment registered under section 393.1 168.187. 393.2 (c) The total cost of such equipment and parts and 393.3 accessories attached or to be attached to such equipment must be 393.4 multiplied by a fraction. The numerator of the fraction is the 393.5 Minnesota mileage as reported on the current pro rata 393.6 application provided for in section 168.187 and the denominator 393.7 of the fraction is the total mileage reported on the current pro 393.8 rata registration application. The amount so determined must be 393.9 multiplied by the tax rate to obtain the tax due. 393.10 In computing the tax under this section "sales price" does not 393.11 include the amount of any tax, except any manufacturer's or 393.12 importer's excise tax, imposed by the United States upon or with 393.13 respect to retail sales, whether imposed on the retailer or the 393.14 consumer. 393.15 (d) A retailer covered by this section shall make a return 393.16 and remit to the commissioner the tax due for the preceding 393.17 calendar month in accordance with sections 289A.11 and 289A.20, 393.18 subdivision 4. 393.19 Subd. 3. [REGISTRATION SUBSEQUENT TO PAYMENT OF TAX.] A 393.20 person who has paid the tax under this chapter or chapter 297B 393.21 and who meets the requirements of this section at the time of 393.22 the sale, but was not registered under this section at the time 393.23 of the sale, may register as a retailer, make a return, and file 393.24 for a refund of the difference between the tax calculated under 393.25 this chapter or chapter 297B and the tax calculated under 393.26 subdivision 2. 393.27 Subd. 4. [AGREEMENT WITH COMMISSIONER OF PUBLIC SAFETY.] 393.28 Notwithstanding subdivisions 1 to 3, the commissioner may enter 393.29 into an agreement with the commissioner of public safety 393.30 whereby, upon approval of both commissioners, the commissioner 393.31 of public safety shall collect the sales tax on motor vehicles 393.32 from persons defined in subdivision 1. For the purpose of 393.33 collecting the tax, the commissioner of public safety shall act 393.34 as the agent of the commissioner of revenue and shall be subject 393.35 to all rules consistent with this chapter that may be prescribed 393.36 by the commissioner. 394.1 ENFORCEMENT 394.2 Sec. 34. [297A.91] [SEIZURE; COURT REVIEW.] 394.3 Subdivision 1. [SEIZURE OF PROPERTY USED IN ILLEGAL 394.4 TRANSPORT.] (a) If the retailer does not have a sales or use tax 394.5 permit and has been engaging in transporting personal property 394.6 into the state without payment of the tax, the commissioner of 394.7 revenue or the commissioner's agents may seize in the name of 394.8 the state any truck, automobile, or means of transportation not 394.9 owned or operated by a common carrier, used in the illegal 394.10 importation and transportation of any tangible personal property 394.11 by a retailer or the retailer's agent or employee. The 394.12 commissioner may demand the forfeiture and sale of the truck, 394.13 automobile, or other means of transportation together with the 394.14 property being transported illegally, unless the owner 394.15 establishes to the satisfaction of the commissioner or the court 394.16 that the owner had no notice or knowledge or reason to believe 394.17 that the vehicle was used or intended to be used in any such 394.18 violation. 394.19 (b) Within two days after the seizure, the person making 394.20 the seizure shall deliver an inventory of the vehicle and 394.21 property seized to the person from whom the seizure was made, if 394.22 known, and to any person known or believed to have any right, 394.23 title, interest or lien on the vehicle or property. The person 394.24 making the seizure shall also file a copy of the inventory with 394.25 the commissioner. 394.26 Subd. 2. [COURT REVIEW OF FORFEITURE.] (a) Within ten days 394.27 after the date of service of the inventory, the person from whom 394.28 the vehicle and property were seized or any person claiming an 394.29 interest in the vehicle or property may file with the 394.30 commissioner a demand for a judicial determination of the 394.31 question of whether the vehicle or property was lawfully subject 394.32 to seizure and forfeiture. The commissioner, within 30 days, 394.33 shall institute an action in the district court of the county 394.34 where the seizure was made to determine the issue of forfeiture. 394.35 (b) The action must be brought in the name of the state and 394.36 prosecuted by the county attorney or the attorney general. The 395.1 court shall hear the action without a jury and shall determine 395.2 the issues of fact and law involved. If a judgment of 395.3 forfeiture is entered and is not stayed pending an appeal, the 395.4 commissioner may have the forfeited vehicle and property sold at 395.5 public auction as provided by law. 395.6 Subd. 3. [TREATMENT OF SEIZED PROPERTY.] If a demand for 395.7 judicial determination is made and no action is commenced as 395.8 provided in this subdivision, the vehicle and property must be 395.9 released by the commissioner and redelivered to the person 395.10 entitled to it. If no demand is made, the vehicle and property 395.11 seized are considered forfeited to the state by operation of law 395.12 and may be disposed of by the commissioner as if there was a 395.13 judgment of forfeiture. The forfeiture and sale of the 395.14 automobile, truck, or other means of transportation, and of the 395.15 property being transported illegally in it, are a penalty for 395.16 the violation of this chapter. After deducting the expense of 395.17 keeping the vehicle and property, the fee for seizure, and the 395.18 costs of the sale, the commissioner shall pay liens from the 395.19 funds collected. The commissioner shall pay all liens, 395.20 according to their priority, that are established at the hearing 395.21 as being bona fide and as existing without the lienor having any 395.22 notice or knowledge that the vehicle or property was being used 395.23 or was intended to be used for or in connection with any such 395.24 violation as specified in the order of the court. The 395.25 commissioner shall pay the balance of the proceeds into the 395.26 state treasury to be credited to the general fund. The state is 395.27 not liable for any liens in excess of the proceeds from the sale 395.28 after allowable deductions. A sale under this section frees the 395.29 vehicle and property sold from all liens. The order of the 395.30 district court may be appealed as in other civil cases. 395.31 Sec. 35. [297A.92] [SECURITY.] 395.32 Subdivision 1. [AMOUNT OF SECURITY.] To ensure compliance 395.33 with the taxes imposed by this chapter, the commissioner may 395.34 require a retailer subject to this chapter to deposit security 395.35 with the commissioner. The security must be in the form and 395.36 amount the commissioner requires, but not more than twice the 396.1 retailer's estimated average liability for the period for which 396.2 the returns are required to be filed, or $10,000, whichever is 396.3 less. The amount of security may be increased or decreased by 396.4 the commissioner, subject to the limitations in this section. 396.5 Subd. 2. [AUCTIONS OF SECURITY.] The commissioner may sell 396.6 property deposited as security at public auction if necessary to 396.7 recover the amount required to be collected, including any 396.8 interest and penalties. Notice of the sale must be served upon 396.9 the person who deposited the security. It must be served 396.10 personally, or by mail as prescribed for the service of a notice 396.11 of a deficiency. After a sale any surplus above the amount due 396.12 not required as security under this section must be returned to 396.13 the person who deposited the security. 396.14 Subd. 3. [BOND.] In lieu of security, the commissioner may 396.15 require a retailer to file a bond. The bond must be issued by a 396.16 surety company authorized to transact business in this state and 396.17 approved by the commissioner of commerce as to solvency and 396.18 responsibility. 396.19 Sec. 36. [297A.93] [JEOPARDY ASSESSMENT AND COLLECTION.] 396.20 (a) If the commissioner has reason to believe that the 396.21 person required to file the return is about to leave the state 396.22 or remove the person's property from this state with the purpose 396.23 of evading the tax and penalties imposed by this chapter, or 396.24 that the collection of the tax will be jeopardized by delays 396.25 incident to other methods of collection, the commissioner may 396.26 immediately declare the person's reporting period at an end and 396.27 assess a tax on the basis of the commissioner's own knowledge or 396.28 information available. The commissioner may then demand 396.29 immediate payment of the tax, and, if payment is not immediately 396.30 made, collect the tax by any method prescribed in chapter 270. 396.31 (b) It is not a defense to an assessment made under this 396.32 section that the tax period has not terminated, that the time 396.33 otherwise allowed by law for filing a return has not expired, 396.34 that the notices otherwise required by law for making an 396.35 assessment have not been given, or that the time otherwise 396.36 allowed by law for taking or prosecuting an appeal or for paying 397.1 the tax has not expired. 397.2 DEPOSIT OF REVENUES 397.3 Sec. 37. [297A.94] [DEPOSIT OF REVENUES.] 397.4 (a) Except as provided in this section, the commissioner 397.5 shall deposit the revenues, including interest and penalties, 397.6 derived from the taxes imposed by this chapter in the state 397.7 treasury and credit them to the general fund. 397.8 (b) The commissioner shall deposit taxes in the Minnesota 397.9 agricultural and economic account in the special revenue fund if: 397.10 (1) the taxes are derived from sales and use of property 397.11 and services purchased for the construction and operation of an 397.12 agricultural resource project; and 397.13 (2) the purchase was made on or after the date on which a 397.14 conditional commitment was made for a loan guaranty for the 397.15 project under section 41A.04, subdivision 3. 397.16 The commissioner of finance shall certify to the commissioner 397.17 the date on which the project received the conditional 397.18 commitment. The amount deposited in the loan guaranty account 397.19 must be reduced by any refunds and by the costs incurred by the 397.20 department of revenue to administer and enforce the assessment 397.21 and collection of the taxes. 397.22 (c) The commissioner shall deposit the revenues, including 397.23 interest and penalties, derived from the taxes imposed on sales 397.24 and purchases included in section 297A.61, subdivision 16, 397.25 paragraphs (b) and (f), in the state treasury, and credit them 397.26 as follows: 397.27 (1) first to the general obligation special tax bond debt 397.28 service account in each fiscal year the amount required by 397.29 section 16A.661, subdivision 3, paragraph (b); and 397.30 (2) after the requirements of clause (1) have been met, the 397.31 balance to the general fund. 397.32 (d) The commissioner shall deposit the revenues, including 397.33 interest and penalties, collected under section 297A.64, 397.34 subdivision 5, in the state treasury and credit them to the 397.35 general fund. By July 15 of each year the commissioner shall 397.36 transfer to the highway user tax distribution fund an amount 398.1 equal to the excess fees collected under section 297A.64, 398.2 subdivision 5, for the previous calendar year. 398.3 LOCAL SALES AND USE TAXES 398.4 Sec. 38. [297A.95] [COORDINATION OF STATE AND LOCAL SALES 398.5 TAX RATES.] 