Minnesota Office of the Revisor of Statutes
[*Add Subtitle/link: Office]

Menu

Revisor of Statutes Menu

HF 677

3rd Engrossment - 88th Legislature (2013 - 2014) Posted on 04/24/2013 09:47pm

KEY: stricken = removed, old language. underscored = added, new language.

Pdf

Version List Authors and Status

1.1A bill for an act
1.2 relating to financing of state and local government; making changes to individual
1.3income, corporate franchise, property, sales and use, estate, mineral, liquor,
1.4tobacco, aggregate materials, local, and other taxes and tax-related provisions;
1.5restoring the school district current year aid payment shift percentage to 90;
1.6conforming to federal section 179 expensing allowances; imposing an income
1.7surcharge; allowing an up-front exemption for capital equipment; modifying
1.8the definition of income for the property tax refund; decreasing the threshold
1.9percentage for the homestead credit refund for homeowners and the property
1.10tax refund for renters; increasing the maximum refunds for renters; changing
1.11property tax aids and credits; imposing an insurance surcharge; modifying
1.12pension aids; providing pension funding; changing provisions of the Sustainable
1.13Forest Incentive Act; modifying definitions for property taxes; providing
1.14exemptions; creating joint entertainment facilities coordination; imposing a
1.15sports memorabilia gross receipts tax; changing tax rates on tobacco and liquor;
1.16providing reimbursement for certain property tax abatement; modifying the small
1.17business investment tax credit; expanding the definition of domestic corporation
1.18to include foreign corporations incorporated in or doing business in tax havens;
1.19making changes to additions and subtractions from federal taxable income;
1.20changing rates for individuals, estates, and trusts; providing for charitable
1.21contributions and veterans jobs tax credits; modifying estate tax exclusions for
1.22qualifying small business and farm property; imposing a gift tax; expanding
1.23the sales tax to include suite and box seat rentals; modifying the definition
1.24of sales and purchase; changing the tax rate and modifying provisions for the
1.25rental motor vehicle tax; modifying nexus provisions; providing for multiple
1.26points of use certificates; modifying exemptions; authorizing local sales taxes;
1.27authorizing economic development powers; providing authority, organization,
1.28powers, and duties for development of a Destination Medical Center; authorizing
1.29state infrastructure aid; imposing a tax on extraction and processing of fracturing
1.30sand; providing a taconite production tax grant for water supply improvements;
1.31authorizing taconite production tax bonds for grants to school districts; modifying
1.32and providing provisions for public finance; modifying the definition of market
1.33value for tax, debt, and other purposes; requiring labor peace agreements on
1.34certain qualifying projects; making conforming, policy, and technical changes to
1.35tax provisions; requiring studies and reports; appropriating money;amending
1.36Minnesota Statutes 2012, sections 16A.152, subdivision 2; 16A.46; 38.18;
1.3740A.15, subdivision 2; 69.011, subdivision 1; 69.021, subdivisions 7, 8, by
1.38adding a subdivision; 88.51, subdivision 3; 103B.102, subdivision 3; 103B.245,
1.39subdivision 3; 103B.251, subdivision 8; 103B.335; 103B.3369, subdivision 5;
2.1103B.635, subdivision 2; 103B.691, subdivision 2; 103C.501, subdivision 4;
2.2103D.905, subdivisions 2, 3, 8; 103F.405, subdivision 1; 116J.8737, subdivisions
2.31, 2, 8; 117.025, subdivision 7; 118A.04, subdivision 3; 118A.05, subdivision
2.45; 123A.455, subdivision 1; 123B.75, subdivision 5; 126C.48, subdivision 8;
2.5127A.45, subdivision 2; 127A.48, subdivision 1; 138.053; 144F.01, subdivision
2.64; 162.07, subdivisions 3, 4; 163.04, subdivision 3; 163.051; 163.06, subdivision
2.76; 165.10, subdivision 1; 168.012, subdivision 9, by adding a subdivision;
2.8216C.436, subdivision 7; 237.52, subdivision 3, by adding a subdivision;
2.9270.077; 270.41, subdivision 5; 270B.01, subdivision 8; 270B.12, subdivision
2.104; 270C.34, subdivision 1; 270C.38, subdivision 1; 270C.42, subdivision 2;
2.11270C.56, subdivision 1; 271.06, by adding a subdivision; 272.01, subdivision 2;
2.12272.02, subdivisions 39, 97, by adding subdivisions; 272.03, subdivision 9, by
2.13adding subdivisions; 273.032; 273.11, subdivision 1, by adding a subdivision;
2.14273.114, subdivision 6; 273.124, subdivisions 3a, 13; 273.13, subdivisions
2.1521b, 23, 25; 273.1398, subdivisions 3, 4; 273.19, subdivision 1; 273.372,
2.16subdivision 4; 273.39; 275.011, subdivision 1; 275.077, subdivision 2; 275.71,
2.17subdivision 4; 276.04, subdivision 2; 276A.01, subdivisions 10, 12, 13, 15;
2.18276A.06, subdivision 10; 279.01, subdivision 1, by adding a subdivision; 279.02;
2.19279.06, subdivision 1; 287.05, by adding a subdivision; 287.08; 287.20, by
2.20adding a subdivision; 287.23, subdivision 1; 287.385, subdivision 7; 289A.02,
2.21subdivision 7; 289A.08, subdivisions 1, 3, 7; 289A.10, subdivision 1, by adding
2.22a subdivision; 289A.12, subdivision 14, by adding a subdivision; 289A.18, by
2.23adding a subdivision; 289A.20, subdivisions 3, 4, by adding a subdivision;
2.24289A.26, subdivisions 3, 4, 7, 9; 289A.55, subdivision 9; 289A.60, subdivision
2.254; 290.01, subdivisions 5, 19, as amended, 19a, 19b, 19c, 19d, 31, as amended,
2.26by adding subdivisions; 290.06, subdivisions 2c, 2d, by adding subdivisions;
2.27290.067, subdivisions 1, 2a; 290.0671, subdivision 1; 290.0675, subdivision 1;
2.28290.0677, subdivision 2; 290.068, subdivisions 3, 6a; 290.0681, subdivisions 1,
2.293, 4, 5; 290.091, subdivision 2; 290.0921, subdivision 3; 290.0922, subdivision 1;
2.30290.17, subdivision 4; 290.21, subdivision 4; 290.9705, subdivision 1; 290A.03,
2.31subdivisions 3, 15, as amended; 290A.04, subdivisions 2, 2a, 4; 290B.04,
2.32subdivision 2; 290C.02, subdivision 6; 290C.05; 290C.07; 291.005, subdivision
2.331; 291.03, subdivisions 1, 8, 9, 10, 11, by adding a subdivision; 296A.01,
2.34subdivision 19, by adding a subdivision; 296A.22, subdivisions 1, 3; 297A.61,
2.35subdivisions 3, 4, by adding a subdivision; 297A.64, subdivisions 1, 2; 297A.66,
2.36by adding a subdivision; 297A.665; 297A.668, by adding a subdivision;
2.37297A.67, subdivision 7; 297A.68, subdivision 5; 297A.70, subdivisions 4, 8, by
2.38adding subdivisions; 297A.71, by adding subdivisions; 297A.75, subdivisions 1,
2.392, 3; 297A.815, subdivision 3; 297A.993, subdivisions 1, 2; 297B.11; 297E.021,
2.40subdivision 2; 297E.14, subdivision 7; 297F.01, subdivisions 3, 19, 23, by
2.41adding a subdivision; 297F.05, subdivisions 1, 3, 4, by adding a subdivision;
2.42297F.09, subdivision 9; 297F.18, subdivision 7; 297F.24, subdivision 1; 297F.25,
2.43subdivision 1; 297G.03, subdivision 1, by adding a subdivision; 297G.04;
2.44297G.09, subdivision 8; 297G.17, subdivision 7; 297I.05, subdivisions 7, 11, 12;
2.45297I.30, subdivisions 1, 2; 297I.80, subdivision 1; 298.01, subdivisions 3, 3b,
2.464; 298.018; 298.227, as amended; 298.24, subdivision 1; 298.28, subdivisions
2.474, 6, 10; 298.75, subdivision 2; 325D.32, subdivision 2; 353G.08, subdivision
2.482; 365.025, subdivision 4; 366.095, subdivision 1; 366.27; 368.01, subdivision
2.4923; 368.47; 370.01; 373.01, subdivisions 1, 3; 373.40, subdivisions 1, 2, 4;
2.50375.167, subdivision 1; 375.18, subdivision 3; 375.555; 383B.152; 383B.245;
2.51383B.73, subdivision 1; 383D.41, by adding a subdivision; 383E.20; 383E.23;
2.52385.31; 394.36, subdivision 1; 398A.04, subdivision 8; 401.05, subdivision 3;
2.53403.02, subdivision 21, by adding subdivisions; 403.06, subdivision 1a; 403.11,
2.54subdivision 1, by adding a subdivision; 410.32; 412.221, subdivision 2; 412.301;
2.55428A.02, subdivision 1; 430.102, subdivision 2; 447.10; 450.19; 450.25;
2.56458A.10; 458A.31, subdivision 1; 465.04; 469.033, subdivision 6; 469.034,
2.57subdivision 2; 469.053, subdivisions 4, 4a, 6; 469.071, subdivision 5; 469.107,
2.58subdivision 1; 469.169, by adding a subdivision; 469.176, subdivisions 4c, 4g,
3.16; 469.177, by adding a subdivision; 469.180, subdivision 2; 469.187; 469.190,
3.2subdivision 7, by adding a subdivision; 469.206; 469.319, subdivision 4; 469.340,
3.3subdivision 4; 471.24; 471.571, subdivisions 1, 2; 471.73; 473.325, subdivision
3.42; 473.39, by adding a subdivision; 473.629; 473.661, subdivision 3; 473.667,
3.5subdivision 9; 473.671; 473.711, subdivision 2a; 473F.02, subdivisions 12, 14,
3.615, 23; 473F.08, subdivision 10, by adding a subdivision; 474A.04, subdivision
3.71a; 474A.062; 474A.091, subdivision 3a; 475.521, subdivisions 1, 2, 4; 475.53,
3.8subdivisions 1, 3, 4; 475.58, subdivisions 2, 3b; 475.73, subdivision 1; 477A.011,
3.9subdivisions 20, 30, 32, 34, 42, by adding subdivisions; 477A.0124, subdivision
3.102; 477A.013, subdivisions 8, 9, by adding a subdivision; 477A.015; 477A.03,
3.11subdivisions 2a, 2b, by adding a subdivision; 641.23; 641.24; 645.44, by adding
3.12a subdivision; Laws 1971, chapter 773, section 1, subdivision 2, as amended;
3.13Laws 1988, chapter 645, section 3, as amended; Laws 1993, chapter 375, article
3.149, section 46, subdivisions 2, as amended, 5, as amended; Laws 1998, chapter
3.15389, article 8, section 43, subdivisions 1, 3, as amended, 5, as amended; Laws
3.161999, chapter 243, article 6, section 11; Laws 2002, chapter 377, article 3, section
3.1725, as amended; Laws 2005, First Special Session chapter 3, article 5, section
3.1837, subdivisions 2, 4; Laws 2008, chapter 366, article 5, sections 26; 33; 34, as
3.19amended; article 7, section 19, subdivision 3, as amended; Laws 2010, chapter
3.20216, section 55; Laws 2010, chapter 389, article 1, section 12; article 5, section 6,
3.21subdivisions 4, 6; Laws 2010, First Special Session chapter 1, article 13, section 4,
3.22subdivision 1, as amended; proposing coding for new law in Minnesota Statutes,
3.23chapters 116C; 287; 290; 290A; 292; 295; 297I; 403; 435; 469; proposing coding
3.24for new law as Minnesota Statutes, chapter 297J; repealing Minnesota Statutes
3.252012, sections 16A.725; 256.9658; 272.69; 273.11, subdivisions 1a, 22; 276A.01,
3.26subdivision 11; 289A.60, subdivision 31; 290.01, subdivision 6b; 290.06,
3.27subdivision 22a; 290.0672; 290.0921, subdivision 7; 383A.80, subdivision 4;
3.28383B.80, subdivision 4; 428A.101; 428A.21; 473F.02, subdivision 13; 477A.011,
3.29subdivisions 2a, 19, 21, 29, 31, 32, 33, 36, 39, 40, 41, 42; 477A.013, subdivisions
3.3011, 12; 477A.0133; 477A.0134; Laws 2006, chapter 259, article 11, section 3, as
3.31amended; Laws 2009, chapter 88, article 4, section 23, as amended.
3.32BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

3.33ARTICLE 1
3.34ONE-TIME PROVISIONS

3.35    Section 1. Minnesota Statutes 2012, section 16A.152, subdivision 2, is amended to read:
3.36    Subd. 2. Additional revenues; priority. (a) If on the basis of a forecast of general
3.37fund revenues and expenditures, the commissioner of management and budget determines
3.38that there will be a positive unrestricted budgetary general fund balance at the close of
3.39the biennium, the commissioner of management and budget must allocate money to the
3.40following accounts and purposes in priority order:
3.41    (1) the cash flow account established in subdivision 1 until that account reaches
3.42$350,000,000;
3.43    (2) the budget reserve account established in subdivision 1a until that account
3.44reaches $653,000,000;
3.45    (3) the amount necessary to increase the aid payment schedule for school district
3.46aids and credits payments in section 127A.45 to not more than 90 percent rounded to the
4.1nearest tenth of a percent without exceeding the amount available and with any remaining
4.2funds deposited in the budget reserve;
4.3    (4) the amount necessary to restore all or a portion of the net aid reductions under
4.4section 127A.441 and to reduce the property tax revenue recognition shift under section
4.5123B.75, subdivision 5 , by the same amount;
4.6(5) to reduce the rate of the surcharge in section 290.06, subdivision 2g, for taxable
4.7years beginning after December 31, 2013, and before January 1, 2015, to not less than
4.8zero with the rate rounded to the nearest tenth of a percent, without exceeding the amount
4.9available, and with any remaining funds deposited in the budget reserve; and
4.10(5) (6) to the state airports fund, the amount necessary to restore the amount
4.11transferred from the state airports fund under Laws 2008, chapter 363, article 11, section
4.123, subdivision 5.
4.13    (b) The amounts necessary to meet the requirements of this section are appropriated
4.14from the general fund within two weeks after the forecast is released or, in the case of
4.15transfers under paragraph (a), clauses (3) and (4), as necessary to meet the appropriations
4.16schedules otherwise established in statute.
4.17    (c) The commissioner of management and budget shall certify the total dollar
4.18amount of the reductions under paragraph (a), clauses (3) and (4), to the commissioner of
4.19education. The commissioner of education shall increase the aid payment percentage and
4.20reduce the property tax shift percentage by these amounts and apply those reductions to
4.21the current fiscal year and thereafter.
4.22(d) The commissioner of management and budget shall certify the total dollar
4.23amount available under paragraph (a), clause (5), to the commissioner of revenue. The
4.24commissioner of revenue shall determine the percentage reduction in the surcharge rate
4.25for taxable years beginning after December 31, 2013, and before January 1, 2015, and
4.26shall reduce the surcharge rate.

4.27    Sec. 2. Minnesota Statutes 2012, section 123B.75, subdivision 5, is amended to read:
4.28    Subd. 5. Levy recognition. (a) For fiscal years 2009 and 2010, in June of each
4.29year, the school district must recognize as revenue, in the fund for which the levy was
4.30made, the lesser of:
4.31(1) the sum of May, June, and July school district tax settlement revenue received in
4.32that calendar year, plus general education aid according to section 126C.13, subdivision
4.334
, received in July and August of that calendar year; or
4.34(2) the sum of:
5.1(i) 31 percent of the referendum levy certified according to section 126C.17, in
5.2calendar year 2000; and
5.3(ii) the entire amount of the levy certified in the prior calendar year according to
5.4section 124D.86, subdivision 4, for school districts receiving revenue under sections
5.5124D.86, subdivision 3, clauses (1), (2), and (3); 126C.41, subdivisions 1, 2, paragraph (a),
5.6and 3
, paragraphs (b), (c), and (d); 126C.43, subdivision 2; and 126C.48, subdivision 6; plus
5.7(iii) zero percent of the amount of the levy certified in the prior calendar year for the
5.8school district's general and community service funds, plus or minus auditor's adjustments,
5.9not including the levy portions that are assumed by the state, that remains after subtracting
5.10the referendum levy certified according to section 126C.17 and the amount recognized
5.11according to item (ii).
5.12(b) (a) For fiscal year 2011 and later years 2011, 2012, and 2013, in June of each
5.13year, the school district must recognize as revenue, in the fund for which the levy was
5.14made, the lesser of:
5.15(1) the sum of May, June, and July school district tax settlement revenue received in
5.16that calendar year, plus general education aid according to section 126C.13, subdivision
5.174
, received in July and August of that calendar year; or
5.18(2) the sum of:
5.19(i) the greater of 48.6 percent of the referendum levy certified according to section
5.20126C.17 in the prior calendar year, or 31 percent of the referendum levy certified
5.21according to section 126C.17 in calendar year 2000; plus
5.22(ii) the entire amount of the levy certified in the prior calendar year according to
5.23section 124D.4531, 124D.86, subdivision 4, for school districts receiving revenue under
5.24sections 124D.86, subdivision 3, clauses (1), (2), and (3); 126C.41, subdivisions 1, 2,
5.25paragraph (a), and 3, paragraphs (b), (c), and (d); 126C.43, subdivision 2; and 126C.48,
5.26subdivision 6; plus
5.27(iii) 48.6 percent of the amount of the levy certified in the prior calendar year for the
5.28school district's general and community service funds, plus or minus auditor's adjustments,
5.29that remains after subtracting the referendum levy certified according to section 126C.17
5.30and the amount recognized according to item (ii).
5.31(b) For fiscal year 2014 and later years, in June of each year, the school district must
5.32recognize as revenue, in the fund for which the levy was made, the lesser of:
5.33(1) the sum of May, June, and July school district tax settlement revenue received in
5.34that calendar year, plus general education aid according to section 126C.13, subdivision
5.354
, received in July and August of that calendar year; or
5.36(2) the sum of:
6.1(i) 31 percent of the referendum levy certified according to section 126C.17 in
6.2calendar year 2000;
6.3(ii) the entire amount of the levy certified in the prior calendar year according to
6.4section 124D.4531; 124D.86, subdivision 4, for school districts receiving revenue under
6.5sections 124D.86, subdivision 3, clauses (1) to (3); 126C.41, subdivisions 1, 2, paragraph
6.6(a), and 3, paragraphs (b), (c), and (d); 126C.43, subdivision 2; and 126C.48, subdivision
6.76; and
6.8(iii) zero percent of the amount of the levy certified in the prior calendar year for the
6.9school district's general and community service funds, plus or minus auditor's adjustments,
6.10that remains after subtracting the referendum levy certified according to section 126C.17
6.11
and the amount recognized according to item (ii).
6.12EFFECTIVE DATE.This section is effective July 1, 2013.

6.13    Sec. 3. Minnesota Statutes 2012, section 127A.45, subdivision 2, is amended to read:
6.14    Subd. 2. Definitions. (a) "Other district receipts" means payments by county
6.15treasurers pursuant to section 276.10, apportionments from the school endowment fund
6.16pursuant to section 127A.33, apportionments by the county auditor pursuant to section
6.17127A.34, subdivision 2 , and payments to school districts by the commissioner of revenue
6.18pursuant to chapter 298.
6.19(b) "Cumulative amount guaranteed" means the product of
6.20(1) the cumulative disbursement percentage shown in subdivision 3; times
6.21(2) the sum of
6.22(i) the current year aid payment percentage of the estimated aid and credit
6.23entitlements paid according to subdivision 13; plus
6.24(ii) 100 percent of the entitlements paid according to subdivisions 11 and 12; plus
6.25(iii) the other district receipts.
6.26(c) "Payment date" means the date on which state payments to districts are made
6.27by the electronic funds transfer method. If a payment date falls on a Saturday, a Sunday,
6.28or a weekday which is a legal holiday, the payment shall be made on the immediately
6.29preceding business day. The commissioner may make payments on dates other than
6.30those listed in subdivision 3, but only for portions of payments from any preceding
6.31payment dates which could not be processed by the electronic funds transfer method due
6.32to documented extenuating circumstances.
6.33(d) The current year aid payment percentage equals 73 in fiscal year 2010 and 70 in
6.34fiscal year 2011, and 60 90 in fiscal years 2012 2014 and later.
7.1EFFECTIVE DATE.This section is effective July 1, 2013.

