HF 4194

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to taxes; modifying the treatment of certain income from foreign
operations under the corporate franchise tax; increasing local government
aid; providing a property tax rebate; establishing a tax rate for school district
operating capital revenue; appropriating money; amending Minnesota Statutes
2004, sections 290.34, subdivision 1; 477A.013, subdivision 9; Minnesota
Statutes 2005 Supplement, sections 126C.10, subdivision 13a; 290.01,
subdivisions 6b, 19c, 19d; 477A.013, subdivision 8; repealing Minnesota
Statutes 2005 Supplement, section 477A.03, subdivision 2a.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2005 Supplement, section 126C.10, subdivision 13a,
is amended to read:

Subd. 13a.

Operating capital levy.

To obtain operating capital revenue for fiscal
year 2007 and later, a district may levy an amount not more than the product of its
operating capital revenue for the fiscal year times the lesser of one or the ratio of its
adjusted net tax capacity per adjusted marginal cost pupil unit to the operating capital
equalizing factor. The operating capital equalizing factor equals $22,222 for fiscal year
2006, and $10,700 for fiscal year 2007 and later. new text begin For fiscal years 2008 and later, by
September 30 of each year, the commissioner shall establish a tax rate for operating capital
revenue that raises $56,000,000. A district's operating capital levy must not exceed its
operating capital revenue.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2007.
new text end

Sec. 2.

Minnesota Statutes 2005 Supplement, section 290.01, subdivision 6b, is
amended to read:

Subd. 6b.

Foreign operating corporation.

The term "foreign operating
corporation," when applied to a corporation, means a domestic corporation with the
following characteristics:

(1) it is part of a unitary business at least one member of which is taxable in this state;

(2) it is not a foreign sales corporation under section 922 of the Internal Revenue
Code, as amended through December 31, 1999, for the taxable year; new text begin and
new text end

(3) new text begin either new text end (i) deleted text begin the average of the percentages of its property and payrolls, including
the pro rata share of its unitary partnerships' property and payrolls, assigned to locations
outside the United States, where the United States includes the District of Columbia and
excludes the commonwealth of Puerto Rico and possessions of the United States, as
determined under section 290.191 or 290.20, is 80 percent or more; or (ii) deleted text end it has in effect a
valid election under section 936 of the Internal Revenue Code; deleted text begin and
deleted text end

deleted text begin (4) it has $1,000,000 of payroll and $2,000,000 of property, as determined under
section 290.191 or 290.20, that are located outside the United States. If the domestic
corporation does not have payroll as determined under section 290.191 or 290.20, but it
or its partnerships have paid $1,000,000 for work, performed directly for the domestic
corporation or the partnerships, outside the United States, then paragraph (3)(i) shall not
require payrolls to be included in the average calculation deleted text end new text begin or (ii) at least 80 percent of
the gross income from all sources of the corporation in the taxable year (A) is derived
from sources without the United States, as defined in subtitle A, chapter 1, subchapter
N, part 1, of the Internal Revenue Code; and (B) is attributable to the active conduct of
a trade or business in a foreign country new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2005.
new text end

Sec. 3.

Minnesota Statutes 2005 Supplement, section 290.01, subdivision 19c, is
amended to read:

Subd. 19c.

Corporations; additions to federal taxable income.

For corporations,
there shall be added to federal taxable income:

(1) the amount of any deduction taken for federal income tax purposes for income,
excise, or franchise taxes based on net income or related minimum taxes, including but not
limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
another state, a political subdivision of another state, the District of Columbia, or any
foreign country or possession of the United States;

(2) interest not subject to federal tax upon obligations of: the United States, its
possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
state, any of its political or governmental subdivisions, any of its municipalities, or any
of its governmental agencies or instrumentalities; the District of Columbia; or Indian
tribal governments;

(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
Revenue Code;

(4) the amount of any net operating loss deduction taken for federal income tax
purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
deduction under section 810 of the Internal Revenue Code;

(5) the amount of any special deductions taken for federal income tax purposes
under sections 241 to 247 of the Internal Revenue Code;

(6) losses from the business of mining, as defined in section 290.05, subdivision 1,
clause (a), that are not subject to Minnesota income tax;

(7) the amount of any capital losses deducted for federal income tax purposes under
sections 1211 and 1212 of the Internal Revenue Code;

(8) the exempt foreign trade income of a foreign sales corporation under sections
921(a) and 291 of the Internal Revenue Code;