398.6 In preparing and distributing a sales tax schedule for use 398.7 within a local jurisdiction with a separate general sales tax, 398.8 the state department of revenue shall coordinate the state and 398.9 local sales tax so that a sale of $1 reflects a tax equal to the 398.10 combination of the state and local sales tax rates. The 398.11 combined sales tax on other sales amounts must also reflect the 398.12 coordinated rather than the separate effects of the state and 398.13 local sales taxes. The schedule must be coordinated as long as 398.14 the local sales tax is in effect. If the sales tax percentage 398.15 is changed for either of the taxes, the schedule must be 398.16 adjusted to reflect the change. 398.17 Sec. 39. [297A.96] [LOCAL ADMISSIONS AND AMUSEMENT TAXES; 398.18 EXEMPTION FOR ARTS ORGANIZATIONS.] 398.19 If an event is sponsored by a nonprofit arts organization, 398.20 then amounts charged for admission to the event or to the 398.21 organization's premises are not subject to a tax imposed by a 398.22 local unit of government or imposed on sales taking place in a 398.23 single named local unit of government on sales of admissions or 398.24 amusements, under a law other than a general sales tax law. 398.25 Sec. 40. [297A.97] [OUTSTATE RETAILERS; LOCAL TAX 398.26 COLLECTION NOT REQUIRED.] 398.27 A retailer not maintaining a place of business in this 398.28 state is not required to collect taxes imposed by a political 398.29 subdivision of this state. 398.30 Sec. 41. [297A.98] [LOCAL GOVERNMENTS EXEMPT FROM LOCAL 398.31 SALES TAXES.] 398.32 Notwithstanding any other law, ordinance, or charter 398.33 provision, a political subdivision of the state is not required 398.34 to pay any general sales tax imposed by a political subdivision 398.35 of the state. 398.36 Sec. 42. [297A.99] [LOCAL SALES TAXES.] 399.1 Subdivision 1. [AUTHORIZATION; SCOPE.] (a) A political 399.2 subdivision of this state may impose a general sales tax if 399.3 permitted by special law or if the political subdivision enacted 399.4 and imposed the tax before the effective date of section 399.5 477A.016 and its predecessor provision. 399.6 (b) This section governs the imposition of a general sales 399.7 tax by the political subdivision. The provisions of this 399.8 section preempt the provisions of any special law: 399.9 (1) enacted before June 2, 1997, or 399.10 (2) enacted on or after June 2, 1997, that does not 399.11 explicitly exempt the special law provision from this section's 399.12 rules by reference. 399.13 (c) This section does not apply to or preempt a sales tax 399.14 on motor vehicles or a special excise tax on motor vehicles. 399.15 Subd. 2. [LOCAL RESOLUTION BEFORE APPLICATION FOR 399.16 AUTHORITY.] Before the governing body of a political subdivision 399.17 requests legislative approval of a special law for a local sales 399.18 tax that is administered under this section, it shall adopt a 399.19 resolution indicating its approval of the tax. The resolution 399.20 must include, at a minimum, information on the proposed tax 399.21 rate, how the revenues will be used, the total revenue that will 399.22 be raised before the tax expires, and the estimated length of 399.23 time that the tax will be in effect. This subdivision applies 399.24 to local laws enacted after June 30, 1998. 399.25 Subd. 3. [REQUIREMENTS FOR ADOPTION, USE, TERMINATION.] (a) 399.26 Imposition of a local sales tax is subject to approval by voters 399.27 of the political subdivision at a general election. 399.28 (b) The proceeds of the tax must be dedicated exclusively 399.29 to payment of the cost of a specific capital improvement which 399.30 is designated at least 90 days before the referendum on 399.31 imposition of the tax is conducted. 399.32 (c) The tax must terminate after the improvement designated 399.33 under paragraph (b) has been completed. 399.34 (d) After a sales tax imposed by a political subdivision 399.35 has expired or been terminated, the political subdivision is 399.36 prohibited from imposing a local sales tax for a period of one 400.1 year. Notwithstanding subdivision 13, this paragraph applies to 400.2 all local sales taxes in effect at the time of or imposed after 400.3 the date of enactment of this section. 400.4 Subd. 4. [TAX BASE.] (a) The tax applies to sales taxable 400.5 under this chapter that occur within the political subdivision. 400.6 (b) Taxable services are subject to a political 400.7 subdivision's sales tax, if they are performed either: 400.8 (1) within the political subdivision, or 400.9 (2) partly within and partly without the political 400.10 subdivision and more of the service is performed within the 400.11 political subdivision, based on the cost of performance. 400.12 Subd. 5. [TAX RATE.] (a) The tax rate is as specified in 400.13 the special law authorization and as imposed by the political 400.14 subdivision. 400.15 (b) The full political subdivision rate applies to any 400.16 sales that are taxed at a state rate less than or more than the 400.17 state general sales and use tax rate. 400.18 Subd. 6. [USE TAX.] A compensating use tax applies, at the 400.19 same rate as the sales tax, on the use, storage, distribution, 400.20 or consumption of tangible personal property or taxable services. 400.21 Subd. 7. [EXEMPTIONS.] (a) All goods or services that are 400.22 otherwise exempt from taxation under this chapter are exempt 400.23 from a political subdivision's tax. 400.24 (b) The gross receipts from the sale of tangible personal 400.25 property that meets the requirement of section 297A.68, 400.26 subdivision 13 or 14, are exempt, except the qualification test 400.27 applies based on the boundaries of the political subdivision 400.28 instead of the state of Minnesota. 400.29 (c) All mobile transportation equipment, and parts and 400.30 accessories attached to or to be attached to the equipment are 400.31 exempt, if purchased by a holder of a motor carrier direct pay 400.32 permit under section 297A.90. 400.33 Subd. 8. [CREDIT FOR OTHER LOCAL TAXES.] If a person paid 400.34 sales or use tax to another political subdivision of this state 400.35 on an item subject to tax under this section, a credit applies 400.36 against the tax imposed under this section. The credit equals 401.1 the tax the person paid to the other political subdivision for 401.2 the item. 401.3 Subd. 9. [ENFORCEMENT; COLLECTION; AND ADMINISTRATION.] 401.4 (a) The commissioner of revenue shall collect the taxes subject 401.5 to this section. The commissioner may collect the tax with the 401.6 state sales and use tax. All taxes under this section are 401.7 subject to the same penalties, interest, and enforcement 401.8 provisions as apply to the state sales and use tax. 401.9 (b) A request for a refund of state sales tax paid in 401.10 excess of the amount of tax legally due includes a request for a 401.11 refund of the political subdivision taxes paid on the goods or 401.12 services. The commissioner shall refund to the taxpayer the 401.13 full amount of the political subdivision taxes paid on exempt 401.14 sales or use. 401.15 (c) A political subdivision that is collecting and 401.16 administering its own sales and use tax before January 1, 1998, 401.17 may elect to be exempt from this subdivision and subdivision 11. 401.18 Subd. 10. [USE OF ZIP CODE IN DETERMINING LOCATION OF 401.19 SALE.] To determine whether to impose the local tax, the 401.20 retailer may use zip codes if the zip code area is entirely 401.21 within the political subdivision. When a zip code area is not 401.22 entirely within a political subdivision, the retailer shall not 401.23 collect the local tax if the purchaser notifies the retailer 401.24 that the purchaser's delivery address is outside of the 401.25 political subdivision, unless the retailer verifies that the 401.26 delivery address is in the political subdivision using a means 401.27 other than the zip code. Notwithstanding subdivision 13, this 401.28 subdivision applies to all local sales taxes without regard to 401.29 the date of authorization. 401.30 Subd. 11. [REVENUES; COST OF COLLECTION.] The commissioner 401.31 shall remit the proceeds of the tax, less refunds and a 401.32 proportionate share of the cost of collection, at least 401.33 quarterly, to the political subdivision. The commissioner shall 401.34 deduct from the proceeds remitted an amount that equals 401.35 (1) the direct and indirect costs of the department to 401.36 administer, audit, and collect the political subdivision's tax, 402.1 plus 402.2 (2) the political subdivision's proportionate share of the 402.3 indirect cost of administering all taxes under this section. 402.4 Subd. 12. [EFFECTIVE DATES; NOTIFICATION.] (a) A political 402.5 subdivision may impose a tax under this section starting only on 402.6 the first day of a calendar quarter. A political subdivision 402.7 may repeal a tax under this section stopping only on the last 402.8 day of a calendar quarter. 402.9 (b) The political subdivision shall notify the commissioner 402.10 of revenue at least 90 days before imposing or repealing a tax 402.11 under this section. 402.12 Subd. 13. [APPLICATION.] This section applies to all local 402.13 sales taxes that were authorized before, on, or after June 2, 402.14 1997. 402.15 Sec. 43. [297A.991] [REPORTING OF SALES TAX ON MINNESOTA 402.16 GOVERNMENTS.] 402.17 Subdivision 1. [COMMISSIONER OF REVENUE TO REPORT.] For 402.18 each fiscal year, the commissioner shall estimate the amount of 402.19 revenues derived from imposing the tax under this chapter and 402.20 chapter 297B on state agencies and political subdivisions. The 402.21 commissioner shall report this amount to the commissioner of 402.22 finance before the time for filing reports for the fiscal year 402.23 with the United States Department of Commerce. 402.24 Subd. 2. [COMMISSIONER OF FINANCE TO REPORT.] In reporting 402.25 the sales tax and sales tax on motor vehicles collections to the 402.26 United States Department of Commerce, the commissioner of 402.27 finance shall exclude the estimated amount from the sales and 402.28 motor vehicle collections. Sales tax and sales tax on motor 402.29 vehicles revenues received from political subdivisions must be 402.30 reported as intergovernmental grants or similar 402.31 intergovernmental revenue. The amount of the sales tax and 402.32 sales tax on motor vehicles paid by state agencies must be 402.33 reported as reduced state expenditures. 402.34 Sec. 44. [REVISOR'S INSTRUCTIONS.] 