Minnesota Legislature
HF 4127
3rd Engrossment - 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; providing agricultural 1.4 assistance; extending the time to qualify for and 1.5 making certain other changes to the 1999 sales tax 1.6 rebate and 1999 agricultural assistance; providing 1.7 agricultural assistance; reducing individual income 1.8 tax rates; making changes to income, franchise, 1.9 withholding, sales and use, property, motor vehicle 1.10 sales and registration, mortgage registry, health care 1.11 provider, motor fuels, cigarette and tobacco, liquor, 1.12 insurance premiums, lawful gambling, taconite 1.13 production, estate, and special taxes; limiting 1.14 certain maximum motor vehicle registration tax 1.15 amounts; changing and allowing tax credits, 1.16 subtractions, and exemptions; conforming with changes 1.17 in federal income tax provisions; providing for 1.18 allocation and apportionment of income; changing 1.19 property tax valuation, assessment, levy, 1.20 classification, homestead, credit, aid, exemption, 1.21 deferral, review, appeal, abatement, and distribution 1.22 provisions; changing levy authority; reducing rates on 1.23 lawful gambling taxes; changing tax increment 1.24 financing and housing improvement area provisions; 1.25 providing special authority for certain political 1.26 subdivisions; transferring money to the Minnesota 1.27 Minerals 21st Century Fund; providing for a grant to 1.28 the city of Richfield to be used for acquisition of 1.29 certain residential property; changing and clarifying 1.30 tax administration, collection, enforcement, interest, 1.31 and penalty provisions; authorizing certain special 1.32 assessments; changing revenue recapture provisions; 1.33 modifying certain aids to local units of government; 1.34 changing county reporting requirements; providing 1.35 certain duties and powers to the commissioner of 1.36 revenue, the state auditor, and to the attorney 1.37 general; defining terms; classifying data; requiring 1.38 studies; transferring certain funds; appropriating 1.39 money; amending Minnesota Statutes 1998, sections 1.40 8.30; 16A.46; 60A.15, subdivision 1; 97A.061, by 1.41 adding subdivisions; 115A.557, subdivision 3; 168.013, 1.42 subdivision 1a; 270.063, by adding a subdivision; 1.43 270.072, subdivision 2, and by adding a subdivision; 1.44 270A.03, subdivision 7; 270A.07, subdivision 1; 1.45 272.115, subdivision 1; 273.111, subdivision 3; 1.46 273.124, by adding a subdivision; 273.125, subdivision 2.1 8; 273.1399, subdivision 1; 273.37, subdivision 3; 2.2 275.066; 276.19, subdivision 1; 289A.08, by adding a 2.3 subdivision; 289A.20, subdivision 2; 289A.26, 2.4 subdivision 1; 289A.35; 289A.60, subdivisions 1, 14, 2.5 and 15; 290.01, subdivisions 19c, 19d, and 19e; 2.6 290.015, subdivisions 1, 3, and 4; 290.06, subdivision 2.7 22, and by adding subdivisions; 290.0671, subdivision 2.8 6, and by adding a subdivision; 290.0672, subdivisions 2.9 1 and 2; 290.17, subdivision 2; 290.92, subdivisions 2.10 3, 19, 28, and 29; 290B.04, by adding a subdivision; 2.11 290B.05, subdivision 3; 290B.07; 290B.08, subdivisions 2.12 1 and 2; 290B.09, subdivision 2; 295.50, subdivision 2.13 9b; 295.58; 296A.03, subdivision 5; 296A.21, 2.14 subdivisions 2 and 3; 296A.22, subdivision 6; 297A.01, 2.15 subdivisions 13 and 15; 297A.15, by adding a 2.16 subdivision; 297A.25, subdivisions 5, 16, 34, and by 2.17 adding subdivisions; 297B.01, subdivision 7; 297B.03; 2.18 297B.09, subdivision 1; 297E.02, by adding a 2.19 subdivision; 297F.01, subdivisions 7, 14, 17, and by 2.20 adding subdivisions; 297F.08, subdivisions 2, 5, 8, 2.21 and 9; 297F.09, subdivisions 1 and 2; 297F.13, 2.22 subdivision 4; 297F.21, subdivisions 1 and 3; 428A.11, 2.23 by adding subdivisions; 428A.13, subdivisions 1 and 3; 2.24 428A.14, subdivision 1; 428A.15; 428A.16; 428A.17; 2.25 428A.19; 428A.21; 429.011, subdivisions 2a and 5; 2.26 429.021, subdivision 1; 429.031, subdivision 1; 2.27 469.040, by adding a subdivision; 469.115; 469.1734, 2.28 subdivision 4; 469.174, subdivisions 9, 10, 11, 12, 2.29 14, and 22; 469.175, subdivisions 1a, 2, 2a, 3, 5, and 2.30 6; 469.176, subdivision 1b, and by adding a 2.31 subdivision; 469.1761, subdivision 4; 469.1763, 2.32 subdivision 2; 469.177, subdivision 1; 469.1771, 2.33 subdivision 2a, and by adding a subdivision; 469.1813, 2.34 subdivision 4; 477A.06, subdivision 3; 477A.11, 2.35 subdivision 1; 477A.12; 477A.13; and 477A.14; 2.36 Minnesota Statutes 1999 Supplement, sections 16D.09, 2.37 subdivision 2; 168.012, subdivision 1; 270.65; 2.38 270A.03, subdivision 2; 270A.07, subdivision 2; 2.39 272.02, subdivision 39, and by adding a subdivision; 2.40 273.124, subdivisions 1, 8, and 14; 273.13, 2.41 subdivisions 24 and 25; 273.1382, subdivision 1b; 2.42 273.1398, subdivision 4a; 275.70, subdivision 5; 2.43 275.71, subdivision 4; 287.01, subdivision 2; 289A.02, 2.44 subdivision 7; 289A.20, subdivision 4; 289A.55, 2.45 subdivision 9; 290.01, subdivisions 19, 19b, and 31; 2.46 290.06, subdivisions 2c and 2d; 290.0671, subdivision 2.47 1; 290.0675, subdivisions 1, 2, and 3; 290.091, 2.48 subdivisions 1, 2, and 6; 290A.03, subdivision 15; 2.49 290B.03, subdivision 1; 290B.05, subdivision 1; 2.50 291.005, subdivision 1; 295.53, subdivision 1; 2.51 297A.25, subdivisions 9 and 11; 297E.02, subdivisions 2.52 1, 4, and 6; 297F.08, subdivision 8a; 298.24, 2.53 subdivision 1; 383D.74, subdivision 2; 469.1771, 2.54 subdivision 1; 469.1813, subdivisions 1 and 6; 2.55 477A.011, subdivision 36; 477A.03, subdivision 2; and 2.56 477A.06, subdivision 1; Laws 1987, chapter 402, 2.57 section 2, subdivisions 1, 4, and 5; Laws 1988, 2.58 chapter 645, section 3, as amended; Laws 1997, chapter 2.59 231, article 1, section 19; Laws 1999, chapter 112, 2.60 section 1, subdivisions 1, 2, and 7; Laws 1999, 2.61 chapter 112, section 2; Laws 1999, chapter 243, 2.62 article 1, section 2; Laws 1999, chapter 243, article 2.63 6, section 18; proposing coding for new law in 2.64 Minnesota Statutes, chapters 273; 278; and 477A; 2.65 repealing Minnesota Statutes 1998, sections 270.072, 2.66 subdivision 5; 270.075, subdivisions 3 and 4; 270.083; 2.67 273.127; 273.1316; 297F.09, subdivision 6; 297G.09, 2.68 subdivision 5; 469.055, subdivision 5; 469.101, 2.69 subdivision 21; 469.135; 469.136; 469.137; 469.138; 2.70 469.139; 469.140; 469.174, subdivision 13; 469.175, 2.71 subdivision 6a; and 469.176, subdivision 4a; Minnesota 3.1 Rules, part 8160.0300, subpart 4. 3.2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 3.3 ARTICLE 1 3.4 2000 SALES TAX REBATE 3.5 Section 1. [STATEMENT OF PURPOSE.] 3.6 (a) The state of Minnesota derives revenues from a variety 3.7 of taxes, fees, and other sources, including the state sales tax. 3.8 (b) It is fair and reasonable to refund the existing state 3.9 budget surplus in the form of a rebate of nonbusiness consumer 3.10 sales taxes paid by individuals in calendar year 1998. 3.11 (c) Information concerning the amount of sales tax paid at 3.12 various income levels is contained in the Minnesota tax 3.13 incidence report, which is written by the commissioner of 3.14 revenue and presented to the legislature according to Minnesota 3.15 Statutes, section 270.0682. 3.16 (d) It is fair and reasonable to use information contained 3.17 in the Minnesota tax incidence report, updated to calendar year 3.18 1998, to determine the proportionate share of the sales tax 3.19 rebate due each eligible taxpayer since no effective or 3.20 practical mechanism exists for determining the amount of actual 3.21 sales tax paid by each eligible individual. 3.22 Sec. 2. [SALES TAX REBATE.] 3.23 (a) An individual who: 3.24 (1) was eligible for a credit under Laws 1998, chapter 389, 3.25 article 1, section 1, and who filed for or received that credit 3.26 on or before November 30, 2000; or 3.27 (2) was a resident of Minnesota for any part of 1998, and 3.28 filed a 1998 Minnesota income tax return on or before November 3.29 30, 2000, and had a tax liability before refundable credits on 3.30 that return of at least $1 but did not file the claim for credit 3.31 authorized under Laws 1998, chapter 389, article 1, section 1, 3.32 as amended, and who was not allowed to be claimed as a dependent 3.33 on a 1998 federal income tax return filed by another person; or 3.34 (3) had the property taxes payable on his or her homestead 3.35 abated to zero under Laws 1998, chapter 383, section 20, shall 3.36 receive a sales tax rebate. 4.1 (b) The sales tax rebate for taxpayers who qualify under 4.2 paragraph (a) as married filing joint or head of household must 4.3 be computed according to the following schedule: 4.4 Income Sales Tax Rebate 4.5 less than $2,500 $168 4.6 at least $2,500 but less than $5,000 $217 4.7 at least $5,000 but less than $10,000 $231 4.8 at least $10,000 but less than $15,000 $253 4.9 at least $15,000 but less than $20,000 $275 4.10 at least $20,000 but less than $25,000 $299 4.11 at least $25,000 but less than $30,000 $312 4.12 at least $30,000 but less than $35,000 $338 4.13 at least $35,000 but less than $40,000 $369 4.14 at least $40,000 but less than $45,000 $396 4.15 at least $45,000 but less than $50,000 $417 4.16 at least $50,000 but less than $60,000 $444 4.17 at least $60,000 but less than $70,000 $476 4.18 at least $70,000 but less than $80,000 $523 4.19 at least $80,000 but less than $90,000 $562 4.20 at least $90,000 but less than $100,000 $620 4.21 at least $100,000 but less than $120,000 $671 4.22 at least $120,000 but less than $140,000 $735 4.23 at least $140,000 but less than $160,000 $795 4.24 at least $160,000 but less than $180,000 $851 4.25 at least $180,000 but less than $200,000 $904 4.26 at least $200,000 but less than $400,000 $1,157 4.27 at least $400,000 but less than $600,000 $1,522 4.28 at least $600,000 but less than $800,000 $1,826 4.29 at least $800,000 but less than $1,000,000 $2,093 4.30 $1,000,000 and over $2,400 4.31 (c) The sales tax rebate for individuals who qualify under 4.32 paragraph (a) as single or married filing separately must be 4.33 computed according to the following schedule: 4.34 Income Sales Tax Rebate 4.35 less than $2,500 $95 4.36 at least $2,500 but less than $5,000 $116 5.1 at least $5,000 but less than $10,000 $137 5.2 at least $10,000 but less than $15,000 $184 5.3 at least $15,000 but less than $20,000 $210 5.4 at least $20,000 but less than $25,000 $228 5.5 at least $25,000 but less than $30,000 $238 5.6 at least $30,000 but less than $40,000 $259 5.7 at least $40,000 but less than $50,000 $290 5.8 at least $50,000 but less than $70,000 $342 5.9 at least $70,000 but less than $100,000 $435 5.10 at least $100,000 but less than $140,000 $524 5.11 at least $140,000 but less than $200,000 $632 5.12 at least $200,000 but less than $400,000 $857 5.13 at least $400,000 but less than $600,000 $1,128 5.14 $600,000 and over $1,200 5.15 (d) Individuals who were not residents of Minnesota for any 5.16 part of 1998 and who paid more than $10 in Minnesota sales tax 5.17 on nonbusiness consumer purchases in that year qualify for a 5.18 rebate under this paragraph only. Qualifying nonresidents must 5.19 file a claim for rebate on a form prescribed by the commissioner 5.20 by November 30, 2000. The claim must include receipts showing 5.21 the Minnesota sales tax paid and the date of the sale. Taxes 5.22 paid on purchases allowed in the computation of federal taxable 5.23 income or reimbursed by an employer are not eligible for the 5.24 rebate. The commissioner shall determine the qualifying taxes 5.25 paid and rebate the lesser of: 5.26 (1) 29.7 percent of that amount; or 5.27 (2) the maximum amount for which the claimant would have 5.28 been eligible as determined under paragraph (b) if the taxpayer 5.29 filed the 1998 federal income tax return as a married taxpayer 5.30 filing jointly or head of household, or as determined under 5.31 paragraph (c) for other taxpayers. 5.32 (e) "Income," for purposes of this section other than 5.33 paragraph (d), is taxable income as defined in section 63 of the 5.34 Internal Revenue Code of 1986, as amended through December 31, 5.35 1997, plus the sum of any additions to federal taxable income 5.36 for the taxpayer under Minnesota Statutes, section 290.01, 6.1 subdivision 19a, and reported on the original 1998 income tax 6.2 return, including subsequent adjustments to that return made 6.3 within the time limits specified in paragraph (l). For an 6.4 individual who was a resident of Minnesota for less than the 6.5 entire year, the sales tax rebate equals the sales tax rebate 6.6 calculated under paragraph (b) or (c) multiplied by the 6.7 percentage determined pursuant to Minnesota Statutes, section 6.8 290.06, subdivision 2c, paragraph (e), as calculated on the 6.9 original 1998 income tax return, including subsequent 6.10 adjustments to that return made within the time limits specified 6.11 in paragraph (l). For purposes of paragraph (d), "income" is 6.12 taxable income as defined in section 63 of the Internal Revenue 6.13 Code of 1986, as amended through December 31, 1997, and reported 6.14 on the taxpayer's original federal tax return for the first 6.15 taxable year beginning after December 31, 1997. 6.16 (f) Individuals who were residents of Minnesota for all of 6.17 1998, were not eligible for a rebate under paragraph (a), 6.18 attained the age of 18 on or before December 31, 1998, and 6.19 received in 1998 social security benefits as defined in section 6.20 86(d)(1) of the Internal Revenue Code of 1986, as amended 6.21 through December 31, 1999, are entitled to a rebate of $95. If 6.22 the Social Security Administration or Railroad Retirement Board 6.23 is paying benefits to a recipient by electronic funds transfers 6.24 in 2000, the rebate under this paragraph must be paid by the 6.25 commissioner through electronic funds transfer to the same 6.26 financial institution and into the same account into which the 6.27 Social Security Administration or Railroad Retirement Board 6.28 transfers social security benefits in calendar year 2000. 6.29 (g) An individual who: 6.30 (1) was allowed to be claimed as a dependent on a 1998 6.31 federal income tax return filed by another person; 6.32 (2) would have otherwise been eligible for a rebate under 6.33 clause (a)(2); and 6.34 (3) reported earned income as defined in section 6.35 32(c)(2)(A)(i) of the Internal Revenue Code, 6.36 is eligible for a rebate under this paragraph only. The 7.1 rebate under this paragraph equals 35 percent of the amount 7.2 allowed under the schedule in paragraph (c) based on the 7.3 individual's income. For an individual who was a resident of 7.4 Minnesota for less than the entire year, the sales tax rebate 7.5 equals the rebate calculated under this paragraph multiplied by 7.6 the percentage determined pursuant to Minnesota Statutes, 7.7 section 290.06, subdivision 2c, paragraph (e), as calculated on 7.8 the original 1998 income tax return. 7.9 (h) An individual who 7.10 (1) was a resident of Minnesota for any part of 1998; 7.11 (2) was not eligible for a rebate under paragraph (a) or 7.12 (f); 7.13 (3) was not allowed to be claimed as a dependent on a 1998 7.14 federal income tax return by another person; and 7.15 (4) filed a 1998 Minnesota income tax return before 7.16 November 30, 2000, in order to 7.17 (i) claim a credit under section 290.067, 290.0671, or 7.18 290.0674; 7.19 (ii) claim a refund of withheld taxes; or 7.20 (iii) claim a refund of estimated taxes, 7.21 is eligible for a rebate under this paragraph only. For married 7.22 couples filing joint returns and heads of households, the rebate 7.23 equals the minimum amount in paragraph (b). For single filers 7.24 and married individuals filing separate returns, the rebate 7.25 equals the minimum amount in paragraph (c). For an individual 7.26 who was a resident of Minnesota for less than the entire year, 7.27 the sales tax rebate equals the rebate calculated under this 7.28 paragraph multiplied by the percentage determined pursuant to 7.29 Minnesota Statutes, section 290.06, subdivision 2c, paragraph 7.30 (e), as calculated on the original 1998 income tax return. 7.31 (i) For a fiscal year taxpayer, the dates in paragraphs (a) 7.32 through (d) are extended one month for each month in calendar 7.33 year 1998 that occurred prior to the start of the individual's 7.34 1998 fiscal tax year. 7.35 (j) Before payment, the commissioner of revenue shall 7.36 adjust the rebate as follows: 8.1 the rebates calculated in paragraphs (b), (c), (d), (f), 8.2 (g), and (h) must be proportionately reduced to account for (i) 8.3 rebates under paragraphs (g) and (h), and (ii) 1998 income tax 8.4 returns that are filed on or after January 1, 2000, but before 8.5 June 1, 2000, so that the estimated amount of sales tax rebates 8.6 payable under paragraphs (b), (c), (d), (f), (g), and (h) on the 8.7 date the rebate is processed does not exceed $635,600,000. The 8.8 adjustment under this paragraph is not a rule subject to 8.9 Minnesota Statutes, chapter 14. 8.10 (k) The commissioner of revenue may begin making sales tax 8.11 rebates by July 1, 2000. Sales tax rebates not paid by January 8.12 1, 2001, bear interest at the rate specified in Minnesota 8.13 Statutes, section 270.75. 8.14 (l) A sales tax rebate shall not be adjusted based on 8.15 changes to a 1998 income tax return that are made by order of 8.16 assessment after the date the rebate is processed, or made by 8.17 the taxpayer that are filed with the commissioner of revenue 8.18 after that date. 8.19 (m) Individuals who filed a joint income tax return for 8.20 1998 shall receive a joint sales tax rebate. After the sales 8.21 tax rebate has been issued, but before the check has been 8.22 cashed, either joint claimant may request a separate check for 8.23 one-half of the joint sales tax rebate. Notwithstanding 8.24 anything in this section to the contrary, if prior to payment, 8.25 the commissioner has been notified that persons who filed a 8.26 joint 1998 income tax return are living at separate addresses, 8.27 as indicated on their 1999 income tax return or otherwise, the 8.28 commissioner may issue separate checks to each person. The 8.29 amount payable to each person is one-half of the total joint 8.30 rebate. 8.31 (n) If a rebate is received by the estate of a deceased 8.32 individual after the probate estate has been closed, and if the 8.33 original rebate check is returned to the commissioner with a 8.34 copy of the decree of descent or final account of the estate, 8.35 social security numbers, and addresses of the beneficiaries, the 8.36 commissioner may issue separate checks in proportion to their 9.1 share in the residuary estate in the names of the residuary 9.2 beneficiaries of the estate. 9.3 (o) The sales tax rebate is a "Minnesota tax law" for 9.4 purposes of Minnesota Statutes, section 270B.01, subdivision 8. 9.5 (p) The sales tax rebate is "an overpayment of any tax 9.6 collected by the commissioner" for purposes of Minnesota 9.7 Statutes, section 270.07, subdivision 5. For purposes of this 9.8 paragraph, a joint sales tax rebate is payable to each spouse 9.9 equally. 9.10 (q) If the commissioner of revenue cannot locate an 9.11 individual entitled to a sales tax rebate by July 1, 2002, or if 9.12 an individual to whom a sales tax rebate was issued has not 9.13 cashed the check by July 1, 2002, the right to the sales tax 9.14 rebate lapses and the check must be deposited in the general 9.15 fund. 9.16 (r) Individuals entitled to a sales tax rebate pursuant to 9.17 paragraph (a), (f), (g), or (h) but who did not receive one, and 9.18 individuals who receive a sales tax rebate that was not 9.19 correctly computed, must file a claim with the commissioner 9.20 before July 1, 2001, in a form prescribed by the commissioner. 9.21 These claims must be treated as if they are a claim for refund 9.22 under Minnesota Statutes, section 289A.50, subdivisions 4 and 7. 9.23 (s) The sales tax rebate is a refund subject to revenue 9.24 recapture under Minnesota Statutes, chapter 270A. The 9.25 commissioner of revenue shall remit the entire refund to the 9.26 claimant agency, which shall, upon the request of the spouse who 9.27 does not owe the debt, refund one-half of the joint sales tax 9.28 rebate to the spouse who does not owe the debt. 9.29 (t) The rebate is a reduction of fiscal year 2000 sales tax 9.30 revenues. The amount necessary to make the sales tax rebates 9.31 and interest provided in this section is appropriated from the 9.32 general fund to the commissioner of revenue in fiscal year 2000 9.33 and is available until June 30, 2002. 9.34 (u) If a sales tax rebate check is cashed by someone other 9.35 than the payee or payees of the check, and the commissioner of 9.36 revenue determines that the check has been forged or improperly 10.1 endorsed or the commissioner determines that a rebate was 10.2 overstated or erroneously issued, the commissioner may issue an 10.3 order of assessment for the amount of the check or the amount 10.4 the check is overstated against the person or persons cashing 10.5 it. The assessment must be made within two years after the 10.6 check is cashed, but if cashing the check constitutes theft 10.7 under Minnesota Statutes, section 609.52, or forgery under 10.8 Minnesota Statutes, section 609.631, the assessment can be made 10.9 at any time. The assessment may be appealed administratively 10.10 and judicially. The commissioner may take action to collect the 10.11 assessment in the same manner as provided by Minnesota Statutes, 10.12 chapter 289A, for any other order of the commissioner assessing 10.13 tax. 10.14 (v) Notwithstanding Minnesota Statutes, sections 9.031, 10.15 16A.40, 16B.49, 16B.50, and any other law to the contrary, the 10.16 commissioner of revenue may take whatever actions the 10.17 commissioner deems necessary to pay the rebates required by this 10.18 section, and may, in consultation with the commissioner of 10.19 finance and the state treasurer, contract with a private vendor 10.20 or vendors to process, print, and mail the rebate checks or 10.21 warrants required under this section and receive and disburse 10.22 state funds to pay those checks or warrants. 10.23 (w) The commissioner may pay rebates required by this 10.24 section by electronic funds transfer to individuals who 10.25 requested that their 1999 individual income tax refund be paid 10.26 through electronic funds transfer. The commissioner may make 10.27 the electronic funds transfer payments to the same financial 10.28 institution and into the same account as the 1999 individual 10.29 income tax refund. 10.30 Sec. 3. [APPROPRIATIONS.] 10.31 (a) $1,730,600 is appropriated from the general fund to the 10.32 commissioner of revenue to administer the sales tax rebates in 10.33 this article and in article 3 for fiscal year 2000. Any 10.34 unencumbered balance remaining on June 30, 2000, does not cancel 10.35 but is available for expenditure by the commissioner of revenue 10.36 until June 30, 2001. Notwithstanding Minnesota Statutes, 11.1 section 16A.285, and except as provided in paragraph (b), the 11.2 commissioner of revenue may not use this appropriation for any 11.3 purpose other than administering the 1999 and 2000 sales tax 11.4 rebates. This is a one-time appropriation and may not be added 11.5 to the agency's budget base. 11.6 (b) Of the amount appropriated in paragraph (a), the 11.7 necessary amount is transferred from the commissioner of revenue 11.8 to the legislative auditor, not to exceed $50,000, for an audit 11.9 of the appropriations to the department of revenue for 11.10 administration of the property tax rebates in Laws 1997, chapter 11.11 231, article 16, section 29; and Laws 1998, chapter 389, article 11.12 1, section 4; and the appropriation for administration of the 11.13 sales tax rebate in Laws 1999, chapter 243, article 1, section 11.14 3. The purpose of this audit is to determine whether the funds 11.15 appropriated were expended consistent with the purpose of the 11.16 appropriations. The legislative auditor shall report the 11.17 findings of the audit to the legislature by January 1, 2001. 11.18 (c) $278,000 is appropriated from the general fund to the 11.19 state treasurer to pay the cost of clearing sales tax rebate 11.20 checks through commercial banks. 11.21 Sec. 4. [EFFECTIVE DATE.] 11.22 Sections 1 to 3 are effective the day following final 11.23 enactment. 11.24 ARTICLE 2 11.25 AGRICULTURAL ASSISTANCE 11.26 Section 1. Laws 1999, chapter 112, section 1, subdivision 11.27 1, is amended to read: 11.28 Subdivision 1. [DEFINITIONS.] (a) The definitions in this 11.29 subdivision apply to this section. 11.30 (b) "Acre" means an acre of effective agricultural use land 11.31 within the state of Minnesota as reported to the farm service 11.32 agency on form 156EZ. 11.33 (c) "Commissioner" means the commissioner of revenue. 11.34 (d) "Effective agricultural use land" means the land 11.35 suitable for growing an agricultural crop and excludes land 11.36 enrolled in the conservation reserve program established by 12.1 Minnesota Statutes, section 103F.515, or the water bank program 12.2 established by Minnesota Statutes, section 103F.601. 12.3 (e) "Farm" or "farm operation" means an agricultural 12.4 production operation with a unique farm number as reported on 12.5 form 156EZ to the farm service agency, which includes at least 12.6 40 acres of effective agricultural use land. 12.7 (f) "Farm operator" means a person who is identified as the 12.8 operator of a farm on form 156EZ filed with the farm service 12.9 agency. 12.10 (g) "Farm service agency" means the United States Farm 12.11 Service Agency. 12.12 (h) "Farmer" or "farmer at risk" means a person who 12.13 produces an agricultural crop or livestock and is reported to 12.14 the farm service agency as bearing a percentage of the risk for 12.15 the farm operation. 12.16 (i) "Livestock" means cattle, hogs, poultry, and sheep. 12.17 (j) "Livestock production facility" means a farm that has 12.18 produced at least a total of $10,000 in sales of unprocessed 12.19 livestock or unprocessed dairy products or receipts from the 12.20 care of another farmer's livestock as reported on schedule F or 12.21 form 1065 or form 1120 or 1120S of the farmer's federal income 12.22 tax return for either taxable years beginning in calendar year 12.23 1997 or 1998. 12.24 (k) "Person" includes individuals, fiduciaries, estates, 12.25 trusts, partnerships, joint ventures, and corporations. 12.26 EFFECTIVE DATE: This section is effective retroactively to 12.27 April 23, 1999. 12.28 Sec. 2. Laws 1999, chapter 112, section 1, subdivision 2, 12.29 is amended to read: 12.30 Subd. 2. [PAYMENT TO FARMERS.] Every farm operator may 12.31 apply on a separate form for each farm that they operate to the 12.32 commissioner for payments as provided under this subdivision. 12.33 The payment shall be made to each farmer at risk for a farm 12.34 operation and shall equal $4, multiplied by the number of acres 12.35 of the farm operation, multiplied by the percentage of the risk 12.36 borne by that farmer for that farm operation. If total payments 13.1 for a farm to all farmers at risk for that farm would exceed 13.2 $5,600, the payment to each farmer at risk shall be prorated so 13.3 that the total payments to all farmers at risk for that farm do 13.4 not exceed $5,600. 13.5 Applications shall be based on information reported to the 13.6 farm service agency for crop year 1998 by December 31, 1998. 13.7 The applications shall include the social security number or 13.8 federal employer identification number or a producer number 13.9 assigned by the farm service agency for each farmer and the farm 13.10 service agency farm number from form 156EZ. The commissioner 13.11 shall prepare application forms for the payment and ensure that 13.12 they are available throughout the state. The commissioner shall 13.13 make payments by June 30, 1999, to each eligible farmer who 13.14 applies by May 31, 1999, or within 30 days of the application if 13.15 the application is received after May 31, 1999. In no case will 13.16 applications be accepted afterSeptemberJune 30,19992000. 13.17 EFFECTIVE DATE: This section is effective the day 13.18 following final enactment. 13.19 Sec. 3. Laws 1999, chapter 112, section 1, subdivision 7, 13.20 is amended to read: 13.21 Subd. 7. [CERTIFICATION AND PAYMENT.] Any person eligible 13.22 for the refund under subdivisions 4 to 8 shall send the 13.23 commissioner a copy of the certification that the taxpayer 13.24 received from the county auditor. In no case will applications 13.25 be accepted afterNovemberJune 30,19992000. The commissioner 13.26 shall issue a refund by July 15, 1999, to each qualifying 13.27 taxpayer who applied by June 15, 1999, or within 30 days of 13.28 receipt of the application if received after June 15, 1999. 13.29 EFFECTIVE DATE: This section is effective the day 13.30 following final enactment. 13.31 Sec. 4. Laws 1999, chapter 112, section 2, is amended to 13.32 read: 13.33 Sec. 2. [APPROPRIATION.] 13.34 (a) The amount necessary to fund the payments required 13.35 under section 1, subdivisions 2 and 7, is appropriated in fiscal 13.36yearyears 1999 and 2000 from the general fund to the 14.1 commissioner of revenue. This appropriation is available until 14.2 June 30,20002001. 14.3 (b) $68,000 is appropriated in fiscal year 1999 to the 14.4 commissioner of revenue for distribution to counties for the 14.5 costs of administering section 1, subdivisions 4 to 8. This 14.6 appropriation is available until June 30, 2000. The 14.7 distribution to counties shall be based on the number of refunds 14.8 received under the provisions of section 1, subdivisions 4 to 8. 14.9 EFFECTIVE DATE: This section is effective the day 14.10 following final enactment. 14.11 Sec. 5. [AGRICULTURAL ASSISTANCE IN 2000.] 14.12 Subdivision 1. [DEFINITIONS.] (a) The definitions in this 14.13 subdivision apply to this section. 14.14 (b) "Acre" means an acre of agricultural land within a 14.15 qualified county as reported on the schedule of crop insurance. 14.16 (c) "Commissioner" means the commissioner of agriculture. 14.17 (d) "Crop insurance" means federal multiple peril crop and 14.18 revenue insurance, hail and wind crop insurance, or catastrophic 14.19 crop insurance. 14.20 (e) "Person" includes individuals, fiduciaries, estates, 14.21 trusts, partnerships, joint farm ventures, and corporations. 14.22 (f) "Qualified counties" means the counties which were 14.23 declared as disaster counties in Minnesota by a 1999 14.24 presidential declaration or which are contiguous to any one of 14.25 the counties which was declared a disaster county in Minnesota 14.26 by a 1999 presidential declaration. The counties are: Aitkin, 14.27 Becker, Beltrami, Carlton, Cass, Clay, Clearwater, Cook, Crow 14.28 Wing, Hubbard, Itasca, Kanabec, Kittson, Koochiching, Lake, Lake 14.29 of the Woods, Mahnomen, Marshall, Mille Lacs, Morrison, Norman, 14.30 Otter Tail, Pennington, Pine, Polk, Red Lake, Roseau, St. Louis, 14.31 Todd, Wadena, and Wilkin. 14.32 Subd. 2. [PAYMENT.] Every person operating a farm in a 14.33 qualified county who has obtained crop insurance on that farm 14.34 may apply on a form prepared by the commissioner for payments as 14.35 provided under this subdivision. The payment equals $4, 14.36 multiplied by the number of acres covered under the crop 15.1 insurance. In no case shall total payments for any single acre 15.2 of land exceed $4. 15.3 Applications must be based on information for crop year 15.4 2000. The applications must include the applicant's social 15.5 security number or federal employer identification number and a 15.6 copy of the schedule of crop insurance for crop year 2000. In 15.7 the case of a married couple, the social security numbers or 15.8 federal employer identification numbers are required for both 15.9 spouses. The commissioner shall prepare application forms for 15.10 the payments and ensure that they are available in the qualified 15.11 counties. The commissioner shall make payments by October 1, 15.12 2000, to each eligible person who applies by August 15, 2000, or 15.13 within 45 days of the application if the application is received 15.14 after August 15, 2000. In no case will applications be accepted 15.15 after September 30, 2000. 15.16 Subd. 3. [LIMIT.] No individual or married couple may 15.17 receive total payments under this section in excess of $5,600 15.18 whether individually, through the person's pro rata ownership 15.19 share of another eligible farming entity, or both. 15.20 Subd. 4. [PENALTIES.] If the commissioner of agriculture 15.21 determines that claims for payments under subdivision 2 are or 15.22 were excessive or were filed with fraudulent intent, the claim 15.23 must be disallowed in full. If the claim has been paid, the 15.24 commissioner of agriculture shall notify the commissioner of 15.25 revenue of the relevant information, and the amount disallowed 15.26 must be recovered by assessment and collection under Minnesota 15.27 Statutes, chapters 270 and 289A. The assessment must be made 15.28 within two years after a check is cashed, but if cashing a check 15.29 constitutes theft under Minnesota Statutes, section 609.52, or 15.30 forgery under Minnesota Statutes, section 609.631, the 15.31 assessment may be made at any time. The assessment may be 15.32 appealed administratively and judicially. 15.33 EFFECTIVE DATE: This section is effective the day 15.34 following final enactment. 15.35 Sec. 6. [APPROPRIATION.] 15.36 (a) The amount necessary to fund the payments under section 16.1 5 is appropriated in fiscal year 2001 from the general fund to 16.2 the commissioner of agriculture. This appropriation is 16.3 available until June 30, 2001. 16.4 (b) The amount necessary to administer the agricultural 16.5 assistance program under section 5 is appropriated from the 16.6 general fund to the commissioner of agriculture, provided that 16.7 amount shall not exceed $50,000. 16.8 EFFECTIVE DATE: This section is effective the day 16.9 following final enactment. 16.10 ARTICLE 3 16.11 1999 SALES TAX REBATE 16.12 Section 1. Laws 1999, chapter 243, article 1, section 2, 16.13 is amended to read: 16.14 Sec. 2. [SALES TAX REBATE.] 16.15 (a) An individual who: 16.16 (1) was eligible for a credit under Laws 1997, chapter 231, 16.17 article 1, section 16, as amended by Laws 1997, First Special 16.18 Session chapter 5, section 35, and Laws 1997, Third Special 16.19 Session chapter 3, section 11, and Laws 1998, chapter 304, and 16.20 Laws 1998, chapter 389, article 1, section 3, and who filed for 16.21 or received that credit on or before June 15, 1999; or 16.22 (2) was a resident of Minnesota for any part of 1997, and 16.23 filed a 1997 Minnesota income tax return on or before June 15, 16.24 1999, and had a tax liability before refundable credits on that 16.25 return of at least $1 but did not file the claim for credit 16.26 authorized under Laws 1997, chapter 231, article 1, section 16, 16.27 as amended, and who was not allowed to be claimed as a dependent 16.28 on a 1997 federal income tax return filed by another person; or 16.29 (3) had the property taxes payable on his or her homestead 16.30 abated to zero under Laws 1997, chapter 231, article 2, section 16.31 64, 16.32 shall receive a sales tax rebate. 16.33 (b) The sales tax rebate for taxpayers who qualify under 16.34 paragraph (a) as married filing joint or head of household must 16.35 be computed according to the following schedule: 16.36 Income Sales Tax Rebate 17.1 less than $2,500 $ 358 17.2 at least $2,500 but less than $5,000 $ 469 17.3 at least $5,000 but less than $10,000 $ 502 17.4 at least $10,000 but less than $15,000 $ 549 17.5 at least $15,000 but less than $20,000 $ 604 17.6 at least $20,000 but less than $25,000 $ 641 17.7 at least $25,000 but less than $30,000 $ 690 17.8 at least $30,000 but less than $35,000 $ 762 17.9 at least $35,000 but less than $40,000 $ 820 17.10 at least $40,000 but less than $45,000 $ 874 17.11 at least $45,000 but less than $50,000 $ 921 17.12 at least $50,000 but less than $60,000 $ 969 17.13 at least $60,000 but less than $70,000 $1,071 17.14 at least $70,000 but less than $80,000 $1,162 17.15 at least $80,000 but less than $90,000 $1,276 17.16 at least $90,000 but less than $100,000 $1,417 17.17 at least $100,000 but less than $120,000 $1,535 17.18 at least $120,000 but less than $140,000 $1,682 17.19 at least $140,000 but less than $160,000 $1,818 17.20 at least $160,000 but less than $180,000 $1,946 17.21 at least $180,000 but less than $200,000 $2,067 17.22 at least $200,000 but less than $400,000 $2,644 17.23 at least $400,000 but less than $600,000 $3,479 17.24 at least $600,000 but less than $800,000 $4,175 17.25 at least $800,000 but less than $1,000,000 $4,785 17.26 $1,000,000 and over $5,000 17.27 (c) The sales tax rebate for individuals who qualify under 17.28 paragraph (a) as single or married filing separately must be 17.29 computed according to the following schedule: 17.30 Income Sales Tax Rebate 17.31 less than $2,500 $ 204 17.32 at least $2,500 but less than $5,000 $ 249 17.33 at least $5,000 but less than $10,000 $ 299 17.34 at least $10,000 but less than $15,000 $ 408 17.35 at least $15,000 but less than $20,000 $ 464 17.36 at least $20,000 but less than $25,000 $ 496 18.1 at least $25,000 but less than $30,000 $ 515 18.2 at least $30,000 but less than $40,000 $ 570 18.3 at least $40,000 but less than $50,000 $ 649 18.4 at least $50,000 but less than $70,000 $ 776 18.5 at least $70,000 but less than $100,000 $ 958 18.6 at least $100,000 but less than $140,000 $1,154 18.7 at least $140,000 but less than $200,000 $1,394 18.8 at least $200,000 but less than $400,000 $1,889 18.9 at least $400,000 but less than $600,000 $2,485 18.10 $600,000 and over $2,500 18.11 (d) Individuals who were not residents of Minnesota for any 18.12 part of 1997 and who paid more than $10 in Minnesota sales tax 18.13 on nonbusiness consumer purchases in that year qualify for a 18.14 rebate under this paragraph only. Qualifying nonresidents must 18.15 file a claim for rebate on a form prescribed by the commissioner 18.16 before the later of June 15, 1999, or 30 days after the date of 18.17 enactment of this act. The claim must include receipts showing 18.18 the Minnesota sales tax paid and the date of the sale. Taxes 18.19 paid on purchases allowed in the computation of federal taxable 18.20 income or reimbursed by an employer are not eligible for the 18.21 rebate. The commissioner shall determine the qualifying taxes 18.22 paid and rebate the lesser of: 18.23 (1) 69.0 percent of that amount; or 18.24 (2) the maximum amount for which the claimant would have 18.25 been eligible as determined under paragraph (b) if the taxpayer 18.26 filed the 1997 federal income tax return as a married taxpayer 18.27 filing jointly or head of household, or as determined under 18.28 paragraph (c) for other taxpayers. 18.29 (e) "Income," for purposes of this section other than 18.30 paragraph (d), is taxable income as defined in section 63 of the 18.31 Internal Revenue Code of 1986, as amended through December 31, 18.32 1996, plus the sum of any additions to federal taxable income 18.33 for the taxpayer under Minnesota Statutes, section 290.01, 18.34 subdivision 19a, and reported on the original 1997 income tax 18.35 return including subsequent adjustments to that return made 18.36 within the time limits specified in paragraph (h). For an 19.1 individual who was a resident of Minnesota for less than the 19.2 entire year, the sales tax rebate equals the sales tax rebate 19.3 calculated under paragraph (b) or (c) multiplied by the 19.4 percentage determined pursuant to Minnesota Statutes, section 19.5 290.06, subdivision 2c, paragraph (e), as calculated on the 19.6 original 1997 income tax return including subsequent adjustments 19.7 to that return made within the time limits specified in 19.8 paragraph (h). For purposes of paragraph (d), "income" is 19.9 taxable income as defined in section 63 of the Internal Revenue 19.10 Code of 1986, as amended through December 31, 1996, and reported 19.11 on the taxpayer's original federal tax return for the first 19.12 taxable year beginning after December 31, 1996. 19.13 (f) An individual who would have been eligible for a rebate 19.14 under paragraph (a), clause (1) or (2), or (d) had the 19.15 individual filed a 1997 Minnesota income tax return or claim 19.16 form by June 15, 1999, who files the return or claim form by 19.17 June 30, 2000, is eligible for the rebate amount under paragraph 19.18 (b) as adjusted by paragraph (h) if the individual is married 19.19 filing joint or head of household and the rebate amount under 19.20 paragraph (c) as adjusted by paragraph (h) if the individual is 19.21 married filing separately or single. 19.22 (g) For a fiscal year taxpayer, the June 15, 1999, dates in 19.23 paragraphs (a) through (d) are extended one month for each month 19.24 in calendar year 1997 that occurred prior to the start of the 19.25 individual's 1997 fiscal tax year. 19.26 (h) Before payment, the commissioner of revenue shall 19.27 adjust the rebate as follows: 19.28 (1) the rebates calculated in paragraphs (b), (c), and (d) 19.29 must be proportionately reduced to account for 1997 income tax 19.30 returns that are filed on or after January 1, 1999, but before 19.31 July 1, 1999, so that the amount of sales tax rebates payable 19.32 under paragraphs (b), (c), and (d) does not exceed 19.33 $1,250,000,000; and 19.34 (2) the commissioner of finance shall certify by July 15, 19.35 1999, preliminary fiscal year 1999 general fund net nondedicated 19.36 revenues. The certification shall exclude the impact of any 20.1 legislation enacted during the 1999 regular session. If 20.2 certified net nondedicated revenues exceed the amount forecast 20.3 in February 1999, up to $50,000,000 of the increase shall be 20.4 added to the total amount rebated. The commissioner of revenue 20.5 shall adjust all rebates proportionally to reflect any 20.6 increases. The total amount of the rebate shall not exceed 20.7 $1,300,000,000. 20.8 The adjustments under this paragraph are not rules subject to 20.9 Minnesota Statutes, chapter 14. 20.10(g)(i) The commissioner of revenue may begin making sales 20.11 tax rebates by August 1, 1999. Sales tax rebates not paid by 20.12 October 1, 1999, bear interest at the rate specified in 20.13 Minnesota Statutes, section 270.75. Sales tax rebates paid to 20.14 (1) taxpayers who file their original 1997 Minnesota income tax 20.15 return after June 15, 1999, and (2) qualifying nonresidents who 20.16 file a claim for rebate after June 15, 1999, 20.17 bear interest at the rate specified in Minnesota Statutes, 20.18 section 270.75, beginning October 1, 2000. 20.19(h)(j) A sales tax rebate shall not be adjusted based on 20.20 changes to a 1997 income tax return that are made by order of 20.21 assessment after June 15, 1999, or made by the taxpayer that are 20.22 filed with the commissioner of revenue after June 15, 1999. 20.23(i)(k) Individuals who filed a joint income tax return for 20.24 1997 shall receive a joint sales tax rebate. After the sales 20.25 tax rebate has been issued, but before the check has been 20.26 cashed, either joint claimant may request a separate check for 20.27 one-half of the joint sales tax rebate. Notwithstanding 20.28 anything in this section to the contrary, if prior to payment, 20.29 the commissioner has been notified that persons who filed a 20.30 joint 1997 income tax return are living at separate addresses, 20.31 as indicated on their 1998 income tax return or otherwise, the 20.32 commissioner may issue separate checks to each person. The 20.33 amount payable to each person is one-half of the total joint 20.34 rebate. If a rebate is received by the estate of a deceased 20.35 individual after the probate estate has been closed, and if the 20.36 original rebate check is returned to the commissioner with a 21.1 copy of the decree of descent or final account of the estate, 21.2 social security numbers, and addresses of the beneficiaries, the 21.3 commissioner may issue separate checks in proportion to their 21.4 share in the residuary estate in the names of the residuary 21.5 beneficiaries of the estate. 21.6(j)(l) The sales tax rebate is a "Minnesota tax law" for 21.7 purposes of Minnesota Statutes, section 270B.01, subdivision 8. 21.8(k)(m) The sales tax rebate is "an overpayment of any tax 21.9 collected by the commissioner" for purposes of Minnesota 21.10 Statutes, section 270.07, subdivision 5. For purposes of this 21.11 paragraph, a joint sales tax rebate is payable to each spouse 21.12 equally. 21.13(l)(n) If the commissioner of revenue cannot locate an 21.14 individual entitled to a sales tax rebate by July 1, 2001, or if 21.15 an individual to whom a sales tax rebate was issued has not 21.16 cashed the check by July 1, 2001, the right to the sales tax 21.17 rebate lapses and the check must be deposited in the general 21.18 fund. 21.19(m)(o) Individuals entitled to a sales tax rebate pursuant 21.20 to paragraph (a), but who did not receive one, and individuals 21.21 who receive a sales tax rebate that was not correctly computed, 21.22 must file a claim with the commissioner before July 1, 2000, in 21.23 a form prescribed by the commissioner. Taxpayers who file their 21.24 original 1997 Minnesota income tax return after June 15, 1999, 21.25 and qualifying nonresidents who file a claim for rebate after 21.26 June 15, 1999, and who do not receive it or who receive a sales 21.27 tax rebate that was not correctly computed, must file a claim 21.28 with the commissioner before July 1, 2001, in a form prescribed 21.29 by the commissioner. These claims must be treated as if they 21.30 are a claim for refund under Minnesota Statutes, section 21.31 289A.50, subdivisions 4 and 7. 21.32(n)(p) The sales tax rebate is a refund subject to revenue 21.33 recapture under Minnesota Statutes, chapter 270A. The 21.34 commissioner of revenue shall remit the entire refund to the 21.35 claimant agency, which shall, upon the request of the spouse who 21.36 does not owe the debt, refund one-half of the joint sales tax 22.1 rebate to the spouse who does not owe the debt. 22.2(o)(q) The rebate is a reduction of fiscal year 1999 sales 22.3 tax revenues. The amount necessary to make the sales tax 22.4 rebates and interest provided in this section is appropriated 22.5 from the general fund to the commissioner of revenue in fiscal 22.6 year 1999 and is available until June 30, 2001. 22.7(p)(r) If a sales tax rebate check is cashed by someone 22.8 other than the payee or payees of the check, and the 22.9 commissioner of revenue determines that the check has been 22.10 forged or improperly endorsed or the commissioner determines 22.11 that a rebate was overstated or erroneously issued, the 22.12 commissioner may issue an order of assessment for the amount of 22.13 the check or the amount the check is overstated against the 22.14 person or persons cashing it. The assessment must be made 22.15 within two years after the check is cashed, but if cashing the 22.16 check constitutes theft under Minnesota Statutes, section 22.17 609.52, or forgery under Minnesota Statutes, section 609.631, 22.18 the assessment can be made at any time. The assessment may be 22.19 appealed administratively and judicially. The commissioner may 22.20 take action to collect the assessment in the same manner as 22.21 provided by Minnesota Statutes, chapter 289A, for any other 22.22 order of the commissioner assessing tax. 22.23(q)(s) Notwithstanding Minnesota Statutes, sections 9.031, 22.24 16A.40, 16B.49, 16B.50, and any other law to the contrary, the 22.25 commissioner of revenue may take whatever actions the 22.26 commissioner deems necessary to pay the rebates required by this 22.27 section, and may, in consultation with the commissioner of 22.28 finance and the state treasurer, contract with a private vendor 22.29 or vendors to process, print, and mail the rebate checks or 22.30 warrants required under this section and receive and disburse 22.31 state funds to pay those checks or warrants. 22.32(r)(t) The commissioner may pay rebates required by this 22.33 section by electronic funds transfer to individuals who 22.34 requested that their 1998 individual income tax refund be paid 22.35 through electronic funds transfer. The commissioner may make 22.36 the electronic funds transfer payments to the same financial 23.1 institution and into the same account as the 1998 individual 23.2 income tax refund. 23.3 EFFECTIVE DATE: This section is effective the day 23.4 following final enactment. 23.5 Sec. 2. [APPLICATION OF LAW.] 23.6 The limitation on the total amount of rebates in Laws 1999, 23.7 chapter 243, article 1, section 2, paragraph (f), does not apply 23.8 to rebates issued under section 1. To the extent applicable, 23.9 all other provisions of Laws 1999, chapter 243, article 1, 23.10 section 2, apply to the rebates paid under section 1. 23.11 EFFECTIVE DATE: This section is effective the day 23.12 following final enactment. 23.13 Sec. 3. [APPROPRIATION.] 23.14 The amount necessary to pay the rebates under section 1 is 23.15 appropriated from the general fund to the commissioner of 23.16 revenue for fiscal years 2000 and 2001. 23.17 EFFECTIVE DATE: This section is effective the day 23.18 following final enactment. 23.19 ARTICLE 4 23.20 INCOME AND FRANCHISE TAXES 23.21 Section 1. Minnesota Statutes 1998, section 289A.08, is 23.22 amended by adding a subdivision to read: 23.23 Subd. 16. [TAX REFUND OR RETURN PREPARERS.] (a) A "tax 23.24 refund or return preparer," as defined in section 289A.60, 23.25 subdivision 13, paragraph (g), who prepared more than 500 23.26 Minnesota individual income tax returns for the prior calendar 23.27 year must file all Minnesota individual income tax returns 23.28 prepared for the current calendar year by electronic means. 23.29 (b) For tax returns prepared for the tax year beginning in 23.30 2001, the "500" in paragraph (a) is reduced to 250. 23.31 (c) For tax returns prepared for tax years beginning after 23.32 December 31, 2001, the "500" in paragraph (a) is reduced to 100. 23.33 (d) Paragraph (a) does not apply to a return if the 23.34 taxpayer has indicated on the return that the taxpayer did not 23.35 want the return filed by electronic means. 23.36 EFFECTIVE DATE: This section is effective for tax returns 24.1 prepared for taxable years beginning after December 31, 1999. 24.2 Sec. 2. Minnesota Statutes 1998, section 289A.20, 24.3 subdivision 2, is amended to read: 24.4 Subd. 2. [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 24.5 WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 24.6 WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 24.7 (a) A tax required to be deducted and withheld during the 24.8 quarterly period must be paid on or before the last day of the 24.9 month following the close of the quarterly period, unless an 24.10 earlier time for payment is provided. A tax required to be 24.11 deducted and withheld from compensation of an entertainer and 24.12 from a payment to an out-of-state contractor must be paid on or 24.13 before the date the return for such tax must be filed under 24.14 section 289A.18, subdivision 2. Taxes required to be deducted 24.15 and withheld by partnerships and S corporations must be paid on 24.16 or before the date the return must be filed under section 24.17 289A.18, subdivision 2. 24.18 (b) An employer who, during the previous quarter, withheld 24.19 more than $1,500 of tax under section 290.92, subdivision 2a or 24.20 3, or 290.923, subdivision 2, must deposit tax withheld under 24.21 those sections with the commissioner within the time allowed to 24.22 deposit the employer's federal withheld employment taxes under 24.23 Treasury Regulation, section 31.6302-1, without regard to the 24.24 safe harbor or de minimis rules in subparagraph (f) or the 24.25 one-day rule in subsection (c), clause (3). Taxpayers must 24.26 submit a copy of their federal notice of deposit status to the 24.27 commissioner upon request by the commissioner. 24.28 (c) The commissioner may prescribe by rule other return 24.29 periods or deposit requirements. In prescribing the reporting 24.30 period, the commissioner may classify payors according to the 24.31 amount of their tax liability and may adopt an appropriate 24.32 reporting period for the class that the commissioner judges to 24.33 be consistent with efficient tax collection. In no event will 24.34 the duration of the reporting period be more than one year. 24.35 (d) If less than the correct amount of tax is paid to the 24.36 commissioner, proper adjustments with respect to both the tax 25.1 and the amount to be deducted must be made, without interest, in 25.2 the manner and at the times the commissioner prescribes. If the 25.3 underpayment cannot be adjusted, the amount of the underpayment 25.4 will be assessed and collected in the manner and at the times 25.5 the commissioner prescribes. 25.6 (e) If the aggregate amount of the tax withheld during a 25.7 fiscal year ending June 30 under section 290.92, subdivision 2a 25.8 or 3, is equal to or exceeds the amounts established for 25.9 remitting federal withheld taxes pursuant to the regulations 25.10 promulgated under section 6302(h) of the Internal Revenue Code, 25.11 the employer must remit each required deposit for wages paid in 25.12 the subsequent calendar year by means of a funds transfer as 25.13 defined in section 336.4A-104, paragraph (a). The funds 25.14 transfer payment date, as defined in section 336.4A-401, must be 25.15 on or before the date the deposit is due. If the date the 25.16 deposit is due is not a funds transfer business day, as defined 25.17 in section 336.4A-105, paragraph (a), clause (4), the payment 25.18 date must be on or before the funds transfer business day next 25.19 following the date the deposit is due. 25.20 (f) A third-party bulk filer as defined in section 290.92, 25.21 subdivision 30, paragraph (a), clause (2), who remits 25.22 withholding deposits must remit all deposits by means of a funds 25.23 transfer as provided in paragraph (e), regardless of the 25.24 aggregate amount of tax withheld during a fiscal year for all of 25.25 the employers. 25.26 EFFECTIVE DATE: This section is effective for wages paid 25.27 after December 31, 1999. 25.28 Sec. 3. Minnesota Statutes 1998, section 289A.26, 25.29 subdivision 1, is amended to read: 25.30 Subdivision 1. [MINIMUM LIABILITY.] A corporation subject 25.31 to taxation under chapter 290 (excluding section 290.92) or an 25.32 entity subject to taxation under section 290.05, subdivision 3, 25.33 must make payment of estimated tax for the taxable year if its 25.34 tax liability so computed can reasonably be expected to exceed 25.35 $500, or in accordance with rules prescribed by the commissioner 25.36 for an affiliated group of corporationselecting to filefiling 26.1 one returnas permittedunder section 289A.08, subdivision 3. 26.2 EFFECTIVE DATE: This section is effective the day 26.3 following final enactment. 26.4 Sec. 4. Minnesota Statutes 1998, section 289A.60, 26.5 subdivision 1, is amended to read: 26.6 Subdivision 1. [PENALTY FOR FAILURE TO PAY TAX.] (a) If a 26.7 tax other than a withholding or sales or use tax is not paid 26.8 within the time specified for payment, a penalty must be added 26.9 to the amount required to be shown as tax. The penalty is three 26.10 percent of the tax not paid on or before the date specified for 26.11 payment of the tax if the failure is for not more than 30 days, 26.12 with an additional penalty of three percent of the amount of tax 26.13 remaining unpaid during each additional 30 days or fraction of 26.14 30 days during which the failure continues, not exceeding 24 26.15 percent in the aggregate. 26.16 If an individual files a state individual income tax return 26.17 and pays all of the state individual income tax with the filing 26.18 of a return within six months of the date the return is due and 26.19 the amount paid by the due date of the return is at least 90 26.20 percent of the amount of tax due, as shown on the return, the 26.21 individual is presumed to have reasonable cause for the late 26.22 payment. 26.23 (b) If a withholding or sales or use tax is not paid within 26.24 the time specified for payment, a penalty must be added to the 26.25 amount required to be shown as tax. The penalty is five percent 26.26 of the tax not paid on or before the date specified for payment 26.27 of the tax if the failure is for not more than 30 days, with an 26.28 additional penalty of five percent of the amount of tax 26.29 remaining unpaid during each additional 30 days or fraction of 26.30 30 days during which the failure continues, not exceeding 15 26.31 percent in the aggregate. 26.32 EFFECTIVE DATE: This section is effective for taxable 26.33 years beginning after December 31, 1999. 26.34 Sec. 5. Minnesota Statutes 1999 Supplement, section 26.35 290.01, subdivision 19b, is amended to read: 26.36 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 27.1 individuals, estates, and trusts, there shall be subtracted from 27.2 federal taxable income: 27.3 (1) interest income on obligations of any authority, 27.4 commission, or instrumentality of the United States to the 27.5 extent includable in taxable income for federal income tax 27.6 purposes but exempt from state income tax under the laws of the 27.7 United States; 27.8 (2) if included in federal taxable income, the amount of 27.9 any overpayment of income tax to Minnesota or to any other 27.10 state, for any previous taxable year, whether the amount is 27.11 received as a refund or as a credit to another taxable year's 27.12 income tax liability; 27.13 (3) the amount paid to others, less the credit allowed 27.14 under section 290.0674, not to exceed $1,625 for each qualifying 27.15 child in grades kindergarten to 6 and $2,500 for each qualifying 27.16 child in grades 7 to 12, for tuition, textbooks, and 27.17 transportation of each qualifying child in attending an 27.18 elementary or secondary school situated in Minnesota, North 27.19 Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of 27.20 this state may legally fulfill the state's compulsory attendance 27.21 laws, which is not operated for profit, and which adheres to the 27.22 provisions of the Civil Rights Act of 1964 and chapter 363. For 27.23 the purposes of this clause, "tuition" includes fees or tuition 27.24 as defined in section 290.0674, subdivision 1, clause (1). As 27.25 used in this clause, "textbooks" includes books and other 27.26 instructional materials and equipment used in elementary and 27.27 secondary schools in teaching only those subjects legally and 27.28 commonly taught in public elementary and secondary schools in 27.29 this state. Equipment expenses qualifying for deduction 27.30 includes expenses as defined and limited in section 290.0674, 27.31 subdivision 1, clause (3). "Textbooks" does not include 27.32 instructional books and materials used in the teaching of 27.33 religious tenets, doctrines, or worship, the purpose of which is 27.34 to instill such tenets, doctrines, or worship, nor does it 27.35 include books or materials for, or transportation to, 27.36 extracurricular activities including sporting events, musical or 28.1 dramatic events, speech activities, driver's education, or 28.2 similar programs. For purposes of the subtraction provided by 28.3 this clause, "qualifying child" has the meaning given in section 28.4 32(c)(3) of the Internal Revenue Code; 28.5 (4) contributions made in taxable years beginning after 28.6 December 31, 1981, and before January 1, 1985, to a qualified 28.7 governmental pension plan, an individual retirement account, 28.8 simplified employee pension, or qualified plan covering a 28.9 self-employed person that were included in Minnesota gross 28.10 income in the taxable year for which the contributions were made 28.11 but were deducted or were not included in the computation of 28.12 federal adjusted gross income, less any amount allowed to be 28.13 subtracted as a distribution under this subdivision or a 28.14 predecessor provision in taxable years that began before January 28.15 1, 2000. This subtraction applies only for taxable years 28.16 beginning after December 31, 1999, and before January 1, 2001. 28.17 If an individual's subtraction under this clause exceeds the 28.18 individual's taxable income, the excess may be carried forward 28.19 to taxable years beginning after December 31, 2000, and before 28.20 January 1, 2002; 28.21 (5) income as provided under section 290.0802; 28.22 (6) the amount of unrecovered accelerated cost recovery 28.23 system deductions allowed under subdivision 19g; 28.24 (7) to the extent included in federal adjusted gross 28.25 income, income realized on disposition of property exempt from 28.26 tax under section 290.491; 28.27 (8) to the extent not deducted in determining federal 28.28 taxable income or used to claim the long-term care insurance 28.29 credit under section 290.0672, the amount paid for health 28.30 insurance of self-employed individuals as determined under 28.31 section 162(l) of the Internal Revenue Code, except that the 28.32 percent limit does not apply. If thetaxpayerindividual 28.33 deducted insurance payments under section 213 of the Internal 28.34 Revenue Code of 1986, the subtraction under this clause must be 28.35 reduced by the lesser of: 28.36 (i) the total itemized deductions allowed under section 29.1 63(d) of the Internal Revenue Code, less state, local, and 29.2 foreign income taxes deductible under section 164 of the 29.3 Internal Revenue Code and the standard deduction under section 29.4 63(c) of the Internal Revenue Code; or 29.5 (ii) the lesser of (A) the amount of insurance qualifying 29.6 as "medical care" under section 213(d) of the Internal Revenue 29.7 Code to the extent not deducted under section 162(1) of the 29.8 Internal Revenue Code or excluded from income or (B) the total 29.9 amount deductible for medical care under section 213(a); 29.10 (9) the exemption amount allowed under Laws 1995, chapter 29.11 255, article 3, section 2, subdivision 3; 29.12 (10) to the extent included in federal taxable income, 29.13 postservice benefits for youth community service under section 29.14 124D.42 for volunteer service under United States Code, title 29.15 42, section 5011(d), as amended; 29.16 (11) to the extent not deducted in determining federal 29.17 taxable income by an individual who does not itemize deductions 29.18 for federal income tax purposes for the taxable year, an amount 29.19 equal to 50 percent of the excess of charitable contributions 29.20 allowable as a deduction for the taxable year under section 29.21 170(a) of the Internal Revenue Code over $500;and29.22 (12) to the extent included in federal taxable income, 29.23 holocaust victims' settlement payments for any injury incurred 29.24 as a result of the holocaust, if received by an individual who 29.25 was persecuted for racial or religious reasons by Nazi Germany 29.26 or any other Axis regime or an heir of such a person; and 29.27 (13) for taxable years beginning before January 1, 2008, 29.28 the amount of the federal small ethanol producer credit allowed 29.29 under section 40(a)(3) of the Internal Revenue Code which is 29.30 included in gross income under section 87 of the Internal 29.31 Revenue Code. 29.32 EFFECTIVE DATE: This section is effective for taxable 29.33 years beginning after December 31, 1999. 29.34 Sec. 6. Minnesota Statutes 1998, section 290.01, 29.35 subdivision 19c, is amended to read: 29.36 Subd. 19c. [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 30.1 INCOME.] For corporations, there shall be added to federal 30.2 taxable income: 30.3 (1) the amount of any deduction taken for federal income 30.4 tax purposes for income, excise, or franchise taxes based on net 30.5 income or related minimum taxes, including but not limited to 30.6 the tax imposed under section 290.0922, paid by the corporation 30.7 to Minnesota, another state, a political subdivision of another 30.8 state, the District of Columbia, or any foreign country or 30.9 possession of the United States; 30.10 (2) interest not subject to federal tax upon obligations 30.11 of: the United States, its possessions, its agencies, or its 30.12 instrumentalities; the state of Minnesota or any other state, 30.13 any of its political or governmental subdivisions, any of its 30.14 municipalities, or any of its governmental agencies or 30.15 instrumentalities; the District of Columbia; or Indian tribal 30.16 governments; 30.17 (3) exempt-interest dividends received as defined in 30.18 section 852(b)(5) of the Internal Revenue Code; 30.19 (4) the amount of any net operating loss deduction taken 30.20 for federal income tax purposes under section 172 or 832(c)(10) 30.21 of the Internal Revenue Code or operations loss deduction under 30.22 section 810 of the Internal Revenue Code; 30.23 (5) the amount of any special deductions taken for federal 30.24 income tax purposes under sections 241 to 247 of the Internal 30.25 Revenue Code; 30.26 (6) losses from the business of mining, as defined in 30.27 section 290.05, subdivision 1, clause (a), that are not subject 30.28 to Minnesota income tax; 30.29 (7) the amount of any capital losses deducted for federal 30.30 income tax purposes under sections 1211 and 1212 of the Internal 30.31 Revenue Code; 30.32 (8) the amount of any charitable contributions deducted for 30.33 federal income tax purposes under section 170 of the Internal 30.34 Revenue Code; 30.35 (9) the exempt foreign trade income of a foreign sales 30.36 corporation under sections 921(a) and 291 of the Internal 31.1 Revenue Code; 31.2 (10) the amount of percentage depletion deducted under 31.3 sections 611 through 614 and 291 of the Internal Revenue Code; 31.4 (11) for certified pollution control facilities placed in 31.5 service in a taxable year beginning before December 31, 1986, 31.6 and for which amortization deductions were elected under section 31.7 169 of the Internal Revenue Code of 1954, as amended through 31.8 December 31, 1985, the amount of the amortization deduction 31.9 allowed in computing federal taxable income for those 31.10 facilities; 31.11 (12) the amount of any deemed dividend from a foreign 31.12 operating corporation determined pursuant to section 290.17, 31.13 subdivision 4, paragraph (g); 31.14 (13) the amount of any environmental tax paid under section 31.15 59(a) of the Internal Revenue Code; and 31.16 (14) the amount of a partner's pro rata share of net income 31.17 which does not flow through to the partner because the 31.18 partnership elected to pay the tax on the income under section 31.19 6242(a)(2) of the Internal Revenue Code. 31.20 EFFECTIVE DATE: This section is effective for taxable 31.21 years beginning after December 31, 1999. 