(9) the amount of percentage depletion deducted under sections 611 through 614 and
291 of the Internal Revenue Code;

(10) for certified pollution control facilities placed in service in a taxable year
beginning before December 31, 1986, and for which amortization deductions were elected
under section 169 of the Internal Revenue Code of 1954, as amended through December
31, 1985, the amount of the amortization deduction allowed in computing federal taxable
income for those facilities;

(11) the amount of any deemed dividend from a foreign operating corporation
determined pursuant to section 290.17, subdivision 4, paragraph (g) new text begin . The deemed dividend
is reduced by the amount of the addition to income required by clauses (19), (20), (21),
and (22) new text end ;

(12) the amount of a partner's pro rata share of net income which does not flow
through to the partner because the partnership elected to pay the tax on the income under
section 6242(a)(2) of the Internal Revenue Code;

(13) the amount of net income excluded under section 114 of the Internal Revenue
Code;

(14) any increase in subpart F income, as defined in section 952(a) of the Internal
Revenue Code, for the taxable year when subpart F income is calculated without regard
to the provisions of section 614 of Public Law 107-147;

(15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
has an activity that in the taxable year generates a deduction for depreciation under
section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
amount of the loss from the activity that is not allowed in the taxable year. In succeeding
taxable years when the losses not allowed in the taxable year are allowed, the depreciation
under section 168(k)(1)(A) and (k)(4)(A) is allowed;

(16) 80 percent of the amount by which the deduction allowed by section 179 of the
Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
Revenue Code of 1986, as amended through December 31, 2003;

(17) to the extent deducted in computing federal taxable income, the amount of the
deduction allowable under section 199 of the Internal Revenue Code; deleted text begin and
deleted text end

(18) the exclusion allowed under section 139A of the Internal Revenue Code for
federal subsidies for prescription drug plans deleted text begin . deleted text end new text begin ;
new text end

new text begin (19) an amount equal to the interest and intangible expenses, losses, and costs paid,
accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
of a corporation that is a member of the taxpayer's unitary business group that qualifies
as a foreign operating corporation. For purposes of this clause, intangible expenses and
costs include:
new text end

new text begin (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
use, maintenance or management, ownership, sale, exchange, or any other disposition of
intangible property;
new text end

new text begin (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
transactions;
new text end

new text begin (iii) royalty, patent, technical, and copyright fees;
new text end

new text begin (iv) licensing fees; and
new text end

new text begin (v) other similar expenses and costs.
new text end

new text begin For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
applications, trade names, trademarks, service marks, copyrights, mask works, trade
secrets, and similar types of intangible assets.
new text end

new text begin This clause does not apply to any item of interest or intangible expenses or costs paid,
accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
to the item of income to the extent that the income to the foreign operating corporation
is income from sources without the United States as defined in subtitle A, chapter 1,
subchapter N, part 1, of the Internal Revenue Code;
new text end

new text begin (20) except as already included in the taxpayer's taxable income pursuant to clause
(19), any interest income and income generated from intangible property received or
accrued by a foreign operating corporation that is a member of the taxpayer's unitary
group. For purposes of this clause, income generated from intangible property includes:
new text end

new text begin (i) income related to the direct or indirect acquisition, use, maintenance or
management, ownership, sale, exchange, or any other disposition of intangible property;
new text end

new text begin (ii) income from factoring transactions or discounting transactions;
new text end

new text begin (iii) royalty, patent, technical, and copyright fees;
new text end

new text begin (iv) licensing fees; and
new text end

new text begin (v) other similar income.
new text end

new text begin For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
applications, trade names, trademarks, service marks, copyrights, mask works, trade
secrets, and similar types of intangible assets.
new text end

new text begin This clause does not apply to any item of interest or intangible income received or accrued
by a foreign operating corporation with respect to the item of income to the extent that the
income is income from sources without the United States as defined in subtitle A, chapter
1, subchapter N, part 1, of the Internal Revenue Code;
new text end

new text begin (21) the dividends attributable to the income of a foreign operating corporation that
is a member of the taxpayer's unitary group in an amount that is equal to the dividends
paid deduction of a real estate investment trust under section 561(a) of the Internal
Revenue Code for amounts paid or accrued by the real estate investment trust to the
foreign operating corporation; and
new text end

new text begin (22) the income of a foreign operating corporation that is a member of the taxpayer's
unitary group in an amount that is equal to gains derived from the sale of real or personal
property located in the United States.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2005.
new text end

Sec. 4.