7.2    Sec. 4. Minnesota Statutes 2012, section 290.01, subdivision 19a, is amended to read:
7.3    Subd. 19a. Additions to federal taxable income. For individuals, estates, and
7.4trusts, there shall be added to federal taxable income:
7.5    (1)(i) interest income on obligations of any state other than Minnesota or a political
7.6or governmental subdivision, municipality, or governmental agency or instrumentality
7.7of any state other than Minnesota exempt from federal income taxes under the Internal
7.8Revenue Code or any other federal statute; and
7.9    (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
7.10Code, except:
7.11(A) the portion of the exempt-interest dividends exempt from state taxation under
7.12the laws of the United States; and
7.13(B) the portion of the exempt-interest dividends derived from interest income
7.14on obligations of the state of Minnesota or its political or governmental subdivisions,
7.15municipalities, governmental agencies or instrumentalities, but only if the portion of the
7.16exempt-interest dividends from such Minnesota sources paid to all shareholders represents
7.1795 percent or more of the exempt-interest dividends, including any dividends exempt
7.18under subitem (A), that are paid by the regulated investment company as defined in section
7.19851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
7.20defined in section 851(g) of the Internal Revenue Code, making the payment; and
7.21    (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
7.22government described in section 7871(c) of the Internal Revenue Code shall be treated as
7.23interest income on obligations of the state in which the tribe is located;
7.24    (2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid or
7.25accrued within the taxable year under this chapter and the amount of taxes based on net
7.26income paid, sales and use, motor vehicle sales, or excise taxes paid to any other state
7.27or to any province or territory of Canada, to the extent allowed as a deduction under
7.28section 63(d) of the Internal Revenue Code, but the addition may not be more than the
7.29amount by which the itemized deductions as allowed under section 63(d) of the Internal
7.30Revenue Code exceeds the amount of the standard deduction as defined in section 63(c) of
7.31the Internal Revenue Code, disregarding the amounts allowed under sections 63(c)(1)(C)
7.32and 63(c)(1)(E) of the Internal Revenue Code, minus any addition that would have been
7.33required under clause (21) if the taxpayer had claimed the standard deduction. For the
7.34purpose of this paragraph, the disallowance of itemized deductions under section 68 of
8.1the Internal Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise
8.2taxes are the last itemized deductions disallowed;
8.3    (3) the capital gain amount of a lump-sum distribution to which the special tax under
8.4section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
8.5    (4) the amount of income taxes paid or accrued within the taxable year under this
8.6chapter and taxes based on net income paid to any other state or any province or territory
8.7of Canada, to the extent allowed as a deduction in determining federal adjusted gross
8.8income. For the purpose of this paragraph, income taxes do not include the taxes imposed
8.9by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
8.10    (5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10
8.11other than expenses or interest used in computing net interest income for the subtraction
8.12allowed under subdivision 19b, clause (1);
8.13    (6) the amount of a partner's pro rata share of net income which does not flow
8.14through to the partner because the partnership elected to pay the tax on the income under
8.15section 6242(a)(2) of the Internal Revenue Code;
8.16    (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
8.17Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
8.18in the taxable year generates a deduction for depreciation under section 168(k) and the
8.19activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
8.20the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
8.21limited to excess of the depreciation claimed by the activity under section 168(k) over the
8.22amount of the loss from the activity that is not allowed in the taxable year. In succeeding
8.23taxable years when the losses not allowed in the taxable year are allowed, the depreciation
8.24under section 168(k) is allowed;
8.25    (8) for taxable years beginning before January 1, 2013, 80 percent of the amount by
8.26which the deduction allowed by section 179 of the Internal Revenue Code exceeds the
8.27deduction allowable by section 179 of the Internal Revenue Code of 1986, as amended
8.28through December 31, 2003;
8.29    (9) to the extent deducted in computing federal taxable income, the amount of the
8.30deduction allowable under section 199 of the Internal Revenue Code;
8.31    (10) for taxable years beginning before January 1, 2013, the exclusion allowed under
8.32section 139A of the Internal Revenue Code for federal subsidies for prescription drug plans;
8.33(11) the amount of expenses disallowed under section 290.10, subdivision 2;
8.34    (12) for taxable years beginning before January 1, 2010, the amount deducted for
8.35qualified tuition and related expenses under section 222 of the Internal Revenue Code, to
8.36the extent deducted from gross income;
9.1    (13) for taxable years beginning before January 1, 2010, the amount deducted for
9.2certain expenses of elementary and secondary school teachers under section 62(a)(2)(D)
9.3of the Internal Revenue Code, to the extent deducted from gross income;
9.4(14) the additional standard deduction for property taxes payable that is allowable
9.5under section 63(c)(1)(C) of the Internal Revenue Code;
9.6(15) the additional standard deduction for qualified motor vehicle sales taxes
9.7allowable under section 63(c)(1)(E) of the Internal Revenue Code;
9.8(16) discharge of indebtedness income resulting from reacquisition of business
9.9indebtedness and deferred under section 108(i) of the Internal Revenue Code;
9.10(17) the amount of unemployment compensation exempt from tax under section
9.1185(c) of the Internal Revenue Code;
9.12(18) changes to federal taxable income attributable to a net operating loss that the
9.13taxpayer elected to carry back for more than two years for federal purposes but for which
9.14the losses can be carried back for only two years under section 290.095, subdivision
9.1511, paragraph (c);
9.16(19) to the extent included in the computation of federal taxable income in taxable
9.17years beginning after December 31, 2010, the amount of disallowed itemized deductions,
9.18but the amount of disallowed itemized deductions plus the addition required under clause
9.19(2) may not be more than the amount by which the itemized deductions as allowed under
9.20section 63(d) of the Internal Revenue Code exceeds the amount of the standard deduction
9.21as defined in section 63(c) of the Internal Revenue Code, disregarding the amounts
9.22allowed under sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue Code, and
9.23reduced by any addition that would have been required under clause (21) if the taxpayer
9.24had claimed the standard deduction:
9.25(i) the amount of disallowed itemized deductions is equal to the lesser of:
9.26(A) three percent of the excess of the taxpayer's federal adjusted gross income
9.27over the applicable amount; or
9.28(B) 80 percent of the amount of the itemized deductions otherwise allowable to the
9.29taxpayer under the Internal Revenue Code for the taxable year;
9.30(ii) the term "applicable amount" means $100,000, or $50,000 in the case of a
9.31married individual filing a separate return. Each dollar amount shall be increased by
9.32an amount equal to:
9.33(A) such dollar amount, multiplied by
9.34(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
9.35Revenue Code for the calendar year in which the taxable year begins, by substituting
9.36"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof;
10.1(iii) the term "itemized deductions" does not include:
10.2(A) the deduction for medical expenses under section 213 of the Internal Revenue
10.3Code;
10.4(B) any deduction for investment interest as defined in section 163(d) of the Internal
10.5Revenue Code; and
10.6(C) the deduction under section 165(a) of the Internal Revenue Code for casualty or
10.7theft losses described in paragraph (2) or (3) of section 165(c) of the Internal Revenue
10.8Code or for losses described in section 165(d) of the Internal Revenue Code;
10.9(20) to the extent included in federal taxable income in taxable years beginning after
10.10December 31, 2010, the amount of disallowed personal exemptions for taxpayers with
10.11federal adjusted gross income over the threshold amount:
10.12(i) the disallowed personal exemption amount is equal to the dollar amount of the
10.13personal exemptions claimed by the taxpayer in the computation of federal taxable income
10.14multiplied by the applicable percentage;
10.15(ii) "applicable percentage" means two percentage points for each $2,500 (or
10.16fraction thereof) by which the taxpayer's federal adjusted gross income for the taxable
10.17year exceeds the threshold amount. In the case of a married individual filing a separate
10.18return, the preceding sentence shall be applied by substituting "$1,250" for "$2,500." In
10.19no event shall the applicable percentage exceed 100 percent;
10.20(iii) the term "threshold amount" means:
10.21(A) $150,000 in the case of a joint return or a surviving spouse;
10.22(B) $125,000 in the case of a head of a household;
10.23(C) $100,000 in the case of an individual who is not married and who is not a
10.24surviving spouse or head of a household; and
10.25(D) $75,000 in the case of a married individual filing a separate return; and
10.26(iv) the thresholds shall be increased by an amount equal to:
10.27(A) such dollar amount, multiplied by
10.28(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
10.29Revenue Code for the calendar year in which the taxable year begins, by substituting
10.30"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof; and
10.31(21) to the extent deducted in the computation of federal taxable income, for taxable
10.32years beginning after December 31, 2010, and before January 1, 2013, the difference
10.33between the standard deduction allowed under section 63(c) of the Internal Revenue Code
10.34and the standard deduction allowed for 2011 and 2012 under the Internal Revenue Code
10.35as amended through December 1, 2010.
11.1EFFECTIVE DATE.This section is effective for taxable years beginning after
11.2December 31, 2012.

11.3    Sec. 5. Minnesota Statutes 2012, section 290.01, subdivision 19c, is amended to read:
11.4    Subd. 19c. Corporations; additions to federal taxable income. For corporations,
11.5there shall be added to federal taxable income:
11.6    (1) the amount of any deduction taken for federal income tax purposes for income,
11.7excise, or franchise taxes based on net income or related minimum taxes, including but not
11.8limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
11.9another state, a political subdivision of another state, the District of Columbia, or any
11.10foreign country or possession of the United States;
11.11    (2) interest not subject to federal tax upon obligations of: the United States, its
11.12possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
11.13state, any of its political or governmental subdivisions, any of its municipalities, or any
11.14of its governmental agencies or instrumentalities; the District of Columbia; or Indian
11.15tribal governments;
11.16    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
11.17Revenue Code;
11.18    (4) the amount of any net operating loss deduction taken for federal income tax
11.19purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
11.20deduction under section 810 of the Internal Revenue Code;
11.21    (5) the amount of any special deductions taken for federal income tax purposes
11.22under sections 241 to 247 and 965 of the Internal Revenue Code;
11.23    (6) losses from the business of mining, as defined in section 290.05, subdivision 1,
11.24clause (a), that are not subject to Minnesota income tax;
11.25    (7) the amount of any capital losses deducted for federal income tax purposes under
11.26sections 1211 and 1212 of the Internal Revenue Code;
11.27    (8) the exempt foreign trade income of a foreign sales corporation under sections
11.28921(a) and 291 of the Internal Revenue Code;
11.29    (9) the amount of percentage depletion deducted under sections 611 through 614 and
11.30291 of the Internal Revenue Code;
11.31    (10) for certified pollution control facilities placed in service in a taxable year
11.32beginning before December 31, 1986, and for which amortization deductions were elected
11.33under section 169 of the Internal Revenue Code of 1954, as amended through December
11.3431, 1985, the amount of the amortization deduction allowed in computing federal taxable
11.35income for those facilities;
12.1    (11) the amount of any deemed dividend from a foreign operating corporation
12.2determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend
12.3shall be reduced by the amount of the addition to income required by clauses (20), (21),
12.4(22), and (23);
12.5    (12) the amount of a partner's pro rata share of net income which does not flow
12.6through to the partner because the partnership elected to pay the tax on the income under
12.7section 6242(a)(2) of the Internal Revenue Code;
12.8    (13) the amount of net income excluded under section 114 of the Internal Revenue
12.9Code;
12.10    (14) any increase in subpart F income, as defined in section 952(a) of the Internal
12.11Revenue Code, for the taxable year when subpart F income is calculated without regard to
12.12the provisions of Division C, title III, section 303(b) of Public Law 110-343;
12.13    (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
12.14and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
12.15has an activity that in the taxable year generates a deduction for depreciation under
12.16section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
12.17that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
12.18under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
12.19depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
12.20amount of the loss from the activity that is not allowed in the taxable year. In succeeding
12.21taxable years when the losses not allowed in the taxable year are allowed, the depreciation
12.22under section 168(k)(1)(A) and (k)(4)(A) is allowed;
12.23    (16) for taxable years beginning before January 1, 2013, 80 percent of the amount by
12.24which the deduction allowed by section 179 of the Internal Revenue Code exceeds the
12.25deduction allowable by section 179 of the Internal Revenue Code of 1986, as amended
12.26through December 31, 2003;
12.27    (17) to the extent deducted in computing federal taxable income, the amount of the
12.28deduction allowable under section 199 of the Internal Revenue Code;
12.29    (18) for taxable years beginning before January 1, 2013, the exclusion allowed under
12.30section 139A of the Internal Revenue Code for federal subsidies for prescription drug plans;
12.31    (19) the amount of expenses disallowed under section 290.10, subdivision 2;
12.32    (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
12.33accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
12.34of a corporation that is a member of the taxpayer's unitary business group that qualifies
12.35as a foreign operating corporation. For purposes of this clause, intangible expenses and
12.36costs include:
13.1    (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
13.2use, maintenance or management, ownership, sale, exchange, or any other disposition of
13.3intangible property;
13.4    (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
13.5transactions;
13.6    (iii) royalty, patent, technical, and copyright fees;
13.7    (iv) licensing fees; and
13.8    (v) other similar expenses and costs.
13.9For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
13.10applications, trade names, trademarks, service marks, copyrights, mask works, trade
13.11secrets, and similar types of intangible assets.
13.12This clause does not apply to any item of interest or intangible expenses or costs paid,
13.13accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
13.14to such item of income to the extent that the income to the foreign operating corporation
13.15is income from sources without the United States as defined in subtitle A, chapter 1,
13.16subchapter N, part 1, of the Internal Revenue Code;
13.17    (21) except as already included in the taxpayer's taxable income pursuant to clause
13.18(20), any interest income and income generated from intangible property received or
13.19accrued by a foreign operating corporation that is a member of the taxpayer's unitary
13.20group. For purposes of this clause, income generated from intangible property includes:
13.21    (i) income related to the direct or indirect acquisition, use, maintenance or
13.22management, ownership, sale, exchange, or any other disposition of intangible property;
13.23    (ii) income from factoring transactions or discounting transactions;
13.24    (iii) royalty, patent, technical, and copyright fees;
13.25    (iv) licensing fees; and
13.26    (v) other similar income.
13.27For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
13.28applications, trade names, trademarks, service marks, copyrights, mask works, trade
13.29secrets, and similar types of intangible assets.
13.30This clause does not apply to any item of interest or intangible income received or accrued
13.31by a foreign operating corporation with respect to such item of income to the extent that
13.32the income is income from sources without the United States as defined in subtitle A,
13.33chapter 1, subchapter N, part 1, of the Internal Revenue Code;
13.34    (22) the dividends attributable to the income of a foreign operating corporation that
13.35is a member of the taxpayer's unitary group in an amount that is equal to the dividends
14.1paid deduction of a real estate investment trust under section 561(a) of the Internal
14.2Revenue Code for amounts paid or accrued by the real estate investment trust to the
14.3foreign operating corporation;
14.4    (23) the income of a foreign operating corporation that is a member of the taxpayer's
14.5unitary group in an amount that is equal to gains derived from the sale of real or personal
14.6property located in the United States;
14.7    (24) for taxable years beginning before January 1, 2010, the additional amount
14.8allowed as a deduction for donation of computer technology and equipment under section
14.9170(e)(6) of the Internal Revenue Code, to the extent deducted from taxable income; and
14.10(25) discharge of indebtedness income resulting from reacquisition of business
14.11indebtedness and deferred under section 108(i) of the Internal Revenue Code.
14.12EFFECTIVE DATE.This section is effective for taxable years beginning after
14.13December 31, 2012.

14.14    Sec. 6. Minnesota Statutes 2012, section 290.06, is amended by adding a subdivision
14.15to read:
14.16    Subd. 2g. Income surcharge. (a) In addition to the tax computed under subdivision
14.172c and section 290.091, for taxable years beginning after December 31, 2012, and
14.18before January 1, 2015, there is a surcharge imposed on individuals, estates, and trusts.
14.19The surcharge equals four percent of taxable net income over a threshold. For married
14.20individuals filing separately, estates, and trusts, the threshold is $250,000. For all other
14.21filers, the threshold is $500,000.
14.22(b) For a nonresident or part-year resident, the surcharge must be allocated based on
14.23the percentage calculated under section 290.06, subdivision 2c, paragraph (e).
14.24EFFECTIVE DATE.This section is effective for taxable years beginning after
14.25December 31, 2012.

14.26    Sec. 7. Minnesota Statutes 2012, section 297A.68, subdivision 5, is amended to read:
14.27    Subd. 5. Capital equipment. (a) Capital equipment is exempt. The tax must be
14.28imposed and collected as if the rate under section 297A.62, subdivision 1, applied, and
14.29then refunded in the manner provided in section 297A.75.
14.30"Capital equipment" means machinery and equipment purchased or leased, and used
14.31in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining,
14.32or refining tangible personal property to be sold ultimately at retail if the machinery and
14.33equipment are essential to the integrated production process of manufacturing, fabricating,
15.1mining, or refining. Capital equipment also includes machinery and equipment
15.2used primarily to electronically transmit results retrieved by a customer of an online
15.3computerized data retrieval system.
15.4(b) Capital equipment includes, but is not limited to:
15.5(1) machinery and equipment used to operate, control, or regulate the production
15.6equipment;
15.7(2) machinery and equipment used for research and development, design, quality
15.8control, and testing activities;
15.9(3) environmental control devices that are used to maintain conditions such as
15.10temperature, humidity, light, or air pressure when those conditions are essential to and are
15.11part of the production process;
15.12(4) materials and supplies used to construct and install machinery or equipment;
15.13(5) repair and replacement parts, including accessories, whether purchased as spare
15.14parts, repair parts, or as upgrades or modifications to machinery or equipment;
15.15(6) materials used for foundations that support machinery or equipment;
15.16(7) materials used to construct and install special purpose buildings used in the
15.17production process;
15.18(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed
15.19as part of the delivery process regardless if mounted on a chassis, repair parts for
15.20ready-mixed concrete trucks, and leases of ready-mixed concrete trucks; and
15.21(9) machinery or equipment used for research, development, design, or production
15.22of computer software.
15.23(c) Capital equipment does not include the following:
15.24(1) motor vehicles taxed under chapter 297B;
15.25(2) machinery or equipment used to receive or store raw materials;
15.26(3) building materials, except for materials included in paragraph (b), clauses (6)
15.27and (7);
15.28(4) machinery or equipment used for nonproduction purposes, including, but not
15.29limited to, the following: plant security, fire prevention, first aid, and hospital stations;
15.30support operations or administration; pollution control; and plant cleaning, disposal of
15.31scrap and waste, plant communications, space heating, cooling, lighting, or safety;
15.32(5) farm machinery and aquaculture production equipment as defined by section
15.33297A.61 , subdivisions 12 and 13;
15.34(6) machinery or equipment purchased and installed by a contractor as part of an
15.35improvement to real property;
16.1(7) machinery and equipment used by restaurants in the furnishing, preparing, or
16.2serving of prepared foods as defined in section 297A.61, subdivision 31;
16.3(8) machinery and equipment used to furnish the services listed in section 297A.61,
16.4subdivision 3
, paragraph (g), clause (6), items (i) to (vi) and (viii);
16.5(9) machinery or equipment used in the transportation, transmission, or distribution
16.6of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines,
16.7tanks, mains, or other means of transporting those products. This clause does not apply to
16.8machinery or equipment used to blend petroleum or biodiesel fuel as defined in section
16.9239.77 ; or
16.10(10) any other item that is not essential to the integrated process of manufacturing,
16.11fabricating, mining, or refining.
16.12(d) For purposes of this subdivision:
16.13(1) "Equipment" means independent devices or tools separate from machinery but
16.14essential to an integrated production process, including computers and computer software,
16.15used in operating, controlling, or regulating machinery and equipment; and any subunit or
16.16assembly comprising a component of any machinery or accessory or attachment parts of
16.17machinery, such as tools, dies, jigs, patterns, and molds.
16.18(2) "Fabricating" means to make, build, create, produce, or assemble components or
16.19property to work in a new or different manner.
16.20(3) "Integrated production process" means a process or series of operations through
16.21which tangible personal property is manufactured, fabricated, mined, or refined. For
16.22purposes of this clause, (i) manufacturing begins with the removal of raw materials
16.23from inventory and ends when the last process prior to loading for shipment has been
16.24completed; (ii) fabricating begins with the removal from storage or inventory of the
16.25property to be assembled, processed, altered, or modified and ends with the creation
16.26or production of the new or changed product; (iii) mining begins with the removal of
16.27overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and
16.28ends when the last process before stockpiling is completed; and (iv) refining begins with
16.29the removal from inventory or storage of a natural resource and ends with the conversion
16.30of the item to its completed form.
16.31(4) "Machinery" means mechanical, electronic, or electrical devices, including
16.32computers and computer software, that are purchased or constructed to be used for the
16.33activities set forth in paragraph (a), beginning with the removal of raw materials from
16.34inventory through completion of the product, including packaging of the product.
17.1(5) "Machinery and equipment used for pollution control" means machinery and
17.2equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity
17.3described in paragraph (a).
17.4(6) "Manufacturing" means an operation or series of operations where raw materials
17.5are changed in form, composition, or condition by machinery and equipment and which
17.6results in the production of a new article of tangible personal property. For purposes of
17.7this subdivision, "manufacturing" includes the generation of electricity or steam to be
17.8sold at retail.
17.9(7) "Mining" means the extraction of minerals, ores, stone, or peat.
17.10(8) "Online data retrieval system" means a system whose cumulation of information
17.11is equally available and accessible to all its customers.
17.12(9) "Primarily" means machinery and equipment used 50 percent or more of the time
17.13in an activity described in paragraph (a).
17.14(10) "Refining" means the process of converting a natural resource to an intermediate
17.15or finished product, including the treatment of water to be sold at retail.
17.16(11) This subdivision does not apply to telecommunications equipment as
17.17provided in subdivision 35, and does not apply to wire, cable, fiber, poles, or conduit
17.18for telecommunications services.
17.19EFFECTIVE DATE.This section is effective for sales and purchases made after
17.20June 30, 2013.