402.35 Subdivision 1. [CODIFICATION OF LOCAL LAWS.] In the next 402.36 edition of Minnesota Statutes, after consultation with the 403.1 chairs of the house and senate tax committees and with the 403.2 commissioner of revenue, the revisor of statutes may codify 403.3 local laws authorizing the imposition of a general sales or 403.4 general sales and use tax. 403.5 Subd. 2. [INTERNAL REFERENCES.] In the next edition of 403.6 Minnesota Statutes, the revisor of statutes shall change any 403.7 references to a repealed section in Minnesota Statutes, chapter 403.8 297A, to the appropriate recodified section. 403.9 Subd. 3. [AMENDMENTS TO REPEALED 403.10 SECTIONS.] Notwithstanding any law to the contrary, if a 403.11 provision of a section of Minnesota Statutes repealed by this 403.12 article is amended or repealed during the same legislative 403.13 session, the amendment or repealer shall supersede the 403.14 provisions of this article, and the revisor shall codify the 403.15 amendment or repealer consistent with the recodification of the 403.16 affected section by this article. 403.17 Sec. 45. [REPEALER.] 403.18 Minnesota Statutes 1998, sections 297A.01; 297A.02; 403.19 297A.022; 297A.023; 297A.03; 297A.04; 297A.041; 297A.06; 403.20 297A.065; 297A.07; 297A.09; 297A.10; 297A.11; 297A.12; 297A.13; 403.21 297A.135; 297A.14; 297A.141; 297A.15; 297A.16; 297A.17; 297A.18; 403.22 297A.21; 297A.211; 297A.213; 297A.22; 297A.23; 297A.24; 297A.25; 403.23 297A.2531; 297A.2545; 297A.255; 297A.256; 297A.2571; 297A.2572; 403.24 297A.2573; 297A.259; 297A.26; 297A.28; 297A.33, subdivision 2; 403.25 297A.44, subdivision 1; 297A.46; 297A.47; and 297A.48, are 403.26 repealed. 403.27 Sec. 46. [EFFECTIVE DATE.] 403.28 Sections 1 and 44, subdivisions 1 and 3 are effective the 403.29 day following final enactment. 403.30 Sections 2 and 3, paragraph (f), are effective for sales 403.31 taxes retained after June 30, 2001. 403.32 Section 3, paragraph (e), is effective for amounts 403.33 collected after June 30, 2001. 403.34 Sections 4 to 21 are effective for sales and purchases 403.35 occurring after June 30, 2001. 403.36 Section 22 is effective for use tax liabilities incurred 404.1 after June 30, 2001. 404.2 Section 23 is effective for gross receipts reported after 404.3 June 30, 2001. 404.4 Sections 24 and 25 are effective for offsets against taxes 404.5 after June 30, 2001. 404.6 Section 26 is effective for aircraft registered or licensed 404.7 and for sales or purchases of aircraft after June 30, 2001. 404.8 Sections 27 to 30 are effective for permits applied for, 404.9 issued, canceled, or revoked after June 30, 2001. 404.10 Section 31 is effective for selling events held after June 404.11 30, 2001. 404.12 Section 32 is effective for direct payment by purchasers 404.13 after June 30, 2001. 404.14 Section 33 is effective for registered motor carriers after 404.15 June 30, 2001. 404.16 Section 34 is effective for seizures after June 30, 2001. 404.17 Section 35 is effective for security required, security 404.18 auctions held, and security bonds required after June 30, 2001. 404.19 Section 36 is effective for assessments after June 30, 2001. 404.20 Section 37 is effective for revenues deposited after June 404.21 30, 2001. 404.22 Section 38 is effective for sales tax schedules distributed 404.23 after 30, 2001. 404.24 Sections 39 to 42 are effective for local sales taxes 404.25 collected after June 30, 2001. 404.26 Section 43 is effective for sales taxes reported after June 404.27 30, 2001. 404.28 Sections 44, subdivision 2, and 45 are effective July 1, 404.29 2001. 404.30 ARTICLE 17 404.31 SALES AND USE TAX RECODIFICATION 404.32 CONFORMING CHANGES 404.33 Section 1. Minnesota Statutes 1998, section 115A.69, 404.34 subdivision 6, is amended to read: 404.35 Subd. 6. [PROPERTY EXEMPT FROM TAXATION.] Any real or 404.36 personal property owned, used, or occupied by the district for 405.1 any authorized purpose is declared to be acquired, owned, used 405.2 and occupied for public and governmental purposes, and shall be 405.3 exempted from taxation by the state or any political subdivision 405.4 of the state, except to the extent that the property is subject 405.5 to the sales and use tax under chapter 297A, provided that those 405.6 properties shall be subject to special assessments levied by a 405.7 political subdivision for a local improvement in amounts 405.8 proportionate to and not exceeding the special benefit received 405.9 by the properties from the improvement. No possible use of the 405.10 properties in any manner different from their use for solid 405.11 waste management at the time shall be considered in determining 405.12 the special benefit received by the properties. 405.13 Sec. 2. Minnesota Statutes 1998, section 116A.25, is 405.14 amended to read: 405.15 116A.25 [PROPERTY EXEMPT FROM TAXATION.] 405.16 Any properties, real or personal, owned, leased, 405.17 controlled, used, or occupied by a water or sewer or water and 405.18 sewer commission or board for any purpose referred to in 405.19 sections 116A.01 to 116A.26 are declared to be acquired, owned, 405.20 leased, controlled, used and occupied for public, governmental, 405.21 and municipal purposes, and shall be exempt from taxation by the 405.22 state or any political subdivision of the state, except to the 405.23 extent that the property is subject to the sales and use tax 405.24 under chapter 297A, provided that such properties shall be 405.25 subject to special assessments levied by a political subdivision 405.26 for a local improvement in amounts proportionate to and not 405.27 exceeding the special benefit received by the properties from 405.28 such improvement. No possible use of any such properties in any 405.29 manner different from their use as part of a distribution or 405.30 disposal system at the time shall be considered in determining 405.31 the special benefit received by such properties. All such 405.32 assessments shall be subject to final confirmation by the county 405.33 board or boards in whose jurisdiction the system is constructed 405.34 and whose determination of the benefits shall be conclusive upon 405.35 the political subdivision levying the assessment. 405.36 Sec. 3. Minnesota Statutes 1998, section 360.035, is 406.1 amended to read: 406.2 360.035 [EXEMPTION FROM TAXATION.] 406.3 Any properties, real or personal, acquired, owned, leased, 406.4 controlled, used, or occupied by a municipality for any of the 406.5 purposes of sections 360.011 to 360.076, are declared to be 406.6 acquired, owned, leased, controlled, used, or occupied for 406.7 public, governmental, and municipal purposes, and shall be 406.8 exempt from taxation by the state or any of its political 406.9 subdivisions, except to the extent that the property is subject 406.10 to the sales and use tax under chapter 297A. Nothing contained 406.11 in sections 360.011 to 360.076 shall be construed as exempting 406.12 properties, real or personal, leased from the municipality to a 406.13 tenant or lessee who is a private person, association, or 406.14 corporation from assessments or taxes. Leased municipal airport 406.15 property that is not located at the airport operated by the 406.16 metropolitan airports commission shall not be subject to payment 406.17 of any portion of rentals under section 272.68, subdivision 3. 406.18 Sec. 4. Minnesota Statutes 1998, section 458A.09, is 406.19 amended to read: 406.20 458A.09 [EXEMPTION FROM TAXATION.] 406.21 Notwithstanding any other provision of law to the contrary, 406.22 the properties, moneys, and other assets of the commission, and 406.23 all revenues or other income of the commission shall be exempt 406.24 from all taxation, licenses, fees, or charges of any kind 406.25 imposed by the state or by any county, municipality, political 406.26 subdivision, taxing district, or other public agency or body of 406.27 the state, except to the extent that the property is subject to 406.28 the sales and use tax under chapter 297A. 406.29 Sec. 5. Minnesota Statutes 1998, section 458A.30, is 406.30 amended to read: 406.31 458A.30 [TAX EXEMPTION.] 406.32 Notwithstanding any other provisions of law to the 406.33 contrary, the property, moneys, and other assets of the 406.34 authority, or revenues or other income of the authority, and all 406.35 bonds, certificates of indebtedness, or other obligations issued 406.36 by the authority, with the approval of the city council, and the 407.1 interest thereon, shall be exempt from all taxation, licenses, 407.2 fees, or charges of any kind imposed by the state of Minnesota, 407.3 or by any county, municipality, political subdivision, taxing 407.4 district, or other public agency or body of the state, including 407.5 but not limited to the excise tax on gasoline or special fuel 407.6 under chapter 296A, except to the extent that the property is 407.7 subject to the sales and use tax under chapter 297A. 407.8 Sec. 6. Minnesota Statutes 1998, section 458D.23, is 407.9 amended to read: 407.10 458D.23 [PROPERTY EXEMPT FROM TAXATION.] 407.11 Any properties, real or personal, owned, leased, 407.12 controlled, used, or occupied by the sanitary sewer board for 407.13 any purpose under sections 458D.01 to 458D.24 are declared to be 407.14 acquired, owned, leased, controlled, used and occupied for 407.15 public, governmental, and municipal purposes, and shall be 407.16 exempt from taxation by the state or any political subdivision 407.17 of the state, except to the extent that the property is subject 407.18 to the sales and use tax under chapter 297A, provided that such 407.19 properties shall be subject to special assessments levied by a 407.20 political subdivision for a local improvement in amounts 407.21 proportionate to and not exceeding the special benefit received 407.22 by the properties from such improvement. No possible use of any 407.23 such properties in any manner different from their use as part 407.24 of a disposal system at the time shall be considered in 407.25 determining the special benefit received by such properties. 407.26 All such assessments shall be subject to final approval by the 407.27 board, whose determination of the benefits shall be conclusive 407.28 upon the political subdivision levying the assessment. All 407.29 bonds, certificates of indebtedness or other obligations of the 407.30 board, and the interest thereon, shall be exempt from taxation 407.31 by the state or any political subdivision of the state. 