31.22 Sec. 7. Minnesota Statutes 1998, section 290.01, 31.23 subdivision 19d, is amended to read: 31.24 Subd. 19d. [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 31.25 TAXABLE INCOME.] For corporations, there shall be subtracted 31.26 from federal taxable income after the increases provided in 31.27 subdivision 19c: 31.28 (1) the amount of foreign dividend gross-up added to gross 31.29 income for federal income tax purposes under section 78 of the 31.30 Internal Revenue Code; 31.31 (2) the amount of salary expense not allowed for federal 31.32 income tax purposes due to claiming the federal jobs credit 31.33 under section 51 of the Internal Revenue Code; 31.34 (3) any dividend (not including any distribution in 31.35 liquidation) paid within the taxable year by a national or state 31.36 bank to the United States, or to any instrumentality of the 32.1 United States exempt from federal income taxes, on the preferred 32.2 stock of the bank owned by the United States or the 32.3 instrumentality; 32.4 (4) amounts disallowed for intangible drilling costs due to 32.5 differences between this chapter and the Internal Revenue Code 32.6 in taxable years beginning before January 1, 1987, as follows: 32.7 (i) to the extent the disallowed costs are represented by 32.8 physical property, an amount equal to the allowance for 32.9 depreciation under Minnesota Statutes 1986, section 290.09, 32.10 subdivision 7, subject to the modifications contained in 32.11 subdivision 19e; and 32.12 (ii) to the extent the disallowed costs are not represented 32.13 by physical property, an amount equal to the allowance for cost 32.14 depletion under Minnesota Statutes 1986, section 290.09, 32.15 subdivision 8; 32.16 (5) the deduction for capital losses pursuant to sections 32.17 1211 and 1212 of the Internal Revenue Code, except that: 32.18 (i) for capital losses incurred in taxable years beginning 32.19 after December 31, 1986, capital loss carrybacks shall not be 32.20 allowed; 32.21 (ii) for capital losses incurred in taxable years beginning 32.22 after December 31, 1986, a capital loss carryover to each of the 32.23 15 taxable years succeeding the loss year shall be allowed; 32.24 (iii) for capital losses incurred in taxable years 32.25 beginning before January 1, 1987, a capital loss carryback to 32.26 each of the three taxable years preceding the loss year, subject 32.27 to the provisions of Minnesota Statutes 1986, section 290.16, 32.28 shall be allowed; and 32.29 (iv) for capital losses incurred in taxable years beginning 32.30 before January 1, 1987, a capital loss carryover to each of the 32.31 five taxable years succeeding the loss year to the extent such 32.32 loss was not used in a prior taxable year and subject to the 32.33 provisions of Minnesota Statutes 1986, section 290.16, shall be 32.34 allowed; 32.35 (6) an amount for interest and expenses relating to income 32.36 not taxable for federal income tax purposes, if (i) the income 33.1 is taxable under this chapter and (ii) the interest and expenses 33.2 were disallowed as deductions under the provisions of section 33.3 171(a)(2), 265 or 291 of the Internal Revenue Code in computing 33.4 federal taxable income; 33.5 (7) in the case of mines, oil and gas wells, other natural 33.6 deposits, and timber for which percentage depletion was 33.7 disallowed pursuant to subdivision 19c, clause (11), a 33.8 reasonable allowance for depletion based on actual cost. In the 33.9 case of leases the deduction must be apportioned between the 33.10 lessor and lessee in accordance with rules prescribed by the 33.11 commissioner. In the case of property held in trust, the 33.12 allowable deduction must be apportioned between the income 33.13 beneficiaries and the trustee in accordance with the pertinent 33.14 provisions of the trust, or if there is no provision in the 33.15 instrument, on the basis of the trust's income allocable to 33.16 each; 33.17 (8) for certified pollution control facilities placed in 33.18 service in a taxable year beginning before December 31, 1986, 33.19 and for which amortization deductions were elected under section 33.20 169 of the Internal Revenue Code of 1954, as amended through 33.21 December 31, 1985, an amount equal to the allowance for 33.22 depreciation under Minnesota Statutes 1986, section 290.09, 33.23 subdivision 7; 33.24 (9) the amount included in federal taxable income 33.25 attributable to the credits provided in Minnesota Statutes 1986, 33.26 section 273.1314, subdivision 9, or Minnesota Statutes, section 33.27 469.171, subdivision 6; 33.28 (10) amounts included in federal taxable income that are 33.29 due to refunds of income, excise, or franchise taxes based on 33.30 net income or related minimum taxes paid by the corporation to 33.31 Minnesota, another state, a political subdivision of another 33.32 state, the District of Columbia, or a foreign country or 33.33 possession of the United States to the extent that the taxes 33.34 were added to federal taxable income under section 290.01, 33.35 subdivision 19c, clause (1), in a prior taxable year; 33.36 (11) 80 percent of royalties, fees, or other like income 34.1 accrued or received from a foreign operating corporation or a 34.2 foreign corporation which is part of the same unitary business 34.3 as the receiving corporation; 34.4 (12) income or gains from the business of mining as defined 34.5 in section 290.05, subdivision 1, clause (a), that are not 34.6 subject to Minnesota franchise tax; 34.7 (13) the amount of handicap access expenditures in the 34.8 taxable year which are not allowed to be deducted or capitalized 34.9 under section 44(d)(7) of the Internal Revenue Code; 34.10 (14) the amount of qualified research expenses not allowed 34.11 for federal income tax purposes under section 280C(c) of the 34.12 Internal Revenue Code, but only to the extent that the amount 34.13 exceeds the amount of the credit allowed under section 290.068; 34.14 (15) the amount of salary expenses not allowed for federal 34.15 income tax purposes due to claiming the Indian employment credit 34.16 under section 45A(a) of the Internal Revenue Code;and34.17 (16) the amount of any refund of environmental taxes paid 34.18 under section 59A of the Internal Revenue Code; and 34.19 (17) for taxable years beginning before January 1, 2008, 34.20 the amount of the federal small ethanol producer credit allowed 34.21 under section 40(a)(3) of the Internal Revenue Code which is 34.22 included in gross income under section 87 of the Internal 34.23 Revenue Code. 34.24 EFFECTIVE DATE: This section is effective for taxable 34.25 years beginning after December 31, 1999. 34.26 Sec. 8. Minnesota Statutes 1998, section 290.01, 34.27 subdivision 19e, is amended to read: 34.28 Subd. 19e. [DEPRECIATION MODIFICATIONS FOR CORPORATIONS.] 34.29 In the case of corporations, a modification shall be made for 34.30 the accelerated cost recovery system. The allowable deduction 34.31 for the accelerated cost recovery system is the same amount as 34.32 provided in section 168 of the Internal Revenue Code with the 34.33 following modifications. The modifications apply to taxable 34.34 years beginning after December 31, 1986, and to property for 34.35 which deductions under the Tax Reform Act of 1986, Public Law 34.36 Number 99-514, are elected or apply. The modifications in 35.1 paragraphs (a) and (c) do not apply to taxable years beginning 35.2 after December 31, 2000. 35.3 (a) For property placed in service after December 31, 1980, 35.4 and before January 1, 1987, 40 percent of the allowance pursuant 35.5 to section 168 of the Internal Revenue Code of 1954, as amended 35.6 through December 31, 1985, for 15-, 18-, or 19-year real 35.7 property shall not be allowed and for all other property 20 35.8 percent shall not be allowed. 35.9 (b) For property placed in service after December 31, 1987, 35.10 no modification shall be made. 35.11 (c) For property placed in service after July 31, 1986, and 35.12 before January 1, 1987, for which the taxpayer elects the 35.13 deduction pursuant to section 203 of the Tax Reform Act of 1986, 35.14 Public Law Number 99-514, and for property placed in service 35.15 after December 31, 1986, and before January 1, 1988, 15 percent 35.16 of the allowance pursuant to section 168 of the Internal Revenue 35.17 Code shall not be allowed. 35.18 (d) For property placed in service after December 31, 1980, 35.19 and before January 1, 1987, for which the taxpayer elects to use 35.20 the straight line method provided in section 168(b)(3), (f)(12), 35.21 or (j)(1) or a method provided in section 168(e)(2) of the 35.22 Internal Revenue Code, as amended through December 31, 1986, but 35.23 excluding property for which the taxpayer elects the deduction 35.24 pursuant to section 203 of the Tax Reform Act of 1986, Public 35.25 Law Number 99-514, the modifications provided in paragraph (a) 35.26 do not apply. 35.27 (e) For taxable years beginning before January 1, 2001, for 35.28 property subject to the modifications contained in paragraphs 35.29 (a) and (c) and Minnesota Statutes 1986, section 290.09, 35.30 subdivision 7, clause (c), the following modification shall be 35.31 made after the entire amount of the allowable deduction has been 35.32 allowed for federal tax purposes for that property under the 35.33 provisions of section 168 of the Internal Revenue Code. The 35.34 remaining depreciable basis in those assets for Minnesota 35.35 purposes, including the amount of any basis reduction to reflect 35.36 the investment tax credit for federal purposes under sections 36.1 48(q) and 49(d) of the Internal Revenue Code, shall be a 36.2 depreciation allowance computed using the straight line method 36.3 over the following number of years: 36.4 (1) three-year property, one year; 36.5 (2) five-year and seven-year property, two years; 36.6 (3) ten-year property, five years; and 36.7 (4) all other property, seven years. 36.8 (f) For taxable years beginning after December 31, 2000, 36.9 the amount of any remaining modification made under paragraph 36.10 (a) or (c) or Minnesota Statutes 1986, section 290.09, 36.11 subdivision 7, clause (c), not previously deducted under 36.12 paragraph (e), including the amount of any basis reduction to 36.13 reflect the federal investment tax credit for federal purposes 36.14 under section 48(q) and 49(d) of the Internal Revenue Code, is a 36.15 depreciation allowance in the first taxable year after December 36.16 31, 2000. 36.17 (g) For taxable years beginning before January 1, 2001, and 36.18 for property placed in service after December 31, 1987, the 36.19 remaining depreciable basis for Minnesota purposes that is 36.20 attributable to the basis reduction for federal purposes to 36.21 reflect the investment tax credit under sections 48(q) and 49(d) 36.22 of the Internal Revenue Code, shall be allowed as a deduction in 36.23 the first taxable year after the entire amount of the allowable 36.24 deduction for that property under the provisions of section 168 36.25 of the Internal Revenue Code, has been allowed, except that 36.26 where the straight line method provided in section 168(b)(3) is 36.27 used, the deduction provided in this clause shall be allowed in 36.28 the last taxable year in which an allowance for depreciation is 36.29 allowed for that property. 36.30(g)(h) For qualified timber property for which the 36.31 taxpayer made an election under section 194 of the Internal 36.32 Revenue Code, the remaining depreciable basis for Minnesota 36.33 purposes is allowed as a deduction in the first taxable year 36.34 after the entire allowable deduction has been allowed for 36.35 federal tax purposes. 36.36(h)(i) The basis of property to which section 168 of the 37.1 Internal Revenue Code applies is its basis as provided in this 37.2 chapter including the modifications provided in this subdivision 37.3 and in Minnesota Statutes 1986, section 290.09, subdivision 7, 37.4 paragraph (c). The recapture tax provisions provided in 37.5 sections 1245 and 1250 of the Internal Revenue Code apply but 37.6 must be calculated using the basis provided in the preceding 37.7 sentence. 37.8(i)(j) The basis of an asset acquired in an exchange of 37.9 assets, including an involuntary conversion, is the same as its 37.10 federal basis under the provisions of the Internal Revenue Code, 37.11 except that the difference in basis due to the modifications in 37.12 this subdivision and in Minnesota Statutes 1986, section 290.09, 37.13 subdivision 7, paragraph (c), is a deduction as provided in 37.14 paragraph (e). 37.15 EFFECTIVE DATE: This section is effective for taxable 37.16 years beginning after December 31, 2000. 37.17 Sec. 9. Minnesota Statutes 1998, section 290.015, 37.18 subdivision 1, is amended to read: 37.19 Subdivision 1. [GENERAL RULE.] (a) Except as provided in 37.20 subdivision 3, a person that conducts a trade or business that 37.21 has a place of business in this state, regularly has employees 37.22 or independent contractors conducting business activities on its 37.23 behalf in this state, or owns or leases real property that is 37.24 located in this state or tangible personal propertylocated, 37.25 including but not limited to mobile property, that is present in 37.26 this stateas defined in section 290.191, subdivision 6,37.27paragraph (e),is subject to the taxes imposed by this chapter. 37.28 (b) Except as provided in subdivision 3, a person that 37.29 conducts a trade or business not described in paragraph (a) is 37.30 subject to the taxes imposed by this chapter if the trade or 37.31 business obtains or regularly solicits business from within this 37.32 state, without regard to physical presence in this state. 37.33 (c) For purposes of paragraph (b), business from within 37.34 this state includes, but is not limited to: 37.35 (1) sales of products or services of any kind or nature to 37.36 customers in this state who receive the product or service in 38.1 this state; 38.2 (2) sales of services which are performed from outside this 38.3 state but the services are received in this state; 38.4 (3) transactions with customers in this state that involve 38.5 intangible property and result inincome flowing to the person38.6from withinreceipts attributed to this state as provided in 38.7 section 290.191, subdivision 5 or 6; 38.8 (4) leases of tangible personal property that is located in 38.9 this state as defined in section 290.191, subdivision 5, 38.10 paragraph (g), or 6, paragraph (e); and 38.11 (5) sales and leases of real property located in this 38.12 state; and38.13(6) if a financial institution, deposits received from38.14customers in this state. 38.15 (d) For purposes of paragraph (b), solicitation includes, 38.16 but is not limited to: 38.17 (1) the distribution, by mail or otherwise, without regard 38.18 to the state from which such distribution originated or in which 38.19 the materials were prepared, of catalogs, periodicals, 38.20 advertising flyers, or other written solicitations of business 38.21 to customers in this state; 38.22 (2) display of advertisements on billboards or other 38.23 outdoor advertising in this state; 38.24 (3) advertisements in newspapers published in this state; 38.25 (4) advertisements in trade journals or other periodicals, 38.26 the circulation of which is primarily within this state; 38.27 (5) advertisements in a Minnesota edition of a national or 38.28 regional publication or a limited regional edition of which this 38.29 state is included of a broader regional or national publication 38.30 which are not placed in other geographically defined editions of 38.31 the same issue of the same publication; 38.32 (6) advertisements in regional or national publications in 38.33 an edition which is not by its contents geographically targeted 38.34 to Minnesota, but which is sold over the counter in Minnesota or 38.35 by subscription to Minnesota residents; 38.36 (7) advertisements broadcast on a radio or television 39.1 station located in Minnesota; or 39.2 (8) any other solicitation by telegraph, telephone, 39.3 computer database, cable, optic, microwave, or other 39.4 communication system. 39.5 EFFECTIVE DATE: This section is effective for taxable 39.6 years beginning after December 31, 1999. 39.7 Sec. 10. Minnesota Statutes 1998, section 290.015, 39.8 subdivision 3, is amended to read: 39.9 Subd. 3. [EXCEPTIONS.] (a) A person is not subject to tax 39.10 under this chapter if the person is engaged in the business of 39.11 selling tangible personal property and taxation of that person 39.12 under this chapter is precluded by Public Law Number 86-272, 39.13 United States Code, title 15, sections 381 to 384, or would be 39.14 so precluded except for the fact that the person stored tangible 39.15 personal property in a state licensed facility under chapter 231. 39.16 (b) Ownership of an interest in the following types of 39.17 property (including those contacts with this state reasonably 39.18 required to evaluate and complete the acquisition or disposition 39.19 of the property, the servicing of the property or the income 39.20 from it, the collection of income from the property, or the 39.21 acquisition or liquidation of collateral relating to the 39.22 property) shall not be a factor in determining whether the owner 39.23 is subject to tax under this chapter: 39.24 (1) an interest in a real estate mortgage investment 39.25 conduit, a real estate investment trust, a financial asset 39.26 securitization investment trust, or a regulated investment 39.27 company or a fund of a regulated investment company, as those 39.28 terms are defined in the Internal Revenue Code; 39.29 (2) an interest in money market instruments or securities 39.30 as defined in section 290.191, subdivision 6, paragraphs (c) and 39.31 (d); 39.32 (3) an interest in a loan-backed, mortgage-backed, or 39.33 receivable-backed security representing either: (i) ownership 39.34 in a pool of promissory notes, mortgages, or receivables or 39.35 certificates of interest or participation in such notes, 39.36 mortgages, or receivables, or (ii) debt obligations or equity 40.1 interests which provide for payments in relation to payments or 40.2 reasonable projections of payments on the notes, mortgages, or 40.3 receivables; 40.4 (4) an interest acquired from a person in assets described 40.5 in section 290.191, subdivision 11, paragraphs (e) to (l), 40.6 subject to the provisions of paragraph (c), clause (2)(A); 40.7 (5) an interest acquired from a person in the right to 40.8 service, or collect income from any assets described in section 40.9 290.191, subdivision 11, paragraphs (e) to (l), subject to the 40.10 provisions of paragraph (c), clause (2)(A); 40.11 (6) an interest acquired from a person in a funded or 40.12 unfunded agreement to extend or guarantee credit whether 40.13 conditional, mandatory, temporary, standby, secured, or 40.14 otherwise, subject to the provisions of paragraph (c), clause 40.15 (2)(A); 40.16 (7) an interest of a person other than an individual, 40.17 estate, or trust, in any intangible, tangible, real, or personal 40.18 property acquired in satisfaction, whether in whole or in part, 40.19 of any asset embodying a payment obligation which is in default, 40.20 whether secured or unsecured, the ownership of an interest in 40.21 which would be exempt under the preceding provisions of this 40.22 subdivision, provided the property is disposed of within a 40.23 reasonable period of time; or 40.24 (8) amounts held in escrow or trust accounts, pursuant to 40.25 and in accordance with the terms of property described in this 40.26 subdivision. 40.27 (c)(1) For purposes of paragraph (b), clauses (4) to (6), 40.28 an interest in the type of assets or credit agreements described 40.29 is deemed to exist at the time the owner becomes legally 40.30 obligated, conditionally or unconditionally, to fund, acquire, 40.31 renew, extend, amend, or otherwise enter into the credit 40.32 arrangement. 40.33 (2)(A) An owner has acquired an interest from a person in 40.34 paragraph (b), clauses (4) to (6), assets if: 40.35 (i) the owner at the time of the acquisition of the asset 40.36 does not own, directly or indirectly, 15 percent or more of the 41.1 outstanding stock or in the case of a partnership 15 percent or 41.2 more of the capital or profit interests of the person from whom 41.3 it acquired the asset; 41.4 (ii) the person from whom the owner acquired the asset 41.5 regularly sells, assigns, or transfers interests in paragraph 41.6 (b), clauses (4) to (6), assets during the 12 calendar months 41.7 immediately preceding the month of acquisition to three or more 41.8 persons; and 41.9 (iii) the person from whom the owner acquired the asset 41.10 does not sell, assign, or transfer 75 percent or more of its 41.11 paragraph (b), clauses (4) to (6), assets during the 12 calendar 41.12 months immediately preceding the month of acquisition to the 41.13 owner. 41.14 For purposes of determining indirect ownership under item (i), 41.15 the owner is deemed to own all stock, capital, or profit 41.16 interests owned by another person if the owner directly owns 15 41.17 percent or more of the stock, capital, or profit interests in 41.18 the other person. The owner is also deemed to own through any 41.19 intermediary parties all stock, capital, and profit interests 41.20 directly owned by a person to the extent there exists a 15 41.21 percent or more chain of ownership of stock, capital, or profit 41.22 interests between the owner, intermediary parties and the person. 41.23 (B) If the owner of the asset is a member ofthea unitary 41.24groupbusiness, paragraph (b), clauses (4) to (8), do not apply 41.25 to an interest acquired from another member of the unitarygroup41.26 business. If the interest in the asset was originally acquired 41.27 from a nonunitary member and at that time qualified as a section 41.28 290.015, subdivision 3, paragraph (b), asset, the foregoing 41.29 limitation does not apply. 41.30 EFFECTIVE DATE: This section is effective for taxable 41.31 years beginning after December 31, 1999. 41.32 Sec. 11. Minnesota Statutes 1998, section 290.015, 41.33 subdivision 4, is amended to read: 41.34 Subd. 4. [LIMITATIONS.] (a) This section does not subject 41.35 a trade or business to any regulation, including any tax, of any 41.36 local unit of government or subdivision of this state if the 42.1 trade or business does not own or lease tangible or real 42.2 property located within this state and has no employees or 42.3 independent contractors present in this state to assist in the 42.4 carrying on of the business. 42.5 (b) The purchase of tangible personal property or 42.6 intangible property or services by a person that conducts a 42.7 trade or business with the principal place of business outside 42.8 of Minnesota, referred to as the "non-Minnesota person", from a 42.9 person within Minnesota shall not be taken into account in 42.10 determining whether the non-Minnesota person is subject to the 42.11 taxes imposed by this chapter, except for services involving 42.12 either the direct solicitation of Minnesota customers or 42.13 relationships with Minnesota customers after sales are made. 42.14 This paragraph is subject to the limitations contained in 42.15 subdivision 3, paragraph (b), clauses (4) to (6). 42.16 (c)NoContact with any Minnesota financial institution by 42.17 any financial institution with its principal place of business 42.18 outside Minnesota with respect to transactions described in 42.19 subdivision 3, or with respect to deposits received from or by a 42.20 Minnesota financial institution, shall not be taken into account 42.21 in determining whether such a financial institution is subject 42.22 to the taxes imposed by this chapter.The fact ofParticipation 42.23 by a Minnesota financial institution in a transaction which also 42.24 involves a borrower and a financial institution that conducts a 42.25 trade or business with its principal place of business outside 42.26 of Minnesota shall not be a factor in determining whether such 42.27 financial institution is subject to the taxes imposed by this 42.28 chapter. This paragraph does not apply to transactions between 42.29 or among members of the same unitarygroupbusiness. 42.30 EFFECTIVE DATE: This section is effective for taxable 42.31 years beginning after December 31, 1999. 42.32 Sec. 12. Minnesota Statutes 1999 Supplement, section 42.33 290.06, subdivision 2c, is amended to read: 42.34 Subd. 2c. [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 42.35 AND TRUSTS.] (a) The income taxes imposed by this chapter upon 42.36 married individuals filing joint returns and surviving spouses 43.1 as defined in section 2(a) of the Internal Revenue Code must be 43.2 computed by applying to their taxable net income the following 43.3 schedule of rates: 43.4 (1) On the first$25,220$25,680,5.55.35 percent; 43.5 (2) On all over$25,220$25,680, but not over 43.6$100,200$102,030,7.257.05 percent; 43.7 (3) On all over$100,200$102,030,87.85 percent. 43.8 Married individuals filing separate returns, estates, and 43.9 trusts must compute their income tax by applying the above rates 43.10 to their taxable income, except that the income brackets will be 43.11 one-half of the above amounts. 43.12 (b) The income taxes imposed by this chapter upon unmarried 43.13 individuals must be computed by applying to taxable net income 43.14 the following schedule of rates: 43.15 (1) On the first$17,250$17,570,5.55.35 percent; 43.16 (2) On all over$17,250$17,570, but not over 43.17$56,680$57,710,7.257.05 percent; 43.18 (3) On all over$56,680$57,710,87.85 percent. 43.19 (c) The income taxes imposed by this chapter upon unmarried 43.20 individuals qualifying as a head of household as defined in 43.21 section 2(b) of the Internal Revenue Code must be computed by 43.22 applying to taxable net income the following schedule of rates: 43.23 (1) On the first$21,240$21,630,5.55.35 percent; 43.24 (2) On all over$21,240$21,630, but not 43.25 over$85,350$86,910,7.257.05 percent; 43.26 (3) On all over$85,350$86,910,87.85 percent. 43.27 (d) In lieu of a tax computed according to the rates set 43.28 forth in this subdivision, the tax of any individual taxpayer 43.29 whose taxable net income for the taxable year is less than an 43.30 amount determined by the commissioner must be computed in 43.31 accordance with tables prepared and issued by the commissioner 43.32 of revenue based on income brackets of not more than $100. The 43.33 amount of tax for each bracket shall be computed at the rates 43.34 set forth in this subdivision, provided that the commissioner 43.35 may disregard a fractional part of a dollar unless it amounts to 43.36 50 cents or more, in which case it may be increased to $1. 44.1 (e) An individual who is not a Minnesota resident for the 44.2 entire year must compute the individual's Minnesota income tax 44.3 as provided in this subdivision. After the application of the 44.4 nonrefundable credits provided in this chapter, the tax 44.5 liability must then be multiplied by a fraction in which: 44.6 (1) the numerator is the individual's Minnesota source 44.7 federal adjusted gross income as defined in section 62 of the 44.8 Internal Revenue Code and increased by the additions required 44.9 under section 290.01, subdivision 19a, clauses (1) and (6), 44.10 after applying the allocation and assignability provisions of 44.11 section 290.081, clause (a), or 290.17; and 44.12 (2) the denominator is the individual's federal adjusted 44.13 gross income as defined in section 62 of the Internal Revenue 44.14 Code of 1986, increased by the amounts specified in section 44.15 290.01, subdivision 19a, clauses (1) and (6), and reduced by the 44.16 amounts specified in section 290.01, subdivision 19b, clause (1). 44.17 EFFECTIVE DATE: This section is effective for taxable 44.18 years beginning after December 31, 1999. 44.19 Sec. 13. Minnesota Statutes 1999 Supplement, section 44.20 290.06, subdivision 2d, is amended to read: 44.21 Subd. 2d. [INFLATION ADJUSTMENT OF BRACKETS.] (a) For 44.22 taxable years beginning after December 31,19992000, the 44.23 minimum and maximum dollar amounts for each rate bracket for 44.24 which a tax is imposed in subdivision 2c shall be adjusted for 44.25 inflation by the percentage determined under paragraph (b). For 44.26 the purpose of making the adjustment as provided in this 44.27 subdivision all of the rate brackets provided in subdivision 2c 44.28 shall be the rate brackets as they existed for taxable years 44.29 beginning after December 31,19981999, and before January 44.30 1,20002001. The rate applicable to any rate bracket must not 44.31 be changed. The dollar amounts setting forth the tax shall be 44.32 adjusted to reflect the changes in the rate brackets. The rate 44.33 brackets as adjusted must be rounded to the nearest $10 amount. 44.34 If the rate bracket ends in $5, it must be rounded up to the 44.35 nearest $10 amount. 44.36 (b) The commissioner shall adjust the rate brackets and by 45.1 the percentage determined pursuant to the provisions of section 45.2 1(f) of the Internal Revenue Code, except that in section 45.3 1(f)(3)(B) the word "19981999" shall be substituted for the 45.4 word "1992." For20002001, the commissioner shall then 45.5 determine the percent change from the 12 months ending on August 45.6 31,19981999, to the 12 months ending on August 31,19992000, 45.7 and in each subsequent year, from the 12 months ending on August 45.8 31,19981999, to the 12 months ending on August 31 of the year 45.9 preceding the taxable year. The determination of the 45.10 commissioner pursuant to this subdivision shall not be 45.11 considered a "rule" and shall not be subject to the 45.12 Administrative Procedure Act contained in chapter 14. 45.13 No later than December 15 of each year, the commissioner 45.14 shall announce the specific percentage that will be used to 45.15 adjust the tax rate brackets. 45.16 EFFECTIVE DATE: This section is effective for taxable 45.17 years beginning after December 31, 1999. 45.18 Sec. 14. Minnesota Statutes 1998, section 290.06, 45.19 subdivision 22, is amended to read: 45.20 Subd. 22. [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 45.21 taxpayer who is liable for taxes on or measured by net income to 45.22 another state or province or territory of Canada, as provided in 45.23 paragraphs (b) through (f), upon income allocated or apportioned 45.24 to Minnesota, is entitled to a credit for the tax paid to 45.25 another state or province or territory of Canada if the tax is 45.26 actually paid in the taxable year or a subsequent taxable year. 45.27 A taxpayer who is a resident of this state pursuant to section 45.28 290.01, subdivision 7, clause (2), and who is subject to income 45.29 tax as a resident in the state of the individual's domicile is 45.30 not allowed this credit unless the state of domicile does not 45.31 allow a similar credit. 45.32 (b) For an individual, estate, or trust, the credit is 45.33 determined by multiplying the tax payable under this chapter by 45.34 the ratio derived by dividing the income subject to tax in the 45.35 other state or province or territory of Canada that is also 45.36 subject to tax in Minnesota while a resident of Minnesota by the 46.1 taxpayer's federal adjusted gross income, as defined in section 46.2 62 of the Internal Revenue Code, modified by the addition 46.3 required by section 290.01, subdivision 19a, clause (1), and the 46.4 subtraction allowed by section 290.01, subdivision 19b, clause 46.5 (1), to the extent the income is allocated or assigned to 46.6 Minnesota under sections 290.081 and 290.17. 46.7 (c) If the taxpayer is an athletic team that apportions all 46.8 of its income under section 290.17, subdivision 5,paragraph46.9(c),the credit is determined by multiplying the tax payable 46.10 under this chapter by the ratio derived from dividing the total 46.11 net income subject to tax in the other state or province or 46.12 territory of Canada by the taxpayer's Minnesota taxable income. 46.13 (d) The credit determined under paragraph (b) or (c) shall 46.14 not exceed the amount of tax so paid to the other state or 46.15 province or territory of Canada on the gross income earned 46.16 within the other state or province or territory of Canada 46.17 subject to tax under this chapter, nor shall the allowance of 46.18 the credit reduce the taxes paid under this chapter to an amount 46.19 less than what would be assessed if such income amount was 46.20 excluded from taxable net income. 46.21 (e) In the case of the tax assessed on a lump sum 46.22 distribution under section 290.032, the credit allowed under 46.23 paragraph (a) is the tax assessed by the other state or province 46.24 or territory of Canada on the lump sum distribution that is also 46.25 subject to tax under section 290.032, and shall not exceed the 46.26 tax assessed under section 290.032. To the extent the total 46.27 lump sum distribution defined in section 290.032, subdivision 1, 46.28 includes lump sum distributions received in prior years or is 46.29 all or in part an annuity contract, the reduction to the tax on 46.30 the lump sum distribution allowed under section 290.032, 46.31 subdivision 2, includes tax paid to another state that is 46.32 properly apportioned to that distribution. 46.33 (f) If a Minnesota resident reported an item of income to 46.34 Minnesota and is assessed tax in such other state or province or 46.35 territory of Canada on that same income after the Minnesota 46.36 statute of limitations has expired, the taxpayer shall receive a 47.1 credit for that year under paragraph (a), notwithstanding any 47.2 statute of limitations to the contrary. The claim for the 47.3 credit must be submitted within one year from the date the taxes 47.4 were paid to the other state or province or territory of 47.5 Canada. The taxpayer must submit sufficient proof to show 47.6 entitlement to a credit. 47.7 (g) For the purposes of this subdivision, a resident 47.8 shareholder of a corporation treated as an "S" corporation under 47.9 section 290.9725, must be considered to have paid a tax imposed 47.10 on the shareholder in an amount equal to the shareholder's pro 47.11 rata share of any net income tax paid by the S corporation to 47.12 another state. For the purposes of the preceding sentence, the 47.13 term "net income tax" means any tax imposed on or measured by a 47.14 corporation's net income. 47.15 (h) For the purposes of this subdivision, a resident 47.16 partner of an entity taxed as a partnership under the Internal 47.17 Revenue Code must be considered to have paid a tax imposed on 47.18 the partner in an amount equal to the partner's pro rata share 47.19 of any net income tax paid by the partnership to another state. 47.20 For purposes of the preceding sentence, the term "net income" 47.21 tax means any tax imposed on or measured by a partnership's net 47.22 income. 47.23 (i) For the purposes of this subdivision, "another state" 47.24 includes the District of Columbia, but does not include Puerto 47.25 Rico or the several territories organized by Congress. 47.26 (j) The limitations on the credit in paragraphs (b), (c), 47.27 and (d), are imposed on a state by state basis. 47.28 EFFECTIVE DATE: This section is effective the day 47.29 following final enactment. 47.30 Sec. 15. Minnesota Statutes 1998, section 290.06, is 47.31 amended by adding a subdivision to read: 47.32 Subd. 22a. [NONRESIDENT'S CREDIT FOR TAXES PAID TO STATE 47.33 OF DOMICILE.] (a) Notwithstanding subdivision 22, a nonresident 47.34 who is subject to tax in this state on the gain on the sale of a 47.35 partnership interest, which is allocable to this state under 47.36 section 290.17, subdivision 2, paragraph (c), is allowed a 48.1 credit for the tax paid to the state of the individual's 48.2 domicile upon the gain in the taxable year or a subsequent 48.3 taxable year. This credit is only allowed if the state of 48.4 domicile does not allow a credit for the tax paid to Minnesota 48.5 on the gain. 48.6 (b) For purposes of this subdivision, the credit equals the 48.7 tax paid to the state of domicile multiplied by the ratio 48.8 derived by dividing the amount of gain on the sale of the 48.9 partnership interest subject to tax in the other state that is 48.10 also subject to tax in Minnesota by the taxpayer's federal 48.11 adjusted gross income, as defined in section 62 of the Internal 48.12 Revenue Code. The credit allowed may not reduce the taxes paid 48.13 under this chapter to an amount less than the tax that would 48.14 apply if the gain were excluded from taxable net income. 48.15 (c) If a nonresident taxpayer reported the gain to 48.16 Minnesota and is assessed tax in the state of domicile on that 48.17 same income after the Minnesota statute of limitations has 48.18 expired, the taxpayer is allowed a credit for that year, 48.19 notwithstanding any statute of limitations to the contrary. The 48.20 claim for the credit must be submitted within one year from the 48.21 date the taxes were paid to the state of domicile and the 48.22 taxpayer must submit sufficient proof to show entitlement to a 48.23 credit. 48.24 (d) For the purposes of this subdivision, "another state" 48.25 includes the District of Columbia, but does not include Puerto 48.26 Rico or the several territories organized by Congress. 48.27 EFFECTIVE DATE: This section is effective for taxable 48.28 years beginning after December 31, 1999. 48.29 Sec. 16. Minnesota Statutes 1998, section 290.06, is 48.30 amended by adding a subdivision to read: 48.31 Subd. 28. [CREDIT FOR TRANSIT PASSES.] A taxpayer may take 48.32 a credit against the tax due under this chapter equal to 30 48.33 percent of the expense incurred by the taxpayer to provide 48.34 transit passes, for use in Minnesota, to employees of the 48.35 taxpayer. As used in this subdivision, "transit pass" has the 48.36 meaning given in section 132(f)(5)(A) of the Internal Revenue 49.1 Code. If the taxpayer purchases the transit passes from the 49.2 transit system operator, and resells them to the employees, the 49.3 credit is based on the amount of the difference between the 49.4 price paid for the passes by the employer and the amount charged 49.5 to employees. 49.6 EFFECTIVE DATE: This section is effective for taxable 49.7 years beginning after December 31, 1999. 49.8 Sec. 17. Minnesota Statutes 1999 Supplement, section 49.9 290.0671, subdivision 1, is amended to read: 49.10 Subdivision 1. [CREDIT ALLOWED.] (a) An individual is 49.11 allowed a credit against the tax imposed by this chapter equal 49.12 to a percentage of earned income. To receive a credit, a 49.13 taxpayer must be eligible for a credit under section 32 of the 49.14 Internal Revenue Code. 49.15 (b) For individuals with no qualifying children, the credit 49.16 equals1.14751.9125 percent of the first $4,460 of earned 49.17 income. The credit is reduced by1.14751.9125 percent of 49.18 earned income or modified adjusted gross income, whichever is 49.19 greater, in excess of $5,570, but in no case is the credit less 49.20 than zero. 49.21 (c) For individuals with one qualifying child, the credit 49.22 equals7.458.5 percent of the first $6,680 of earned income and 49.23 8.5 percent of earned income over $11,650 but less than $12,990. 49.24 The credit is reduced by5.135.73 percent of earned income or 49.25 modified adjusted gross income, whichever is greater, in excess 49.26 of $14,560, but in no case is the credit less than zero. 49.27 (d) For individuals with two or more qualifying children, 49.28 the credit equals8.8ten percent of the first $9,390 of earned 49.29 income and 20 percent of earned income over $14,350 but less 49.30 than $16,230. The credit is reduced by9.3810.3 percent of 49.31 earned income or modified adjusted gross income, whichever is 49.32 greater, in excess of $17,280, but in no case is the credit less 49.33 than zero. 49.34 (e) For a nonresident or part-year resident, the credit 49.35 must be allocated based on the percentage calculated under 49.36 section 290.06, subdivision 2c, paragraph (e). 50.1 (f) For a person who was a resident for the entire tax year 50.2 and has earned income not subject to tax under this chapter, the 50.3 credit must be allocated based on the ratio of federal adjusted 50.4 gross income reduced by the earned income not subject to tax 50.5 under this chapter over federal adjusted gross income. 50.6 (g) The commissioner shall construct tables showing the 50.7 amount of the credit at various income levels and make them 50.8 available to taxpayers. The tables shall follow the schedule 50.9 contained in this subdivision, except that the commissioner may 50.10 graduate the transition between income brackets. 50.11 EFFECTIVE DATE: This section is effective for taxable 50.12 years beginning after December 31, 1999, and is not contingent 50.13 on the enactment of sections 18 and 19. 50.14 Sec. 18. Minnesota Statutes 1998, section 290.0671, 50.15 subdivision 6, is amended to read: 50.16 Subd. 6. [APPROPRIATION.] An amount sufficient to pay the 50.17 refunds required by this section is appropriated to the 50.18 commissioner from the general fund. This amount includes any 50.19 amounts appropriated to the commissioner of human services from 50.20 the federal Temporary Assistance for Needy Families (TANF) block 50.21 grant funds for transfer to the commissioner of revenue. 50.22 Sec. 19. Minnesota Statutes 1998, section 290.0671, is 50.23 amended by adding a subdivision to read: 50.24 Subd. 6a. [TANF APPROPRIATION FOR WORKING FAMILY CREDIT 50.25 EXPANSION.] (a) On an annual basis the commissioner of revenue, 50.26 with the assistance of the commissioner of human services, shall 50.27 calculate the value of the refundable portion of the Minnesota 50.28 Working Family Credit provided under this section that qualifies 50.29 for payment with funds from the federal Temporary Assistance for 50.30 Needy Families (TANF) block grant. Of this total amount, the 50.31 commissioner of revenue shall estimate the portion entailed by 50.32 the expansion of the credit rates for individuals with 50.33 qualifying children over the rates provided in Laws 1999, 50.34 chapter 243, article 2, section 12. 50.35 (b) An amount sufficient to pay the refunds entailed by the 50.36 expansion of the credit rates for individuals with qualifying 51.1 children over the rates provided in Laws 1999, chapter 243, 51.2 article 2, section 12, as estimated in paragraph (a), is 51.3 appropriated to the commissioner of human services from the 51.4 federal Temporary Assistance for Needy Families (TANF) block 51.5 grant funds, for transfer to the commissioner of revenue for 51.6 deposit in the general fund. 51.7 Sec. 20. Minnesota Statutes 1998, section 290.0672, 51.8 subdivision 1, is amended to read: 51.9 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 51.10 section, the following terms have the meanings given. 51.11 (b) "Long-term care insurance" means a policy that: 51.12 (1) qualifies for a deduction under section 213 of the 51.13 Internal Revenue Code, disregarding the 7.5 percent income test; 51.14 or meets the requirements given in section 62A.46; or provides 51.15 similar coverage issued under the laws of another jurisdiction; 51.16 and 51.17 (2)does not havehas a lifetime long-term care benefit 51.18 limit of not less than $100,000; and 51.19 (3)includes inflation protection that meets or exceedshas 51.20 been offered in compliance with the inflation protection 51.21 requirements ofthe long-term care insurance model regulation51.22cited under section 7702B(g)(2)(A)(i)(x) of the Internal Revenue51.23Codesection 62S.23. 51.24 (c) "Qualified beneficiary" means the taxpayer or the 51.25 taxpayer's spouse. 51.26 (d) "Premiums deducted in determining federal taxable 51.27 income" means the lesser of (1) long-term care insurance 51.28 premiums that qualify as deductions under section 213 of the 51.29 Internal Revenue Code; and (2) the total amount deductible for 51.30 medical care under section 213 of the Internal Revenue Code. 51.31 EFFECTIVE DATE: This section is effective for taxable 51.32 years beginning after December 31, 1999. 51.33 Sec. 21. Minnesota Statutes 1998, section 290.0672, 51.34 subdivision 2, is amended to read: 51.35 Subd. 2. [CREDIT.] A taxpayer is allowed a credit against 51.36 the tax imposed by this chapter for long-term care insurance 52.1 policy premiums paid during the tax year. The credit for each 52.2 policy equalsthe lesser of (1)25 percent of premiums paid to 52.3 the extent not deducted in determining federal taxable income;52.4or (2) $100. A taxpayer may claim a credit for only one policy 52.5 for each qualified beneficiary.Only one credit may be claimed52.6by any taxpayer for each policy.A maximum of $100 applies to 52.7 each qualified beneficiary. The maximum total credit allowed 52.8 per year is $200 for married couples filing joint returns and 52.9 $100 for all other filers. For a nonresident or part-year 52.10 resident, the credit determined under this section must be 52.11 allocated based on the percentage calculated under section 52.12 290.06, subdivision 2c, paragraph (e). 52.13 EFFECTIVE DATE: This section is effective for taxable 52.14 years beginning after December 31, 1999. 52.15 Sec. 22. Minnesota Statutes 1999 Supplement, section 52.16 290.0675, subdivision 1, is amended to read: 52.17 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 52.18 section the following terms have the meanings given. 52.19 (b) "Earned income" means the sum of the following: 52.20 (1) earned income as defined in section 32(c)(2) of the 52.21 Internal Revenue Code; 52.22 (2) to the extent included in the Minnesota taxable income, 52.23 income received from a retirement pension, profit-sharing, stock 52.24 bonus, or annuity plan; and 52.25 (3) to the extent included in Minnesota taxable income, 52.26 social security benefits as defined in section 86(d)(1) of the 52.27 Internal Revenue Code. 52.28 (c) "Taxable income" means net income as defined in section 52.29 290.01, subdivision 19. 52.30 (d) "Earned income of lesser-earning spouse" means the 52.31 earned income of the spouse with the lesser amount of earned 52.32 income as defined in paragraph (b) for the taxable year. 52.33 EFFECTIVE DATE: This section is effective for taxable 52.34 years beginning after December 31, 1999. 52.35 Sec. 23. Minnesota Statutes 1999 Supplement, section 52.36 290.0675, subdivision 2, is amended to read: 53.1 Subd. 2. [CREDIT ALLOWED.] A married couple filing a joint 53.2 return is allowed a credit against the tax imposed under section 53.3 290.06. 53.4 The minimum taxable income for the married couple to be 53.5 eligible for the credit is$25,000$25,680, and the minimum 53.6 earned income in order for the couple to be eligible for the 53.7 credit is$14,000$14,250 for each spouse. 53.8 EFFECTIVE DATE: This section is effective for taxable 53.9 years beginning after December 31, 1999. 53.10 Sec. 24. Minnesota Statutes 1999 Supplement, section 53.11 290.0675, subdivision 3, is amended to read: 53.12 Subd. 3. [CREDIT AMOUNT.] The credit amount is as shown in 53.13 the table in this subdivision, based on the couple's taxable 53.14 income for the tax year and on the earned income of the 53.15 lesser-earning spouse. 53.16Credit ForCredit For53.17Earned Income ofTaxable IncomeTaxable Income53.18Lesser Earning Spouse$25,000-$99,999$100,000-over53.19$14,000 - $14,999$9$053.20$15,000 - $15,999$27$053.21$16,000 - $16,999$44$053.22$17,000 - $17,999$62$053.23$18,000 - $18,999$79$053.24$19,000 - $19,999$97$053.25$20,000 - $20,999$114$053.26$21,000 - $21,999$132$053.27$22,000 - $22,999$149$053.28$23,000 - $23,999$162$053.29$24,000 - $24,999$162$053.30$25,000 - $25,999$162$053.31$26,000 - $26,999$162$053.32$27,000 - $27,999$162$053.33$28,000 - $28,999$162$953.34$29,000 - $29,999$162$1653.35$30,000 - $30,999$162$2453.36$31,000 - $31,999$162$3154.1$32,000 - $32,999$162$3954.2$33,000 - $33,999$162$4654.3$34,000 - $34,999$162$5454.4$35,000 - $35,999$162$6154.5$36,000 - $36,999$162$6954.6$37,000 - $37,999$162$7654.7$38,000 - $38,999$162$8454.8$39,000 - $39,999$162$9154.9$40,000 - $40,999$162$9954.10$41,000 - $41,999$162$10654.11$42,000 - $42,999$162$11454.12$43,000 - $43,999$162$12154.13$44,000 - $44,999$162$12954.14$45,000 - $45,999$162$13654.15$46,000 - $46,999$162$14454.16$47,000 - $47,999$162$15154.17$48,000 - $48,999$162$15954.18$49,000 - $49,999$162$16654.19$50,000 - $50,999$162$17454.20$51,000 - $51,999$162$18154.21$52,000 - $52,999$162$18954.22$53,000 - $53,999$162$19654.23$54,000 - $54,999$162$20454.24$55,000 - $55,999$162$21154.25$56,000 - $56,999$162$21954.26$57,000 - $57,999$162$22654.27$58,000 - $58,999$162$23454.28$59,000 - $59,999$162$24154.29$60,000 - $60,999$162$24954.30$61,000 - $61,999$162$25654.31$62,000 and over$162$26154.32 Credit For Credit For 54.33 Earned Income of Taxable Income Taxable Income 54.34 Lesser Earning Spouse $25,680-$102,029 $102,030-over 54.35 $14,250 - $15,249 $7 $0 54.36 $15,250 - $16,249 $24 $0 55.1 $16,250 - $17,249 $41 $0 55.2 $17,250 - $18,249 $58 $0 55.3 $18,250 - $19,249 $75 $0 55.4 $19,250 - $20,249 $92 $0 55.5 $20,250 - $21,249 $109 $0 55.6 $21,250 - $22,249 $126 $0 55.7 $22,250 - $23,249 $143 $0 55.8 $23,250 - $24,249 $160 $0 55.9 $24,250 - $25,249 $161 $0 55.10 $25,250 - $26,249 $161 $0 55.11 $26,250 - $27,249 $161 $0 55.12 $27,250 - $28,249 $161 $0 55.13 $28,250 - $29,249 $161 $0 55.14 $29,250 - $30,249 $161 $0 55.15 $30,250 - $31,249 $161 $0 55.16 $31,250 - $32,249 $161 $6 55.17 $32,250 - $33,249 $161 $14 55.18 $33,250 - $34,249 $161 $22 55.19 $34,250 - $35,249 $161 $30 55.20 $35,250 - $36,249 $161 $38 55.21 $36,250 - $37,249 $161 $46 55.22 $37,250 - $38,249 $161 $54 55.23 $38,250 - $39,249 $161 $62 55.24 $39,250 - $40,249 $161 $70 55.25 $40,250 - $41,249 $161 $78 55.26 $41,250 - $42,249 $161 $86 55.27 $42,250 - $43,249 $161 $94 55.28 $43,250 - $44,249 $161 $102 55.29 $44,250 - $45,249 $161 $110 55.30 $45,250 - $46,249 $161 $118 55.31 $46,250 - $47,249 $161 $126 55.32 $47,250 - $48,249 $161 $134 55.33 $48,250 - $49,249 $161 $142 55.34 $49,250 - $50,249 $161 $150 55.35 $50,250 - $51,249 $161 $158 55.36 $51,250 - $52,249 $161 $166 56.1 $52,250 - $53,249 $161 $174 56.2 $53,250 - $54,249 $161 $182 56.3 $54,250 - $55,249 $161 $190 56.4 $55,250 - $56,249 $161 $198 56.5 $56,250 - $57,249 $161 $206 56.6 $57,250 - $58,249 $161 $214 56.7 $58,250 - $59,249 $161 $222 56.8 $59,250 - $60,249 $161 $230 56.9 $60,250 - $61,249 $161 $238 56.10 $61,250 - $62,249 $161 $246 56.11 $62,250 - $63,249 $161 $254 56.12 $63,250 - $64,249 $161 $262 56.13 $64,250 and over $161 $268 56.14 For taxable years beginning after December 31, 2000, the 56.15 commissioner shall update the table as necessary to provide a 56.16 credit that reflects the relationship between the marginal tax 56.17 rates imposed under section 290.06, subdivision 2c. 56.18 EFFECTIVE DATE: This section is effective for taxable 56.19 years beginning after December 31, 1999. 56.20 Sec. 25. Minnesota Statutes 1999 Supplement, section 56.21 290.091, subdivision 1, is amended to read: 56.22 Subdivision 1. [IMPOSITION OF TAX.] In addition to all 56.23 other taxes imposed by this chapter a tax is imposed on 56.24 individuals, estates, and trusts equal to the excess (if any) of 56.25 (a) an amount equal to6.56.4 percent of alternative 56.26 minimum taxable income after subtracting the exemption amount, 56.27 over 56.28 (b) the regular tax for the taxable year. 56.29 EFFECTIVE DATE: This section is effective for taxable 56.30 years beginning after December 31, 1999. 56.31 Sec. 26. Minnesota Statutes 1999 Supplement, section 56.32 290.091, subdivision 2, is amended to read: 56.33 Subd. 2. [DEFINITIONS.] For purposes of the tax imposed by 56.34 this section, the following terms have the meanings given: 56.35 (a) "Alternative minimum taxable income" means the sum of 56.36 the following for the taxable year: 57.1 (1) the taxpayer's federal alternative minimum taxable 57.2 income as defined in section 55(b)(2) of the Internal Revenue 57.3 Code; 57.4 (2) the taxpayer's itemized deductions allowed in computing 57.5 federal alternative minimum taxable income, but excluding: 57.6 (i) the Minnesota charitable contribution deduction; 57.7 (ii) the medical expense deduction; 57.8 (iii) the casualty, theft, and disaster loss deduction; 57.9 (iv) the impairment-related work expenses of a disabled 57.10 person; and 57.11 (v) holocaust victims' settlement payments to the extent 57.12 allowed under section 290.01, subdivision 19b; 57.13 (3) for depletion allowances computed under section 613A(c) 57.14 of the Internal Revenue Code, with respect to each property (as 57.15 defined in section 614 of the Internal Revenue Code), to the 57.16 extent not included in federal alternative minimum taxable 57.17 income, the excess of the deduction for depletion allowable 57.18 under section 611 of the Internal Revenue Code for the taxable 57.19 year over the adjusted basis of the property at the end of the 57.20 taxable year (determined without regard to the depletion 57.21 deduction for the taxable year); 57.22 (4) to the extent not included in federal alternative 57.23 minimum taxable income, the amount of the tax preference for 57.24 intangible drilling cost under section 57(a)(2) of the Internal 57.25 Revenue Code determined without regard to subparagraph (E); and 57.26 (5) to the extent not included in federal alternative 57.27 minimum taxable income, the amount of interest income as 57.28 provided by section 290.01, subdivision 19a, clause (1); 57.29 less the sum of the amounts determined under the following: 57.30 (1) interest income as defined in section 290.01, 57.31 subdivision 19b, clause (1); 57.32 (2) an overpayment of state income tax as provided by 57.33 section 290.01, subdivision 19b, clause (2), to the extent 57.34 included in federal alternative minimum taxable income; and 57.35 (3) the amount of investment interest paid or accrued 57.36 within the taxable year on indebtedness to the extent that the 58.1 amount does not exceed net investment income, as defined in 58.2 section 163(d)(4) of the Internal Revenue Code. Interest does 58.3 not include amounts deducted in computing federal adjusted gross 58.4 income; and 58.5 (4) amounts subtracted from federal taxable income as 58.6 provided by section 290.01, subdivision 19b, clauses (4) and (6). 58.7 In the case of an estate or trust, alternative minimum 58.8 taxable income must be computed as provided in section 59(c) of 58.9 the Internal Revenue Code. 58.10 (b) "Investment interest" means investment interest as 58.11 defined in section 163(d)(3) of the Internal Revenue Code. 58.12 (c) "Tentative minimum tax" equals6.56.4 percent of 58.13 alternative minimum taxable income after subtracting the 58.14 exemption amount determined under subdivision 3. 58.15 (d) "Regular tax" means the tax that would be imposed under 58.16 this chapter (without regard to this section and section 58.17 290.032), reduced by the sum of the nonrefundable credits 58.18 allowed under this chapter. 58.19 (e) "Net minimum tax" means the minimum tax imposed by this 58.20 section. 58.21 (f) "Minnesota charitable contribution deduction" means a 58.22 charitable contribution deduction under section 170 of the 58.23 Internal Revenue Code to or for the use of an entity described 58.24 in section 290.21, subdivision 3, clauses (a) to (e). When the 58.25 federal deduction for charitable contributions is limited under 58.26 section 170(b) of the Internal Revenue Code, the allowable 58.27 contributions in the year of contribution are deemed to be first 58.28 contributions to entities described in section 290.21, 58.29 subdivision 3, clauses (a) to (e). 58.30 EFFECTIVE DATE: This section is effective for taxable 58.31 years beginning after December 31, 1999. 58.32 Sec. 27. Minnesota Statutes 1999 Supplement, section 58.33 290.091, subdivision 6, is amended to read: 58.34 Subd. 6. [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) A credit 58.35 is allowed against the tax imposed by this chapter on 58.36 individuals, trusts, and estates equal to the minimum tax credit 59.1 for the taxable year. The minimum tax credit equals the 59.2 adjusted net minimum tax for taxable years beginning after 59.3 December 31, 1988, reduced by the minimum tax credits allowed in 59.4 a prior taxable year. The credit may not exceed the excess (if 59.5 any) for the taxable year of 59.6 (1) the regular tax, over 59.7 (2) the greater of (i) the tentative alternative minimum 59.8 tax, or (ii) zero. 59.9 (b) The adjusted net minimum tax for a taxable year equals 59.10 the lesser of the net minimum tax or the excess (if any) of 59.11 (1) the tentative minimum tax, over 59.12 (2)6.56.4 percent of the sum of 59.13 (i) adjusted gross income as defined in section 62 of the 59.14 Internal Revenue Code, 59.15 (ii) interest income as defined in section 290.01, 59.16 subdivision 19a, clause (1), 59.17 (iii) interest on specified private activity bonds, as 59.18 defined in section 57(a)(5) of the Internal Revenue Code, to the 59.19 extent not included under clause (ii), 59.20 (iv) depletion as defined in section 57(a)(1), determined 59.21 without regard to the last sentence of paragraph (1), of the 59.22 Internal Revenue Code, less 59.23 (v) the deductions allowed in computing alternative minimum 59.24 taxable income provided in subdivision 2, paragraph (a), clause 59.25 (2) of the first series of clauses and clauses (1), (2), and (3) 59.26 of the second series of clauses, and 59.27 (vi) the exemption amount determined under subdivision 3. 59.28 In the case of an individual who is not a Minnesota 59.29 resident for the entire year, adjusted net minimum tax must be 59.30 multiplied by the fraction defined in section 290.06, 59.31 subdivision 2c, paragraph (e). In the case of a trust or 59.32 estate, adjusted net minimum tax must be multiplied by the 59.33 fraction defined under subdivision 4, paragraph (b). 59.34 EFFECTIVE DATE: This section is effective for taxable 59.35 years beginning after December 31, 1999. 59.36 Sec. 28. Minnesota Statutes 1998, section 290.17, 60.1 subdivision 2, is amended to read: 60.2 Subd. 2. [INCOME NOT DERIVED FROM CONDUCT OF A TRADE OR 60.3 BUSINESS.] The income of a taxpayer subject to the allocation 60.4 rules that is not derived from the conduct of a trade or 60.5 business must be assigned in accordance with paragraphs (a) to 60.6 (f): 60.7 (a)(1) Subject to paragraphs (a)(2)and, (a)(3), and 60.8 (a)(4), income fromlabor or personal or professional services60.9 wages as defined in section 3401(a) and (f) of the Internal 60.10 Revenue Code is assigned to this state if, and to the extent 60.11 that, thelabor or services arework of the employee is 60.12 performed within it; all other income from such sources is 60.13 treated as income from sources without this state. 60.14 Severance pay shall be considered income from labor or 60.15 personal or professional services. 60.16 (2) In the case of an individual who is a nonresident of 60.17 Minnesota and who is an athlete or entertainer, income from 60.18 compensation for labor or personal services performed within 60.19 this state shall be determined in the following manner: 60.20 (i) The amount of income to be assigned to Minnesota for an 60.21 individual who is a nonresident salaried athletic team employee 60.22 shall be determined by using a fraction in which the denominator 60.23 contains the total number of days in which the individual is 60.24 under a duty to perform for the employer, and the numerator is 60.25 the total number of those days spent in Minnesota. For purposes 60.26 of this paragraph, off-season training activities, unless 60.27 conducted at the team's facilities as part of a team imposed 60.28 program, are not included in the total number of duty days. 60.29 Bonuses earned as a result of play during the regular season or 60.30 for participation in championship, play-off, or all-star games 60.31 must be allocated under the formula. Signing bonuses are not 60.32 subject to allocation under the formula if they are not 60.33 conditional on playing any games for the team, are payable 60.34 separately from any other compensation, and are nonrefundable; 60.35 and 60.36 (ii) The amount of income to be assigned to Minnesota for 61.1 an individual who is a nonresident, and who is an athlete or 61.2 entertainer not listed in clause (i), for that person's athletic 61.3 or entertainment performance in Minnesota shall be determined by 61.4 assigning to this state all income from performances or athletic 61.5 contests in this state. 61.6 (3) For purposes of this section, amounts received by a 61.7 nonresident as "retirement income" as defined in section (b)(1) 61.8 of the State Income Taxation of Pension Income Act, Public Law 61.9 Number 104-95, are not considered income derived from carrying 61.10 on a trade or business or fromperforming personal or61.11professional serviceswages or other compensation for work an 61.12 employee performed in Minnesota, and are not taxable under this 61.13 chapter. 61.14 (4) Wages, otherwise assigned to this state under clause 61.15 (1) and not qualifying under clause (3), are not taxable under 61.16 this chapter if the following conditions are met: 61.17 (i) The recipient was not a resident of this state for any 61.18 part of the taxable year in which the wages were received; and 61.19 (ii) The wages are for work performed while the recipient 61.20 was a resident of this state. 61.21 (b) Income or gains from tangible property located in this 61.22 state that is not employed in the business of the recipient of 61.23 the income or gains must be assigned to this state. 61.24 (c) Income or gains from intangible personal property not 61.25 employed in the business of the recipient of the income or gains 61.26 must be assigned to this state if the recipient of the income or 61.27 gains is a resident of this state or is a resident trust or 61.28 estate. 61.29 Gain on the sale of a partnership interest is allocable to 61.30 this state in the ratio of the original cost of partnership 61.31 tangible property in this state to the original cost of 61.32 partnership tangible property everywhere, determined at the time 61.33 of the sale. If more than 50 percent of the value of the 61.34 partnership's assets consists of intangibles, gain or loss from 61.35 the sale of the partnership interest is allocated to this state 61.36 in accordance with the sales factor of the partnership for its 62.1 first full tax period immediately preceding the tax period of 62.2 the partnership during which the partnership interest was sold. 62.3 Gain on the sale of goodwill or income from a covenant not 62.4 to compete that is connected with a business operating all or 62.5 partially in Minnesota is allocated to this state to the extent 62.6 that the income from the business in the year preceding the year 62.7 of sale was assignable to Minnesota under subdivision 3. 62.8 When an employer pays an employee for a covenant not to 62.9 compete, the income allocated to this state is in the ratio of 62.10 the employee's service in Minnesota in the calendar year 62.11 preceding leaving the employment of the employer over the total 62.12 services performed by the employee for the employer in that year. 62.13 (d) Income from winnings on Minnesota pari-mutuel betting 62.14 tickets, the Minnesota state lottery, and lawful gambling as 62.15 defined in section 349.12, subdivision 24, conducted within the 62.16 boundaries of the state of Minnesota shall be assigned to this 62.17 state. 62.18 (e) All items of gross income not covered in paragraphs (a) 62.19 to (d) and not part of the taxpayer's income from a trade or 62.20 business shall be assigned to the taxpayer's domicile. 62.21 (f) For the purposes of this section, working as an 62.22 employee shall not be considered to be conducting a trade or 62.23 business. 62.24 EFFECTIVE DATE: This section is effective for wages 62.25 received after the day following final enactment, except that to 62.26 the extent this section impacts an employer's requirement to 62.27 withhold Minnesota tax under section 290.92, subdivision 41, the 62.28 requirement to withhold is effective for wages paid after 62.29 December 31, 2000. 62.30 Sec. 29. Minnesota Statutes 1998, section 290.92, 62.31 subdivision 3, is amended to read: 62.32 Subd. 3. [WITHHOLDING, IRREGULAR PERIOD.] If payment of 62.33 wages is made to an employee by an employer 62.34 (a) With respect to a payroll period or other period, any 62.35 part of which is included in a payroll period or other period 62.36 with respect to which wages are also paid to such employees by 63.1 such employer, or 63.2 (b) Without regard to any payroll period or other period, 63.3 but on or prior to the expiration of a payroll period or other 63.4 period with respect to which wages are also paid to such 63.5 employee by such employer, or 63.6 (c) With respect to a period beginning in one and ending in 63.7 another calendar year, or 63.8 (d) Through an agent, fiduciary, or other person who also 63.9 has the control, receipt, custody, or disposal of or pays, the 63.10 wages payable by another employer to such employee. 63.11 The manner of withholding and the amount to be deducted and 63.12 withheld under subdivision 2a shall be determined in accordance 63.13 with rules prescribed by the commissioner under which the 63.14 withholding exemption allowed to the employee in any calendar 63.15 year shall approximate the withholding exemption allowable with 63.16 respect to an annual payroll period, except that if supplemental 63.17 wages are not paid concurrent with a payroll period the employer 63.18 shall withhold tax on the supplemental payment at the rate of 63.19 6.25 percent as if no exemption had been claimed. 63.20 EFFECTIVE DATE: This section is effective for wages paid 63.21 after December 31, 2000. 63.22 Sec. 30. Minnesota Statutes 1998, section 290.92, 63.23 subdivision 19, is amended to read: 63.24 Subd. 19. [EMPLOYEES INCURRING NO INCOME TAX LIABILITY.] 