17.21    Sec. 8. Minnesota Statutes 2012, section 297A.75, subdivision 1, is amended to read:
17.22    Subdivision 1. Tax collected. The tax on the gross receipts from the sale of the
17.23following exempt items must be imposed and collected as if the sale were taxable and the
17.24rate under section 297A.62, subdivision 1, applied. The exempt items include:
17.25    (1) capital equipment exempt under section 297A.68, subdivision 5;
17.26    (2) (1) building materials for an agricultural processing facility exempt under section
17.27297A.71, subdivision 13 ;
17.28    (3) (2) building materials for mineral production facilities exempt under section
17.29297A.71, subdivision 14 ;
17.30    (4) (3) building materials for correctional facilities under section 297A.71,
17.31subdivision 3
;
17.32    (5) (4) building materials used in a residence for disabled veterans exempt under
17.33section 297A.71, subdivision 11;
17.34    (6) (5) elevators and building materials exempt under section 297A.71, subdivision
17.3512
;
18.1    (7) (6) building materials for the Long Lake Conservation Center exempt under
18.2section 297A.71, subdivision 17;
18.3    (8) (7) materials and supplies for qualified low-income housing under section
18.4297A.71, subdivision 23 ;
18.5    (9) (8) materials, supplies, and equipment for municipal electric utility facilities
18.6under section 297A.71, subdivision 35;
18.7    (10) (9) equipment and materials used for the generation, transmission, and
18.8distribution of electrical energy and an aerial camera package exempt under section
18.9297A.68 , subdivision 37;
18.10    (11) (10) commuter rail vehicle and repair parts under section 297A.70, subdivision
18.113, paragraph (a), clause (10);
18.12    (12) (11) materials, supplies, and equipment for construction or improvement of
18.13projects and facilities under section 297A.71, subdivision 40;
18.14(13) (12) materials, supplies, and equipment for construction or improvement of a
18.15meat processing facility exempt under section 297A.71, subdivision 41;
18.16(14) (13) materials, supplies, and equipment for construction, improvement, or
18.17expansion of an aerospace defense manufacturing facility exempt under section 297A.71,
18.18subdivision 42;
18.19(15) (14) enterprise information technology equipment and computer software for
18.20use in a qualified data center exempt under section 297A.68, subdivision 42; and
18.21(16) (15) materials, supplies, and equipment for qualifying capital projects under
18.22section 297A.71, subdivision 44.
18.23EFFECTIVE DATE.This section is effective for sales and purchases made after
18.24June 30, 2013.

18.25    Sec. 9. Minnesota Statutes 2012, section 297A.75, subdivision 2, is amended to read:
18.26    Subd. 2. Refund; eligible persons. Upon application on forms prescribed by the
18.27commissioner, a refund equal to the tax paid on the gross receipts of the exempt items
18.28must be paid to the applicant. Only the following persons may apply for the refund:
18.29    (1) for subdivision 1, clauses (1) to (3) and (2), the applicant must be the purchaser;
18.30    (2) for subdivision 1, clauses (4) (3) and (7) (6), the applicant must be the
18.31governmental subdivision;
18.32    (3) for subdivision 1, clause (5) (4), the applicant must be the recipient of the
18.33benefits provided in United States Code, title 38, chapter 21;
18.34    (4) for subdivision 1, clause (6) (5), the applicant must be the owner of the
18.35homestead property;
19.1    (5) for subdivision 1, clause (8) (7), the owner of the qualified low-income housing
19.2project;
19.3    (6) for subdivision 1, clause (9) (8), the applicant must be a municipal electric utility
19.4or a joint venture of municipal electric utilities;
19.5    (7) for subdivision 1, clauses (10) (9), (12), (13), and (14), and (15), the owner
19.6of the qualifying business; and
19.7    (8) for subdivision 1, clauses (10), (11), (12), and (16) (15), the applicant must be
19.8the governmental entity that owns or contracts for the project or facility.
19.9EFFECTIVE DATE.This section is effective for sales and purchases made after
19.10June 30, 2013.

19.11    Sec. 10. Minnesota Statutes 2012, section 297A.75, subdivision 3, is amended to read:
19.12    Subd. 3. Application. (a) The application must include sufficient information
19.13to permit the commissioner to verify the tax paid. If the tax was paid by a contractor,
19.14subcontractor, or builder, under subdivision 1, clause (3), (4), (5), (6), (7), (8), (9), (10),
19.15(11), (12), (13), (14), or (15), or (16), the contractor, subcontractor, or builder must
19.16furnish to the refund applicant a statement including the cost of the exempt items and the
19.17taxes paid on the items unless otherwise specifically provided by this subdivision. The
19.18provisions of sections 289A.40 and 289A.50 apply to refunds under this section.
19.19    (b) An applicant may not file more than two applications per calendar year for
19.20refunds for taxes paid on capital equipment exempt under section 297A.68, subdivision 5.
19.21    (c) Total refunds for purchases of items in section 297A.71, subdivision 40, must not
19.22exceed $5,000,000 in fiscal years 2010 and 2011. Applications for refunds for purchases
19.23of items in sections 297A.70, subdivision 3, paragraph (a), clause (11), and 297A.71,
19.24subdivision 40, must not be filed until after June 30, 2009.
19.25EFFECTIVE DATE.This section is effective for sales and purchases made after
19.26June 30, 2013.

19.27    Sec. 11. ESTIMATED TAXES; EXCEPTIONS.
19.28No addition to tax, penalties, or interest may be made under Minnesota Statutes,
19.29section 289A.25, for any period before July 1, 2013, with respect to an underpayment
19.30of estimated tax, to the extent that the underpayment was created or increased by the
19.31surcharge imposed under this article.
19.32EFFECTIVE DATE.This section is effective for taxable years beginning after
19.33December 31, 2012.

20.1    Sec. 12. APPROPRIATIONS.
20.2(a) The amount necessary to increase the aid payment percentage in section 3 to 90
20.3percent, estimated to be $262,600,000, is appropriated in fiscal year 2014 from the general
20.4fund to the commissioner of education.
20.5(b) The amount necessary to reduce the percentage of levy recognized in the prior
20.6calendar year in section 2 from 48.6 percent to zero percent, estimated to be $569,900,000,
20.7is appropriated in fiscal year 2014 from the general fund to the commissioner of education.
20.8(c) The amount paid in additional state general education aids and other school aids
20.9as a result of reducing the percentage of levy recognized in the prior calendar year in
20.10Minnesota Statutes, section 123B.75, subdivision 5, from 48.6 percent to zero percent,
20.11estimated to be $21,700,000, is appropriated in fiscal year 2015 from the general fund to
20.12the commissioner of education.
20.13EFFECTIVE DATE.This section is effective the day following final enactment.

20.14ARTICLE 2
20.15HOMESTEAD CREDIT REFUND AND RENTER PROPERTY TAX REFUND

20.16    Section 1. Minnesota Statutes 2012, section 290A.03, subdivision 3, is amended to read:
20.17    Subd. 3. Income. (1) "Income" means the sum of the following:
20.18    (a) federal adjusted gross income as defined in the Internal Revenue Code; and
20.19    (b) the sum of the following amounts to the extent not included in clause (a):
20.20    (i) all nontaxable income;
20.21    (ii) the amount of a passive activity loss that is not disallowed as a result of section
20.22469, paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity
20.23loss carryover allowed under section 469(b) of the Internal Revenue Code;
20.24    (iii) an amount equal to the total of any discharge of qualified farm indebtedness
20.25of a solvent individual excluded from gross income under section 108(g) of the Internal
20.26Revenue Code;
20.27    (iv) cash public assistance and relief;
20.28    (v) any pension or annuity (including railroad retirement benefits, all payments
20.29received under the federal Social Security Act, Supplemental Security Income, and
20.30veterans benefits), which was not exclusively funded by the claimant or spouse, or which
20.31was funded exclusively by the claimant or spouse and which funding payments were
20.32excluded from federal adjusted gross income in the years when the payments were made;
20.33    (vi) interest received from the federal or a state government or any instrumentality
20.34or political subdivision thereof;
21.1    (vii) workers' compensation;
21.2    (viii) nontaxable strike benefits;
21.3    (ix) the gross amounts of payments received in the nature of disability income or
21.4sick pay as a result of accident, sickness, or other disability, whether funded through
21.5insurance or otherwise;
21.6    (x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of
21.71986, as amended through December 31, 1995;
21.8    (xi) contributions made by the claimant to an individual retirement account,
21.9including a qualified voluntary employee contribution; simplified employee pension plan;
21.10self-employed retirement plan; cash or deferred arrangement plan under section 401(k)
21.11of the Internal Revenue Code; or deferred compensation plan under section 457 of the
21.12Internal Revenue Code, to the extent the sum of amounts exceeds the retirement base
21.13amount for the claimant and spouse;
21.14    (xii) to the extent not included in federal adjusted gross income, distributions received
21.15by the claimant or spouse from a traditional or Roth style retirement account or plan;
21.16    (xiii) nontaxable scholarship or fellowship grants;
21.17    (xiii) (xiv) the amount of deduction allowed under section 199 of the Internal
21.18Revenue Code;
21.19    (xiv) (xv) the amount of deduction allowed under section 220 or 223 of the Internal
21.20Revenue Code;
21.21    (xv) (xvi) the amount of deducted for tuition expenses required to be added to
21.22income under section 290.01, subdivision 19a, clause (12); under section 222 of the
21.23Internal Revenue Code; and
21.24    (xvi) (xvii) the amount deducted for certain expenses of elementary and secondary
21.25school teachers under section 62(a)(2)(D) of the Internal Revenue Code; and.
21.26    (xvii) unemployment compensation.
21.27    In the case of an individual who files an income tax return on a fiscal year basis, the
21.28term "federal adjusted gross income" shall mean federal adjusted gross income reflected
21.29in the fiscal year ending in the calendar year. Federal adjusted gross income shall not be
21.30reduced by the amount of a net operating loss carryback or carryforward or a capital loss
21.31carryback or carryforward allowed for the year.
21.32    (2) "Income" does not include:
21.33    (a) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 102;
21.34    (b) amounts of any pension or annuity which was exclusively funded by the claimant
21.35or spouse and which funding payments were not excluded from federal adjusted gross
21.36income in the years when the payments were made;
22.1    (c) to the extent included in federal adjusted gross income, amounts contributed by
22.2the claimant or spouse to a traditional or Roth style retirement account or plan, but not
22.3to exceed the retirement base amount reduced by the amount of contributions excluded
22.4from federal adjusted gross income, but not less than zero;
22.5    (d) surplus food or other relief in kind supplied by a governmental agency;
22.6    (d) (e) relief granted under this chapter;
22.7    (e) (f) child support payments received under a temporary or final decree of
22.8dissolution or legal separation; or
22.9    (f) (g) restitution payments received by eligible individuals and excludable interest
22.10as defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of
22.112001, Public Law 107-16.
22.12    (3) The sum of the following amounts may be subtracted from income:
22.13    (a) for the claimant's first dependent, the exemption amount multiplied by 1.4;
22.14    (b) for the claimant's second dependent, the exemption amount multiplied by 1.3;
22.15    (c) for the claimant's third dependent, the exemption amount multiplied by 1.2;
22.16    (d) for the claimant's fourth dependent, the exemption amount multiplied by 1.1;
22.17    (e) for the claimant's fifth dependent, the exemption amount; and
22.18    (f) if the claimant or claimant's spouse was disabled or attained the age of 65
22.19on or before December 31 of the year for which the taxes were levied or rent paid, the
22.20exemption amount.
22.21    For purposes of this subdivision, the "exemption amount" means the exemption
22.22amount under section 151(d) of the Internal Revenue Code for the taxable year for which
22.23the income is reported; and "retirement base amount" means the deductible amount for
22.24the taxable year for the claimant and spouse under section 219(b)(5)(A) of the Internal
22.25Revenue Code, adjusted for inflation as provided in section 219(b)(5)(D) of the Internal
22.26Revenue Code, without regard to whether the claimant or spouse claimed a deduction.
22.27EFFECTIVE DATE.This section is effective beginning with refunds based on
22.28property taxes payable in 2014 and rent paid in 2013.

22.29    Sec. 2. Minnesota Statutes 2012, section 290A.04, subdivision 2, is amended to read:
22.30    Subd. 2. Homeowners; homestead credit refund. A claimant whose property
22.31taxes payable are in excess of the percentage of the household income stated below shall
22.32pay an amount equal to the percent of income shown for the appropriate household
22.33income level along with the percent to be paid by the claimant of the remaining amount
22.34of property taxes payable. The state refund equals the amount of property taxes payable
22.35that remain, up to the state refund amount shown below.
23.1
23.2
23.3
Household Income
Percent of Income
Percent Paid by
Claimant
Maximum
State
Refund
23.4
$0 to 1,549
1.0 percent
15 percent
$
2,460
23.5
1,550 to 3,089
1.1 percent
15 percent
$
2,460
23.6
3,090 to 4,669
1.2 percent
15 percent
$
2,460
23.7
4,670 to 6,229
1.3 percent
20 percent
$
2,460
23.8
6,230 to 7,769
1.4 percent
20 percent
$
2,460
23.9
7,770 to 10,879
1.5 percent
20 percent
$
2,460
23.10
10,880 to 12,429
1.6 percent
20 percent
$
2,460
23.11
12,430 to 13,989
1.7 percent
20 percent
$
2,460
23.12
13,990 to 15,539
1.8 percent
20 percent
$
2,460
23.13
15,540 to 17,079
1.9 percent
25 percent
$
2,460
23.14
17,080 to 18,659
2.0 percent
25 percent
$
2,460
23.15
18,660 to 21,759
2.1 percent
25 percent
$
2,460
23.16
21,760 to 23,309
2.2 percent
30 percent
$
2,460
23.17
23,310 to 24,859
2.3 percent
30 percent
$
2,460
23.18
24,860 to 26,419
2.4 percent
30 percent
$
2,460
23.19
26,420 to 32,629
2.5 percent
35 percent
$
2,460
23.20
32,630 to 37,279
2.6 percent
35 percent
$
2,460
23.21
37,280 to 46,609
2.7 percent
35 percent
$
2,000
23.22
46,610 to 54,369
2.8 percent
35 percent
$
2,000
23.23
54,370 to 62,139
2.8 percent
40 percent
$
1,750
23.24
62,140 to 69,909
3.0 percent
40 percent
$
1,440
23.25
69,910 to 77,679
3.0 percent
40 percent
$
1,290
23.26
77,680 to 85,449
3.0 percent
40 percent
$
1,130
23.27
85,450 to 90,119
3.5 percent
45 percent
$
960
23.28
90,120 to 93,239
3.5 percent
45 percent
$
790
23.29
93,240 to 97,009
3.5 percent
50 percent
$
650
23.30
97,010 to 100,779
3.5 percent
50 percent
$
480
23.31
23.32
23.33
Household Income
Percent of Income
Percent Paid by
Claimant
Maximum
State
Refund
23.34
$0 to 1,619
1.0 percent
15 percent
$
2,580
23.35
1,620 to 3,229
1.1 percent
15 percent
$
2,580
23.36
3,230 to 4,889
1.2 percent
15 percent
$
2,580
23.37
4,890 to 6,519
1.3 percent
20 percent
$
2,580
23.38
6,520 to 8,129
1.4 percent
20 percent
$
2,580
23.39
8,130 to 11,389
1.5 percent
20 percent
$
2,580
23.40
11,390 to 13,009
1.6 percent
20 percent
$
2,580
23.41
13,010 to 14,649
1.7 percent
20 percent
$
2,580
23.42
14,650 to 16,269
1.8 percent
20 percent
$
2,580
23.43
16,270 to 17,879
1.9 percent
25 percent
$
2,580
23.44
17,880 to 22,779
2.0 percent
25 percent
$
2,580
24.1
22,780 to 24,399
2.0 percent
30 percent
$
2,580
24.2
24,400 to 27,659
2.0 percent
30 percent
$
2,580
24.3
27,660 to 39,029
2.0 percent
35 percent
$
2,580
24.4
39,030 to 56,919
2.0 percent
35 percent
$
2,090
24.5
56,920 to 65,049
2.0 percent
40 percent
$
1,830
24.6
65,050 to 73,189
2.1 percent
40 percent
$
1,510
24.7
73,190 to 81,319
2.2 percent
40 percent
$
1,350
24.8
81,320 to 89,449
2.3 percent
40 percent
$
1,180
24.9
89,450 to 94,339
2.4 percent
45 percent
$
1,000
24.10
94,340 to 97,609
2.5 percent
45 percent
$
830
24.11
97,610 to 101,559
2.5 percent
50 percent
$
680
24.12
101,560 to 105,499
2.5 percent
50 percent
$
500
24.13    The payment made to a claimant shall be the amount of the state refund calculated
24.14under this subdivision. No payment is allowed if the claimant's household income is
24.15$100,780 $105,500 or more.
24.16EFFECTIVE DATE.This section is effective for refund claims based on taxes
24.17payable in 2014 and thereafter.

24.18    Sec. 3. Minnesota Statutes 2012, section 290A.04, subdivision 2a, is amended to read:
24.19    Subd. 2a. Renters. A claimant whose rent constituting property taxes exceeds the
24.20percentage of the household income stated below must pay an amount equal to the percent
24.21of income shown for the appropriate household income level along with the percent to
24.22be paid by the claimant of the remaining amount of rent constituting property taxes. The
24.23state refund equals the amount of rent constituting property taxes that remain, up to the
24.24maximum state refund amount shown below.
24.25
24.26
24.27
Household Income
Percent of Income
Percent Paid by
Claimant
Maximum
State
Refund
24.28
$0 to 3,589
1.0 percent
5 percent
$
1,190
24.29
3,590 to 4,779
1.0 percent
10 percent
$
1,190
24.30
4,780 to 5,969
1.1 percent
10 percent
$
1,190
24.31
5,970 to 8,369
1.2 percent
10 percent
$
1,190
24.32
8,370 to 10,759
1.3 percent
15 percent
$
1,190
24.33
10,760 to 11,949
1.4 percent
15 percent
$
1,190
24.34
11,950 to 13,139
1.4 percent
20 percent
$
1,190
24.35
13,140 to 15,539
1.5 percent
20 percent
$
1,190
24.36
15,540 to 16,729
1.6 percent
20 percent
$
1,190
24.37
16,730 to 17,919
1.7 percent
25 percent
$
1,190
24.38
17,920 to 20,319
1.8 percent
25 percent
$
1,190
25.1
20,320 to 21,509
1.9 percent
30 percent
$
1,190
25.2
21,510 to 22,699
2.0 percent
30 percent
$
1,190
25.3
22,700 to 23,899
2.2 percent
30 percent
$
1,190
25.4
23,900 to 25,089
2.4 percent
30 percent
$
1,190
25.5
25,090 to 26,289
2.6 percent
35 percent
$
1,190
25.6
26,290 to 27,489
2.7 percent
35 percent
$
1,190
25.7
27,490 to 28,679
2.8 percent
35 percent
$
1,190
25.8
28,680 to 29,869
2.9 percent
40 percent
$
1,190
25.9
29,870 to 31,079
3.0 percent
40 percent
$
1,190
25.10
31,080 to 32,269
3.1 percent
40 percent
$
1,190
25.11
32,270 to 33,459
3.2 percent
40 percent
$
1,190
25.12
33,460 to 34,649
3.3 percent
45 percent
$
1,080
25.13
34,650 to 35,849
3.4 percent
45 percent
$
960
25.14
35,850 to 37,049
3.5 percent
45 percent
$
830
25.15
37,050 to 38,239
3.5 percent
50 percent
$
720
25.16
38,240 to 39,439
3.5 percent
50 percent
$
600
25.17
38,440 to 40,629
3.5 percent
50 percent
$
360
25.18
40,630 to 41,819
3.5 percent
50 percent
$
120
25.19
$0 to 4,909
1.0 percent
5 percent
$
2,000
25.20
4,910 to 6,529
1.0 percent
10 percent
$
2,000
25.21
6,530 to 8,159
1.1 percent
10 percent
$
1,950
25.22
8,160 to 11,439
1.2 percent
10 percent
$
1,900
25.23
11,440 to 14,709
1.3 percent
15 percent
$
1,850
25.24
14,710 to 16,339
1.4 percent
15 percent
$
1,800
25.25
16,340 to 17,959
1.4 percent
20 percent
$
1,750
25.26
17,960 to 21,239
1.5 percent
20 percent
$
1,700
25.27
21,240 to 22,869
1.6 percent
20 percent
$
1,650
25.28
22,870 to 24,499
1.7 percent
25 percent
$
1,650
25.29
24,500 to 27,779
1.8 percent
25 percent
$
1,650
25.30
27,780 to 29,399
1.9 percent
30 percent
$
1,650
25.31
29,400 to 34,299
2.0 percent
30 percent
$
1,650
25.32
34,300 to 39,199
2.0 percent
35 percent
$
1,650
25.33
39,200 to 45,739
2.0 percent
40 percent
$
1,650
25.34
45,740 to 47,369
2.0 percent
45 percent
$
1,500
25.35
47,370 to 49,009
2.0 percent
45 percent
$
1,350
25.36
49,010 to 50,649
2.0 percent
45 percent
$
1,150
25.37
50,650 to 52,269
2.0 percent
50 percent
$
1,000
25.38
52,270 to 53,909
2.0 percent
50 percent
$
900
25.39
53,910 to 55,539
2.0 percent
50 percent
$
500
25.40
55,540 to 57,169
2.0 percent
50 percent
$
200
26.1    The payment made to a claimant is the amount of the state refund calculated under
26.2this subdivision. No payment is allowed if the claimant's household income is $41,820
26.3 $57,170 or more.
26.4EFFECTIVE DATE.This section is effective for claims based on rent paid in
26.52013 and following years.