407.32 Sec. 7. Minnesota Statutes 1999 Supplement, section 407.33 469.101, subdivision 2, is amended to read: 407.34 Subd. 2. [ACQUIRE PROPERTY.] The economic development 407.35 authority may acquire by lease, purchase, gift, devise, or 407.36 condemnation proceedings the needed right, title, and interest 408.1 in property to create economic development districts. It shall 408.2 pay for the property out of money it receives under sections 408.3 469.090 to 469.108. It may hold and dispose of the property 408.4 subject to the limits and conditions in sections 469.090 to 408.5 469.108. The title to property acquired by condemnation or 408.6 purchase must be in fee simple, absolute. The authority may 408.7 accept an interest in property acquired in another way subject 408.8 to any condition of the grantor or donor. The condition must be 408.9 consistent with the proper use of the property under sections 408.10 469.090 to 469.108. Property acquired, owned, leased, 408.11 controlled, used, or occupied by the authority for any of the 408.12 purposes of this section is for public governmental and 408.13 municipal purposes and is exempt from taxation by the state or 408.14 by its political subdivisions, except to the extent that the 408.15 property is subject to the sales and use tax under chapter 408.16 297A. The exemption applies only while the authority holds 408.17 property for its own purpose. The exemption is subject to the 408.18 provisions of section 272.02, subdivision 39. When the property 408.19 is sold it becomes subject to taxation. 408.20 Sec. 8. Minnesota Statutes 1998, section 469.127, is 408.21 amended to read: 408.22 469.127 [TAX STATUS.] 408.23 The pedestrian skyway system, underground pedestrian 408.24 concourse, the people mover system, and publicly owned parking 408.25 structures are declared to be public property to be used for 408.26 essential public and governmental purposes. They are exempt 408.27 from all taxes and special assessments of the city, county, 408.28 state, or any political subdivision thereof, except to the 408.29 extent that the property is subject to the sales and use tax 408.30 under chapter 297A. Taxes do not include charges for utilities 408.31 and special services such as heat, water, electricity, gas, 408.32 sewage disposal, or garbage removal. 408.33 Sec. 9. Minnesota Statutes 1998, section 473.448, is 408.34 amended to read: 408.35 473.448 [TRANSIT ASSETS EXEMPT FROM TAX BUT MUST PAY 408.36 ASSESSMENTS.] 409.1 (a) Notwithstanding any other provision of law to the 409.2 contrary, the properties, moneys, and other assets of the 409.3 council used for transit operations or for special 409.4 transportation services and all revenues or other income from 409.5 the council's transit operations or special transportation 409.6 services are exempt from all taxation, licenses, or fees imposed 409.7 by the state or by any county, municipality, political 409.8 subdivision, taxing district, or other public agency or body of 409.9 the state, except to the extent that the property is subject to 409.10 the sales and use tax under chapter 297A. 409.11 (b) Notwithstanding paragraph (a), the council's transit 409.12 properties are subject to special assessments levied by a 409.13 political subdivision for a local improvement in amounts 409.14 proportionate to and not exceeding the special benefit received 409.15 by the properties from the improvement. 409.16 Sec. 10. Minnesota Statutes 1998, section 473.545, is 409.17 amended to read: 409.18 473.545 [PROPERTY EXEMPT FROM TAXATION.] 409.19 Any properties, real or personal, owned, leased, 409.20 controlled, used, or occupied by the council for any purpose 409.21 referred to in Minnesota Statutes 1984, section 473.502, are 409.22 declared to be acquired, owned, leased, controlled, used and 409.23 occupied for public, governmental, and municipal purposes, and 409.24 shall be exempt from taxation by the state or any political 409.25 subdivision of the state, except to the extent that the property 409.26 is subject to the sales and use tax under chapter 297A, provided 409.27 that such properties shall be subject to special assessments 409.28 levied by a political subdivision for a local improvement in 409.29 amounts proportionate to and not exceeding the special benefit 409.30 received by the properties from such improvement. No possible 409.31 use of any such properties in any manner different from their 409.32 use as part of the metropolitan disposal system at the time 409.33 shall be considered in determining the special benefit received 409.34 by such properties. All such assessments shall be subject to 409.35 final confirmation by the metropolitan council, whose 409.36 determination of the benefits shall be conclusive upon the 410.1 political subdivision levying the assessment. 410.2 Sec. 11. Minnesota Statutes 1998, section 473.608, 410.3 subdivision 2, is amended to read: 410.4 Subd. 2. [GETTING AIRPORT PROPERTY.] It may acquire by 410.5 lease, purchase, gift, devise, or condemnation proceedings all 410.6 necessary right, title, and interest in and to lands and 410.7 personal property required for airports and all other real or 410.8 personal property required for the purposes contemplated by 410.9 sections 473.601 to 473.679, within the metropolitan area, pay 410.10 therefor out of funds obtained as hereinafter provided, and hold 410.11 and dispose of the same, subject to the limitations and 410.12 conditions herein prescribed except that the corporation may not 410.13 acquire by any means lands or personal property for a major new 410.14 airport. Title to any such property acquired by condemnation or 410.15 purchase shall be in fee simple, absolute, unqualified in any 410.16 way, but any such real or personal property or interest therein 410.17 otherwise acquired may be so acquired or accepted subject to any 410.18 condition which may be imposed thereon by the grantor or donor 410.19 and agreed to by the corporation, not inconsistent with the 410.20 proper use of the property by the corporation for the purposes 410.21 herein provided. Any properties, real or personal, acquired, 410.22 owned, leased, controlled, used, and occupied by the corporation 410.23 for any of the purposes of sections 473.601 to 473.679, are 410.24 declared to be acquired, owned, leased, controlled, used, and 410.25 occupied for public, governmental, and municipal purposes, and 410.26 shall be exempt from taxation by the state or any of its 410.27 political subdivisions, except to the extent that the property 410.28 is subject to the sales and use tax under chapter 297A. Nothing 410.29 contained in sections 473.601 to 473.679, shall be construed as 410.30 exempting properties, real or personal, leased from the 410.31 metropolitan airports commission to a tenant or lessee who is a 410.32 private person, association, or corporation from assessments or 410.33 taxes. 410.34 ARTICLE 18 410.35 CORPORATIONS CREATED BY POLITICAL SUBDIVISIONS 410.36 Section 1. Minnesota Statutes 1998, section 238.08, 411.1 subdivision 3, is amended to read: 411.2 Subd. 3. [MUNICIPAL OPERATION.] Nothing in this chapter 411.3 shall be construed to limit any municipality from the right to 411.4 construct, purchase, and operateacable communications 411.5systemsystems, or, to operate facilities and channels for 411.6 community television, including, but not limited to, public, 411.7 educational, and governmental access and local origination 411.8 programming. Any municipal system, including the operation of 411.9 community television by a municipality, shall be subject to this 411.10 chapter to the same extent as would any nonpublic cable 411.11 communications system. 411.12 Sec. 2. [465.717] [CREATION OF CORPORATIONS BY POLITICAL 411.13 SUBDIVISIONS.] 411.14 Subdivision 1. [STATUTORY AUTHORIZATION REQUIRED.] A 411.15 county, home rule charter city, statutory city, town, school 411.16 district, or other political subdivision, including a joint 411.17 powers entity operating under section 471.59, may not create a 411.18 corporation, whether for profit or not for profit, unless 411.19 explicitly authorized to do so by law. 411.20 Subd. 2. [AUTHORITY TO INCORPORATE A JOINT POWERS ENTITY.] 411.21 A joint powers entity created under section 471.59 may 411.22 incorporate itself as a nonprofit under chapter 317A. A 411.23 corporation created under this subdivision shall comply with 411.24 every law that applies to the participating political 411.25 subdivisions and shall possess no greater authority or power 411.26 than that held by the joint powers entity itself. 411.27 Sec. 3. [465.719] [EXISTING CORPORATIONS CREATED BY 411.28 POLITICAL SUBDIVISIONS.] 411.29 Subdivision 1. [DEFINITIONS.] The following definitions 411.30 apply to this section: 411.31 (a) "Political subdivision" means a county, a statutory or 411.32 home rule charter city, a town, a school district, or other 411.33 political subdivision of the state. Political subdivision 411.34 includes a political subdivision acting individually or jointly 411.35 as provided under section 471.59. 411.36 (b) "Corporation" means a corporation created by a 412.1 political subdivision before May 31, 1997, in which (1) the 412.2 corporation's articles of incorporation or bylaws provide for 412.3 the governing body of the political subdivision to serve as a 412.4 corporation's governing board; (2) the articles of incorporation 412.5 or bylaws provide for appointed officials of the political 412.6 subdivision or members of the governing body of the political 412.7 subdivision or both to be automatically appointed to the board 412.8 solely by virtue of their appointment or election to office and 412.9 they constitute a majority of the corporation's board members; 412.10 or (3) the governing body of the political subdivision approves 412.11 the budget or expenditures of the corporation for purposes other 412.12 than those related to oversight of public grants or loans made 412.13 to the corporation under a competitive process for which other 412.14 entities are eligible. Corporation does not include: 412.15 (1) a corporation established under chapters 453, 453A, or 412.16 sections 119A.374 to 119A.376; 245.62 to 245.66; 412.17 (2) a nonprofit corporation created to raise funds for use 412.18 by a political subdivision if less than a majority of the board 412.19 of directors of the corporation are members of the governing 412.20 body of the political subdivision appointed to the board of 412.21 directors by virtue of their election to office; or 412.22 (3) a corporation created by a political subdivision 412.23 pursuant to state statute or special law or federal law. 412.24 Subd. 2. [RESOLUTION REQUIRED.] In order to provide for 412.25 the continued existence of a corporation created by a political 412.26 subdivision, the political subdivision, or its successor, that 412.27 created the corporation must adopt a resolution at a regularly 412.28 scheduled meeting of the governing body of the political 412.29 subdivision. The resolution must include the information 412.30 required in subdivisions 4 to 9. A certified copy of the 412.31 resolution must be filed with the secretary of state. If a 412.32 resolution is not adopted within three years of the effective 412.33 date of this section, the board of directors of the corporation 412.34 shall direct and authorize an officer or designee of the 412.35 corporation to file with the secretary of state immediately a 412.36 notice of intent to dissolve the corporation and then as soon as 413.1 possible, complete dissolution of the corporation as provided in 413.2 the corporation's articles of incorporation and bylaws, and the 413.3 law under which the corporation was formed. 