63.25 (a) Notwithstanding any other provision of this section, except 63.26 the provisions of subdivision 5a, an employershallis notbe63.27 required to deduct and withhold any tax under this chapterupon63.28a payment offrom wages paid to an employee ifthere is in63.29effect with respect to such payment: 63.30 (1) the employee furnished the employer with a withholding 63.31 exemption certificate, in such form and containing such other63.32information as the commissioner may prescribe, furnished to the63.33employer by the employee certifyingthat: 63.34 (i) certifies the employee(a)incurred no liability for 63.35 income tax imposed under this chapter for the employee's 63.36 preceding taxable year, and; 64.1(b)(ii) certifies the employee anticipates incurring no 64.2 liability for income tax imposed under this chapter for the 64.3 current taxable year; and 64.4 (iii) is in a form and contains any other information 64.5 prescribed by the commissioner; or 64.6 (2)(i) the employee is not a resident of Minnesota when the 64.7 wages were paid; and 64.8 (ii) the employer reasonably expects that the employer will 64.9 not pay the employee enough wages assignable to Minnesota under 64.10 section 290.17, subdivision 2, clause (a)(1), to meet the 64.11 nonresident requirement to file a Minnesota individual income 64.12 tax return for the taxable year under section 289A.08, 64.13 subdivision 1, paragraph (a). 64.14 (b) The commissioner shall by rule provide for the 64.15 coordination of the provisions of this subdivision with the 64.16 provisions of subdivision 7. 64.17 EFFECTIVE DATE: This section is effective the day 64.18 following final enactment. 64.19 Sec. 31. Minnesota Statutes 1998, section 290.92, 64.20 subdivision 28, is amended to read: 64.21 Subd. 28. [PAYMENTS TO HORSERACING LICENSE HOLDERS.] 64.22 Effective with payments made after April 1, 1988, any holder of 64.23 a license issued by the Minnesota racing commission who makes a 64.24 payment for personal or professional services to a holder of a 64.25 class C license issued by the commission, except an amount paid 64.26 as a purse, shall deduct from the payment and withholdseven64.27 6.25 percent of the amount as Minnesota withholding tax when the 64.28 amount paid to that individual by the same person during the 64.29 calendar year exceeds $600. For purposes of the provisions of 64.30 this section, a payment to any person which is subject to 64.31 withholding under this subdivision must be treated as if the 64.32 payment was a wage paid by an employer to an employee. Every 64.33 individual who is to receive a payment which is subject to 64.34 withholding under this subdivision shall furnish the license 64.35 holder with a statement, made under the penalties of perjury, 64.36 containing the name, address, and social security account number 65.1 of the person receiving the payment. No withholding is required 65.2 if the individual presents a signed certificate from the 65.3 individual's employer which states that the individual is an 65.4 employee of that employer. A nonresident individual who holds a 65.5 class C license must be treated as an athlete for purposes of 65.6 applying the provisions of sections 290.17, subdivision 65.7 2(1)(b)(ii) and 290.92, subdivision 4a. 65.8 EFFECTIVE DATE: This section applies to payments made 65.9 after the date of final enactment. 65.10 Sec. 32. Minnesota Statutes 1998, section 290.92, 65.11 subdivision 29, is amended to read: 65.12 Subd. 29. [LOTTERY PRIZES.]Eight7.25 percent of the 65.13 payment of Minnesota state lottery winnings which are subject to 65.14 withholding must be withheld as Minnesota withholding tax. For 65.15 purposes of this subdivision, the term "winnings which are 65.16 subject to withholding" has the meaning given in section 65.17 3402(q)(3) of the Internal Revenue Code. For purposes of the 65.18 provisions of this section, a payment to any person of winnings 65.19 which are subject to withholding must be treated as if the 65.20 payment was a wage paid by an employer to an employee. Every 65.21 individual who is to receive a payment of winnings which are 65.22 subject to withholding shall furnish the state lottery with a 65.23 statement, made under the penalties of perjury, containing the 65.24 name, address, and social security account number of the person 65.25 receiving the payment. The Minnesota state lottery is liable 65.26 for the payment of the tax required to be withheld under this 65.27 subdivision but is not liable to any person for the amount of 65.28 the payment. 65.29 EFFECTIVE DATE: This section applies to winnings paid 65.30 after the date of final enactment. 65.31 Sec. 33. Minnesota Statutes 1998, section 469.1734, 65.32 subdivision 4, is amended to read: 65.33 Subd. 4. [INCOME TAX.] (a) Upon application by the 65.34 qualifying business to the city, and approval of the city, a 65.35 qualifying business shall receive a credit against taxes imposed 65.36 under chapter 290, other than the tax imposed under section 66.1 290.92, based on the taxable net income of the qualified 66.2 business attributable to the border city, but outside the border 66.3 city development zone, multiplied by 9.8 percent in the case of 66.4 a taxpayer under section 290.02, and8.57.85 percent in the 66.5 case of a taxpayer taxable under section 290.06, subdivision 66.6 2c. The attributable net income of a qualified business in the 66.7 border city is determined by multiplying the taxable net income 66.8 of the business entity, determined as if the business were a C 66.9 corporation, by a fraction: 66.10 (1) the numerator of which is: 66.11 (i) the ratio of the taxpayer's property factor under 66.12 section 290.191 located in the border city, but outside of the 66.13 border city development zone, for the taxable year over the 66.14 property factor numerator determined under section 290.191, plus 66.15 (ii) the ratio of the taxpayer's payroll factor under 66.16 section 290.191 located in the border city, but outside of the 66.17 border city development zone, for the taxable year over the 66.18 payroll factor numerator determined under section 290.191; and 66.19 (2) the denominator of which is two. 66.20 (b) The credit under this subdivision applies after any 66.21 credit allowed under subdivision 5. 66.22 (c) After any notice period required by subdivision 7, the 66.23 city council must determine whether granting the credit is in 66.24 the best interest of the city, and if it so determines, must 66.25 approve the granting of the credit and determine its amount. 66.26 (d) The credit under this subdivision may not exceed the 66.27 amount of the tax credit certificates received by the taxpayer 66.28 from the city, less any tax credit certificates used under 66.29 section 469.1732, subdivision 2, and subdivisions 5 and 6. 66.30 (e) No taxpayer may receive the credit under this 66.31 subdivision for more than five taxable years. 66.32 EFFECTIVE DATE: This section is effective for taxable 66.33 years beginning after December 31, 2000. 66.34 Sec. 34. [TAX INFORMATION SAMPLE DATA STUDY.] 66.35 (a) One of the goals of a reengineered income tax system is 66.36 to reduce the administrative burden for both taxpayers and tax 67.1 administrators. In order to reduce the cost of handling paper 67.2 returns and to explore electronic options for taxpayer filing of 67.3 tax data, the department of revenue will explore eliminating the 67.4 requirement of Minnesota Statutes, section 289A.08, subdivision 67.5 11, that the federal return be attached in filing a Minnesota 67.6 individual income tax return. This federal return information 67.7 is used for the purposes of ensuring the accurate calculation of 67.8 individuals' Minnesota income tax liabilities and for the 67.9 purposes of preparing the microdata samples under Minnesota 67.10 Statutes, section 270.0681. 67.11 (b) To ensure the continued reliability of income tax data 67.12 samples and to evaluate ways in which the quality of samples may 67.13 be improved, the commissioner shall study and evaluate 67.14 alternatives to requiring taxpayers to attach a copy of their 67.15 federal return when filing Minnesota state income tax. The 67.16 study must be prepared in consultation with the coordinating 67.17 committee established in Minnesota Statutes, section 270.0681, 67.18 subdivision 2. The study must: 67.19 (1) evaluate the quality of federal electronic data 67.20 compared to sample data prepared from returns filed with the 67.21 department; 67.22 (2) evaluate alternative sampling methodology, including 67.23 preselection of sampled returns, panel data, and other sampling 67.24 methods; and 67.25 (3) evaluate and test whether alternative methods can 67.26 (i) provide a data sample that is as accurate and reliable 67.27 as one prepared from federal returns that are filed with or 67.28 attached to Minnesota individual income tax returns; and 67.29 (ii) result in a data sample that will continue to be 67.30 available to staff of both the department of finance and the 67.31 legislature on the same basis as one prepared from returns 67.32 required to be attached to or filed with the Minnesota tax 67.33 returns. 67.34 (c) The commissioner of revenue shall report the findings 67.35 of the study to the house tax committee chair, the senate tax 67.36 committee chair, and the commissioner of finance. 68.1 (d) The commissioner of revenue shall, with the approval of 68.2 the commissioner of finance, prepare a bill for introduction in 68.3 the 2001 legislative session that eliminates, for some or all 68.4 taxpayers, the requirement that a copy of the federal return be 68.5 filed with the individual income tax return, if the commissioner 68.6 determines as a result of the study that: 68.7 (1) an alternative method would provide a data sample that 68.8 is as accurate and reliable as one prepared from federal returns 68.9 required to be filed with the Minnesota return; and 68.10 (2) the sample will continue to be available to the staff 68.11 of both the department of finance and the legislature on the 68.12 same basis as one prepared from returns required to be filed 68.13 with Minnesota tax returns. 68.14 EFFECTIVE DATE: This section is effective the day 68.15 following final enactment. 68.16 Sec. 35. [COMMISSIONER OF REVENUE; TEMPORARY POWERS.] 68.17 Subdivision 1. [APPLICABILITY.] This section gives the 68.18 commissioner of revenue certain temporary powers. These powers 68.19 apply only to taxes imposed under Minnesota Statutes, sections 68.20 290.032, 290.06, and 290.091 administered by the commissioner 68.21 under Minnesota Statutes, chapters 289A and 290. 68.22 Subd. 2. [PAYMENT OF TAXES.] The commissioner may 68.23 establish additional due dates, applicable to certain groups of 68.24 taxpayers, for the payment of taxes. Unless the commissioner 68.25 has the written consent of the taxpayer, the additional payment 68.26 dates must not require the taxpayer to pay the tax earlier than 68.27 the payment dates provided by statute or rule. The commissioner 68.28 may accept various forms of payment, including, but not limited 68.29 to, financial transaction cards and electronic funds transfer. 68.30 Subd. 3. [FILING OF RETURN.] The commissioner may 68.31 establish additional due dates, applicable to certain groups of 68.32 taxpayers, for the filing of tax returns. Unless the 68.33 commissioner has the written consent of the taxpayer, the return 68.34 due date must not be earlier than the due date provided by 68.35 statute or rule. In conducting pilot studies, the commissioner 68.36 may use tax return forms with varying formats, accept electronic 69.1 filed returns, and waive the taxpayer signature requirements. 69.2 Subd. 4. [AGREEMENTS.] The commissioner may enter written 69.3 agreements with taxpayers that provide for the payment of taxes 69.4 or the filing of returns at dates earlier than provided by 69.5 statute or rule. The commissioner and the taxpayer may also 69.6 agree in writing to other changes from the statutory or rule 69.7 requirements related to the administration of these taxes. If 69.8 the taxpayer agrees to pay taxes at a date earlier than that 69.9 provided by statute, the commissioner may negotiate payments to 69.10 the taxpayer to compensate in part or in full for the loss 69.11 incurred as a result of the accelerated payment. 69.12 Subd. 5. [PROCEDURE; APPROVAL.] Pilot studies proposed 69.13 under these authorities must be presented to the chairs of the 69.14 house of representatives tax committee and the senate committee 69.15 on taxes and to the chairs of the committees on state government 69.16 finance of the house of representatives and the senate. No 69.17 study may be undertaken without the approval of both tax 69.18 committee chairs. If either chair fails to respond within 15 69.19 days after the proposal is presented, that chair is considered 69.20 to have approved the study. If the study is approved, the 69.21 commissioner shall initially seek participation on a voluntary 69.22 basis from within the targeted taxpayer group. 69.23 Subd. 6. [EXPIRATION DATE.] This section expires June 30, 69.24 2002, and all pilot projects under this section must be 69.25 completed by June 30, 2002. 69.26 EFFECTIVE DATE: This section is effective the day 69.27 following final enactment. 69.28 Sec. 36. [STUDY OF TAXPAYER ASSISTANCE SERVICES.] 69.29 The commissioner of revenue shall study the availability of 69.30 taxpayer assistance services throughout the state and provide a 69.31 written report to the legislature, in compliance with Minnesota 69.32 Statutes, sections 3.195 and 3.197, by January 15, 2001. 69.33 "Taxpayer assistance services" means accounting and tax 69.34 preparation services provided by volunteers to low-income and 69.35 disadvantaged Minnesota residents to help them file federal and 69.36 state income tax returns and Minnesota property tax refund 70.1 claims and to provide personal representation before the 70.2 department of revenue and the Internal Revenue Service. The 70.3 study must evaluate: 70.4 (1) ways of establishing a measure to evaluate the 70.5 effectiveness of volunteers in achieving the department's 70.6 mission of achieving compliance with the tax laws; 70.7 (2) the geographic distribution and number of volunteer tax 70.8 preparation sites throughout the state, in comparison to the 70.9 distribution of low-income, elderly, and nonnative English 70.10 speakers; 70.11 (3) the income, language skills, and age-related screening 70.12 criteria used at volunteer tax preparations sites in determining 70.13 Minnesota residents' eligibility for taxpayer assistance 70.14 services; 70.15 (4) the level of training, support, and coordination that 70.16 the department provides to volunteers and the optimal level of 70.17 training for volunteers to have an adequate understanding of 70.18 Minnesota's tax forms; 70.19 (5) the effectiveness of grants awarded under Laws 1999, 70.20 chapter 243, article 2, section 31; and 70.21 (6) the availability of volunteers to assist taxpayers in 70.22 preparing Minnesota property tax refund claims after April 15. 70.23 The commissioner must invite testimony from organizations 70.24 and government entities concerned with taxpayer assistance, both 70.25 paid and volunteer. Organizations receiving grants under Laws 70.26 1999, chapter 243, article 2, section 31, must provide 70.27 information necessary to the completion of the study to the 70.28 commissioner on request. 70.29 The study must consider the role of current economic 70.30 conditions, including the state unemployment rate, in training 70.31 and retaining qualified volunteers, the adequacy of current 70.32 taxpayer assistance services, the role of the department of 70.33 revenue in assisting low-income, elderly, and nonnative English 70.34 speakers, and must recommend ways for improving the availability 70.35 and the quality of taxpayer assistance services. 70.36 Sec. 37. [REPORT ON ELECTRONIC CHECKOFF.] 71.1 The commissioner of revenue must report by February 1, 71.2 2001, to the committees on taxes of the house of representatives 71.3 and the senate on implementing an electronic income tax checkoff 71.4 program. The program must be designed to allow an individual 71.5 who files an income tax return electronically to designate that 71.6 a portion of the individual's tax liability reported on the 71.7 return be deposited in one or more accounts established by law 71.8 and dedicated to particular programs or purposes. 71.9 EFFECTIVE DATE: This section is effective the day 71.10 following final enactment. 71.11 ARTICLE 5 71.12 PROPERTY TAXES 71.13 Section 1. Minnesota Statutes 1998, section 270.072, 71.14 subdivision 2, is amended to read: 71.15 Subd. 2. [ASSESSMENT OF FLIGHT PROPERTY.] The flight 71.16 property of all airline companies operating in Minnesota shall 71.17 be assessed and appraised annually by the commissioner with 71.18 reference to its value on January 2 of the assessment year in 71.19 the manner prescribed by sections 270.071 to 270.079. Aircraft 71.20 with a gross weight of less than 30,000 pounds and used on 71.21 intermittent or irregularly timed flights shall be excluded from 71.22 the provisions of sections 270.071 to 270.079. 71.23 EFFECTIVE DATE: This section is effective for taxes 71.24 payable in 2001 and thereafter. 71.25 Sec. 2. Minnesota Statutes 1998, section 270.072, is 71.26 amended by adding a subdivision to read: 71.27 Subd. 6. [AIRFLIGHT PROPERTY TAX LIEN.] The tax imposed 71.28 under sections 270.071 to 270.079 is a lien on all real and 71.29 personal property within this state of the airline company in 71.30 whose name the property is assessed. For purposes of sections 71.31 270.65 and 270.69, the date of assessment for the tax imposed 71.32 under sections 270.071 to 270.079 is January 2 of each year for 71.33 the taxes payable in the following year. 71.34 EFFECTIVE DATE: This section is effective for taxes 71.35 payable in 2001 and thereafter. 71.36 Sec. 3. Minnesota Statutes 1999 Supplement, section 72.1 272.02, subdivision 39, is amended to read: 72.2 Subd. 39. [ECONOMIC DEVELOPMENT; PUBLIC PURPOSE.] The 72.3 holding of property by a political subdivision of the state for 72.4 later resale for economic development purposes shall be 72.5 considered a public purpose in accordance with subdivision 8 for 72.6 a period not to exceed eight years, except that for property 72.7 located in a city of 5,000 population or under that is located 72.8 outside of the metropolitan area as defined in section 473.121, 72.9 subdivision 2, the period must not exceed 15 years. 72.10 The holding of property by a political subdivision of the 72.11 state for later resale (1) which is purchased or held for 72.12 housing purposes, or (2) which meets the conditions described in 72.13 section 469.174, subdivision 10, shall be considered a public 72.14 purpose in accordance with subdivision 8. 72.15 The governing body of the political subdivision which 72.16 acquires property which is subject to this subdivision shall 72.17 after the purchase of the property certify to the city or county 72.18 assessor whether the property is held for economic development 72.19 purposes or housing purposes, or whether it meets the conditions 72.20 of section 469.174, subdivision 10. If the property is acquired 72.21 for economic development purposes and buildings or other 72.22 improvements are constructed after acquisition of the property, 72.23 and if more than one-half of the floor space of the buildings or 72.24 improvements which is available for lease to or use by a private 72.25 individual, corporation, or other entity is leased to or 72.26 otherwise used by a private individual, corporation, or other 72.27 entity the provisions of this subdivision shall not apply to the 72.28 property. This subdivision shall not create an exemption from 72.29 section 272.01, subdivision 2; 272.68; 273.19; or 469.040, 72.30 subdivision 3; or other provision of law providing for the 72.31 taxation of or for payments in lieu of taxes for publicly held 72.32 property which is leased, loaned, or otherwise made available 72.33 and used by a private person. 72.34 EFFECTIVE DATE: This section is effective for taxes levied 72.35 in 2000, payable in 2001, and thereafter. 72.36 Sec. 4. Minnesota Statutes 1999 Supplement, section 73.1 272.02, is amended by adding a subdivision to read: 73.2 Subd. 44. [ELECTRIC GENERATION FACILITY PERSONAL 73.3 PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 73.4 machinery and other personal property which is part of a 73.5 simple-cycle combustion-turbine electric generation facility 73.6 that exceeds 250 megawatts of installed capacity and that meets 73.7 the requirements of this subdivision is exempt. At the time of 73.8 construction, the facility must: 73.9 (1) utilize natural gas as a primary fuel; 73.10 (2) be located within 20 miles of parallel existing 16-inch 73.11 and 12-inch (outside diameter) natural gas pipelines and a 73.12 345-kilovolt high-voltage electric transmission line; and 73.13 (3) be designed to provide peaking, emergency backup, or 73.14 contingency services, and have received a certificate of need 73.15 under section 216B.243 demonstrating demand for its capacity. 73.16 Construction of the facility must be commenced after 73.17 January 1, 2000, and before January 1, 2004. Property eligible 73.18 for this exemption does not include electric transmission lines 73.19 and interconnections or gas pipelines and interconnections 73.20 appurtenant to the property or the facility. 73.21 EFFECTIVE DATE: This section is effective for assessment 73.22 year 2001 and thereafter. 73.23 Sec. 5. Minnesota Statutes 1998, section 272.115, 73.24 subdivision 1, is amended to read: 73.25 Subdivision 1. [REQUIREMENT.] Except as otherwise provided 73.26 in subdivision 5, whenever any real estate is sold for a 73.27 consideration in excess of $1,000, whether by warranty deed, 73.28 quitclaim deed, contract for deed or any other method of sale, 73.29 the grantor, grantee or the legal agent of either shall file a 73.30 certificate of value with the county auditor in the county in 73.31 which the property is located when the deed or other document is 73.32 presented for recording. Contract for deeds are subject to 73.33 recording under section 507.235, subdivision 1. Value shall, in 73.34 the case of any deed not a gift, be the amount of the full 73.35 actual consideration thereof, paid or to be paid, including the 73.36 amount of any lien or liens assumed. The items and value of 74.1 personal property transferred with the real property must be 74.2 listed and deducted from the sale price. The certificate of 74.3 value shall include the classification to which the property 74.4 belongs for the purpose of determining the fair market value of 74.5 the property. The certificate shall include financing terms and 74.6 conditions of the sale which are necessary to determine the 74.7 actual, present value of the sale price for purposes of the 74.8 sales ratio study. The commissioner of revenue shall promulgate 74.9 administrative rules specifying the financing terms and 74.10 conditions which must be included on the certificate. Pursuant 74.11 to the authority of the commissioner of revenue in section 74.12 270.066, the certificate of value must include the social 74.13 security number or the federal employer identification number of 74.14 the grantors and grantees. The identification numbers of the 74.15 grantors and grantees are private data on individuals or 74.16 nonpublic data as defined in section 13.02, subdivisions 9 and 74.17 12, but, notwithstanding that section, the private or nonpublic 74.18 data may be disclosed to the commissioner of revenue for 74.19 purposes of tax administration. The information required to be 74.20 shown on the certificate of value is limited to the information 74.21 required as of the date of the acknowledgment on the deed or 74.22 other document to be recorded. 74.23 EFFECTIVE DATE: This section is effective the day 74.24 following final enactment. 74.25 Sec. 6. Minnesota Statutes 1998, section 273.111, 74.26 subdivision 3, is amended to read: 74.27 Subd. 3. [REQUIREMENTS.] (a) Real estate consisting of ten 74.28 acres or more or a nursery or greenhouse, and qualifying for 74.29 classification as class 1b, 2a, or 2b under section 273.13, 74.30 subdivision 23, paragraph (d), shall be entitled to valuation 74.31 and tax deferment under this section only if it is primarily 74.32 devoted to agricultural use, and meets the qualifications in 74.33 subdivision 6, and either: 74.34 (1) is the homestead of the owner, or of a surviving 74.35 spouse, child, or sibling of the owner or is real estate which 74.36 is farmed with the real estate which contains the homestead 75.1 property; or 75.2 (2) has been in possession of the applicant, the 75.3 applicant's spouse, parent, or sibling, or any combination 75.4 thereof, for a period of at least seven years prior to 75.5 application for benefits under the provisions of this section, 75.6 or is real estate which is farmed with the real estate which 75.7 qualifies under this clause and is withintwofour townships or 75.8 cities or combination thereof from the qualifying real estate; 75.9 or 75.10 (3) is the homestead of a shareholder in a family farm 75.11 corporation as defined in section 500.24, notwithstanding the 75.12 fact that legal title to the real estate may be held in the name 75.13 of the family farm corporation; or 75.14 (4) is in the possession of a nursery or greenhouse or an 75.15 entity owned by a proprietor, partnership, or corporation which 75.16 also owns the nursery or greenhouse operations on the parcel or 75.17 parcels. 75.18 (b) Valuation of real estate under this section is limited 75.19 to parcels the ownership of which is in noncorporate entities 75.20 except for: 75.21 (1) family farm corporations organized pursuant to section 75.22 500.24; and 75.23 (2) corporations that derive 80 percent or more of their 75.24 gross receipts from the wholesale or retail sale of 75.25 horticultural or nursery stock. 75.26 Corporate entities who previously qualified for tax 75.27 deferment pursuant to this section and who continue to otherwise 75.28 qualify under subdivisions 3 and 6 for a period of at least 75.29 three years following the effective date of Laws 1983, chapter 75.30 222, section 8, will not be required to make payment of the 75.31 previously deferred taxes, notwithstanding the provisions of 75.32 subdivision 9. Special assessments are payable at the end of 75.33 the three-year period or at time of sale, whichever comes first. 75.34 (c) Land that previously qualified for tax deferment under 75.35 this section and no longer qualifies because it is not primarily 75.36 used for agricultural purposes but would otherwise qualify under 76.1 subdivisions 3 and 6 for a period of at least three years will 76.2 not be required to make payment of the previously deferred 76.3 taxes, notwithstanding the provisions of subdivision 9. Sale of 76.4 the land prior to the expiration of the three-year period 76.5 requires payment of deferred taxes as follows: sale in the year 76.6 the land no longer qualifies requires payment of the current 76.7 year's deferred taxes plus payment of deferred taxes for the two 76.8 prior years; sale during the second year the land no longer 76.9 qualifies requires payment of the current year's deferred taxes 76.10 plus payment of the deferred taxes for the prior year; and sale 76.11 during the third year the land no longer qualifies requires 76.12 payment of the current year's deferred taxes. Deferred taxes 76.13 shall be paid even if the land qualifies pursuant to subdivision 76.14 11a. When such property is sold or no longer qualifies under 76.15 this paragraph, or at the end of the three-year period, 76.16 whichever comes first, all deferred special assessments plus 76.17 interest are payable in equal installments spread over the time 76.18 remaining until the last maturity date of the bonds issued to 76.19 finance the improvement for which the assessments were levied. 76.20 If the bonds have matured, the deferred special assessments plus 76.21 interest are payable within 90 days. The provisions of section 76.22 429.061, subdivision 2, apply to the collection of these 76.23 installments. Penalties are not imposed on any such special 76.24 assessments if timely paid. 76.25 EFFECTIVE DATE: This section is effective for taxes 76.26 payable in 2000 and thereafter. 76.27 Sec. 7. Minnesota Statutes 1999 Supplement, section 76.28 273.124, subdivision 1, is amended to read: 76.29 Subdivision 1. [GENERAL RULE.] (a) Residential real estate 76.30 that is occupied and used for the purposes of a homestead by its 76.31 owner, who must be a Minnesota resident, is a residential 76.32 homestead. 76.33 Agricultural land, as defined in section 273.13, 76.34 subdivision 23, that is occupied and used as a homestead by its 76.35 owner, who must be a Minnesota resident, is an agricultural 76.36 homestead. 77.1 Dates for establishment of a homestead and homestead 77.2 treatment provided to particular types of property are as 77.3 provided in this section. 77.4 Propertyofheld by a trustee, beneficiary, or grantor of77.5 under a trust isnot disqualified from receivingeligible for 77.6 homesteadbenefitsclassification if thehomesteadrequirements 77.7 under this chapter are satisfied. 77.8 The assessor shall require proof, as provided in 77.9 subdivision 13, of the facts upon which classification as a 77.10 homestead may be determined. Notwithstanding any other law, the 77.11 assessor may at any time require a homestead application to be 77.12 filed in order to verify that any property classified as a 77.13 homestead continues to be eligible for homestead status. 77.14 Notwithstanding any other law to the contrary, the department of 77.15 revenue may, upon request from an assessor, verify whether an 77.16 individual who is requesting or receiving homestead 77.17 classification has filed a Minnesota income tax return as a 77.18 resident for the most recent taxable year for which the 77.19 information is available. 77.20 When there is a name change or a transfer of homestead 77.21 property, the assessor may reclassify the property in the next 77.22 assessment unless a homestead application is filed to verify 77.23 that the property continues to qualify for homestead 77.24 classification. 77.25 (b) For purposes of this section, homestead property shall 77.26 include property which is used for purposes of the homestead but 77.27 is separated from the homestead by a road, street, lot, 77.28 waterway, or other similar intervening property. The term "used 77.29 for purposes of the homestead" shall include but not be limited 77.30 to uses for gardens, garages, or other outbuildings commonly 77.31 associated with a homestead, but shall not include vacant land 77.32 held primarily for future development. In order to receive 77.33 homestead treatment for the noncontiguous property, the owner 77.34 must use the property for the purposes of the homestead, and 77.35 must apply to the assessor, both by the deadlines given in 77.36 subdivision 9. After initial qualification for the homestead 78.1 treatment, additional applications for subsequent years are not 78.2 required. 78.3 (c) Residential real estate that is occupied and used for 78.4 purposes of a homestead by a relative of the owner is a 78.5 homestead but only to the extent of the homestead treatment that 78.6 would be provided if the related owner occupied the property. 78.7 For purposes of this paragraph and paragraph (g), "relative" 78.8 means a parent, stepparent, child, stepchild, grandparent, 78.9 grandchild, brother, sister, uncle, aunt, nephew, or niece. 78.10 This relationship may be by blood or marriage. Property that 78.11 has been classified as seasonal recreational residential 78.12 property at any time during which it has been owned by the 78.13 current owner or spouse of the current owner will not be 78.14 reclassified as a homestead unless it is occupied as a homestead 78.15 by the owner; this prohibition also applies to property that, in 78.16 the absence of this paragraph, would have been classified as 78.17 seasonal recreational residential property at the time when the 78.18 residence was constructed. Neither the related occupant nor the 78.19 owner of the property may claim a property tax refund under 78.20 chapter 290A for a homestead occupied by a relative. In the 78.21 case of a residence located on agricultural land, only the 78.22 house, garage, and immediately surrounding one acre of land 78.23 shall be classified as a homestead under this paragraph, except 78.24 as provided in paragraph (d). 78.25 (d) Agricultural property that is occupied and used for 78.26 purposes of a homestead by a relative of the owner, is a 78.27 homestead, only to the extent of the homestead treatment that 78.28 would be provided if the related owner occupied the property, 78.29 and only if all of the following criteria are met: 78.30 (1) the relative who is occupying the agricultural property 78.31 is a son, daughter, grandson, granddaughter, father, or mother 78.32 of the owner of the agricultural property or a son,ordaughter, 78.33 grandson, or granddaughter of the spouse of the owner of the 78.34 agricultural property; 78.35 (2) the owner of the agricultural property must be a 78.36 Minnesota resident; 79.1 (3) the owner of the agricultural property must not receive 79.2 homestead treatment on any other agricultural property in 79.3 Minnesota; and 79.4 (4) the owner of the agricultural property is limited to 79.5 only one agricultural homestead per family under this paragraph. 79.6 Neither the related occupant nor the owner of the property 79.7 may claim a property tax refund under chapter 290A for a 79.8 homestead occupied by a relative qualifying under this 79.9 paragraph. For purposes of this paragraph, "agricultural 79.10 property" means the house, garage, other farm buildings and 79.11 structures, and agricultural land. 79.12 Application must be made to the assessor by the owner of 79.13 the agricultural property to receive homestead benefits under 79.14 this paragraph. The assessor may require the necessary proof 79.15 that the requirements under this paragraph have been met. 79.16 (e) In the case of property owned by a property owner who 79.17 is married, the assessor must not deny homestead treatment in 79.18 whole or in part if only one of the spouses occupies the 79.19 property and the other spouse is absent due to: (1) marriage 79.20 dissolution proceedings, (2) legal separation, (3) employment or 79.21 self-employment in another location, or (4) other personal 79.22 circumstances causing the spouses to live separately, not 79.23 including an intent to obtain two homestead classifications for 79.24 property tax purposes. To qualify under clause (3), the 79.25 spouse's place of employment or self-employment must be at least 79.26 50 miles distant from the other spouse's place of employment, 79.27 and the homesteads must be at least 50 miles distant from each 79.28 other. Homestead treatment, in whole or in part, shall not be 79.29 denied to the owner's spouse who previously occupied the 79.30 residence with the owner if the absence of the owner is due to 79.31 one of the exceptions provided in this paragraph. 79.32 (f) The assessor must not deny homestead treatment in whole 79.33 or in part if: 79.34 (1) in the case of a property owner who is not married, the 79.35 owner is absent due to residence in a nursing home or boarding 79.36 care facility and the property is not otherwise occupied; or 80.1 (2) in the case of a property owner who is married, the 80.2 owner or the owner's spouse or both are absent due to residence 80.3 in a nursing home or boarding care facility and the property is 80.4 not occupied or is occupied only by the owner's spouse. 80.5 (g) If an individual is purchasing property with the intent 80.6 of claiming it as a homestead and is required by the terms of 80.7 the financing agreement to have a relative shown on the deed as 80.8 a coowner, the assessor shall allow a full homestead 80.9 classification. This provision only applies to first-time 80.10 purchasers, whether married or single, or to a person who had 80.11 previously been married and is purchasing as a single individual 80.12 for the first time. The application for homestead benefits must 80.13 be on a form prescribed by the commissioner and must contain the 80.14 data necessary for the assessor to determine if full homestead 80.15 benefits are warranted. 80.16 (h) If residential or agricultural real estate is occupied 80.17 and used for purposes of a homestead by a child of a deceased 80.18 owner and the property is subject to jurisdiction of probate 80.19 court, the child shall receive relative homestead classification 80.20 under paragraph (c) or (d) to the same extent they would be 80.21 entitled to it if the owner was still living, until the probate 80.22 is completed. For purposes of this paragraph, "child" includes 80.23 a relationship by blood or by marriage. 80.24 EFFECTIVE DATE: This section is effective for taxes 80.25 payable in 2001 and thereafter. 80.26 Sec. 8. Minnesota Statutes 1999 Supplement, section 80.27 273.124, subdivision 8, is amended to read: 80.28 Subd. 8. [HOMESTEAD OWNED BY OR LEASED TO FAMILY FARM 80.29 CORPORATION, JOINT FARM VENTURE, LIMITED LIABILITY COMPANY, OR 80.30 PARTNERSHIPOR LEASED TO FAMILY FARM CORPORATION OR80.31PARTNERSHIP.] (a) Each family farm corporation, each joint farm 80.32 venture, each limited liability company, and each partnership 80.33 operating a family farm is entitled to class 1b under section 80.34 273.13, subdivision 22, paragraph (b), or class 2a assessment 80.35 for one homestead occupied by a shareholder, member, or partner 80.36 thereof who is residing on the land except as provided in 81.1 subdivision 14, paragraph (g), and actively engaged in farming 81.2 of the land owned by the corporation, joint farm venture, 81.3 limited liability company, or partnership. Homestead treatment 81.4 applies even if legal title to the property is in the name of 81.5 the corporation, joint farm venture, limited liability company, 81.6 or partnership and not in the name of the person residing on it. 81.7 "Family farm corporation,"and"family farm," and "farm 81.8 partnership" have the meanings given in section 500.24, except 81.9 that the number of allowable shareholders or partners under this 81.10 subdivision shall not exceed 12. "Limited liability company" 81.11 has the meaning contained in section 322B.03, subdivision 28. 81.12 "Joint farm venture" means a cooperative agreement among two or 81.13 more farm enterprises authorized to operate farm land under 81.14 section 500.24. 81.15 (b) In addition to property specified in paragraph (a), any 81.16 other residences owned by corporations, joint farm ventures, 81.17 limited liability companies, or partnerships described in 81.18 paragraph (a) which are located on agricultural land and 81.19 occupied as homesteads by shareholders, members, or partners who 81.20 are actively engaged in farming on behalf of the corporation, 81.21 joint farm venture, limited liability company, or partnership 81.22 must also be assessed as class 2a property or as class 1b 81.23 property under section 273.13, subdivision 22, paragraph (b). 81.24 (c) Agricultural property owned by a shareholder of a 81.25 family farm corporation or joint farm venture, as defined in 81.26 paragraph (a), or by a member of a limited liability company, or 81.27 by a partner in a partnership operating a family farm and leased 81.28 to the family farm corporation by the shareholder, or to a 81.29 member of a limited liability company, or to the partnership by 81.30 the partner, is eligible for classification as class 1b under 81.31 section 273.13, subdivision 22, paragraph (b), or class 2a under 81.32 section 273.13, subdivision 23, paragraph (a), if the owner is 81.33 actually residing on the property except as provided in 81.34 subdivision 14, paragraph (g), and is actually engaged in 81.35 farming the land on behalf of the corporation, joint farm 81.36 venture, limited liability company, or partnership. This 82.1 paragraph applies without regard to any legal possession rights 82.2 of the family farm corporation, joint farm venture, limited 82.3 liability company, or partnership operating a family farm under 82.4 the lease. 82.5 EFFECTIVE DATE: This section is effective for taxes 82.6 payable in 2001 and thereafter except that the references to a 82.7 limited liability company or a member of a limited liability 82.8 company are effective only if H.F. No. 3312 is enacted during 82.9 the 2000 session. 82.10 Sec. 9. Minnesota Statutes 1999 Supplement, section 82.11 273.124, subdivision 14, is amended to read: 82.12 Subd. 14. [AGRICULTURAL HOMESTEADS; SPECIAL PROVISIONS.] 82.13 (a) Real estate of less than ten acres that is the homestead of 82.14 its owner must be classified as class 2a under section 273.13, 82.15 subdivision 23, paragraph (a), if: 82.16 (1) the parcel on which the house is located is contiguous 82.17 on at least two sides to (i) agricultural land, (ii) land owned 82.18 or administered by the United States Fish and Wildlife Service, 82.19 or (iii) land administered by the department of natural 82.20 resources on which in lieu taxes are paid under sections 477A.11 82.21 to 477A.14; 82.22 (2) its owner also owns a noncontiguous parcel of 82.23 agricultural land that is at least 20 acres; 82.24 (3) the noncontiguous land is located not farther than four 82.25 townships or cities, or a combination of townships or cities 82.26 from the homestead; and 82.27 (4) the agricultural use value of the noncontiguous land 82.28 and farm buildings is equal to at least 50 percent of the market 82.29 value of the house, garage, and one acre of land. 82.30 Homesteads initially classified as class 2a under the 82.31 provisions of this paragraph shall remain classified as class 82.32 2a, irrespective of subsequent changes in the use of adjoining 82.33 properties, as long as the homestead remains under the same 82.34 ownership, the owner owns a noncontiguous parcel of agricultural 82.35 land that is at least 20 acres, and the agricultural use value 82.36 qualifies under clause (4). Homestead classification under this 83.1 paragraph is limited to property that qualified under this 83.2 paragraph for the 1998 assessment. 83.3 (b)(i) Agricultural property consisting of at least 40 83.4 acres shall be classified as the owner's homestead, to the same 83.5 extent as other agricultural homestead property, if all of the 83.6 following criteria are met: 83.7 (1) the owner, or the owner's son or daughter, is actively 83.8 farming the agricultural property; 83.9 (2) the owner of the agricultural property is a Minnesota 83.10 resident, and if the owner's son or daughter is actively farming 83.11 the agricultural property under clause (1), that person must 83.12 also be a Minnesota resident; 83.13 (3) neither the owner nor the spouse of theagricultural83.14propertyowner claims another agricultural homestead in 83.15 Minnesota; and 83.16 (4) the owner does not live farther than four townships or 83.17 cities, or a combination of four townships or cities, from the 83.18 agricultural property, and if the owner's son or daughter is 83.19 actively farming the agricultural property under clause (1), 83.20 that person must also live within the four townships or cities, 83.21 or combination of four townships or cities from the agricultural 83.22 property. 83.23 The relationship under this paragraph may be either by 83.24 blood or marriage. 83.25 (ii) Property containing the residence of an owner who owns 83.26 qualified property under clause (i) shall be classified as part 83.27 of the owner's agricultural homestead, if that property is also 83.28 used for noncommercial storage or drying of agricultural crops. 83.29 (c) Except as provided in paragraph (e), noncontiguous land 83.30 shall be included as part of a homestead under section 273.13, 83.31 subdivision 23, paragraph (a), only if the homestead is 83.32 classified as class 2a and the detached land is located in the 83.33 same township or city, or not farther than four townships or 83.34 cities or combination thereof from the homestead. Any taxpayer 83.35 of these noncontiguous lands must notify the county assessor 83.36 that the noncontiguous land is part of the taxpayer's homestead, 84.1 and, if the homestead is located in another county, the taxpayer 84.2 must also notify the assessor of the other county. 84.3 (d) Agricultural land used for purposes of a homestead and 84.4 actively farmed by a person holding a vested remainder interest 84.5 in it must be classified as a homestead under section 273.13, 84.6 subdivision 23, paragraph (a). If agricultural land is 84.7 classified class 2a, any other dwellings on the land used for 84.8 purposes of a homestead by persons holding vested remainder 84.9 interests who are actively engaged in farming the property, and 84.10 up to one acre of the land surrounding each homestead and 84.11 reasonably necessary for the use of the dwelling as a home, must 84.12 also be assessed class 2a. 84.13 (e) Agricultural land and buildings that were class 2a 84.14 homestead property under section 273.13, subdivision 23, 84.15 paragraph (a), for the 1997 assessment shall remain classified 84.16 as agricultural homesteads for subsequent assessments if: 84.17 (1) the property owner abandoned the homestead dwelling 84.18 located on the agricultural homestead as a result of the April 84.19 1997 floods; 84.20 (2) the property is located in the county of Polk, Clay, 84.21 Kittson, Marshall, Norman, or Wilkin; 84.22 (3) the agricultural land and buildings remain under the 84.23 same ownership for the current assessment year as existed for 84.24 the 1997 assessment year and continue to be used for 84.25 agricultural purposes; 84.26 (4) the dwelling occupied by the owner is located in 84.27 Minnesota and is within 30 miles of one of the parcels of 84.28 agricultural land that is owned by the taxpayer; and 84.29 (5) the owner notifies the county assessor that the 84.30 relocation was due to the 1997 floods, and the owner furnishes 84.31 the assessor any information deemed necessary by the assessor in 84.32 verifying the change in dwelling. Further notifications to the 84.33 assessor are not required if the property continues to meet all 84.34 the requirements in this paragraph and any dwellings on the 84.35 agricultural land remain uninhabited. 84.36 (f) Agricultural land and buildings that were class 2a 85.1 homestead property under section 273.13, subdivision 23, 85.2 paragraph (a), for the 1998 assessment shall remain classified 85.3 agricultural homesteads for subsequent assessments if: 85.4 (1) the property owner abandoned the homestead dwelling 85.5 located on the agricultural homestead as a result of damage 85.6 caused by a March 29, 1998, tornado; 85.7 (2) the property is located in the county of Blue Earth, 85.8 Brown, Cottonwood, LeSueur, Nicollet, Nobles, or Rice; 85.9 (3) the agricultural land and buildings remain under the 85.10 same ownership for the current assessment year as existed for 85.11 the 1998 assessment year; 85.12 (4) the dwelling occupied by the owner is located in this 85.13 state and is within 50 miles of one of the parcels of 85.14 agricultural land that is owned by the taxpayer; and 85.15 (5) the owner notifies the county assessor that the 85.16 relocation was due to a March 29, 1998, tornado, and the owner 85.17 furnishes the assessor any information deemed necessary by the 85.18 assessor in verifying the change in homestead dwelling. For 85.19 taxes payable in 1999, the owner must notify the assessor by 85.20 December 1, 1998. Further notifications to the assessor are not 85.21 required if the property continues to meet all the requirements 85.22 in this paragraph and any dwellings on the agricultural land 85.23 remain uninhabited. 85.24 (g) Agricultural property consisting of at least 40 acres 85.25 of a family farm corporation, joint farm venture, limited 85.26 liability company, or partnership as described under subdivision 85.27 8 shall be classified homestead, to the same extent as other 85.28 agricultural homestead property, if all of the following 85.29 criteria are met: 85.30 (1) the shareholder, member, or partner is actively farming 85.31 the agricultural property; 85.32 (2) the shareholder, member, or partner of the agricultural 85.33 property is a Minnesota resident; 85.34 (3) neither the shareholder, member, or partner, nor the 85.35 spouse of the shareholder, member, or partner claims another 85.36 agricultural homestead in Minnesota; and 86.1 (4) the shareholder, member, or partner does not live 86.2 farther than four townships or cities, or a combination of four 86.3 townships or cities, from the agricultural property. 86.4 EFFECTIVE DATE: This section is effective for taxes 86.5 payable in 2001 and thereafter except that the references to a 86.6 limited liability company or a member of a limited liability 86.7 company are effective only if H.F. No. 3312 is enacted during 86.8 the 2000 session. 86.9 Sec. 10. Minnesota Statutes 1998, section 273.124, is 86.10 amended by adding a subdivision to read: 86.11 Subd. 21. [TRUST PROPERTY; HOMESTEAD.] Real property held 86.12 by a trustee under a trust is eligible for classification as 86.13 homestead property if: 86.14 (1) the grantor or surviving spouse of the grantor of the 86.15 trust occupies and uses the property as a homestead; 86.16 (2) a relative or surviving relative of the grantor who 86.17 meets the requirements of subdivision 1, paragraph (c), in the 86.18 case of residential real estate; or subdivision 1, paragraph 86.19 (d), in the case of agricultural property, occupies and uses the 86.20 property as a homestead; 86.21 (3) a family farm corporation, joint farm venture, limited 86.22 liability company, or partnership operating a family farm rents 86.23 the property held by a trustee under a trust, and a shareholder, 86.24 member, or partner of the corporation, joint farm venture, 86.25 limited liability company, or partnership occupies and uses the 86.26 property as a homestead, and is actively farming the property on 86.27 behalf of the corporation, joint farm venture, limited liability 86.28 company, or partnership; or 86.29 (4) a person who has received homestead classification for 86.30 property taxes payable in 2000 on the basis of an unqualified 86.31 legal right under the terms of the trust agreement to occupy the 86.32 property as that person's homestead and who continues to use the 86.33 property as a homestead. 86.34 For purposes of this subdivision, "grantor" is defined as 86.35 the person creating or establishing a testamentary, inter Vivos, 86.36 revocable or irrevocable trust by written instrument or through 87.1 the exercise of a power of appointment. 87.2 EFFECTIVE DATE: This section is effective for taxes 87.3 payable in 2001 and thereafter except that the references to a 87.4 limited liability company or a member of a limited liability 87.5 company are effective only if H.F. No. 3312 is enacted during 87.6 the 2000 session. 87.7 Sec. 11. Minnesota Statutes 1998, section 273.125, 87.8 subdivision 8, is amended to read: 87.9 Subd. 8. [MANUFACTURED HOMES; SECTIONAL STRUCTURES.] (a) 87.10 In this section, "manufactured home" means a structure 87.11 transportable in one or more sections, which is built on a 87.12 permanent chassis, and designed to be used as a dwelling with or 87.13 without a permanent foundation when connected to the required 87.14 utilities, and contains the plumbing, heating, air conditioning, 87.15 and electrical systems in it. Manufactured home includes any 87.16 accessory structure that is an addition or supplement to the 87.17 manufactured home and, when installed, becomes a part of the 87.18 manufactured home. 87.19 (b) A manufactured home that meets each of the following 87.20 criteria must be valued and assessed as an improvement to real 87.21 property, the appropriate real property classification applies, 87.22 and the valuation is subject to review and the taxes payable in 87.23 the manner provided for real property: 87.24 (1) the owner of the unit holds title to the land on which 87.25 it is situated; 87.26 (2) the unit is affixed to the land by a permanent 87.27 foundation or is installed at its location in accordance with 87.28 the Manufactured Home Building Code in sections 327.31 to 87.29 327.34, and rules adopted under those sections, or is affixed to 87.30 the land like other real property in the taxing district; and 87.31 (3) the unit is connected to public utilities, has a well 87.32 and septic tank system, or is serviced by water and sewer 87.33 facilities comparable to other real property in the taxing 87.34 district. 87.35 (c) A manufactured home that meets each of the following 87.36 criteria must be assessed at the rate provided by the 88.1 appropriate real property classification but must be treated as 88.2 personal property, and the valuation is subject to review and 88.3 the taxes payable in the manner provided in this section: 88.4 (1) the owner of the unit is a lessee of the land under the 88.5 terms of a lease; 88.6 (2) the unit is affixed to the land by a permanent 88.7 foundation or is installed at its location in accordance with 88.8 the Manufactured Home Building Code contained in sections 327.31 88.9 to 327.34, and the rules adopted under those sections, or is 88.10 affixed to the land like other real property in the taxing 88.11 district; and 88.12 (3) the unit is connected to public utilities, has a well 88.13 and septic tank system, or is serviced by water and sewer 88.14 facilities comparable to other real property in the taxing 88.15 district. 88.16 (d) Sectional structures must be valued and assessed as an 88.17 improvement to real property if the owner of the structure holds 88.18 title to the land on which it is located or is a qualifying 88.19 lessee of the land under section 273.19. In this paragraph 88.20 "sectional structure" means a building or structural unit that 88.21 has been in whole or substantial part manufactured or 88.22 constructed at an off-site location to be wholly or partially 88.23 assembled on-site alone or with other units and attached to a 88.24 permanent foundation. 88.25 (e) The commissioner of revenue may adopt rules under the 88.26 Administrative Procedure Act to establish additional criteria 88.27 for the classification of manufactured homes and sectional 88.28 structures under this subdivision. 88.29 (f) A storage shed, deck, or similar improvement 88.30 constructed on property that is leased or rented as a site for a 88.31 manufactured home, sectional structure, park trailer, or travel 88.32 trailer is taxable as provided in this section. In the case of 88.33 property that is leased or rented as a site for a travel 88.34 trailer, a storage shed, deck, or similar improvement on the 88.35 site that is considered personal property under this paragraph 88.36 is taxable only if its total estimated market value is over 89.1 $500. The property is taxable as personal property to the 89.2 lessee of the site if it is not owned by the owner of the site. 89.3 The property is taxable as real estate if it is owned by the 89.4 owner of the site. As a condition of permitting the owner of 89.5 the manufactured home, sectional structure, park trailer, or 89.6 travel trailer to construct improvements on the leased or rented 89.7 site, the owner of the site must obtain the permanent home 89.8 address of the lessee or user of the site. The site owner must 89.9 provide the name and address to the assessor upon request. 89.10 EFFECTIVE DATE: This section is effective beginning with 89.11 the 2000 assessment. 89.12 Sec. 12. Minnesota Statutes 1999 Supplement, section 89.13 273.13, subdivision 24, is amended to read: 89.14 Subd. 24. [CLASS 3.] (a) Commercial and industrial 89.15 property and utility real and personal property is class 3a. 89.16 (1) Except as otherwise provided, each parcel of 89.17 commercial, industrial, or utility real property has a class 89.18 rate of 2.4 percent of the first tier of market value, and 3.4 89.19 percent of the remaining market value, except that. In the case 89.20 of contiguous parcels of property owned by the same person or 89.21 entity, only the value equal to the first-tier value of the 89.22 contiguous parcels qualifies for the reduced class rate, except 89.23 that contiguous parcels owned by the same person or entity shall 89.24 be eligible for the first-tier value class rate on each separate 89.25 business operated by the owner of the property, provided the 89.26 business is housed in a separate structure. For the purposes of 89.27 this subdivision, the first tier means the first $150,000 of 89.28 market value. Real property owned in fee by a utility for 89.29 transmission line right-of-way shall be classified at the class 89.30 rate for the higher tier.All personal property shall be89.31classified at the class rate for the higher tier. For purposes89.32of this subdivision "personal property" means tools, implements,89.33and machinery of an electric generating, transmission, or89.34distribution system, or a pipeline system transporting or89.35distributing water, gas, crude oil, or petroleum products or89.36mains and pipes used in the distribution of steam or hot or90.1chilled water for heating or cooling buildings, which are90.2fixtures.90.3 For purposes of thisparagraphsubdivision, parcels are 90.4 considered to be contiguous even if they are separated from each 90.5 other by a road, street,vacant lot,waterway, or other similar 90.6 intervening type of property. Connections between parcels that 90.7 consist of power lines or pipelines do not cause the parcels to 90.8 be contiguous. Property owners who have contiguous parcels of 90.9 property that constitute separate businesses that may qualify 90.10 for the first-tier class rate shall notify the assessor by July 90.11 1, for treatment beginning in the following taxes payable year. 90.12 (2) Personal property that is: (i) part of an electric 90.13 generation, transmission, or distribution system; or (ii) part 90.14 of a pipeline system transporting or distributing water, gas, 90.15 crude oil, or petroleum products; and (iii) not described in 90.16 clause (3), has a class rate as provided under clause (1) for 90.17 the first tier of market value and the remaining market value. 90.18 In the case of multiple parcels in one county that are owned by 90.19 one person or entity, only one first tier amount is eligible for 90.20 the reduced rate. 90.21 (3) The entire market value of personal property that is: 90.22 (i) tools, implements, and machinery of an electric generation, 90.23 transmission, or distribution system; (ii) tools, implements, 90.24 and machinery of a pipeline system transporting or distributing 90.25 water, gas, crude oil, or petroleum products; or (iii) the mains 90.26 and pipes used in the distribution of steam or hot or chilled 90.27 water for heating or cooling buildings, has a class rate as 90.28 provided under clause (1) for the remaining market value in 90.29 excess of the first tier. 90.30 (b) Employment property defined in section 469.166, during 90.31 the period provided in section 469.170, shall constitute class 90.32 3b. The class rates for class 3b property are determined under 90.33 paragraph (a). 90.34 (c)(1) Subject to the limitations of clause (2), structures 90.35 which are (i) located on property classified as class 3a, (ii) 90.36 constructed under an initial building permit issued after 91.1 January 2, 1996, (iii) located in a transit zone as defined 91.2 under section 473.3915, subdivision 3, (iv) located within the 91.3 boundaries of a school district, and (v) not primarily used for 91.4 retail or transient lodging purposes, shall have a class rate 91.5 equal to the lesser of 2.975 percent or the class rate of the 91.6 second tier of the commercial property rate under paragraph (a) 91.7 on any portion of the market value that does not qualify for the 91.8 first tier class rate under paragraph (a). As used in item (v), 91.9 a structure is primarily used for retail or transient lodging 91.10 purposes if over 50 percent of its square footage is used for 91.11 those purposes. A class rate equal to the lesser of 2.975 91.12 percent or the class rate of the second tier of the commercial 91.13 property class rate under paragraph (a) shall also apply to 91.14 improvements to existing structures that meet the requirements 91.15 of items (i) to (v) if the improvements are constructed under an 91.16 initial building permit issued after January 2, 1996, even if 91.17 the remainder of the structure was constructed prior to January 91.18 2, 1996. For the purposes of this paragraph, a structure shall 91.19 be considered to be located in a transit zone if any portion of 91.20 the structure lies within the zone. If any property once 91.21 eligible for treatment under this paragraph ceases to remain 91.22 eligible due to revisions in transit zone boundaries, the 91.23 property shall continue to receive treatment under this 91.24 paragraph for a period of three years. 91.25 (2) This clause applies to any structure qualifying for the 91.26 transit zone reduced class rate under clause (1) on January 2, 91.27 1999, or any structure meeting any of the qualification criteria 91.28 in item (i) and otherwise qualifying for the transit zone 91.29 reduced class rate under clause (1). Such a structure continues 91.30 to receive the transit zone reduced class rate until the 91.31 occurrence of one of the events in item (ii). Property 91.32 qualifying under item (i)(D), that is located outside of a city 91.33 of the first class, qualifies for the transit zone reduced class 91.34 rate as provided in that item. Property qualifying under item 91.35 (i)(E) qualifies for the transit zone reduced class rate as 91.36 provided in that item. 92.1 (i) A structure qualifies for the rate in this clause if it 92.2 is: 92.3 (A) property for which a building permit was issued before 92.4 December 31, 1998; or 92.5 (B) property for which a building permit was issued before 92.6 June 30, 2001, if: 92.7 (I) at least 50 percent of the land on which the structure 92.8 is to be built has been acquired or is the subject of signed 92.9 purchase agreements or signed options as of March 15, 1998, by 92.10 the entity that proposes construction of the project or an 92.11 affiliate of the entity; 92.12 (II) signed agreements have been entered into with one 92.13 entity or with affiliated entities to lease for the account of 92.14 the entity or affiliated entities at least 50 percent of the 92.15 square footage of the structure or the owner of the structure 92.16 will occupy at least 50 percent of the square footage of the 92.17 structure; and 92.18 (III) one of the following requirements is met: 92.19 the project proposer has submitted the completed data 92.20 portions of an environmental assessment worksheet by December 92.21 31, 1998; or 92.22 a notice of determination of adequacy of an environmental 92.23 impact statement has been published by April 1, 1999; or 92.24 an alternative urban areawide review has been completed by 92.25 April 1, 1999; or 92.26 (C) property for which a building permit is issued before 92.27 July 30, 1999, if: 92.28 (I) at least 50 percent of the land on which the structure 92.29 is to be built has been acquired or is the subject of signed 92.30 purchase agreements as of March 31, 1998, by the entity that 92.31 proposes construction of the project or an affiliate of the 92.32 entity; 92.33 (II) a signed agreement has been entered into between the 92.34 building developer and a tenant to lease for its own account at 92.35 least 200,000 square feet of space in the building; 92.36 (III) a signed letter of intent is entered into by July 1, 93.1 1998, between the building developer and the tenant to lease the 93.2 space for its own account; and 93.3 (IV) the environmental review process required by state law 93.4 was commenced by December 31, 1998; 93.5 (D) property for which an irrevocable letter of credit with 93.6 a housing and redevelopment authority was signed before December 93.7 31, 1998. The structure shall receive the transit zone reduced 93.8 class rate during construction and for the duration of time that 93.9 the original tenants remain in the building. Any unoccupied net 93.10 leasable square footage that is not leased within 36 months 93.11 after the certificate of occupancy has been issued for the 93.12 building shall not be eligible to receive the reduced class 93.13 rate. This reduced class rate applies only ifthea qualifying 93.14 entitythat constructed the structurecontinues to own the 93.15 property; 93.16 (E) property, located in a city of the first class, and for 93.17 which the building permits for the excavation, the parking ramp, 93.18 and the office tower were issued prior to April 1, 1999, shall 93.19 receive the reduced class rate during construction and for the 93.20 first five assessment years immediately following its initial 93.21 occupancy provided that, when completed, at least 25 percent of 93.22 the net leasable square footage must be occupied bythea 93.23 qualifying entityor the parent entity constructing the93.24structureeach year during this time period. In order to 93.25 receive the reduced class rate on the structure in any 93.26 subsequent assessment years, at least 50 percent of the rentable 93.27 square footage must be occupied bythea qualifying entityor93.28the parent entity that constructed the structure. This reduced 93.29 class rate applies only ifthea qualifying entityor the parent93.30entity that constructed the structurecontinues to own the 93.31 property. 