26.6    Sec. 4. Minnesota Statutes 2012, section 290A.04, subdivision 4, is amended to read:
26.7    Subd. 4. Inflation adjustment. (a) Beginning for property tax refunds payable in
26.8calendar year 2002, the commissioner shall annually adjust the dollar amounts of the
26.9income thresholds and the maximum refunds under subdivisions 2 and 2a for inflation.
26.10The commissioner shall make the inflation adjustments in accordance with section 1(f) of
26.11the Internal Revenue Code, except that for purposes of this subdivision the percentage
26.12increase shall be determined as provided in this subdivision.
26.13    (b) In adjusting the dollar amounts of the income thresholds and the maximum
26.14refunds under subdivision 2 for inflation, the percentage increase shall be determined
26.15from the year ending on June 30, 2011 2013, to the year ending on June 30 of the year
26.16preceding that in which the refund is payable.
26.17    (c) In adjusting the dollar amounts of the income thresholds and the maximum
26.18refunds under subdivision 2a for inflation, the percentage increase shall be determined
26.19from the year ending on June 30, 2000 2013, to the year ending on June 30 of the year
26.20preceding that in which the refund is payable.
26.21    (d) The commissioner shall use the appropriate percentage increase to annually
26.22adjust the income thresholds and maximum refunds under subdivisions 2 and 2a for
26.23inflation without regard to whether or not the income tax brackets are adjusted for inflation
26.24in that year. The commissioner shall round the thresholds and the maximum amounts,
26.25as adjusted to the nearest $10 amount. If the amount ends in $5, the commissioner shall
26.26round it up to the next $10 amount.
26.27    (e) The commissioner shall annually announce the adjusted refund schedule at the
26.28same time provided under section 290.06. The determination of the commissioner under
26.29this subdivision is not a rule under the Administrative Procedure Act.
26.30EFFECTIVE DATE.This section is effective for refund claims based on taxes
26.31payable in 2014 and rent paid in 2013 and following years.

26.32    Sec. 5. [290A.28] NOTIFICATION OF POTENTIAL ELIGIBILITY.
27.1    Subdivision 1. Notification of eligibility. (a) By August 1, 2014, the commissioner
27.2shall notify, in writing or electronically, individual homeowners whom the commissioner
27.3determines likely will be eligible for a homestead credit refund under this chapter for
27.4that property taxes payable year. In determining whether to notify a homeowner, the
27.5commissioner shall consider the property tax information available to the commissioner
27.6under paragraph (b) and the most recent income information available to the commissioner
27.7from filing under this chapter for the prior year or under chapter 290 for the current or
27.8prior year. The notification must include information on how to file for the homestead
27.9credit refund and the range of potential homestead credit refunds that the homeowner
27.10could qualify to receive. The notification requirement under this section does not apply
27.11to a homeowner who has already filed for the homestead credit refund for the current
27.12or prior year.
27.13    (b) By May 15, 2014, each county auditor shall transmit to the commissioner
27.14of revenue the following information for each property classified as a residential or
27.15agricultural homestead under section 273.13, subdivision 22 or 23:
27.16    (1) the property taxes payable;
27.17    (2) the name and address of the owner;
27.18    (3) the Social Security number or numbers of the owners; and
27.19    (4) any other information the commissioner deems necessary or useful to carry
27.20out the provisions of this section.
27.21The information must be provided in the form and manner prescribed by the commissioner.
27.22    Subd. 2. Report. By March 15, 2015, the commissioner must provide written
27.23reports to the chairs and ranking minority members of the legislative committees with
27.24jurisdiction over taxes, in compliance with Minnesota Statutes, sections 3.195 and 3.197.
27.25The report must provide information on the number and dollar amount of homeowner
27.26property tax refund claims based on taxes payable in 2014, including:
27.27    (i) the number and dollar amount of claims projected for homestead credit refunds
27.28based on taxes payable in 2014 prior to enactment of the notification requirement in
27.29this section;
27.30    (ii) the number of notifications issued as provided in this section, including the
27.31number issued by county;
27.32    (iii) the number and dollar amount of claims for homestead credit refunds based on
27.33taxes payable in 2014 processed through December 31, 2014; and
27.34    (iv) a description of any outreach efforts undertaken by the commissioner for
27.35homestead credit refunds based on taxes payable in 2014, in addition to the notification
27.36required in this section.
28.1EFFECTIVE DATE.This section is effective for refund claims based on property
28.2taxes payable in 2014.

28.3ARTICLE 3
28.4PROPERTY TAX AIDS AND CREDITS

28.5    Section 1. Minnesota Statutes 2012, section 69.021, is amended by adding a
28.6subdivision to read:
28.7    Subd. 12. Surcharge aid accounts. (a) A surcharge fire pension aid account is
28.8established in the special revenue fund to receive amounts as provided under section
28.9297I.07, subdivision 3, clause (1). The commissioner shall administer the account and
28.10allocate money in the account as follows:
28.11    (1) 17.342 percent as supplemental state pension funding paid to the executive
28.12director of the Public Employees Retirement Association for deposit in the public
28.13employees police and fire retirement fund established by section 353.65, subdivision 1;
28.14    (2) 8.658 percent to municipalities employing firefighters with retirement coverage
28.15by the public employees police and fire retirement plan, allocated in proportion to the
28.16relationship that the preceding December 31 number of firefighters employed by each
28.17municipality who have public employees police and fire retirement plan coverage bears to
28.18the total preceding December 31 number of municipal firefighters covered by the public
28.19employees police and fire retirement plan; and
28.20    (3) 74 percent for municipalities other than the municipalities receiving a
28.21disbursement under clause (2) which qualified to receive fire state aid in that calendar year,
28.22allocated in proportion to the most recent amount of fire state aid paid under subdivision 7
28.23for the municipality bears to the most recent total fire state aid for all municipalities other
28.24than the municipalities receiving a disbursement under clause (2) paid under subdivision
28.257, with the allocated amount for fire departments participating in the voluntary statewide
28.26lump-sum volunteer firefighter retirement plan paid to the executive director of the Public
28.27Employees Retirement Association for deposit in the fund established by section 353G.02,
28.28subdivision 3, and credited to the respective account and with the balance paid to the
28.29treasurer of each municipality for transmittal within 30 days of receipt to the treasurer of
28.30the applicable volunteer firefighter relief association for deposit in its special fund.
28.31    (b) A surcharge police pension aid account is established in the special revenue
28.32fund to receive amounts as provided by section 297I.07, subdivision 3, clause (2). The
28.33commissioner shall administer the account and allocate money in the account as follows:
28.34    (1) one-third to be distributed as police state aid as provided under subdivision 7a; and
29.1    (2) two-thirds to be apportioned, on the basis of the number of active police officers
29.2certified for police state aid receipt under section 69.011, subdivisions 2 and 2b, between:
29.3    (i) the executive director of the Public Employees Retirement Association for
29.4deposit as a supplemental state pension funding aid in the public employees police and fire
29.5retirement fund established by section 353.65, subdivision 1; and
29.6    (ii) the executive director of the Minnesota State Retirement System for deposit as a
29.7supplemental state pension funding aid in the state patrol retirement fund.
29.8    (c) On or before September 1, annually, the executive director of the Public
29.9Employees Retirement Association shall report to the commissioner the following:
29.10    (1) the municipalities which employ firefighters with retirement coverage by the
29.11public employees police and fire retirement plan;
29.12    (2) the number of firefighters with public employees police and fire retirement plan
29.13employed by each municipality;
29.14    (3) the fire departments covered by the voluntary statewide lump-sum volunteer
29.15firefighter retirement plan; and
29.16    (4) any other information requested by the commissioner to administer the surcharge
29.17fire pension aid account.
29.18    (d) For this subdivision, (i) the number of firefighters employed by a municipality
29.19who have public employees police and fire retirement plan coverage means the number
29.20of firefighters with public employees police and fire retirement plan coverage that were
29.21employed by the municipality for not less than 30 hours per week for a minimum of six
29.22months prior to December 31 preceding the date of the payment under this section and, if
29.23the person was employed for less than the full year, prorated to the number of full months
29.24employed; and, (ii) the number of active police officers certified for police state aid receipt
29.25under section 69.011, subdivisions 2 and 2b means, for each municipality, the number of
29.26police officers meeting the definition of peace officer in section 69.011, subdivision 1,
29.27counted as provided and limited by section 69.011, subdivisions 2 and 2b.
29.28    (e) The payments under this section shall be made on October 1 each year, based
29.29on the amount in the surcharge fire pension aid account and the amount in the surcharge
29.30police pension aid account on the preceding June 30, with interest at 1 percent for each
29.31month, or portion of a month, that the amount remains unpaid after October 1. The
29.32amounts necessary to make the payments under this subdivision are annually appropriated
29.33to the commissioner from the surcharge fire and police pension aid accounts. Any
29.34necessary adjustments shall be made to subsequent payments.
29.35    (f) The provisions of this chapter that prevent municipalities and relief associations
29.36from being eligible for, or receiving state aid under this chapter until the applicable
30.1financial reporting requirements have been complied with, apply to the amounts payable
30.2to municipalities and relief associations under this subdivision.
30.3    (g) The amounts necessary to make the payments under this subdivision are
30.4appropriated to the commissioner from the respective accounts in the special revenue fund.
30.5EFFECTIVE DATE.This section is effective beginning in the fiscal year beginning
30.6July 1, 2013.

30.7    Sec. 2. Minnesota Statutes 2012, section 273.1398, subdivision 4, is amended to read:
30.8    Subd. 4. Disparity reduction credit. (a) Beginning with taxes payable in 1989,
30.9class 4a and class 3a property qualifies for a disparity reduction credit if: (1) the property
30.10is located in a border city that has an enterprise zone, as defined in section 469.166; (2)
30.11the property is located in a city with a population greater than 2,500 and less than 35,000
30.12according to the 1980 decennial census; (3) the city is adjacent to a city in another state or
30.13immediately adjacent to a city adjacent to a city in another state; and (4) the adjacent city
30.14in the other state has a population of greater than 5,000 and less than 75,000 according to
30.15the 1980 decennial census.
30.16    (b) The credit is an amount sufficient to reduce (i) the taxes levied on class 4a
30.17property to 2.3 2 percent of the property's market value and (ii) the tax on class 3a property
30.18to 2.3 2 percent of market value.
30.19    (c) The county auditor shall annually certify the costs of the credits to the
30.20Department of Revenue. The department shall reimburse local governments for the
30.21property taxes forgone as the result of the credits in proportion to their total levies.
30.22EFFECTIVE DATE.This section is effective beginning with taxes payable in 2014.

30.23    Sec. 3. Minnesota Statutes 2012, section 290C.02, subdivision 6, is amended to read:
30.24    Subd. 6. Forest land. "Forest land" means land containing a minimum of 20
30.25contiguous acres for which the owner has implemented a forest management plan that was
30.26prepared or updated within the past ten years by an approved plan writer. For purposes of
30.27this subdivision, acres are considered to be contiguous even if they are separated by a road,
30.28waterway, railroad track, or other similar intervening property. At least 50 percent of the
30.29contiguous acreage must meet the definition of forest land in section 88.01, subdivision 7.
30.30For the purposes of sections 290C.01 to 290C.11, forest land does not include the following:
30.31    (i) land used for residential or agricultural purposes,;
30.32    (ii) land enrolled in the reinvest in Minnesota program, a state or federal conservation
30.33reserve or easement reserve program under sections 103F.501 to 103F.531, the Minnesota
31.1agricultural property tax law under section 273.111, or land subject to agricultural land
31.2preservation controls or restrictions as defined in section 40A.02 or under the Metropolitan
31.3Agricultural Preserves Act under chapter 473H, or;
31.4    (iii) land subject to a conservation easement funded under section 97A.056 or a
31.5comparable permanent easement conveyed to a governmental or nonprofit entity; or
31.6    (iv) land improved with a structure, pavement, sewer, campsite, or any road, other
31.7than a township road, used for purposes not prescribed in the forest management plan.
31.8EFFECTIVE DATE.This section is effective for payments made beginning in
31.9calendar year 2014.

31.10    Sec. 4. Minnesota Statutes 2012, section 290C.05, is amended to read:
31.11290C.05 ANNUAL CERTIFICATION.
31.12    On or before July 1 of each year, beginning with the year after the original claimant
31.13has received an approved application, the commissioner shall send each claimant enrolled
31.14under the sustainable forest incentive program a certification form. For purposes of this
31.15section, the original claimant is the person that filed the first application under section
31.16290C.04 to enroll the land in the program. The claimant must sign the certification,
31.17attesting that the requirements and conditions for continued enrollment in the program are
31.18currently being met, and must return the signed certification form, along with a copy of
31.19the property tax statement for the property taxes payable on the enrolled property for the
31.20calendar year and any other information the commissioner deems necessary to determine
31.21whether the property is qualified under section 290C.02, subdivision 6, or the amount of
31.22the payment under section 290C.07, paragraph (a), clause (2), to the commissioner by
31.23August 15 of that same year. If the claimant does not return an annual certification form
31.24by the due date, the provisions in section 290C.11 apply.
31.25EFFECTIVE DATE.This section is effective for payments made beginning in
31.26calendar year 2014.

31.27    Sec. 5. Minnesota Statutes 2012, section 290C.07, is amended to read:
31.28290C.07 CALCULATION OF INCENTIVE PAYMENT.
31.29    (a) An approved claimant under the sustainable forest incentive program is eligible
31.30to receive an annual payment. The payment shall be equal to the lesser of (1) $7 per acre
31.31 or (2) one-half of the property tax payable for the calendar year for each acre enrolled in
31.32the sustainable forest incentive program.
32.1    (b) The annual payment for each Social Security number or state or federal business
32.2tax identification number must not exceed $100,000.
32.3EFFECTIVE DATE.This section is effective for payments made beginning in
32.4calendar year 2014.

32.5    Sec. 6. [297I.07] SURCHARGE ON HOMEOWNERS AND AUTO POLICIES.
32.6    Subdivision 1. Surcharge on policies. (a) Each licensed insurer engaged in writing
32.7insurance shall collect a surcharge equal to $5 per calendar year for each policy issued
32.8or renewed during that calendar year for:
32.9    (1) homeowners insurance authorized in section 60A.06, subdivision 1, clause
32.10(1)(c); and
32.11    (2) automobile insurance as defined in section 65B.14, subdivision 2.
32.12    (b) The surcharge amount collected under this subdivision must not be considered
32.13premium for any other purpose. The surcharge amount must be separately stated on either a
32.14billing or policy declaration or document containing similar information sent to an insured.
32.15    Subd. 2. Collection and administration. The commissioner shall administer the
32.16surcharge imposed by this section in the same manner as the taxes imposed by this chapter.
32.17    Subd. 3. Deposit of revenues. The commissioner shall deposit revenues from the
32.18surcharge under this section as follows:
32.19    (1) amounts from the surcharge imposed under subdivision 1, paragraph (a), clause
32.20(1), in a surcharge fire pension aid account in the special revenue fund; and
32.21    (2) amounts from the surcharge imposed under subdivision 1, paragraph (a), clause
32.22(2), in a surcharge police pension aid account in the special revenue fund.
32.23    Subd. 4. Surcharge termination. The surcharge imposed under subdivision
32.241 ends on the December 31 next following the actuarial valuation date on which the
32.25assets of the retirement plan on a market value equals or exceeds 90 percent of the total
32.26actuarial accrued liabilities of the retirement plan as disclosed in an actuarial valuation
32.27prepared under section 356.215 and the Standards for Actuarial Work promulgated by the
32.28Legislative Commission on Pensions and Retirement, for the State Patrol retirement plan
32.29or the public employees police and fire retirement plan, whichever occurs last.
32.30EFFECTIVE DATE.This section is effective for policies issued after June 30, 2013.

32.31    Sec. 7. Minnesota Statutes 2012, section 477A.011, subdivision 30, is amended to read:
32.32    Subd. 30. Pre-1940 housing percentage. (a) Except as provided in paragraph (b),
32.33"pre-1940 housing percentage" for a city is 100 times the most recent federal census count
33.1by the United States Bureau of the Census of all housing units in the city built before
33.21940, divided by the total number of all housing units in the city. Housing units includes
33.3both occupied and vacant housing units as defined by the federal census.
33.4    (b) For the city of East Grand Forks only, "pre-1940 housing percentage" is equal
33.5to 100 times the 1990 federal census count of all housing units in the city built before
33.61940, divided by the most recent count by the United States Bureau of the Census of all
33.7housing units in the city. Housing units includes both occupied and vacant housing units
33.8as defined by the federal census.
33.9EFFECTIVE DATE.This section is effective for aids payable in calendar year
33.102014 and thereafter.

33.11    Sec. 8. Minnesota Statutes 2012, section 477A.011, is amended by adding a
33.12subdivision to read:
33.13    Subd. 30a. Percent of housing built between 1940 and 1970. "Percent of housing
33.14built between 1940 and 1970" is equal to 100 times the most recent count by the United
33.15States Bureau of the Census of all housing units in the city built after 1939 but before
33.161970, divided by the total number of all housing units in the city. Housing units includes
33.17both occupied and vacant housing units as defined by the federal census.
33.18EFFECTIVE DATE.This section is effective for aids payable in calendar year
33.192014 and thereafter.

33.20    Sec. 9. Minnesota Statutes 2012, section 477A.011, subdivision 34, is amended to read:
33.21    Subd. 34. City revenue need. (a) For a city with a population equal to or greater
33.22than 2,500 10,000, "city revenue need" is the greater of 285 or 1.15 times the sum of (1)
33.235.0734098 4.59 times the pre-1940 housing percentage; plus (2) 19.141678 times the
33.24population decline percentage 0.622 times the percent of housing built between 1940 and
33.251970; plus (3) 2504.06334 times the road accidents factor 169.415 times the jobs per
33.26capita; plus (4) 355.0547; minus (5) the metropolitan area factor; minus (6) 49.10638
33.27times the household size the sparsity adjustment; plus (5) 307.664.
33.28    (b) For a city with a population equal to or greater than 2,500 and less than 10,000,
33.29"city revenue need" is 1.15 times the sum of (1) 572.62; plus (2) 5.026 times the pre-1940
33.30housing percentage; minus (3) 53.768 times household size; plus (4) 14.022 times peak
33.31population decline.
33.32    (b) (c) For a city with a population less than 2,500, "city revenue need" is the sum of
33.33(1) 2.387 times the pre-1940 housing percentage; plus (2) 2.67591 times the commercial
34.1industrial percentage; plus (3) 3.16042 times the population decline percentage; plus (4)
34.21.206 times the transformed population; minus (5) 62.772 410 plus 0.367 times the city's
34.3population over 100. The city revenue need under this paragraph shall not exceed 630.
34.4    (c) (d) For a city with a population of at least 2,500 or more and a population in one
34.5of the most recently available five years that was less than 2,500, "city revenue need"
34.6is the sum of (1) its city revenue need calculated under paragraph (a) multiplied by its
34.7transition factor; plus (2) its city revenue need calculated under the formula in paragraph
34.8(b) multiplied by the difference between one and its transition factor. For purposes of this
34.9paragraph, a city's "transition factor" is equal to 0.2 multiplied by the number of years that
34.10the city's population estimate has been 2,500 or more. This provision only applies for aids
34.11payable in calendar years 2006 to 2008 to cities with a 2002 population of less than 2,500.
34.12It applies to any city for aids payable in 2009 and thereafter but less than 3,000, the "city
34.13revenue need" equals (1) the transition factor times the city's revenue need calculated in
34.14paragraph (b) plus (2) 630 times the difference between one and the transition factor. For
34.15a city with a population of at least 10,000 but less than 10,500, the "city revenue need"
34.16equals (1) the transition factor times the city's revenue need calculated in paragraph (a)
34.17plus (2) the city's revenue need calculated under the formula in paragraph (b) times the
34.18difference between one and the transition factor. For purposes of this paragraph "transition
34.19factor" is 0.2 percent times the amount that the city's population exceeds the minimum
34.20threshold in either of the first two sentences.
34.21    (d) (e) The city revenue need cannot be less than zero.
34.22    (e) (f) For calendar year 2005 2015 and subsequent years, the city revenue need for
34.23a city, as determined in paragraphs (a) to (d) (e), is multiplied by the ratio of the annual
34.24implicit price deflator for government consumption expenditures and gross investment for
34.25state and local governments as prepared by the United States Department of Commerce,
34.26for the most recently available year to the 2003 2013 implicit price deflator for state
34.27and local government purchases.
34.28EFFECTIVE DATE.This section is effective for aids payable in calendar year
34.292014 and thereafter.