413.4 Subd. 3. [AMENDED ARTICLES OF INCORPORATION, BYLAWS.] If 413.5 the political subdivision adopts a resolution under subdivision 413.6 2, the board of directors of the corporation shall direct and 413.7 authorize an officer or designee of the corporation to file 413.8 amended articles of incorporation, if necessary, as soon as 413.9 practicable after adoption of the resolution to make the 413.10 articles of incorporation consistent with the resolution and to 413.11 provide for the application of the laws under subdivision 9. 413.12 Thereafter, the corporation may not amend its articles of 413.13 incorporation unless the political subdivision adopts a 413.14 resolution in support of the change as provided in subdivision 2 413.15 for ratifying existing corporations and a certified copy of the 413.16 resolution is attached to the amended articles of incorporation 413.17 filed with the secretary of state. 413.18 Subd. 4. [EXISTING CONTRACTS.] If on the effective date of 413.19 this section the corporation has contracts or other obligations 413.20 that are inconsistent with any requirement of this section, the 413.21 resolution may provide for the delayed application of that 413.22 requirement for the time necessary to avoid a breach or 413.23 impairment of the contract or obligation. 413.24 Subd. 5. [NEED FOR CORPORATION.] The resolution must make 413.25 a detailed and specific finding regarding the purpose of the 413.26 corporation, and why the corporation is the best alternative for 413.27 accomplishing the purpose. 413.28 Subd. 6. [AUTHORITIES AND POWERS OF CORPORATION 413.29 LIMITED.] The resolution must specify what authorities and 413.30 powers the corporation possesses. The authorities and powers of 413.31 the corporation must not exceed the authorities and powers of 413.32 the political subdivision that created it, except as otherwise 413.33 authorized in this section. 413.34 Subd. 7. [BOARD MEMBERSHIP.] If a majority of the 413.35 corporation's governing board includes elected or appointed 413.36 officials of the political subdivision creating the corporation, 414.1 the resolution must make a detailed and specific finding 414.2 regarding the purpose of those officials serving on the board, 414.3 and why the corporation cannot accomplish its purpose unless 414.4 those officials serve on the board. Alternatively, the 414.5 resolution may provide for other board membership and the 414.6 articles of incorporation amended to be consistent with the 414.7 resolution. 414.8 Subd. 8. [ALLOCATION OF ASSETS AND LIABILITIES.] If the 414.9 political subdivision that created the corporation is a joint 414.10 powers board, the joint powers agreement and the resolution must 414.11 specify how the assets and liabilities of the corporation are 414.12 allocated or attributed to each member of the joint powers 414.13 board, including, but not limited to, for the purposes of any 414.14 applicable levy or debt limits. If a corporation is created by 414.15 more than one political subdivision, each political subdivision 414.16 that ratifies creation of the corporation must adopt a 414.17 resolution required by this section and, among other 414.18 requirements, each resolution must specify and agree with the 414.19 resolution of the other political subdivisions as to how the 414.20 assets and liabilities of the corporation are allocated or 414.21 attributed to each political subdivision, including, but not 414.22 limited to, for the purposes of any applicable levy or debt 414.23 limits. 414.24 Subd. 9. [APPLICATION OF OTHER LAWS.] A corporation 414.25 created by a political subdivision under this section must 414.26 comply with every law that applies to the political subdivision, 414.27 as if the corporation is a part of the political subdivision, 414.28 unless the resolution ratifying creation of the corporation 414.29 specifically exempts the corporation from part or all of a law. 414.30 If the resolution exempts the corporation from part or all of a 414.31 law, the resolution must make a detailed and specific finding as 414.32 to why the corporation cannot fulfill its purpose if the 414.33 corporation is subject to that law. A corporation may not be 414.34 exempted from section 471.705, the Minnesota Open Meeting Law, 414.35 sections 138.163 to 138.25, governing records management, or 414.36 chapter 13, the Minnesota Government Data Practices Act. Any 415.1 affected or interested person may bring an action in district 415.2 court to void the resolution on the grounds that the findings 415.3 are not sufficiently detailed and specific, or that the 415.4 corporation can fulfill its purpose if it is subject to the law 415.5 from which the resolution exempts the corporation. Laws that 415.6 apply to a political subdivision that also apply to a 415.7 corporation created by a political subdivision under this 415.8 subdivision include, but are not limited to: 415.9 (1) section 471.705, the Minnesota Open Meeting Law; 415.10 (2) chapter 13, the Minnesota Government Data Practices 415.11 Act; 415.12 (3) section 471.345, the Uniform Municipal Contracting Law; 415.13 (4) sections 43A.17, limiting the compensation of employees 415.14 based on the governor's salary; 471.991 to 471.999, providing 415.15 for equitable pay; and 465.72 and 465.722, governing severance 415.16 pay; 415.17 (5) section 275.065, providing for truth-in-taxation 415.18 hearings. If any tax revenues of the political subdivision will 415.19 be appropriated to the corporation, the corporation's annual 415.20 operating and capital budgets must be included in the 415.21 truth-in-taxation hearing of the political subdivision that 415.22 created the corporation; 415.23 (6) if the corporation issues debt, its debt is included in 415.24 the political subdivision's debt limit if it would be included 415.25 if issued by the political subdivision, and issuance of the debt 415.26 is subject to the election and other requirements of chapter 475 415.27 and section 471.69; 415.28 (7) section 471.895, prohibiting acceptance of gifts from 415.29 interested parties, and sections 471.87 to 471.89, relating to 415.30 interests in contracts; 415.31 (8) chapter 466, relating to municipal tort liability; 415.32 (9) chapter 118A, requiring deposit insurance or bond or 415.33 pledged collateral for deposits; 415.34 (10) chapter 118A, restricting investments; 415.35 (11) section 471.346, requiring ownership of vehicles to be 415.36 identified; 416.1 (12) sections 471.38 to 471.41, requiring claims to be in 416.2 writing, itemized, and approved by the governing board before 416.3 payment can be made; and 416.4 (13) the corporation cannot make advances of pay, make or 416.5 guarantee loans to employees, or provide in-kind benefits unless 416.6 authorized by law. 416.7 Subd. 10. [THREE-YEAR REVIEW OF APPLICABILITY OF OTHER 416.8 LAWS.] At least every three years after adoption of a resolution 416.9 that exempts a corporation from part or all of a law under 416.10 subdivision 9, the political subdivision must review the 416.11 activities of the corporation and whether the exemption should 416.12 continue to apply to the corporation. The political subdivision 416.13 must conduct the review at a regularly scheduled meeting of its 416.14 governing body. The political subdivision must adopt a 416.15 resolution to continue any exemption and a certified copy of the 416.16 resolution must be filed with the secretary of state. The 416.17 political subdivision cannot exempt the corporation from a law 416.18 for the first time under the review process of this subdivision. 416.19 Subd. 11. [TAXES USED FOR PUBLIC PURPOSE.] If the 416.20 political subdivision has authority under other law to 416.21 appropriate tax revenues for use by the corporation, those funds 416.22 must be appropriated and used only for public purposes. 416.23 Subd. 12. [AUDIT.] A corporation created by a political 416.24 subdivision that receives public money from the political 416.25 subdivision, other than grants or loans made under a competitive 416.26 process for which other entities are eligible, must be audited 416.27 annually by either a certified public accountant or the state 416.28 auditor. Except as provided below, the audit report must be 416.29 presented at a regularly scheduled meeting of the governing body 416.30 of the political subdivision that created the corporation. The 416.31 audit report must be made available to individuals after 416.32 presentation of the audit report to the governing body of the 416.33 political subdivision. The data classification of an audit 416.34 performed by the office of the state auditor is governed by 416.35 chapter 6. 416.36 Subd. 13. [STATE AUDITOR POWERS.] The state auditor has 417.1 the same powers with regard to a corporation created by a 417.2 political subdivision as the state auditor has with regard to 417.3 the political subdivision that created the corporation. 417.4 Subd. 14. [DATA CLASSIFICATION.] The following data 417.5 created, collected, or maintained by a corporation subject to 417.6 this section are classified as private data under section 13.02, 417.7 subdivision 12, or as nonpublic data under section 13.02, 417.8 subdivision 9: (1) proprietary data relating either (i) to 417.9 private businesses, or (ii) to enterprises operated by the 417.10 corporation that are in competition with entities offering 417.11 similar goods and services, so long as the data are not 417.12 generally known or readily ascertainable by proper means and 417.13 disclosure of specific data would cause harm to the competitive 417.14 position of the enterprise or private business, provided that 417.15 the goods or services do not require a tax levy; and (2) any 417.16 data identified in section 13.491 collected or received by a 417.17 transit organization. 417.18 Sec. 4. [CLARIFICATION.] 417.19 Existing corporations that reported to the state auditor 417.20 under Minnesota Statutes 1998, section 465.715, subdivision 3, 417.21 but do not meet the definition of a corporation under section 3, 417.22 subdivision 1, paragraph (b), remain as established and are not 417.23 affected by this act or by Minnesota Statutes, section 465.715. 417.24 Sec. 5. [REPEALER.] 417.25 Minnesota Statutes 1998, section 465.715, subdivisions 1, 417.26 2, and 3; and Minnesota Statutes 1999 Supplement, section 417.27 465.715, subdivision 1a, are repealed. 417.28 ARTICLE 19 417.29 MISCELLANEOUS 417.30 Section 1. [3.901] [LEGISLATIVE BUDGET OFFICE.] 417.31 Subdivision 1. [ESTABLISHMENT; PURPOSE.] A legislative 417.32 budget office is established under the control of the 417.33 legislative coordinating commission to provide the house and 417.34 senate with independent, accurate, and timely information and 417.35 analysis regarding state revenues and expenditures. The office 417.36 shall provide information on request of a member of the 418.1 legislature. The office shall provide priority to requests of 418.2 the chair of a standing committee or division of a standing 418.3 committee of the legislature, the chair of a legislative 418.4 commission, the speaker of the house, the president of the 418.5 senate, or the majority or minority leader of the house or 418.6 senate. 