Minnesota Statutes 2005 Supplement, section 290.01, subdivision 19d, is
amended to read:

Subd. 19d.

Corporations; modifications decreasing federal taxable income.

For
corporations, there shall be subtracted from federal taxable income after the increases
provided in subdivision 19c:

(1) the amount of foreign dividend gross-up added to gross income for federal
income tax purposes under section 78 of the Internal Revenue Code;

(2) the amount of salary expense not allowed for federal income tax purposes due to
claiming the federal jobs credit under section 51 of the Internal Revenue Code;

(3) any dividend (not including any distribution in liquidation) paid within the
taxable year by a national or state bank to the United States, or to any instrumentality of
the United States exempt from federal income taxes, on the preferred stock of the bank
owned by the United States or the instrumentality;

(4) amounts disallowed for intangible drilling costs due to differences between
this chapter and the Internal Revenue Code in taxable years beginning before January
1, 1987, as follows:

(i) to the extent the disallowed costs are represented by physical property, an amount
equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09,
subdivision 7, subject to the modifications contained in subdivision 19e; and

(ii) to the extent the disallowed costs are not represented by physical property, an
amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
290.09, subdivision 8;

(5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
Internal Revenue Code, except that:

(i) for capital losses incurred in taxable years beginning after December 31, 1986,
capital loss carrybacks shall not be allowed;

(ii) for capital losses incurred in taxable years beginning after December 31, 1986,
a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
allowed;

(iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
capital loss carryback to each of the three taxable years preceding the loss year, subject to
the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and

(iv) for capital losses incurred in taxable years beginning before January 1, 1987,
a capital loss carryover to each of the five taxable years succeeding the loss year to the
extent such loss was not used in a prior taxable year and subject to the provisions of
Minnesota Statutes 1986, section 290.16, shall be allowed;

(6) an amount for interest and expenses relating to income not taxable for federal
income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
291 of the Internal Revenue Code in computing federal taxable income;

(7) in the case of mines, oil and gas wells, other natural deposits, and timber for
which percentage depletion was disallowed pursuant to subdivision 19c, clause (11), a
reasonable allowance for depletion based on actual cost. In the case of leases the deduction
must be apportioned between the lessor and lessee in accordance with rules prescribed
by the commissioner. In the case of property held in trust, the allowable deduction must
be apportioned between the income beneficiaries and the trustee in accordance with the
pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
of the trust's income allocable to each;

(8) for certified pollution control facilities placed in service in a taxable year
beginning before December 31, 1986, and for which amortization deductions were elected
under section 169 of the Internal Revenue Code of 1954, as amended through December
31, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
1986, section 290.09, subdivision 7;

(9) amounts included in federal taxable income that are due to refunds of income,
excise, or franchise taxes based on net income or related minimum taxes paid by the
corporation to Minnesota, another state, a political subdivision of another state, the
District of Columbia, or a foreign country or possession of the United States to the extent
that the taxes were added to federal taxable income under section 290.01, subdivision 19c,
clause (1), in a prior taxable year;

(10) 80 percent of royalties, fees, or other like income accrued or received from a
foreign operating corporation or a foreign corporation which is part of the same unitary
business as the receiving corporation new text begin , unless the income resulting from the payments or
accruals is income from sources within the United States as defined in subtitle A, chapter
1, subchapter N, part 1, of the Internal Revenue Code new text end ;

(11) income or gains from the business of mining as defined in section 290.05,
subdivision 1, clause (a), that are not subject to Minnesota franchise tax;

(12) the amount of handicap access expenditures in the taxable year which are not
allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;

(13) the amount of qualified research expenses not allowed for federal income tax
purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that
the amount exceeds the amount of the credit allowed under section 290.068;

(14) the amount of salary expenses not allowed for federal income tax purposes due
to claiming the Indian employment credit under section 45A(a) of the Internal Revenue
Code;

(15) the amount of any refund of environmental taxes paid under section 59A of the
Internal Revenue Code;

(16) for taxable years beginning before January 1, 2008, the amount of the federal
small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code
which is included in gross income under section 87 of the Internal Revenue Code;

(17) for a corporation whose foreign sales corporation, as defined in section 922
of the Internal Revenue Code, constituted a foreign operating corporation during any
taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
claiming the deduction under section 290.21, subdivision 4, for income received from
the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of
income excluded under section 114 of the Internal Revenue Code, provided the income is
not income of a foreign operating company;

(18) any decrease in subpart F income, as defined in section 952(a) of the Internal
Revenue Code, for the taxable year when subpart F income is calculated without regard
to the provisions of section 614 of Public Law 107-147;

(19) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19c, clause (15), an amount equal to one-fifth of
the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
amount of the addition made by the taxpayer under subdivision 19c, clause (15). The
resulting delayed depreciation cannot be less than zero; and

(20) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of the
amount of the addition.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2005.
new text end

Sec. 5.