34.30    Sec. 10. Minnesota Statutes 2012, section 477A.011, subdivision 42, is amended to read:
34.31    Subd. 42. City jobs base Jobs per capita. (a) "City jobs base" for a city with a
34.32population of 5,000 or more is equal to the product of (1) $25.20, (2) the number of
34.33jobs per capita in the city, and (3) its population. For cities with a population less than
34.345,000, the city jobs base is equal to zero. For a city receiving aid under subdivision 36,
34.35paragraph (k), its city jobs base is reduced by the lesser of 36 percent of the amount of
35.1aid received under that paragraph or $1,000,000. No city's city jobs base may exceed
35.2$4,725,000 under this paragraph.
35.3    (b) For calendar year 2010 and subsequent years, the city jobs base for a city, as
35.4determined in paragraph (a), is multiplied by the ratio of the appropriation under section
35.5477A.03, subdivision 2a, for the year in which the aid is paid to the appropriation under
35.6that section for aids payable in 2009.
35.7    (c) For purposes of this subdivision, "Jobs per capita in the city" means (1) the
35.8average annual number of employees in the city based on the data from the Quarterly
35.9Census of Employment and Wages, as reported by the Department of Employment and
35.10Economic Development, for the most recent calendar year available as of May 1, 2008
35.11 November 1 of every odd-numbered year, divided by (2) the city's population for the
35.12same calendar year as the employment data. The commissioner of the Department of
35.13Employment and Economic Development shall certify to the city the average annual
35.14number of employees for each city by June 1, 2008 January 15, of every even-numbered
35.15year beginning with January 15, 2014. A city may challenge an estimate under this
35.16paragraph by filing its specific objection, including the names of employers that it feels
35.17may have misreported data, in writing with the commissioner by June 20, 2008 December
35.181 of every odd-numbered year. The commissioner shall make every reasonable effort
35.19to address the specific objection and adjust the data as necessary. The commissioner
35.20shall certify the estimates of the annual employment to the commissioner of revenue by
35.21July 15, 2008 January 15 of all even-numbered years, including any estimates still under
35.22objection. For aids payable in 2014, "jobs per capita" shall be based on the annual number
35.23of employees and population for calendar year 2010 without additional review.
35.24EFFECTIVE DATE.This section is effective for aids payable in calendar year
35.252014 and thereafter.

35.26    Sec. 11. Minnesota Statutes 2012, section 477A.011, is amended by adding a
35.27subdivision to read:
35.28    Subd. 44. Peak population decline. "Peak population decline" is equal to 100
35.29times the difference between one and the ratio of the city's current population, to the
35.30highest city population reported in a federal census from the 1970 census or later. "Peak
35.31population decline" shall not be less than zero.
35.32EFFECTIVE DATE.This section is effective for aids payable in calendar year
35.332014 and thereafter.

36.1    Sec. 12. Minnesota Statutes 2012, section 477A.011, is amended by adding a
36.2subdivision to read:
36.3    Subd. 45. Sparsity adjustment. For a city with a population of 10,000 or more, the
36.4sparsity adjustment is 100 for any city with an average population density less than 150
36.5per square mile, according to the most recent federal census, and the sparsity adjustment is
36.6zero for all other cities.
36.7EFFECTIVE DATE.This section is effective for aids payable in calendar year
36.82014 and thereafter.

36.9    Sec. 13. Minnesota Statutes 2012, section 477A.013, subdivision 8, is amended to read:
36.10    Subd. 8. City formula aid. (a) For aids payable in 2014 only, the formula aid for
36.11a city is equal to the lesser of its unmet need or the sum of (1) its 2013 certified aid and
36.12(2) the product of (i) the difference between its unmet need and its 2013 certified aid
36.13and (ii) the aid gap percentage.
36.14    (b) For aids payable in 2015 and thereafter, the formula aid for a city is equal to
36.15the sum of (1) its city jobs base, (2) its small city aid base, and (3) the need increase
36.16percentage multiplied by the average of its unmet need for the most recently available two
36.17years formula aid in the previous year and (2) the product of (i) the difference between
36.18its unmet need and its certified aid in the previous year under subdivision 9, and (ii)
36.19the aid gap percentage.
36.20No city may have a formula aid amount less than zero. The need increase aid gap
36.21 percentage must be the same for all cities.
36.22    The applicable need increase aid gap percentage must be calculated by the
36.23Department of Revenue so that the total of the aid under subdivision 9 equals the total
36.24amount available for aid under section 477A.03. Data used in calculating aids to cities
36.25under sections 477A.011 to 477A.013 shall be the most recently available data as of
36.26January 1 in the year in which the aid is calculated except that the data used to compute "net
36.27levy" in subdivision 9 is the data most recently available at the time of the aid computation.
36.28EFFECTIVE DATE.This section is effective for aids payable in calendar year
36.292014 and thereafter.

36.30    Sec. 14. Minnesota Statutes 2012, section 477A.013, subdivision 9, is amended to read:
36.31    Subd. 9. City aid distribution. (a) In calendar year 2013 2014 and thereafter, each
36.32city shall receive an aid distribution equal to the sum of (1) the city formula aid under
36.33subdivision 8, and (2) its city aid base aid adjustment under subdivision 13.
37.1    (b) For aids payable in 2013 and 2014 only, the total aid in the previous year for
37.2any city shall mean the amount of aid it was certified to receive for aids payable in 2012
37.3under this section. For aids payable in 2015 and thereafter, the total aid in the previous
37.4year for any city means the amount of aid it was certified to receive under this section in
37.5the previous payable year.
37.6    (c) For aids payable in 2010 and thereafter, the total aid for any city shall not exceed
37.7the sum of (1) ten percent of the city's net levy for the year prior to the aid distribution
37.8plus (2) its total aid in the previous year. For aids payable in 2009 and thereafter, the total
37.9aid for any city with a population of 2,500 or more may not be less than its total aid under
37.10this section in the previous year minus the lesser of $10 multiplied by its population, or ten
37.11percent of its net levy in the year prior to the aid distribution.
37.12    (d) (b) For aids payable in 2014 only, the total aid for a city may not be less than the
37.13amount it was certified to receive in 2013. For aids payable in 2010 2015 and thereafter,
37.14the total aid for a city with a population less than 2,500 must not be less than the amount
37.15it was certified to receive in the previous year minus the lesser of $10 multiplied by its
37.16population, or five percent of its 2003 certified aid amount. For aids payable in 2009 only,
37.17the total aid for a city with a population less than 2,500 must not be less than what it
37.18received under this section in the previous year unless its total aid in calendar year 2008
37.19was aid under section 477A.011, subdivision 36, paragraph (s), in which case its minimum
37.20aid is zero its net levy in the year prior to the aid distribution.
37.21    (e) A city's aid loss under this section may not exceed $300,000 in any year in
37.22which the total city aid appropriation under section 477A.03, subdivision 2a, is equal or
37.23greater than the appropriation under that subdivision in the previous year, unless the
37.24city has an adjustment in its city net tax capacity under the process described in section
37.25469.174, subdivision 28.
37.26    (f) If a city's net tax capacity used in calculating aid under this section has decreased
37.27in any year by more than 25 percent from its net tax capacity in the previous year due to
37.28property becoming tax-exempt Indian land, the city's maximum allowed aid increase
37.29under paragraph (c) shall be increased by an amount equal to (1) the city's tax rate in the
37.30year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease
37.31resulting from the property becoming tax exempt.
37.32EFFECTIVE DATE.This section is effective for aids payable in calendar year
37.332014 and thereafter.

37.34    Sec. 15. Minnesota Statutes 2012, section 477A.013, is amended by adding a
37.35subdivision to read:
38.1    Subd. 13. Certified aid adjustments. (a) A city that received an aid base increase
38.2under Minnesota Statutes 2012, section 477A.011, subdivision 36, paragraph (e), shall
38.3have its total aid under subdivision 9 increased by an amount equal to $150,000 for aids
38.4payable in 2014 through 2018.
38.5    (b) A city that received a temporary aid increase under Minnesota Statutes 2012,
38.6section 477A.011, subdivision 36, paragraph (m), (v), or (w), shall have its total aid under
38.7subdivision 9 decreased by the amount of its aid base increase under those paragraphs in
38.8calendar year 2013.

38.9    Sec. 16. Minnesota Statutes 2012, section 477A.015, is amended to read:
38.10477A.015 PAYMENT DATES.
38.11The commissioner of revenue shall make the payments of local government aid to
38.12affected taxing authorities in two installments on July 20 and December 26 annually.
38.13When the commissioner of public safety determines that a local government has
38.14suffered financial hardship due to a natural disaster, the commissioner of public safety
38.15shall notify the commissioner of revenue, who shall make payments of aids under sections
38.16477A.011 to 477A.014, which are otherwise due on December 26, as soon as is practical
38.17after the determination is made but not before July 20.
38.18The commissioner may pay all or part of the payments of aids under sections
38.19477A.011 to 477A.014, which are due on December 26 at any time after August 15 if a
38.20local government requests such payment as being necessary for meeting its cash flow
38.21needs. For aids payable in 2013 only, a city that is located in an area deemed a disaster
38.22area during the month of April 2013, as defined in section 12A.01, subdivision 5, shall
38.23receive its December 26, 2013 payment with its July 20, 2013 payment.
38.24EFFECTIVE DATE.This section is effective for aids payable in calendar year
38.252013 and thereafter.

38.26    Sec. 17. Minnesota Statutes 2012, section 477A.03, subdivision 2a, is amended to read:
38.27    Subd. 2a. Cities. For aids payable in 2013 2014 and thereafter, the total aid paid
38.28under section 477A.013, subdivision 9, is $426,438,012 $506,438,012. For aids payable
38.29in 2015 and thereafter, the total aid paid under section 477A.013, subdivision 9, is the
38.30amount certified under that section in the previous year multiplied by the inflation
38.31adjustment under subdivision 6.
38.32EFFECTIVE DATE.This section is effective for aids payable in calendar year
38.332014 and thereafter.

39.1    Sec. 18. Minnesota Statutes 2012, section 477A.03, subdivision 2b, is amended to read:
39.2    Subd. 2b. Counties. (a) For aids payable in 2013 2014 and thereafter, the total aid
39.3payable under section 477A.0124, subdivision 3, is $80,795,000 $95,795,000. Each
39.4calendar year, $500,000 of this appropriation shall be retained by the commissioner
39.5of revenue to make reimbursements to the commissioner of management and budget
39.6for payments made under section 611.27. For calendar year 2004, the amount shall
39.7be in addition to the payments authorized under section 477A.0124, subdivision 1.
39.8For calendar year 2005 and subsequent years, the amount shall be deducted from the
39.9appropriation under this paragraph. The reimbursements shall be to defray the additional
39.10costs associated with court-ordered counsel under section 611.27. Any retained amounts
39.11not used for reimbursement in a year shall be included in the next distribution of county
39.12need aid that is certified to the county auditors for the purpose of property tax reduction
39.13for the next taxes payable year.
39.14    (b) For aids payable in 2013 2014 and thereafter, the total aid under section
39.15477A.0124, subdivision 4 , is $84,909,575 $99,909,575. The commissioner of management
39.16and budget shall bill the commissioner of revenue for the cost of preparation of local impact
39.17notes as required by section 3.987, not to exceed $207,000 in each fiscal year 2004 and
39.18thereafter. The commissioner of education shall bill the commissioner of revenue for the
39.19cost of preparation of local impact notes for school districts as required by section 3.987,
39.20not to exceed $7,000 in each fiscal year 2004 and thereafter. The commissioner of revenue
39.21shall deduct the amounts billed under this paragraph from the appropriation under this
39.22paragraph. The amounts deducted are appropriated to the commissioner of management
39.23and budget and the commissioner of education for the preparation of local impact notes.
39.24EFFECTIVE DATE.This section is effective for aid payable in 2014 and thereafter.

39.25    Sec. 19. Minnesota Statutes 2012, section 477A.03, is amended by adding a
39.26subdivision to read:
39.27    Subd. 6. Inflation adjustment. In 2015 and thereafter, the amount paid under
39.28subdivision 2a shall be multiplied by an amount equal to one plus the sum of (1) the
39.29percentage increase in the implicit price deflator for government expenditures and gross
39.30investment for state and local government purchases as prepared by the United States
39.31Department of Commerce, for the 12-month period ending March 31 of the previous
39.32calendar year, and (2) the percentage increase in total city population for the most recently
39.33available years as of January 15 of the current year. The percentage increase in this
39.34subdivision shall not be less than 2.5 percent or greater than five percent.
40.1EFFECTIVE DATE.This section is effective for aids payable in calendar year
40.22014 and thereafter.

40.3    Sec. 20. REPEALER.
40.4(a) Minnesota Statutes 2012, sections 477A.011, subdivisions 2a, 19, 29, 31, 32, 33,
40.536, 39, 40, 41, and 42; 477A.013, subdivisions 11 and 12; 477A.0133; and 477A.0134, are
40.6repealed.
40.7(b) Laws 2006, chapter 259, article 11, section 3, as amended by Laws 2008, chapter
40.8154, article 1, section 4, is repealed.
40.9EFFECTIVE DATE.This section is effective for aids payable in calendar year
40.102014 and thereafter.

40.11ARTICLE 4
40.12PROPERTY TAXES

40.13    Section 1. Minnesota Statutes 2012, section 103B.102, subdivision 3, is amended to
40.14read:
40.15    Subd. 3. Evaluation and report. The Board of Water and Soil Resources shall
40.16evaluate performance, financial, and activity information for each local water management
40.17entity. The board shall evaluate the entities' progress in accomplishing their adopted plans
40.18on a regular basis as determined by the board based on budget and operations of the local
40.19water management entity, but not less than once every five ten years. The board shall
40.20maintain a summary of local water management entity performance on the board's Web site.
40.21Beginning February 1, 2008, and annually thereafter, the board shall provide an analysis
40.22of local water management entity performance to the chairs of the house of representatives
40.23and senate committees having jurisdiction over environment and natural resources policy.

40.24    Sec. 2. Minnesota Statutes 2012, section 103B.335, is amended to read:
40.25103B.335 TAX LEVY AUTHORITY.
40.26    Subdivision 1. Local water planning and management. The governing body of
40.27any county, municipality, or township may levy a tax in an amount required to implement
40.28sections 103B.301 to 103B.355 or a comprehensive watershed management plan as
40.29defined in section 103B.3363.
40.30    Subd. 2. Priority programs; conservation and watershed districts. A county
40.31may levy amounts necessary to pay the reasonable increased costs to soil and water
40.32conservation districts and watershed districts of administering and implementing priority
41.1programs identified in an approved and adopted plan or a comprehensive watershed
41.2management plan as defined in section 103B.3363.

41.3    Sec. 3. Minnesota Statutes 2012, section 103B.3369, subdivision 5, is amended to read:
41.4    Subd. 5. Financial assistance. A base grant may be awarded to a county that
41.5provides a match utilizing a water implementation tax or other local source. A water
41.6implementation tax that a county intends to use as a match to the base grant must be
41.7levied at a rate sufficient to generate a minimum amount determined by the board.
41.8The board may award performance-based grants to local units of government that are
41.9responsible for implementing elements of applicable portions of watershed management
41.10plans, comprehensive plans, local water management plans, or comprehensive watershed
41.11management plans, developed or amended, adopted and approved, according to chapter
41.12103B, 103C, or 103D. Upon request by a local government unit, the board may also
41.13award performance-based grants to local units of government to carry out TMDL
41.14implementation plans as provided in chapter 114D, if the TMDL implementation plan has
41.15been incorporated into the local water management plan according to the procedures for
41.16approving comprehensive plans, watershed management plans, local water management
41.17plans, or comprehensive watershed management plans under chapter 103B, 103C, or
41.18103D, or if the TMDL implementation plan has undergone a public review process.
41.19Notwithstanding section 16A.41, the board may award performance-based grants on an
41.20advanced basis. The fee authorized in section 40A.152 may be used as a local match
41.21or as a supplement to state funding to accomplish implementation of comprehensive
41.22plans, watershed management plans, local water management plans, or comprehensive
41.23watershed management plans under chapter 103B, 103C, or 103D.

41.24    Sec. 4. Minnesota Statutes 2012, section 103C.501, subdivision 4, is amended to read:
41.25    Subd. 4. Cost-sharing funds. (a) The state board shall allocate at least 70 percent
41.26of cost-sharing funds to areas with high priority erosion, sedimentation, or water quality
41.27problems or water quantity problems due to altered hydrology. The areas must be selected
41.28based on the statewide priorities established by the state board.
41.29    (b) The allocated funds must be used for conservation practices for high priority
41.30problems identified in the comprehensive and annual work plans of the districts, for
41.31the technical assistance portion of the grant funds to leverage federal or other nonstate
41.32funds, or to address high-priority needs identified in local water management plans or
41.33comprehensive watershed management plans.
41.34    (b) The remaining cost-sharing funds may be allocated to districts as follows:
42.1    (1) for technical and administrative assistance, not more than 20 percent of the
42.2funds; and
42.3    (2) for conservation practices for lower priority erosion, sedimentation, or water
42.4quality problems.

42.5    Sec. 5. Minnesota Statutes 2012, section 103F.405, subdivision 1, is amended to read:
42.6    Subdivision 1. Authority. Each statutory or home rule charter city, town, or
42.7county that has planning and zoning authority under sections 366.10 to 366.19, 394.21
42.8to 394.37, or 462.351 to 462.365 is encouraged to adopt a soil loss ordinance. The soil
42.9loss ordinance must use the soil loss tolerance for each soil series described in the United
42.10States Soil Natural Resources Conservation Service Field Office Technical Guide, or
42.11another method approved by the Board of Water and Soil Resources, to determine the
42.12soil loss limits, but the soil loss limits must be attainable by the best practicable soil
42.13conservation practice. Ordinances adopted by local governments within the metropolitan
42.14area defined in section 473.121 must be consistent with local water management plans
42.15adopted under section 103B.235 a comprehensive plan, local water management plan, or
42.16watershed management plan developed or amended, adopted and approved, according
42.17to chapter 103B, 103C, or 103D.

42.18    Sec. 6. Minnesota Statutes 2012, section 168.012, subdivision 9, is amended to read:
42.19    Subd. 9. Manufactured homes and park trailers. Manufactured homes and park
42.20trailers shall not be taxed as motor vehicles using the public streets and highways and shall
42.21be exempt from the motor vehicle tax provisions of this chapter. Except as provided in
42.22section 273.125, manufactured homes and park trailers shall be taxed as personal property.
42.23The provisions of Minnesota Statutes 1957, section 272.02 or any other act providing for
42.24tax exemption shall be inapplicable to manufactured homes and park trailers, except such
42.25manufactured homes as are held by a licensed dealer or limited dealer and exempted as
42.26inventory under subdivision 9a. Travel trailers not conspicuously displaying current
42.27registration plates on the property tax assessment date shall be taxed as manufactured
42.28homes if occupied as human dwelling places.
42.29EFFECTIVE DATE.This section is effective for taxes payable in 2014 and
42.30thereafter.

42.31    Sec. 7. Minnesota Statutes 2012, section 168.012, is amended by adding a subdivision
42.32to read:
43.1    Subd. 9a. Manufactured home as dealer inventory. Manufactured homes as
43.2defined in section 327.31, subdivision 6, shall be considered as dealer inventory if the
43.3home is:
43.4(1) listed as inventory and held by a licensed or limited dealer;
43.5(2) unoccupied and not available for rent;
43.6(3) may or may not be permanently connected to utilities when located in a
43.7manufactured park; and
43.8(4) may or may not be temporarily connected to utilities when located at a dealer's
43.9sales center.
43.10EFFECTIVE DATE.This section is effective for taxes payable in 2014 and
43.11thereafter.