418.7 Subd. 2. [DUTIES.] The legislative budget office may: 418.8 (1) provide research and analysis of current and projected 418.9 state revenue, state expenditures, and state tax expenditures; 418.10 (2) provide alternative revenue and expenditure projections 418.11 on request; 418.12 (3) conduct budget and tax studies and provide general 418.13 fiscal and budgetary information; 418.14 (4) recommend means to improve the efficiency of state and 418.15 local government programs; 418.16 (5) analyze state and local government capital expenditures 418.17 and means of financing them; 418.18 (6) prepare fiscal notes or review fiscal notes prepared by 418.19 the executive branch; 418.20 (7) assist standing committees with analysis of fiscal 418.21 matters within their jurisdiction; and 418.22 (8) provide other assistance as requested by the 418.23 legislature, either house, or the legislative coordinating 418.24 commission. 418.25 EFFECTIVE DATE: This section is effective July 1, 2001. 418.26 Sec. 2. [3.902] [EMPLOYEES; LEGISLATIVE BUDGET OFFICE.] 418.27 Subdivision 1. [DIRECTOR.] The legislative coordinating 418.28 commission shall appoint a qualified director of the legislative 418.29 budget office who serves at the pleasure of the commission. The 418.30 commission shall fix the director's compensation. 418.31 Subd. 2. [OTHER STAFF.] Subject to the approval of the 418.32 commission, the director shall: 418.33 (1) employ and fix the compensation of other staff 418.34 necessary to efficiently perform the duties imposed upon the 418.35 office; 418.36 (2) buy necessary furniture, equipment, and supplies; and 419.1 (3) enter into contracts for services as necessary to 419.2 efficiently perform the duties imposed upon the office. 419.3 EFFECTIVE DATE: This section is effective July 1, 2001. 419.4 Sec. 3. [3.903] [ACCESS TO DATA.] 419.5 All departments and agencies of the executive and judicial 419.6 branches must comply with requests from the director of the 419.7 legislative budget office for information, data, estimates, and 419.8 statistics on the funding, revenue, operation, and affairs of 419.9 the department or agency. The commissioner of finance and 419.10 commissioner of revenue shall provide the director with full and 419.11 free access to information, data, estimates, and statistics in 419.12 the possession of the finance or revenue department on the state 419.13 budget, revenue, expenditures, and tax expenditures, including 419.14 access to computerized databases and computer systems. 419.15 EFFECTIVE DATE: This section is effective July 1, 2001. 419.16 Sec. 4. Minnesota Statutes 1998, section 3.98, subdivision 419.17 3, is amended to read: 419.18 Subd. 3. A copy of the fiscal note shall be delivered to 419.19 the chair of theappropriationsways and means committee of the 419.20 house of representatives, the chair of the finance committee of 419.21 the senate, the chair of the standing committee to which the 419.22 bill has been referred,tothe chief author of the bill, the 419.23 director of the legislative budget office, andtothe 419.24 commissioner of finance. 419.25 EFFECTIVE DATE: This section is effective July 1, 2001. 419.26 Sec. 5. Minnesota Statutes 1998, section 8.30, is amended 419.27 to read: 419.28 8.30 [COMPROMISE OF TAX AND FEE CLAIMS.] 419.29 Notwithstanding any other provisions of law to the 419.30 contrary, the attorney general shall have authority to 419.31 compromise taxes, fees, surcharges, assessments, penalties, and 419.32 interest in any case referred to the attorney general by the 419.33 commissioner of revenue, whether reduced to judgment or not, 419.34 where, in the attorney general's opinion, it shall be in the 419.35 best interests of the state to do so. Such a compromiseof a419.36tax debt shallmust be insucha formasprescribed by the 420.1 attorney generalshall prescribeand shall be in writing signed 420.2 by the attorney general, the taxpayer or taxpayer's 420.3 representative, and the commissioner of revenue. 420.4 EFFECTIVE DATE: This section is effective for compromises 420.5 entered into after the day of final enactment. 420.6 Sec. 6. Minnesota Statutes 1998, section 16A.46, is 420.7 amended to read: 420.8 16A.46 [LOST OR DESTROYED WARRANT DUPLICATE; INDEMNITY.] 420.9 The commissioner may issue a duplicate to an owner if the 420.10 loss or destruction of an unpaid warrant is documented by 420.11 affidavit. When the duplicate is issued, the original is void. 420.12 The commissioner may require an indemnity bond from the 420.13 applicant to the state for double the amount of the warrant for 420.14 anyone damaged by the issuance of the duplicate. The 420.15 commissioner may refuse to issue a duplicate of an unpaid state 420.16 warrant. If the commissioner acts in good faith the 420.17 commissioner is not liable, whether the application is granted 420.18 or denied. For an unpaid refund or rebate issued under a tax 420.19 law administered by the commissioner of revenue that has been 420.20 lost or destroyed, an affidavit is not required for the 420.21 commissioner to issue a duplicate if the duplicate is issued to 420.22 the same name and social security number as the original warrant 420.23 and that information is verified on a tax return filed by the 420.24 recipient. 420.25 EFFECTIVE DATE: This section is effective the day 420.26 following final enactment. 420.27 Sec. 7. Minnesota Statutes 1999 Supplement, section 420.28 16D.09, subdivision 2, is amended to read: 420.29 Subd. 2. [NOTIFICATION OF ACTION BY DEPARTMENT OF 420.30 REVENUE.] When the department of revenue has determined that a 420.31 debt is uncollectible and has written off that debt as provided 420.32 in subdivision 1, the commissioner of revenue must make a 420.33 reasonable attempt to notify the debtor of that action and of 420.34 the release of any liens imposed under section 270.69 related to 420.35 that debt, within 30 days after the determination has been 420.36 reported to the commissioner of finance. A lien imposed under 421.1 section 270.69 need not be released unless after the write-off 421.2 of uncollectible debt there is no remaining collectible 421.3 liability recorded on the lien. 421.4 EFFECTIVE DATE: This section is effective for debts 421.5 written off on or after the day following final enactment. 421.6 Sec. 8. Minnesota Statutes 1999 Supplement, section 421.7 168.012, subdivision 1, is amended to read: 421.8 Subdivision 1. [VEHICLES EXEMPT FROM TAX AND REGISTRATION 421.9 FEES.] (a) The following vehicles are exempt from the provisions 421.10 of this chapter requiring payment of tax and registration fees, 421.11 except as provided in subdivision 1c: 421.12 (1) vehicles owned and used solely in the transaction of 421.13 official business by the federal government, the state, or any 421.14 political subdivision; 421.15 (2) vehicles owned and used exclusively by educational 421.16 institutions and used solely in the transportation of pupils to 421.17 and from such institutions; 421.18 (3) vehicles used solely in driver education programs at 421.19 nonpublic high schools; 421.20 (4) vehicles owned by nonprofit charities and used 421.21 exclusively to transport disabled persons for educational 421.22 purposes; 421.23 (5) vehicles owned and used by honorary consul; 421.24 (6) ambulances owned by ambulance services licensed under 421.25 section 144E.10, the general appearance of which is 421.26 unmistakable; and 421.27 (7) vehicles owned by a commercial driving school licensed 421.28 under section 171.34, or an employee of a commercial driving 421.29 school licensed under section 171.34, and the vehicle is used 421.30 exclusively for driver education and training. 421.31 (b) Vehicles owned by the federal government, municipal 421.32 fire apparatuses including fire-suppression support vehicles, 421.33 police patrols and ambulances, the general appearance of which 421.34 is unmistakable, shall not be required to register or display 421.35 number plates. 421.36 (c) Unmarked vehicles used in general police work, liquor 422.1 investigations, arson investigations, and passenger automobiles, 422.2 pickup trucks, and buses owned or operated by the department of 422.3 corrections shall be registered and shall display appropriate 422.4 license number plates which shall be furnished by the registrar 422.5 at cost. Original and renewal applications for these license 422.6 plates authorized for use in general police work and for use by 422.7 the department of corrections must be accompanied by a 422.8 certification signed by the appropriate chief of police if 422.9 issued to a police vehicle, the appropriate sheriff if issued to 422.10 a sheriff's vehicle, the commissioner of corrections if issued 422.11 to a department of corrections vehicle, or the appropriate 422.12 officer in charge if issued to a vehicle of any other law 422.13 enforcement agency. The certification must be on a form 422.14 prescribed by the commissioner and state that the vehicle will 422.15 be used exclusively for a purpose authorized by this section. 422.16 (d) Unmarked vehicles used by the departments of revenue 422.17 and labor and industry, fraud unit, in conducting seizures or 422.18 criminal investigations must be registered and must display 422.19 passenger vehicle classification license number plates which 422.20 shall be furnished at cost by the registrar. Original and 422.21 renewal applications for these passenger vehicle license plates 422.22 must be accompanied by a certification signed by the 422.23 commissioner of revenue or the commissioner of labor and 422.24 industry. The certification must be on a form prescribed by the 422.25 commissioner and state that the vehicles will be used 422.26 exclusively for the purposes authorized by this section. 422.27 (e) Unmarked vehicles used by the division of disease 422.28 prevention and control of the department of health must be 422.29 registered and must display passenger vehicle classification 422.30 license number plates. These plates must be furnished at cost 422.31 by the registrar. Original and renewal applications for these 422.32 passenger vehicle license plates must be accompanied by a 422.33 certification signed by the commissioner of health. The 422.34 certification must be on a form prescribed by the commissioner 422.35 and state that the vehicles will be used exclusively for the 422.36 official duties of the division of disease prevention and 423.1 control. 