Minnesota Statutes 2004, section 290.34, subdivision 1, is amended to read:

Subdivision 1.

Business conducted in such a way as to create losses or improper
taxable net income.

new text begin (a) new text end When any corporation liable to taxation under this chapter
conducts its business in such a manner as, directly or indirectly, to benefit its members
or stockholders or any person or corporation interested in such business or to reduce the
income attributable to this state by selling the commodities or services in which it deals
at less than the fair price which might be obtained therefor, or buying such commodities
or services at more than the fair price for which they might have been obtained, or when
any corporation, a substantial portion of whose shares is owned directly or indirectly by
another corporation, deals in the commodities or services of the latter corporation in such
a manner as to create a loss or improper net income or to reduce the taxable net income
attributable to this state, the commissioner of revenue may determine the amount of its
income so as to reflect what would have been its reasonable taxable net income but for the
arrangements causing the understatement of its taxable net income or the overstatement of
its losses, having regard to the fair profits which, but for any agreement, arrangement, or
understanding, might have been or could have been obtained from such business.

new text begin (b) When any corporation engages in a transaction or series of transactions whose
primary business purpose is the avoidance of tax, or engages in a transaction or series of
transactions without economic substance, that transaction or series of transactions is
disregarded and the commissioner shall determine taxable net income without regard for
the transaction or series of transactions.
new text end

new text begin EFFECTIVE DATE; INTENT OF LEGISLATURE. new text end

new text begin This section is effective the
day following final enactment and does not change Minnesota law, but merely clarifies
the legislature's intention with respect to transactions without economic substance or
business purpose.
new text end

Sec. 6.

Minnesota Statutes 2005 Supplement, section 477A.013, subdivision 8, is
amended to read:

Subd. 8.

City formula aid.

In calendar year 2004 and subsequent years, the
formula aid for a city is equal to deleted text begin the need increase percentage multiplied by deleted text end the difference
between (1) the city's revenue need multiplied by its population, and (2) the sum of the
city's net tax capacity multiplied by the tax effort rate; the taconite aids under sections
298.28 and 298.282 to any city except a city directly impacted by a taconite mine or plant,
multiplied by the following percentages:

(i) zero percent for aids payable in 2004;

(ii) 25 percent for aids payable in 2005;

(iii) 50 percent for aids payable in 2006;

(iv) 75 percent for aids payable in 2007; and

(v) 100 percent for aids payable in 2008 and thereafter.

For purposes of this subdivision, "a city directly impacted by a taconite mine or
plant" means: (1) Babbit, (2) Eveleth, (3) Hibbing, (4) Keewatin, (5) Mountain Iron, (6)
Silver Bay, or (7) Virginia.

No city may have a formula aid amount less than zero. deleted text begin The need increase percentage
must be the same for all cities.
deleted text end

deleted text begin The applicable need increase percentage must be calculated by the Department of
Revenue so that the total of the aid under subdivision 9 equals the total amount available
for aid under section after the subtraction under section deleted text begin 477A.014, subdivisions
4 and 5 deleted text end .
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with aids payable in 2007.
new text end

Sec. 7.

Minnesota Statutes 2004, section 477A.013, subdivision 9, is amended to read:

Subd. 9.

City aid distribution.

(a) In calendar year 2002 and thereafter, each
city shall receive an aid distribution equal to the sum of (1) the city formula aid under
subdivision 8, and (2) its city aid base.