43.12    Sec. 8. Minnesota Statutes 2012, section 272.02, subdivision 39, is amended to read:
43.13    Subd. 39. Economic development; public purpose. The holding of property by a
43.14political subdivision of the state for later resale for economic development purposes shall
43.15be considered a public purpose in accordance with subdivision 8 for a period not to exceed
43.16nine years, except that for property located in a city of 5,000 20,000 population or under
43.17that is located outside of the metropolitan area as defined in section 473.121, subdivision
43.182
, the period must not exceed 15 years.
43.19The holding of property by a political subdivision of the state for later resale (1)
43.20which is purchased or held for housing purposes, or (2) which meets the conditions
43.21described in section 469.174, subdivision 10, shall be considered a public purpose in
43.22accordance with subdivision 8.
43.23The governing body of the political subdivision which acquires property which is
43.24subject to this subdivision shall after the purchase of the property certify to the city or
43.25county assessor whether the property is held for economic development purposes or
43.26housing purposes, or whether it meets the conditions of section 469.174, subdivision 10.
43.27If the property is acquired for economic development purposes and buildings or other
43.28improvements are constructed after acquisition of the property, and if more than one-half
43.29of the floor space of the buildings or improvements which is available for lease to or use
43.30by a private individual, corporation, or other entity is leased to or otherwise used by
43.31a private individual, corporation, or other entity the provisions of this subdivision shall
43.32not apply to the property. This subdivision shall not create an exemption from section
43.33272.01, subdivision 2 ; 272.68; 273.19; or 469.040, subdivision 3; or other provision of
43.34law providing for the taxation of or for payments in lieu of taxes for publicly held property
43.35which is leased, loaned, or otherwise made available and used by a private person.
44.1EFFECTIVE DATE.This section is effective for assessment year 2013 and
44.2thereafter and for taxes payable in 2014 and thereafter.

44.3    Sec. 9. Minnesota Statutes 2012, section 272.02, is amended by adding a subdivision
44.4to read:
44.5    Subd. 98. Certain property owned by an Indian tribe. (a) Property is exempt that:
44.6    (1) was classified as 3a under section 273.13, subdivision 24, for taxes payable
44.7in 2013;
44.8    (2) is located in a city of the first class with a population greater than 300,000 as of
44.9the 2010 federal census;
44.10    (3) is owned and occupied directly or indirectly by a federally recognized Indian
44.11tribe within the state of Minnesota; and
44.12    (4) is used exclusively for tribal purposes or institutions of public charity as defined
44.13in subdivision 7.
44.14    (b) For purposes of this subdivision, a "tribal purpose" is a public purpose as defined
44.15in subdivision 8 and includes noncommercial tribal government activities. Property
44.16that qualifies for the exemption under this subdivision is limited to no more than two
44.17contiguous parcels and structures that do not exceed in the aggregate 20,000 square feet.
44.18Property acquired for single-family housing, market-rate apartments, agriculture, or
44.19forestry does not qualify for this exemption. The exemption created by this subdivision
44.20expires with taxes payable in 2024.
44.21EFFECTIVE DATE.This section is effective beginning with taxes payable in 2014.

44.22    Sec. 10. Minnesota Statutes 2012, section 272.02, is amended by adding a subdivision
44.23to read:
44.24    Subd. 99. Public entertainment facility; property tax exemption; special
44.25assessment. Any real or personal property acquired, owned, leased, controlled, used,
44.26or occupied by a first class city for the primary purpose of providing an arena for a
44.27professional basketball team is declared to be acquired, owned, leased, controlled, used,
44.28and occupied for public, governmental, and municipal purposes, and is exempt from ad
44.29valorem taxation by the state or any political subdivision of the state, provided that the
44.30properties are subject to special assessments levied by a political subdivision for a local
44.31improvement in amounts proportionate to and not exceeding the special benefit received
44.32by the properties from the improvement. In determining the special benefit received by
44.33the properties, no possible use of any of the properties in any manner different from their
44.34intended use for providing a professional basketball arena at the time may be considered.
45.1Notwithstanding section 272.01, subdivision 2, or 273.19, real or personal property subject
45.2to a lease or use agreement between the city and another person for uses related to the
45.3purposes of the operation of the arena is exempt from taxation regardless of the length of
45.4the lease or use agreement. This section, insofar as it provides an exemption or special
45.5treatment, does not apply to any real property that is leased for residential, business, or
45.6commercial development, or to a restaurant that is open for general business more than
45.7200 days a year, or for other purposes different from those necessary to the provision
45.8and operation of the arena.
45.9EFFECTIVE DATE.This section is effective beginning with assessment year 2013.

45.10    Sec. 11. Minnesota Statutes 2012, section 272.02, is amended by adding a subdivision
45.11to read:
45.12    Subd. 100. Public entertainment facility; property tax exemption; special
45.13assessment. Any real or personal property acquired, owned, leased, controlled, used,
45.14or occupied by a first class city for the primary purpose of providing a ball park for a
45.15minor league baseball team is declared to be acquired, owned, leased, controlled, used,
45.16and occupied for public, governmental, and municipal purposes, and is exempt from ad
45.17valorem taxation by the state or any political subdivision of the state, provided that the
45.18properties are subject to special assessments levied by a political subdivision for a local
45.19improvement in amounts proportionate to and not exceeding the special benefit received
45.20by the properties from the improvement. In determining the special benefit received by
45.21the properties, no possible use of any of the properties in any manner different from
45.22their intended use for providing a minor league ballpark at the time may be considered.
45.23Notwithstanding section 272.01, subdivision 2, or 273.19, real or personal property
45.24subject to a lease or use agreement between the city and another person for uses related to
45.25the purposes of the operation of the ballpark and related parking facilities is exempt from
45.26taxation regardless of the length of the lease or use agreement. This section, insofar as it
45.27provides an exemption or special treatment, does not apply to any real property that is
45.28leased for residential, business, or commercial development or other purposes different
45.29from those necessary to the provision and operation of the ball park.
45.30EFFECTIVE DATE.This section is effective beginning with assessment year 2013.

45.31    Sec. 12. Minnesota Statutes 2012, section 272.02, is amended by adding a subdivision
45.32to read:
46.1    Subd. 101. Electric generation facility; personal property. (a) Notwithstanding
46.2subdivision 9, clause (a), and section 453.54, subdivision 20, attached machinery and
46.3other personal property which is part of an electric generation facility that exceeds five
46.4megawatts of installed capacity and meets the requirements of this subdivision is exempt.
46.5At the time of construction, the facility must be:
46.6    (1) designed to utilize natural gas as a primary fuel;
46.7    (2) owned and operated by a municipal power agency as defined in section 453.52,
46.8subdivision 8;
46.9    (3) designed to utilize reciprocating engines paired with generators to produce
46.10electrical power;
46.11    (4) located within the service territory of a municipal power agency's electrical
46.12municipal utility that serves load exclusively in a metropolitan county as defined in
46.13section 473.121, subdivision 4; and
46.14(5) designed to connect directly with a municipality's substation.
46.15    (b) Construction of the facility must be commenced after June 1, 2013, and before
46.16June 1, 2017. Property eligible for this exemption does not include electric transmission
46.17lines and interconnections or gas pipelines and interconnections appurtenant to the
46.18property or the facility.
46.19EFFECTIVE DATE.This section is effective for assessment year 2013, taxes
46.20payable in 2014, and thereafter.

46.21    Sec. 13. Minnesota Statutes 2012, section 273.11, is amended by adding a subdivision
46.22to read:
46.23    Subd. 24. Valuation limit for class 4d property. Notwithstanding the provisions of
46.24subdivision 1, the taxable value of any property classified as class 4d under section 273.13,
46.25subdivision 25, is limited as provided under this section. For assessment year 2013, the
46.26value may not exceed $100,000 times the number of dwelling units. For subsequent years,
46.27the limit is adjusted each year by the average statewide change in estimated market value
46.28of property classified as class 4a and 4d under section 273.13, subdivision 25, for the
46.29previous assessment year, excluding valuation change due to new construction, rounded to
46.30the nearest $1,000. Beginning with assessment year 2014, the commissioner of revenue
46.31must certify the limit for each assessment year by November 1 of the previous year.
46.32EFFECTIVE DATE.This section is effective beginning with assessment year 2013.

46.33    Sec. 14. Minnesota Statutes 2012, section 279.01, subdivision 1, is amended to read:
47.1    Subdivision 1. Due dates; penalties. Except as provided in subdivision subdivisions
47.2 3 or 4 to 5, on May 16 or 21 days after the postmark date on the envelope containing the
47.3property tax statement, whichever is later, a penalty accrues and thereafter is charged upon
47.4all unpaid taxes on real estate on the current lists in the hands of the county treasurer. The
47.5penalty is at a rate of two percent on homestead property until May 31 and four percent on
47.6June 1. The penalty on nonhomestead property is at a rate of four percent until May 31 and
47.7eight percent on June 1. This penalty does not accrue until June 1 of each year, or 21 days
47.8after the postmark date on the envelope containing the property tax statements, whichever
47.9is later, on commercial use real property used for seasonal residential recreational purposes
47.10and classified as class 1c or 4c, and on other commercial use real property classified as
47.11class 3a, provided that over 60 percent of the gross income earned by the enterprise on the
47.12class 3a property is earned during the months of May, June, July, and August. In order for
47.13the first half of the tax due on class 3a property to be paid after May 15 and before June 1,
47.14or 21 days after the postmark date on the envelope containing the property tax statement,
47.15whichever is later, without penalty, the owner of the property must attach an affidavit
47.16to the payment attesting to compliance with the income provision of this subdivision.
47.17Thereafter, for both homestead and nonhomestead property, on the first day of each month
47.18beginning July 1, up to and including October 1 following, an additional penalty of one
47.19percent for each month accrues and is charged on all such unpaid taxes provided that if the
47.20due date was extended beyond May 15 as the result of any delay in mailing property tax
47.21statements no additional penalty shall accrue if the tax is paid by the extended due date. If
47.22the tax is not paid by the extended due date, then all penalties that would have accrued if
47.23the due date had been May 15 shall be charged. When the taxes against any tract or lot
47.24exceed $100, one-half thereof may be paid prior to May 16 or 21 days after the postmark
47.25date on the envelope containing the property tax statement, whichever is later; and, if so
47.26paid, no penalty attaches; the remaining one-half may be paid at any time prior to October
47.2716 following, without penalty; but, if not so paid, then a penalty of two percent accrues
47.28thereon for homestead property and a penalty of four percent on nonhomestead property.
47.29Thereafter, for homestead property, on the first day of November an additional penalty of
47.30four percent accrues and on the first day of December following, an additional penalty of
47.31two percent accrues and is charged on all such unpaid taxes. Thereafter, for nonhomestead
47.32property, on the first day of November and December following, an additional penalty of
47.33four percent for each month accrues and is charged on all such unpaid taxes. If one-half of
47.34such taxes are not paid prior to May 16 or 21 days after the postmark date on the envelope
47.35containing the property tax statement, whichever is later, the same may be paid at any time
48.1prior to October 16, with accrued penalties to the date of payment added, and thereupon
48.2no penalty attaches to the remaining one-half until October 16 following.
48.3    This section applies to payment of personal property taxes assessed against
48.4improvements to leased property, except as provided by section 277.01, subdivision 3.
48.5    A county may provide by resolution that in the case of a property owner that has
48.6multiple tracts or parcels with aggregate taxes exceeding $100, payments may be made in
48.7installments as provided in this subdivision.
48.8    The county treasurer may accept payments of more or less than the exact amount of
48.9a tax installment due. Payments must be applied first to the oldest installment that is due
48.10but which has not been fully paid. If the accepted payment is less than the amount due,
48.11payments must be applied first to the penalty accrued for the year or the installment being
48.12paid. Acceptance of partial payment of tax does not constitute a waiver of the minimum
48.13payment required as a condition for filing an appeal under section 278.03 or any other law,
48.14nor does it affect the order of payment of delinquent taxes under section 280.39.

48.15    Sec. 15. Minnesota Statutes 2012, section 279.01, is amended by adding a subdivision
48.16to read:
48.17    Subd. 5. Federal active service exception. In the case of a homestead property
48.18owned by an individual who is on federal active service, as defined in section 190.05,
48.19subdivision 5c, as a member of the National Guard or a reserve component, a six-month
48.20grace period is granted for complying with the due dates imposed by subdivision 1. During
48.21this period, no late fees or penalties shall accrue against the property. The due date for
48.22property taxes owed under this chapter for an individual covered by this subdivision shall
48.23be November 16 for taxes due on May 16, and April 16 of the following year for taxes due
48.24on October 16. A taxpayer making a payment under this subdivision must accompany
48.25the payment with a signed copy of the taxpayer's orders or form DD214 showing the
48.26dates of active service which clearly indicate that the taxpayer was in active service as a
48.27member of the National Guard or a reserve component on the date the payment was due.
48.28This grace period applies to all homestead property owned by individuals on federal active
48.29service, as herein defined, for all of that property's due dates which fall on a day that is
48.30included in the taxpayer's federal active service.

48.31    Sec. 16. Minnesota Statutes 2012, section 279.02, is amended to read:
48.32279.02 DUTIES OF COUNTY AUDITOR AND TREASURER.
48.33    Subdivision 1. Delinquent property; rates. On the first business day in January, of
48.34each year, the county treasurer shall return the tax lists on hand to the county auditor, who
49.1shall compare the same with the statements receipted for by the treasurer on file in the
49.2auditor's office and each tract or lot of real property against which the taxes, or any part
49.3thereof, remain unpaid, shall be deemed delinquent, and thereupon an additional penalty
49.4of two percent on the amount of the original tax remaining unpaid shall immediately
49.5accrue and thereafter be charged upon all such delinquent taxes; and any auditor who
49.6shall make out and deliver any statement of delinquent taxes without including therein
49.7the penalties imposed by law, and any treasurer who shall receive payment of such taxes
49.8without including in such payment all items as shown on the auditor's statement, shall be
49.9liable to the county for the amounts of any items omitted.
49.10    Subd. 2. Federal active service exception. Notwithstanding subdivision 1, a
49.11homestead property owned by an individual who is on federal active service, as defined
49.12in section 190.05, subdivision 5c, as a member of the National Guard or a reserve
49.13component, shall not be deemed delinquent under this section if the due dates imposed
49.14under section 279.01 fall on a day in which the individual was on federal active service.

49.15    Sec. 17. Minnesota Statutes 2012, section 287.05, is amended by adding a subdivision
49.16to read:
49.17    Subd. 10. Hennepin and Ramsey Counties. For properties located in Hennepin
49.18and Ramsey Counties, the county may impose an additional mortgage registry tax as
49.19defined in sections 383A.80 and 383B.80.
49.20EFFECTIVE DATE.This section is effective for deeds and mortgages
49.21acknowledged on or after July 1, 2013.

49.22    Sec. 18. [287.40] HENNEPIN AND RAMSEY COUNTIES.
49.23    For properties located in Hennepin and Ramsey Counties, the county may impose an
49.24additional deed tax as defined in sections 383A.80 and 383B.80.
49.25EFFECTIVE DATE.This section is effective for deeds and mortgages
49.26acknowledged on or after July 1, 2013.

49.27    Sec. 19. Laws 1988, chapter 645, section 3, as amended by Laws 1999, chapter 243,
49.28article 6, section 9, Laws 2000, chapter 490, article 6, section 15, and Laws 2008, chapter
49.29154, article 2, section 30, is amended to read:
49.30    Sec. 3. TAX; PAYMENT OF EXPENSES.
49.31    (a) The tax levied by the hospital district under Minnesota Statutes, section 447.34,
49.32must not be levied at a rate that exceeds the amount authorized to be levied under that
50.1section. The proceeds of the tax may be used for all purposes of the hospital district,
50.2except as provided in paragraph (b).
50.3    (b) 0.015 percent of taxable market value of the tax in paragraph (a) may be used
50.4solely by the Cook ambulance service and the Orr ambulance service for the purpose of
50.5capital expenditures as it relates to:
50.6    (1) ambulance acquisitions for the Cook ambulance service and the Orr ambulance
50.7service and not;
50.8    (2) attached and portable equipment for use in and for the ambulances; and
50.9    (3) parts and replacement parts for maintenance and repair of the ambulances.
50.10The money may not be used for administrative, operation, or salary expenses.
50.11    (c) The part of the levy referred to in paragraph (b) must be administered by the
50.12Cook Hospital and passed on in equal amounts directly to the Cook area ambulance
50.13service board and the city of Orr to be held in trust until funding for a new ambulance is
50.14needed by either the Cook ambulance service or the Orr ambulance service used for the
50.15purposes in paragraph (b).

50.16    Sec. 20. Laws 1999, chapter 243, article 6, section 11, is amended to read:
50.17    Sec. 11. CEMETERY LEVY FOR SAWYER BY CARLTON COUNTY.
50.18    Subdivision 1. Levy authorized. Notwithstanding other law to the contrary, the
50.19Carlton county board of commissioners may annually levy in and for the unorganized
50.20township territory of Sawyer an amount up to $1,000 annually for cemetery purposes,
50.21beginning with taxes payable in 2000 and ending with taxes payable in 2009.
50.22    Subd. 2. Effective date. This section is effective June 1, 1999, without local
50.23approval.
50.24EFFECTIVE DATE; LOCAL APPROVAL.This section applies to taxes
50.25payable in 2014 and thereafter, and is effective the day after the Carlton county board
50.26of commissioners and its chief clerical officer timely complete their compliance with
50.27Minnesota Statutes, section 645.021, subdivisions 2 and 3.

50.28    Sec. 21. Laws 2008, chapter 366, article 5, section 33, the effective date, is amended to
50.29read:
50.30EFFECTIVE DATE.This section is effective for taxes levied in 2008, payable in
50.312009, and is repealed effective for taxes levied in 2013 2018, payable in 2014 2019,
50.32and thereafter.
51.1EFFECTIVE DATE.This section is effective beginning with taxes payable in 2014.

51.2    Sec. 22. Laws 2010, chapter 389, article 1, section 12, the effective date, is amended to
51.3read:
51.4EFFECTIVE DATE.This section is effective for assessment years year 2010 and
51.52011, for taxes payable in 2011 and 2012 thereafter.
51.6EFFECTIVE DATE.This section is effective for assessment year 2012 and
51.7thereafter.

51.8    Sec. 23. MINNEAPOLIS AND ST. PAUL; ENTERTAINMENT FACILITIES
51.9COORDINATION.
51.10    (a) On or before January 1, 2015, the cities of St. Paul and Minneapolis shall establish
51.11a joint governing structure to coordinate and provide for joint marketing, promotion, and
51.12scheduling of conventions and events at the Target Center and Xcel Energy Center.
51.13    (b) On or before February 1, 2014, the cities of St. Paul and Minneapolis, and
51.14representatives from the primary professional sports team tenant of each facility, shall also
51.15study and report to the legislature on creating a joint governing structure to provide for
51.16joint administration, financing, and operations of the facilities and the possible effects of
51.17joint governance on the finances of each facility and each city. The study under this
51.18paragraph must:
51.19    (1) examine the current finances of each facility, including past and projected costs
51.20and revenues; projected capital improvements; and the current and projected impact
51.21of each facility on the city's general fund;
51.22    (2) determine the impacts of joint governance on the future finances of each facility
51.23and city;
51.24    (3) examine the inclusion of other entertainment venues in the joint governance, and
51.25the impact the inclusion of those facilities would have on all the facilities within the joint
51.26governing structure and the cities in which they are located; and
51.27    (4) consider the amount of city, regional, and state funding, if any, that would be
51.28required to fund and operate the facilities under a joint governing structure.
51.29    (c) In considering joint governing structures under paragraph (b), the study shall
51.30specifically consider the feasibility of joining the Target Center and the Xcel Energy
51.31Center, and possibly other venues, to the Minnesota Sports Facilities Authority under
51.32Minnesota Statutes, section 473J.08.
52.1    (d) Representatives of the cities and the primary professional sports team tenants
52.2of each facility shall meet within 30 days of the effective date of this section to begin
52.3implementation of this section.
52.4EFFECTIVE DATE.This section is effective the day following final enactment
52.5upon compliance with the provisions of Minnesota Statutes, section 645.021, subdivisions
52.62 and 3, by the governing bodies of the cities of St. Paul and Minneapolis and their chief
52.7clerical officers, and provided that, notwithstanding the time limits under Minnesota
52.8Statutes, section 645.021, subdivision 3, the certificates of approval are filed with the
52.9secretary of state within 30 days after enactment of this act.

52.10    Sec. 24. MORATORIUM ON CHANGES IN ASSESSMENT PRACTICE.
52.11    (a) An assessor may not deviate from current practices or policies used generally in
52.12assessing or determining the taxable status of property used in the production of biofuels,
52.13wine, beer, distilled beverages, or dairy products.
52.14    (b) An assessor may not change the taxable status of any existing property involved
52.15in the industrial processes identified in paragraph (a), unless the change is made as a result
52.16of a change in use of the property, or to correct an error. For currently taxable properties,
52.17the assessor may change the estimated market value of the property.
52.18EFFECTIVE DATE.This section is effective for assessment year 2013 only.