423.2 (f) All other motor vehicles shall be registered and 423.3 display tax-exempt number plates which shall be furnished by the 423.4 registrar at cost, except as provided in subdivision 1c. All 423.5 vehicles required to display tax-exempt number plates shall have 423.6 the name of the state department or political subdivision, 423.7 nonpublic high school operating a driver education program, or 423.8 licensed commercial driving school, on the vehicle plainly 423.9 displayed on both sides thereof in letters not less than 2-1/2 423.10 inches high and one-half inch wide; except that each state 423.11 hospital and institution for the mentally ill and mentally 423.12 retarded may have one vehicle without the required 423.13 identification on the sides of the vehicle, and county social 423.14 service agencies may have vehicles used for child and vulnerable 423.15 adult protective services without the required identification on 423.16 the sides of the vehicle. Such identification shall be in a 423.17 color giving contrast with that of the part of the vehicle on 423.18 which it is placed and shall endure throughout the term of the 423.19 registration. The identification must not be on a removable 423.20 plate or placard and shall be kept clean and visible at all 423.21 times; except that a removable plate or placard may be utilized 423.22 on vehicles leased or loaned to a political subdivision or to a 423.23 nonpublic high school driver education program. 423.24 Sec. 9. Minnesota Statutes 1998, section 270.063, is 423.25 amended by adding a subdivision to read: 423.26 Subd. 4. [FEDERAL TAX REFUND OFFSET FEES.] For fees 423.27 charged by the department of the treasury of the United States 423.28 for the offset of federal tax refunds that are deducted from the 423.29 refund amounts remitted to the commissioner, the unpaid debts of 423.30 the taxpayers whose refunds are being offset to satisfy the 423.31 debts are reduced only by the actual amount of the refund 423.32 payments received by the commissioner. 423.33 EFFECTIVE DATE: This section is effective for offsets of 423.34 refunds made on or after the day following final enactment. 423.35 Sec. 10. Minnesota Statutes 1999 Supplement, section 423.36 270.65, is amended to read: 424.1 270.65 [DATE OF ASSESSMENT; DEFINITION.] 424.2 For purposes of taxes administered by the commissioner, the 424.3 term "date of assessment" means the date a liability reported on 424.4 a return wasfiledentered into the records of the commissioner 424.5 or the date a return should have been filed, whichever is later; 424.6 or, in the case of taxes determined by the commissioner, "date 424.7 of assessment" means the date of the order assessing taxes or 424.8 date of the return made by the commissioner; or, in the case of 424.9 an amended return filed by the taxpayer, the assessment date is 424.10 the date additional liability reported on the return, if any, 424.11 wasfiled withentered into the records of the commissioner; or, 424.12 in the case of a check from a taxpayer that is dishonored and 424.13 results in an erroneous refund being given to the taxpayer, 424.14 remittance of the check is deemed to be an assessment and the 424.15 "date of assessment" is the date the check was received by the 424.16 commissioner. 424.17 EFFECTIVE DATE: This section is effective for assessments 424.18 made on or after the day following final enactment. 424.19 Sec. 11. Minnesota Statutes 1999 Supplement, section 424.20 270A.03, subdivision 2, is amended to read: 424.21 Subd. 2. [CLAIMANT AGENCY.] "Claimant agency" means any 424.22 state agency, as defined by section 14.02, subdivision 2, the 424.23 regents of the University of Minnesota, any district court of 424.24 the state, any county, any statutory or home rule charter city 424.25 presenting a claim for a municipal hospital or a public 424.26 library or a municipal ambulance service, a hospital district, a 424.27 private nonprofit hospital that leases its building from the 424.28 county in which it is located, any public agency responsible for 424.29 child support enforcement, any public agency responsible for the 424.30 collection of court-ordered restitution, and any public agency 424.31 established by general or special law that is responsible for 424.32 the administration of a low-income housing program. 424.33 EFFECTIVE DATE: This section is effective for claims 424.34 submitted after June 30, 2000. 424.35 Sec. 12. Minnesota Statutes 1998, section 270A.03, 424.36 subdivision 7, is amended to read: 425.1 Subd. 7. [REFUND.] "Refund" means an individual income tax 425.2 refund or political contribution refund, pursuant to chapter 425.3 290, or a property tax credit or refund, pursuant to chapter 425.4 290A. 425.5 For purposes of this chapter, lottery prizes, as set forth 425.6 in section 349A.08, subdivision 8, and amounts granted to 425.7 persons by the legislature on the recommendation of the joint 425.8 senate-house of representatives subcommittee on claims shall be 425.9 treated as refunds. 425.10 In the case of a joint property tax refund payable to 425.11 spouses under chapter 290A, the refund shall be considered as 425.12 belonging to each spouse in the proportion of the total refund 425.13 that equals each spouse's proportion of the total income 425.14 determined under section 290A.03, subdivision 3. In the case of 425.15 a joint income tax refund under chapter 289A, the refund shall 425.16 be considered as belonging to each spouse in the proportion of 425.17 the total refund that equals each spouse's proportion of the 425.18 total taxable income determined under section 290.01, 425.19 subdivision 29. The commissioner shall remit the entire refund 425.20 to the claimant agency, which shall, upon the request of the 425.21 spouse who does not owe the debt, determine the amount of the 425.22 refund belonging to that spouse and refund the amount to that 425.23 spouse. For court fines, fees, and surcharges and court-ordered 425.24 restitution under section 611A.04, subdivision 2, the notice 425.25 provided by the commissioner of revenue under section 270A.07, 425.26 subdivision 2, paragraph (b), serves as the appropriate legal 425.27 notice to the spouse who does not owe the debt. 425.28 EFFECTIVE DATE: This section is effective for notices 425.29 provided after June 30, 2000. 425.30 Sec. 13. Minnesota Statutes 1998, section 270A.07, 425.31 subdivision 1, is amended to read: 425.32 Subdivision 1. [NOTIFICATION REQUIREMENT.] Any claimant 425.33 agency, seeking collection of a debt through setoff against a 425.34 refund due, shall submit to the commissioner information 425.35 indicating the amount of each debt and information identifying 425.36 the debtor, as required by section 270A.04, subdivision 3. 426.1 For each setoff of a debt against a refund due, the 426.2 commissioner shall charge a fee of $10.The claimant agency may426.3add the fee to the amount of the debt.426.4 The claimant agency shall notify the commissioner when a 426.5 debt has been satisfied or reduced by at least $200 within 30 426.6 days after satisfaction or reduction. 426.7 EFFECTIVE DATE: This section is effective the day 426.8 following final enactment. 426.9 Sec. 14. Minnesota Statutes 1999 Supplement, section 426.10 270A.07, subdivision 2, is amended to read: 426.11 Subd. 2. [SETOFF PROCEDURES.] (a) The commissioner, upon 426.12 receipt of notification, shall initiate procedures to detect any 426.13 refunds otherwise payable to the debtor. When the commissioner 426.14 determines that a refund is due to a debtor whose debt was 426.15 submitted by a claimant agency, the commissioner shall first 426.16 deduct the fee in subdivision 1 and then remit the refund or the 426.17 amount claimed, whichever is less, to the agency. In 426.18 transferring or remitting moneys to the claimant agency, the 426.19 commissioner shall provide information indicating the amount 426.20 applied against each debtor's obligation and the debtor's 426.21 address listed on the tax return. 426.22 (b) The commissioner shall remit to the debtor the amount 426.23 of any refund due in excess of the debt submitted for setoff by 426.24 the claimant agency. Notice of the amount setoff and address of 426.25 the claimant agency shall accompany any disbursement to the 426.26 debtor of the balance of a refund, or shall be sent to the 426.27 debtor at the time of setoff if the entire refund is set off. 426.28 The notice shall also advise the debtor of the right to contest 426.29 the validity of the claim, other than a claim based upon child 426.30 support under section 518.171, 518.54, 518.551, or chapter 518C 426.31 at a hearing, subject to the restrictions in this paragraph. 426.32 The debtor must assert this right by written request to the 426.33 claimant agency, which request the claimant agency must receive 426.34 within 45 days of the date of the notice. This right does not 426.35 apply to (1) issues relating to the validity of the claim that 426.36 have been previously raised at a hearing under this section or 427.1 section 270A.09; (2) issues relating to the validity of the 427.2 claim that were not timely raised by the debtor under section 427.3 270A.08, subdivision 2; (3) issues relating to the validity of 427.4 the claim that have been previously raised at a hearing 427.5 conducted under rules promulgated by the United States 427.6 Department of Housing and Urban Development or any public agency 427.7 that is responsible for the administration of a low-income 427.8 housing program, or that were not timely raised by the debtor 427.9 under those rules; or (4) issues relating to the validity of the 427.10 claim for which a hearing is discretionary under section 427.11 270A.09. The notice shall include an explanation of the right 427.12 of the spouse who does not owe the debt to request the claimant 427.13 agency to repay the spouse's portion of a joint refund. 427.14 EFFECTIVE DATE: This section is effective for notices 427.15 provided after June 30, 2000. 427.16 Sec. 15. Minnesota Statutes 1998, section 289A.35, is 427.17 amended to read: 427.18 289A.35 [ASSESSMENTS; COMMISSIONER FILED RETURNS.] 427.19 The commissionershallhas the authority to make 427.20 determinations, corrections, and assessments with respect to 427.21 state taxes, including interest, additions to taxes, and 427.22 assessable penalties. The commissioner may audit and adjust the 427.23 taxpayer's computation of federal taxable income, items of 427.24 federal tax preferences, or federal credit amounts to make them 427.25 conform with the provisions of chapter 290 or section 298.01. 427.26 If a taxpayer fails to file a required return, the commissioner, 427.27 from information in the commissioner's possession or obtainable 427.28 by the commissioner, may make a return for the taxpayer. The 427.29 return will be prima facie correct and valid. If a return has 427.30 been filed, the commissioner shallexamineenter the liability 427.31 reported on the return and may make any audit or investigation 427.32 that is considered necessary. The commissioner may use 427.33 statistical or other sampling techniques consistent with 427.34 generally accepted auditing standards in examining returns or 427.35 records and making assessments. 427.36 EFFECTIVE DATE: This section is effective the day 428.1 following final enactment. 