(b) deleted text begin The aid for a city in calendar year 2004 shall not exceed the amount of its aid in
calendar year 2003 after the reductions under Laws 2003, First Special Session chapter 21,
article 5.
deleted text end

deleted text begin (c) For aids payable in 2005 and thereafter, the total aid for any city shall not exceed
the sum of (1) ten percent of the city's net levy for the year prior to the aid distribution
plus (2) its total aid in the previous year. deleted text end For aids payable in 2005 and thereafter, the total
aid for any city with a population of 2,500 or more may not decrease from its total aid
under this section in the previous year by an amount greater than ten percent of its net
levy in the year prior to the aid distribution.

deleted text begin (d) For aids payable in 2004 only, the total aid for a city with a population less than
2,500 may not be less than the amount it was certified to receive in 2003 minus the greater
of (1) the reduction to this aid payment in 2003 under Laws 2003, First Special Session
chapter 21, article 5, or (2) five percent of its 2003 aid amount. deleted text end new text begin (c) new text end For aids payable in
2005 and thereafter, the total aid for a city with a population less than 2,500 must not be
less than the amount it was certified to receive in the previous year minus five percent
of its 2003 certified aid amount.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with aids payable in 2007.
new text end

Sec. 8. new text begin PROPERTY TAX REBATE.
new text end

new text begin Subdivision 1. new text end

new text begin Eligibility; amount. new text end

new text begin (a) An owner of a homestead is eligible for
a property tax rebate under this section, unless the property taxes on the homestead are
delinquent within the meaning of Minnesota Statutes, section 290A.10.
new text end

new text begin (b) On or before October 1, 2006, the commissioner of revenue shall pay the eligible
owner a property tax rebate equal to 12 percent of the property taxes payable in 2006 on
the homestead, provided that the rebate may not exceed:
new text end

new text begin (1) $130, for a homestead with a taxable market value of $450,000 or less;
new text end

new text begin (2) $100, for a homestead with a taxable market value greater than $450,000 but
not greater than $475,000; and
new text end

new text begin (3) $50, for a homestead with a taxable market value greater than $475,000 but
not greater than $500,000.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the terms in this subdivision
have the meanings given them.
new text end

new text begin (b) "Commissioner" means the commissioner of revenue.
new text end

new text begin (c) "Homestead" means property qualifying as a homestead under Minnesota
Statutes, section 290A.03, subdivision 6, with a taxable market value of $500,000 or
less, for property taxes payable in 2006.
new text end

new text begin (d) "Owner" means the individual or trust that is the taxpayer of record for the
homestead when the property tax statement was prepared for property taxes payable
in 2006.
new text end

new text begin (e) "Property taxes payable" has the meaning given in Minnesota Statutes, section
290A.03, subdivision 13, except that any adjustments provided under Minnesota Statutes,
section 290A.03, subdivision 13, to line 1 of the property tax statement do not apply.
new text end

new text begin Subd. 3. new text end

new text begin County to provide data. new text end

new text begin (a) The county auditor shall provide the
following data to the commissioner of revenue for each homestead in the county:
new text end

new text begin (1) the name or names of the property owner or owners;
new text end

new text begin (2) the mailing address of the property owner;
new text end

new text begin (3) the Social Security number of each property owner;
new text end

new text begin (4) the amount of property taxes payable in 2006 for the homestead;
new text end

new text begin (5) the taxable market value of the homestead for property taxes payable in 2006; and
new text end

new text begin (6) whether property taxes are delinquent on the homestead within the meaning
of Minnesota Statutes, section 290A.10.
new text end

new text begin (b) The county auditor shall provide the data to the commissioner electronically in
the format and manner and at the time or times specified by the commissioner.
new text end

new text begin Subd. 4. new text end

new text begin Joint rebate rules. new text end

new text begin If a homestead is owned by two or more persons as
joint tenants or tenants in common, the commissioner shall pay the rebate to all of the
tenants jointly.
new text end

new text begin Subd. 5. new text end

new text begin Deceased individuals. new text end

new text begin If a rebate is received by the estate of a deceased
individual after the probate estate has been closed, and if the original rebate check is
returned to the commissioner with a copy of the decree of descent or final account of the
estate, Social Security numbers, and addresses of the beneficiaries, the commissioner may
issue separate checks in proportion to their share in the residuary estate in the names of
the residuary beneficiaries of the estate.
new text end

new text begin Subd. 6. new text end

new text begin Application of other law. new text end

new text begin (a) The property tax rebate is a "Minnesota tax
law" for purposes of Minnesota Statutes, section 270B.01, subdivision 8.
new text end

new text begin (b) The property tax rebate is "an overpayment of any tax collected by the
commissioner" for purposes of Minnesota Statutes, section 270C.64.
new text end