93.32 (ii) A structure specified by this clause, other than a 93.33 structure qualifying under clause (i)(D) or (E), shall continue 93.34 to receive the transit zone reduced class rate until the 93.35 occurrence of one of the following events: 93.36 (A) if the structure upon initial occupancy will be owner 94.1 occupied by the entity initially constructing the structure or 94.2 an affiliated entity, the structure receives the reduced class 94.3 rate until the structure ceases to be at least 50 percent 94.4 occupied by the entity or an affiliated entity, provided, if the 94.5 portion of the structure occupied by that entity or an affiliate 94.6 of the entity is less than 85 percent, the transit zone class 94.7 rate reduction for the portion of structure not so occupied 94.8 terminates upon the leasing of such space to any nonaffiliated 94.9 entity; or 94.10 (B) if the structure is leased by a single entity or 94.11 affiliated entity at the time of initial occupancy, the 94.12 structure shall receive the reduced class rate until the 94.13 structure ceases to be at least 50 percent occupied by the 94.14 entity or an affiliated entity, provided, if the portion of the 94.15 structure occupied by that entity or an affiliate of the entity 94.16 is less than 85 percent, the transit zone class rate reduction 94.17 for the portion of structure not so occupied shall terminate 94.18 upon the leasing of such space to any nonaffiliated entity; or 94.19 (C) if the structure meets the criteria in item (i)(C), the 94.20 structure shall receive the reduced class rate until the 94.21 expiration of the initial lease term of the applicable tenants. 94.22 Percentages occupied or leased shall be determined based 94.23 upon net leasable square footage in the structure. The assessor 94.24 shall allocate the value of the structure in the same fashion as 94.25 provided in the general law for portions of any structure 94.26 receiving and not receiving the transit tax class reduction as a 94.27 result of this clause. 94.28 (3) For purposes of paragraph (c), "qualifying entity" 94.29 means the entity owning the property on September 1, 2000, or an 94.30 affiliate of an entity that owned the property on September 1, 94.31 2000. 94.32 EFFECTIVE DATE: That portion of this section relating to 94.33 the definition of real and personal utility property is 94.34 effective for taxes payable in 2000 and thereafter. All other 94.35 changes in the section are effective for taxes payable in 2001 94.36 and thereafter. 95.1 Sec. 13. Minnesota Statutes 1999 Supplement, section 95.2 273.13, subdivision 25, is amended to read: 95.3 Subd. 25. [CLASS 4.] (a) Class 4a is residential real 95.4 estate containing four or more units and used or held for use by 95.5 the owner or by the tenants or lessees of the owner as a 95.6 residence for rental periods of 30 days or more. Class 4a also 95.7 includes hospitals licensed under sections 144.50 to 144.56, 95.8 other than hospitals exempt under section 272.02, and contiguous 95.9 property used for hospital purposes, without regard to whether 95.10 the property has been platted or subdivided. Class 4a property 95.11 in a city with a population of 5,000 or less, that is (1) 95.12 located outside of the metropolitan area, as defined in section 95.13 473.121, subdivision 2, or outside any county contiguous to the 95.14 metropolitan area, and (2) whose city boundary is at least 15 95.15 miles from the boundary of any city with a population greater 95.16 than 5,000 has a class rate of 2.15 percent of market value. 95.17 All other class 4a property has a class rate of 2.4 percent of 95.18 market value. For purposes of this paragraph, population has 95.19 the same meaning given in section 477A.011, subdivision 3. 95.20 (b) Class 4b includes: 95.21 (1) residential real estate containing less than four units 95.22 that does not qualify as class 4bb, other than seasonal 95.23 residential, and recreational; 95.24 (2) manufactured homes not classified under any other 95.25 provision; 95.26 (3) a dwelling, garage, and surrounding one acre of 95.27 property on a nonhomestead farm classified under subdivision 23, 95.28 paragraph (b) containing two or three units; 95.29 (4) unimproved property that is classified residential as 95.30 determined under subdivision 33. 95.31 Class 4b property has a class rate of 1.65 percent of 95.32 market value. 95.33 (c) Class 4bb includes: 95.34 (1) nonhomestead residential real estate containing one 95.35 unit, other than seasonal residential, and recreational; and 95.36 (2) a single family dwelling, garage, and surrounding one 96.1 acre of property on a nonhomestead farm classified under 96.2 subdivision 23, paragraph (b). 96.3 Class 4bb has a class rate of 1.2 percent on the first 96.4 $76,000 of market value and a class rate of 1.65 percent of its 96.5 market value that exceeds $76,000. 96.6 Property that has been classified as seasonal recreational 96.7 residential property at any time during which it has been owned 96.8 by the current owner or spouse of the current owner does not 96.9 qualify for class 4bb. 96.10 (d) Class 4c property includes: 96.11 (1) except as provided in subdivision 22, paragraph (c), 96.12 real property devoted to temporary and seasonal residential 96.13 occupancy for recreation purposes, including real property 96.14 devoted to temporary and seasonal residential occupancy for 96.15 recreation purposes and not devoted to commercial purposes for 96.16 more than 250 days in the year preceding the year of 96.17 assessment. For purposes of this clause, property is devoted to 96.18 a commercial purpose on a specific day if any portion of the 96.19 property is used for residential occupancy, and a fee is charged 96.20 for residential occupancy. In order for a property to be 96.21 classified as class 4c, seasonal recreational residential for 96.22 commercial purposes, at least 40 percent of the annual gross 96.23 lodging receipts related to the property must be from business 96.24 conducted during 90 consecutive days and either (i) at least 60 96.25 percent of all paid bookings by lodging guests during the year 96.26 must be for periods of at least two consecutive nights; or (ii) 96.27 at least 20 percent of the annual gross receipts must be from 96.28 charges for rental of fish houses, boats and motors, 96.29 snowmobiles, downhill or cross-country ski equipment, or charges 96.30 for marina services, launch services, and guide services, or the 96.31 sale of bait and fishing tackle. For purposes of this 96.32 determination, a paid booking of five or more nights shall be 96.33 counted as two bookings. Class 4c also includes commercial use 96.34 real property used exclusively for recreational purposes in 96.35 conjunction with class 4c property devoted to temporary and 96.36 seasonal residential occupancy for recreational purposes, up to 97.1 a total of two acres, provided the property is not devoted to 97.2 commercial recreational use for more than 250 days in the year 97.3 preceding the year of assessment and is located within two miles 97.4 of the class 4c property with which it is used. Class 4c 97.5 property classified in this clause also includes the remainder 97.6 of class 1c resorts provided that the entire property including 97.7 that portion of the property classified as class 1c also meets 97.8 the requirements for class 4c under this clause; otherwise the 97.9 entire property is classified as class 3. Owners of real 97.10 property devoted to temporary and seasonal residential occupancy 97.11 for recreation purposes and all or a portion of which was 97.12 devoted to commercial purposes for not more than 250 days in the 97.13 year preceding the year of assessment desiring classification as 97.14 class 1c or 4c, must submit a declaration to the assessor 97.15 designating the cabins or units occupied for 250 days or less in 97.16 the year preceding the year of assessment by January 15 of the 97.17 assessment year. Those cabins or units and a proportionate 97.18 share of the land on which they are located will be designated 97.19 class 1c or 4c as otherwise provided. The remainder of the 97.20 cabins or units and a proportionate share of the land on which 97.21 they are located will be designated as class 3a. The owner of 97.22 property desiring designation as class 1c or 4c property must 97.23 provide guest registers or other records demonstrating that the 97.24 units for which class 1c or 4c designation is sought were not 97.25 occupied for more than 250 days in the year preceding the 97.26 assessment if so requested. The portion of a property operated 97.27 as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 97.28 nonresidential facility operated on a commercial basis not 97.29 directly related to temporary and seasonal residential occupancy 97.30 for recreation purposes shall not qualify for class 1c or 4c; 97.31 (2) qualified property used as a golf course if: 97.32 (i) it is open to the public on a daily fee basis. It may 97.33 charge membership fees or dues, but a membership fee may not be 97.34 required in order to use the property for golfing, and its green 97.35 fees for golfing must be comparable to green fees typically 97.36 charged by municipal courses; and 98.1 (ii) it meets the requirements of section 273.112, 98.2 subdivision 3, paragraph (d). 98.3 A structure used as a clubhouse, restaurant, or place of 98.4 refreshment in conjunction with the golf course is classified as 98.5 class 3a property; 98.6 (3) real property up to a maximum of one acre of land owned 98.7 by a nonprofit community service oriented organization; provided 98.8 that the property is not used for a revenue-producing activity 98.9 for more than six days in the calendar year preceding the year 98.10 of assessment and the property is not used for residential 98.11 purposes on either a temporary or permanent basis. For purposes 98.12 of this clause, a "nonprofit community service oriented 98.13 organization" means any corporation, society, association, 98.14 foundation, or institution organized and operated exclusively 98.15 for charitable, religious, fraternal, civic, or educational 98.16 purposes, and which is exempt from federal income taxation 98.17 pursuant to section 501(c)(3), (10), or (19) of the Internal 98.18 Revenue Code of 1986, as amended through December 31, 1990. For 98.19 purposes of this clause, "revenue-producing activities" shall 98.20 include but not be limited to property or that portion of the 98.21 property that is used as an on-sale intoxicating liquor or 3.2 98.22 percent malt liquor establishment licensed under chapter 340A, a 98.23 restaurant open to the public, bowling alley, a retail store, 98.24 gambling conducted by organizations licensed under chapter 349, 98.25 an insurance business, or office or other space leased or rented 98.26 to a lessee who conducts a for-profit enterprise on the 98.27 premises. Any portion of the property which is used for 98.28 revenue-producing activities for more than six days in the 98.29 calendar year preceding the year of assessment shall be assessed 98.30 as class 3a. The use of the property for social events open 98.31 exclusively to members and their guests for periods of less than 98.32 24 hours, when an admission is not charged nor any revenues are 98.33 received by the organization shall not be considered a 98.34 revenue-producing activity; 98.35 (4) post-secondary student housing of not more than one 98.36 acre of land that is owned by a nonprofit corporation organized 99.1 under chapter 317A and is used exclusively by a student 99.2 cooperative, sorority, or fraternity for on-campus housing or 99.3 housing located within two miles of the border of a college 99.4 campus; 99.5 (5) manufactured home parks as defined in section 327.14, 99.6 subdivision 3;and99.7 (6) real property that is actively and exclusively devoted 99.8 to indoor fitness, health, social, recreational, and related 99.9 uses, is owned and operated by a not-for-profit corporation, and 99.10 is located within the metropolitan area as defined in section 99.11 473.121, subdivision 2; and 99.12 (7) a leased or privately owned noncommercial aircraft 99.13 storage hangar not exempt under section 272.01, subdivision 2, 99.14 and the land on which it is located, provided that: 99.15 (i) the land is on an airport owned or operated by a city, 99.16 town, county, metropolitan airports commission, or group 99.17 thereof, and 99.18 (ii) the land lease, or any ordinance or signed agreement 99.19 restricting the use of the leased premise, prohibits commercial 99.20 activity performed at the hangar. 99.21 If a hangar classified under this clause is sold after June 99.22 30, 2000, a bill of sale must be filed by the new owner with the 99.23 assessor of the county where the property is located within 60 99.24 days of the sale. 99.25 Class 4c property has a class rate of 1.65 percent of 99.26 market value, except that (i) each parcel of seasonal 99.27 residential recreational property not used for commercial 99.28 purposes has the same class rates as class 4bb property, (ii) 99.29 manufactured home parks assessed under clause (5) have the same 99.30 class rate as class 4b property, and (iii) property described in 99.31 paragraph (d), clause (4), has the same class rate as the rate 99.32 applicable to the first tier of class 4bb nonhomestead 99.33 residential real estate under paragraph (c). 99.34 (e) Class 4d property is qualifying low-income rental 99.35 housing certified to the assessor by the housing finance agency 99.36 under sections 273.126 and 462A.071. Class 4d includes land in 100.1 proportion to the total market value of the building that is 100.2 qualifying low-income rental housing. For all properties 100.3 qualifying as class 4d, the market value determined by the 100.4 assessor must be based on the normal approach to value using 100.5 normal unrestricted rents. 100.6 Class 4d property has a class rate of one percent of market 100.7 value. 100.8 EFFECTIVE DATE: This section is effective for taxes 100.9 payable in 2001 and thereafter. 100.10 Sec. 14. Minnesota Statutes 1999 Supplement, section 100.11 273.1382, subdivision 1b, is amended to read: 100.12 Subd. 1b. [EDUCATION AGRICULTURAL CREDIT.] Property 100.13 classified as class 2a agricultural homestead or class 2b 100.14 agricultural nonhomestead or timberland is eligible for 100.15 education agricultural credit. The credit is equal to5470 100.16 percent, in the case of agricultural homestead property up to 100.17 $600,000 in market value, or5063 percent, in the case of all 100.18 other agriculturalnonhomesteadproperty or timberland, of the 100.19 property's net tax capacity times the education credit tax rate 100.20 determined in subdivision 1. Thenet tax capacityportion of 100.21 class 2a propertyattributable toconsisting of the house, 100.22 garage, and surrounding one acre of land is not eligible for the 100.23 credit under this subdivision, nor does its market value count 100.24 towards the valuation threshold contained in this subdivision. 100.25 EFFECTIVE DATE: This section is effective for taxes 100.26 payable in 2001 and thereafter. 100.27 Sec. 15. Minnesota Statutes 1998, section 273.37, 100.28 subdivision 3, is amended to read: 100.29 Subd. 3. Taxable wind energy conversion systems, as 100.30 defined in section 216C.06, subdivision 12, which are not owned, 100.31 operated, and exclusively controlled by the owner of the land 100.32 upon which the system is situated, must be listed and assessed 100.33 by the commissioner of revenue as personal property in the name 100.34 of the owner of the system in the taxing district where it is 100.35 situated. 100.36 EFFECTIVE DATE: This section is effective for the 2000 101.1 assessment and thereafter. 101.2 Sec. 16. [273.372] [PROCEEDINGS AND APPEALS; UTILITY 101.3 VALUATIONS.] 101.4 An appeal by a utility company concerning the exemption, 101.5 valuation, or classification on property for which the 101.6 commissioner of revenue has provided the county with 101.7 commissioner's orders or recommended values must be brought 101.8 against the commissioner in tax court or in district court of 101.9 the county where the property is located, and not against the 101.10 county or taxing district where the property is located. If the 101.11 appeal to a court is of an order of the commissioner, it must be 101.12 brought under chapter 271. If the appeal is brought under 101.13 chapter 278, the procedures in that chapter apply. This 101.14 provision applies to the property contained under sections 101.15 273.33, 273.35, 273.36, and 273.37, but only if the appealed 101.16 values have remained unchanged from those provided to the county 101.17 by the commissioner. If the exemption, valuation, or 101.18 classification being appealed has been changed by the county, 101.19 then the action must be brought under chapter 278 in the county 101.20 where the property is located. 101.21 Upon filing of any appeal by a utility company against the 101.22 commissioner, the commissioner shall give notice by first class 101.23 mail to each county which would be affected by the appeal. 101.24 Companies that submit the reports under section 273.371 by 101.25 the date specified in that section, or by the date specified by 101.26 the commissioner in an extension, may appeal administratively to 101.27 the commissioner under the procedures in section 270.11, 101.28 subdivision 6, prior to bringing an action in tax court or in 101.29 district court, however, instituting an administrative appeal 101.30 with the commissioner does not change or modify the deadline in 101.31 section 278.01 for bringing an action in tax court or district 101.32 court. 101.33 EFFECTIVE DATE: This section is effective for appeals made 101.34 on property for assessment year 1999 and thereafter. 101.35 Sec. 17. Minnesota Statutes 1998, section 275.066, is 101.36 amended to read: 102.1 275.066 [SPECIAL TAXING DISTRICTS; DEFINITION.] 102.2 For the purposes of property taxation and property tax 102.3 state aids, the term "special taxing districts" includes the 102.4 following entities: 102.5 (1) watershed districts under chapter 103D; 102.6 (2) sanitary districts under sections 115.18 to 115.37; 102.7 (3) regional sanitary sewer districts under sections 115.61 102.8 to 115.67; 102.9 (4) regional public library districts under section 102.10 134.201; 102.11 (5) park districts under chapter 398; 102.12 (6) regional railroad authorities under chapter 398A; 102.13 (7) hospital districts under sections 447.31 to 447.38; 102.14 (8) St. Cloud metropolitan transit commission under 102.15 sections 458A.01 to 458A.15; 102.16 (9) Duluth transit authority under sections 458A.21 to 102.17 458A.37; 102.18 (10) regional development commissions under sections 102.19 462.381 to 462.398; 102.20 (11) housing and redevelopment authorities under sections 102.21 469.001 to 469.047; 102.22 (12) port authorities under sections 469.048 to 469.068; 102.23 (13) economic development authorities under sections 102.24 469.090 to 469.1081; 102.25 (14) metropolitan council under sections 473.123 to 102.26 473.549; 102.27 (15) metropolitan airports commission under sections 102.28 473.601 to 473.680; 102.29 (16) metropolitan mosquito control commission under 102.30 sections 473.701 to 473.716; 102.31 (17) Morrison county rural development financing authority 102.32 under Laws 1982, chapter 437, section 1; 102.33 (18) Croft Historical Park District under Laws 1984, 102.34 chapter 502, article 13, section 6; 102.35 (19) East Lake county medical clinic district under Laws 102.36 1989, chapter 211, sections 1 to 6; 103.1 (20) Floodwood area ambulance district under Laws 1993, 103.2 chapter 375, article 5, section 39;and103.3 (21) Middle Mississippi river watershed management 103.4 organization under sections 103B.211 and 103B.241; and 103.5 (22) any other political subdivision of the state of 103.6 Minnesota, excluding counties, school districts, cities, and 103.7 towns, that has the power to adopt and certify a property tax 103.8 levy to the county auditor, as determined by the commissioner of 103.9 revenue. 103.10 EFFECTIVE DATE: This section is effective for taxes levied 103.11 in 2000, payable in 2001, and thereafter. 103.12 Sec. 18. Minnesota Statutes 1998, section 276.19, 103.13 subdivision 1, is amended to read: 103.14 Subdivision 1. [NOTICE OF OVERPAYMENT.] If an overpayment 103.15 of property tax arises on a parcelfor any reasondue to receipt 103.16 of a payment that exceeds the total amount of the tax required 103.17 to be paid on the property tax statement, the responsible county 103.18 official shall promptly notify the payer by regular mail that 103.19 the overpayment has occurred. The notice must state the amount 103.20 of overpayment and identify the parcel on which the overpayment 103.21 occurred. The notice must also instruct the payer how to claim 103.22 the overpayment and advise that the overpayment is subject to 103.23 forfeiture under this section. If the name or address of the 103.24 payer is not known, the notice of unclaimed overpayment must be 103.25 mailed to the taxpayer of record in the office of the county 103.26 auditor. 103.27 EFFECTIVE DATE: This section is effective for overpayment 103.28 of taxes made the day following final enactment and thereafter, 103.29 and applies only to taxes levied in 1999, payable in 2000, and 103.30 thereafter. 103.31 Sec. 19. [278.14] [REFUNDS OF MISTAKENLY BILLED TAXES.] 103.32 Subdivision 1. [APPLICABILITY.] A county must pay a refund 103.33 of a mistakenly billed tax as provided in this section. As used 103.34 in this section, "mistakenly billed tax" means an amount of 103.35 property tax that was billed, to the extent the amount billed 103.36 exceeds the accurate tax amount due to a misclassification of 104.1 the owner's property under section 273.13 or a mathematical 104.2 error in the calculation of the tax on the owner's property, 104.3 together with any penalty or interest paid on that amount. This 104.4 section applies only to taxes payable in the current year and 104.5 the two prior years. As used in this section, "mathematical 104.6 error" is limited to an error in: 104.7 (1) converting the market value of a property to tax 104.8 capacity or to a referendum market value; 104.9 (2) application of the tax rate as computed by the auditor 104.10 under sections 275.08, subdivisions 1b, 1c, and 1d; 276A.06, 104.11 subdivisions 4 and 5; and 473F.07, subdivisions 4 and 5, to the 104.12 property's tax capacity or referendum market value; or 104.13 (3) calculation of or eligibility for a credit. 104.14 The remedy provided under this section does not apply to a 104.15 misclassification under section 273.13 that is due to the 104.16 failure of the property owner to apply for the correct 104.17 classification as required by law. 104.18 Subd. 2. [PROCEDURE.] A refund of mistakenly billed tax 104.19 must be paid upon verification of a claim made in a written 104.20 application by the owner of the property or upon discovery of 104.21 the mistakenly billed tax by the county. Refunds of 104.22 overpayments will be made as provided in section 278.12. 104.23 Subd. 3. [APPEALS.] If the county rejects a claim by a 104.24 property owner under subdivision 2, it must notify the property 104.25 owner of that decision within 90 days of receipt of the claim. 104.26 The property owner may appeal that decision to the tax court 104.27 within 60 days after receipt of a notice from the county of the 104.28 decision. Relief granted by the tax court is limited to current 104.29 year taxes, and taxes in the two prior years. 104.30 EFFECTIVE DATE: This section is effective for overpayment 104.31 of taxes made the day following final enactment and thereafter, 104.32 and applies only to taxes levied in 1999, payable in 2000, and 104.33 thereafter. 104.34 Sec. 20. Minnesota Statutes 1999 Supplement, section 104.35 290B.03, subdivision 1, is amended to read: 104.36 Subdivision 1. [PROGRAM QUALIFICATIONS.] The 105.1 qualifications for the senior citizens' property tax deferral 105.2 program are as follows: 105.3 (1) the property must be owned and occupied as a homestead 105.4 by a person 65 years of age or older. In the case of a married 105.5 couple, both of the spouses must be at least 65 years old at the 105.6 time the first property tax deferral is granted, regardless of 105.7 whether the property is titled in the name of one spouse or both 105.8 spouses, or titled in another way that permits the property to 105.9 have homestead status; 105.10 (2) the total household income of the qualifying 105.11 homeowners, as defined in section 290A.03, subdivision 5, for 105.12 the calendar year preceding the year of the initial application 105.13 may not exceed $60,000; 105.14 (3) the homestead must have been owned and occupied as the 105.15 homestead of at least one of the qualifying homeowners for at 105.16 least 15 years prior to the year the initial application is 105.17 filed; 105.18 (4)there are no delinquent property taxes, penalties, or105.19interest on the homesteaded property;105.20(5) there are no delinquent special assessments on the105.21homesteaded property;105.22(6)there are no state or federal tax liens or judgment 105.23 liens on the homesteaded property; 105.24(7)(5) there are no mortgages or other liens on the 105.25 property that secure future advances, except for those subject 105.26 to credit limits that result in compliance with clause(8)(6); 105.27 and 105.28(8)(6) the total unpaid balances of debts secured by 105.29 mortgages and other liens on the property, including unpaid and 105.30 delinquent special assessments and interest and any delinquent 105.31 property taxes, penalties, and interest, but not including 105.32 property taxes payable during the year, does not exceed3075 105.33 percent of the assessor's estimated market value for the year. 105.34 Sec. 21. Minnesota Statutes 1998, section 290B.04, is 105.35 amended by adding a subdivision to read: 105.36 Subd. 7. [PAYMENT OF DELINQUENT TAXES AND SPECIAL 106.1 ASSESSMENTS.] Upon approval of a senior citizen's initial 106.2 application, the commissioner of revenue shall pay to the 106.3 treasurer of the county where the property is located the amount 106.4 of any delinquent property taxes, penalties, interest, and 106.5 delinquent special assessments and interest on the property 106.6 which is the subject of the application. 106.7 Sec. 22. Minnesota Statutes 1999 Supplement, section 106.8 290B.05, subdivision 1, is amended to read: 106.9 Subdivision 1. [DETERMINATION BY COMMISSIONER.] The 106.10 commissioner shall determine each qualifying homeowner's "annual 106.11 maximum property tax amount" following approval of the 106.12 homeowner's initial application and following the receipt of a 106.13 resumption of eligibility certification. The "annual maximum 106.14 property tax amount" equals three percent of the homeowner's 106.15 total household income for the year preceding either the initial 106.16 application or the resumption of eligibility certification, 106.17 whichever is applicable. Following approval of the initial 106.18 application, the commissioner shall determine the qualifying 106.19 homeowner's "maximum allowable deferral." No tax may be 106.20 deferred relative to the appropriate assessment year for any 106.21 homeowner whose total household income for the previous year 106.22 exceeds $60,000. No tax shall be deferred in any year in which 106.23 the homeowner does not meet the program qualifications in 106.24 section 290B.03. The maximum allowable total deferral is equal 106.25 to 75 percent of the assessor's estimated market value for the 106.26 year, less the balance of any mortgage loans and other amounts 106.27 secured by liens against the property at the time of 106.28 application, including any unpaid and delinquent special 106.29 assessments and interest and any delinquent property taxes, 106.30 penalties, and interest, but not including property taxes 106.31 payable during the year. 106.32 Sec. 23. Minnesota Statutes 1998, section 290B.05, 106.33 subdivision 3, is amended to read: 106.34 Subd. 3. [CALCULATION OF DEFERRED PROPERTY TAX AMOUNT.] 106.35 When final property tax amounts for the following year have been 106.36 determined, the county auditor shall calculate the "deferred 107.1 property tax amount." The deferred property tax amount is equal 107.2 to the lesser of (1) the maximum allowable deferral for the 107.3 year; or (2) the difference between the total amount of property 107.4 taxes levied upon the qualifying homestead by all taxing 107.5 jurisdictions and the maximum property tax amount. Any special 107.6 assessments levied by any local unit of government must not be 107.7 included in the total tax used to calculate the deferred tax 107.8 amount.No deferral of the current year's property taxes is107.9allowed if there are any delinquent property taxes or delinquent107.10special assessments for any previous year.Any tax attributable 107.11 to new improvements made to the property after the initial 107.12 application has been approved under section 290B.04, subdivision 107.13 2, must be excluded when determining any subsequent deferred 107.14 property tax amount. The county auditor shall annually, on or 107.15 before April 15, certify to the commissioner of revenue the 107.16 property tax deferral amounts determined under this subdivision 107.17 by property and by owner. 107.18 Sec. 24. Minnesota Statutes 1998, section 290B.07, is 107.19 amended to read: 107.20 290B.07 [LIEN; DEFERRED PORTION.] 107.21 (a) Payment by the state to the county treasurer 107.22 of property taxes, penalties, interest, or special assessments 107.23 and interest deferred under thissectionchapter is deemed a 107.24 loan from the state to the program participant. The 107.25 commissioner must compute the interest as provided in section 107.26 270.75, subdivision 5, but not to exceed five percent, and 107.27 maintain records of the total deferred amount and interest for 107.28 each participant. Interest shall accrue beginning September 1 107.29 of the payable year for which the taxes are deferred. Any 107.30 deferral made under this chapter shall not be construed as 107.31 delinquent property taxes. 107.32 The lien created under section 272.31 continues to secure 107.33 payment by the taxpayer, or by the taxpayer's successors or 107.34 assigns, of the amount deferred, including interest, with 107.35 respect to all years for which amounts are deferred. The lien 107.36 for deferred taxes and interest has the same priority as any 108.1 other lien under section 272.31, except that liens, including 108.2 mortgages, recorded or filed prior to the recording or filing of 108.3 the notice under section 290B.04, subdivision 2, have priority 108.4 over the lien for deferred taxes and interest. A seller's 108.5 interest in a contract for deed, in which a qualifying homeowner 108.6 is the purchaser or an assignee of the purchaser, has priority 108.7 over deferred taxes and interest on deferred taxes, regardless 108.8 of whether the contract for deed is recorded or filed. The lien 108.9 for deferred taxes and interest for future years has the same 108.10 priority as the lien for deferred taxes and interest for the 108.11 first year, which is always higher in priority than any 108.12 mortgages or other liens filed, recorded, or created after the 108.13 notice recorded or filed under section 290B.04, subdivision 2. 108.14 The county treasurer or auditor shall maintain records of the 108.15 deferred portion and shall list the amount of deferred taxes for 108.16 the year and the cumulative deferral and interest for all 108.17 previous years as a lien against the property. In any 108.18 certification of unpaid taxes for a tax parcel, the county 108.19 auditor shall clearly distinguish between taxes payable in the 108.20 current year, deferred taxes and interest, and delinquent 108.21 taxes. Payment of the deferred portion becomes due and owing at 108.22 the time specified in section 290B.08. Upon receipt of the 108.23 payment, the commissioner shall issue a receipt for it to the 108.24 person making the payment upon request and shall notify the 108.25 auditor of the county in which the parcel is located, within ten 108.26 days, identifying the parcel to which the payment applies. Upon 108.27 receipt by the commissioner of revenue of collected funds in the 108.28 amount of the deferral, the state's loan to the program 108.29 participant is deemed paid in full. 108.30 (b) If property for which taxes have been deferred under 108.31 this chapter forfeits under chapter 281 for nonpayment of a 108.32 nondeferred property tax amount, or because of nonpayment of 108.33 amounts previously deferred following a termination under 108.34 section 290B.08, the lien for the taxes deferred under this 108.35 chapter, plus interest and costs, shall be canceled by the 108.36 county auditor as provided in section 282.07. However, 109.1 notwithstanding any other law to the contrary, any proceeds from 109.2 a subsequent sale of the property under chapter 282 or another 109.3 law, must be used to first reimburse the county's forfeited tax 109.4 sale fund for any direct costs of selling the property or any 109.5 costs directly related to preparing the property for sale, and 109.6 then to reimburse the state for the amount of the canceled 109.7 lien. Within 90 days of the receipt of any sale proceed to 109.8 which the state is entitled under these provisions, the county 109.9 auditor must pay those funds to the commissioner of revenue by 109.10 warrant for deposit in the general fund. No other deposit, use, 109.11 distribution, or release of gross sale proceeds or receipts may 109.12 be made by the county until payments sufficient to fully 109.13 reimburse the state for the canceled lien amount have been 109.14 transmitted to the commissioner. 109.15 Sec. 25. Minnesota Statutes 1998, section 290B.08, 109.16 subdivision 1, is amended to read: 109.17 Subdivision 1. [TERMINATION.] (a) The deferral of taxes 109.18 granted under this chapter terminates when one of the following 109.19 occurs: 109.20 (1) the property is sold or transferred; 109.21 (2) the death oftheall qualifying 109.22homeowner(s)homeowners; 109.23 (3) the homeowner notifies the commissioner in writing that 109.24 the homeowner desires to discontinue the deferral; or 109.25 (4) the property no longer qualifies as a homestead. 109.26 (b) A property is not terminated from the program because 109.27 no deferred property tax amount is determined on the homestead 109.28 for any given year after the homestead's initial enrollment into 109.29 the program. 109.30 EFFECTIVE DATE: This section is effective for deferrals of 109.31 property taxes payable in 2001 and thereafter. 109.32 Sec. 26. Minnesota Statutes 1998, section 290B.08, 109.33 subdivision 2, is amended to read: 109.34 Subd. 2. [PAYMENT UPON TERMINATION.] Upon the termination 109.35 of the deferral under subdivision 1, the amount of deferred 109.36 taxesand, penalties, interest, and special assessments and 110.1 interest, plus the recording or filing fees under both section 110.2 290B.04, subdivision 2, and this subdivision becomes due and 110.3 payable to the commissioner within 90 days of termination of the 110.4 deferral for terminations under subdivision 1, paragraph (a), 110.5 clauses (1) and (2), and within one year of termination of the 110.6 deferral for terminations under subdivision 1, paragraph (a), 110.7 clauses (3) and (4). No additional interest is due on the 110.8 deferral if timely paid. On receipt of payment, the 110.9 commissioner shall within ten days notify the auditor of the 110.10 county in which the parcel is located, identifying the parcel to 110.11 which the payment applies and shall remit the recording or 110.12 filing fees under section 290B.04, subdivision 2, and this 110.13 subdivision to the auditor. A notice of termination of 110.14 deferral, containing the legal description and the recording or 110.15 filing data for the notice of qualification for deferral under 110.16 section 290B.04, subdivision 2, shall be prepared and recorded 110.17 or filed by the county auditor in the same office in which the 110.18 notice of qualification for deferral under section 290B.04, 110.19 subdivision 2, was recorded or filed, and the county auditor 110.20 shall mail a copy of the notice of termination to the property 110.21 owner. The property owner shall pay the recording or filing 110.22 fees. Upon recording or filing of the notice of termination of 110.23 deferral, the notice of qualification for deferral under section 110.24 290B.04, subdivision 2, and the lien created by it are 110.25 discharged. If the deferral is not timely paid, the penalty, 110.26 interest, lien, forfeiture, and other rules for the collection 110.27 of ad valorem property taxes apply. 110.28 Sec. 27. Minnesota Statutes 1998, section 290B.09, 110.29 subdivision 2, is amended to read: 110.30 Subd. 2. [APPROPRIATION.] An amount sufficient to pay the 110.31 total amount of property tax determined under subdivision 1, 110.32 plus any amounts paid under section 290B.04, subdivision 7, is 110.33 annually appropriated from the general fund to the commissioner 110.34 of revenue. 110.35 Sec. 28. Minnesota Statutes 1999 Supplement, section 110.36 383D.74, subdivision 2, is amended to read: 111.1 Subd. 2. [EXPIRATION.] The authority to impose a penalty 111.2 under this section expires on December 31,20002005. 111.3 EFFECTIVE DATE: This section is effective the day 111.4 following final enactment. 111.5 Sec. 29. Minnesota Statutes 1998, section 429.011, 111.6 subdivision 2a, is amended to read: 111.7 Subd. 2a. [MUNICIPALITY.] "Municipality" also includes a 111.8 county in the case of construction, reconstruction, or 111.9 improvement of a county state-aid highway or county highway as 111.10 defined in section 160.02 including curbs and gutters and storm 111.11 sewersand includes; a county exercising its powers and duties 111.12 under section 444.075, subdivision 1; and a county for expenses 111.13 not paid for under section 403.113, subdivision 3, paragraph 111.14 (b), clause (3). 111.15 EFFECTIVE DATE: This section is effective the day 111.16 following final enactment. 111.17 Sec. 30. Minnesota Statutes 1998, section 429.011, 111.18 subdivision 5, is amended to read: 111.19 Subd. 5. [IMPROVEMENT.] "Improvement" means any type of 111.20 improvement made under authority granted by section 429.021, and 111.21 in the case of a county is limited to the construction, 111.22 reconstruction, or improvement of a county state-aid highway or 111.23 county highway including curbs and gutters and storm sewers, and 111.24 to the purchase, installation, or maintenance of signs, posts, 111.25 and markers for addressing related to the operation of enhanced 111.26 911 telephone service. 111.27 EFFECTIVE DATE: This section is effective the day 111.28 following final enactment. 111.29 Sec. 31. Minnesota Statutes 1998, section 429.021, 111.30 subdivision 1, is amended to read: 111.31 Subdivision 1. [IMPROVEMENTS AUTHORIZED.] The council of a 111.32 municipality shall have power to make the following improvements: 111.33 (1) To acquire, open, and widen any street, and to improve 111.34 the same by constructing, reconstructing, and maintaining 111.35 sidewalks, pavement, gutters, curbs, and vehicle parking strips 111.36 of any material, or by grading, graveling, oiling, or otherwise 112.1 improving the same, including the beautification thereof and 112.2 including storm sewers or other street drainage and connections 112.3 from sewer, water, or similar mains to curb lines. 112.4 (2) To acquire, develop, construct, reconstruct, extend, 112.5 and maintain storm and sanitary sewers and systems, including 112.6 outlets, holding areas and ponds, treatment plants, pumps, lift 112.7 stations, service connections, and other appurtenances of a 112.8 sewer system, within and without the corporate limits. 112.9 (3) To construct, reconstruct, extend, and maintain steam 112.10 heating mains. 112.11 (4) To install, replace, extend, and maintain street lights 112.12 and street lighting systems and special lighting systems. 112.13 (5) To acquire, improve, construct, reconstruct, extend, 112.14 and maintain water works systems, including mains, valves, 112.15 hydrants, service connections, wells, pumps, reservoirs, tanks, 112.16 treatment plants, and other appurtenances of a water works 112.17 system, within and without the corporate limits. 112.18 (6) To acquire, improve and equip parks, open space areas, 112.19 playgrounds, and recreational facilities within or without the 112.20 corporate limits. 112.21 (7) To plant trees on streets and provide for their 112.22 trimming, care, and removal. 112.23 (8) To abate nuisances and to drain swamps, marshes, and 112.24 ponds on public or private property and to fill the same. 112.25 (9) To construct, reconstruct, extend, and maintain dikes 112.26 and other flood control works. 112.27 (10) To construct, reconstruct, extend, and maintain 112.28 retaining walls and area walls. 112.29 (11) To acquire, construct, reconstruct, improve, alter, 112.30 extend, operate, maintain, and promote a pedestrian skyway 112.31 system. Such improvement may be made upon a petition pursuant 112.32 to section 429.031, subdivision 3. 112.33 (12) To acquire, construct, reconstruct, extend, operate, 112.34 maintain, and promote underground pedestrian concourses. 112.35 (13) To acquire, construct, improve, alter, extend, 112.36 operate, maintain, and promote public malls, plazas or 113.1 courtyards. 113.2 (14) To construct, reconstruct, extend, and maintain 113.3 district heating systems. 113.4 (15) To construct, reconstruct, alter, extend, operate, 113.5 maintain, and promote fire protection systems in existing 113.6 buildings, but only upon a petition pursuant to section 429.031, 113.7 subdivision 3. 113.8 (16) To acquire, construct, reconstruct, improve, alter, 113.9 extend, and maintain highway sound barriers. 113.10 (17) To improve, construct, reconstruct, extend, and 113.11 maintain gas and electric distribution facilities owned by a 113.12 municipal gas or electric utility. 113.13 (18) To purchase, install, and maintain signs, posts, and 113.14 other markers for addressing related to the operation of 113.15 enhanced 911 telephone service. 113.16 EFFECTIVE DATE: This section is effective the day 113.17 following final enactment. 113.18 Sec. 32. Minnesota Statutes 1998, section 429.031, 113.19 subdivision 1, is amended to read: 113.20 Subdivision 1. [PREPARATION OF PLANS, NOTICE OF HEARING.] 113.21 (a) Before the municipality awards a contract for an improvement 113.22 or orders it made by day labor, or before the municipality may 113.23 assess any portion of the cost of an improvement to be made 113.24 under a cooperative agreement with the state or another 113.25 political subdivision for sharing the cost of making the 113.26 improvement, the council shall hold a public hearing on the 113.27 proposed improvement following two publications in the newspaper 113.28 of a notice stating the time and place of the hearing, the 113.29 general nature of the improvement, the estimated cost, and the 113.30 area proposed to be assessed. The two publications must be a 113.31 week apart, and the hearing must be at least three days after 113.32 the second publication. Not less than ten days before the 113.33 hearing, notice of the hearing must also be mailed to the owner 113.34 of each parcel within the area proposed to be assessed and must 113.35 contain a statement that a reasonable estimate of the impact of 113.36 the assessment will be available at the hearing, but failure to 114.1 give mailed notice or any defects in the notice does not 114.2 invalidate the proceedings. For the purpose of giving mailed 114.3 notice, owners are those shown as owners on the records of the 114.4 county auditor or, in any county where tax statements are mailed 114.5 by the county treasurer, on the records of the county treasurer; 114.6 but other appropriate records may be used for this purpose. For 114.7 properties that are tax exempt or subject to taxation on a gross 114.8 earnings basis and are not listed on the records of the county 114.9 auditor or the county treasurer, the owners may be ascertained 114.10 by any practicable means, and mailed notice must be given them 114.11 as provided in this subdivision. 114.12 (b) Before the adoption of a resolution ordering the 114.13 improvement, the council shall secure from the city engineer or 114.14 some other competent person of its selection a report advising 114.15 it in a preliminary way as to whether the proposed improvement 114.16 is necessary, cost-effective, and feasible and as to whether it 114.17 should best be made as proposed or in connection with some other 114.18 improvement. The report must also include the estimated cost of 114.19 the improvement as recommended. A reasonable estimate of the 114.20 total amount to be assessed, and a description of the 114.21 methodology used to calculate individual assessments for 114.22 affected parcels, must be available at the hearing. No error or 114.23 omission in the report invalidates the proceeding unless it 114.24 materially prejudices the interests of an owner. 114.25 (c) If the report is not prepared by an employee of a 114.26 municipality, the compensation for preparing the report under 114.27 this subdivision must be based on the following factors: 114.28 (1) the time and labor required; 114.29 (2) the experience and knowledge of the preparer; 114.30 (3) the complexity and novelty of the problems involved; 114.31 and 114.32 (4) the extent of the responsibilities assumed. 114.33 (d) The compensation must not be based primarily on a 114.34 percentage of the estimated cost of the improvement. 114.35 (e) The council may also take other steps prior to the 114.36 hearing, including, among other things, the preparation of plans 115.1 and specifications and the advertisement for bids that will in 115.2 its judgment provide helpful information in determining the 115.3 desirability and feasibility of the improvement. 115.4 (f) The hearing may be adjourned from time to time, and a 115.5 resolution ordering the improvement may be adopted at any time 115.6 within six months after the date of the hearing by vote of a 115.7 majority of all members of the council when the improvement has 115.8 been petitioned for by the owners of not less than 35 percent in 115.9 frontage of the real property abutting on the streets named in 115.10 the petition as the location of the improvement. When there has 115.11 been no such petition, the resolution may be adopted only by 115.12 vote of four-fifths of all members of the council; provided that 115.13 if the mayor of the municipality is a member of the council but 115.14 has no vote or votes only in case of a tie, the mayor is not 115.15 deemed to be a member for the purpose of determining a 115.16 four-fifths majority vote. 115.17 (g) The resolution ordering the improvement may reduce, but 115.18 not increase, the extent of the improvement as stated in the 115.19 notice of hearing. 115.20 EFFECTIVE DATE: This section is effective for mailed 115.21 notices and hearings held June 1, 2000, and thereafter. 115.22 Sec. 33. Minnesota Statutes 1998, section 469.040, is 115.23 amended by adding a subdivision to read: 115.24 Subd. 5. [DESIGNATED HOUSING CORPORATION.] Property 115.25 located within the exterior boundaries of the White Earth Indian 115.26 Reservation that is owned by the tribe's designated housing 115.27 entity as defined in United States Code, title 25, section 115.28 4103(21), and that is a housing project or a housing development 115.29 project, as defined in section 469.002, subdivisions 13 and 15, 115.30 is exempt from all real and personal property taxes of the city, 115.31 the county, the state, or any political subdivision thereof, but 115.32 the property is subject to subdivision 3. A copy of those 115.33 portions of the annual reports submitted on behalf of the 115.34 housing entity to the Secretary of the United States Department 115.35 of Housing and Urban Development for the project that contain 115.36 information sufficient to determine the amount due under 116.1 subdivision 3 satisfies the reporting requirements of 116.2 subdivision 3 for the project. 116.3 EFFECTIVE DATE: This section is effective for the 2000 116.4 assessment, taxes payable in 2001, and thereafter. 116.5 Sec. 34. Laws 1987, chapter 402, section 2, subdivision 1, 116.6 is amended to read: 116.7 Subdivision 1. [AGREEMENT.] The city of Moose Lake and one 116.8 or more of the towns of Moose Lake, Silver, and Windemere may by 116.9 action of their city council and town boards establish the Moose 116.10 Lake fire protection district.The town of Silver may provide116.11that only a described part of its territory be included within116.12the district.The district shall provide fire protection 116.13 services throughout its territory and may exercise all the 116.14 powers of the city and towns that relate to fire protection 116.15 anywhere within its territory. Any other contiguous town or 116.16 home rule charter or statutory city may join the district with 116.17 the agreement of the cities and towns that comprise the district 116.18 at the time of its application to join. Action to join the 116.19 district may be taken by the city council or town board of the 116.20 city or town. 116.21 EFFECTIVE DATE: Pursuant to Minnesota Statutes, section 116.22 645.023, subdivision 1, clause (a), this section is effective 116.23 without local approval the day following final enactment. 116.24 Sec. 35. Laws 1987, chapter 402, section 2, subdivision 4, 116.25 is amended to read: 116.26 Subd. 4. [TAX.] The district may impose a property tax on 116.27 real property in the district in an amount sufficient to 116.28 discharge its operating expenses and debt payable in each year. 116.29 The tax shall be disregarded in the calculation of any levies or 116.30 limits on levies provided by Minnesota Statutes, chapter 275, or 116.31 other law. A city or town that joins the district may not incur 116.32 expenses or debt for fire protection services for territory 116.33 included in the district and may not impose taxes for that 116.34 purpose.The town of Silver may impose a property tax on116.35territory not included in the district to discharge costs or116.36debt incurred to provide fire protection services to that117.1territory.117.2 EFFECTIVE DATE: Pursuant to Minnesota Statutes, section 117.3 645.023, subdivision 1, clause (a), this section is effective 117.4 without local approval the day following final enactment. 117.5 Sec. 36. Laws 1987, chapter 402, section 2, subdivision 5, 117.6 is amended to read: 117.7 Subd. 5. [PUBLIC INDEBTEDNESS.] The district may incur 117.8 debt in the manner provided for a municipality by Minnesota 117.9 Statutes, chapter 475, when necessary to accomplish a duty 117.10 charged to it. The district may also issue certificates of 117.11 indebtedness subject to debt limits for the district to purchase 117.12 capital equipment having an expected useful life at least as 117.13 long as the terms of the certificates. The certificates must be 117.14 payable in not more than five years and must be issued on the 117.15 terms and in the manner as the board may determine. Before 117.16 issuing certificates in an amount exceeding .25 percent of the 117.17 taxable property of the district, the board shall publish a 117.18 resolution indicating its intent to issue the certificates in a 117.19 newspaper of general circulation in the district. The 117.20 certificates may be issued without an election unless within ten 117.21 days of the publication a petition signed by the sum of at least 117.22 ten percent of the voters in the member towns voting in the last 117.23 regular town election and ten percent of the voters of the city 117.24 voting in the last city general election requesting an election 117.25 on their issuance is filed with the board. If a petition is 117.26 filed, the certificates may not be issued unless their issuance 117.27 is approved by a majority of the voters at a general or special 117.28 election in which all the residents of the city and member towns 117.29 are eligible to vote. A tax levy shall be made against all 117.30 property in the district to pay the principal and interest on 117.31 the certificates, in accordance with Minnesota Statutes, section 117.32 475.61, as in the case of bonds. 117.33 EFFECTIVE DATE: Pursuant to Minnesota Statutes, section 117.34 645.023, subdivision 1, clause (a), this section is effective 117.35 without local approval the day following final enactment. 117.36 Sec. 37. [EVELETH-GILBERT JOINT RECREATION BOARD TAX.] 118.1 The cities and towns who participate in the Eveleth-Gilbert 118.2 joint recreation board may levy a tax on the taxable property 118.3 within their taxing jurisdictions situated within the boundaries 118.4 of independent school district No. 2154, Eveleth-Gilbert, as 118.5 provided in this section. The maximum amount that may be levied 118.6 by all participating cities and towns combined shall not exceed 118.7 a total of $125,000 per year, for a maximum of eight years. 118.8 Property within the school district may be made subject to the 118.9 tax permitted by this section by the agreement of the governing 118.10 body or town board of the city or town where the property is 118.11 located. The agreement may be by resolution of a governing body 118.12 or town board or by a joint powers agreement under Minnesota 118.13 Statutes, section 471.59. If levied, this tax is in addition to 118.14 all other taxes permitted to be levied for park and recreation 118.15 purposes by the participating cities and towns. It shall be 118.16 disregarded in the calculation of all tax levy limitations 118.17 imposed by charter and any general overall levy limitations. A 118.18 city or town may withdraw its agreement to future taxes by 118.19 notice to the recreation board and the county auditor unless 118.20 provided otherwise by a joint powers agreement. The tax shall 118.21 be collected by the St. Louis county treasurer and paid directly 118.22 to the Eveleth-Gilbert joint recreation board. 118.23 This section applies in the cities of Eveleth, Gilbert, 118.24 Leonidas, McKinley, and Iron Junction, and in the towns of 118.25 Biwabik, Clinton, and Fayal, all located in St. Louis county. 118.26 EFFECTIVE DATE: This section is effective for taxes 118.27 payable in 2001 through taxes payable in 2008. 118.28 Sec. 38. [STUDY OF TAXATION OF FOREST LAND.] 118.29 Subdivision 1. [STUDY.] The commissioner of revenue, in 118.30 cooperation with the Minnesota forest resources council, shall 118.31 study the taxation of forest land in this state. The study 118.32 shall include a review of the current application of property 118.33 taxes to these lands and a review and comparison with other 118.34 forest land tax policies. It shall also include recommendations 118.35 for changes in tax policy: 118.36 (1) to encourage forest productivity; 119.1 (2) to maintain land in forest cover; 119.2 (3) to encourage the application of sustainable site level 119.3 forest management guidelines; 119.4 (4) to address impacts on local government revenues; and 119.5 (5) for changes in tax rates. 119.6 The study shall be completed and transmitted to the chairs of 119.7 the house and senate tax committees by December 1, 2000. 119.8 Subd. 2. [APPROPRIATION.] $50,000 is appropriated from the 119.9 general fund in fiscal year 2000 to the commissioner of revenue 119.10 for completion of the study required in this section. This 119.11 appropriation is available until December 31, 2000. 119.12 EFFECTIVE DATE: This section is effective the day 119.13 following final enactment. 119.14 Sec. 39. [APPROPRIATION.] 119.15 Notwithstanding section 16A.1521, the balance of the 119.16 property tax reform account as of July 1, 2000, is transferred 119.17 to the general fund and any additional funds appropriated to the 119.18 property tax reform account as a result of the November, 1999, 119.19 forecast are canceled and the appropriation remains in the 119.20 general fund. 119.21 Sec. 40. [REPEALER.] 119.22 (a) Minnesota Statutes 1998, sections 270.072, subdivision 119.23 5; and 270.075, subdivisions 3 and 4; are repealed. 119.24 (b) Minnesota Statutes 1998, section 273.127, is repealed. 119.25 (c) Minnesota Statutes 1998, section 273.1316, is repealed. 119.26 EFFECTIVE DATE: Paragraph (a) is effective for taxes 119.27 payable in 2001 and thereafter. Paragraph (b) is effective for 119.28 taxes payable in 2000 and thereafter. Paragraph (c) is 119.29 effective the day following final enactment. 119.30 Sec. 41. [EFFECTIVE DATE.] 119.31 Sections 20 to 24, 26, and 27 apply to all homeowners and 119.32 all property taxes deferred beginning in payable 2001, including 119.33 those homeowners who initially qualified under this program for 119.34 taxes payable in 1999 or 2000, except that if a homeowner did 119.35 not qualify for any property tax deferral for payable 2000 119.36 because of the percentage threshold in Minnesota Statutes, 120.1 section 290B.03, subdivision 1, paragraph (6), or the 120.2 prohibition on qualification of owners of property with 120.3 delinquent taxes or delinquent special assessments, and now 120.4 qualifies for the program with the changes in those provisions, 120.5 the homeowner may apply to the commissioner by July 1, 2000, and 120.6 request a retroactive qualification into the program for taxes 120.7 payable in 2000. The commissioner of revenue shall notify the 120.8 county auditor of such eligible taxpayers. The commissioner 120.9 shall make payment to the county for the appropriate amount due 120.10 for taxes payable in 2000, and the county treasurer shall refund 120.11 the taxpayer for any excess tax amount that the taxpayer has 120.12 paid to the county. 120.13 ARTICLE 6 120.14 LEVY LIMITS AND AIDS TO LOCAL GOVERNMENT 120.15 Section 1. Minnesota Statutes 1998, section 97A.061, is 120.16 amended by adding a subdivision to read: 120.17 Subd. 4. [OFFSET OF PAYMENTS.] Payments to a county or 120.18 town under this section must be reduced by the amount of payment 120.19 to that county or town under section 477A.12 for the same lands 120.20 in the same year. 120.21 EFFECTIVE DATE: This section is effective for payments 120.22 made in calendar year 2001 and thereafter. 120.23 Sec. 2. Minnesota Statutes 1998, section 97A.061, is 120.24 amended by adding a subdivision to read: 120.25 Subd. 5. [ALLOCATION OF PAYMENTS.] Notwithstanding section 120.26 477A.14, the amounts paid to a county under section 477A.14 for 120.27 lands that are also subject to payment under this section shall 120.28 be allocated within the county in accordance with subdivision 2. 120.29 EFFECTIVE DATE: This section is effective for payments 120.30 made in calendar year 2001 and thereafter. 120.31 Sec. 3. Minnesota Statutes 1999 Supplement, section 120.32 273.1398, subdivision 4a, is amended to read: 120.33 Subd. 4a. [AID OFFSET FOR COURT COSTS.] (a) By July 15, 120.34 1999, the supreme court shall determine and certify to the 120.35 commissioner of revenue for each county, other than counties 120.36 located in the eighth judicial district, the county's share of 121.1 the costs assumed under Laws 1999, chapter 216, article 7, 121.2 during the fiscal year beginning July 1, 2000, less an amount 121.3 equal to the county's share of transferred fines collected by 121.4 the district courts in the county during calendar year 1998. 121.5 (b) Payments to a county under subdivision 2 or section 121.6 273.166 for calendar year 2000 must be permanently reduced by an 121.7 amount equal to 75 percent of the net cost to the state for 121.8 assumption of district court costs as certified in paragraph (a). 121.9 (c) Payments to a county under subdivision 2 or section 121.10 273.166 for calendar year 2001 must be permanently reduced by an 121.11 amount equal to 25 percent of the net cost to the state for 121.12 assumption of district court costs as certified in paragraph (a). 121.13 (d) Payments to a county under subdivision 2 for calendar 121.14 year 2001 are permanently increased by an amount equal to 7.5 121.15 percent of the county's share of transferred fines collected by 121.16 the district courts in the county during calendar year 1998, as 121.17 determined under paragraph (a). If the amount determined in 121.18 paragraph (a) exceeds the amount of aid a county is scheduled to 121.19 be paid under subdivision 2 in 2000, then the county shall not 121.20 receive an aid increase under this paragraph. 121.21 EFFECTIVE DATE: This section is effective for aids payable 121.22 in 2001 and thereafter. 121.23 Sec. 4. Minnesota Statutes 1999 Supplement, section 121.24 275.70, subdivision 5, is amended to read: 121.25 Subd. 5. [SPECIAL LEVIES.] "Special levies" means those 121.26 portions of ad valorem taxes levied by a local governmental unit 121.27 for the following purposes or in the following manner: 121.28 (1) to pay the costs of the principal and interest on 121.29 bonded indebtedness or to reimburse for the amount of liquor 121.30 store revenues used to pay the principal and interest due on 121.31 municipal liquor store bonds in the year preceding the year for 121.32 which the levy limit is calculated; 121.33 (2) to pay the costs of principal and interest on 121.34 certificates of indebtedness issued for any corporate purpose 121.35 except for the following: 121.36 (i) tax anticipation or aid anticipation certificates of 122.1 indebtedness; 122.2 (ii) certificates of indebtedness issued under sections 122.3 298.28 and 298.282; 122.4 (iii) certificates of indebtedness used to fund current 122.5 expenses or to pay the costs of extraordinary expenditures that 122.6 result from a public emergency; or 122.7 (iv) certificates of indebtedness used to fund an 122.8 insufficiency in tax receipts or an insufficiency in other 122.9 revenue sources; 122.10 (3) to provide for the bonded indebtedness portion of 122.11 payments made to another political subdivision of the state of 122.12 Minnesota; 122.13 (4) to fund payments made to the Minnesota state armory 122.14 building commission under section 193.145, subdivision 2, to 122.15 retire the principal and interest on armory construction bonds; 122.16 (5) for unreimbursed expenses related to flooding that 122.17 occurred during the first half of calendar year 1997, as allowed 122.18 by the commissioner of revenue under section 275.74, paragraph 122.19 (b); 122.20 (6) for local units of government located in an area 122.21 designated by the Federal Emergency Management Agency pursuant 122.22 to a major disaster declaration issued for Minnesota by 122.23 President Clinton after April 1, 1997, and before June 11, 1997, 122.24 for the amount of tax dollars lost due to abatements authorized 122.25 under section 273.123, subdivision 7, and Laws 1997, chapter 122.26 231, article 2, section 64, to the extent that they are related 122.27 to the major disaster and to the extent that neither the state 122.28 or federal government reimburses the local government for the 122.29 amount lost; 122.30 (7) property taxes approved by voters which are levied 122.31 against the referendum market value as provided under section 122.32 275.61; 122.33 (8) to fund matching requirements needed to qualify for 122.34 federal or state grants or programs to the extent that either 122.35 (i) the matching requirement exceeds the matching requirement in 122.36 calendar year 1997, or (ii) it is a new matching requirement 123.1 that didn't exist prior to 1998; 123.2 (9) to pay the expenses reasonably and necessarily incurred 123.3 in preparing for or repairing the effects of natural disaster 123.4 including the occurrence or threat of widespread or severe 123.5 damage, injury, or loss of life or property resulting from 123.6 natural causes, in accordance with standards formulated by the 123.7 emergency services division of the state department of public 123.8 safety, as allowed by the commissioner of revenue under section 123.9 275.74, paragraph (b); 123.10 (10) for the amount of tax revenue lost due to abatements 123.11 authorized under section 273.123, subdivision 7, for damage 123.12 related to the tornadoes of March 29, 1998, to the extent that 123.13 neither the state or federal government provides reimbursement 123.14 for the amount lost; 123.15 (11) pay amounts required to correct an error in the levy 123.16 certified to the county auditor by a city or county in a levy 123.17 year, but only to the extent that when added to the preceding 123.18 year's levy it is not in excess of an applicable statutory, 123.19 special law or charter limitation, or the limitation imposed on 123.20 the governmental subdivision by sections 275.70 to 275.74 in the 123.21 preceding levy year; 123.22 (12) to pay an abatement under section 469.1815; 123.23 (13) to pay the employer contribution to the local 123.24 government correctional service retirement plan under section 123.25 353E.03, subdivision 2, to the extent that the employer 123.26 contribution exceeds 5.49 percent of total salary;and123.27 (14) to pay the operating or maintenance costs of a county 123.28 jail as authorized in section 641.01 or 641.262, or of a 123.29 correctional facility as defined in section 241.021, subdivision 123.30 1, paragraph (5), to the extent that the county can demonstrate 123.31 to the commissioner of revenue that the amount has been included 123.32 in the county budget as a direct result of a rule, minimum 123.33 requirement, minimum standard, or directive of the department of 123.34 corrections, or to pay the operating or maintenance costs of a 123.35 regional jail as authorized in section 641.262. For purposes of 123.36 this clause, a district court order is not a rule, minimum 124.1 requirement, minimum standard, or directive of the department of 124.2 corrections. If the county utilizes this special levy, any 124.3 amount levied by the county in the previous levy year for the 124.4 purposes specified under this clause and included in the 124.5 county's previous year's levy limitation computed under section 124.6 275.71, shall be deducted from the levy limit base under section 124.7 275.71, subdivision 2, when determining the county's current 124.8 year levy limitation. The county shall provide the necessary 124.9 information to the commissioner of revenue for making this 124.10 determination; and 124.11 (15) to repay a state or federal loan used to fund the 124.12 direct or indirect required spending by the local government due 124.13 to a state or federal transportation project or other state or 124.14 federal capital project. This authority may only be used if the 124.15 project is not a local government initiative. 124.16 EFFECTIVE DATE: Minnesota Statutes, section 275.70, 124.17 subdivision 5, as amended by this section, is effective 124.18 beginning with taxes levied in 2000, payable in 2001 and 124.19 thereafter, for any year in which general levy limits are 124.20 imposed, notwithstanding Laws 1997, chapter 231, article 3, 124.21 section 9, as amended by Laws 1999, chapter 243, article 6, 124.22 section 10. 