52.19    Sec. 25. STUDY AND REPORT ON CERTAIN PROPERTY USED IN
52.20BUSINESS AND PRODUCTION.
52.21In order to provide the legislature with information on the assessment of property
52.22used in business and production activities, the commissioner of revenue must study the
52.23impact of the exception contained in Minnesota Statutes, section 272.03, subdivision
52.241(c)(iii). The commissioner must report a summary of findings and recommendations to
52.25the chairs and ranking minority members of the taxes committees of the senate and house
52.26of representatives by February 1, 2014.
52.27EFFECTIVE DATE.This section is effective the day following final enactment.

52.28    Sec. 26. REIMBURSEMENT FOR PROPERTY TAX ABATEMENTS.
52.29    Subdivision 1. Reimbursement. The commissioner of revenue shall reimburse
52.30taxing jurisdictions for property tax abatements granted in Hennepin County under Laws
52.312011, First Special Session chapter 7, article 5, section 13, notwithstanding the time limits
53.1contained in that section. The reimbursements must be made to each taxing jurisdiction
53.2pursuant to the certification of the Hennepin County auditor.
53.3    Subd. 2. Appropriation. The amount necessary, not to exceed $400,000, is
53.4appropriated to the commissioner of revenue from the general fund to make the payments
53.5required under this section. This appropriation does not cancel but is available until June
53.630, 2014.
53.7EFFECTIVE DATE.This section is effective the day following final enactment.

53.8    Sec. 27. IRON RANGE FISCAL DISPARITIES STUDY.
53.9    Subdivision 1. Study required. The commissioner of revenue shall conduct a study
53.10of the tax relief area revenue distribution program contained in Minnesota Statutes, chapter
53.11276A, commonly known as the Iron Range fiscal disparities program. By February 1,
53.122015, the commissioner shall submit a report to the chairs and ranking minority members
53.13of the house of representatives and senate tax committees consisting of the findings of the
53.14study and identification of issues for policy makers to consider. The study must analyze:
53.15    (1) the extent to which the benefits of the economic growth in the region are shared
53.16throughout the region, especially for growth that results from state or regional decisions;
53.17    (2) the program's impact on the variability of tax rates across jurisdictions of the
53.18region;
53.19    (3) the program's impact on the distribution of homestead property tax burdens
53.20across jurisdictions of the region; and
53.21    (4) the relationship between the impacts of the program and overburden on
53.22jurisdictions containing properties that provide regional benefits, specifically the costs
53.23those properties impose on their host jurisdictions in excess of their tax payments. The
53.24report must include a description of other property tax, aid, and local development
53.25programs that interact with the fiscal disparities program.
53.26    Subd. 2. Funds transfer from fiscal disparities levy. For taxes payable in 2014
53.27only, $75,000 must be added to St. Louis County's areawide levy as otherwise determined
53.28under Minnesota Statutes, section 276A.06, subdivision 5. Upon receipt of the proceeds of
53.29this levy, St. Louis County must transfer this money to the commissioner of management
53.30and budget for deposit into an account in the special revenue fund. One-half of the
53.31proceeds of the levy must be transferred prior to June 30, 2014.
53.32    Subd. 3. Appropriation. $37,500 in fiscal year 2014 and $37,500 in fiscal year
53.332015 are appropriated from the account in the special revenue fund established under
53.34subdivision 2 to the commissioner of revenue to pay for the study required by this section.
53.35Any amounts remaining in the account in the special revenue fund on June 30, 2015, must
54.1be distributed to St. Louis County for the purposes of reducing the areawide tax rate
54.2for taxes payable in 2016.
54.3EFFECTIVE DATE.This section is effective July 1, 2013.

54.4    Sec. 28. REPEALER.
54.5(a) Minnesota Statutes 2012, sections 428A.101; and 428A.21, are repealed.
54.6(b) Minnesota Statutes 2012, sections 383A.80, subdivision 4; and 383B.80,
54.7subdivision 4, are repealed.
54.8EFFECTIVE DATE.This section is effective the day following final enactment,
54.9and paragraph (b) reinstates the authority for Hennepin and Ramsey Counties to
54.10impose the additional mortgage registry and deed tax effective for deeds and mortgages
54.11acknowledged on or after July 1, 2013.

54.12ARTICLE 5
54.13SPECIAL TAXES

54.14    Section 1. Minnesota Statutes 2012, section 270C.56, subdivision 1, is amended to read:
54.15    Subdivision 1. Liability imposed. A person who, either singly or jointly with
54.16others, has the control of, supervision of, or responsibility for filing returns or reports,
54.17paying taxes, or collecting or withholding and remitting taxes and who fails to do so, or a
54.18person who is liable under any other law, is liable for the payment of taxes arising under
54.19chapters 295, 296A, 297A, 297F, and 297G, or sections 256.9658, 290.92, and 297E.02,
54.20and the applicable penalties and interest on those taxes.
54.21EFFECTIVE DATE.This section is effective July 1, 2013.

54.22    Sec. 2. [295.61] SPORTS MEMORABILIA GROSS RECEIPTS TAX.
54.23    Subdivision 1. Definitions. (a) For purposes of this section, the following terms
54.24have the meanings given, unless the context clearly indicates otherwise.
54.25(b) "Commissioner" means the commissioner of revenue.
54.26(c) "Sale" means a transfer of title or possession of tangible personal property,
54.27whether absolutely or conditionally.
54.28(d) "Sports memorabilia" means items available for sale to the public that are sold
54.29under a license granted by any professional sports league or a team that is a franchise of a
54.30professional sports league, or an affiliate or subsidiary of a league or a team, including:
54.31(1) one-of-a-kind items related to sports figures, teams, or events;
55.1(2) trading cards;
55.2(3) photographs;
55.3(4) clothing;
55.4(5) sports event licensed items;
55.5(6) sports equipment; and
55.6(7) similar items.
55.7(e) "Wholesale" or "sale at wholesale" means a sale to a retailer, as defined in section
55.8297A.61, subdivision 9, for the purpose of reselling the property to a third party.
55.9(f) "Wholesaler" means any person making wholesale sales of sports memorabilia
55.10to purchasers in the state.
55.11    Subd. 2. Imposition. A tax is imposed on each sale at wholesale of sports
55.12memorabilia equal to ten percent of the gross revenues from the sale.
55.13    Subd. 3. Estimated payments; annual return. (a) Each wholesaler must make
55.14estimated payments of the tax for the calendar year to the commissioner in quarterly
55.15installments by April 15, July 15, October 15, and January 15 of the following calendar
55.16year. Estimated tax payments are not required if the tax for the calendar year is less than
55.17$500. An underpayment of estimated installments bears interest at the rate specified in
55.18section 270C.40, from the due date of the payment until paid or until the due date of the
55.19annual return at the rate specified in section 270C.40. An underpayment of an estimated
55.20installment is the difference between the amount paid and the lesser of (1) 90 percent of
55.21one-quarter of the tax for the calendar year, or (2) the tax for the actual gross revenues
55.22received during the quarter.
55.23(b) A taxpayer with an aggregate tax liability of $10,000 or more during a fiscal
55.24year ending June 30, must remit all liabilities by funds transfer as defined in section
55.25336.4A-104, paragraph (a), in the next calendar year. The funds-transfer payment date,
55.26as defined in section 336.4A-401, is on or before the first funds-transfer business day
55.27after the date the tax is due.
55.28(c) The taxpayer must file an annual return reconciling the estimated payments by
55.29March 15 of the following calendar year.
55.30(d) The estimated payments and annual return must contain the information and be
55.31in the form prescribed by the commissioner.
55.32    Subd. 4. Compensating use tax. If the tax is not paid under subdivision 2, a
55.33compensating tax is imposed on possession for sale or use of sports memorabilia in
55.34the state. The rate of tax equals the rate under subdivision 2, and must be paid by the
55.35possessor of the items.
56.1    Subd. 5. Administrative provisions. Unless specifically provided otherwise by this
56.2section, the audit, assessment, refund, penalty, interest, enforcement, collection remedies,
56.3appeal, and administrative provisions of chapters 270C and 289A that apply to taxes
56.4imposed under chapter 297A apply to taxes imposed under this section.
56.5    Subd. 6. Disposition of revenues. The commissioner shall deposit the revenues
56.6from the tax in the general fund.
56.7EFFECTIVE DATE.This section is effective for sales made after June 30, 2013.

56.8    Sec. 3. Minnesota Statutes 2012, section 297F.01, subdivision 3, is amended to read:
56.9    Subd. 3. Cigarette. "Cigarette" means any roll for smoking made wholly or in part
56.10of tobacco, that weighs 4.5 pounds or less per thousand:
56.11(1) the wrapper or cover of which is made of paper or another substance or material
56.12except tobacco; or
56.13(2) wrapped in any substance containing tobacco, however labeled or named, which,
56.14because of its appearance, size, the type of tobacco used in the filler, or its packaging,
56.15pricing, marketing, or labeling, is likely to be offered to or purchased by consumers as
56.16a cigarette, as defined in clause (1), unless it is wrapped in whole tobacco leaf and does
56.17not have a cellulose acetate or other cigarette-like filter.
56.18EFFECTIVE DATE.This section is effective July 1, 2013.

56.19    Sec. 4. Minnesota Statutes 2012, section 297F.01, is amended by adding a subdivision
56.20to read:
56.21    Subd. 10b. Moist snuff. "Moist snuff" means any finely cut, ground, or powdered
56.22smokeless tobacco that is intended to be placed or dipped in the mouth.

56.23    Sec. 5. Minnesota Statutes 2012, section 297F.01, subdivision 19, is amended to read:
56.24    Subd. 19. Tobacco products. "Tobacco products" means any product containing,
56.25made, or derived from tobacco that is intended for human consumption, whether chewed,
56.26smoked, absorbed, dissolved, inhaled, snorted, sniffed, or ingested by any other means,
56.27or any component, part, or accessory of a tobacco product, including, but not limited
56.28to, cigars; little cigars; cheroots; stogies; periques; granulated, plug cut, crimp cut,
56.29ready rubbed, and other smoking tobacco; snuff; snuff flour; cavendish; plug and twist
56.30tobacco; fine-cut and other chewing tobacco; shorts; refuse scraps, clippings, cuttings
56.31and sweepings of tobacco, and other kinds and forms of tobacco; but does not include
56.32cigarettes as defined in this section. Tobacco products excludes any tobacco product
57.1that has been approved by the United States Food and Drug Administration for sale as
57.2a tobacco cessation product, as a tobacco dependence product, or for other medical
57.3purposes, and is being marketed and sold solely for such an approved purpose.
57.4EFFECTIVE DATE.This section is effective July 1, 2013.

57.5    Sec. 6. Minnesota Statutes 2012, section 297F.05, subdivision 1, is amended to read:
57.6    Subdivision 1. Rates; cigarettes. A tax is imposed upon the sale of cigarettes in
57.7this state, upon having cigarettes in possession in this state with intent to sell, upon any
57.8person engaged in business as a distributor, and upon the use or storage by consumers, at
57.9the following rates:
57.10(1) on cigarettes weighing not more than three pounds per thousand, 24 141.5 mills
57.11on each such cigarette; and
57.12(2) on cigarettes weighing more than three pounds per thousand, 48 283 mills on
57.13each such cigarette.
57.14EFFECTIVE DATE.This section is effective July 1, 2013.

57.15    Sec. 7. Minnesota Statutes 2012, section 297F.05, is amended by adding a subdivision
57.16to read:
57.17    Subd. 1a. Annual indexing. (a) Each year the commissioner shall adjust the
57.18tax rates under subdivision 1, including any adjustment made in prior years under this
57.19subdivision, by multiplying the mill rates for the current calendar year by an adjustment
57.20factor. The adjustment factor equals the in-lieu sales tax rate that applies to the following
57.21calendar year divided by the in-lieu sales tax rate for the current calendar year. For
57.22purposes of this subdivision, "in-lieu sales tax rate" means the tax rate established under
57.23section 297F.25, subdivision 1, in tenths of a cent per pack.
57.24    (b) The commissioner shall publish the resulting rate by November 1 and the rate
57.25applies to sales made on or after January 1 of the following year.
57.26(c) The determination of the commissioner under this subdivision is not a rule and is
57.27not subject to the Administrative Procedure Act in chapter 14.

57.28    Sec. 8. Minnesota Statutes 2012, section 297F.05, subdivision 3, is amended to read:
57.29    Subd. 3. Rates; tobacco products. (a) A tax is imposed upon all tobacco products
57.30in this state and upon any person engaged in business as a distributor, at the rate of 35
57.31 95 percent of the wholesale sales price of the tobacco products. The tax is imposed at
57.32the time the distributor:
58.1(1) brings, or causes to be brought, into this state from outside the state tobacco
58.2products for sale;
58.3(2) makes, manufactures, or fabricates tobacco products in this state for sale in
58.4this state; or
58.5(3) ships or transports tobacco products to retailers in this state, to be sold by those
58.6retailers.
58.7(b) Notwithstanding paragraph (a), a minimum tax equal to the rate imposed on a
58.8pack of 20 cigarettes weighing not more than three pounds per thousand, as established
58.9under subdivision 1, is imposed on each container of moist snuff.
58.10For purposes of this subdivision, a "container" means the smallest consumer-size can,
58.11package, or other container that is marketed or packaged by the manufacturer, distributor,
58.12or retailer for separate sale to a retail purchaser.
58.13EFFECTIVE DATE.This section is effective July 1, 2013, except the minimum
58.14tax under paragraph (b) is effective January 1, 2014.

58.15    Sec. 9. Minnesota Statutes 2012, section 297F.05, subdivision 4, is amended to read:
58.16    Subd. 4. Use tax; tobacco products. A tax is imposed upon the use or storage by
58.17consumers of tobacco products in this state, and upon such consumers, at the rate of 35 95
58.18 percent of the cost to the consumer of the tobacco products or the minimum tax under
58.19subdivision 3, paragraph (b), whichever is greater.
58.20EFFECTIVE DATE.This section is effective July 1, 2013.

58.21    Sec. 10. Minnesota Statutes 2012, section 297F.24, subdivision 1, is amended to read:
58.22    Subdivision 1. Fee imposed. (a) A fee is imposed upon the sale of nonsettlement
58.23cigarettes in this state, upon having nonsettlement cigarettes in possession in this state
58.24with intent to sell, upon any person engaged in business as a distributor, and upon the use
58.25or storage by consumers of nonsettlement cigarettes. The fee equals a rate of 1.75 2.5
58.26cents per cigarette.
58.27(b) The purpose of this fee is to:
58.28(1) ensure that manufacturers of nonsettlement cigarettes pay fees to the state that
58.29are comparable to costs attributable to the use of the cigarettes;
58.30(2) prevent manufacturers of nonsettlement cigarettes from undermining the state's
58.31policy of discouraging underage smoking by offering nonsettlement cigarettes at prices
58.32substantially below the cigarettes of other manufacturers; and
58.33(3) fund such other purposes as the legislature determines appropriate.

59.1    Sec. 11. Minnesota Statutes 2012, section 297F.25, subdivision 1, is amended to read:
59.2    Subdivision 1. Imposition. (a) A tax is imposed on distributors on the sale of
59.3cigarettes by a cigarette distributor to a retailer or cigarette subjobber for resale in this
59.4state. The tax is equal to 6.5 percent of the combined tax rate under section 297A.62,
59.5multiplied by the weighted average retail price and must be expressed in cents per pack
59.6rounded to the nearest one-tenth of a cent. The weighted average retail price must be
59.7determined annually, with new rates published by November 1, and effective for sales
59.8on or after January 1 of the following year. The weighted average retail price must be
59.9established by surveying cigarette retailers statewide in a manner and time determined by
59.10the commissioner. The commissioner shall make an inflation adjustment in accordance
59.11with the Consumer Price Index for all urban consumers inflation indicator as published in
59.12the most recent state budget forecast. The commissioner shall use the inflation factor for
59.13the calendar year in which the new tax rate takes effect. If the survey indicates that the
59.14average retail price of cigarettes has not increased relative to the average retail price in
59.15the previous year's survey, then the commissioner shall not make an inflation adjustment.
59.16The determination of the commissioner pursuant to this subdivision is not a "rule" and is
59.17not subject to the Administrative Procedure Act contained in chapter 14. For packs of
59.18cigarettes with other than 20 cigarettes, the tax must be adjusted proportionally.
59.19(b) Notwithstanding paragraph (a), and in lieu of a survey of cigarette retailers, the
59.20tax calculation of the weighted average retail price for the sales of cigarettes from August
59.211, 2011, through December 31, 2011, shall be calculated by: (1) increasing the average
59.22retail price per pack of 20 cigarettes from the most recent survey by the percentage change
59.23in a weighted average of the presumed legal prices for cigarettes during the year after
59.24completion of that survey, as reported and published by the Department of Commerce
59.25under section 325D.371; (2) subtracting the sales tax included in the retail price; and (3)
59.26adjusting for expected inflation. The rate must be published by May 1 and is effective for
59.27sales after July 31. If the weighted average of the presumed legal prices indicates that the
59.28average retail price of cigarettes has not increased relative to the average retail price in the
59.29most recent survey, then no inflation adjustment must be made. For packs of cigarettes
59.30with other than 20 cigarettes, the tax must be adjusted proportionally.
59.31EFFECTIVE DATE.This section is effective July 1, 2013.

59.32    Sec. 12. Minnesota Statutes 2012, section 297G.03, subdivision 1, is amended to read:
59.33    Subdivision 1. General rate; distilled spirits and wine. The following excise tax is
59.34imposed on all distilled spirits and wine manufactured, imported, sold, or possessed in
59.35this state:
60.1
Standard
Metric
60.2
60.3
60.4
(a) Distilled spirits, liqueurs, cordials,
and specialties regardless of alcohol
content (excluding ethyl alcohol)
$
5.03
11.02 per gallon
$
1.33
2.91 per liter
60.5
60.6
60.7
60.8
(b) Wine containing 14 percent or less
alcohol by volume (except cider as
defined in section 297G.01, subdivision
3a
)
$
.30
2.08 per gallon
$
.08
.55 per liter
60.9
60.10
60.11
(c) Wine containing more than 14
percent but not more than 21 percent
alcohol by volume
$
.95
2.73 per gallon
$
.25
.72 per liter
60.12
60.13
60.14
(d) Wine containing more than 21
percent but not more than 24 percent
alcohol by volume
$
1.82
3.64 per gallon
$
.48
.97 per liter
60.15
60.16
(e) Wine containing more than 24
percent alcohol by volume
$
3.52
5.34 per gallon
$
.93
1.42 per liter
60.17
60.18
(f) Natural and artificial sparkling wines
containing alcohol
$
1.82
3.60 per gallon
$
.48
.95 per liter
60.19
60.20
(g) Cider as defined in section 297G.01,
subdivision 3a
$
.15
1.93 per gallon
$
.04
.51 per liter
60.21
60.22
(h) Low-alcohol dairy cocktails
$
.08
1.36 per gallon
$
.02
.36 per liter
60.23In computing the tax on a package of distilled spirits or wine, a proportional tax at a
60.24like rate on all fractional parts of a gallon or liter must be paid, except that the tax on a
60.25fractional part of a gallon less than 1/16 of a gallon is the same as for 1/16 of a gallon.
60.26EFFECTIVE DATE.This section is effective July 1, 2013.

60.27    Sec. 13. Minnesota Statutes 2012, section 297G.03, is amended by adding a
60.28subdivision to read:
60.29    Subd. 5. Small winery credit. (a) A qualified winery is entitled to a tax credit of
60.30$2.08 per gallon on 50,000 gallons sold in any fiscal year beginning July 1. Qualified
60.31wineries may take the credit on the 18th day of each month, but the total credit allowed
60.32may not exceed in any fiscal year the lesser of:
60.33(1) the liability for tax; or
60.34(2) $104,000.
60.35(b) For purposes of this subdivision, a "qualified winery" means a winery, whether
60.36or not located in this state, producing less than 100,000 gallons of wine in the calendar
60.37year immediately preceding the calendar year for which the credit under this subdivision
60.38is claimed. In determining the number of gallons, all brands or labels of a winery must
60.39be combined. All facilities for the production of wine owned or controlled by the same
60.40person, corporation, or other entity must be treated as a single winery.
61.1EFFECTIVE DATE.This section is effective July 1, 2013.