new text begin (c) The property tax rebate is a refund subject to revenue recapture under Minnesota
Statutes, chapter 270A. The commissioner of revenue shall remit the entire refund to the
claimant agency, which shall, upon the request of a joint owner who does not owe the debt,
refund a share of the joint property tax rebate to the joint owner who does not owe the debt
equal to the requesting owner's proportionate ownership of the property. The requesting
owner must certify this share to the agency, along with appropriate documentation.
new text end

new text begin Subd. 7. new text end

new text begin Lapse of entitlement. new text end

new text begin If the commissioner of revenue cannot locate an
individual entitled to a rebate by July 1, 2008, or if an individual to whom a rebate was
issued has not cashed the check by July 1, 2008, the right to the rebate lapses and the
check must be deposited in the general fund.
new text end

new text begin Subd. 8. new text end

new text begin Claims for unpaid rebates. new text end

new text begin Individuals entitled to a tax rebate under
subdivision 1 but who did not receive one, and individuals who receive a rebate that was
incorrectly computed, must file a claim with the commissioner before July 1, 2008, in a
form prescribed by the commissioner. These claims must be treated as if they are a claim
for refund under Minnesota Statutes, section 289A.50, subdivisions 4 and 7.
new text end

new text begin Subd. 9. new text end

new text begin Appropriation. new text end

new text begin The amount necessary to make the property tax rebates
and interest provided in this section is appropriated from the general fund to the
commissioner of revenue in fiscal year 2006 and is available until June 30, 2008.
new text end

new text begin Subd. 10. new text end

new text begin Illegally cashed checks. new text end

new text begin If a rebate check is cashed by someone other
than the payee or payees of the check, and the commissioner of revenue determines that
the check has been forged or improperly endorsed or the commissioner determines that
a rebate was overstated or erroneously issued, the commissioner may issue an order of
assessment for the amount of the check or the amount the check is overstated against
the person or persons cashing it. The assessment must be made within two years after
the check is cashed, but if cashing the check constitutes theft under Minnesota Statutes,
section 609.52, or forgery under Minnesota Statutes, section 609.631, the assessment can
be made at any time. The assessment may be appealed administratively and judicially. The
commissioner may take action to collect the assessment in the same manner as provided by
Minnesota Statutes, chapter 270C, for any other order of the commissioner assessing tax.
new text end

new text begin Subd. 11. new text end

new text begin Authority to contract with vendor. new text end

new text begin Notwithstanding Minnesota Statutes,
sections 9.031, 16A.40, 16B.49, and any other law to the contrary, the commissioner
of revenue may take whatever actions the commissioner deems necessary to pay the
rebates required by this section, and may, in consultation with the commissioner of
finance, contract with a private vendor or vendors to process, print, and mail the rebate
checks or warrants required under this section and receive and disburse state funds to pay
those checks or warrants.
new text end

new text begin Subd. 12. new text end

new text begin Electronic payment. new text end

new text begin The commissioner may pay rebates required by this
section by electronic funds transfer to individuals who requested that their 2005 individual
income tax refund be paid through electronic funds transfer. The commissioner may make
the electronic funds transfer payments to the same financial institution and into the same
account as the 2005 individual income tax refund.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after final enactment.
new text end

Sec. 9. new text begin APPROPRIATIONS.
new text end

new text begin (a) $....... is appropriated in fiscal year 2006 from the general fund to the
commissioner of revenue to administer the property tax rebates in section 8. Any
unencumbered balance remaining on June 30, 2006, does not cancel but is available
for expenditure by the commissioner of revenue until June 30, 2007. Notwithstanding
Minnesota Statutes, section 16A.285, the commissioner of revenue may not use this
appropriation for any purpose other than administering the property tax rebates. This is a
onetime appropriation and may not be added to the agency's budget base.
new text end

new text begin (b) $....... is appropriated in fiscal year 2006 from the general fund to the
commissioner of finance to pay the cost of clearing property tax rebate checks through
commercial banks. Any unencumbered balance remaining on June 30, 2006, does
not cancel but is available for expenditure by the commissioner until June 30, 2007.
Notwithstanding Minnesota Statutes, section 16A.285, the commissioner may not use this
appropriation for any purpose other than paying the cost of clearing rebate checks.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after final enactment.
new text end

Sec. 10. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2005 Supplement, section 477A.03, subdivision 2a, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in 2007.
new text end