124.23 Sec. 5. Minnesota Statutes 1999 Supplement, section 124.24 275.71, subdivision 4, is amended to read: 124.25 Subd. 4. [PROPERTY TAX LEVY LIMIT.] For taxes levied 124.26 in1998 and1999, the property tax levy limit for a local 124.27 governmental unit is equal to its adjusted levy limit base 124.28 determined under subdivision 3 plus any additional levy 124.29 authorized under section 275.73, which is levied against net tax 124.30 capacity, reduced by the sum of (1) the total amount of aids 124.31 that the local governmental unit is certified to receive under 124.32 sections 477A.011 to 477A.014, (2) homestead and agricultural 124.33 aids it is certified to receive under section 273.1398, (3) 124.34 local performance aid it is certified to receive under section 124.35 477A.05, (4) taconite aids under sections 298.28 and 298.282 124.36 including any aid which was required to be placed in a special 125.1 fund for expenditure in the next succeeding year but excluding 125.2 amounts allocated under section 298.28, subdivision 2, paragraph 125.3 (b), (5) flood loss aid under section 273.1383, and (6) 125.4 low-income housing aid under sections 477A.06 and 477A.065. 125.5 EFFECTIVE DATE: This section is effective for taxes levied 125.6 in 1999, payable in 2000. 125.7 Sec. 6. Minnesota Statutes 1999 Supplement, section 125.8 477A.011, subdivision 36, is amended to read: 125.9 Subd. 36. [CITY AID BASE.] (a) Except as provided in 125.10 paragraphs (b) to(k)(n), "city aid base" means, for each city, 125.11 the sum of the local government aid and equalization aid it was 125.12 originally certified to receive in calendar year 1993 under 125.13 Minnesota Statutes 1992, section 477A.013, subdivisions 3 and 5, 125.14 and the amount of disparity reduction aid it received in 125.15 calendar year 1993 under Minnesota Statutes 1992, section 125.16 273.1398, subdivision 3. 125.17 (b) For aids payable in 1996 and thereafter, a city that in 125.18 1992 or 1993 transferred an amount from governmental funds to 125.19 its sewer and water fund, which amount exceeded its net levy for 125.20 taxes payable in the year in which the transfer occurred, has a 125.21 "city aid base" equal to the sum of (i) its city aid base, as 125.22 calculated under paragraph (a), and (ii) one-half of the 125.23 difference between its city aid distribution under section 125.24 477A.013, subdivision 9, for aids payable in 1995 and its city 125.25 aid base for aids payable in 1995. 125.26 (c) The city aid base for any city with a population less 125.27 than 500 is increased by $40,000 for aids payable in calendar 125.28 year 1995 and thereafter, and the maximum amount of total aid it 125.29 may receive under section 477A.013, subdivision 9, paragraph 125.30 (c), is also increased by $40,000 for aids payable in calendar 125.31 year 1995 only, provided that: 125.32 (i) the average total tax capacity rate for taxes payable 125.33 in 1995 exceeds 200 percent; 125.34 (ii) the city portion of the tax capacity rate exceeds 100 125.35 percent; and 125.36 (iii) its city aid base is less than $60 per capita. 126.1 (d) The city aid base for a city is increased by $20,000 in 126.2 1998 and thereafter and the maximum amount of total aid it may 126.3 receive under section 477A.013, subdivision 9, paragraph (c), is 126.4 also increased by $20,000 in calendar year 1998 only, provided 126.5 that: 126.6 (i) the city has a population in 1994 of 2,500 or more; 126.7 (ii) the city is located in a county, outside of the 126.8 metropolitan area, which contains a city of the first class; 126.9 (iii) the city's net tax capacity used in calculating its 126.10 1996 aid under section 477A.013 is less than $400 per capita; 126.11 and 126.12 (iv) at least four percent of the total net tax capacity, 126.13 for taxes payable in 1996, of property located in the city is 126.14 classified as railroad property. 126.15 (e) The city aid base for a city is increased by $200,000 126.16 in 1999 and thereafter and the maximum amount of total aid it 126.17 may receive under section 477A.013, subdivision 9, paragraph 126.18 (c), is also increased by $200,000 in calendar year 1999 only, 126.19 provided that: 126.20 (i) the city was incorporated as a statutory city after 126.21 December 1, 1993; 126.22 (ii) its city aid base does not exceed $5,600; and 126.23 (iii) the city had a population in 1996 of 5,000 or more. 126.24 (f) The city aid base for a city is increased by $450,000 126.25 in 1999 to 2008 and the maximum amount of total aid it may 126.26 receive under section 477A.013, subdivision 9, paragraph (c), is 126.27 also increased by $450,000 in calendar year 1999 only, provided 126.28 that: 126.29 (i) the city had a population in 1996 of at least 50,000; 126.30 (ii) its population had increased by at least 40 percent in 126.31 the ten-year period ending in 1996; and 126.32 (iii) its city's net tax capacity for aids payable in 1998 126.33 is less than $700 per capita. 126.34 (g) Beginning in 2002, the city aid base for a city is 126.35 equal to the sum of its city aid base in 2001 and the amount of 126.36 additional aid it was certified to receive under section 477A.06 127.1 in 2001. For 2002 only, the maximum amount of total aid a city 127.2 may receive under section 477A.013, subdivision 9, paragraph 127.3 (c), is also increased by the amount it was certified to receive 127.4 under section 477A.06 in 2001. 127.5 (h) The city aid base for a city is increased by $150,000 127.6 for aids payable in 2000 and thereafter, and the maximum amount 127.7 of total aid it may receive under section 477A.013, subdivision 127.8 9, paragraph (c), is also increased by $150,000 in calendar year 127.9 2000 only, provided that: 127.10 (1) the city has a population that is greater than 1,000 127.11 and less than 2,500; 127.12 (2) its commercial and industrial percentage for aids 127.13 payable in 1999 is greater than 45 percent; and 127.14 (3) the total market value of all commercial and industrial 127.15 property in the city for assessment year 1999 is at least 15 127.16 percent less than the total market value of all commercial and 127.17 industrial property in the city for assessment year 1998. 127.18 (i) The city aid base for a city is increased by $200,000 127.19 in 2000 and thereafter, and the maximum amount of total aid it 127.20 may receive under section 477A.013, subdivision 9, paragraph 127.21 (c), is also increased by $200,000 in calendar year 2000 only, 127.22 provided that: 127.23 (1) the city had a population in 1997 of 2,500 or more; 127.24 (2) the net tax capacity of the city used in calculating 127.25 its 1999 aid under section 477A.013 is less than $650 per 127.26 capita; 127.27 (3) the pre-1940 housing percentage of the city used in 127.28 calculating 1999 aid under section 477A.013 is greater than 12 127.29 percent; 127.30 (4) the 1999 local government aid of the city under section 127.31 477A.013 is less than 20 percent of the amount that the formula 127.32 aid of the city would have been if the need increase percentage 127.33 was 100 percent; and 127.34 (5) the city aid base of the city used in calculating aid 127.35 under section 477A.013 is less than $7 per capita. 127.36 (j) The city aid base for a city is increased by $225,000 128.1 in calendar years 2000 to 2002 and the maximum amount of total 128.2 aid it may receive under section 477A.013, subdivision 9, 128.3 paragraph (c), is also increased by $225,000 in calendar year 128.4 2000 only, provided that: 128.5 (1) the city had a population of at least 5,000; 128.6 (2) its population had increased by at least 50 percent in 128.7 the ten-year period ending in 1997; 128.8 (3) the city is located outside of the Minneapolis-St. Paul 128.9 metropolitan statistical area as defined by the United States 128.10 Bureau of the Census; and 128.11 (4) the city received less than $30 per capita in aid under 128.12 section 477A.013, subdivision 9, for aids payable in 1999. 128.13 (k) The city aid base for a city is increased by $102,000 128.14 in 2000 and thereafter, and the maximum amount of total aid it 128.15 may receive under section 477A.013, subdivision 9, paragraph 128.16 (c), is also increased by $102,000 in calendar year 2000 only, 128.17 provided that: 128.18 (1) the city has a population in 1997 of 2,000 or more; 128.19 (2) the net tax capacity of the city used in calculating 128.20 its 1999 aid under section 477A.013 is less than $455 per 128.21 capita; 128.22 (3) the net levy of the city used in calculating 1999 aid 128.23 under section 477A.013 is greater than $195 per capita; and 128.24 (4) the 1999 local government aid of the city under section 128.25 477A.013 is less than 38 percent of the amount that the formula 128.26 aid of the city would have been if the need increase percentage 128.27 was 100 percent. 128.28 (l) The city aid base for a city is increased by $32,000 in 128.29 2001 and thereafter, and the maximum amount of total aid it may 128.30 receive under section 477A.013, subdivision 9, paragraph (c), is 128.31 also increased by $32,000 in calendar year 2001 only, provided 128.32 that: 128.33 (1) the city has a population in 1998 that is greater than 128.34 200 but less than 500; 128.35 (2) the city's revenue need used in calculating aids 128.36 payable in 2000 was greater than $200 per capita; 129.1 (3) the city net tax capacity for the city used in 129.2 calculating aids available in 2000 was equal to or less than 129.3 $200 per capita; 129.4 (4) the city aid base of the city used in calculating aid 129.5 under section 477A.013 is less than $65 per capita; and 129.6 (5) the city's formula aid for aids payable in 2000 was 129.7 greater than zero. 129.8 (m) The city aid base for a city is increased by $7,200 in 129.9 2001 and thereafter, and the maximum amount of total aid it may 129.10 receive under section 477A.013, subdivision 9, paragraph (c), is 129.11 also increased by $7,200 in calendar year 2001 only, provided 129.12 that: 129.13 (1) the city had a population in 1998 that is greater than 129.14 200 but less than 500; 129.15 (2) the city's commercial industrial percentage used in 129.16 calculating aids payable in 2000 was less than ten percent; 129.17 (3) more than 25 percent of the city's population was 60 129.18 years old or older according to the 1990 census; 129.19 (4) the city aid base of the city used in calculating aid 129.20 under section 477A.013 is less than $15 per capita; and 129.21 (5) the city's formula aid for aids payable in 2000 was 129.22 greater than zero. 129.23 (n) The city aid base for a city is increased by $45,000 in 129.24 2001 and thereafter, and the maximum amount of total aid it may 129.25 receive under section 477A.013, subdivision 9, paragraph (c), is 129.26 also increased by $45,000 in calendar year 2001 only, provided 129.27 that: 129.28 (1) the net tax capacity of the city used in calculating 129.29 its 2000 aid under section 477A.013 is less than $810 per 129.30 capita; 129.31 (2) the population of the city declined more than two 129.32 percent between 1988 and 1998; 129.33 (3) the net levy of the city used in calculating 2000 aid 129.34 under section 477A.013 is greater than $240 per capita; and 129.35 (4) the city received less than $36 per capita in aid under 129.36 section 477A.013, subdivision 9, for aids payable in 2000. 130.1 EFFECTIVE DATE: This section is effective beginning with 130.2 aids payable in 2001 and thereafter. 130.3 Sec. 7. Minnesota Statutes 1999 Supplement, section 130.4 477A.03, subdivision 2, is amended to read: 130.5 Subd. 2. [ANNUAL APPROPRIATION.] (a) A sum sufficient to 130.6 discharge the duties imposed by sections 477A.011 to 477A.014 is 130.7 annually appropriated from the general fund to the commissioner 130.8 of revenue. 130.9 (b) Aid payments to counties under section 477A.0121 are 130.10 limited to $20,265,000 in 1996. Aid payments to counties under 130.11 section 477A.0121 are limited to $27,571,625 in 1997. For aid 130.12 payable in 1998 and thereafter, the total aids paid under 130.13 section 477A.0121 are the amounts certified to be paid in the 130.14 previous year, adjusted for inflation as provided under 130.15 subdivision 3. 130.16 (c)(i) For aids payable in 1998 and thereafter, the total 130.17 aids paid to counties under section 477A.0122 are the amounts 130.18 certified to be paid in the previous year, adjusted for 130.19 inflation as provided under subdivision 3. 130.20 (ii) Aid payments to counties under section 477A.0122 in 130.21 2000 are further increased by an additional $20,000,000 in 2000. 130.22 (d) Aid payments to cities in 1999 under section 477A.013, 130.23 subdivision 9, are limited to $380,565,489. For aids payable in 130.24 2000and 2001, the total aids paid under section 477A.013, 130.25 subdivision 9, are the amounts certified to be paid in the 130.26 previous year, adjusted for inflation as provided in subdivision 130.27 3, and increased by the amount necessary to effectuate Laws 130.28 1999, chapter 243, article 5, section 48, paragraph (b). For 130.29 aids payable in 2001 through 2003, the total aids paid under 130.30 section 477A.013, subdivision 9, are the amounts certified to be 130.31 paid in the previous year, adjusted for inflation as provided 130.32 under subdivision 3. For aids payable in20022004, the total 130.33 aids paid under section 477A.013, subdivision 9, are the amounts 130.34 certified to be paid in the previous year, adjusted for 130.35 inflation as provided under subdivision 3, and increased by the 130.36 amount certified to be paid in20012003 under section 477A.06. 131.1 For aids payable in20032005 and thereafter, the total aids 131.2 paid under section 477A.013, subdivision 9, are the amounts 131.3 certified to be paid in the previous year, adjusted for 131.4 inflation as provided under subdivision 3. The additional 131.5 amount authorized under subdivision 4 is not included when 131.6 calculating the appropriation limits under this paragraph. 131.7 EFFECTIVE DATE: This section is effective for aids payable 131.8 in 2000 and thereafter. 131.9 Sec. 8. Minnesota Statutes 1999 Supplement, section 131.10 477A.06, subdivision 1, is amended to read: 131.11 Subdivision 1. [ELIGIBILITY.] (a) For assessment years 131.121998, 1999, and2000, 2001, and 2002, for all class 4d property 131.13 on which construction was begun before January 1, 1999, the 131.14 assessor shall determine the difference between the actual net 131.15 tax capacity and the net tax capacity that would be determined 131.16 for the property if the class rates for assessment year 1997 131.17 were in effect. 131.18 (b) In calendar years1999, 2000, and2001, 2002, and 2003, 131.19 each city shall be eligible for aid equal to (i) the amount by 131.20 which the sum of the differences determined in clause (a) for 131.21 the corresponding assessment year exceeds two percent of the 131.22 city's total taxable net tax capacity for taxes payable in 1998, 131.23 multiplied by (ii) the city government's average local tax rate 131.24 for taxes payable in 1998. 131.25 Sec. 9. Minnesota Statutes 1998, section 477A.06, 131.26 subdivision 3, is amended to read: 131.27 Subd. 3. [APPROPRIATION; PAYMENT.] (a) The commissioner 131.28 shall pay each city its qualifying aid amount on or before July 131.29 20 of each year. An amount sufficient to pay the aid authorized 131.30 under this section is appropriated to the commissioner of 131.31 revenue from the property tax reform account in fiscal years 131.32 2000 and 2001, and from the general fund in fiscalyearyears 131.33 2002, 2003, and 2004. 131.34 (b) For fiscal years 2001and 2002through 2004, the amount 131.35 of aid appropriated under this section may not exceed $1,500,000 131.36 each year. 132.1 (c) If the total amount of aid that would otherwise be 132.2 payable under the formula in this section exceeds the maximum 132.3 allowed under paragraph (b), the amount of aid for each city is 132.4 reduced proportionately to equal the limit. 132.5 Sec. 10. Minnesota Statutes 1998, section 477A.11, 132.6 subdivision 1, is amended to read: 132.7 Subdivision 1. [TERMS.] For the purpose ofLaws 1979,132.8Chapter 303, Article 8, Sections 1 to 5sections 477A.11 to 132.9 477A.145, the terms defined in this section have the meanings 132.10 given them. 132.11 EFFECTIVE DATE: This section applies to payments made in 132.12 calendar year 2001 and thereafter. 132.13 Sec. 11. Minnesota Statutes 1998, section 477A.12, is 132.14 amended to read: 132.15 477A.12 [ANNUAL APPROPRIATIONS; LANDS ELIGIBLE; 132.16 CERTIFICATION OF ACREAGE.] 132.17 (a)There isAs an offset for expenses incurred by counties 132.18 and towns in support of natural resources lands, the following 132.19 amounts are annually appropriated to the commissioner of natural 132.20 resources from the general fund forpayment to counties within132.21the state an amount equal totransfer to the commissioner of 132.22 revenue. The commissioner of revenue shall pay the transferred 132.23 funds to counties as required by sections 477A.11 to 477A.145. 132.24 The amounts are: 132.25 (1) for acquired natural resources land, $3, as adjusted 132.26 for inflation under section 477A.145, multiplied by the total 132.27 number of acres of acquired natural resources land or,beginning132.28July 1, 1996,at the county's option three-fourths of one 132.29 percent of the appraised value of all acquired natural resources 132.30 land in the county, whichever is greater; 132.31 (2) 75 cents, as adjusted for inflation under section 132.32 477A.145, multiplied by the number of acres of 132.33 county-administered other natural resources land; and 132.34 (3) 37.5 cents, as adjusted for inflation under section 132.35 477A.145, multiplied by the number of acres of 132.36 commissioner-administered other natural resources land located 133.1 in each county as of July 1 of each year prior to the payment 133.2 year. 133.3 (b) Lands for which payments in lieu are made pursuant to 133.4 section 97A.061, subdivision 3, and Laws 1973, chapter 567, 133.5 shall not be eligible for payments under this section. Each 133.6 county auditor shall certify to the department of natural 133.7 resources during July of each year prior to the payment year the 133.8 number of acres of county-administered other natural resources 133.9 land within the county. The department of natural resources 133.10 may, in addition to the certification of acreage, require 133.11 descriptive lists of land so certified. The commissioner of 133.12 natural resources shall determine and certify to the 133.13 commissioner of revenue by March 1 of the payment year: 133.14 (1) the number of acres and most recent appraised value of 133.15 acquired natural resources landandwithin each county; 133.16 (2) the number of acres of commissioner-administered 133.17 natural resources land within each county; and 133.18 (3) the number of acres of county-administered other 133.19 natural resources land within each county, based on the reports 133.20 filed by each county auditor with the commissioner of natural 133.21 resources. 133.22 The commissioner of revenue shall determine the 133.23 distributions provided for in this section using the number of 133.24 acres and appraised values certified by the commissioner of 133.25 natural resources by March 1 of the payment year. 133.26 (c) For the purposes of this section, the appraised value 133.27 of acquired natural resources land is the purchase price for the 133.28 first five years after acquisition. The appraised value of 133.29 acquired natural resources land received as a donation is the 133.30 value determined for the commissioner of natural resources by a 133.31 licensed appraiser, or the county assessor's estimated market 133.32 value if no appraisal is done. The appraised value must be 133.33 determined by the county assessor every five years after the 133.34 land is acquired. 133.35 EFFECTIVE DATE: This section applies to payments made in 133.36 calendar year 2001 and thereafter. 134.1 Sec. 12. Minnesota Statutes 1998, section 477A.13, is 134.2 amended to read: 134.3 477A.13 [TIME OF PAYMENT, DEDUCTIONS.] 134.4 Payments to the countiesshallof the amounts determined 134.5 under section 477A.12 must be made by the commissioner of 134.6 revenue from the general fundduring the month of July of the134.7year next following certification. There shall be deducted from134.8amounts paid any amounts paid to a county or township during the134.9preceding year pursuant to sections 97A.061, subdivisions 1 and134.102, and 272.68, subdivision 3, with respect to the lands134.11certified pursuant to section 477A.12at the time provided in 134.12 section 477A.015 for the first installment of local government 134.13 aid. 134.14 EFFECTIVE DATE: This section applies to payments made in 134.15 calendar year 2001 and thereafter. 134.16 Sec. 13. Minnesota Statutes 1998, section 477A.14, is 134.17 amended to read: 134.18 477A.14 [USE OF FUNDS.] 134.19FortyExcept as provided in section 97A.061, subdivision 5, 134.20 40 percent of the total payment to the county shall be deposited 134.21 in the county general revenue fund to be used to provide 134.22 property tax levy reduction. The remainder shall be distributed 134.23 by the county in the following priority: 134.24 (a) 37.5 cents, as adjusted for inflation under section 134.25 477A.145, for each acre of county-administered other natural 134.26 resources land shall be deposited in a resource development fund 134.27 to be created within the county treasury for use in resource 134.28 development, forest management, game and fish habitat 134.29 improvement, and recreational development and maintenance of 134.30 county-administered other natural resources land. Any county 134.31 receiving less than $5,000 annually for the resource development 134.32 fund may elect to deposit that amount in the county general 134.33 revenue fund; 134.34 (b) From the funds remaining, within 30 days of receipt of 134.35 the payment to the county, the county treasurer shall pay each 134.36 organized township 30 centsper, as adjusted for inflation under 135.1 section 477A.145, for each acre of acquired natural resources 135.2 land and 7.5 centsper, as adjusted for inflation under section 135.3 477A.145, for each acre of other natural resources land located 135.4 within its boundaries. Payments for natural resources lands not 135.5 located in an organized township shall be deposited in the 135.6 county general revenue fund. Payments to counties and townships 135.7 pursuant to this paragraph shall be used to provide property tax 135.8 levy reduction, except that of the payments for natural 135.9 resources lands not located in an organized township, the county 135.10 may allocate the amount determined to be necessary for 135.11 maintenance of roads in unorganized townships. Provided that, 135.12 if the total payment to the county pursuant to section 477A.12 135.13 is not sufficient to fully fund the distribution provided for in 135.14 this clause, the amount available shall be distributed to each 135.15 township and the county general revenue fund on a pro rata 135.16 basis; and 135.17 (c) Any remaining funds shall be deposited in the county 135.18 general revenue fund. Provided that, if the distribution to the 135.19 county general revenue fund exceeds $35,000, the excess shall be 135.20 used to provide property tax levy reduction. 135.21 EFFECTIVE DATE: This section applies to payments made in 135.22 calendar year 2001 and thereafter. 135.23 Sec. 14. [477A.145] [INFLATION ADJUSTMENT.] 135.24 In 2001 and each year thereafter, the amounts required to 135.25 be adjusted for inflation in sections 477A.12 and 477A.14 shall 135.26 be increased to an amount equal to: (1) the amount before the 135.27 inflation adjustment multiplied by (2) one plus the percentage 135.28 increase in the implicit price deflator for government 135.29 consumption expenditures and gross investment for state and 135.30 local governments prepared by the Bureau of Economic Analysis of 135.31 the United States Department of Commerce for the period 135.32 indicated below: 135.33 (i) the period starting with the first quarter of 1994 and 135.34 ending with the third quarter of the calendar year prior to the 135.35 year in which aid is paid, provided that lands acquired by the 135.36 state under chapter 84A that are designated as state parks, 136.1 state recreation areas, scientific and natural areas, or 136.2 wildlife management areas are included in the definition of 136.3 acquired natural resource land under section 477A.11 for 136.4 calculating payments in calendar year 2001 and thereafter; 136.5 (ii) otherwise the period starting with the first quarter 136.6 of 1987 and ending with the third quarter of the calendar year 136.7 prior to the year in which the aid is paid. 136.8 These adjusted amounts must be rounded to the nearest one-tenth 136.9 of a cent. 136.10 EFFECTIVE DATE: This section applies to payments made in 136.11 calendar year 2001 and thereafter. 136.12 Sec. 15. Laws 1988, chapter 645, section 3, as amended by 136.13 Laws 1999, chapter 243, article 6, section 9, is amended to read: 136.14 Sec. 3. [TAX; PAYMENT OF EXPENSES.] 136.15 (a) The tax levied by the hospital district under Minnesota 136.16 Statutes, section 447.34, must not be levied at a rate that 136.17 exceeds.00630.063 percent of taxable market value. 136.18 (b).00480.048 percent of taxable market value of tax in 136.19 paragraph (a) may be used only for acquisition, betterment, and 136.20 maintenance of the district's hospital and nursing home 136.21 facilities and equipment, and not for administrative or salary 136.22 expenses. 136.23 (c).00150.015 percent of taxable market value of the tax 136.24 in paragraph (a) may be used solely for the purpose of capital 136.25 expenditures as it relates to ambulance acquisitions for the 136.26 Cook ambulance service and the Orr ambulance service and not for 136.27 administrative or salary expenses. 136.28 The part of the levy referred to in paragraph (c) must be 136.29 administered by the Cook Hospital and passed on directly to the 136.30 Cook area ambulance service board and the city of Orr to be held 136.31 in trust until funding for a new ambulance is needed by either 136.32 the Cook ambulance service or the Orr ambulance service. 136.33 EFFECTIVE DATE: This section is effective the day 136.34 following final enactment. 136.35 Sec. 16. Laws 1999, chapter 243, article 6, section 18, is 136.36 amended to read: 137.1 Sec. 18. [EFFECTIVE DATE.] 137.2 Sections 3 to 6 and 10 are effective for taxes levied in 137.3 1999, and payable in 2000. Section 7 is effective the day 137.4 following final enactment for taxes levied in 1999 and 137.5 thereafter. Sections 8 and 17 are effective for taxes levied in 137.6 1999, payable in 2000, and thereafter. 137.7 The.00150.063 percent of market value levy described in 137.8 section 9, paragraph (a), and the 0.015 percent of taxable 137.9 market value levy described in section 9, paragraph (c),isare 137.10 effective for the cities of Cook and Orr and the counties of St. 137.11 Louis and Koochiching for affected parts of those counties on 137.12 January 1, 2000, to be requestedfor levies certified in the 137.13 year 2000, with the first payment to be receivedand taxes 137.14 payable in 2001 and thereafter. The 0.048 percent market value 137.15 levy described in section 9, paragraph (b), is effective for the 137.16 cities of Cook and Orr and the counties of St. Louis and 137.17 Koochiching for the affected parts of those counties on January 137.18 1, 1999, for levies certified in 1999 and taxes payable in 2000 137.19 and thereafter. 137.20 EFFECTIVE DATE: This section is effective the day 137.21 following final enactment. 137.22 Sec. 17. [CAPITOL REGION WATERSHED DISTRICT LEVY LIMIT.] 137.23 The capitol region watershed district managers may levy an 137.24 annual ad valorem tax of 0.02418 percent of taxable market value 137.25 or $200,000, whichever is less, under Minnesota Statutes, 137.26 section 103D.905, subdivision 3, notwithstanding the maximum 137.27 dollar limit for the administrative fund in that subdivision. 137.28 EFFECTIVE DATE: This section is effective for taxes levied 137.29 in 2000, payable in 2001 and thereafter. 137.30 Sec. 18. [ADDITIONAL AID; LINCOLN COUNTY.] 137.31 Subdivision 1. [AID INCREASE.] For aids payable in 2000, 137.32 Lincoln county shall receive an aid payment of up to $150,000 137.33 under this section. The entire amount of this additional aid 137.34 shall be paid from the appropriation for reimbursement for 137.35 court-ordered counsel under section 477A.0121, subdivision 4, 137.36 with the December 26 payment of other aids paid under Minnesota 138.1 Statutes, section 477A.015, and shall be equal to the estimated 138.2 amount of the appropriation under Minnesota Statutes, section 138.3 477A.0121, subdivision 4, up to $150,000, that will not be spent 138.4 for public defender costs under Minnesota Statutes, section 138.5 611.27, in fiscal year 2000. 138.6 For aids payable in 2001, Lincoln county shall receive an 138.7 additional payment under this section of up to the difference 138.8 between $150,000 and what the county received under this 138.9 provision in the previous year. The entire amount of this 138.10 additional aid shall be paid from the appropriation for 138.11 reimbursement for court-ordered counsel under section 477A.0121, 138.12 subdivision 4, with the December 26 payment of other aids paid 138.13 under Minnesota Statutes, section 477A.015, and shall be equal 138.14 to the estimated amount of the appropriation under Minnesota 138.15 Statutes, section 477A.0121, subdivision 4, up to the limit 138.16 determined in this paragraph, that will not be spent for public 138.17 defender costs under Minnesota Statutes, section 611.27, in 138.18 fiscal year 2001. 138.19 The county is not limited to the purposes listed in 138.20 Minnesota Statutes, section 477A.015, for spending this aid and 138.21 may pay a portion of this aid to Lake Benton township to 138.22 reimburse the township for losses due to the Wind Tower lawsuit 138.23 settlement. The aid under this section must not be included in 138.24 calculating any aids or any limitations on levies or 138.25 expenditures under law. 138.26 EFFECTIVE DATE: This section is effective the day after 138.27 timely compliance by the governing body of Lincoln county and 138.28 its chief clerical officer with Minnesota Statutes, section 138.29 645.021, subdivisions 2 and 3. 138.30 Sec. 19. [LOCAL GOVERNMENT AID TO CITIES; THE CITY OF ST. 138.31 CLOUD AND ST. AUGUSTA TOWNSHIP (THE CITY OF VENTURA).] 138.32 Subdivision 1. [ADDITIONAL LOCAL GOVERNMENT AID.] For aids 138.33 payable in 2001 only, an additional payment of $32,000 shall be 138.34 paid to the city of St. Cloud and an additional aid payment of 138.35 $75,000 shall be paid to St. Augusta township or its succeeding 138.36 municipal government (the city of Ventura). This aid shall be 139.1 paid out of the city aid appropriation under Minnesota Statutes, 139.2 section 477A.03, subdivision 2, paragraph (d). The aid under 139.3 this section must not be included in calculating aid paid under 139.4 Minnesota Statutes, section 477A.013, subdivision 9, or any 139.5 other law, or of any limitations on levies or expenditures. 139.6 EFFECTIVE DATE: This section is effective for aids payable 139.7 in calendar year 2001 only for the city of St. Cloud, upon 139.8 timely compliance by its governing body and its chief clerical 139.9 officer with Minnesota Statutes, section 645.021, subdivisions 2 139.10 and 3. This section is effective for aids payable in calendar 139.11 year 2001 only for St. Augusta township (city of Ventura), upon 139.12 timely compliance by its governing body and its chief clerical 139.13 officer with Minnesota Statutes, section 645.021, subdivisions 2 139.14 and 3. 139.15 Sec. 20. [LAKE OF THE WOODS AND KOOCHICHING COUNTIES; 139.16 EXPENDITURES FOR ROAD AND BRIDGE PURPOSES.] 139.17 (a) Notwithstanding Minnesota Statutes, section 163.06, 139.18 subdivisions 4 and 5, the county board of Lake of the Woods 139.19 county, by resolution, may expend the proceeds of the levy under 139.20 Minnesota Statutes, section 163.06, in any organized or 139.21 unorganized township or portion thereof in the county. 139.22 (b) Notwithstanding Minnesota Statutes, section 163.06, 139.23 subdivisions 4 and 5, the county board of Koochiching county, by 139.24 resolution, may expend the proceeds of the levy under Minnesota 139.25 Statutes, section 163.06, in any organized or unorganized 139.26 township or portion thereof in the county. 139.27 EFFECTIVE DATES: This section is effective for Lake of the 139.28 Woods county upon approval by and compliance with Minnesota 139.29 Statutes, section 645.021, subdivision 3. This section is 139.30 effective for Koochiching county upon approval by and compliance 139.31 with Minnesota Statutes, section 645.021, subdivision 3. 139.32 Sec. 21. [ST. LOUIS COUNTY; CAPITAL IMPROVEMENT PLAN 139.33 DEFINITION.] 139.34 For St. Louis county, the St. Louis county heritage and 139.35 arts center is included in the definition of "capital 139.36 improvement" in Minnesota Statutes, section 373.40, subdivision 140.1 1, but only with respect to bonds issued before July 1, 2002. 140.2 EFFECTIVE DATE: This section is effective upon approval by 140.3 the governing body of St. Louis county, and compliance with 140.4 Minnesota Statutes, section 645.021, subdivision 3. 140.5 ARTICLE 7 140.6 MOTOR VEHICLE REGISTRATION TAX 140.7 Section 1. Minnesota Statutes 1998, section 168.013, 140.8 subdivision 1a, is amended to read: 140.9 Subd. 1a. [PASSENGER AUTOMOBILE; HEARSE.] (a) On passenger 140.10 automobiles as defined in section 168.011, subdivision 7, and 140.11 hearses, except as otherwise provided, the tax shall be $10 plus 140.12 an additional tax equal to 1.25 percent of the base value. 140.13 (b) Subject to the classification provisions herein, "base 140.14 value" means the manufacturer's suggested retail price of the 140.15 vehicle including destination charge using list price 140.16 information published by the manufacturer or determined by the 140.17 registrar if no suggested retail price exists, and shall not 140.18 include the cost of each accessory or item of optional equipment 140.19 separately added to the vehicle and the suggested retail price. 140.20 (c) If the manufacturer's list price information contains a 140.21 single vehicle identification number followed by various 140.22 descriptions and suggested retail prices, the registrar shall 140.23 select from those listings only the lowest price for determining 140.24 base value. 140.25 (d) If unable to determine the base value because the 140.26 vehicle is specially constructed, or for any other reason, the 140.27 registrar may establish such value upon the cost price to the 140.28 purchaser or owner as evidenced by a certificate of cost but not 140.29 including Minnesota sales or use tax or any local sales or other 140.30 local tax. 140.31 (e) The registrar shall classify every vehicle in its 140.32 proper base value class as follows: 140.33 FROM TO 140.34 $ 0 $199.99 140.35 200 399.99 140.36 and thereafter a series of classes successively set in brackets 141.1 having a spread of $200 consisting of such number of classes as 141.2 will permit classification of all vehicles. 141.3 (f) The base value for purposes of this section shall be 141.4 the middle point between the extremes of its class. 141.5 (g) The registrar shall establish the base value, when new, 141.6 of every passenger automobile and hearse registered prior to the 141.7 effective date of Extra Session Laws 1971, chapter 31, using 141.8 list price information published by the manufacturer or any 141.9 nationally recognized firm or association compiling such data 141.10 for the automotive industry. If unable to ascertain the base 141.11 value of any registered vehicle in the foregoing manner, the 141.12 registrar may use any other available source or method. The tax 141.13 on all previously registered vehicles shall be computed upon the 141.14 base value thus determined taking into account the depreciation 141.15 provisions of paragraph (h). 141.16 (h) Except as provided in paragraph (i), the annual 141.17 additional tax computed upon the base value as provided herein, 141.18 during the first and second years of vehicle life shall be 141.19 computed upon 100 percent of the base value; for the third and 141.20 fourth years, 90 percent of such value; for the fifth and sixth 141.21 years, 75 percent of such value; for the seventh year, 60 141.22 percent of such value; for the eighth year, 40 percent of such 141.23 value; for the ninth year, 30 percent of such value; for the 141.24 tenth year, ten percent of such value; for the 11th and each 141.25 succeeding year, the sum of $25. 141.26 In no event shall the annual additional tax be less than 141.27 $25. The total tax under this subdivision shall not exceed $189 141.28 for the first renewal period and shall not exceed $99 for 141.29 subsequent renewal periods. The total tax under this 141.30 subdivision on any vehicle filing its initial registration in 141.31 Minnesota in the second year of vehicle life shall not exceed 141.32 $189 and shall not exceed $99 for subsequent renewal periods. 141.33 The total tax under this subdivision on any vehicle filing its 141.34 initial registration in Minnesota in the third or subsequent 141.35 year of vehicle life shall not exceed $99 and shall not exceed 141.36 $99 in any subsequent renewal period. 142.1 (i) The annual additional tax under paragraph (h) on a 142.2 motor vehicle on which the first annual tax was paid before 142.3 January 1, 1990, must not exceed the tax that was paid on that 142.4 vehicle the year before. 142.5 EFFECTIVE DATE: This section is effective for taxes first 142.6 due after June 30, 2000. 142.7 Sec. 2. Minnesota Statutes 1998, section 297B.09, 142.8 subdivision 1, is amended to read: 142.9 Subdivision 1. [GENERAL FUND SHARE.](a)Money collected 142.10 and received under this chapter must be depositedin the state142.11treasury and credited to the general fund. The amounts142.12collected and received shall be creditedas provided in this 142.13 subdivision,.and transferred from the general fund on July 15142.14and February 15 of each fiscal year. The commissioner of142.15finance must make each transfer based upon the actual receipts142.16of the preceding six calendar months and include the interest142.17earned during that six-month period. The commissioner of142.18finance may establish a quarterly or other schedule providing142.19for more frequent payments to the transit assistance fund if the142.20commissioner determines it is necessary or desirable to provide142.21for the cash flow needs of the recipients of money from the142.22transit assistance fund.142.23(b) Twenty-fiveThirty-two percent of the money collected 142.24 and receivedunder this chapter after June 30, 1990, and before142.25July 1, 1991, must be transferred to the highway user tax142.26distribution fund and the transit assistance fund for142.27apportionment as follows: 75 percentmust betransferred to142.28 deposited in the highway user tax distribution fundfor142.29apportionment in the same manner and for the same purposes as142.30other money in that fund, and the remaining2568 percent of the 142.31 money must betransferred to the transit assistance fund to be142.32appropriated to the commissioner of transportation for transit142.33assistance within the state and to the metropolitan142.34councildeposited in the general fund. 142.35(c) The distributions under this subdivision to the highway142.36user tax distribution fund until June 30, 1991, and to the trunk143.1highway fund thereafter, must be reduced by the amount necessary143.2to fund the appropriation under section 41A.09, subdivision 1.143.3For the fiscal years ending June 30, 1988, and June 30, 1989,143.4the commissioner of finance, before making the transfers143.5required on July 15 and January 15 of each year, shall estimate143.6the amount required to fund the appropriation under section143.741A.09, subdivision 1, for the six-month period for which the143.8transfer is being made. The commissioner shall then reduce the143.9amount transferred to the highway user tax distribution fund by143.10the amount of that estimate. The commissioner shall reduce the143.11estimate for any six-month period by the amount by which the143.12estimate for the previous six-month period exceeded the amount143.13needed to fund the appropriation under section 41A.09,143.14subdivision 1, for that previous six-month period. If at any143.15time during a six-month period in those fiscal years the amount143.16of reduction in the transfer to the highway user tax143.17distribution fund is insufficient to fund the appropriation143.18under section 41A.09, subdivision 1, for that period, the143.19commissioner shall transfer to the general fund from the highway143.20user tax distribution fund an additional amount sufficient to143.21fund the appropriation for that period, but the additional143.22amount so transferred to the general fund in a six-month period143.23may not exceed the amount transferred to the highway user tax143.24distribution fund for that six-month period.143.25 EFFECTIVE DATE: This section is effective for money 143.26 collected and received after June 30, 2002. 143.27 Sec. 3. [APPROPRIATION.] 143.28 For fiscal year 2001, $149,804,000 is appropriated from the 143.29 general fund to the highway user tax distribution fund. For 143.30 fiscal year 2002, $161,723,000 is appropriated from the general 143.31 fund to the highway user tax distribution fund. 143.32 ARTICLE 8 143.33 SALES AND USE TAXES 143.34 Section 1. Minnesota Statutes 1999 Supplement, section 143.35 289A.20, subdivision 4, is amended to read: 143.36 Subd. 4. [SALES AND USE TAX.] (a) The taxes imposed by 144.1 chapter 297A are due and payable to the commissioner monthly on 144.2 or before the 20th day of the month following the month in which 144.3 the taxable event occurred, or following another reporting 144.4 period as the commissioner prescribes or as allowed under 144.5 section 289A.18, subdivision 4, paragraph (f), except that use 144.6 taxes due on an annual use tax return as provided under section 144.7 289A.11, subdivision 1, are payable by April 15 following the 144.8 close of the calendar year. 144.9 (b) A vendor having a liability of $120,000 or more during 144.10 a fiscal year ending June 30 must remit the June liability for 144.11 the next year in the following manner: 144.12 (1) Two business days before June 30 of the year, the 144.13 vendor must remit7562 percent of the estimated June liability 144.14 to the commissioner. 144.15 (2) On or before August 14 of the year, the vendor must pay 144.16 any additional amount of tax not remitted in June. 144.17 (c) A vendor having a liability of $120,000 or more during 144.18 a fiscal year ending June 30 must remit all liabilities on 144.19 returns due for periods beginning in the subsequent calendar 144.20 year by means of a funds transfer as defined in section 144.21 336.4A-104, paragraph (a). The funds transfer payment date, as 144.22 defined in section 336.4A-401, must be on or before the 14th day 144.23 of the month following the month in which the taxable event 144.24 occurred, or on or before the 14th day of the month following 144.25 the month in which the sale is reported under section 289A.18, 144.26 subdivision 4, except for7562 percent of the estimated June 144.27 liability, which is due two business days before June 30. The 144.28 remaining amount of the June liability is due on August 14. If 144.29 the date the tax is due is not a funds transfer business day, as 144.30 defined in section 336.4A-105, paragraph (a), clause (4), the 144.31 payment date must be on or before the funds transfer business 144.32 day next following the date the tax is due. 144.33 (d) If the vendor required to remit by electronic funds 144.34 transfer as provided in paragraph (c) is unable due to 144.35 reasonable cause to determine the actual sales and use tax due 144.36 on or before the due date for payment, the vendor may remit an 145.1 estimate of the tax owed using one of the following options: 145.2 (1) 100 percent of the tax reported on the previous month's 145.3 sales and use tax return; 145.4 (2) 100 percent of the tax reported on the sales and use 145.5 tax return for the same month in the previous calendar year; or 145.6 (3) 95 percent of the actual tax due. 145.7 Any additional amount of tax that is not remitted on or 145.8 before the due date for payment, must be remitted with the 145.9 return. If a vendor fails to remit the actual liability or does 145.10 not remit using one of the estimate options by the due date for 145.11 payment, the vendor must remit actual liability as provided in 145.12 paragraph (c) in all subsequent periods. This paragraph does 145.13 not apply to the June sales and use tax liability. 145.14 EFFECTIVE DATE: The portion of this section related to the 145.15 percent of the June liability that must be filed by two business 145.16 days before the end of June is effective beginning with the June 145.17 2002 liability. The remainder of this section is effective the 145.18 day following final enactment. 145.19 Sec. 2. Minnesota Statutes 1998, section 289A.60, 145.20 subdivision 14, is amended to read: 145.21 Subd. 14. [PENALTY FOR USE OF SALES TAX EXEMPTION 145.22 CERTIFICATES TO EVADE TAX.] A person who uses an exemption 145.23 certificate to buy property or purchase services that will be 145.24 used for purposes other than the exemption claimed, with the 145.25 intent to evade payment of sales tax to the seller, is subject 145.26 to a penalty of $100 for each transaction where that use of an 145.27 exemption certificate has occurred. 145.28 EFFECTIVE DATE: This section is effective for exemption 145.29 certificates used on or after July 1, 2000. 145.30 Sec. 3. Minnesota Statutes 1998, section 289A.60, 145.31 subdivision 15, is amended to read: 145.32 Subd. 15. [ACCELERATED PAYMENT OF JUNE SALES TAX 145.33 LIABILITY; PENALTY FOR UNDERPAYMENT.] If a vendor is required by 145.34 law to submit an estimation of June sales tax liabilities and75145.35 62 percent payment by a certain date, the vendor shall pay a 145.36 penalty equal to ten percent of the amount of actual June 146.1 liability required to be paid in June less the amount remitted 146.2 in June. The penalty must not be imposed, however, if the 146.3 amount remitted in June equals the lesser of7562 percent of 146.4 the preceding May's liability or7562 percent of the average 146.5 monthly liability for the previous calendar year. 146.6 EFFECTIVE DATE: This section is effective beginning with 146.7 the June 2002 liability. 146.8 Sec. 4. Minnesota Statutes 1998, section 297A.01, 146.9 subdivision 13, is amended to read: 146.10 Subd. 13. "Agricultural production," as used in section 146.11 297A.25, subdivision 9, includes, but is not limited to, 146.12 horticulture; floriculture; maple syrup harvesting; raising of 146.13 pets, fur bearing animals, research animals, farmed cervidae, as 146.14 defined in section 17.451, subdivision 2, llamas, as defined in 146.15 section 17.455, subdivision 2, ratitae, as defined in section 146.16 17.453, subdivision 3, and horses. 146.17 EFFECTIVE DATE: This section is effective for sales and 146.18 purchases made after June 30, 2000. 146.19 Sec. 5. Minnesota Statutes 1998, section 297A.01, 146.20 subdivision 15, is amended to read: 146.21 Subd. 15. "Farm machinery" means new or used machinery, 146.22 equipment, implements, accessories, and contrivances used 146.23 directly and principally in the production for sale, but not 146.24 including the processing, of livestock, dairy animals, dairy 146.25 products, poultry and poultry products, fruits, 146.26 vegetables, trees and shrubs, forage, grains and bees and apiary 146.27 products. "Farm machinery" includes: 146.28 (1) machinery for the preparation, seeding or cultivation 146.29 of soil for growing agricultural crops and sod, harvesting and 146.30 threshing of agricultural products, harvesting or mowing of sod, 146.31 and certain machinery for dairy, livestock and poultry farms; 146.32 (2) barn cleaners, milking systems, grain dryers, automatic 146.33 feeding systems and similar installations, whether or not the 146.34 equipment is installed by the seller and becomes part of the 146.35 real property; 146.36 (3) irrigation equipment sold for exclusively agricultural 147.1 use, including pumps, pipe fittings, valves, sprinklers and 147.2 other equipment necessary to the operation of an irrigation 147.3 system when sold as part of an irrigation system, whether or not 147.4 the equipment is installed by the seller and becomes part of the 147.5 real property; 147.6 (4) logging equipment, including chain saws used for 147.7 commercial logging; 147.8 (5) fencing used for the containment of farmed cervidae, as 147.9 defined in section 17.451, subdivision 2; 147.10 (6) primary and backup generator units used to generate 147.11 electricity for the purpose of operating farm machinery, as 147.12 defined in this subdivision, or providing light or space heating 147.13 necessary for the production of livestock, dairy animals, dairy 147.14 products, or poultry and poultry products;and147.15 (7) aquaculture production equipment as defined in 147.16 subdivision 19; and 147.17 (8) equipment used for maple syrup harvesting. 147.18 Repair or replacement parts for farm machinery shall not be 147.19 included in the definition of farm machinery. 147.20 Tools, shop equipment, grain bins, feed bunks, fencing 147.21 material except fencing material covered by clause (5), 147.22 communication equipment and other farm supplies shall not be 147.23 considered to be farm machinery. "Farm machinery" does not 147.24 include motor vehicles taxed under chapter 297B, snowmobiles, 147.25 snow blowers, lawn mowers except those used in the production of 147.26 sod for sale, garden-type tractors or garden tillers and the 147.27 repair and replacement parts for those vehicles and machines. 147.28 EFFECTIVE DATE: This section is effective for sales and 147.29 purchases made after June 30, 2000. 147.30 Sec. 6. Minnesota Statutes 1998, section 297A.15, is 147.31 amended by adding a subdivision to read: 147.32 Subd. 8. [REFUND; APPROPRIATION; AGRICULTURAL PROCESSING 147.33 FACILITIES.] The tax on the gross receipts from the sale of 147.34 items exempt under section 297A.25, subdivision 90 or 91, must 147.35 be imposed and collected as if the sale were taxable and the 147.36 rate under section 297A.02, subdivision 1, applied. 148.1 Upon application by the owner of the property on forms 148.2 prescribed by the commissioner, a refund equal to the tax paid 148.3 on the gross receipts of the building materials and equipment 148.4 must be paid to the owner. In the case of materials and 148.5 equipment in which the tax was paid by a contractor, application 148.6 must be made by the owner for the sales tax paid by the 148.7 contractor. The application must include sufficient information 148.8 to permit the commissioner to verify the sales tax paid for the 148.9 project. The contractor must furnish to the owner a statement 148.10 of the cost of building materials and equipment and the sales 148.11 taxes paid on these items. The amount required to make the 148.12 refunds is annually appropriated to the commissioner. Interest 148.13 must be paid on the refund at the rate in section 270.76 from 60 148.14 days after the date the refund claim is filed with the 148.15 commissioner. 148.16 EFFECTIVE DATE: This section is effective for applications 148.17 for refund made after June 30, 2000. 148.18 Sec. 7. Minnesota Statutes 1998, section 297A.25, 148.19 subdivision 5, is amended to read: 148.20 Subd. 5. [OUTSTATE TRANSPORT OR DELIVERY.] The gross 148.21 receipts from the following sales of, and storage, use, or 148.22 consumption of, tangible personal property are exempt: 148.23 (1) property which, without intermediate use, is shipped or 148.24 transported outside Minnesota by the purchaser and thereafter 148.25 used in a trade or business or is stored, processed, fabricated 148.26 or manufactured into, attached to or incorporated into other 148.27 tangible personal property transported or shipped outside 148.28 Minnesota and thereafter used in a trade or business outside 148.29 Minnesota, and which is not thereafter returned to a point 148.30 within Minnesota, except in the course of interstate commerce 148.31 (storage shall not constitute intermediate use); provided that 148.32 the property is not subject to tax in that state or country to 148.33 which it is transported for storage or use and provided further 148.34 that sales of tangible personal property to be used in other 148.35 states or countries as part of a maintenance contract shall be 148.36 specifically exempt;or149.1 (2) property which the seller delivers to a common carrier 149.2 for delivery outside Minnesota, places in the United States mail 149.3 or parcel post directed to the purchaser outside Minnesota, or 149.4 delivers to the purchaser outside Minnesota by means of the 149.5 seller's own delivery vehicles, and which is not thereafter 149.6 returned to a point within Minnesota, except in the course of 149.7 interstate commerce; or 149.8 (3) aircraft, as defined in section 360.511 and approved by 149.9 the Federal Aviation Administration, and which the seller 149.10 delivers to a purchaser outside Minnesota or which, without 149.11 intermediate use, is shipped or transported outside Minnesota by 149.12 the purchaser, but only if the purchaser is not a resident of 149.13 Minnesota and provided that the aircraft is not thereafter 149.14 returned to a point within Minnesota, except in the course of 149.15 interstate commerce or isolated and occasional use and will be 149.16 registered in another state or country upon its removal from 149.17 Minnesota; this exemption applies even if the purchaser takes 149.18 possession of the aircraft in Minnesota and uses the aircraft in 149.19 the state exclusively for training purposes for a period not to 149.20 exceed ten days prior to removing the aircraft from this state. 149.21 EFFECTIVE DATE: This section is effective for purchases 149.22 made after the date of final enactment. 149.23 Sec. 8. Minnesota Statutes 1999 Supplement, section 149.24 297A.25, subdivision 9, is amended to read: 149.25 Subd. 9. [MATERIALS CONSUMED IN PRODUCTION.] The gross 149.26 receipts from the sale of and the storage, use, or consumption 149.27 of all materials, including chemicals, fuels, petroleum 149.28 products, lubricants, packaging materials, including returnable 149.29 containers used in packaging food and beverage products, feeds, 149.30 seeds, fertilizers, electricity, gas and steam, used or consumed 149.31 in agricultural or industrial production of personal property 149.32 intended to be sold ultimately at retail, whether or not the 149.33 item so used becomes an ingredient or constituent part of the 149.34 property produced are exempt. Seeds, trees, fertilizers, and 149.35 herbicides purchased for use by farmers in the Conservation 149.36 Reserve Program under United States Code, title 16, section 150.1 590h, as amended through December 31, 1991, the Integrated Farm 150.2 Management Program under section 1627 of Public Law Number 150.3 101-624, the Wheat and Feed Grain Programs under sections 301 to 150.4 305 and 401 to 405 of Public Law Number 101-624, and the 150.5 conservation reserve program under sections 103F.505 to 150.6 103F.531, are included in this exemption. Sales to a 150.7 veterinarian of materials used or consumed in the care, 150.8 medication, and treatment of horses and agricultural production 150.9 animals are exempt under this subdivision. Chemicals used for 150.10 cleaning food processing machinery and equipment are included in 150.11 this exemption. Materials, including chemicals, fuels, and 150.12 electricity purchased by persons engaged in agricultural or 150.13 industrial production to treat waste generated as a result of 150.14 the production process are included in this exemption. Such 150.15 production shall include, but is not limited to, research, 150.16 development, design or production of any tangible personal 150.17 property, manufacturing, processing (other than by restaurants 150.18 and consumers) of agricultural products whether vegetable or 150.19 animal, commercial fishing, refining, smelting, reducing, 150.20 brewing, distilling, printing, mining, quarrying, lumbering, 150.21 generating electricity and the production of road building 150.22 materials. Such production shall not include painting, 150.23 cleaning, repairing or similar processing of property except as 150.24 part of the original manufacturing process. Machinery, 150.25 equipment, implements, tools, accessories, appliances, 150.26 contrivances, furniture and fixtures, used in such production 150.27 and fuel, electricity, gas or steam used for space heating or 150.28 lighting, are not included within this exemption; however, 150.29 accessory tools, equipment and other short lived items, which 150.30 are separate detachable units used in producing a direct effect 150.31 upon the product, where such items have an ordinary useful life 150.32 of less than 12 months, are included within the exemption 150.33 provided herein. The following materials, tools, and equipment 150.34 used in metalcasting are exempt under this subdivision: 150.35 crucibles, thermocouple protection sheaths and tubes, stalk 150.36 tubes, refractory materials, molten metal filters and filter 151.1 boxes,anddegassing lances, and base blocks. Electricity used 151.2 to make snow for outdoor use for ski hills, ski slopes, or ski 151.3 trails is included in this exemption. Petroleum and special 151.4 fuels used in producing or generating power for propelling 151.5 ready-mixed concrete trucks on the public highways of this state 151.6 are not included in this exemption. 151.7 EFFECTIVE DATE: This section is effective for sales and 151.8 purchases made after June 30, 2000. 151.9 Sec. 9. Minnesota Statutes 1999 Supplement, section 151.10 297A.25, subdivision 11, is amended to read: 151.11 Subd. 11. [SALES TO GOVERNMENT.] The gross receipts from 151.12 all sales, including sales in which title is retained by a 151.13 seller or a vendor or is assigned to a third party under an 151.14 installment sale or lease purchase agreement under section 151.15 465.71, of tangible personal property to, and all storage, use 151.16 or consumption of such property by, the United States and its 151.17 agencies and instrumentalities, the University of Minnesota, 151.18 state universities, community colleges, technical colleges, 151.19 state academies, the Perpich center for arts education, an 151.20 instrumentality of a political subdivision that is accredited as 151.21 an optional/special function school by the North Central 151.22 Association of Colleges and Schools, school districts, public 151.23 libraries, public library systems, multicounty, multitype 151.24 library systems as defined in section 134.001, county law 151.25 libraries under chapter 134A, state agency libraries, the state 151.26 library under section 480.09, and the legislative reference 151.27 library are exempt. 151.28 As used in this subdivision, "school districts" means 151.29 public school entities and districts of every kind and nature 151.30 organized under the laws of the state of Minnesota, including, 151.31 without limitation, school districts, intermediate school 151.32 districts, education districts, service cooperatives, secondary 151.33 vocational cooperative centers, special education cooperatives, 151.34 joint purchasing cooperatives, telecommunication cooperatives, 151.35 regional management information centers, and any instrumentality 151.36 of a school district, as defined in section 471.59. 152.1 Sales exempted by this subdivision include sales under 152.2 section 297A.01, subdivision 3, paragraph (f). 152.3 Sales to hospitals and nursing homes owned and operated by 152.4 political subdivisions of the state are exempt under this 152.5 subdivision. 152.6 Sales of supplies and equipment used in the operation of an 152.7 ambulance service owned and operated by a political subdivision 152.8 of the state are exempt under this subdivision provided that the 152.9 supplies and equipment are used in the course of providing 152.10 medical care. Sales to a political subdivision of repair and 152.11 replacement parts for emergency rescue vehicles and fire trucks 152.12 and apparatus are exempt under this subdivision. 152.13 Sales to a political subdivision of machinery and 152.14 equipment, except for motor vehicles, used directly for mixed 152.15 municipal solid waste management services at a solid waste 152.16 disposal facility as defined in section 115A.03, subdivision 10, 152.17 are exempt under this subdivision. 152.18 Sales to political subdivisions of chore and homemaking 152.19 services to be provided to elderly or disabled individuals are 152.20 exempt. 152.21 Sales to a town of gravel and of machinery, equipment, and 152.22 accessories, except motor vehicles, used exclusively for road 152.23 and bridge maintenance, and leases of motor vehicles exempt from 152.24 tax under section 297B.03, clause (10), are exempt. 152.25 Sales of telephone services to the department of 152.26 administration that are used to provide telecommunications 152.27 services through the intertechnologies revolving fund are exempt 152.28 under this subdivision. 152.29 This exemption shall not apply to building, construction or 152.30 reconstruction materials purchased by a contractor or a 152.31 subcontractor as a part of a lump-sum contract or similar type 152.32 of contract with a guaranteed maximum price covering both labor 152.33 and materials for use in the construction, alteration, or repair 152.34 of a building or facility. This exemption does not apply to 152.35 construction materials purchased by tax exempt entities or their 152.36 contractors to be used in constructing buildings or facilities 153.1 which will not be used principally by the tax exempt entities. 153.2 This exemption does not apply to the leasing of a motor 153.3 vehicle as defined in section 297B.01, subdivision 5, except for 153.4 leases entered into by the United States or its agencies or 153.5 instrumentalities. 153.6 The tax imposed on sales to political subdivisions of the 153.7 state under this section applies to all political subdivisions 153.8 other than those explicitly exempted under this subdivision, 153.9 notwithstanding section 115A.69, subdivision 6, 116A.25, 153.10 360.035, 458A.09, 458A.30, 458D.23, 469.101, subdivision 2, 153.11 469.127, 473.448, 473.545, or 473.608 or any other law to the 153.12 contrary enacted before 1992. 153.13 Sales exempted by this subdivision include sales made to 153.14 other states or political subdivisions of other states, if the 153.15 sale would be exempt from taxation if it occurred in that state, 153.16 but do not include sales under section 297A.01, subdivision 3, 153.17 paragraphs (c) and (e). 153.18 EFFECTIVE DATE: This section is effective for sales and 153.19 purchases occurring after June 30, 2000. 153.20 Sec. 10. Minnesota Statutes 1998, section 297A.25, 153.21 subdivision 16, is amended to read: 153.22 Subd. 16. [SALES TO NONPROFIT GROUPS.] The gross receipts 153.23 from the sale of tangible personal property to, and the storage, 153.24 use or other consumption of such property by, any corporation, 153.25 society, association, foundation, or institution organized and 153.26 operated exclusively for charitable, religious, or educational 153.27 purposes if the property purchased is to be used in the 153.28 performance of charitable, religious, or educational functions, 153.29 or any senior citizen group or association of groups that in 153.30 general limits membership to persons who are either (1) age 55 153.31 or older, or (2) physically disabled, and is organized and 153.32 operated exclusively for pleasure, recreation, and other 153.33 nonprofit purposes, no part of the net earnings of which inures 153.34 to the benefit of any private shareholders, are exempt. For 153.35 purposes of this subdivision, charitable purpose includes the 153.36 maintenance of a cemetery owned by a religious organization. 154.1 Sales exempted by this subdivision include sales pursuant to 154.2 section 297A.01, subdivision 3, paragraphs (d) and (f). This 154.3 exemption shall not apply to building, construction, or 154.4 reconstruction materials purchased by a contractor or a 154.5 subcontractor as a part of a lump-sum contract or similar type 154.6 of contract with a guaranteed maximum price covering both labor 154.7 and materials for use in the construction, alteration, or repair 154.8 of a building or facility. This exemption does not apply to 154.9 construction materials purchased by tax exempt entities or their 154.10 contractors to be used in constructing buildings or facilities 154.11 which will not be used principally by the tax exempt entities. 154.12 This exemptiondoes not applyapplies to the leasing of a motor 154.13 vehicle as defined in section 297B.01, subdivision 5, only if 154.14 the vehicle is: 154.15 (1) a truck, as defined in section 168.011, a bus, as 154.16 defined in section 168.011, or a passenger automobile, as 154.17 defined in section 168.011, if the automobile is designed and 154.18 used for carrying more than nine persons including the driver; 154.19 and 154.20 (2) intended to be used primarily to transport tangible 154.21 personal property or individuals, other than employees, to whom 154.22 the organization provides service in performing its charitable, 154.23 religious, or educational purpose. 154.24 EFFECTIVE DATE: This section is effective for sales and 154.25 purchases occurring after June 30, 2000. 154.26 Sec. 11. Minnesota Statutes 1998, section 297A.25, 154.27 subdivision 34, is amended to read: 154.28 Subd. 34. [MOTOR VEHICLES.] The gross receipts from the 154.29 sale or use of any motor vehicle taxable under the provisions of 154.30 the sales tax on motor vehicles laws of Minnesota shall be 154.31 exempt from taxation under this chapter. Notwithstanding 154.32 subdivision 11, the exemption provided under this subdivision 154.33 remains in effect for motor vehicles purchased or leased by 154.34 political subdivisions of the state if the vehicles are exempt 154.35 from registration under section 168.012, subdivision 1, 154.36 paragraph (b), or exempt from taxation under section 473.448. 