428.2 Sec. 16. Minnesota Statutes 1999 Supplement, section 428.3 289A.55, subdivision 9, is amended to read: 428.4 Subd. 9. [INTEREST ON PENALTIES.] (a) A penalty imposed 428.5 under section 289A.60, subdivision 1, 2, 3, 4, 5, 6, or 21 bears 428.6 interest from the date the return or payment was required to be 428.7 filed or paid, including any extensions, to the date of payment 428.8 of the penalty. 428.9 (b) A penalty not included in paragraph (a) bears interest 428.10 only if it is not paid withinten60 days from the date of 428.11 notice. In that case interest is imposed from the date of 428.12 notice to the date of payment. 428.13 EFFECTIVE DATE: This section is effective for penalties 428.14 assessed after the date of final enactment. 428.15 Sec. 17. Minnesota Statutes 1998, section 296A.03, 428.16 subdivision 5, is amended to read: 428.17 Subd. 5. [FORM OF APPLICATION; BOND.] (a) A written 428.18 application shall be made in the form and manner prescribed by 428.19 the commissioner. 428.20 (b) The commissioner shall also require the applicant or 428.21 licensee to deposit with the state treasurer securities of the 428.22 United States government or the state of Minnesota or to execute 428.23 and file a bond, with a corporate surety approved by the 428.24 commissioner, to the state of Minnesota in an amount to be 428.25 determined by the commissioner and in a form to be fixed by the 428.26 commissioner and approved by the attorney general, and which 428.27 shall be conditioned for the payment when due of all excise 428.28 taxes,inspectionfees, penalties, and accrued interest arising 428.29 in the ordinary course of business or by reason of any 428.30 delinquent money which may be due the state. The bond shall 428.31 cover all places of business within the state where petroleum 428.32 products are received by the licensee. The applicant or 428.33 licensee shall designate and maintain an agent in this state 428.34 upon whom service may be made for all purposes of this section. 428.35 (c) An initial applicant for a distributor's license shall 428.36 furnish a bond in a minimum sum of $3,000 for the first year. 429.1 (d) The commissioner, on reaching the opinion that the bond 429.2 given by a licensee is inadequate in amount to fully protect the 429.3 state, shall require an additional bond in such amount as the 429.4 commissioner deems sufficient. 429.5 (e) A licensee who desires to be exempt from depositing 429.6 securities or furnishing such bond shall furnish to the 429.7 commissioner an itemized financial statement showing the assets 429.8 and the liabilities of the applicant. If it appears to the 429.9 commissioner, from the financial statement or otherwise, that 429.10 the applicant is financially responsible, then the commissioner 429.11 may exempt the applicant from depositing such securities or 429.12 furnishing such bond until the commissioner otherwise orders. 429.13 (f) When the surety upon any bond issued under the 429.14 provisions of this chapter have fulfilled the conditions of such 429.15 bond and compensated the state for any loss occasioned by any 429.16 act or omission of any licensee under this chapter, such surety 429.17 shall be subrogated to all the rights of the state in connection 429.18 with the transaction where such loss occurred. 429.19 EFFECTIVE DATE: This section is effective the day 429.20 following final enactment. 429.21 Sec. 18. Minnesota Statutes 1998, section 296A.21, 429.22 subdivision 2, is amended to read: 429.23 Subd. 2. [COLLECTION.] No action shall be brought for the 429.24 collection of delinquent taxes andinspectionfees under section 429.25 270.68 unless commenced within five years after the date of 429.26 assessment of the taxes and fees. 429.27 EFFECTIVE DATE: This section is effective the day 429.28 following final enactment. 429.29 Sec. 19. Minnesota Statutes 1998, section 296A.21, 429.30 subdivision 3, is amended to read: 429.31 Subd. 3. [FALSE OR FRAUDULENT REPORT.] In the case of a 429.32 false or fraudulent report with intent to evadetaxtaxes or 429.33inspection feefees or of a failure to file a report, the taxes 429.34 or fees may be assessed at any time, and a proceeding in court 429.35 for their collection must be begun within five years after the 429.36 assessment. 430.1 EFFECTIVE DATE: This section is effective the day 430.2 following final enactment. 430.3 Sec. 20. Minnesota Statutes 1998, section 296A.22, 430.4 subdivision 6, is amended to read: 430.5 Subd. 6. [SALE PROHIBITED UNDER CERTAIN CONDITIONS.] No 430.6 petroleum product shall be unloaded or sold by any person or 430.7 distributor whose tax andinspectionfees are the basis for 430.8 collection action under subdivision 2. 430.9 EFFECTIVE DATE: This section is effective the day 430.10 following final enactment. 430.11 Sec. 21. Minnesota Statutes 1999 Supplement, section 430.12 298.24, subdivision 1, is amended to read: 430.13 Subdivision 1. (a) For concentrate produced in19992000 430.14 and 2001, there is imposed upon taconite and iron sulphides, and 430.15 upon the mining and quarrying thereof, and upon the production 430.16 of iron ore concentrate therefrom, and upon the concentrate so 430.17 produced, a tax of $2.141 per gross ton of merchantable iron ore 430.18 concentrate produced therefrom. 430.19 (b) For concentrates produced in20002002 and subsequent 430.20 years, the tax rate shall be equal to the preceding year's tax 430.21 rate plus an amount equal to the preceding year's tax rate 430.22 multiplied by the percentage increase in the implicit price 430.23 deflator from the fourth quarter of the second preceding year to 430.24 the fourth quarter of the preceding year. "Implicit price 430.25 deflator"for the gross national productmeans the implicit 430.26 price deflator for the gross domestic product prepared by the 430.27 bureau of economic analysis of the United States Department of 430.28 Commerce. 430.29 (c) On concentrates produced in 1997 and thereafter, an 430.30 additional tax is imposed equal to three cents per gross ton of 430.31 merchantable iron ore concentrate for each one percent that the 430.32 iron content of the product exceeds 72 percent, when dried at 430.33 212 degrees Fahrenheit. 430.34 (d) The tax shall be imposed on the average of the 430.35 production for the current year and the previous two years. The 430.36 rate of the tax imposed will be the current year's tax rate. 431.1 This clause shall not apply in the case of the closing of a 431.2 taconite facility if the property taxes on the facility would be 431.3 higher if this clause and section 298.25 were not applicable. 431.4 (e) If the tax or any part of the tax imposed by this 431.5 subdivision is held to be unconstitutional, a tax of $2.141 per 431.6 gross ton of merchantable iron ore concentrate produced shall be 431.7 imposed. 431.8 (f) Consistent with the intent of this subdivision to 431.9 impose a tax based upon the weight of merchantable iron ore 431.10 concentrate, the commissioner of revenue may indirectly 431.11 determine the weight of merchantable iron ore concentrate 431.12 included in fluxed pellets by subtracting the weight of the 431.13 limestone, dolomite, or olivine derivatives or other basic flux 431.14 additives included in the pellets from the weight of the 431.15 pellets. For purposes of this paragraph, "fluxed pellets" are 431.16 pellets produced in a process in which limestone, dolomite, 431.17 olivine, or other basic flux additives are combined with 431.18 merchantable iron ore concentrate. No subtraction from the 431.19 weight of the pellets shall be allowed for binders, mineral and 431.20 chemical additives other than basic flux additives, or moisture. 431.21 (g)(1) Notwithstanding any other provision of this 431.22 subdivision, for the first two years of a plant's production of 431.23 direct reduced ore, no tax is imposed under this section. As 431.24 used in this paragraph, "direct reduced ore" is ore that results 431.25 in a product that has an iron content of at least 75 percent. 431.26 For the third year of a plant's production of direct reduced 431.27 ore, the rate to be applied to direct reduced ore is 25 percent 431.28 of the rate otherwise determined under this subdivision. For 431.29 the fourth such production year, the rate is 50 percent of the 431.30 rate otherwise determined under this subdivision; for the fifth 431.31 such production year, the rate is 75 percent of the rate 431.32 otherwise determined under this subdivision; and for all 431.33 subsequent production years, the full rate is imposed. 431.34 (2) Subject to clause (1), production of direct reduced ore 431.35 in this state is subject to the tax imposed by this section, but 431.36 if that production is not produced by a producer of taconite or 432.1 iron sulfides, the production of taconite or iron sulfides 432.2 consumed in the production of direct reduced iron in this state 432.3 is not subject to the tax imposed by this section on taconite or 432.4 iron sulfides. 432.5 EFFECTIVE DATE: This section is effective for concentrates 432.6 produced in 2000 and thereafter. 432.7 Sec. 22. Minnesota Statutes 1999 Supplement, section 432.8 505.08, subdivision 3, is amended to read: 432.9 Subd. 3. [PREMATURE REFERENCE TO PLAT; FORFEITURE.] Any 432.10 person who shall dispose of,or lease, or offer to sellany land 432.11 included in a plat by reference to the plat before the same is 432.12 recorded, shall forfeit to the county $100 for each lot, or part 432.13 of a lot, so disposed of,or leased, or offered; and any 432.14 official, land surveyor, or person whose duty it is to comply 432.15 with any of the provisions of this chapter, shall forfeit not 432.16 less than $100 for each month during which compliance is 432.17 delayed. All forfeitures under this chapter shall be recovered 432.18 in an action brought in the name of the county. Notwithstanding 432.19 any provisions of this subdivision to the contrary, this 432.20 subdivision shall not apply to an offer to sell or lease a unit 432.21 in a proposed common interest community as defined in chapter 432.22 515B. 432.23 EFFECTIVE DATE: This section is effective the day 432.24 following final enactment. 432.25 Sec. 23. [ITASCA AND CASS COUNTIES; DISTRIBUTION OF CASINO 432.26 TAX REVENUES.] 432.27 Notwithstanding any contrary provision of law, in the case 432.28 of one tribal government that operates three casinos, two of 432.29 which are located in Cass county, and one of which is located in 432.30 Itasca county, the payments to the counties under Minnesota 432.31 Statutes, section 270.60, subdivision 4, attributable to 432.32 agreements with that tribe, must be distributed, two-thirds to 432.33 Cass county, and one-third to Itasca county. This section 432.34 applies to distributions in 2001, 2002, and 2003. 432.35 EFFECTIVE DATE: This section is effective upon approval by 432.36 the governing bodies of both Itasca county and Cass county, and 433.1 compliance by both of them with Minnesota Statutes, section 433.2 645.021, subdivision 3. 433.3 Sec. 24. [REPEALER.] 433.4 Minnesota Rules, part 8160.0300, subpart 4, is repealed. 433.5 EFFECTIVE DATE: This section is effective for assessments 433.6 made on or after the day following final enactment.