155.1 EFFECTIVE DATE: This section is retroactively effective 155.2 July 1, 1997. 155.3 Sec. 12. Minnesota Statutes 1998, section 297A.25, is 155.4 amended by adding a subdivision to read: 155.5 Subd. 84. [MATERIALS USED TO MAKE RESIDENTIAL PROPERTY 155.6 HANDICAPPED ACCESSIBLE.] The gross receipts from the sale to, 155.7 and the storage, use, or consumption of building materials and 155.8 equipment to a nonprofit organization is exempt if: 155.9 (1) the materials and equipment are used or incorporated 155.10 into modifying an existing residential structure to make it 155.11 handicapped accessible; and 155.12 (2) the materials and equipment used in the modification 155.13 would qualify for an exemption under either subdivision 20 or 43 155.14 if made by the current owner of the residence. 155.15 For purposes of this subdivision, "nonprofit organization" 155.16 means any nonprofit corporation, society, association, 155.17 foundation, or institution organized and operated exclusively 155.18 for charitable, religious, educational, or civic purposes; or a 155.19 veterans' group exempt from federal taxation under section 155.20 501(c), clause (19), of the Internal Revenue Code. 155.21 EFFECTIVE DATE: This section is effective for sales and 155.22 purchases occurring after June 30, 2000. 155.23 Sec. 13. Minnesota Statutes 1998, section 297A.25, is 155.24 amended by adding a subdivision to read: 155.25 Subd. 85. [MAINTENANCE OF CEMETERY GROUNDS.] Lawn care and 155.26 related services used in the maintenance of cemetery grounds are 155.27 exempt. For purposes of this subdivision, "lawn care and 155.28 related services" means the services listed in section 297A.01, 155.29 subdivision 3, paragraph (i), clause (vi), and "cemetery" means 155.30 a cemetery for human burial. 155.31 EFFECTIVE DATE: This section is effective for sales and 155.32 purchases occurring after June 30, 2000. 155.33 Sec. 14. Minnesota Statutes 1998, section 297A.25, is 155.34 amended by adding a subdivision to read: 155.35 Subd. 86. [PATENT, TRADEMARK, AND COPYRIGHT DRAWINGS AND 155.36 DOCUMENTS.] The gross receipts from the sale of, and use, 156.1 storage, distribution, or consumption of a drawing, diagram, or 156.2 similar or related document or a copy of such a document are 156.3 exempt if the document: 156.4 (1) is produced and sold by a patent drafter; and 156.5 (2) is for use in: 156.6 (i) a patent, trademark, or copyright application to be 156.7 filed with government agencies; 156.8 (ii) an application to the federal Food and Drug 156.9 Administration for approval of a medical device; or 156.10 (iii) a judicial or quasi-judicial proceeding, including 156.11 mediation and arbitration, relating to the validity of or legal 156.12 rights under a patent, trademark, or copyright. 156.13 For purposes of this subdivision, a "patent drafter" is a 156.14 person who prepares illustrative documents required in the 156.15 preparation of intellectual property applications. 156.16 EFFECTIVE DATE: This section is effective for sales, use, 156.17 storage, distribution, or consumption occurring after June 30, 156.18 2000. 156.19 Sec. 15. Minnesota Statutes 1998, section 297A.25, is 156.20 amended by adding a subdivision to read: 156.21 Subd. 88. [MACHINERY AND EQUIPMENT FOR SKI AREAS.] The 156.22 gross receipts from the sale, storage, use, or consumption of 156.23 tangible personal property used or consumed primarily and 156.24 directly for tramways at ski areas or in snowmaking and 156.25 snow-grooming operations at ski hills, ski slopes, or ski 156.26 trails, including machinery, equipment, fuel, electricity, and 156.27 water additives used in the production and maintenance of 156.28 machine-made snow, are exempt. 156.29 EFFECTIVE DATE: This section is effective for sales and 156.30 purchases made after June 30, 2000. 156.31 Sec. 16. Minnesota Statutes 1998, section 297A.25, is 156.32 amended by adding a subdivision to read: 156.33 Subd. 89. [FEED FOR POULTRY RAISED FOR HUMAN CONSUMPTION.] 156.34 The gross receipts from the sale of, and storage, use, or 156.35 consumption of poultry feed is exempt if the poultry is raised 156.36 for human consumption. 157.1 EFFECTIVE DATE: This section is effective for sales and 157.2 purchases made after June 30, 2000. 157.3 Sec. 17. Minnesota Statutes 1998, section 297A.25, is 157.4 amended by adding a subdivision to read: 157.5 Subd. 90. [CONSTRUCTION MATERIALS AND EQUIPMENT; 157.6 AGRICULTURAL PROCESSING FACILITY.] Materials, supplies, and 157.7 equipment used or consumed in the construction and initial 157.8 equipping of an agricultural pork processing facility are exempt 157.9 from the tax imposed under this chapter provided that the 157.10 following conditions are met: 157.11 (1) the construction and equipping of the facility will be 157.12 at least $4,000,000; 157.13 (2) the facility is owned and operated by a cooperative 157.14 organized under chapter 308A; and 157.15 (3) the facility will have a maximum daily processing 157.16 capacity of at least 400 hogs. 157.17 The exemption applies regardless of whether the materials, 157.18 supplies, and equipment are purchased by the owner or by a 157.19 contractor, subcontractor, or builder. The tax must be 157.20 calculated and paid at the time of purchase and a refund applied 157.21 for in the manner prescribed in section 297A.15, subdivision 8. 157.22 EFFECTIVE DATE: This section is effective for sales and 157.23 purchases made after January 1, 2000, and before December 31, 157.24 2000. 157.25 Sec. 18. Minnesota Statutes 1998, section 297A.25, is 157.26 amended by adding a subdivision to read: 157.27 Subd. 91. [CONSTRUCTION MATERIALS AND EQUIPMENT; PORK AND 157.28 BEEF AGRICULTURAL PROCESSING FACILITY.] Materials, supplies, and 157.29 equipment used or consumed in the construction and initial 157.30 equipping of an agricultural processing facility are exempt from 157.31 the tax imposed under this chapter provided that the following 157.32 conditions are met: 157.33 (1) the construction and equipping of the facility will be 157.34 at least $1,500,000; 157.35 (2) the facility is owned and operated by a C corporation, 157.36 as defined in section 1361(a)(2) of the Internal Revenue Code of 158.1 1986, with fewer than 20 shareholders of which at least one-half 158.2 of them are full-time or part-time farmers; 158.3 (3) the facility will have a weekly processing capacity of 158.4 at least 50 hogs and 30 beef animals. The exemption applies 158.5 regardless of whether the materials, supplies, and equipment are 158.6 purchased by the owner or by a contractor, subcontractor, or 158.7 builder. The tax must be calculated and paid at the time of 158.8 purchase and a refund applied for in the manner prescribed in 158.9 section 297A.15, subdivision 8. 158.10 EFFECTIVE DATE: This section is effective for sales and 158.11 purchases made after December 1, 1999, and before December 31, 158.12 2000. 158.13 Sec. 19. Minnesota Statutes 1998, section 297B.01, 158.14 subdivision 7, is amended to read: 158.15 Subd. 7. [SALE, SELLS, SELLING, PURCHASE, PURCHASED, OR 158.16 ACQUIRED.] "Sale," "sells," "selling," "purchase," "purchased," 158.17 or "acquired" means any transfer of title of any motor vehicle, 158.18 whether absolutely or conditionally, for a consideration in 158.19 money or by exchange or barter for any purpose other than resale 158.20 in the regular course of business. Any motor vehicle utilized 158.21 by the owner only by leasing such vehicle to others or by 158.22 holding it in an effort to so lease it, and which is put to no 158.23 other use by the owner other than resale after such lease or 158.24 effort to lease, shall be considered property purchased for 158.25 resale. The terms also shall include any transfer of title or 158.26 ownership of a motor vehicle byway of gift or by any other158.27manner or by anyother meanswhatsoever, for or without 158.28 consideration, except that these terms shall not include: 158.29 (a) the acquisition of a motor vehicle by inheritance from 158.30 or by bequest of, a decedent who owned it; 158.31 (b) the transfer of a motor vehicle which was previously 158.32 licensed in the names of two or more joint tenants and 158.33 subsequently transferred without monetary consideration to one 158.34 or more of the joint tenants; 158.35 (c) the transfer of a motor vehicle by way of gift between 158.36a husband and wife or parent and childindividuals, when the 159.1 transfer is with no monetary or other consideration or 159.2 expectation of consideration and the parties to the transfer 159.3 submit an affidavit to that effect at the time the title 159.4 transfer is recorded; 159.5 (d) the voluntary or involuntary transfer of a motor 159.6 vehicle between a husband and wife in a divorce proceeding; or 159.7 (e) the transfer of a motor vehicle by way of a gift to an 159.8 organization that is exempt from federal income taxation under 159.9 section 501(c)(3) of the Internal Revenue Code, as amended 159.10 through December 31, 1996, when the motor vehicle will be used 159.11 exclusively for religious, charitable, or educational purposes. 159.12 EFFECTIVE DATE: This section is effective for 159.13 registrations after June 30, 2000. 159.14 Sec. 20. Minnesota Statutes 1998, section 297B.03, is 159.15 amended to read: 159.16 297B.03 [EXEMPTIONS.] 159.17 There is specifically exempted from the provisions of this 159.18 chapter and from computation of the amount of tax imposed by it 159.19 the following: 159.20 (1) Purchase or use, including use under a lease purchase 159.21 agreement or installment sales contract made pursuant to section 159.22 465.71, of any motor vehicle by the United States and its 159.23 agencies and instrumentalities and by any person described in 159.24 and subject to the conditions provided in section 297A.25, 159.25 subdivision 18. 159.26 (2) Purchase or use of any motor vehicle by any person who 159.27 was a resident of another state at the time of the purchase and 159.28 who subsequently becomes a resident of Minnesota, provided the 159.29 purchase occurred more than 60 days prior to the date such 159.30 person began residing in the state of Minnesota. 159.31 (3) Purchase or use of any motor vehicle by any person 159.32 making a valid election to be taxed under the provisions of 159.33 section 297A.211. 159.34 (4) Purchase or use of any motor vehicle previously 159.35 registered in the state of Minnesota when such transfer 159.36 constitutes a transfer within the meaning of section 118, 331, 160.1 332, 336, 337, 338, 351or, 355, 368, 721, 731, 1031, 1033, or 160.2 1563(a) of the Internal Revenue Code of 1986, as amended through 160.3 December 31,19881999. 160.4 (5) Purchase or use of any vehicle owned by a resident of 160.5 another state and leased to a Minnesota based private or for 160.6 hire carrier for regular use in the transportation of persons or 160.7 property in interstate commerce provided the vehicle is titled 160.8 in the state of the owner or secured party, and that state does 160.9 not impose a sales tax or sales tax on motor vehicles used in 160.10 interstate commerce. 160.11 (6) Purchase or use of a motor vehicle by a private 160.12 nonprofit or public educational institution for use as an 160.13 instructional aid in automotive training programs operated by 160.14 the institution. "Automotive training programs" includes motor 160.15 vehicle body and mechanical repair courses but does not include 160.16 driver education programs. 160.17 (7) Purchase of a motor vehicle for use as an ambulance by 160.18 an ambulance service licensed under section 144E.10. 160.19 (8) Purchase of a motor vehicle by or for a public library, 160.20 as defined in section 134.001, subdivision 2, as a bookmobile or 160.21 library delivery vehicle. 160.22 (9) Purchase of a ready-mixed concrete truck. 160.23 (10) Purchase or use of a motor vehicle by a town for use 160.24 exclusively for road maintenance, including snowplows and dump 160.25 trucks, but not including automobiles, vans, or pickup trucks. 160.26 (11) Purchase or use of a motor vehicle by a corporation, 160.27 society, association, foundation, or institution organized and 160.28 operated exclusively for charitable, religious, or educational 160.29 purposes, but only if the vehicle is: 160.30 (i) a truck, as defined in section 168.011, a bus, as 160.31 defined in section 168.011, or a passenger automobile, as 160.32 defined in section 168.011, if the automobile is designed and 160.33 used for carrying more than nine persons including the driver; 160.34 and 160.35 (ii) intended to be used primarily to transport tangible 160.36 personal property or individuals, other than employees, to whom 161.1 the organization provides service in performing its charitable, 161.2 religious, or educational purpose. 161.3 EFFECTIVE DATE: This section is effective for sales and 161.4 purchases occurring after June 30, 2000, except that the new 161.5 language in clause (4) is effective the day following final 161.6 enactment. 161.7 Sec. 21. [LOCAL TAXES ON MOTOR VEHICLES.] 161.8 Subdivision 1. [SALES TAX PROHIBITED; PHASE-OUT.] (a) 161.9 Except as provided in paragraph (b), after June 30, 2000, no 161.10 home rule charter or statutory city, county, or other political 161.11 subdivision may impose a tax on the sale, transfer, or use of a 161.12 motor vehicle that exceeds the tax authorized under subdivision 161.13 2. 161.14 (b) If, on March 8, 2000, a tax was in effect in a home 161.15 rule charter or statutory city, county, or other political 161.16 subdivision that exceeded the limit imposed under subdivision 2, 161.17 the rate of that tax is reduced as follows: 161.18 (1) for sales or transfers after December 31, 2000, and 161.19 before January 1, 2002, the tax rate in effect on March 8, 2000, 161.20 is reduced by 25 percent; 161.21 (2) for sales or transfers after December 31, 2001, and 161.22 before January 1, 2003, the tax rate in effect on March 8, 2000, 161.23 is reduced by 50 percent; and 161.24 (3) for sales or transfers after December 31, 2002, and 161.25 before January 1, 2004, the tax rate in effect on March 8, 2000, 161.26 is reduced by 75 percent. 161.27 For sales or transfers after December 31, 2003, the political 161.28 subdivision may impose no tax except as authorized under 161.29 subdivision 2. 161.30 Subd. 2. [EXCISE TAX ON MOTOR VEHICLES AUTHORIZED.] 161.31 Notwithstanding Minnesota Statutes, section 477A.016, or any 161.32 other provision of law, ordinance, or city charter, if a sales 161.33 and use tax on motor vehicles that was imposed by a political 161.34 subdivision is terminated under subdivision 1, the political 161.35 subdivision may impose by ordinance an excise tax of up to $20 161.36 per motor vehicle, as defined by ordinance, that was purchased 162.1 or acquired from any person engaged within the territory of the 162.2 political subdivision in the business of selling motor vehicles 162.3 at retail. The proceeds of the tax must be used for the 162.4 purposes for which the tax terminated under subdivision 1 was 162.5 used. 162.6 EFFECTIVE DATE: This section is effective July 1, 2000. 162.7 Sec. 22. [DEVELOPMENT OF SALES AND USE TAX COLLECTION 162.8 SYSTEM.] 162.9 Subdivision 1. [AUTHORIZATION TO ENTER INTO MULTISTATE 162.10 DISCUSSIONS.] The commissioner of revenue may enter into 162.11 discussions with states regarding development of a multistate, 162.12 voluntary, streamlined system for sales and use tax collection 162.13 and administration. These discussions will focus on development 162.14 of a system that is capable of determining whether a transaction 162.15 is taxable or exempt, the appropriate tax rate applied to the 162.16 transaction, and the total tax due on the transaction, and shall 162.17 provide a method for collecting and remitting sales and use 162.18 taxes to the state. The system may provide compensation for the 162.19 costs of collecting and remitting sales and use taxes. 162.20 Discussions between the department and other states may result 162.21 in developing and issuing a joint request for information from 162.22 public and private potential parties. The commissioner must 162.23 publish the notices in the State Register. 162.24 Subd. 2. [LIMITED TEST AUTHORIZATION.] (a) The 162.25 commissioner may participate in a sales tax pilot project with 162.26 other states and selected businesses to test a means for 162.27 simplifying sales and use tax administration, and may enter into 162.28 joint agreements for that purpose. 162.29 (b) Agreements to participate in the test will establish 162.30 provisions for the administration, imposition, and collection of 162.31 sales and use taxes resulting in revenues paid by the taxpayer 162.32 that are the same as would be paid under existing law. 162.33 (c) Parties to the agreements are excused from complying 162.34 with the provisions of Minnesota Statutes, chapters 289A and 162.35 297A, except for provisions setting tax rates and providing for 162.36 tax exemptions, to the extent a different procedure is required 163.1 by the agreements. 163.2 (d) Agreements authorized under this section terminate no 163.3 later than December 31, 2001. 163.4 Subd. 3. [DISCLOSURE.] Any agreements entered into under 163.5 subdivision 1 or 2 are subject to the provisions of Minnesota 163.6 Statutes, chapter 270B. 163.7 Subd. 4. [REPORT ON PROJECT.] By March 1, 2002, the 163.8 commissioner shall report to the chairs of the house of 163.9 representatives tax committee and the senate committee on 163.10 taxes. The report must describe the status of multistate 163.11 discussions conducted under subdivision 1 and, if a proposed 163.12 system has been agreed upon by participating states, must also 163.13 recommend whether the state should participate in the system. 163.14 EFFECTIVE DATE: This section is effective the day 163.15 following final enactment. 163.16 ARTICLE 9 163.17 HEALTH CARE TAXES 163.18 Section 1. Minnesota Statutes 1998, section 60A.15, 163.19 subdivision 1, is amended to read: 163.20 Subdivision 1. [DOMESTIC AND FOREIGN COMPANIES.] (a) On or 163.21 before April 1, June 1, and December 1 of each year, every 163.22 domestic and foreign company, including town and farmers' mutual 163.23 insurance companies, domestic mutual insurance companies, marine 163.24 insurance companies, health maintenance organizations, community 163.25 integrated service networks, and nonprofit health service plan 163.26 corporations, shall pay to the commissioner of revenue 163.27 installments equal to one-third of the insurer's total estimated 163.28 tax for the current year. Except as provided in paragraphs (d), 163.29 (e), (h), and (i), installments must be based on a sum equal to 163.30 two percent of the premiums described in paragraph (b). 163.31 (b) Installments under paragraph (a), (d), or (e) are 163.32 percentages of gross premiums less return premiums on all direct 163.33 business received by the insurer in this state, or by its agents 163.34 for it, in cash or otherwise, during such year. 163.35 (c) Failure of a company to make payments of at least 163.36 one-third of either (1) the total tax paid during the previous 164.1 calendar year or (2) 80 percent of the actual tax for the 164.2 current calendar year shall subject the company to the penalty 164.3 and interest provided in this section, unless the total tax for 164.4 the current tax year is $500 or less. 164.5 (d) For health maintenance organizations, nonprofit health 164.6 service plan corporations, and community integrated service 164.7 networks, the installments must be based on an amount determined 164.8 under paragraph (h) or (i). 164.9 (e) For purposes of computing installments for town and 164.10 farmers' mutual insurance companies and for mutual property 164.11 casualty companies with total assets on December 31, 1989, of 164.12 $1,600,000,000 or less, the following rates apply: 164.13 (1) for all life insurance, two percent; 164.14 (2) for town and farmers' mutual insurance companies and 164.15 for mutual property and casualty companies with total assets of 164.16 $5,000,000 or less, on all other coverages, one percent; and 164.17 (3) for mutual property and casualty companies with total 164.18 assets on December 31, 1989, of $1,600,000,000 or less, on all 164.19 other coverages, 1.26 percent. 164.20 (f) If the aggregate amount of premium tax payments under 164.21 this section and the fire marshal tax payments under section 164.22 299F.21 made during a calendar year is equal to or exceeds 164.23 $120,000, all tax payments in the subsequent calendar year must 164.24 be paid by means of a funds transfer as defined in section 164.25 336.4A-104, paragraph (a). The funds transfer payment date, as 164.26 defined in section 336.4A-401, must be on or before the date the 164.27 payment is due. If the date the payment is due is not a funds 164.28 transfer business day, as defined in section 336.4A-105, 164.29 paragraph (a), clause (4), the payment date must be on or before 164.30 the funds transfer business day next following the date the 164.31 payment is due. 164.32 (g) Premiums under medical assistance, general assistance 164.33 medical care, the MinnesotaCare program, and the Minnesota 164.34 comprehensive health insurance plan and all payments, revenues, 164.35 and reimbursements received from the federal government for 164.36 Medicare-related coverage as defined in section 62A.31, 165.1 subdivision 3, paragraph (e), are not subject to tax under this 165.2 section. 165.3 (h)For calendar years 1997, 1998, and 1999, the165.4installments for health maintenance organizations, community165.5integrated service networks, and nonprofit health service plan165.6corporations must be based on an amount equal to one percent of165.7premiums described under paragraph (b). Health maintenance165.8organizations, community integrated service networks, and165.9nonprofit health service plan corporations that have met the165.10cost containment goals established under section 62J.04 in the165.11individual and small employer market for calendar year 1996 are165.12exempt from payment of the tax imposed under this section for165.13premiums paid after March 30, 1997, and before April 1, 1998.165.14Health maintenance organizations, community integrated service165.15networks, and nonprofit health service plan corporations that165.16have met the cost containment goals established under section165.1762J.04 in the individual and small employer market for calendar165.18year 1997 are exempt from payment of the tax imposed under this165.19section for premiums paid after March 30, 1998, and before April165.201, 1999. Health maintenance organizations, community integrated165.21service networks, and nonprofit health service plan corporations165.22that have met the cost containment goals established under165.23section 62J.04 in the individual and small employer market for165.24calendar year 1998 are exempt from payment of the tax imposed165.25under this section for premiums paid after March 30, 1999, and165.26before January 1, 2000Health maintenance organizations, 165.27 community integrated service networks, and nonprofit health 165.28 service plan corporations are exempt from the tax imposed under 165.29 this section on premiums received in calendar years 2001 and 165.30 2002. 165.31 (i) For calendar years after19992002,the commissioner of165.32finance shall determine the balance of the health care access165.33fund on September 1 of each year beginning September 1, 1999.165.34If the commissioner determines that there is no structural165.35deficit for the next fiscal year, no tax shall be imposed under165.36paragraph (d) for the following calendar year. If the166.1commissioner determines that there will be a structural deficit166.2in the fund for the following fiscal year, then the166.3commissioner, in consultation with the commissioner of revenue,166.4shall determine the amount needed to eliminate the structural166.5deficit and a tax shall be imposed under paragraph (d) for the166.6following calendar year. The commissioner shall determine the166.7rate of the tax as either one-quarter of one percent, one-half166.8of one percent, three-quarters of one percent, or one percent of166.9premiums described in paragraph (b), whichever is the lowest of166.10those rates that the commissioner determines will produce166.11sufficient revenue to eliminate the projected structural166.12deficit. The commissioner of finance shall publish in the State166.13Register by October 1 of each year the amount of tax to be166.14imposed for the following calendar year. In determining the166.15structural balance of the health care access fund for fiscal166.16years 2000 and 2001, the commissioner shall disregard the166.17transfer amount from the health care access fund to the general166.18fund for expenditures associated with the services provided to166.19pregnant women and children under the age of two enrolled in the166.20MinnesotaCare programa rate of one percent applies to premiums 166.21 of health maintenance organizations, community-integrated 166.22 service networks, and nonprofit health service plan corporations. 166.23 (j) In approving the premium rates as required in sections 166.24 62L.08, subdivision 8, and 62A.65, subdivision 3, the 166.25 commissioners of health and commerce shall ensure that any 166.26 exemption from the tax as described in paragraphs (h) and (i) is 166.27 reflected in the premium rate. 166.28 EFFECTIVE DATE: This section is effective for taxes on 166.29 premiums received after December 31, 2000. 166.30 Sec. 2. Minnesota Statutes 1998, section 295.50, 166.31 subdivision 9b, is amended to read: 166.32 Subd. 9b. [PATIENT SERVICES.] (a) "Patient services" means 166.33 inpatient and outpatient services and other goods and services 166.34 provided by hospitals, surgical centers, or health care 166.35 providers. They include the following health care goods and 166.36 services provided to a patient or consumer: 167.1 (1) bed and board; 167.2 (2) nursing services and other related services; 167.3 (3) use of hospitals, surgical centers, or health care 167.4 provider facilities; 167.5 (4) medical social services; 167.6 (5) drugs, biologicals, supplies, appliances, and 167.7 equipment; 167.8 (6) other diagnostic or therapeutic items or services; 167.9 (7) medical or surgical services; 167.10 (8) items and services furnished to ambulatory patients not 167.11 requiring emergency care; 167.12 (9) emergency services; and 167.13 (10) covered services listed in section 256B.0625 and in 167.14 Minnesota Rules, parts 9505.0170 to 9505.0475. 167.15 (b) "Patient services" does not include: 167.16 (1) services provided to nursing homes licensed under 167.17 chapter 144A; and 167.18 (2) examinations for purposes of utilization reviews, 167.19 insurance claims or eligibility, litigation, and employment, 167.20 including reviews of medical records for those purposes. 167.21 EFFECTIVE DATE: This section is effective for payments 167.22 received on or after January 1, 2000. 167.23 Sec. 3. Minnesota Statutes 1999 Supplement, section 167.24 295.53, subdivision 1, is amended to read: 167.25 Subdivision 1. [EXEMPTIONS.] (a) The following payments 167.26 are excluded from the gross revenues subject to the hospital, 167.27 surgical center, or health care provider taxes under sections 167.28 295.50 to 295.57: 167.29 (1) payments received for services provided under the 167.30 Medicare program, including payments received from the 167.31 government, and organizations governed by sections 1833 and 1876 167.32 of title XVIII of the federal Social Security Act, United States 167.33 Code, title 42, section 1395, and enrollee deductibles, 167.34 coinsurance, and copayments, whether paid by the Medicare 167.35 enrollee or by a Medicare supplemental coverage as defined in 167.36 section 62A.011, subdivision 3, clause (10). Payments for 168.1 services not covered by Medicare are taxable; 168.2 (2) medical assistance payments including payments received 168.3 directly from the government or from a prepaid plan; 168.4 (3) payments received for home health care services; 168.5 (4) payments received from hospitals or surgical centers 168.6 for goods and services on which liability for tax is imposed 168.7 under section 295.52 or the source of funds for the payment is 168.8 exempt under clause (1), (2), (7), (8), (10),or(13), or (20); 168.9 (5) payments received from health care providers for goods 168.10 and services on which liability for tax is imposed under this 168.11 chapter or the source of funds for the payment is exempt under 168.12 clause (1), (2), (7), (8), (10),or(13), or (20); 168.13 (6) amounts paid for legend drugs, other than nutritional 168.14 products, to a wholesale drug distributor who is subject to tax 168.15 under section 295.52, subdivision 3, reduced by reimbursements 168.16 received for legend drugs under clauses (1), (2), (7), and (8); 168.17 (7) payments received under the general assistance medical 168.18 care program including payments received directly from the 168.19 government or from a prepaid plan; 168.20 (8) payments received for providing services under the 168.21 MinnesotaCare program including payments received directly from 168.22 the government or from a prepaid plan and enrollee deductibles, 168.23 coinsurance, and copayments. For purposes of this clause, 168.24 coinsurance means the portion of payment that the enrollee is 168.25 required to pay for the covered service; 168.26 (9) payments received by a health care provider or the 168.27 wholly owned subsidiary of a health care provider for care 168.28 provided outside Minnesota; 168.29 (10) payments received from the chemical dependency fund 168.30 under chapter 254B; 168.31 (11) payments received in the nature of charitable 168.32 donations that are not designated for providing patient services 168.33 to a specific individual or group; 168.34 (12) payments received for providing patient services 168.35 incurred through a formal program of health care research 168.36 conducted in conformity with federal regulations governing 169.1 research on human subjects. Payments received from patients or 169.2 from other persons paying on behalf of the patients are subject 169.3 to tax; 169.4 (13) payments received from any governmental agency for 169.5 services benefiting the public, not including payments made by 169.6 the government in its capacity as an employer or insurer; 169.7 (14) payments received for services provided by community 169.8 residential mental health facilities licensed under Minnesota 169.9 Rules, parts 9520.0500 to 9520.0690, community support programs 169.10 and family community support programs approved under Minnesota 169.11 Rules, parts 9535.1700 to 9535.1760, and community mental health 169.12 centers as defined in section 245.62, subdivision 2; 169.13 (15) government payments received by a regional treatment 169.14 center; 169.15 (16) payments received for hospice care services; 169.16 (17) payments received by a health care provider for 169.17 hearing aids and related equipment or prescription eyewear 169.18 delivered outside of Minnesota; 169.19 (18) payments received by an educational institution from 169.20 student tuition, student activity fees, health care service 169.21 fees, government appropriations, donations, or grants. Fee for 169.22 service payments and payments for extended coverage are taxable; 169.23 (19) payments received for services provided by: assisted 169.24 living programs and congregate housing programs; and 169.25(20) payments received from nursing homes licensed under169.26chapter 144A for services provided to a nursing home; and169.27(21) payments received for examinations for purposes of169.28utilization reviews, insurance claims or eligibility,169.29litigation, and employment, including reviews of medical records169.30for those purposes.169.31 (20) payments received under the federal Employees Health 169.32 Benefits Act, United States Code, title 5, section 8909(f), as 169.33 amended by the Omnibus Reconciliation Act of 1990. 169.34 (b) Payments received by wholesale drug distributors for 169.35 legend drugs sold directly to veterinarians or veterinary bulk 169.36 purchasing organizations are excluded from the gross revenues 170.1 subject to the wholesale drug distributor tax under sections 170.2 295.50 to 295.59. 170.3 EFFECTIVE DATE: This section is effective for payments 170.4 received on or after January 1, 2000. 170.5 Sec. 4. Minnesota Statutes 1998, section 295.58, is 170.6 amended to read: 170.7 295.58 [DEPOSIT OF REVENUES AND PAYMENT OF REFUNDS.] 170.8 The commissioner shall deposit all revenues, including 170.9 penalties and interest, derived from the taxes imposed by 170.10 sections 295.50 to 295.57 and from the insurance premiums tax on 170.11 health maintenance organizations, community integrated service 170.12 networks, and nonprofit health service plan corporations in the 170.13 health care access fund in the state treasury.Refunds of170.14overpayments must be paid from the health care access fund in170.15the state treasury.There is annually appropriated from the 170.16 health care access fund to the commissioner of revenue the 170.17 amount necessary to make any refunds required undersection170.18295.54this chapter. 170.19 EFFECTIVE DATE: This section is effective for refunds made 170.20 on or after January 1, 1999. 170.21 ARTICLE 10 170.22 SPECIAL TAXES 170.23 Section 1. Minnesota Statutes 1998, section 115A.557, 170.24 subdivision 3, is amended to read: 170.25 Subd. 3. [ELIGIBILITY TO RECEIVE MONEY.] (a) To be 170.26 eligible to receive money distributed by the director under this 170.27 section, a county shall within one year of October 4, 1989: 170.28 (1) create a separate account in its general fund to credit 170.29 the money; and 170.30 (2) set up accounting procedures to ensure that money in 170.31 the separate account is spent only for the purposes in 170.32 subdivision 2. 170.33 (b) In each following year, each county shall also: 170.34 (1) have in place an approved solid waste management plan 170.35 or master plan including a recycling implementation strategy 170.36 under section 115A.551, subdivision 7, and a household hazardous 171.1 waste management plan under section 115A.96, subdivision 6, by 171.2 the dates specified in those provisions; 171.3 (2) submit a report by April 1 of each year to the director 171.4 detailing for the previous calendar year: 171.5 (i) how the money was spent including, but not limited to, 171.6 specific information on the number of employees performing SCORE 171.7 planning, oversight, and administration; the percentage of those 171.8 employees' total work time allocated to SCORE planning, 171.9 oversight, and administration; the specific duties and 171.10 responsibilities of those employees; and the amount of staff 171.11 salary for these SCORE duties and responsibilities of the 171.12 employees; and (ii) the resulting gains achieved in solid waste 171.13 management practicesduring the previous calendar year; and 171.14 (3) provide evidence to the director that local revenue 171.15 equal to 25 percent of the money sought for distribution under 171.16 this section will be spent for the purposes in subdivision 2. 171.17 (c) The director shall withhold all or part of the funds to 171.18 be distributed to a county under this section if the county 171.19 fails to comply with this subdivision and subdivision 2. 171.20 Sec. 2. Minnesota Statutes 1999 Supplement, section 171.21 287.01, subdivision 2, is amended to read: 171.22 Subd. 2. [AMENDMENT.] "Amendment" means generally a 171.23 document that alters an existing mortgage without securing a new 171.24 debt, or increasing the amount of an existing debt; and, that 171.25 does not, in the case of a multistate mortgage described in 171.26 section 287.05, subdivision 1, paragraph (b), result in an 171.27 increased percentage of the real property encumbered by the 171.28 mortgage being located in this state.Specifically,A document 171.29 isconsideredan amendmentto the extent it merely doesif it 171.30 meets the definition in this subdivision, including documents 171.31 that do any one orany combinationmore of the following: 171.32 (i) extends the time for payment of the unpaid portion of 171.33 the original debt; 171.34 (ii) changes the rate of interest applicable to the unpaid 171.35 portion of the original debt; 171.36 (iii) adds additional real property as security for the 172.1 unpaid portion of the original debt; 172.2 (iv) releases some but not all of the real property serving 172.3 as security for the unpaid portion of the debt; 172.4 (v) replaces all the real property serving as security for 172.5 the unpaid portion of the debt with other real property 172.6 regardless of value; 172.7 (vi) replaces a party previously bound by the mortgage with 172.8 a new party who becomes bound by the same amended mortgage; or 172.9 (vii) reduces the amount of the debt secured by real 172.10 property located in this state, or in the case of a multistate 172.11 mortgage described in section 287.05, subdivision 1, paragraph 172.12 (b), reduces the percentage of real property encumbered by the 172.13 mortgage that is located in this state. 172.14 EFFECTIVE DATE: This section is effective the day 172.15 following final enactment. 172.16 Sec. 3. Minnesota Statutes 1999 Supplement, section 172.17 297E.02, subdivision 1, is amended to read: 172.18 Subdivision 1. [IMPOSITION.] A tax is imposed on all 172.19 lawful gambling other than (1) pull-tab deals or games; (2) 172.20 tipboard deals or games; and (3) items listed in section 172.21 297E.01, subdivision 8, clauses (4) and (5), at the rate of9172.22 8.5 percent on the gross receipts as defined in section 297E.01, 172.23 subdivision 8, less prizes actually paid. The tax imposed by 172.24 this subdivision is in lieu of the tax imposed by section 172.25 297A.02 and all local taxes and license fees except a fee 172.26 authorized under section 349.16, subdivision 8, or a tax 172.27 authorized under subdivision 5. 172.28 The tax imposed under this subdivision is payable by the 172.29 organization or party conducting, directly or indirectly, the 172.30 gambling. 172.31 EFFECTIVE DATE: This section is effective July 1, 2000. 172.32 Sec. 4. Minnesota Statutes 1998, section 297E.02, is 172.33 amended by adding a subdivision to read: 172.34 Subd. 2a. [TAX CREDIT FOR CERTAIN RAFFLES.] An 172.35 organization may claim a credit equal to the tax reported under 172.36 subdivision 1 resulting from a raffle the net proceeds of which 173.1 have been used exclusively for the purposes of section 349.12, 173.2 subdivision 25, paragraph (a), clause (2). The organization 173.3 claiming the credit must do so on the monthly gambling tax 173.4 return on which the raffle activity is reported under 173.5 subdivision 1. 173.6 EFFECTIVE DATE: This section is effective August 1, 2000. 173.7 Sec. 5. Minnesota Statutes 1999 Supplement, section 173.8 297E.02, subdivision 4, is amended to read: 173.9 Subd. 4. [PULL-TAB AND TIPBOARD TAX.] (a) A tax is imposed 173.10 on the sale of each deal of pull-tabs and tipboards sold by a 173.11 distributor. The rate of the tax is1.81.7 percent of the 173.12 ideal gross of the pull-tab or tipboard deal. The sales tax 173.13 imposed by chapter 297A on the sale of the pull-tabs and 173.14 tipboards by the distributor is imposed on the retail sales 173.15 price less the tax imposed by this subdivision. The retail sale 173.16 of pull-tabs or tipboards by the organization is exempt from 173.17 taxes imposed by chapter 297A and is exempt from all local taxes 173.18 and license fees except a fee authorized under section 349.16, 173.19 subdivision 8. 173.20 (b) The liability for the tax imposed by this section is 173.21 incurred when the pull-tabs and tipboards are delivered by the 173.22 distributor to the customer or to a common or contract carrier 173.23 for delivery to the customer, or when received by the customer's 173.24 authorized representative at the distributor's place of 173.25 business, regardless of the distributor's method of accounting 173.26 or the terms of the sale. 173.27 The tax imposed by this subdivision is imposed on all sales 173.28 of pull-tabs and tipboards, except the following: 173.29 (1) sales to the governing body of an Indian tribal 173.30 organization for use on an Indian reservation; 173.31 (2) sales to distributors licensed under the laws of 173.32 another state or of a province of Canada, as long as all 173.33 statutory and regulatory requirements are met in the other state 173.34 or province; 173.35 (3) sales of promotional tickets as defined in section 173.36 349.12; and 174.1 (4) pull-tabs and tipboards sold to an organization that 174.2 sells pull-tabs and tipboards under the exemption from licensing 174.3 in section 349.166, subdivision 2. A distributor shall require 174.4 an organization conducting exempt gambling to show proof of its 174.5 exempt status before making a tax-exempt sale of pull-tabs or 174.6 tipboards to the organization. A distributor shall identify, on 174.7 all reports submitted to the commissioner, all sales of 174.8 pull-tabs and tipboards that are exempt from tax under this 174.9 subdivision. 174.10 (c) A distributor having a liability of $120,000 or more 174.11 during a fiscal year ending June 30 must remit all liabilities 174.12 in the subsequent calendar year by a funds transfer as defined 174.13 in section 336.4A-104, paragraph (a). The funds transfer 174.14 payment date, as defined in section 336.4A-401, must be on or 174.15 before the date the tax is due. If the date the tax is due is 174.16 not a funds transfer business day, as defined in section 174.17 336.4A-105, paragraph (a), clause (4), the payment date must be 174.18 on or before the funds transfer business day next following the 174.19 date the tax is due. 174.20 (d) Any customer who purchases deals of pull-tabs or 174.21 tipboards from a distributor may file an annual claim for a 174.22 refund or credit of taxes paid pursuant to this subdivision for 174.23 unsold pull-tab and tipboard tickets. The claim must be filed 174.24 with the commissioner on a form prescribed by the commissioner 174.25 by March 20 of the year following the calendar year for which 174.26 the refund is claimed. The refund must be filed as part of the 174.27 customer's February monthly return. The refund or credit is 174.28 equal to1.81.7 percent of the face value of the unsold 174.29 pull-tab or tipboard tickets, provided that the refund or credit 174.30 will be1.851.75 percent of the face value of the unsold 174.31 pull-tab or tipboard tickets for claims for a refund or credit 174.32 of taxes filed on the February20002001 monthly return. The 174.33 refund claimed will be applied as a credit against tax owing 174.34 under this chapter on the February monthly return. If the 174.35 refund claimed exceeds the tax owing on the February monthly 174.36 return, that amount will be refunded. The amount refunded will 175.1 bear interest pursuant to section 270.76 from 90 days after the 175.2 claim is filed. 175.3 EFFECTIVE DATE: This section is effective July 1, 2000. 175.4 Sec. 6. Minnesota Statutes 1999 Supplement, section 175.5 297E.02, subdivision 6, is amended to read: 175.6 Subd. 6. [COMBINED RECEIPTS TAX.] In addition to the taxes 175.7 imposed under subdivisions 1 and 4, a tax is imposed on the 175.8 combined receipts of the organization. As used in this section, 175.9 "combined receipts" is the sum of the organization's gross 175.10 receipts from lawful gambling less gross receipts directly 175.11 derived from the conduct of bingo, raffles, and paddlewheels, as 175.12 defined in section 297E.01, subdivision 8, for the fiscal year. 175.13 The combined receipts of an organization are subject to a tax 175.14 computed according to the following schedule: 175.15 If the combined receipts for the The tax is: 175.16 fiscal year are: 175.17 Not over $500,000 zero 175.18 Over $500,000, but not over 175.19 $700,0001.81.7 percent of the 175.20 amount over $500,000, but 175.21 not over $700,000 175.22 Over $700,000, but not over 175.23 $900,000$3,600$3,400 plus3.6175.24 3.4 percent of the amount 175.25 over $700,000, but 175.26 not over $900,000 175.27 Over $900,000$10,800$10,200 plus5.4175.28 5.1 percent of the 175.29 amount over $900,000 175.30 EFFECTIVE DATE: This section is effective July 1, 2000. 175.31 Sec. 7. Minnesota Statutes 1998, section 297F.01, 175.32 subdivision 7, is amended to read: 175.33 Subd. 7. [CONSUMER.] "Consumer" meansany personan 175.34 individual who has title to or possession of cigarettes or 175.35 tobacco productsin storage,foruse or otherpersonal 175.36 consumptionin this staterather than for sale. 176.1 EFFECTIVE DATE: This section is effective the day 176.2 following final enactment. 176.3 Sec. 8. Minnesota Statutes 1998, section 297F.01, is 176.4 amended by adding a subdivision to read: 176.5 Subd. 9a. [INVOICE.] "Invoice" means a detailed list of 176.6 cigarettes and tobacco products purchased or sold in this state 176.7 that contains the following information: 176.8 (1) name of seller; 176.9 (2) name of purchaser; 176.10 (3) date of sale; 176.11 (4) invoice number; 176.12 (5) itemized list of goods sold including brands of 176.13 cigarettes and number of cartons of each brand, unit price, and 176.14 identification of tobacco products by name, quantity, and unit 176.15 price; and 176.16 (6) any rebates, discounts, or other reductions. 176.17 EFFECTIVE DATE: This section is effective July 1, 2000. 176.18 Sec. 9. Minnesota Statutes 1998, section 297F.01, 176.19 subdivision 14, is amended to read: 176.20 Subd. 14. [RETAILER.] "Retailer" means a person required 176.21 to be licensed under chapter 461 engaged in this state in the 176.22 business of selling, or offering to sell, cigarettes or tobacco 176.23 products to consumers. 176.24 EFFECTIVE DATE: This section is effective the day 176.25 following final enactment. 176.26 Sec. 10. Minnesota Statutes 1998, section 297F.01, 176.27 subdivision 17, is amended to read: 176.28 Subd. 17. [STAMP.] "Stamp" means the adhesive stamp 176.29 supplied by the commissioner of revenue for use on cigarette 176.30 packages or any other indicia adopted by the commissioner to 176.31 indicate that the tax has been paid. 176.32 EFFECTIVE DATE: This section is effective the day 176.33 following final enactment. 176.34 Sec. 11. Minnesota Statutes 1998, section 297F.01, is 176.35 amended by adding a subdivision to read: 176.36 Subd. 21a. [UNLICENSED SELLER.] "Unlicensed seller" means 177.1 anyone who is not licensed under section 297F.03 or 461.12 to 177.2 sell the particular product to the purchaser or possessor of the 177.3 product. 177.4 EFFECTIVE DATE: This section is effective the day 177.5 following final enactment. 177.6 Sec. 12. Minnesota Statutes 1998, section 297F.08, 177.7 subdivision 2, is amended to read: 177.8 Subd. 2. [TAX DUE; CIGARETTES.] Notwithstanding any other 177.9 provisions of this chapter, the tax due on the return is based 177.10 upon actualheat-appliedstamps purchased during the reporting 177.11 period. 177.12 EFFECTIVE DATE: This section is effective the day 177.13 following final enactment. 177.14 Sec. 13. Minnesota Statutes 1998, section 297F.08, 177.15 subdivision 5, is amended to read: 177.16 Subd. 5. [DEPOSIT OF PROCEEDS.] The commissioner shall use 177.17 the amounts appropriated by law to purchaseheat-appliedstamps 177.18 for resale. The commissioner shall charge the purchasers for 177.19 the costs of the stamps along with the tax value plus shipping 177.20 costs. The costs recovered along with shipping costs must be 177.21 deposited into the general fund. 177.22 EFFECTIVE DATE: This section is effective the day 177.23 following final enactment. 177.24 Sec. 14. Minnesota Statutes 1998, section 297F.08, 177.25 subdivision 8, is amended to read: 177.26 Subd. 8. [SALE OF STAMPS.] The commissioner may sell 177.27heat-appliedstamps on a credit basis under conditions 177.28 prescribed by the commissioner. The commissioner shall sell the 177.29 stamps at a price which includes the tax after giving effect to 177.30 the discount provided in subdivision 7. The commissioner shall 177.31 recover the actual costs of the stamps from the distributor. 177.32 The commissioner shall annually establish the maximum amount of 177.33heat-appliedstamps that may be purchased each month. 177.34 EFFECTIVE DATE: This section is effective the day 177.35 following final enactment. 177.36 Sec. 15. Minnesota Statutes 1999 Supplement, section 178.1 297F.08, subdivision 8a, is amended to read: 178.2 Subd. 8a. [REVOLVING ACCOUNT.] Aheat-appliedcigarette 178.3 tax stamp revolving account is created. The commissioner shall 178.4 use the amounts in this fund to purchaseheat-appliedstamps for 178.5 resale. The commissioner shall charge distributors for the tax 178.6 value of the stamps they receive along with the commissioner's 178.7 cost to purchase the stamps and ship them to the distributor. 178.8 The stamp purchase and shipping costs recovered must be credited 178.9 to the revolving account and are appropriated to the 178.10 commissioner for the further purchases and shipping costs. The 178.11 revolving account is initially funded by a $40,000 transfer from 178.12 the department of revenue. 178.13 EFFECTIVE DATE: This section is effective the day 178.14 following final enactment. 178.15 Sec. 16. Minnesota Statutes 1998, section 297F.08, 178.16 subdivision 9, is amended to read: 178.17 Subd. 9. [TAX STAMPING MACHINES.] The commissioner shall 178.18 require any person licensed as a distributor to stamp packages 178.19 with aheat-appliedtax stamping machine, approved by the 178.20 commissioner, which shall be provided by the distributor. The 178.21 commissioner shall also supervise and check the operation of the 178.22 machines and shall provide for the payment of the tax on any 178.23 package so stamped, subject to the discount provided in 178.24 subdivision 7. If the commissioner finds that a stamping 178.25 machine is not affixing a legible stamp on the package, the 178.26 commissioner may order the distributor to immediately cease the 178.27 stamping process until the machine is functioning properly. 178.28 EFFECTIVE DATE: This section is effective the day 178.29 following final enactment. 178.30 Sec. 17. Minnesota Statutes 1998, section 297F.09, 178.31 subdivision 1, is amended to read: 178.32 Subdivision 1. [MONTHLY RETURN; CIGARETTE DISTRIBUTOR.] On 178.33 or before the 18th day of each calendar month, a distributor 178.34 with a place of business in this state shall file a return with 178.35 the commissioner showing the quantity of cigarettes manufactured 178.36 or brought in from outside the state or purchased during the 179.1 preceding calendar month and the quantity of cigarettes sold or 179.2 otherwise disposed of in this state and outside this state 179.3 during that month. A licensed distributor outside this state 179.4 shall in like manner file a return showing the quantity of 179.5 cigarettes shipped or transported into this state during the 179.6 preceding calendar month. Returns must be made in the form and 179.7 manner prescribed by the commissioner and must contain any other 179.8 information required by the commissioner. The return must be 179.9 accompanied by a remittance for the full unpaid tax liability 179.10 shown by it.The return for the May liability and 75 percent of179.11the estimated June liability is due on the date payment of the179.12tax is due.179.13 EFFECTIVE DATE: This section is effective beginning with 179.14 the June 2002 liability. 179.15 Sec. 18. Minnesota Statutes 1998, section 297F.09, 179.16 subdivision 2, is amended to read: 179.17 Subd. 2. [MONTHLY RETURN; TOBACCO PRODUCTS DISTRIBUTOR.] 179.18 On or before the 18th day of each calendar month, a distributor 179.19 with a place of business in this state shall file a return with 179.20 the commissioner showing the quantity and wholesale sales price 179.21 of each tobacco product: 179.22 (1) brought, or caused to be brought, into this state for 179.23 sale; and 179.24 (2) made, manufactured, or fabricated in this state for 179.25 sale in this state, during the preceding calendar month. 179.26 Every licensed distributor outside this state shall in like 179.27 manner file a return showing the quantity and wholesale sales 179.28 price of each tobacco product shipped or transported to 179.29 retailers in this state to be sold by those retailers, during 179.30 the preceding calendar month. Returns must be made in the form 179.31 and manner prescribed by the commissioner and must contain any 179.32 other information required by the commissioner. The return must 179.33 be accompanied by a remittance for the full tax liability shown, 179.34 less 1.5 percent of the liability as compensation to reimburse 179.35 the distributor for expenses incurred in the administration of 179.36 this chapter.The return for the May liability and 75 percent180.1of the estimated June liability is due on the date payment of180.2the tax is due.180.3 EFFECTIVE DATE: This section is effective beginning with 180.4 the June 2002 liability. 180.5 Sec. 19. Minnesota Statutes 1998, section 297F.13, 180.6 subdivision 4, is amended to read: 180.7 Subd. 4. [RETAILER AND SUBJOBBER TO PRESERVE PURCHASE 180.8 INVOICES.] Every retailer and subjobber shall procure itemized 180.9 invoices of all cigarettes or tobacco products purchased.The180.10invoices shall show the name and address of the seller and the180.11date of purchase.180.12 The retailer and subjobber shall preserve a legible copy of 180.13 each invoice for one year from the date ofpurchasethe invoice. 180.14 The retailer and subjobber shall preserve copies of the invoices 180.15 at each retail location or at a central location provided that 180.16 the invoice must be produced and made available at a retail 180.17 location within one hour when requested by the commissioner or 180.18 duly authorized agents and employees. Copies should be numbered 180.19 and kept in chronological order. 180.20 To determine whether the business is in compliance with the 180.21 provisions of this chapter and sections 325D.30 to 325D.42, at 180.22 any time during usual business hours, the commissioner, or duly 180.23 authorized agents and employees, may enter any place of business 180.24 of a retailer or subjobber without a search warrant and inspect 180.25 the premises, the records required to be kept under this 180.26 chapter, and the packages of cigarettes, tobacco products, and 180.27 vending devices contained on the premises. 180.28 EFFECTIVE DATE: This section is effective July 1, 2000. 180.29 Sec. 20. Minnesota Statutes 1998, section 297F.21, 180.30 subdivision 1, is amended to read: 180.31 Subdivision 1. [CONTRABAND DEFINED.] The following are 180.32 declared to be contraband and therefore subject to civil and 180.33 criminal penalties under this chapter: 180.34 (a) Cigarette packages which do not have stamps affixed to 180.35 them as provided in this chapter, including but not limited to 180.36 (i) packages with illegible stamps and packages with stamps that 181.1 are not complete or whole even if the stamps are legible, and 181.2 (ii) all devices for the vending of cigarettes in which packages 181.3 as defined in item (i) are found, including all contents 181.4 contained within the devices. 181.5 (b) A device for the vending of cigarettes and all packages 181.6 of cigarettes, where the device does not afford at least partial 181.7 visibility of contents. Where any package exposed to view does 181.8 not carry the stamp required by this chapter, it shall be 181.9 presumed that all packages contained in the device are unstamped 181.10 and contraband. 181.11 (c) A device for the vending of cigarettes to which the 181.12 commissioner or authorized agents have been denied access for 181.13 the inspection of contents. In lieu of seizure, the 181.14 commissioner or an agent may seal the device to prevent its use 181.15 until inspection of contents is permitted. 181.16 (d) A device for the vending of cigarettes which does not 181.17 carry the name and address of the owner, plainly marked and 181.18 visible from the front of the machine. 181.19 (e) A device including, but not limited to, motor vehicles, 181.20 trailers, snowmobiles, airplanes, and boats used with the 181.21 knowledge of the owner or of a person operating with the consent 181.22 of the owner for the storage or transportation of more than 181.23 5,000 cigarettes which are contraband under this subdivision. 181.24 When cigarettes are being transported in the course of 181.25 interstate commerce, or are in movement from either a public 181.26 warehouse to a distributor upon orders from a manufacturer or 181.27 distributor, or from one distributor to another, the cigarettes 181.28 are not contraband, notwithstanding the provisions of clause (a). 181.29 (f) Cigarette packages or tobacco products obtained from an 181.30 unlicensed seller. 181.31 (g) Cigarette packages offered for sale or held as 181.32 inventory in violation of section 297F.20, subdivision 7. 181.33 (h) Tobacco products on which the tax has not been paid by 181.34 a licensed distributor. 181.35 (i) Any cigarette packages or tobacco products offered for 181.36 sale or held as inventory for which there is not an invoice from 182.1 a licensed seller as required under section 297F.13, subdivision 182.2 4. 182.3 EFFECTIVE DATE: This section is effective July 1, 2000. 182.4 Sec. 21. Minnesota Statutes 1998, section 297F.21, 182.5 subdivision 3, is amended to read: 182.6 Subd. 3. [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 182.7 DISPOSITION OF SEIZED PROPERTY.] (a) Within ten days after the 182.8 seizure of any alleged contraband, the person making the seizure 182.9 shall make available an inventory of the property seized to the 182.10 person from whom the seizure was made, if known, and file a copy 182.11 with the commissioner. Within ten days after the date of 182.12 service of the inventory, the person from whom the property was 182.13 seized or any person claiming an interest in the property may 182.14 file with the commissioner a demand for a judicial determination 182.15 of the question as to whether the property was lawfully subject 182.16 to seizure and forfeiture. The commissioner, within 60 days, 182.17 shall institute an action in the district court of the county 182.18 where the seizure was made to determine the issue of 182.19 forfeiture. The court shall decide whether the alleged 182.20 contraband is contraband, as defined in subdivision 1. 182.21 (b) The action must be brought in the name of the state and 182.22 must be prosecuted by the county attorney or by the attorney 182.23 general. The court shall hear the action without a jury and 182.24 shall try and determine the issues of fact and law involved. 182.25 (c) When a judgment of forfeiture is entered, the 182.26 commissioner may, unless the judgment is stayed pending an 182.27 appeal, either: 182.28 (1) deliver the forfeited property to the commissioner of 182.29 human services for use by patients in state institutions; 182.30 (2) cause it to be destroyed; or 182.31 (3) cause it to be sold at public auction as provided by 182.32 law. 182.33 (d) If a demand for judicial determination is made and no 182.34 action commenced as provided in this subdivision, the property 182.35 must be released by the commissioner and returned to the person 182.36 entitled to it. If no demand is made, the property seized is 183.1 considered forfeited to the state by operation of law and may be 183.2 disposed of by the commissioner as provided in the case of a 183.3 judgment of forfeiture.When the commissioner is satisfied that183.4a person from whom property is seized was acting in good faith183.5and without intent to evade the tax imposed by this chapter, the183.6commissioner shall release the property seized without further183.7legal proceedings.183.8 EFFECTIVE DATE: This section is effective for alleged 183.9 contraband seized on or after the day following final enactment. 183.10 Sec. 22. [REPEALER.] 183.11 (a) Minnesota Statutes 1998, section 270.083, is repealed. 183.12 (b) Minnesota Statutes 1998, sections 297F.09, subdivision 183.13 6; and 297G.09, subdivision 5, are repealed. 183.14 EFFECTIVE DATE: This section, paragraph (a), is effective 183.15 the day following final enactment. This section, paragraph (b) 183.16 is effective beginning with the June 2002 liability. 183.17 ARTICLE 11 183.18 LOCAL DEVELOPMENT 183.19 Section 1. Minnesota Statutes 1998, section 273.1399, 183.20 subdivision 1, is amended to read: 183.21 Subdivision 1. [DEFINITIONS.] For purposes of this 183.22 section, the following terms have the meanings given. 183.23 (a) "Qualifying captured net tax capacity" means the 183.24 following amounts: 183.25 (1) The captured net tax capacity of a new or the expanded 183.26 part of an existing economic development tax increment financing 183.27 district, for which certification was requested after April 30, 183.28 1990. 183.29 (2) The captured net tax capacity of a new or the expanded 183.30 part of an existing tax increment financing district, other than 183.31 an economic development district, for which certification was 183.32 requested after April 30, 1990, multiplied by the following 183.33 percentage based on the number of years that have elapsed since 183.34 the assessment year of the original net tax capacity. In no 183.35 case may the final amounts be less than zero or greater than the 183.36 total captured net tax capacity of the district. 184.1 Number of Renewal and All other 184.2 years Renovation Districts 184.3 Districts 184.4 0 to 5 0 0 184.5 6 12.5 6.25 184.6 7 25 12.5 184.7 8 37.5 18.75 184.8 9 50 25 184.9 10 62.5 31.25 184.10 11 75 37.5 184.11 12 87.5 43.75 184.12 13 100 50 184.13 14 100 56.25 184.14 15 100 62.5 184.15 16 100 68.75 184.16 17 100 75 184.17 18 100 81.25 184.18 19 100 87.5 184.19 20 100 93.75 184.20 21 or more 100 100 184.21 (3) The following rules apply to a hazardous substance 184.22 subdistrict. The applicable percentage under clause (2) must be 184.23 determined under the "all other districts" category. The number 184.24 of years must be measured from the date of certification of the 184.25 subdistrict for purposes of the additional captured net tax 184.26 capacity resulting from the reduction in the subdistrict's or 184.27 site's original net tax capacity. After termination of the 184.28 overlying district, captured net tax capacity includes the full 184.29 amount that is captured by the subdistrict. 184.30 (4) Qualified captured tax capacity does not include the 184.31 captured tax capacity of exempt districts under subdivisions 6 184.32 and 7. 184.33 (b) The terms defined in section 469.174 have the meanings 184.34 given in that section. 184.35 (c) "Qualified housing district" means: 184.36 (1) a housing district for a residential rental project or 185.1 projects in which the only properties receiving assistance from 185.2 revenues derived from tax increments from the district meet all 185.3 of the requirements for a low-income housing credit under 185.4 section 42 of the Internal Revenue Code of 1986, as amended 185.5 through December 31, 1992, regardless of whether the project 185.6 actually receives a low-income housing credit; or 185.7 (2) a housing district for a single-family homeownership 185.8 project or projects, if 95 percent or more of the homes 185.9 receiving assistance from tax increments from the district are 185.10 purchased by qualified purchasers. A qualified purchaser means 185.11 the first purchaser of a home after the tax increment assistance 185.12 is provided whose income is at or below 70 percent of the median 185.13 gross income for a family of the same size as the purchaser. 185.14 Median gross income is the greater of (i) area median gross 185.15 income, or (ii) the statewide median gross income, as determined 185.16 by the secretary of Housing and Urban Development. 185.17 EFFECTIVE DATE: This section is effective the day 185.18 following final enactment, and applies to all districts that are 185.19 subject to the underlying law. 185.20 Sec. 2. Minnesota Statutes 1998, section 428A.11, is 185.21 amended by adding a subdivision to read: 185.22 Subd. 7. [AUTHORITY.] "Authority" means an economic 185.23 development authority or housing and redevelopment authority 185.24 created pursuant to section 469.003, 469.004, or 469.091 or 185.25 another entity authorized by law to exercise the powers of an 185.26 authority created pursuant to one of those sections. 185.27 Sec. 3. Minnesota Statutes 1998, section 428A.11, is 185.28 amended by adding a subdivision to read: 185.29 Subd. 8. [IMPLEMENTING ENTITY.] "Implementing entity" 185.30 means the city or authority designated in the enabling ordinance 185.31 as responsible for implementing and administering the housing 185.32 improvement area. 185.33 Sec. 4. Minnesota Statutes 1998, section 428A.13, 185.34 subdivision 1, is amended to read: 185.35 Subdivision 1. [ORDINANCE.] The governing body of the city 185.36 may adopt an ordinance establishingaone or more housing 186.1 improvementareaareas. The ordinance must specifically 186.2 describe the portion of the city to be included in the area, the 186.3 basis for the imposition of the fees, and the number of years 186.4 the fee will be in effect. In addition, the ordinance must 186.5 include findings that without the housing improvement area, the 186.6 proposed improvements could not be made by the condominium 186.7 associations or housing unit owners, and the designation is 186.8 needed to maintain and preserve the housing units within the 186.9 housing improvement area. The ordinance shall designate the 186.10 implementing entity. The ordinance may not be adopted until a 186.11 public hearing has been held regarding the ordinance. The 186.12 ordinance may be amended by the governing body of the city, 186.13 provided the governing body complies with the public hearing 186.14 notice provisions of subdivision 2. Within 30 days after 186.15 adoption of the ordinance under this subdivision, the governing 186.16 body shall send a copy of the ordinance to the commissioner of 186.17 revenue. 186.18 Sec. 5. Minnesota Statutes 1998, section 428A.13, 186.19 subdivision 3, is amended to read: 186.20 Subd. 3. [PROPOSED HOUSING IMPROVEMENTS.] At the public 186.21 hearing held under subdivision 2, thecityproposed implementing 186.22 entity shall provide a preliminary listing of the housing 186.23 improvements to be made in the area. The listing shall identify 186.24 those improvements, if any, that are proposed to be made to all 186.25 or a portion of the common elements of a condominium. The 186.26 listing shall also identify those housing units that have 186.27 completed the proposed housing improvements and are proposed to 186.28 be exempted from a portion of the fee. In preparing the list 186.29 thecityproposed implementing entity shall consult with the 186.30 residents of the area and the condominium associations. 186.31 Sec. 6. Minnesota Statutes 1998, section 428A.14, 186.32 subdivision 1, is amended to read: 186.33 Subdivision 1. [AUTHORITY.] Fees may be imposed by the 186.34cityimplementing entity on the housing units within the housing 186.35 improvement area at a rate, term, or amount sufficient to 186.36 produce revenue required to provide housing improvements in the 187.1 area to reimburse the implementing entity for advances made to 187.2 pay for the housing improvements or to pay principal of, 187.3 interest on, and premiums, if any, on bonds issued by the 187.4 implementing entity under section 428A.16. The fee can be 187.5 imposed on the basis of the tax capacity of the housing unit, or 187.6 the total amount of square footage of the housing unit, or a 187.7 method determined by the council and specified in the resolution. 187.8 Before the imposition of the fees, a hearing must be held and 187.9 notice must be published in the official newspaper at least 187.10 seven days before the hearing and shall be mailed at least seven 187.11 days before the hearing to any housing unit owner subject to a 187.12 fee. For purposes of this section, the notice must also include: 187.13 (1) a statement that all interested persons will be given 187.14 an opportunity to be heard at the hearing regarding a proposed 187.15 housing improvement fee; 187.16 (2) the estimated cost of improvements including 187.17 administrative costs to be paid for in whole or in part by the 187.18 fee imposed under the ordinance; 187.19 (3) the amount to be charged against the particular 187.20 property; 187.21 (4) the right of the property owner to prepay the entire 187.22 fee; 187.23 (5) the number of years the fee will be in effect; and 187.24 (6) a statement that the petition requirements of section 187.25 428A.12 have either been met or do not apply to the proposed fee. 187.26 Within six months of the public hearing, thecity187.27 implementing entity may adopt a resolution imposing a fee within 187.28 the area not exceeding the amount expressed in the notice issued 187.29 under this section. 187.30 Prior to adoption of the resolution approving the fee, the 187.31 condominium associations located in the housing improvement area 187.32 shall submit to thecityimplementing entity a financial plan 187.33 prepared by an independent third party, acceptable to thecity187.34 implementing entity and associations, that provides for the 187.35 associations to finance maintenance and operation of the common 187.36 elements in the condominium and a long-range plan to conduct and 188.1 finance capital improvements. 188.2 Sec. 7. Minnesota Statutes 1998, section 428A.15, is 188.3 amended to read: 188.4 428A.15 [COLLECTION OF FEES.] 188.5 Thecityimplementing entity may provide for the collection 188.6 of the housing improvement fees according to the terms of 188.7 section 428A.05. 188.8 Sec. 8. Minnesota Statutes 1998, section 428A.16, is 188.9 amended to read: 188.10 428A.16 [BONDS.] 188.11 At any time after a contract for the construction of all or 188.12 part of an improvement authorized under sections 428A.11 to 188.13 428A.20 has been entered into or the work has been ordered, the 188.14governing body of the cityimplementing entity may issue 188.15 obligations in the amount it deems necessary to defray in whole 188.16 or in part the expense incurred and estimated to be incurred in 188.17 making the improvement, including every item of cost from 188.18 inception to completion and all fees and expenses incurred in 188.19 connection with the improvement or the financing. 188.20 The obligations are payable primarily out of the proceeds 188.21 of the fees imposed under section 428A.14, or from any other 188.22 special assessments or revenues available to be pledged for 188.23 their payment under charter or statutory authority, or from two 188.24 or more of those sources. The governing body of the city, or if 188.25 the governing bodies are the same or consist of identical 188.26 membership, the authority may, by resolution adopted prior to 188.27 the sale of obligations, pledge the full faith, credit, and 188.28 taxing power of the city toassurebonds issued by it to ensure 188.29 payment of the principal and interest if the proceeds of the 188.30 fees in the area are insufficient to pay the principal and 188.31 interest. The obligations must be issued in accordance with 188.32 chapter 475, except that an election is not required, and the 188.33 amount of the obligations are not included in determination of 188.34 the net debt of the city under the provisions of any law or 188.35 charter limiting debt. 188.36 Sec. 9. Minnesota Statutes 1998, section 428A.17, is 189.1 amended to read: 189.2 428A.17 [ADVISORY BOARD.] 189.3 Thegoverning body of the cityimplementing entity may 189.4 create and appoint an advisory board for the housing improvement 189.5 area in the city to advise thegoverning bodyimplementing 189.6 entity in connection with the planning and construction of 189.7 housing improvements. In appointing the board, thecouncil189.8 implementing entity shall consider for membership members of 189.9 condominium associations located in the housing improvement 189.10 area. The advisory board shall make recommendations to 189.11 thegoverning bodyimplementing entity to provide improvements 189.12 or impose fees within the housing improvement area. Before the 189.13 adoption of a proposal by thegoverning bodyimplementing entity 189.14 to provide improvements within the housing improvement area, the 189.15 advisory board of the housing improvement area shall have an 189.16 opportunity to review and comment upon the proposal. 189.17 Sec. 10. Minnesota Statutes 1998, section 428A.19, is 189.18 amended to read: 189.19 428A.19 [ANNUAL REPORTS.] 189.20 Each condominium association located within the housing 189.21 improvement area must, by August 15 annually, submit a copy of 189.22 its audited financial statements to thecityimplementing entity. 189.23 The city may also, as part of the enabling ordinance, require 189.24 the submission of other relevant information from the 189.25 associations. 189.26 Sec. 11. Minnesota Statutes 1998, section 428A.21, is 189.27 amended to read: 189.28 428A.21 [SUNSET.] 189.29 No new housing improvement areas may be established under 189.30 sections 428A.11 to 428A.20 after June 30,20012005. After 189.31 June 30,20012005, a city may establish a housing improvement 189.32 area, provided that it receives enabling legislation authorizing 189.33 the establishment of the area. 189.34 Sec. 12. Minnesota Statutes 1998, section 469.115, is 189.35 amended to read: 189.36 469.115 [POWERS OF AGENCIES.] 190.1 A local agency shall have all the powers necessary or 190.2 convenient to carry out the purposes of sections 469.109 to 190.3 469.123; except that the agencies shall not levy and collect 190.4 taxes or special assessments, nor exercise the power of eminent 190.5 domain unless the governing body of the municipality or 190.6 municipalities, in the case of a joint exercise of power, shall 190.7 by resolution have expressly conferred that power on the 190.8 agency. A local agency shall also have the following powers in 190.9 addition to others granted in sections 469.109 to 469.123: 190.10 (1) to sue and be sued, to have a seal, which shall be 190.11 judicially noticed, and to alter the same at pleasure; to have 190.12 perpetual succession; and to make, amend, and repeal rules and 190.13 regulations not inconsistent with these sections; 190.14 (2) to employ an executive director, technical experts, and 190.15 officers, agents and employees, permanent and temporary, that it 190.16 requires, and determine their qualifications, duties, and 190.17 compensation; for legal service it may require, to call upon the 190.18 chief law officer of the municipality or to employ its own 190.19 counsel and legal staff; so far as practical, to use the 190.20 services of local public bodies, in its area of operation. 190.21 Those local bodies, if requested, shall make the services 190.22 available; 190.23 (3) to delegate to one or more of its agents or employees 190.24 the powers or duties it deems proper; 190.25 (4) upon proper application by a public body or private 190.26 applicant, and after determining that the purpose of sections 190.27 469.109 to 469.123 will be accomplished by the establishment of 190.28 the project in the redevelopment area to approve a redevelopment 190.29 project; 190.30 (5) to sell, transfer, convey, or otherwise dispose of real 190.31 or personal property or any interest therein, and to execute 190.32 leases, deeds, conveyances, negotiable instruments, purchase 190.33 agreements, and other contracts or instruments, and take action 190.34 that is necessary or convenient to carry out the purposes of 190.35 these sections; 190.36 (6) within its area of operation to acquire real or 191.1 personal property or any interest therein by gift, grant, 191.2 purchase, exchange, lease, transfer, bequest, devise, or 191.3 otherwise. An agency may acquire real property which it deems 191.4 necessary for its purposes by exercise of the power of eminent 191.5 domain in the manner provided in chapter 117, after adoption of 191.6 a resolution declaring that the acquisition of the real property 191.7 is necessary to eliminate one or more of the conditions found to 191.8 exist in the resolution adopted pursuant to section 469.111, 191.9 subdivision 1; 191.10 (7) to designate redevelopment areas; 191.11 (8) to cooperate with industrial development corporations, 191.12 state and federal agencies, and private persons or corporations 191.13 in efforts to promote the expansion of recreational, commercial, 191.14 industrial, and manufacturing activity in a redevelopment area; 191.15 (9) upon proper application by any public body or private 191.16 applicant, to determine whether the declared public purpose of 191.17 these sections has been accomplished or will be accomplished by 191.18 the establishment of a redevelopment project in a redevelopment 191.19 area; 191.20 (10) to obtain information necessary to the designation of 191.21 a redevelopment area and the establishment of a redevelopment 191.22 project therein; 191.23 (11) to cooperate with or act as agent for the federal 191.24 government, the state, or any state public body or any agency or 191.25 instrumentality thereof in carrying out the provisions of these 191.26 sections or of any other related federal, state, or local 191.27 legislation; 191.28 (12) to borrow money or other property and accept 191.29 contributions, grants, gifts, services, or other assistance from 191.30 the federal or state government to accomplish the purposes of 191.31 sections 469.109 to 469.123; 191.32 (13)to conduct mined underground space development191.33pursuant to sections 469.135 to 469.141;191.34(14)to include in any contract for financial assistance 191.35 with the federal government any conditions which the federal 191.36 government may attach to its financial aid of a redevelopment 192.1 project; 192.2(15)(14) to issue bonds, notes, or other evidences of 192.3 indebtedness as hereinafter provided, for any of its purposes 192.4 and to secure them by mortgages upon property held or to be held 192.5 by it, or by pledge of its revenues, including grants or 192.6 contributions; and 192.7(16)(15) to invest any funds held in reserve or sinking 192.8 funds, or any funds not required for immediate disbursement, in 192.9 property or securities in which savings banks may legally invest 192.10 funds subject to their control. 192.11 EFFECTIVE DATE: This section is effective the day 192.12 following final enactment. 192.13 Sec. 13. Minnesota Statutes 1998, section 469.174, 192.14 subdivision 9, is amended to read: 192.15 Subd. 9. [TAX INCREMENT FINANCING DISTRICT.] "Tax 192.16 increment financing district" or "district" means a contiguous 192.17 or noncontiguous geographic area within a project delineated in 192.18 the tax increment financing plan, as provided by section 192.19 469.175, subdivision 1, for the purpose of financing 192.20 redevelopment,mined underground space development,housing or 192.21 economic development in municipalities through the use of tax 192.22 increment generated from the captured net tax capacity in the 192.23 tax increment financing district. 192.24 EFFECTIVE DATE: This section is effective the day 192.25 following final enactment. 192.26 Sec. 14. Minnesota Statutes 1998, section 469.174, 192.27 subdivision 10, is amended to read: 192.28 Subd. 10. [REDEVELOPMENT DISTRICT.] (a) "Redevelopment 192.29 district" means a type of tax increment financing district 192.30 consisting of a project, or portions of a project, within which 192.31 the authority finds by resolution that one or more of the 192.32 following conditions, reasonably distributed throughout the 192.33 district, exists: 192.34 (1) parcels consisting of 70 percent of the area of the 192.35 district are occupied by buildings, streets, utilities, or other 192.36 improvements and more than 50 percent of the buildings, not 193.1 including outbuildings, are structurally substandard to a degree 193.2 requiring substantial renovation or clearance; or 193.3 (2) the property consists of vacant, unused, underused, 193.4 inappropriately used, or infrequently used railyards, rail 193.5 storage facilities, or excessive or vacated railroad 193.6 rights-of-way; or 193.7 (3) tank facilities, or property whose immediately previous 193.8 use was for tank facilities, as defined in section 115C.02, 193.9 subdivision 15, if the tank facilities: 193.10 (i) have or had a capacity of more than 1,000,000 gallons; 193.11 (ii) are located adjacent to rail facilities; and 193.12 (iii) have been removed or are unused, underused, 193.13 inappropriately used, or infrequently used. 193.14 (b) For purposes of this subdivision, "structurally 193.15 substandard" shall mean containing defects in structural 193.16 elements or a combination of deficiencies in essential utilities 193.17 and facilities, light and ventilation, fire protection including 193.18 adequate egress, layout and condition of interior partitions, or 193.19 similar factors, which defects or deficiencies are of sufficient 193.20 total significance to justify substantial renovation or 193.21 clearance. 193.22 (c) A building is not structurally substandard if it is in 193.23 compliance with the building code applicable to new buildings or 193.24 could be modified to satisfy the building code at a cost of less 193.25 than 15 percent of the cost of constructing a new structure of 193.26 the same square footage and type on the site. The municipality 193.27 may find that a building is not disqualified as structurally 193.28 substandard under the preceding sentence on the basis of 193.29 reasonably available evidence, such as the size, type, and age 193.30 of the building, the average cost of plumbing, electrical, or 193.31 structural repairs, or other similar reliable evidence. The 193.32 municipality may not make such a determination without an 193.33 interior inspection of the property, but need not have an 193.34 independent, expert appraisal prepared of the cost of repair and 193.35 rehabilitation of the building. An interior inspection of the 193.36 property is not required, if the municipality finds that (1) the 194.1 municipality or authority is unable to gain access to the 194.2 property after using its best efforts to obtain permission from 194.3 the party that owns or controls the property; and (2) the 194.4 evidence otherwise supports a reasonable conclusion that the 194.5 building is structurally substandard. Items of evidence that 194.6 support such a conclusion include recent fire or police 194.7 inspections, on-site property tax appraisals or housing 194.8 inspections, exterior evidence of deterioration, or other 194.9 similar reliable evidence. Written documentation of the 194.10 findings and reasons why an interior inspection was not 194.11 conducted must be made and retained under section 469.175, 194.12 subdivision 3, clause (1). 194.13 (d) A parcel is deemed to be occupied by a structurally 194.14 substandard building for purposes of the finding under paragraph 194.15 (a) if all of the following conditions are met: 194.16 (1) the parcel was occupied by a substandard building 194.17 within three years of the filing of the request for 194.18 certification of the parcel as part of the district with the 194.19 county auditor; 194.20 (2) the substandard building was demolished or removed by 194.21 the authority or the demolition or removal was financed by the 194.22 authority or was done by a developer under a development 194.23 agreement with the authority; 194.24 (3) the authority found by resolution before the demolition 194.25 or removal that the parcel was occupied by a structurally 194.26 substandard building and that after demolition and clearance the 194.27 authority intended to include the parcel within a district; and 194.28 (4) upon filing the request for certification of the tax 194.29 capacity of the parcel as part of a district, the authority 194.30 notifies the county auditor that the original tax capacity of 194.31 the parcel must be adjusted as provided by section 469.177, 194.32 subdivision 1, paragraph (h). 194.33 (e) For purposes of this subdivision, a parcel is not 194.34 occupied by buildings, streets, utilities, or other improvements 194.35 unless 15 percent of the area of the parcel contains 194.36 improvements. 195.1 (f) For districts consisting of two or more noncontiguous 195.2 areas, each area must qualify as a redevelopment district under 195.3 paragraph (a) to be included in the district, and the entire 195.4 area of the district must satisfy paragraph (a). 195.5 EFFECTIVE DATE: This section is effective for districts or 195.6 additions to the geographic area of an existing district for 195.7 which the request for certification was received by the county 195.8 auditor after June 30, 2000. 195.9 Sec. 15. Minnesota Statutes 1998, section 469.174, 195.10 subdivision 11, is amended to read: 195.11 Subd. 11. [HOUSING DISTRICT.] "Housing district" means a 195.12 type of tax increment financing district which consists of a 195.13 project, or a portion of a project, intended for occupancy, in 195.14 part, by persons or families of low and moderate income, as 195.15 defined in chapter 462A, Title II of the National Housing Act of 195.16 1934, the National Housing Act of 1959, the United States 195.17 Housing Act of 1937, as amended, Title V of the Housing Act of 195.18 1949, as amended, any other similar present or future federal, 195.19 state, or municipal legislation, or the regulations promulgated 195.20 under any of those acts. Aprojectdistrict does not qualify as 195.21 a housing district under this subdivision if the fair market 195.22 value of the improvements which are constructed in the district 195.23 for commercial uses or for uses other than low and moderate 195.24 income housing consists of more than 20 percent of the total 195.25 fair market value of the planned improvements in the development 195.26 plan or agreement. The fair market value of the improvements 195.27 may be determined using the cost of construction, capitalized 195.28 income, or other appropriate method of estimating market value. 195.29 Housing project means a project, or a portion of a project, that 195.30 meets all of qualifications of a housing district under this 195.31 subdivision, whether or not actually established as a housing 195.32 district. 195.33 EFFECTIVE DATE: This section is effective for districts 195.34 and amendments adding geographic area to an existing district 195.35 for which the request for certification was filed with the 195.36 county after May 1, 1988. 196.1 Sec. 16. Minnesota Statutes 1998, section 469.174, 196.2 subdivision 12, is amended to read: 196.3 Subd. 12. [ECONOMIC DEVELOPMENT DISTRICT.] "Economic 196.4 development district" means a type of tax increment financing 196.5 district which consists of any project, or portions of a 196.6 project, not meeting the requirements found in the definition of 196.7 redevelopment district, renewal and renovation district, soils 196.8 condition district,mined underground space development196.9district,or housing district, but which the authority finds to 196.10 be in the public interest because: 196.11 (1) it will discourage commerce, industry, or manufacturing 196.12 from moving their operations to another state or municipality; 196.13 or 196.14 (2) it will result in increased employment in the state; or 196.15 (3) it will result in preservation and enhancement of the 196.16 tax base of the state. 196.17 EFFECTIVE DATE: This section is effective the day 196.18 following final enactment. 196.19 Sec. 17. Minnesota Statutes 1998, section 469.174, 196.20 subdivision 14, is amended to read: 196.21 Subd. 14. [ADMINISTRATIVE EXPENSES.] "Administrative 196.22 expenses" means all expenditures of an authority other than: 196.23 (1) amounts paid for the purchase of landor; 196.24 (2) amounts paid to contractors or others providing 196.25 materials and services, including architectural and engineering 196.26 services, directly connected with the physical development of 196.27 the real property in thedistrict,project; 196.28 (3) relocation benefits paid to or services provided for 196.29 persons residing or businesses located in thedistrict,196.30orproject; 196.31 (4) amounts used to pay principal or interest on, fund a 196.32 reserve for, or sell at a discount bonds issued pursuant to 196.33 section 469.178; or 196.34 (5) amounts used to pay other financial obligations to the 196.35 extent those obligations were used to finance costs described in 196.36 clauses (1) to (3). 197.1 For districts for which the requests for certifications 197.2 were made before August 1, 1979, or after June 30, 1982, 197.3 "administrative expenses" includes amounts paid for services 197.4 provided by bond counsel, fiscal consultants, and planning or 197.5 economic development consultants. 197.6 EFFECTIVE DATE: This section is effective for all tax 197.7 increment financing districts, regardless of when the request 197.8 for certification was made. 197.9 Sec. 18. Minnesota Statutes 1998, section 469.174, 197.10 subdivision 22, is amended to read: 197.11 Subd. 22. [TOURISM FACILITY.] "Tourism facility" means 197.12 property that: 197.13 (1) is located in a county where the median income is no 197.14 more than 85 percent of the state median income; 197.15 (2) is located in a county inwhich, excluding the cities197.16of the first class in that county, the earnings on197.17tourism-related activities are 15 percent or more of the total197.18earnings in the countydevelopment region 2, 3, 4, or 5, as 197.19 defined in section 462.385; 197.20 (3)is located outside the metropolitan area defined in197.21section 473.121, subdivision 2;197.22(4)is not located in a city with a population in excess of 197.23 20,000; and 197.24(5)(4) is acquired, constructed, or rehabilitated for use 197.25 as a convention and meeting facility that is privately 197.26 owned,amusement park, recreation facility, cultural facility,197.27 marina,park,hotel, motel, lodging facility, or nonhomestead 197.28 dwelling unit that in each case is intended to serve primarily 197.29 individuals from outside the county. 197.30 EFFECTIVE DATE: This section is effective for districts 197.31 for which the request for certification was received by the 197.32 county auditor after June 30, 2000, but the new clause (4) does 197.33 not apply to (1) expenditures made under a binding contract 197.34 entered before January 1, 2000; or (2) expenditures made under a 197.35 binding contract entered pursuant to a letter of intent with the 197.36 developer or contractor if the letter of intent was entered 198.1 before January 1, 2000. 198.2 Sec. 19. Minnesota Statutes 1998, section 469.175, 198.3 subdivision 1a, is amended to read: 198.4 Subd. 1a. [INCLUSION OF COUNTY ROAD COSTS.] (a) The county 198.5 board may require the authority to pay all or a portion of the 198.6 cost of county road improvements out of increment revenues, if 198.7 the following conditions occur: 198.8 (1) the proposed tax increment financing plan or an 198.9 amendment to the plan contemplates construction of a development 198.10 that will, in the judgment of the county, substantially increase 198.11 the use of county roads requiring construction of road 198.12 improvements or other road costs; and 198.13 (2) the road improvements or other road costs are not 198.14 scheduled for construction within five years under the county 198.15 capital improvement plan orotherwithin five years under 198.16 another formally adopted county plan, and in the opinion of the 198.17 county, would not reasonably be expected to be needed within the 198.18 reasonably foreseeable future if the tax increment financing 198.19 plan were not implemented. 198.20 (b) If the county elects to use increments to finance the 198.21 road improvements, the county must notify the authority and 198.22 municipality within3045 days after receipt of theinformation198.23on theproposed tax incrementdistrictfinancing plan under 198.24 subdivision 2. The notice must include the estimated cost of 198.25 the road improvements and schedule for construction and payment 198.26 of the cost. The authority must include the improvements in the 198.27 tax increment financing plan. The improvements may be financed 198.28 with the proceeds of tax increment bonds or the authority and 198.29 the county may agree that the county will finance the 198.30 improvements with county funds to be repaid in installments, 198.31 with or without interest, out of increment revenues. If the 198.32 cost of the road improvements and other project costs exceed the 198.33 projected amount of the increment revenues, the county and 198.34 authority shall negotiate an agreement, modifying the 198.35 development plan or proposed road improvements that will permit 198.36 financing of the costs before the tax increment financing plan 199.1 may be approved. 199.2 EFFECTIVE DATE: This section, paragraph (a), is effective 199.3 for districts or expansions of the geographic area of districts, 199.4 for which certification is requested after the day following 199.5 final enactment of this act. 199.6 This section, paragraph (b), is effective for tax increment 199.7 financing plans or amendments to plans approved after July 1, 199.8 2000. 199.9 Sec. 20. Minnesota Statutes 1998, section 469.175, 199.10 subdivision 2, is amended to read: 199.11 Subd. 2. [CONSULTATIONS; COMMENT AND FILING.] Before 199.12 formation of a tax increment financing district, the authority 199.13 shall providean opportunity to the members of the county boards199.14of commissioners of any county in which any portion of the199.15proposed district is located and the members of the school board199.16of any school district in which any portion of the proposed199.17district is located to meet with the authority. The authority199.18shall present to the members of the county boards of199.19commissioners and the school boards itsthe county auditor and 199.20 clerk of the school board with the proposed tax increment 199.21 financing plan for the district and the authority's estimate of 199.22 the fiscal and economic implications of the proposed tax 199.23 increment financing district. The authority must provide the 199.24 proposed tax increment financing plan and the information on the 199.25 fiscal and economic implications of the planmust be providedto 199.26 the county auditor and the clerk of the school districtboards199.27 board at least 30 days before the public hearing required by 199.28 subdivision 3. The information on the fiscal and economic 199.29 implications may be included in or as part of the tax increment 199.30 financing plan. The county auditor and clerk of the school 199.31 board shall provide copies to the members of the boards, as 199.32 directed by their respective boards. The 30-day requirement is 199.33 waived if the boards of the county and school district submit 199.34 written comments on the proposal and any modification of the 199.35 proposal to the authority after receipt of the information.The199.36members of the county boards of commissioners and the school200.1boards may present their comments at the public hearing on the200.2tax increment financing plan required by subdivision 3. Upon200.3adoption of the tax increment financing plan, the authority200.4shall file a copy of the plan with the commissioner of revenue.200.5The authority must also file with the commissioner a copy of the200.6development plan for the project area.200.7 EFFECTIVE DATE: This section is effective for tax 200.8 increment financing plans approved after July 1, 2000. 200.9 Sec. 21. Minnesota Statutes 1998, section 469.175, 200.10 subdivision 2a, is amended to read: 200.11 Subd. 2a. [HOUSING DISTRICTS; REDEVELOPMENT DISTRICTS.] In 200.12 the case of a proposed housing district or redevelopment 200.13 district, in addition to the requirements of subdivision 2, at 200.14 least 30 days before the publication of the notice for public 200.15 hearing under subdivision 3, the authority shall deliver written 200.16 notice of the proposed district to each county commissioner who 200.17 represents part of the area proposed to be included in the 200.18 district. The notice must contain a general description of the 200.19 boundaries of the proposed district and the proposed activities 200.20 to be financed by the district, an offer by the authority to 200.21 meet and discuss the proposed district with the county 200.22 commissioner, and a solicitation of the commissioner's comments 200.23 with respect to the district. The commissioner may waive the 200.24 30-day requirement by submitting written comments on the 200.25 proposal and any modification of the proposal to the authority 200.26 after receipt of the information. 200.27 EFFECTIVE DATE: This section is effective for tax 200.28 increment financing districts for which the requests for 200.29 certification is made after May 31, 1993. 200.30 Sec. 22. Minnesota Statutes 1998, section 469.175, 200.31 subdivision 3, is amended to read: 200.32 Subd. 3. [MUNICIPALITY APPROVAL.] A county auditor shall 200.33 not certify the original net tax capacity of a tax increment 200.34 financing district until the tax increment financing plan 200.35 proposed for that district has been approved by the municipality 200.36 in which the district is located. If an authority that proposes 201.1 to establish a tax increment financing district and the 201.2 municipality are not the same, the authority shall apply to the 201.3 municipality in which the district is proposed to be located and 201.4 shall obtain the approval of its tax increment financing plan by 201.5 the municipality before the authority may use tax increment 201.6 financing. The municipality shall approve the tax increment 201.7 financing plan only after a public hearing thereon after 201.8 published notice in a newspaper of general circulation in the 201.9 municipality at least once not less than ten days nor more than 201.10 30 days prior to the date of the hearing. The published notice 201.11 must include a map of the area of the district from which 201.12 increments may be collected and, if the project area includes 201.13 additional area, a map of the project area in which the 201.14 increments may be expended. The hearing may be held before or 201.15 after the approval or creation of the project or it may be held 201.16 in conjunction with a hearing to approve the project. Before or 201.17 at the time of approval of the tax increment financing plan, the 201.18 municipality shall make the following findings, and shall set 201.19 forth in writing the reasons and supporting facts for each 201.20 determination: 201.21 (1) that the proposed tax increment financing district is a 201.22 redevelopment district, a renewal or renovation district,a201.23mined underground space development district,a housing 201.24 district, a soils condition district, or an economic development 201.25 district; if the proposed district is a redevelopment district 201.26 or a renewal or renovation district, the reasons and supporting 201.27 facts for the determination that the district meets the criteria 201.28 of section 469.174, subdivision 10, paragraph (a), clauses (1) 201.29 and (2), or subdivision 10a, must be documented in writing and 201.30 retained and made available to the public by the authority until 201.31 the district has been terminated. 201.32 (2) that the proposed development or redevelopment, in the 201.33 opinion of the municipality, would not reasonably be expected to 201.34 occur solely through private investment within the reasonably 201.35 foreseeable future and that the increased market value of the 201.36 site that could reasonably be expected to occur without the use 202.1 of tax increment financing would be less than the increase in 202.2 the market value estimated to result from the proposed 202.3 development after subtracting the present value of the projected 202.4 tax increments for the maximum duration of the district 202.5 permitted by the plan. The requirements of this clause do not 202.6 apply if the district is a qualified housing district, as 202.7 defined in section 273.1399, subdivision 1. 202.8 (3) that the tax increment financing plan conforms to the 202.9 general plan for the development or redevelopment of the 202.10 municipality as a whole. 202.11 (4) that the tax increment financing plan will afford 202.12 maximum opportunity, consistent with the sound needs of the 202.13 municipality as a whole, for the development or redevelopment of 202.14 the project by private enterprise. 202.15 (5) that the municipality elects the method of tax 202.16 increment computation set forth in section 469.177, subdivision 202.17 3, clause (b), if applicable. 202.18 When the municipality and the authority are not the same, 202.19 the municipality shall approve or disapprove the tax increment 202.20 financing plan within 60 days of submission by the authority, or202.21the plan shall be deemed approved. When the municipality and 202.22 the authority are not the same, the municipality may not amend 202.23 or modify a tax increment financing plan except as proposed by 202.24 the authority pursuant to subdivision 4. Once approved, the 202.25 determination of the authority to undertake the project through 202.26 the use of tax increment financing and the resolution of the 202.27 governing body shall be conclusive of the findings therein and 202.28 of the public need for the financing. 202.29 EFFECTIVE DATE: This section is effective for tax 202.30 increment financing plans approved after June 30, 2000. 202.31 Sec. 23. Minnesota Statutes 1998, section 469.175, 202.32 subdivision 5, is amended to read: 202.33 Subd. 5. [ANNUAL DISCLOSURE.](a) The authority shall202.34annually submit to the county board, the county auditor, the202.35school board, state auditor and, if the authority is other than202.36the municipality, the governing body of the municipality, a203.1report of the status of the district. The report shall include203.2the following information: the amount and the source of revenue203.3in the account, the amount and purpose of expenditures from the203.4account, the amount of any pledge of revenues, including203.5principal and interest on any outstanding bonded indebtedness,203.6the original net tax capacity of the district and any203.7subdistrict, the captured net tax capacity retained by the203.8authority, the captured net tax capacity shared with other203.9taxing districts, the tax increment received, and any additional203.10information necessary to demonstrate compliance with any203.11applicable tax increment financing plan. The authority must203.12submit the annual report for a year on or before August 1 of the203.13next year.203.14(b)An annual statement showingthe tax increment received203.15and expended in that year, the original net tax capacity,203.16captured net tax capacity, amount of outstanding bonded203.17indebtedness, the amount of the district's and any subdistrict's203.18increments paid to other governmental bodies, the amount paid203.19for administrative costs, the sum of increments paid, directly203.20or indirectly, for activities and improvements located outside203.21of the district,for each district the information required to 203.22 be reported under subdivision 6, paragraph (c), clauses (1), 203.23 (2), (3), (11), (12), (20), and (21); the amounts of tax 203.24 increment received and expended in the reporting period; and any 203.25 additional information the authority deems necessaryshallmust 203.26 be published in a newspaper of general circulation in the 203.27 municipality that approved the tax increment financing plan.If203.28the fiscal disparities contribution under chapter 276A or 473F203.29for the district is computed under section 469.177, subdivision203.303, paragraph (a), the annual statement must disclose that fact203.31and indicate the amount of increased property tax imposed on203.32other properties in the municipality as a result of the fiscal203.33disparities contribution. The commissioner of revenue shall203.34prescribe the form of this statement and the method for203.35calculating the increased property taxes.The annual statement 203.36 must inform readers that additional information regarding each 204.1 district may be obtained from the authority, and must explain 204.2 how the additional information may be requested. The authority 204.3 must publish the annual statement for a year no later than 204.4 August 15 of the next year. The authority must identify the 204.5 newspaper of general circulation in the municipality to which 204.6 the annual statement has been or will be submitted for 204.7 publication and provide a copy of the annual statement to 204.8 the county board, the county auditor, the school board, the 204.9 state auditor, and, if the authority is other than the 204.10 municipality, the governing body of the municipality on or 204.11 before August 1 of the year in which the statement must be 204.12 published. 204.13 (c) The disclosureand reportingrequirements imposed by 204.14 this subdivision apply to districts certified before, on, or 204.15 after August 1, 1979. 204.16 EFFECTIVE DATE: This section is effective for reports due 204.17 in 2001 and subsequent years. 204.18 Sec. 24. Minnesota Statutes 1998, section 469.175, 204.19 subdivision 6, is amended to read: 204.20 Subd. 6. [ANNUAL FINANCIAL REPORTING.] (a) The state 204.21 auditor shall develop a uniform system of accounting and 204.22 financial reporting for tax increment financing districts. The 204.23 system of accounting and financial reporting shall, as nearly as 204.24 possible: 204.25 (1) provide for full disclosure of the sources and uses of 204.26 public funds in the district; 204.27 (2) permit comparison and reconciliation with the affected 204.28 local government's accounts and financial reports; 204.29 (3) permit auditing of the funds expended on behalf of a 204.30 district, including a single district that is part of a 204.31 multidistrict project or that is funded in part or whole through 204.32 the use of a development account funded with tax increments from 204.33 other districts or with other public money; 204.34 (4) be consistent with generally accepted accounting 204.35 principles. 204.36 (b) The authority must annually submit to the state auditor 205.1 a financial report in compliance with paragraph (a). Copies of 205.2 the report must also be provided to the countyand school205.3district boardsauditor and to the governing body of the 205.4 municipality, if the authority is not the municipality. To the 205.5 extent necessary to permit compliance with the requirement of 205.6 financial reporting, the county and any other appropriate local 205.7 government unit or private entity must provide the necessary 205.8 records or information to the authority or the state auditor as 205.9 provided by the system of accounting and financial reporting 205.10 developed pursuant to paragraph (a). The authority must submit 205.11 the annual report for a year on or before August 1 of the next 205.12 year. 205.13 (c) The annual financial report must also include the 205.14 following items: 205.15 (1) the original net tax capacity of the district and any 205.16 subdistrict under section 469.177, subdivision 1; 205.17 (2) the net tax capacity for the reporting period of the 205.18 district and any subdistrict; 205.19 (3) the captured net tax capacity of the district,205.20including the amount of any captured net tax capacity shared205.21with other taxing districts; 205.22(3)(4) any fiscal disparity deduction from the captured 205.23 net tax capacity under section 469.177, subdivision 3; 205.24 (5) the captured net tax capacity retained for tax 205.25 increment financing under section 469.177, subdivision 2, 205.26 paragraph (a), clause (1); 205.27 (6) any captured net tax capacity distributed among 205.28 affected taxing districts under section 469.177, subdivision 2, 205.29 paragraph (a), clause (2); 205.30 (7) the type of district; 205.31 (8) the date the municipality approved the tax increment 205.32 financing plan and the date of approval of any modification of 205.33 the tax increment financing plan, the approval of which requires 205.34 notice, discussion, a public hearing, and findings under 205.35 subdivision 4, paragraph (a); 205.36 (9) the date the authority first requested certification of 206.1 the original net tax capacity of the district and the date of 206.2 the request for certification regarding any parcel added to the 206.3 district; 206.4 (10) the date the county auditor first certified the 206.5 original net tax capacity of the district and the date of 206.6 certification of the original net tax capacity of any parcel 206.7 added to the district; 206.8 (11) the month and year in which the authority has received 206.9 or anticipates it will receive the first increment from the 206.10 district; 206.11 (12) the date the district must be decertified; 206.12 (13) for the reporting period and prior years of the 206.13 district, the actual amount received from, at least, the 206.14 following categories: 206.15 (i) tax increments paid by the captured net tax capacity 206.16 retained for tax increment financing under section 469.177, 206.17 subdivision 2, paragraph (a), clause (1), but excluding any 206.18 excess taxes; 206.19 (ii) tax increments that are interest or other investment 206.20 earnings on or from tax increments; 206.21 (iii) tax increments that are proceeds from the sale or 206.22 lease of property, tangible or intangible, purchased by the 206.23 authority with tax increments; 206.24 (iv) tax increments that are repayments of loans or other 206.25 advances made by the authority with tax increments; 206.26 (v) bond or loan proceeds; 206.27 (vi) special assessments; 206.28 (vii) grants; and 206.29 (viii) transfers from funds not exclusively associated with 206.30 the district; 206.31 (14) for the reporting period and for thedurationprior 206.32 years of the district, the amount budgeted under the tax 206.33 increment financing plan, and the actual amount expended for, at 206.34 least, the following categories: 206.35 (i) acquisition of land and buildings through condemnation 206.36 or purchase; 207.1 (ii) site improvements or preparation costs; 207.2 (iii) installation of public utilities, parking facilities, 207.3 streets, roads, sidewalks, or other similar public improvements; 207.4 (iv) administrative costs, including the allocated cost of 207.5 the authority; 207.6 (v) public park facilities, facilities for social, 207.7 recreational, or conference purposes, or other similar public 207.8 improvements; and 207.9 (vi) transfers to funds not exclusively associated with the 207.10 district; 207.11(4)(15) for properties sold to developers, the total cost 207.12 of the property to the authority and the price paid by the 207.13 developer;and207.14(5) the amount of increments rebated or paid to developers207.15or property owners for privately financed improvements or other207.16qualifying costs.207.17 (16) the amount of any payments and the value of any 207.18 in-kind benefits, such as physical improvements and the use of 207.19 building space, that are paid or financed with tax increments 207.20 and are provided to another governmental unit other than the 207.21 municipality during the reporting period; 207.22 (17) the amount of any payments for activities and 207.23 improvements located outside of the district that are paid for 207.24 or financed with tax increments; 207.25 (18) the amount of payments of principal and interest that 207.26 are made during the reporting period on any nondefeased: 207.27 (i) general obligation tax increment financing bonds; 207.28 (ii) other tax increment financing bonds; and 207.29 (iii) notes and pay-as-you-go contracts; 207.30 (19) the principal amount, at the end of the reporting 207.31 period, of any nondefeased: 207.32 (i) general obligation tax increment financing bonds; 207.33 (ii) other tax increment financing bonds; and 207.34 (iii) notes and pay-as-you-go contracts; 207.35 (20) the amount of principal and interest payments that are 207.36 due for the current calendar year on any nondefeased: 208.1 (i) general obligation tax increment financing bonds; 208.2 (ii) other tax increment financing bonds; and 208.3 (iii) notes and pay-as-you-go contracts; 208.4 (21) if the fiscal disparities contribution under chapter 208.5 276A or 473F for the district is computed under section 469.177, 208.6 subdivision 3, paragraph (a), the amount of increased property 208.7 taxes imposed on other properties in the municipality that 208.8 approved the tax increment financing plan as a result of the 208.9 fiscal disparities contribution; 208.10 (22) whether the tax increment financing plan or other 208.11 governing document permits increment revenues to be expended: 208.12 (i) to pay bonds, the proceeds of which were or may be 208.13 expended on activities outside of the district; 208.14 (ii) for deposit into a common bond fund from which money 208.15 may be expended on activities located outside of the district; 208.16 or 208.17 (iii) to otherwise finance activities located outside of 208.18 the tax increment financing district; and 208.19 (23) any additional information the state auditor may 208.20 require. 208.21 (d) The commissioner of revenue shall prescribe the method 208.22 of calculating the increased property taxes under paragraph (c), 208.23 clause (21), and the form of the statement disclosing this 208.24 information on the annual statement under subdivision 5. 208.25 (e) The reporting requirements imposed by this subdivision 208.26 apply to districts certified before, on, and after August 1, 208.27 1979. 208.28 EFFECTIVE DATE: This section is effective for reports due 208.29 in 2001 and subsequent years. 208.30 Sec. 25. Minnesota Statutes 1998, section 469.176, 208.31 subdivision 1b, is amended to read: 208.32 Subd. 1b. [DURATION LIMITS; TERMS.] (a) No tax increment 208.33 shall in any event be paid to the authority 208.34 (1)after 25 years from date of receipt by the authority of208.35the first tax increment for a mined underground space208.36development district,209.1(2)after 15 years after receipt by the authority of the 209.2 first increment for a renewal and renovation district, 209.3(3)(2) after 20 years after receipt by the authority of 209.4 the first increment for a soils condition district, 209.5(4)(3) afternineeight yearsfrom the date of the209.6 after receipt, or 11 years from approval of the tax increment209.7financing plan, whichever is less,by the authority of the first 209.8 increment for an economic development district, 209.9(5)(4) for a housing district or a redevelopment district, 209.10 after 20 years from the date of receipt by the authority of the 209.11 first tax increment by the authority pursuant to section 209.12 469.175, subdivision 1, paragraph (b); or, if no provision is 209.13 made under section 469.175, subdivision 1, paragraph (b), after 209.14 25 years from the date of receipt by the authority of the first 209.15 increment. 209.16 (b) For purposes of determining a duration limit under this 209.17 subdivision or subdivision 1e that is based on the receipt of an 209.18 increment, any increments from taxes payable in the year in 209.19 which the district terminates shall be paid to the authority. 209.20 This paragraph does not affect a duration limit calculated from 209.21 the date of approval of the tax increment financing plan or 209.22 based on the recovery of costs or to a duration limit under 209.23 subdivision 1c. This paragraph does not supersede the 209.24 restrictions on payment of delinquent taxes in subdivision 1f. 209.25 (c) Except as authorized by section 469.175, subdivision 1, 209.26 paragraph (b), an action by the authority to waive or decline to 209.27 accept an increment has no effect for purposes of computing a 209.28 duration limit based on the receipt of increment under this 209.29 subdivision or any other provision of law. The authority is 209.30 deemed to have received an increment for any year in which it 209.31 waived or declined to accept an increment, regardless of whether 209.32 the increment was paid to the authority. 209.33 EFFECTIVE DATE: This section is effective for districts 209.34 for which the request for certification was received by the 209.35 county auditor after June 30, 2000, and does not apply to 209.36 amendments adding geographic area to a district for which the 210.1 request for certification was received before July 1, 2000. 210.2 Sec. 26. Minnesota Statutes 1998, section 469.176, is 210.3 amended by adding a subdivision to read: 210.4 Subd. 4k. [ASSISTING HOUSING OUTSIDE PROJECT 210.5 AREA.] Notwithstanding the definition of a project under section 210.6 469.174, increments may be spent to assist housing that meets 210.7 the requirements under section 469.1763, subdivision 2, 210.8 paragraph (d), regardless of whether the housing is located 210.9 within the boundaries of the project area. 210.10 EFFECTIVE DATE: This section is effective for increments 210.11 spent after July 1, 2000, from districts for which certification 210.12 was requested after May 1, 1990. 210.13 Sec. 27. Minnesota Statutes 1998, section 469.1761, 210.14 subdivision 4, is amended to read: 210.15 Subd. 4. [NONCOMPLIANCE; ENFORCEMENT.] Failure to comply 210.16 with the requirements of this sectionresults in application of210.17the duration limits for economic development districts to the210.18district. If at the time of the noncompliance the district has210.19exceeded the duration limits for an economic development210.20district, the district must be decertified effective for taxes210.21assessed in the next calendar year. The commissioner of revenue210.22shall enforce the provisions of this sectionis subject to 210.23 section 469.1771.The commissioner may waive insubstantial210.24violations. Appeal of the commissioner's orders of210.25noncompliance must be made to the tax court in the manner210.26provided in section 271.06.210.27 EFFECTIVE DATE: This section is effective for violations 210.28 occurring after July 1, 2000. 210.29 Sec. 28. Minnesota Statutes 1998, section 469.1763, 210.30 subdivision 2, is amended to read: 210.31 Subd. 2. [EXPENDITURES OUTSIDE DISTRICT.] (a) For each tax 210.32 increment financing district, an amount equal to at least 75 210.33 percent of the revenue derived from tax increments paid by 210.34 properties in the district must be expended on activities in the 210.35 district or to pay bonds, to the extent that the proceeds of the 210.36 bonds were used to finance activities in the district or to pay, 211.1 or secure payment of, debt service on credit enhanced bonds. 211.2 For districts, other than redevelopment districts for which the 211.3 request for certification was made after June 30, 1995, the 211.4 in-district percentage for purposes of the preceding sentence is 211.5 80 percent. Not more than 25 percent of the revenue derived 211.6 from tax increments paid by properties in the district may be 211.7 expended, through a development fund or otherwise, on activities 211.8 outside of the district but within the defined geographic area 211.9 of the project except to pay, or secure payment of, debt service 211.10 on credit enhanced bonds. For districts, other than 211.11 redevelopment districts for which the request for certification 211.12 was made after June 30, 1995, the pooling percentage for 211.13 purposes of the preceding sentence is 20 percent. The revenue 211.14 derived from tax increments for the district that are expended 211.15 on costs under section 469.176, subdivision 4h, paragraph (b), 211.16 may be deducted first before calculating the percentages that 211.17 must be expended within and without the district. 211.18 (b) In the case of a housing district, a housing project, 211.19 as defined in section 469.174, subdivision 11, is an activity in 211.20 the district. 211.21 (c) All administrative expenses are for activities outside 211.22 of the district. 211.23 (d) The authority may elect, in the tax increment financing 211.24 plan for the district, to increase by up to ten percentage 211.25 points the permitted amount of expenditures for activities 211.26 located outside the geographic area of the district under 211.27 paragraph (a). As permitted by section 469.176, subdivision 4k, 211.28 the expenditures, including the permitted expenditures under 211.29 paragraph (a), need not be made within the geographic area of 211.30 the project. To qualify for the increase under this paragraph, 211.31 the expenditures must: 211.32 (1) be used exclusively to assist housing that meets the 211.33 requirement for a qualified low-income building, as that term is 211.34 used in section 42 of the Internal Revenue Code; 211.35 (2) not exceed the qualified basis of the housing, as 211.36 defined under section 42(c) of the Internal Revenue Code, less 212.1 the amount of any credit allowed under section 42 of the 212.2 Internal Revenue Code; and 212.3 (3) be used to: 212.4 (i) acquire and prepare the site of the housing; 212.5 (ii) acquire, construct, or rehabilitate the housing; or 212.6 (iii) make public improvements directly related to the 212.7 housing. 212.8 EFFECTIVE DATE: This section is effective for increments 212.9 spent after July 1, 2000, from districts for which certification 212.10 was requested after May 1, 1990. 212.11 Sec. 29. Minnesota Statutes 1998, section 469.177, 212.12 subdivision 1, is amended to read: 212.13 Subdivision 1. [ORIGINAL NET TAX CAPACITY.] (a) Upon or 212.14 after adoption of a tax increment financing plan, the auditor of 212.15 any county in which the district is situated shall, upon request 212.16 of the authority, certify the original net tax capacity of the 212.17 tax increment financing district and that portion of the 212.18 district overlying any subdistrict as described in the tax 212.19 increment financing plan and shall certify in each year 212.20 thereafter the amount by which the original net tax capacity has 212.21 increased or decreased as a result of a change in tax exempt 212.22 status of property within the district and any subdistrict, 212.23 reduction or enlargement of the district or changes pursuant to 212.24 subdivision 4. 212.25 (b)In the case of a mined underground space development212.26district the county auditor shall certify the original net tax212.27capacity as zero, plus the net tax capacity, if any, previously212.28assigned to any subsurface area included in the mined212.29underground space development district pursuant to section212.30272.04.212.31(c)For districts approved under section 469.175, 212.32 subdivision 3, or parcels added to existing districts after May 212.33 1, 1988, if the classification under section 273.13 of property 212.34 located in a district changes to a classification that has a 212.35 different assessment ratio, the original net tax capacity of 212.36 that property must be redetermined at the time when its use is 213.1 changed as if the property had originally been classified in the 213.2 same class in which it is classified after its use is changed. 213.3(d)(c) The amount to be added to the original net tax 213.4 capacity of the district as a result of previously tax exempt 213.5 real property within the district becoming taxable equals the 213.6 net tax capacity of the real property as most recently assessed 213.7 pursuant to section 273.18 or, if that assessment was made more 213.8 than one year prior to the date of title transfer rendering the 213.9 property taxable, the net tax capacity assessed by the assessor 213.10 at the time of the transfer. If substantial taxable 213.11 improvements were made to a parcel after certification of the 213.12 district and if the property later becomes tax exempt, in whole 213.13 or part, as a result of the authority acquiring the property 213.14 through foreclosure or exercise of remedies under a lease or 213.15 other revenue agreement or as a result of tax forfeiture, the 213.16 amount to be added to the original net tax capacity of the 213.17 district as a result of the property again becoming taxable is 213.18 the amount of the parcel's value that was included in original 213.19 net tax capacity when the parcel was first certified. The 213.20 amount to be added to the original net tax capacity of the 213.21 district as a result of enlargements equals the net tax capacity 213.22 of the added real property as most recently certified by the 213.23 commissioner of revenue as of the date of modification of the 213.24 tax increment financing plan pursuant to section 469.175, 213.25 subdivision 4. 213.26(e)(d) For districts approved under section 469.175, 213.27 subdivision 3, or parcels added to existing districts after May 213.28 1, 1988, if the net tax capacity of a property increases because 213.29 the property no longer qualifies under the Minnesota 213.30 Agricultural Property Tax Law, section 273.111; the Minnesota 213.31 Open Space Property Tax Law, section 273.112; or the 213.32 Metropolitan Agricultural Preserves Act, chapter 473H, or 213.33 because platted, unimproved property is improved or three years 213.34 pass after approval of the plat under section 273.11, 213.35 subdivision 1, the increase in net tax capacity must be added to 213.36 the original net tax capacity. 214.1(f) Each year the auditor shall also add to the original214.2net tax capacity of each economic development district an amount214.3equal to the original net tax capacity for the preceding year214.4multiplied by the average percentage increase in the market214.5value of all property included in the economic development214.6district during the five years prior to certification of the214.7district. In computing the average percentage increase in214.8market value, the auditor shall exclude the market value, as214.9estimated by the assessor, that is attributable to new214.10construction; extension of sewer, water, roads, or other public214.11utilities; or platting of the land.214.12(g)(e) The amount to be subtracted from the original net 214.13 tax capacity of the district as a result of previously taxable 214.14 real property within the district becoming tax exempt, or a 214.15 reduction in the geographic area of the district, shall be the 214.16 amount of original net tax capacity initially attributed to the 214.17 property becoming tax exempt or being removed from the 214.18 district. If the net tax capacity of property located within 214.19 the tax increment financing district is reduced by reason of a 214.20 court-ordered abatement, stipulation agreement, voluntary 214.21 abatement made by the assessor or auditor or by order of the 214.22 commissioner of revenue, the reduction shall be applied to the 214.23 original net tax capacity of the district when the property upon 214.24 which the abatement is made has not been improved since the date 214.25 of certification of the district and to the captured net tax 214.26 capacity of the district in each year thereafter when the 214.27 abatement relates to improvements made after the date of 214.28 certification. The county auditor may specify reasonable form 214.29 and content of the request for certification of the authority 214.30 and any modification thereof pursuant to section 469.175, 214.31 subdivision 4. 214.32(h)(f) If a parcel of property contained a substandard 214.33 building that was demolished or removed and if the authority 214.34 elects to treat the parcel as occupied by a substandard building 214.35 under section 469.174, subdivision 10, paragraph (b), the 214.36 auditor shall certify the original net tax capacity of the 215.1 parcel using the greater of (1) the current net tax capacity of 215.2 the parcel, or (2) the estimated market value of the parcel for 215.3 the year in which the building was demolished or removed, but 215.4 applying the class rates for the current year. 215.5 EFFECTIVE DATE: This section is effective for districts 215.6 for which the request for certification was received by the 215.7 county auditor after June 30, 2000, and does not apply to 215.8 amendments adding geographic area to a district for which the 215.9 request for certification was received before July 1, 2000. 215.10 Sec. 30. Minnesota Statutes 1999 Supplement, section 215.11 469.1771, subdivision 1, is amended to read: 215.12 Subdivision 1. [ENFORCEMENT.] (a) The owner of taxable 215.13 property located in the city, town, school district, or county 215.14 in which the tax increment financing district is located may 215.15 bring suit for equitable relief or for damages, as provided in 215.16 subdivisions 2, 3, and 4, arising out of a failure of a 215.17 municipality or authority to comply with the provisions of 215.18 sections 469.174 to 469.179, or related provisions of this 215.19 chapter. The prevailing party in a suit filed under the 215.20 preceding sentence is entitled to costs, including reasonable 215.21 attorney fees. 215.22 (b) The state auditor may examine and audit political 215.23 subdivisions' use of tax increment financing. Without previous 215.24 notice, the state auditor may examine or audit accounts and 215.25 records on a random basis as the auditor deems to be in the 215.26 public interest. If the state auditor finds evidence that an 215.27 authority or municipality has violated a provision of the law 215.28 for which a remedy is provided under this section, the state 215.29 auditor shall forward the relevant information to the county 215.30 attorney. The county attorney may bring an action to enforce 215.31 the provisions of sections 469.174 to 469.179 or related 215.32 provisions of this chapter, for matters referred by the state 215.33 auditor or on behalf of the county. If the county attorney 215.34 determines not to bring an action or if the county attorney has 215.35 not brought an action within 12 months after receipt of the 215.36 initial notification by the state auditor of the violation, the 216.1 county attorney shall notify the state auditor in writing. 216.2 (c) If the state auditor finds an authority is not in 216.3 compliance with sections 469.174 to 469.179 or related 216.4 provisions of law, the auditor shall notify the governing body 216.5 of the municipality that approved the tax increment financing 216.6 district of its findings. The governing body of the 216.7 municipality must respond in writing to the state auditor within 216.8 60 days after receiving the notification. Its written response 216.9 must state whether the municipality accepts, in whole or part, 216.10 the auditor's findings. If the municipality does not accept the 216.11 findings, the statement must indicate the basis for its 216.12 disagreement. The state auditor shall annually summarize the 216.13 responses it receives under this section and send the summary 216.14 and copies of the responses to the chairs of the committees of 216.15 the legislature with jurisdiction over tax increment financing. 216.16 (d) The state auditor shall notify the attorney general in 216.17 writing and provide supporting materials for a violation found 216.18 by the auditor, if the: 216.19 (1) auditor receives notification from the county attorney 216.20 under paragraph (b) or receives no notification for a 12-month 216.21 period after initially notifying the county attorney and the 216.22 state auditor confirms with the county attorney or the 216.23 municipality that no action has been brought regarding the 216.24 matter; and 216.25 (2) municipality or development authority have not 216.26 eliminated or resolved the violation to the satisfaction of the 216.27 state auditor. 216.28 The auditor shall provide the municipality and development 216.29 authority a copy of the notification sent to the attorney 216.30 general. 216.31 EFFECTIVE DATE: This section is effective for violations 216.32 occurring after the date of final enactment. 216.33 Sec. 31. Minnesota Statutes 1998, section 469.1771, 216.34 subdivision 2a, is amended to read: 216.35 Subd. 2a. [SUSPENSION OF DISTRIBUTION OF TAX INCREMENT.] 216.36 (a) If an authority fails to make a disclosure or to submit a 217.1 report containing the information required by section 469.175, 217.2 subdivisions 5 and 6, regarding a tax increment financing 217.3 district within the time provided in section 469.175, 217.4 subdivisions 5 and 6,or if a municipality fails to submit a217.5report containing the information required of section 469.175,217.6subdivision 6a, regarding a tax increment financing district217.7within the time provided in section 469.175, subdivision 6a,the 217.8 state auditor shall mail to the authority a written notice that 217.9 it or the municipality has failed to make the required 217.10 disclosure or to submit a required report with respect to a 217.11 particular district. The state auditor shall mail the notice on 217.12 or before the third Tuesday of August of the year in which the 217.13 disclosure or report was required to be made or submitted. The 217.14 notice must describe the consequences of failing to disclose or 217.15 submit a report as provided in paragraph (b). If the state 217.16 auditor has not received a copy of a disclosure or a report 217.17 described in this paragraph on or before the third Tuesday of 217.18 November of the year in which the disclosure or report was 217.19 required to be made or submitted, the state auditor shall mail a 217.20 written notice to the county auditor to hold the distribution of 217.21 tax increment from a particular district. 217.22 (b) Upon receiving written notice from the state auditor to 217.23 hold the distribution of tax increment, the county auditor shall 217.24 hold: 217.25 (1) 25 percent of the amount of tax increment that 217.26 otherwise would be distributed, if the distribution is made 217.27 after the third Friday in November but during the year in which 217.28 the disclosure or report was required to be made or submitted; 217.29 or 217.30 (2) 100 percent of the amount of tax increment that 217.31 otherwise would be distributed, if the distribution is made 217.32 after December 31 of the year in which the disclosure or report 217.33 was required to be made or submitted. 217.34 (c) Upon receiving the copy of the disclosure and all of 217.35 the reports described in paragraph (a) with respect to a 217.36 district regarding which the state auditor has mailed to the 218.1 county auditor a written notice to hold distribution of tax 218.2 increment, the state auditor shall mail to the county auditor a 218.3 written notice lifting the hold and authorizing the county 218.4 auditor to distribute to the authority or municipality any tax 218.5 increment that the county auditor had held pursuant to paragraph 218.6 (b). The state auditor shall mail the written notice required 218.7 by this paragraph within five working days after receiving the 218.8 last outstanding item. The county auditor shall distribute the 218.9 tax increment to the authority or municipality within 15 working 218.10 days after receiving the written notice required by this 218.11 paragraph. 218.12 (d) Notwithstanding any law to the contrary, any interest 218.13 that accrues on tax increment while it is being held by the 218.14 county auditor pursuant to paragraph (b) is not tax increment 218.15 and may be retained by the county. 218.16 (e) For purposes of sections 469.176, subdivisions 1a to 218.17 1g, and 469.177, subdivision 11, tax increment being held by the 218.18 county auditor pursuant to paragraph (b) is considered 218.19 distributed to or received by the authority or municipality as 218.20 of the time that it would have been distributed or received but 218.21 for paragraph (b). 218.22 EFFECTIVE DATE: This section is effective for reports due 218.23 in 2001 and later years. 218.24 Sec. 32. Minnesota Statutes 1998, section 469.1771, is 218.25 amended by adding a subdivision to read: 218.26 Subd. 4a. [INCREMENTS RECEIVED AFTER DURATION LIMIT.] (a) 218.27 This subdivision applies to payments made by the county auditor 218.28 as tax increments that: 218.29 (1) were received by the authority before July 1, 2000, for 218.30 a tax increment financing district after the maximum duration 218.31 limit for the district; and 218.32 (2) were not permitted to be made under section 469.176, 218.33 subdivision 1f, or any other provision of law as tax increments 218.34 after the duration limit for the district. 218.35 (b) The authority or the municipality may enter an 218.36 agreement with the county to repay these amounts in 219.1 installments, without interest, over a period not to exceed 219.2 three years. 219.3 (c) If a repayment agreement is entered or the authority or 219.4 municipality otherwise voluntarily repays these amounts, then 219.5 distributions of these repayments under subdivision 5 must be 219.6 made to each of the taxing jurisdictions, including the 219.7 municipality. 219.8 EFFECTIVE DATE: This section is effective the day 219.9 following final enactment and applies to tax increment financing 219.10 districts, regardless of whether the request for certification 219.11 was made before, on, or after August 1, 1979. 219.12 Sec. 33. Minnesota Statutes 1999 Supplement, section 219.13 469.1813, subdivision 1, is amended to read: 219.14 Subdivision 1. [AUTHORITY.] The governing body of a 219.15 political subdivision may grant an abatement of the taxes 219.16 imposed by the political subdivision on a parcel of property, or 219.17 defer the payments of the taxes and abate the interest and 219.18 penalty that otherwise would apply, if: 219.19 (a) it expects the benefits to the political subdivision of 219.20 the proposed abatement agreement to at least equal the costs to 219.21 the political subdivision of the proposed agreement or intends 219.22 the abatement to phase in a property tax increase, as provided 219.23 in clause (b)(7); and 219.24 (b) it finds that doing so is in the public interest 219.25 because it will: 219.26 (1) increase or preserve tax base; 219.27 (2) provide employment opportunities in the political 219.28 subdivision; 219.29 (3) provide or help acquire or construct public facilities; 219.30 (4) help redevelop or renew blighted areas; 219.31 (5) help provide access to services for residents of the 219.32 political subdivision;or219.33 (6) finance or provide public infrastructure; or 219.34 (7) phase in a property tax increase on the parcel 219.35 resulting from an increase of 50 percent or more in one year on 219.36 the estimated market value of the parcel, other than increase 220.1 attributable to improvement of the parcel. 220.2 EFFECTIVE DATE: This section is effective beginning with 220.3 taxes payable in 2001. 220.4 Sec. 34. Minnesota Statutes 1998, section 469.1813, 220.5 subdivision 4, is amended to read: 220.6 Subd. 4. [PROPERTY LOCATED IN TAX INCREMENT FINANCING 220.7 DISTRICTS.] The governing body of agovernmentalpolitical 220.8 subdivision may not enter into a property tax abatement 220.9 agreement under sections 469.1812 to 469.1815if the property220.10 that provides for abatement of taxes on a parcel, if the 220.11 abatement will occur while the parcel is located in a tax 220.12 increment financing district. 220.13 EFFECTIVE DATE: This section is effective for taxes 220.14 payable in 2001 and later years. 220.15 Sec. 35. Minnesota Statutes 1999 Supplement, section 220.16 469.1813, subdivision 6, is amended to read: 220.17 Subd. 6. [DURATION LIMIT.] (a) A political subdivision may 220.18 grant an abatement for a period no longer than ten years, except 220.19 as provided under paragraph (b). The subdivision may specify in 220.20 the abatement resolution a shorter duration. If the resolution 220.21 does not specify a period of time, the abatement is for eight 220.22 years. If an abatement has been granted to a parcel of property 220.23 and the period of the abatement has expired, the political 220.24 subdivision that granted the abatement may not grant another 220.25 abatement for eight years after the expiration of the first 220.26 abatement. This prohibition does not apply to improvements 220.27 added after and not subject to the first abatement. 220.28 (b) A political subdivision proposing to abate taxes for a 220.29 parcel may request, in writing, that the other political 220.30 subdivisions in which the parcel is located grant an abatement 220.31 for the property. If one of the other political subdivisions 220.32 declines, in writing, to grant an abatement or if 90 days pass 220.33 after receipt of the request to grant an abatement without a 220.34 written response from one of the political subdivisions, the 220.35 duration limit for an abatement for the parcel is increased to 220.36 15 years. If the political subdivision which declined to grant 221.1 an abatement later grants an abatement for the parcel, the 221.2 15-year duration limit is reduced by one year for each year that 221.3 the declining political subdivision grants an abatement for the 221.4 parcel during the period of the abatement granted by the 221.5 requesting political subdivision. The duration limit may not be 221.6 reduced below the limit under paragraph (a). 221.7 EFFECTIVE DATE: This section is effective for taxes 221.8 payable in 2001 and thereafter. 221.9 Sec. 36. Laws 1997, chapter 231, article 1, section 19, is 221.10 amended by adding a subdivision to read: 221.11 Subd. 2a. [DEFINITION OF INCREMENT.] For purposes of this 221.12 section, "tax increments" and "revenues derived from tax 221.13 increments" have the meaning given in Minnesota Statutes, 221.14 section 469.174, subdivision 25, except that the definition 221.15 applies to all tax increment financing districts, regardless of 221.16 when the request for certification was made and regardless of 221.17 when the revenues were received, notwithstanding the effective 221.18 date of Minnesota Statutes, section 469.174, subdivision 25. 221.19 EFFECTIVE DATE: This section is effective the day 221.20 following final enactment. 221.21 Sec. 37. [BROOKLYN PARK EDA; TIF DISTRICT NO. 18.] 221.22 The 1998 amendments to Minnesota Statutes, section 469.176, 221.23 subdivision 7, as set forth in Laws 1998, chapter 389, article 221.24 11, section 6, apply to the Brooklyn Park economic development 221.25 authority's tax increment financing district No. 18, 221.26 notwithstanding the effective date of the amendments. 221.27 EFFECTIVE DATE: This section is effective the day after 221.28 the governing body of the city of Brooklyn Park and its chief 221.29 clerical officer timely complete their compliance with Minnesota 221.30 Statutes, section 645.021, subdivisions 2 and 3. 221.31 Sec. 38. [CITY OF FOUNTAIN; TIF DURATION EXTENSION.] 221.32 The governing body of the city of Fountain may extend the 221.33 duration of tax increment financing district 1-1 through 221.34 December 31, 2008, notwithstanding the provision of Minnesota 221.35 Statutes, section 469.176, subdivision 1b. The extension under 221.36 this section is intended to correct an error in calculation of 222.1 the increment after a division of a parcel in the tax increment 222.2 financing district. As a result, the provisions of Minnesota 222.3 Statutes, section 469.1782, subdivision 1, do not apply to the 222.4 district. 222.5 EFFECTIVE DATE: This section is effective the day after 222.6 the governing bodies of the city, county, and school district, 222.7 and their chief clerical officers, timely complete their 222.8 compliance with Minnesota Statutes, sections 469.1782, 222.9 subdivision 2, and 645.021, subdivisions 2 and 3. 222.10 Sec. 39. [MENDOTA HEIGHTS TAX INCREMENT FINANCING 222.11 DISTRICT; CONTINUATION.] 222.12 Notwithstanding the provisions of Minnesota Statutes, 222.13 section 469.1764, or any other law, tax increment financing 222.14 district No. 1 established by the city of Mendota Heights in 222.15 1981 shall continue in effect for its original authorized 222.16 duration, subject to the condition that, except for expenditures 222.17 to pay preexisting obligations described in Minnesota Statutes, 222.18 section 469.1764, subdivision 5, paragraphs (b) and (c), all 222.19 future expenditures of tax increment shall not exceed $4,500,000 222.20 and shall be limited to the city's freeway road project 222.21 substantially as described in the city's application for a grant 222.22 from the livable communities demonstration account of the 222.23 metropolitan livable communities fund. 222.24 EFFECTIVE DATE: This section is effective the day after 222.25 approval by the governing body of the city of Mendota Heights 222.26 and compliance with Minnesota Statutes, section 645.021, 222.27 subdivision 3. 222.28 Sec. 40. [ST. PAUL HOUSING AND REDEVELOPMENT AUTHORITY; 222.29 HOUSING DISTRICT.] 222.30 Subdivision 1. [AUTHORIZATION.] The governing body of the 222.31 housing and redevelopment authority of the city of St. Paul may 222.32 create a tax increment financing housing district as provided in 222.33 this section for a development containing both owner-occupied 222.34 and residential rental units for mixed income occupancy. 222.35 Subd. 2. [AREA.] The housing district authorized in this 222.36 section may only be created in the northeast quadrant of 223.1 downtown St. Paul, which is defined as the approximately 15-acre 223.2 area bounded by Interstate 94 on the north and east, Jackson 223.3 Street on the west, and Seventh Street on the south, together 223.4 with the west side of Jackson Street to midblock between 223.5 Interstate 94 and Seventh Street. 223.6 Subd. 3. [INCOME REQUIREMENTS FOR COMBINED OWNER-OCCUPIED 223.7 AND RESIDENTIAL RENTAL DEVELOPMENT.] (a) Notwithstanding the 223.8 income requirements in Minnesota Statutes, section 469.174, 223.9 subdivision 11, or 469.1761, a housing district in the northeast 223.10 quadrant means a type of tax increment financing district that 223.11 consists of a project, or a portion of a project, intended for 223.12 occupancy, in part, by persons of low and moderate income as 223.13 defined in chapter 462A, Title II, of the National Housing Act 223.14 of 1934; the National Housing Act of 1959; the United States 223.15 Housing Act of 1937, as amended; Title V of the Housing Act of 223.16 1949, as amended; any other similar present or future federal, 223.17 state, or municipal legislation, or the regulations promulgated 223.18 under any of those acts, as further set forth in this section. 223.19 Twenty percent of the units in the development in the housing 223.20 district must be occupied by individuals whose family income is 223.21 equal to or less than 50 percent of area median gross income and 223.22 an additional 60 percent of the units in the development in the 223.23 housing district must be occupied by individuals whose family 223.24 income is equal to or less than 115 percent of area median gross 223.25 income. Twenty percent of the units in the development in the 223.26 housing district shall not be subject to any income limitations. 223.27 (b) For purposes of this section, family income means the 223.28 median gross income for the area as determined under section 42 223.29 of the Internal Revenue Code of 1986, as amended. The income 223.30 requirements of this subdivision shall be deemed to be satisfied 223.31 if the sum of qualified owner-occupied units and qualified 223.32 residential rental units equals the required total number of 223.33 qualified units. Owner-occupied units must be initially 223.34 purchased and occupied by individuals whose family income 223.35 satisfies the income requirements of this subdivision. For 223.36 residential rental property, the income requirements of this 224.1 subdivision apply for the duration of the tax increment district. 224.2 (c) The development in the housing district, but not the 224.3 project, does not qualify under this subdivision if the fair 224.4 market value of the improvements which are constructed for 224.5 commercial uses or for uses other than owner-occupied and rental 224.6 mixed-income housing consists of more than 20 percent of the 224.7 total fair market value of the planned improvements in the 224.8 development plan or agreement. The fair market value of the 224.9 improvements may be determined using the cost of construction, 224.10 capitalized income, or other appropriate method of estimating 224.11 market value. 224.12 EFFECTIVE DATE: This section is effective the day after 224.13 the governing body of the city of St. Paul and its chief 224.14 clerical officer timely comply with Minnesota Statutes, section 224.15 645.021, subdivisions 2 and 3. 224.16 Sec. 41. [WINONA TAX INCREMENT FINANCING DISTRICT; 224.17 RATIFICATION OF EXPENDITURE.] 224.18 For tax increment financing district No. 2, approved by the 224.19 city of Winona on August 1, 1980, the expenditure of tax 224.20 increments before January 1, 1998, to finance, in part, the 224.21 construction of improvements to the existing municipal 224.22 wastewater treatment plant is ratified and deemed an expenditure 224.23 within the geographic area of the tax increment financing 224.24 district, and Minnesota Statutes, section 469.1764, does not 224.25 apply to the tax increment financing district. 224.26 EFFECTIVE DATE: This section is effective upon approval by 224.27 the Winona city council and compliance with Minnesota Statutes, 224.28 section 645.021. 224.29 Sec. 42. [REDEVELOPMENT GRANTS; RICHFIELD.] 224.30 (a) For fiscal year 2001, $5,000,000 is appropriated from 224.31 the general fund to the commissioner of trade and economic 224.32 development for a redevelopment grant or grants to the city of 224.33 Richfield under Minnesota Statutes, sections 116J.561 to 224.34 116J.566. 224.35 (b) Grants made under this authority may only be used for 224.36 acquisition and site preparation of residential property in the 225.1 city of Richfield, located within an area consisting of no more 225.2 than two blocks immediately to the west of trunk highway 77, 225.3 bounded on the north by trunk highway 62 and on the south by 225.4 77th street. A property qualifies as a residential property 225.5 only if the land is improved with a building and at least 75 225.6 percent of the square footage of the building is for single 225.7 family or multiunit residential uses. 225.8 (c) For purposes of this grant, the local match requirement 225.9 under Minnesota Statutes, section 116J.566, and the requirements 225.10 to repay sales proceeds under section 116J.567, do not apply. 225.11 (d) The city of Richfield must submit a report to the 225.12 chairs of the tax committees of the house of representatives and 225.13 senate by no later than December 15, 2000, on the redevelopment 225.14 plans. This report must include details on the plans for and, 225.15 to the extent available, the actual use of the grant money, 225.16 including, but not limited to, information on: 225.17 (1) residential units purchased or to be purchased, by 225.18 location and type of unit; 225.19 (2) the cost of acquisition or the estimated cost of 225.20 acquisition of the units; 225.21 (3) the cost of demolition or relocation of buildings, 225.22 including any offsetting savings from buildings to be relocated 225.23 or other salvage; 225.24 (4) the cost of relocation of utilities; 225.25 (5) the cost of any other site preparation for development; 225.26 (6) plans for sale and use of the cleared land, including 225.27 estimates of the value of the land after clearance and site 225.28 preparation; and 225.29 (7) the plans for the ultimate use of the properties 225.30 acquired or to be acquired. 225.31 Sec. 43. [MINNESOTA MINERALS 21ST CENTURY FUND.] 225.32 Subdivision 1. [TRANSFER.] $30,000,000 is appropriated in 225.33 fiscal year 2001 from the general fund for transfer to the 225.34 Minnesota Minerals 21st Century Fund. 225.35 Subd. 2. [INFRASTRUCTURE MUST BE MADE AVAILABLE.] Any 225.36 entity controlling the infrastructure created by an investment 226.1 from the Minnesota Minerals 21st Century Fund from money 226.2 transferred under this section shall make the infrastructure 226.3 available to be utilized by other businesses or public 226.4 authorities at costs reasonably designed to meet operating and 226.5 maintenance needs of the infrastructure. The utilization of 226.6 this infrastructure by others only pertains to the 226.7 infrastructure capacity not needed by the primary recipient of 226.8 the investments by the Minnesota Minerals 21st Century Fund. 226.9 Sec. 44. [REPEALER.] 226.10 (a) Minnesota Statutes 1998, sections 469.055, subdivision 226.11 5; 469.101, subdivision 21; 469.135; 469.136; 469.137; 469.138; 226.12 469.139; 469.140; 469.174, subdivision 13; and 469.176, 226.13 subdivision 4a, are repealed. 226.14 (b) Minnesota Statutes 1998, section 469.175, subdivision 226.15 6a, is repealed. 226.16 EFFECTIVE DATE: Paragraph (a) is effective the day 226.17 following final enactment. Paragraph (b) is effective for 226.18 reports due beginning in 2001. 226.19 ARTICLE 12 226.20 FEDERAL UPDATE 226.21 Section 1. Minnesota Statutes 1999 Supplement, section 226.22 289A.02, subdivision 7, is amended to read: 226.23 Subd. 7. [INTERNAL REVENUE CODE.] Unless specifically 226.24 defined otherwise, "Internal Revenue Code" means the Internal 226.25 Revenue Code of 1986, as amended through December 31,19981999. 226.26 EFFECTIVE DATE: This section is effective the day 226.27 following final enactment. 226.28 Sec. 2. Minnesota Statutes 1999 Supplement, section 226.29 290.01, subdivision 19, is amended to read: 226.30 Subd. 19. [NET INCOME.] The term "net income" means the 226.31 federal taxable income, as defined in section 63 of the Internal 226.32 Revenue Code of 1986, as amended through the date named in this 226.33 subdivision, incorporating any elections made by the taxpayer in 226.34 accordance with the Internal Revenue Code in determining federal 226.35 taxable income for federal income tax purposes, and with the 226.36 modifications provided in subdivisions 19a to 19f. 227.1 In the case of a regulated investment company or a fund 227.2 thereof, as defined in section 851(a) or 851(g) of the Internal 227.3 Revenue Code, federal taxable income means investment company 227.4 taxable income as defined in section 852(b)(2) of the Internal 227.5 Revenue Code, except that: 227.6 (1) the exclusion of net capital gain provided in section 227.7 852(b)(2)(A) of the Internal Revenue Code does not apply; 227.8 (2) the deduction for dividends paid under section 227.9 852(b)(2)(D) of the Internal Revenue Code must be applied by 227.10 allowing a deduction for capital gain dividends and 227.11 exempt-interest dividends as defined in sections 852(b)(3)(C) 227.12 and 852(b)(5) of the Internal Revenue Code; and 227.13 (3) the deduction for dividends paid must also be applied 227.14 in the amount of any undistributed capital gains which the 227.15 regulated investment company elects to have treated as provided 227.16 in section 852(b)(3)(D) of the Internal Revenue Code. 227.17 The net income of a real estate investment trust as defined 227.18 and limited by section 856(a), (b), and (c) of the Internal 227.19 Revenue Code means the real estate investment trust taxable 227.20 income as defined in section 857(b)(2) of the Internal Revenue 227.21 Code. 227.22 The net income of a designated settlement fund as defined 227.23 in section 468B(d) of the Internal Revenue Code means the gross 227.24 income as defined in section 468B(b) of the Internal Revenue 227.25 Code. 227.26The Internal Revenue Code of 1986, as amended through227.27December 31, 1986, shall be in effect for taxable years227.28beginning after December 31, 1986. The provisions of sections227.2910104, 10202, 10203, 10204, 10206, 10212, 10221, 10222, 10223,227.3010226, 10227, 10228, 10611, 10631, 10632, and 10711 of the227.31Omnibus Budget Reconciliation Act of 1987, Public Law Number227.32100-203, the provisions of sections 1001, 1002, 1003, 1004,227.331005, 1006, 1008, 1009, 1010, 1011, 1011A, 1011B, 1012, 1013,227.341014, 1015, 1018, 2004, 3041, 4009, 6007, 6026, 6032, 6137,227.356277, and 6282 of the Technical and Miscellaneous Revenue Act of227.361988, Public Law Number 100-647, the provisions of sections228.17811, 7816, and 7831 of the Omnibus Budget Reconciliation Act of228.21989, Public Law Number 101-239, the provisions of sections228.31305, 1704(r), and 1704(e)(1) of the Small Business Job228.4Protection Act, Public Law Number 104-188, and the provisions of228.5sections 975 and 1604(d)(2) and (e) of the Taxpayer Relief Act228.6of 1997, Public Law Number 105-34, and the provisions of section228.74004 of the Omnibus Consolidated and Emergency Supplemental228.8Appropriations Act, 1999, Public Law Number 105-277 shall be228.9effective at the time they become effective for federal income228.10tax purposes.228.11The Internal Revenue Code of 1986, as amended through228.12December 31, 1987, shall be in effect for taxable years228.13beginning after December 31, 1987. The provisions of sections228.144001, 4002, 4011, 5021, 5041, 5053, 5075, 6003, 6008, 6011,228.156030, 6031, 6033, 6057, 6064, 6066, 6079, 6130, 6176, 6180,228.166182, 6280, and 6281 of the Technical and Miscellaneous Revenue228.17Act of 1988, Public Law Number 100-647, the provisions of228.18sections 7815 and 7821 of the Omnibus Budget Reconciliation Act228.19of 1989, Public Law Number 101-239, and the provisions of228.20section 11702 of the Revenue Reconciliation Act of 1990, Public228.21Law Number 101-508, shall become effective at the time they228.22become effective for federal tax purposes.228.23The Internal Revenue Code of 1986, as amended through228.24December 31, 1988, shall be in effect for taxable years228.25beginning after December 31, 1988. The provisions of sections228.267101, 7102, 7104, 7105, 7201, 7202, 7203, 7204, 7205, 7206,228.277207, 7210, 7211, 7301, 7302, 7303, 7304, 7601, 7621, 7622,228.287641, 7642, 7645, 7647, 7651, and 7652 of the Omnibus Budget228.29Reconciliation Act of 1989, Public Law Number 101-239, the228.30provision of section 1401 of the Financial Institutions Reform,228.31Recovery, and Enforcement Act of 1989, Public Law Number 101-73,228.32the provisions of sections 11701 and 11703 of the Revenue228.33Reconciliation Act of 1990, Public Law Number 101-508, and the228.34provisions of sections 1702(g) and 1704(f)(2)(A) and (B) of the228.35Small Business Job Protection Act, Public Law Number 104-188,228.36shall become effective at the time they become effective for229.1federal tax purposes.229.2The Internal Revenue Code of 1986, as amended through229.3December 31, 1989, shall be in effect for taxable years229.4beginning after December 31, 1989. The provisions of sections229.511321, 11322, 11324, 11325, 11403, 11404, 11410, and 11521 of229.6the Revenue Reconciliation Act of 1990, Public Law Number229.7101-508, and the provisions of sections 13224 and 13261 of the229.8Omnibus Budget Reconciliation Act of 1993, Public Law Number229.9103-66, shall become effective at the time they become effective229.10for federal purposes.229.11The Internal Revenue Code of 1986, as amended through229.12December 31, 1990, shall be in effect for taxable years229.13beginning after December 31, 1990.229.14The provisions of section 13431 of the Omnibus Budget229.15Reconciliation Act of 1993, Public Law Number 103-66, shall229.16become effective at the time they became effective for federal229.17purposes.229.18The Internal Revenue Code of 1986, as amended through229.19December 31, 1991, shall be in effect for taxable years229.20beginning after December 31, 1991.229.21The provisions of sections 1936 and 1937 of the229.22Comprehensive National Energy Policy Act of 1992, Public Law229.23Number 102-486, the provisions of sections 13101, 13114, 13122,229.2413141, 13150, 13151, 13174, 13239, 13301, and 13442 of the229.25Omnibus Budget Reconciliation Act of 1993, Public Law Number229.26103-66, and the provisions of section 1604(a)(1), (2), and (3)229.27of the Taxpayer Relief Act of 1997, Public Law Number 105-34,229.28shall become effective at the time they become effective for229.29federal purposes.229.30The Internal Revenue Code of 1986, as amended through229.31December 31, 1992, shall be in effect for taxable years229.32beginning after December 31, 1992.229.33The provisions of sections 13116, 13121, 13206, 13210,229.3413222, 13223, 13231, 13232, 13233, 13239, 13262, and 13321 of229.35the Omnibus Budget Reconciliation Act of 1993, Public Law Number229.36103-66, the provisions of sections 1703(a), 1703(d), 1703(i),230.11703(l), and 1703(m) of the Small Business Job Protection Act,230.2Public Law Number 104-188, and the provision of section 1604(c)230.3of the Taxpayer Relief Act of 1997, Public Law Number 105-34,230.4shall become effective at the time they become effective for230.5federal purposes.230.6The Internal Revenue Code of 1986, as amended through230.7December 31, 1993, shall be in effect for taxable years230.8beginning after December 31, 1993.230.9The provision of section 741 of Legislation to Implement230.10Uruguay Round of General Agreement on Tariffs and Trade, Public230.11Law Number 103-465, the provisions of sections 1, 2, and 3, of230.12the Self-Employed Health Insurance Act of 1995, Public Law230.13Number 104-7, the provision of section 501(b)(2) of the Health230.14Insurance Portability and Accountability Act, Public Law Number230.15104-191, the provisions of sections 1604 and 1704(p)(1) and (2)230.16of the Small Business Job Protection Act, Public Law Number230.17104-188, and the provisions of sections 1011, 1211(b)(1), and230.181602(f) of the Taxpayer Relief Act of 1997, Public Law Number230.19105-34, shall become effective at the time they become effective230.20for federal purposes.230.21The Internal Revenue Code of 1986, as amended through230.22December 31, 1994, shall be in effect for taxable years230.23beginning after December 31, 1994.230.24The provisions of sections 1119(a), 1120, 1121, 1202(a),230.251444, 1449(b), 1602(a), 1610(a), 1613, and 1805 of the Small230.26Business Job Protection Act, Public Law Number 104-188, the230.27provision of section 511 of the Health Insurance Portability and230.28Accountability Act, Public Law Number 104-191, and the230.29provisions of sections 1174 and 1601(i)(2) of the Taxpayer230.30Relief Act of 1997, Public Law Number 105-34, shall become230.31effective at the time they become effective for federal purposes.230.32The Internal Revenue Code of 1986, as amended through March230.3322, 1996, is in effect for taxable years beginning after230.34December 31, 1995.230.35 The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 230.36 1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 231.1 1616, 1617, 1704(l), and 1704(m) of the Small Business Job 231.2 Protection Act, Public Law Number 104-188, the provisions of 231.3 Public Law Number 104-117, the provisions of sections 313(a) and 231.4 (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 1002, 231.5 1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 231.6 1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) 231.7 and (h), and 1604(d)(1) of the Taxpayer Relief Act of 1997, 231.8 Public Law Number 105-34, the provisions of section 6010 of the 231.9 Internal Revenue Service Restructuring and Reform Act of 1998, 231.10 Public Law Number 105-206, and the provisions of section 4003 of 231.11 the Omnibus Consolidated and Emergency Supplemental 231.12 Appropriations Act, 1999, Public Law Number 105-277, shall 231.13 become effective at the time they become effective for federal 231.14 purposes. 231.15 The Internal Revenue Code of 1986, as amended through 231.16 December 31, 1996, shall be in effect for taxable years 231.17 beginning after December 31, 1996. 231.18 The provisions of sections 202(a) and (b), 221(a), 225, 231.19 312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 231.20 (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 231.21 1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 231.22 1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 231.23 of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 231.24 the provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 231.25 7002, and 7003 of the Internal Revenue Service Restructuring and 231.26 Reform Act of 1998, Public Law Number 105-206,andthe 231.27 provisions of section 3001 of the Omnibus Consolidated and 231.28 Emergency Supplemental Appropriations Act, 1999, Public Law 231.29 Number 105-277, and the provisions of section 3001 of the 231.30 Miscellaneous Trade and Technical Corrections Act of 1999, 231.31 Public Law Number 106-36, shall become effective at the time 231.32 they become effective for federal purposes. 231.33 The Internal Revenue Code of 1986, as amended through 231.34 December 31, 1997, shall be in effect for taxable years 231.35 beginning after December 31, 1997. 231.36 The provisions of sections 5002, 6009, 6011, and 7001 of 232.1 the Internal Revenue Service Restructuring and Reform Act of 232.2 1998, Public Law Number 105-206, the provisions of section 9010 232.3 of the Transportation Equity Act for the 21st Century, Public 232.4 Law Number 105-178, the provisions of sections 1004, 4002, and 232.5 5301 of the Omnibus Consolidation and Emergency Supplemental 232.6 Appropriations Act, 1999, Public Law Number 105-277,andthe 232.7 provision of section 303 of the Ricky Ray Hemophilia Relief Fund 232.8 Act of 1998, Public Law Number 105-369, and the provisions of 232.9 sections 532, 534, 536, 537, and 538 of the Ticket to Work and 232.10 Work Incentives Improvement Act of 1999, Public Law Number 232.11 160-170, shall become effective at the time they become 232.12 effective for federal purposes. 232.13 The Internal Revenue Code of 1986, as amended through 232.14 December 31, 1998, shall be in effect for taxable years 232.15 beginning after December 31, 1998. 232.16 The Internal Revenue Code of 1986, as amended through 232.17 December 31, 1999, shall be in effect for taxable years 232.18 beginning after December 31, 1999. 232.19 Except as otherwise provided, references to the Internal 232.20 Revenue Code in subdivisions 19a to 19g mean the code in effect 232.21 for purposes of determining net income for the applicable year. 232.22 EFFECTIVE DATE: This section is effective the day 232.23 following final enactment except that the striking of text is 232.24 effective for taxable years beginning after December 31, 1999. 232.25 Sec. 3. Minnesota Statutes 1999 Supplement, section 232.26 290.01, subdivision 31, is amended to read: 232.27 Subd. 31. [INTERNAL REVENUE CODE.] Unless specifically 232.28 defined otherwise, "Internal Revenue Code" means the Internal 232.29 Revenue Code of 1986, as amended through December 31,19981999. 232.30 EFFECTIVE DATE: This section is effective for tax years 232.31 beginning after December 31, 1999. 232.32 Sec. 4. Minnesota Statutes 1999 Supplement, section 232.33 290A.03, subdivision 15, is amended to read: 232.34 Subd. 15. [INTERNAL REVENUE CODE.] "Internal Revenue Code" 232.35 means the Internal Revenue Code of 1986, as amended through 232.36 December 31,19981999. 233.1 EFFECTIVE DATE: This section is effective the day 233.2 following final enactment. 233.3 Sec. 5. Minnesota Statutes 1999 Supplement, section 233.4 291.005, subdivision 1, is amended to read: 233.5 Subdivision 1. Unless the context otherwise clearly 233.6 requires, the following terms used in this chapter shall have 233.7 the following meanings: 233.8 (1) "Federal gross estate" means the gross estate of a 233.9 decedent as valued and otherwise determined for federal estate 233.10 tax purposes by federal taxing authorities pursuant to the 233.11 provisions of the Internal Revenue Code. 233.12 (2) "Minnesota gross estate" means the federal gross estate 233.13 of a decedent after (a) excluding therefrom any property 233.14 included therein which has its situs outside Minnesota and (b) 233.15 including therein any property omitted from the federal gross 233.16 estate which is includable therein, has its situs in Minnesota, 233.17 and was not disclosed to federal taxing authorities. 233.18 (3) "Personal representative" means the executor, 233.19 administrator or other person appointed by the court to 233.20 administer and dispose of the property of the decedent. If 233.21 there is no executor, administrator or other person appointed, 233.22 qualified, and acting within this state, then any person in 233.23 actual or constructive possession of any property having a situs 233.24 in this state which is included in the federal gross estate of 233.25 the decedent shall be deemed to be a personal representative to 233.26 the extent of the property and the Minnesota estate tax due with 233.27 respect to the property. 233.28 (4) "Resident decedent" means an individual whose domicile 233.29 at the time of death was in Minnesota. 233.30 (5) "Nonresident decedent" means an individual whose 233.31 domicile at the time of death was not in Minnesota. 233.32 (6) "Situs of property" means, with respect to real 233.33 property, the state or country in which it is located; with 233.34 respect to tangible personal property, the state or country in 233.35 which it was normally kept or located at the time of the 233.36 decedent's death; and with respect to intangible personal 234.1 property, the state or country in which the decedent was 234.2 domiciled at death. 234.3 (7) "Commissioner" means the commissioner of revenue or any 234.4 person to whom the commissioner has delegated functions under 234.5 this chapter. 234.6 (8) "Internal Revenue Code" means the United States 234.7 Internal Revenue Code of 1986, as amended through December 31, 234.819981999. 234.9 EFFECTIVE DATE: This section is effective the day 234.10 following final enactment. 234.11 ARTICLE 13 234.12 MISCELLANEOUS 234.13 Section 1. Minnesota Statutes 1998, section 8.30, is 234.14 amended to read: 234.15 8.30 [COMPROMISE OF TAX AND FEE CLAIMS.] 234.16 Notwithstanding any other provisions of law to the 234.17 contrary, the attorney general shall have authority to 234.18 compromise taxes, fees, surcharges, assessments, penalties, and 234.19 interest in any case referred to the attorney general by the 234.20 commissioner of revenue, whether reduced to judgment or not, 234.21 where, in the attorney general's opinion, it shall be in the 234.22 best interests of the state to do so. Such a compromiseof a234.23tax debt shallmust be insucha formasprescribed by the 234.24 attorney generalshall prescribeand shall be in writing signed 234.25 by the attorney general, the taxpayer or taxpayer's 234.26 representative, and the commissioner of revenue. 234.27 EFFECTIVE DATE: This section is effective for compromises 234.28 entered into after the date of final enactment. 234.29 Sec. 2. Minnesota Statutes 1998, section 16A.46, is 234.30 amended to read: 234.31 16A.46 [LOST OR DESTROYED WARRANT DUPLICATE; INDEMNITY.] 234.32 The commissioner may issue a duplicate to an owner if the 234.33 loss or destruction of an unpaid warrant is documented by 234.34 affidavit. When the duplicate is issued, the original is void. 234.35 The commissioner may require an indemnity bond from the 234.36 applicant to the state for double the amount of the warrant for 235.1 anyone damaged by the issuance of the duplicate. The 235.2 commissioner may refuse to issue a duplicate of an unpaid state 235.3 warrant. If the commissioner acts in good faith the 235.4 commissioner is not liable, whether the application is granted 235.5 or denied. For an unpaid refund or rebate issued under a tax 235.6 law administered by the commissioner of revenue that has been 235.7 lost or destroyed, an affidavit is not required for the 235.8 commissioner to issue a duplicate if the duplicate is issued to 235.9 the same name and social security number as the original warrant 235.10 and that information is verified on a tax return filed by the 235.11 recipient. 235.12 EFFECTIVE DATE: This section is effective the day 235.13 following final enactment. 235.14 Sec. 3. Minnesota Statutes 1999 Supplement, section 235.15 16D.09, subdivision 2, is amended to read: 235.16 Subd. 2. [NOTIFICATION OF ACTION BY DEPARTMENT OF 235.17 REVENUE.] When the department of revenue has determined that a 235.18 debt is uncollectible and has written off that debt as provided 235.19 in subdivision 1, the commissioner of revenue must make a 235.20 reasonable attempt to notify the debtor of that action and of 235.21 the release of any liens imposed under section 270.69 related to 235.22 that debt, within 30 days after the determination has been 235.23 reported to the commissioner of finance. A lien imposed under 235.24 section 270.69 need not be released unless after the write-off 235.25 of uncollectible debt there is no remaining collectible 235.26 liability recorded on the lien. 235.27 EFFECTIVE DATE: This section is effective for debts 235.28 written off on or after the day following final enactment. 235.29 Sec. 4. Minnesota Statutes 1999 Supplement, section 235.30 168.012, subdivision 1, is amended to read: 235.31 Subdivision 1. [VEHICLES EXEMPT FROM TAX AND REGISTRATION 235.32 FEES.] (a) The following vehicles are exempt from the provisions 235.33 of this chapter requiring payment of tax and registration fees, 235.34 except as provided in subdivision 1c: 235.35 (1) vehicles owned and used solely in the transaction of 235.36 official business by the federal government, the state, or any 236.1 political subdivision; 236.2 (2) vehicles owned and used exclusively by educational 236.3 institutions and used solely in the transportation of pupils to 236.4 and from such institutions; 236.5 (3) vehicles used solely in driver education programs at 236.6 nonpublic high schools; 236.7 (4) vehicles owned by nonprofit charities and used 236.8 exclusively to transport disabled persons for educational 236.9 purposes; 236.10 (5) vehicles owned and used by honorary consul; 236.11 (6) ambulances owned by ambulance services licensed under 236.12 section 144E.10, the general appearance of which is 236.13 unmistakable; and 236.14 (7) vehicles owned by a commercial driving school licensed 236.15 under section 171.34, or an employee of a commercial driving 236.16 school licensed under section 171.34, and the vehicle is used 236.17 exclusively for driver education and training. 236.18 (b) Vehicles owned by the federal government, municipal 236.19 fire apparatuses including fire-suppression support vehicles, 236.20 police patrols and ambulances, the general appearance of which 236.21 is unmistakable, shall not be required to register or display 236.22 number plates. 236.23 (c) Unmarked vehicles used in general police work, liquor 236.24 investigations, arson investigations, and passenger automobiles, 236.25 pickup trucks, and buses owned or operated by the department of 236.26 corrections shall be registered and shall display appropriate 236.27 license number plates which shall be furnished by the registrar 236.28 at cost. Original and renewal applications for these license 236.29 plates authorized for use in general police work and for use by 236.30 the department of corrections must be accompanied by a 236.31 certification signed by the appropriate chief of police if 236.32 issued to a police vehicle, the appropriate sheriff if issued to 236.33 a sheriff's vehicle, the commissioner of corrections if issued 236.34 to a department of corrections vehicle, or the appropriate 236.35 officer in charge if issued to a vehicle of any other law 236.36 enforcement agency. The certification must be on a form 237.1 prescribed by the commissioner and state that the vehicle will 237.2 be used exclusively for a purpose authorized by this section. 237.3 (d) Unmarked vehicles used by the departments of revenue 237.4 and labor and industry, fraud unit, in conducting seizures or 237.5 criminal investigations must be registered and must display 237.6 passenger vehicle classification license number plates which 237.7 shall be furnished at cost by the registrar. Original and 237.8 renewal applications for these passenger vehicle license plates 237.9 must be accompanied by a certification signed by the 237.10 commissioner of revenue or the commissioner of labor and 237.11 industry. The certification must be on a form prescribed by the 237.12 commissioner and state that the vehicles will be used 237.13 exclusively for the purposes authorized by this section. 237.14 (e) Unmarked vehicles used by the division of disease 237.15 prevention and control of the department of health must be 237.16 registered and must display passenger vehicle classification 237.17 license number plates. These plates must be furnished at cost 237.18 by the registrar. Original and renewal applications for these 237.19 passenger vehicle license plates must be accompanied by a 237.20 certification signed by the commissioner of health. The 237.21 certification must be on a form prescribed by the commissioner 237.22 and state that the vehicles will be used exclusively for the 237.23 official duties of the division of disease prevention and 237.24 control. 237.25 (f) All other motor vehicles shall be registered and 237.26 display tax-exempt number plates which shall be furnished by the 237.27 registrar at cost, except as provided in subdivision 1c. All 237.28 vehicles required to display tax-exempt number plates shall have 237.29 the name of the state department or political subdivision, 237.30 nonpublic high school operating a driver education program, or 237.31 licensed commercial driving school, on the vehicle plainly 237.32 displayed on both sides thereof in letters not less than 2-1/2 237.33 inches high and one-half inch wide; except that each state 237.34 hospital and institution for the mentally ill and mentally 237.35 retarded may have one vehicle without the required 237.36 identification on the sides of the vehicle, and county social 238.1 service agencies may have vehicles used for child and vulnerable 238.2 adult protective services without the required identification on 238.3 the sides of the vehicle. Such identification shall be in a 238.4 color giving contrast with that of the part of the vehicle on 238.5 which it is placed and shall endure throughout the term of the 238.6 registration. The identification must not be on a removable 238.7 plate or placard and shall be kept clean and visible at all 238.8 times; except that a removable plate or placard may be utilized 238.9 on vehicles leased or loaned to a political subdivision or to a 238.10 nonpublic high school driver education program. 238.11 Sec. 5. Minnesota Statutes 1998, section 270.063, is 238.12 amended by adding a subdivision to read: 238.13 Subd. 4. [FEDERAL TAX REFUND OFFSET FEES.] For fees 238.14 charged by the department of the treasury of the United States 238.15 for the offset of federal tax refunds that are deducted from the 238.16 refund amounts remitted to the commissioner, the unpaid debts of 238.17 the taxpayers whose refunds are being offset to satisfy the 238.18 debts are reduced only by the actual amount of the refund 238.19 payments received by the commissioner. 238.20 EFFECTIVE DATE: This section is effective for offsets of 238.21 refunds made on or after the day following final enactment. 238.22 Sec. 6. Minnesota Statutes 1999 Supplement, section 238.23 270.65, is amended to read: 238.24 270.65 [DATE OF ASSESSMENT; DEFINITION.] 238.25 For purposes of taxes administered by the commissioner, the 238.26 term "date of assessment" means the date a liability reported on 238.27 a return wasfiledentered into the records of the commissioner 238.28 or the date a return should have been filed, whichever is later; 238.29 or, in the case of taxes determined by the commissioner, "date 238.30 of assessment" means the date of the order assessing taxes or 238.31 date of the return made by the commissioner; or, in the case of 238.32 an amended return filed by the taxpayer, the assessment date is 238.33 the date additional liability reported on the return, if any, 238.34 wasfiled withentered into the records of the commissioner; or, 238.35 in the case of a check from a taxpayer that is dishonored and 238.36 results in an erroneous refund being given to the taxpayer, 239.1 remittance of the check is deemed to be an assessment and the 239.2 "date of assessment" is the date the check was received by the 239.3 commissioner. 239.4 EFFECTIVE DATE: This section is effective for assessments 239.5 made on or after the day following final enactment. 239.6 Sec. 7. Minnesota Statutes 1999 Supplement, section 239.7 270A.03, subdivision 2, is amended to read: 239.8 Subd. 2. [CLAIMANT AGENCY.] "Claimant agency" means any 239.9 state agency, as defined by section 14.02, subdivision 2, the 239.10 regents of the University of Minnesota, any district court of 239.11 the state, any county, any statutory or home rule charter city 239.12 presenting a claim for a municipal hospital or a public 239.13 library or a municipal ambulance service, a hospital district, a 239.14 private nonprofit hospital that leases its building from the 239.15 county in which it is located, any public agency responsible for 239.16 child support enforcement, any public agency responsible for the 239.17 collection of court-ordered restitution, and any public agency 239.18 established by general or special law that is responsible for 239.19 the administration of a low-income housing program. 239.20 EFFECTIVE DATE: This section is effective for claims 239.21 submitted after June 30, 2000. 239.22 Sec. 8. Minnesota Statutes 1998, section 270A.03, 239.23 subdivision 7, is amended to read: 239.24 Subd. 7. [REFUND.] "Refund" means an individual income tax 239.25 refund or political contribution refund, pursuant to chapter 239.26 290, or a property tax credit or refund, pursuant to chapter 239.27 290A. 239.28 For purposes of this chapter, lottery prizes, as set forth 239.29 in section 349A.08, subdivision 8, and amounts granted to 239.30 persons by the legislature on the recommendation of the joint 239.31 senate-house of representatives subcommittee on claims shall be 239.32 treated as refunds. 239.33 In the case of a joint property tax refund payable to 239.34 spouses under chapter 290A, the refund shall be considered as 239.35 belonging to each spouse in the proportion of the total refund 239.36 that equals each spouse's proportion of the total income 240.1 determined under section 290A.03, subdivision 3. In the case of 240.2 a joint income tax refund under chapter 289A, the refund shall 240.3 be considered as belonging to each spouse in the proportion of 240.4 the total refund that equals each spouse's proportion of the 240.5 total taxable income determined under section 290.01, 240.6 subdivision 29. The commissioner shall remit the entire refund 240.7 to the claimant agency, which shall, upon the request of the 240.8 spouse who does not owe the debt, determine the amount of the 240.9 refund belonging to that spouse and refund the amount to that 240.10 spouse. For court fines, fees, and surcharges and court-ordered 240.11 restitution under section 611A.04, subdivision 2, the notice 240.12 provided by the commissioner of revenue under section 270A.07, 240.13 subdivision 2, paragraph (b), serves as the appropriate legal 240.14 notice to the spouse who does not owe the debt. 240.15 EFFECTIVE DATE: This section is effective for notices 240.16 provided after June 30, 2000. 240.17 Sec. 9. Minnesota Statutes 1998, section 270A.07, 240.18 subdivision 1, is amended to read: 240.19 Subdivision 1. [NOTIFICATION REQUIREMENT.] Any claimant 240.20 agency, seeking collection of a debt through setoff against a 240.21 refund due, shall submit to the commissioner information 240.22 indicating the amount of each debt and information identifying 240.23 the debtor, as required by section 270A.04, subdivision 3. 240.24 For each setoff of a debt against a refund due, the 240.25 commissioner shall charge a fee of $10.The claimant agency may240.26add the fee to the amount of the debt.240.27 The claimant agency shall notify the commissioner when a 240.28 debt has been satisfied or reduced by at least $200 within 30 240.29 days after satisfaction or reduction. 240.30 EFFECTIVE DATE: This section is effective the day 240.31 following final enactment. 240.32 Sec. 10. Minnesota Statutes 1999 Supplement, section 240.33 270A.07, subdivision 2, is amended to read: 240.34 Subd. 2. [SETOFF PROCEDURES.] (a) The commissioner, upon 240.35 receipt of notification, shall initiate procedures to detect any 240.36 refunds otherwise payable to the debtor. When the commissioner 241.1 determines that a refund is due to a debtor whose debt was 241.2 submitted by a claimant agency, the commissioner shall first 241.3 deduct the fee in subdivision 1 and then remit the refund or the 241.4 amount claimed, whichever is less, to the agency. In 241.5 transferring or remitting moneys to the claimant agency, the 241.6 commissioner shall provide information indicating the amount 241.7 applied against each debtor's obligation and the debtor's 241.8 address listed on the tax return. 241.9 (b) The commissioner shall remit to the debtor the amount 241.10 of any refund due in excess of the debt submitted for setoff by 241.11 the claimant agency. Notice of the amount setoff and address of 241.12 the claimant agency shall accompany any disbursement to the 241.13 debtor of the balance of a refund, or shall be sent to the 241.14 debtor at the time of setoff if the entire refund is set off. 241.15 The notice shall also advise the debtor of the right to contest 241.16 the validity of the claim, other than a claim based upon child 241.17 support under section 518.171, 518.54, 518.551, or chapter 518C 241.18 at a hearing, subject to the restrictions in this paragraph. 241.19 The debtor must assert this right by written request to the 241.20 claimant agency, which request the claimant agency must receive 241.21 within 45 days of the date of the notice. This right does not 241.22 apply to (1) issues relating to the validity of the claim that 241.23 have been previously raised at a hearing under this section or 241.24 section 270A.09; (2) issues relating to the validity of the 241.25 claim that were not timely raised by the debtor under section 241.26 270A.08, subdivision 2; (3) issues relating to the validity of 241.27 the claim that have been previously raised at a hearing 241.28 conducted under rules promulgated by the United States 241.29 Department of Housing and Urban Development or any public agency 241.30 that is responsible for the administration of a low-income 241.31 housing program, or that were not timely raised by the debtor 241.32 under those rules; or (4) issues relating to the validity of the 241.33 claim for which a hearing is discretionary under section 241.34 270A.09. The notice shall include an explanation of the right 241.35 of the spouse who does not owe the debt to request the claimant 241.36 agency to repay the spouse's portion of a joint refund. 242.1 EFFECTIVE DATE: This section is effective for notices 242.2 provided after June 30, 2000. 242.3 Sec. 11. Minnesota Statutes 1998, section 289A.35, is 242.4 amended to read: 242.5 289A.35 [ASSESSMENTS; COMMISSIONER FILED RETURNS.] 242.6 The commissionershallhas the authority to make 242.7 determinations, corrections, and assessments with respect to 242.8 state taxes, including interest, additions to taxes, and 242.9 assessable penalties. The commissioner may audit and adjust the 242.10 taxpayer's computation of federal taxable income, items of 242.11 federal tax preferences, or federal credit amounts to make them 242.12 conform with the provisions of chapter 290 or section 298.01. 242.13 If a taxpayer fails to file a required return, the commissioner, 242.14 from information in the commissioner's possession or obtainable 242.15 by the commissioner, may make a return for the taxpayer. The 242.16 return will be prima facie correct and valid. If a return has 242.17 been filed, the commissioner shallexamineenter the liability 242.18 reported on the return and may make any audit or investigation 242.19 that is considered necessary. The commissioner may use 242.20 statistical or other sampling techniques consistent with 242.21 generally accepted auditing standards in examining returns or 242.22 records and making assessments. 242.23 EFFECTIVE DATE: This section is effective the day 242.24 following final enactment. 242.25 Sec. 12. Minnesota Statutes 1999 Supplement, section 242.26 289A.55, subdivision 9, is amended to read: 242.27 Subd. 9. [INTEREST ON PENALTIES.] (a) A penalty imposed 242.28 under section 289A.60, subdivision 1, 2, 3, 4, 5, 6, or 21 bears 242.29 interest from the date the return or payment was required to be 242.30 filed or paid, including any extensions, to the date of payment 242.31 of the penalty. 242.32 (b) A penalty not included in paragraph (a) bears interest 242.33 only if it is not paid withinten60 days from the date of 242.34 notice. In that case interest is imposed from the date of 242.35 notice to the date of payment. 242.36 EFFECTIVE DATE: This section is effective for penalties 243.1 assessed after the date of final enactment. 243.2 Sec. 13. Minnesota Statutes 1998, section 296A.03, 243.3 subdivision 5, is amended to read: 243.4 Subd. 5. [FORM OF APPLICATION; BOND.] (a) A written 243.5 application shall be made in the form and manner prescribed by 243.6 the commissioner. 243.7 (b) The commissioner shall also require the applicant or 243.8 licensee to deposit with the state treasurer securities of the 243.9 United States government or the state of Minnesota or to execute 243.10 and file a bond, with a corporate surety approved by the 243.11 commissioner, to the state of Minnesota in an amount to be 243.12 determined by the commissioner and in a form to be fixed by the 243.13 commissioner and approved by the attorney general, and which 243.14 shall be conditioned for the payment when due of all excise 243.15 taxes,inspectionfees, penalties, and accrued interest arising 243.16 in the ordinary course of business or by reason of any 243.17 delinquent money which may be due the state. The bond shall 243.18 cover all places of business within the state where petroleum 243.19 products are received by the licensee. The applicant or 243.20 licensee shall designate and maintain an agent in this state 243.21 upon whom service may be made for all purposes of this section. 243.22 (c) An initial applicant for a distributor's license shall 243.23 furnish a bond in a minimum sum of $3,000 for the first year. 243.24 (d) The commissioner, on reaching the opinion that the bond 243.25 given by a licensee is inadequate in amount to fully protect the 243.26 state, shall require an additional bond in such amount as the 243.27 commissioner deems sufficient. 243.28 (e) A licensee who desires to be exempt from depositing 243.29 securities or furnishing such bond shall furnish to the 243.30 commissioner an itemized financial statement showing the assets 243.31 and the liabilities of the applicant. If it appears to the 243.32 commissioner, from the financial statement or otherwise, that 243.33 the applicant is financially responsible, then the commissioner 243.34 may exempt the applicant from depositing such securities or 243.35 furnishing such bond until the commissioner otherwise orders. 243.36 (f) When the surety upon any bond issued under the 244.1 provisions of this chapter have fulfilled the conditions of such 244.2 bond and compensated the state for any loss occasioned by any 244.3 act or omission of any licensee under this chapter, such surety 244.4 shall be subrogated to all the rights of the state in connection 244.5 with the transaction where such loss occurred. 244.6 EFFECTIVE DATE: This section is effective the day 244.7 following final enactment. 244.8 Sec. 14. Minnesota Statutes 1998, section 296A.21, 244.9 subdivision 2, is amended to read: 244.10 Subd. 2. [COLLECTION.] No action shall be brought for the 244.11 collection of delinquent taxes andinspectionfees under section 244.12 270.68 unless commenced within five years after the date of 244.13 assessment of the taxes and fees. 244.14 EFFECTIVE DATE: This section is effective the day 244.15 following final enactment. 244.16 Sec. 15. Minnesota Statutes 1998, section 296A.21, 244.17 subdivision 3, is amended to read: 244.18 Subd. 3. [FALSE OR FRAUDULENT REPORT.] In the case of a 244.19 false or fraudulent report with intent to evadetaxtaxes or 244.20inspection feefees or of a failure to file a report, the taxes 244.21 or fees may be assessed at any time, and a proceeding in court 244.22 for their collection must be begun within five years after the 244.23 assessment. 244.24 EFFECTIVE DATE: This section is effective the day 244.25 following final enactment. 244.26 Sec. 16. Minnesota Statutes 1998, section 296A.22, 244.27 subdivision 6, is amended to read: 244.28 Subd. 6. [SALE PROHIBITED UNDER CERTAIN CONDITIONS.] No 244.29 petroleum product shall be unloaded or sold by any person or 244.30 distributor whose tax andinspectionfees are the basis for 244.31 collection action under subdivision 2. 244.32 EFFECTIVE DATE: This section is effective the day 244.33 following final enactment. 244.34 Sec. 17. Minnesota Statutes 1999 Supplement, section 244.35 298.24, subdivision 1, is amended to read: 244.36 Subdivision 1. (a) For concentrate produced in 1999, there 245.1 is imposed upon taconite and iron sulphides, and upon the mining 245.2 and quarrying thereof, and upon the production of iron ore 245.3 concentrate therefrom, and upon the concentrate so produced, a 245.4 tax of $2.141 per gross ton of merchantable iron ore concentrate 245.5 produced therefrom. 245.6 (b) For concentrates produced in 2000 and subsequent years, 245.7 the tax rate shall be equal to the preceding year's tax rate 245.8 plus an amount equal to the preceding year's tax rate multiplied 245.9 by the percentage increase in the implicit price deflator from 245.10 the fourth quarter of the second preceding year to the fourth 245.11 quarter of the preceding year. "Implicit price deflator"for245.12the gross national productmeans the implicit price deflator for 245.13 the gross domestic product prepared by the bureau of economic 245.14 analysis of the United States Department of Commerce. 245.15 (c) On concentrates produced in 1997 and thereafter, an 245.16 additional tax is imposed equal to three cents per gross ton of 245.17 merchantable iron ore concentrate for each one percent that the 245.18 iron content of the product exceeds 72 percent, when dried at 245.19 212 degrees Fahrenheit. 245.20 (d) The tax shall be imposed on the average of the 245.21 production for the current year and the previous two years. The 245.22 rate of the tax imposed will be the current year's tax rate. 245.23 This clause shall not apply in the case of the closing of a 245.24 taconite facility if the property taxes on the facility would be 245.25 higher if this clause and section 298.25 were not applicable. 245.26 (e) If the tax or any part of the tax imposed by this 245.27 subdivision is held to be unconstitutional, a tax of $2.141 per 245.28 gross ton of merchantable iron ore concentrate produced shall be 245.29 imposed. 245.30 (f) Consistent with the intent of this subdivision to 245.31 impose a tax based upon the weight of merchantable iron ore 245.32 concentrate, the commissioner of revenue may indirectly 245.33 determine the weight of merchantable iron ore concentrate 245.34 included in fluxed pellets by subtracting the weight of the 245.35 limestone, dolomite, or olivine derivatives or other basic flux 245.36 additives included in the pellets from the weight of the 246.1 pellets. For purposes of this paragraph, "fluxed pellets" are 246.2 pellets produced in a process in which limestone, dolomite, 246.3 olivine, or other basic flux additives are combined with 246.4 merchantable iron ore concentrate. No subtraction from the 246.5 weight of the pellets shall be allowed for binders, mineral and 246.6 chemical additives other than basic flux additives, or moisture. 246.7 (g)(1) Notwithstanding any other provision of this 246.8 subdivision, for the first two years of a plant's production of 246.9 direct reduced ore, no tax is imposed under this section. As 246.10 used in this paragraph, "direct reduced ore" is ore that results 246.11 in a product that has an iron content of at least 75 percent. 246.12 For the third year of a plant's production of direct reduced 246.13 ore, the rate to be applied to direct reduced ore is 25 percent 246.14 of the rate otherwise determined under this subdivision. For 246.15 the fourth such production year, the rate is 50 percent of the 246.16 rate otherwise determined under this subdivision; for the fifth 246.17 such production year, the rate is 75 percent of the rate 246.18 otherwise determined under this subdivision; and for all 246.19 subsequent production years, the full rate is imposed. 246.20 (2) Subject to clause (1), production of direct reduced ore 246.21 in this state is subject to the tax imposed by this section, but 246.22 if that production is not produced by a producer of taconite or 246.23 iron sulfides, the production of taconite or iron sulfides 246.24 consumed in the production of direct reduced iron in this state 246.25 is not subject to the tax imposed by this section on taconite or 246.26 iron sulfides. 246.27 EFFECTIVE DATE: This section is effective for concentrates 246.28 produced in 2000 and thereafter. 246.29 Sec. 18. [ITASCA AND CASS COUNTIES; DISTRIBUTION OF CASINO 246.30 TAX REVENUES.] 246.31 Notwithstanding any contrary provision of law, in the case 246.32 of one tribal government that operates three casinos, two of 246.33 which are located in Cass county, and one of which is located in 246.34 Itasca county, the payments to the counties under Minnesota 246.35 Statutes, section 270.60, subdivision 4, attributable to 246.36 agreements with that tribe, must be distributed, two-thirds to 247.1 Cass county, and one-third to Itasca county. This section 247.2 applies to distributions in 2001, 2002, and 2003. 247.3 EFFECTIVE DATE: This section is effective upon approval by 247.4 the governing bodies of both Itasca county and Cass county, and 247.5 compliance by both of them with Minnesota Statutes, section 247.6 645.021, subdivision 3. 247.7 Sec. 19. [MINNESOTA WORKERS' COMPENSATION ASSIGNED RISK 247.8 PLAN SURPLUS TRANSFER.] 247.9 On or before July 15, 2000, the commissioner of finance 247.10 must transfer $110,000,000 of assets of the assigned risk plan 247.11 to the general fund. 247.12 EFFECTIVE DATE: This section is effective the day 247.13 following final enactment. 247.14 Sec. 20. [INSTRUCTION TO REVISOR.] 247.15 Notwithstanding any law to the contrary, if a section of 247.16 Minnesota Statutes repealed and recodified by Laws 2000, chapter 247.17 394, is amended by this act, the amendment supersedes the 247.18 provisions of chapter 394, and the revisor shall codify the 247.19 amendment consistent with the recodification of the affected 247.20 section by Laws 2000, chapter 394. 247.21 Sec. 21. [REPEALER.] 247.22 Minnesota Rules, part 8160.0300, subpart 4, is repealed. 247.23 EFFECTIVE DATE: This section is effective for assessments 247.24 made on or after the day following final enactment.