61.2    Sec. 14. Minnesota Statutes 2012, section 297G.04, is amended to read:
61.3297G.04 FERMENTED MALT BEVERAGES; RATE OF TAX.
61.4    Subdivision 1. Tax imposed. The following excise tax is imposed on all fermented
61.5malt beverages that are imported, directly or indirectly sold, or possessed in this state:
61.6(1) on fermented malt beverages containing not more than 3.2 percent alcohol by
61.7weight, $2.40 $25.55 per 31-gallon barrel; and
61.8(2) on fermented malt beverages containing more than 3.2 percent alcohol by
61.9weight, $4.60 $27.75 per 31-gallon barrel.
61.10For fractions of a 31-gallon barrel, the tax rate is calculated proportionally.
61.11    Subd. 2. Tax credit. A qualified brewer producing fermented malt beverages is
61.12entitled to a tax credit of $4.60 $27.75 per barrel on 25,000 50,000 barrels sold in any
61.13fiscal year beginning July 1, regardless of the alcohol content of the product. Qualified
61.14brewers may take the credit on the 18th day of each month, but the total credit allowed
61.15may not exceed in any fiscal year the lesser of:
61.16(1) the liability for tax; or
61.17(2) $115,000 $1,387,500.
61.18For purposes of this subdivision, a "qualified brewer" means a brewer, whether or
61.19not located in this state, manufacturing less than 100,000 200,000 barrels of fermented
61.20malt beverages in the calendar year immediately preceding the calendar year for which
61.21the credit under this subdivision is claimed. In determining the number of barrels, all
61.22brands or labels of a brewer must be combined. All facilities for the manufacture of
61.23fermented malt beverages owned or controlled by the same person, corporation, or other
61.24entity must be treated as a single brewer.
61.25EFFECTIVE DATE.This section is effective July 1, 2013.

61.26    Sec. 15. Minnesota Statutes 2012, section 325D.32, subdivision 2, is amended to read:
61.27    Subd. 2. Cigarettes. "Cigarettes" means and includes any roll for smoking, made
61.28wholly or in part of tobacco, irrespective of size and shape and whether or not such
61.29tobacco is flavored, adulterated or mixed with any other ingredient, the wrapper or cover
61.30of which is made of paper or any other substance or material except whole tobacco leaf,
61.31and includes any cigarette as defined in section 297F.01, subdivision 3.
61.32EFFECTIVE DATE.This section is effective July 1, 2013.

62.1    Sec. 16. FLOOR STOCKS TAX.
62.2    Subdivision 1. Cigarettes. (a) A floor stocks tax is imposed on every person
62.3engaged in the business in this state as a distributor, retailer, subjobber, vendor,
62.4manufacturer, or manufacturer's representative of cigarettes, on the stamped cigarettes and
62.5unaffixed stamps in the person's possession or under the person's control at 12:01 a.m. on
62.6July 1, 2013. The tax is imposed at the rate of 80 mills on each cigarette.
62.7(b) Each distributor, on or before July 11, 2013, shall file a return with the
62.8commissioner of revenue, in the form the commissioner prescribes, showing the stamped
62.9cigarettes and unaffixed stamps on hand at 12:01 a.m. on July 1, 2013, and the amount
62.10of tax due on the cigarettes and unaffixed stamps. Each retailer, subjobber, vendor,
62.11manufacturer, or manufacturer's representative, on or before July 11, 2013, shall file
62.12a return with the commissioner, in the form the commissioner prescribes, showing the
62.13cigarettes on hand at 12:01 a.m. on July 1, 2013, and the amount of tax due on the
62.14cigarettes. The tax imposed by this section is due and payable on or before August 8,
62.152013, and after that date bears interest at the rate of one percent per month.
62.16    Subd. 2. Audit and enforcement. The tax imposed by this section is subject to
62.17the audit, assessment, interest, appeal, refund, penalty, enforcement, administrative, and
62.18collection provisions of Minnesota Statutes, chapters 270C and 297F. The commissioner
62.19of revenue may require a distributor to receive and maintain copies of floor stocks fee
62.20returns filed by all persons requesting a credit for returned cigarettes.
62.21    Subd. 3. Deposit of proceeds. The commissioner of revenue shall deposit the
62.22revenues from the tax under this section in the state treasury and credit them to the
62.23general fund.
62.24EFFECTIVE DATE.This section is effective July 1, 2013.

62.25    Sec. 17. INTERIM SALES TAX RATE.
62.26Notwithstanding the provisions of Minnesota Statutes, section 297F.25, the
62.27commissioner shall adjust the weighted average retail price in section 297F.25, subdivision
62.281, on July 1, 2013, to reflect the price changes under this act. This weighted average
62.29shall be used to compute cigarette sales tax under Minnesota Statutes, section 297F.25,
62.30subdivision 1, until December 31, 2013, when the commissioner shall resume annual
62.31adjustments to the weighted average sales price. The commissioner's determination of
62.32the adjustment that takes effect on January 1, 2014, must be limited to the change in the
62.33weighted average retail that occurs during calendar year 2013 but after July 15, 2013.
62.34EFFECTIVE DATE.This section is effective July 1, 2013.

63.1    Sec. 18. TOBACCO TAX COLLECTION REPORT.
63.2    Subdivision 1. Report to legislature. (a) The commissioner of revenue shall report
63.3to the 2014 legislature on the tobacco tax collection system, including recommendations
63.4to improve compliance under the excise tax for both cigarettes and other tobacco products.
63.5The purpose of the report is to provide information and guidance to the legislature on
63.6improvements to the tobacco tax collection system to:
63.7(1) provide a unified system of collecting both the cigarette and other tobacco
63.8taxes, regardless of category, size, or shape, that ensures the highest reasonable rates of
63.9tax collection;
63.10(2) discourage tax evasion; and
63.11(3) help to prevent illegal sale of tobacco products, which may make these products
63.12more accessible to youth.
63.13(b) In the report, the commissioner shall:
63.14(1) provide a detailed review of the present excise tax collection and compliance
63.15system as it applies to both cigarettes and other tobacco products. This must include
63.16an assessment of the levels of compliance for each category of products and the effect
63.17of the stamping requirement on compliance for each category of products and the effect
63.18of the stamping requirement on compliance rates for cigarettes relative to other tobacco
63.19products. It also must identify any weaknesses in the system;
63.20(2) survey the methods of collection and enforcement used by other states or nations,
63.21including identifying and discussing emerging best practices that ensure tracking of both
63.22cigarettes and other tobacco products and result in the highest rates of tax collection and
63.23compliance. These best practices must consider high-technology alternatives, such as use
63.24of bar codes, radio-frequency identification tags, or similar mechanisms for tracking
63.25compliance;
63.26(3) evaluate the adequacy and effectiveness of the existing penalties and other
63.27sanctions for noncompliance;
63.28(4) evaluate the adequacy of the resources allocated by the state to enforce the
63.29tobacco tax and prevention laws; and
63.30(5) make recommendations on implementation of a comprehensive tobacco tax
63.31collection system for Minnesota that can be implemented by January 1, 2014, including:
63.32(i) recommendations on the specific steps needed to institute and implement the new
63.33system, including estimates of the state's costs of doing so and any additional personnel
63.34requirements;
63.35(ii) recommendations on methods to recover the cost of implementing the system
63.36from the industry;
64.1(iii) evaluation of the extent to which the proposed system is sufficiently flexible
64.2and adaptable to adjust to modifications in the construction, packaging, formatting, and
64.3marketing of tobacco products by the industry; and
64.4(iv) recommendations to modify existing penalties or to impose new penalties or
64.5other sanctions to ensure compliance with the system.
64.6    Subd. 2. Due date. The report required by subdivision 1 is due January 1, 2014.
64.7    Subd. 3. Procedure. The report required under this section must be made in the
64.8manner provided under Minnesota Statutes, section 3.195. In addition, copies must be
64.9provided to the chairs and ranking minority members of the legislative committees and
64.10divisions with jurisdiction over taxation.
64.11    Subd. 4. Appropriation. (a) $100,000 is appropriated from the general fund to the
64.12commissioner of revenue for fiscal year 2014 for the cost of preparing the report under
64.13subdivision 1.
64.14(b) The appropriation under this subdivision is a onetime appropriation and is not
64.15included in the base budget.
64.16EFFECTIVE DATE.This section is effective the day following final enactment.

64.17    Sec. 19. REPEALER.
64.18Minnesota Statutes 2012, sections 16A.725; and 256.9658, are repealed.
64.19EFFECTIVE DATE.This section is effective July 1, 2013.

64.20ARTICLE 6
64.21INDIVIDUAL INCOME AND CORPORATE FRANCHISE TAXES

64.22    Section 1. Minnesota Statutes 2012, section 116J.8737, subdivision 1, is amended to
64.23read:
64.24    Subdivision 1. Definitions. (a) For the purposes of this section, the following terms
64.25have the meanings given.
64.26(b) "Qualified small business" means a business that has been certified by the
64.27commissioner under subdivision 2.
64.28(c) "Qualified investor" means an investor who has been certified by the
64.29commissioner under subdivision 3.
64.30(d) "Qualified fund" means a pooled angel investment network fund that has been
64.31certified by the commissioner under subdivision 4.
65.1(e) "Qualified investment" means a cash investment in a qualified small business
65.2of a minimum of:
65.3(1) $10,000 in a calendar year by a qualified investor; or
65.4(2) $30,000 in a calendar year by a qualified fund.
65.5A qualified investment must be made in exchange for common stock, a partnership
65.6or membership interest, preferred stock, debt with mandatory conversion to equity, or an
65.7equivalent ownership interest as determined by the commissioner.
65.8(f) "Family" means a family member within the meaning of the Internal Revenue
65.9Code, section 267(c)(4).
65.10(g) "Pass-through entity" means a corporation that for the applicable taxable year is
65.11treated as an S corporation or a general partnership, limited partnership, limited liability
65.12partnership, trust, or limited liability company and which for the applicable taxable year is
65.13not taxed as a corporation under chapter 290.
65.14(h) "Intern" means a student of an accredited institution of higher education, or a
65.15former student who has graduated in the past six months from an accredited institution
65.16of higher education, who is employed by a qualified small business in a nonpermanent
65.17position for a duration of nine months or less that provides training and experience in the
65.18primary business activity of the business.
65.19(i) "Liquidation event" means a conversion of qualified investment for cash, cash
65.20and other consideration, or any other form of equity or debt interest.
65.21EFFECTIVE DATE.This section is effective for qualified small businesses
65.22certified after June 30, 2013.

65.23    Sec. 2. Minnesota Statutes 2012, section 116J.8737, subdivision 2, is amended to read:
65.24    Subd. 2. Certification of qualified small businesses. (a) Businesses may apply
65.25to the commissioner for certification as a qualified small business for a calendar year.
65.26The application must be in the form and be made under the procedures specified by the
65.27commissioner, accompanied by an application fee of $150. Application fees are deposited
65.28in the small business investment tax credit administration account in the special revenue
65.29fund. The application for certification for 2010 must be made available on the department's
65.30Web site by August 1, 2010. Applications for subsequent years' certification must be made
65.31available on the department's Web site by November 1 of the preceding year.
65.32(b) Within 30 days of receiving an application for certification under this subdivision,
65.33the commissioner must either certify the business as satisfying the conditions required of a
65.34qualified small business, request additional information from the business, or reject the
65.35application for certification. If the commissioner requests additional information from the
66.1business, the commissioner must either certify the business or reject the application within
66.230 days of receiving the additional information. If the commissioner neither certifies the
66.3business nor rejects the application within 30 days of receiving the original application or
66.4within 30 days of receiving the additional information requested, whichever is later, then
66.5the application is deemed rejected, and the commissioner must refund the $150 application
66.6fee. A business that applies for certification and is rejected may reapply.
66.7(c) To receive certification, a business must satisfy all of the following conditions:
66.8(1) the business has its headquarters in Minnesota;
66.9(2) at least 51 percent of the business's employees are employed in Minnesota, and
66.1051 percent of the business's total payroll is paid or incurred in the state;
66.11(3) the business is engaged in, or is committed to engage in, innovation in Minnesota
66.12in one of the following as its primary business activity:
66.13(i) using proprietary technology to add value to a product, process, or service in a
66.14qualified high-technology field;
66.15(ii) researching or developing a proprietary product, process, or service in a qualified
66.16high-technology field; or
66.17(iii) researching, developing, or producing a new proprietary technology for use in
66.18the fields of agriculture, tourism, forestry, mining, manufacturing, or transportation;
66.19(4) other than the activities specifically listed in clause (3), the business is not
66.20engaged in real estate development, insurance, banking, lending, lobbying, political
66.21consulting, information technology consulting, wholesale or retail trade, leisure,
66.22hospitality, transportation, construction, ethanol production from corn, or professional
66.23services provided by attorneys, accountants, business consultants, physicians, or health
66.24care consultants;
66.25(5) the business has fewer than 25 employees;
66.26(6) the business must pay its employees annual wages of at least 175 percent of the
66.27federal poverty guideline for the year for a family of four and must pay its interns annual
66.28wages of at least 175 percent of the federal minimum wage used for federally covered
66.29employers, except that this requirement must be reduced proportionately for employees
66.30and interns who work less than full-time, and does not apply to an executive, officer, or
66.31member of the board of the business, or to any employee who owns, controls, or holds
66.32power to vote more than 20 percent of the outstanding securities of the business;
66.33(7) the business has (i) not been in operation for more than ten years, or (ii) the
66.34business has not been in operation for more than 20 years if the business is engaged
66.35in the research, development, or production of medical devices or pharmaceuticals for
67.1which United States Food and Drug Administration approval is required for use in the
67.2treatment or diagnosis of a disease or condition;
67.3(8) the business has not previously received private equity investments of more
67.4than $4,000,000; and
67.5    (9) the business is not an entity disqualified under section 80A.50, paragraph (b),
67.6clause (3).; and
67.7(10) the business has not issued securities that are traded on a public exchange.
67.8(d) In applying the limit under paragraph (c), clause (5), the employees in all members
67.9of the unitary business, as defined in section 290.17, subdivision 4, must be included.
67.10(e) In order for a qualified investment in a business to be eligible for tax credits,:
67.11(1) the business must have applied for and received certification for the calendar
67.12year in which the investment was made prior to the date on which the qualified investment
67.13was made.;
67.14(2) the business must not have issued securities that are traded on a public exchange;
67.15(3) the business must not issue securities that are traded on a public exchange within
67.16180 days after the date on which the qualified investment was made; and
67.17(4) the business must not have a liquidation event within 180 days after the date on
67.18which the qualified investment was made.
67.19(f) The commissioner must maintain a list of businesses certified under this
67.20subdivision for the calendar year and make the list accessible to the public on the
67.21department's Web site.
67.22(g) For purposes of this subdivision, the following terms have the meanings given:
67.23(1) "qualified high-technology field" includes aerospace, agricultural processing,
67.24renewable energy, energy efficiency and conservation, environmental engineering, food
67.25technology, cellulosic ethanol, information technology, materials science technology,
67.26nanotechnology, telecommunications, biotechnology, medical device products,
67.27pharmaceuticals, diagnostics, biologicals, chemistry, veterinary science, and similar
67.28fields; and
67.29(2) "proprietary technology" means the technical innovations that are unique and
67.30legally owned or licensed by a business and includes, without limitation, those innovations
67.31that are patented, patent pending, a subject of trade secrets, or copyrighted.
67.32EFFECTIVE DATE.This section is effective for qualified small businesses
67.33certified after June 30, 2013, except the amendments to paragraph (c), clause (7), are
67.34effective the day following final enactment.

67.35    Sec. 3. Minnesota Statutes 2012, section 116J.8737, subdivision 8, is amended to read:
68.1    Subd. 8. Data privacy. (a) Data contained in an application submitted to the
68.2commissioner under subdivision 2, 3, or 4 are nonpublic data, or private data on
68.3individuals, as defined in section 13.02, subdivision 9 or 12, except that the following
68.4data items are public:
68.5(1) the name, mailing address, telephone number, e-mail address, contact person's
68.6name, and industry type of a qualified small business upon approval of the application
68.7and certification by the commissioner under subdivision 2;
68.8(2) the name of a qualified investor upon approval of the application and certification
68.9by the commissioner under subdivision 3;
68.10(3) the name of a qualified fund upon approval of the application and certification
68.11by the commissioner under subdivision 4;
68.12(4) for credit certificates issued under subdivision 5, the amount of the credit
68.13certificate issued, amount of the qualifying investment, the name of the qualifying investor
68.14or qualifying fund that received the certificate, and the name of the qualifying small
68.15business in which the qualifying investment was made;
68.16(5) for credits revoked under subdivision 7, paragraph (a), the amount revoked and
68.17the name of the qualified investor or qualified fund; and
68.18(6) for credits revoked under subdivision 7, paragraphs (b) and (c), the amount
68.19revoked and the name of the qualified small business.
68.20(b) The following data, including data classified as nonpublic or private, must be
68.21provided to the consultant for use in conducting the program evaluation under subdivision
68.2210:
68.23(1) the commissioner of employment and economic development shall provide data
68.24contained in an application for certification received from a qualified small business,
68.25qualified investor, or qualified fund, and any annual reporting information received on a
68.26qualified small business, qualified investor, or qualified fund; and
68.27(2) the commissioner of revenue shall provide data contained in any applicable tax
68.28returns of a qualified small business, qualified investor, or qualified fund.
68.29EFFECTIVE DATE.This section is effective the day following final enactment.

68.30    Sec. 4. Minnesota Statutes 2012, section 289A.02, subdivision 7, is amended to read:
68.31    Subd. 7. Internal Revenue Code. Unless specifically defined otherwise, "Internal
68.32Revenue Code" means the Internal Revenue Code of 1986, as amended through April
68.3314, 2011 January 3, 2013.
68.34EFFECTIVE DATE.This section is effective the day following final enactment.

69.1    Sec. 5. Minnesota Statutes 2012, section 289A.08, subdivision 1, is amended to read:
69.2    Subdivision 1. Generally; individuals. (a) A taxpayer must file a return for each
69.3taxable year the taxpayer is required to file a return under section 6012 of the Internal
69.4Revenue Code, except that:
69.5(1) an individual who is not a Minnesota resident for any part of the year is not
69.6required to file a Minnesota income tax return if the individual's gross income derived
69.7from Minnesota sources as determined under sections 290.081, paragraph (a), and 290.17,
69.8is less than the filing requirements for a single individual who is a full year resident of
69.9Minnesota; and
69.10(2) an individual who is a Minnesota resident is not required to file a Minnesota
69.11income tax return if the individual's gross income derived from Minnesota sources as
69.12determined under section 290.17, less the subtraction allowed under section 290.01,
69.13subdivision 19b
, clauses (11) and (14) (9) and (12), is less than the filing requirements for
69.14a single individual who is a full-year resident of Minnesota.
69.15(b) The decedent's final income tax return, and other income tax returns for prior
69.16years where the decedent had gross income in excess of the minimum amount at which
69.17an individual is required to file and did not file, must be filed by the decedent's personal
69.18representative, if any. If there is no personal representative, the return or returns must
69.19be filed by the transferees, as defined in section 270C.58, subdivision 3, who receive
69.20property of the decedent.
69.21(c) The term "gross income," as it is used in this section, has the same meaning
69.22given it in section 290.01, subdivision 20.

69.23    Sec. 6. Minnesota Statutes 2012, section 289A.08, subdivision 3, is amended to read:
69.24    Subd. 3. Corporations. (a) A corporation that is subject to the state's jurisdiction to
69.25tax under section 290.014, subdivision 5, must file a return, except that a foreign operating
69.26corporation as defined in section 290.01, subdivision 6b, is not required to file a return.
69.27(b) Members of a unitary business that are required to file a combined report on one
69.28return must designate a member of the unitary business to be responsible for tax matters,
69.29including the filing of returns, the payment of taxes, additions to tax, penalties, interest,
69.30or any other payment, and for the receipt of refunds of taxes or interest paid in excess of
69.31taxes lawfully due. The designated member must be a member of the unitary business that
69.32is filing the single combined report and either:
69.33(1) a corporation that is subject to the taxes imposed by chapter 290; or
69.34(2) a corporation that is not subject to the taxes imposed by chapter 290:
70.1(i) Such corporation consents by filing the return as a designated member under this
70.2clause to remit taxes, penalties, interest, or additions to tax due from the members of the
70.3unitary business subject to tax, and receive refunds or other payments on behalf of other
70.4members of the unitary business. The member designated under this clause is a "taxpayer"
70.5for the purposes of this chapter and chapter 270C, and is liable for any liability imposed
70.6on the unitary business under this chapter and chapter 290.
70.7(ii) If the state does not otherwise have the jurisdiction to tax the member designated
70.8under this clause, consenting to be the designated member does not create the jurisdiction
70.9to impose tax on the designated member, other than as described in item (i).
70.10(iii) The member designated under this clause must apply for a business tax account
70.11identification number.
70.12(c) The commissioner shall adopt rules for the filing of one return on behalf of the
70.13members of an affiliated group of corporations that are required to file a combined report.
70.14All members of an affiliated group that are required to file a combined report must file one
70.15return on behalf of the members of the group under rules adopted by the commissioner.
70.16(d) If a corporation claims on a return that it has paid tax in excess of the amount of
70.17taxes lawfully due, that corporation must include on that return information necessary for
70.18payment of the tax in excess of the amount lawfully due by electronic means.
70.19EFFECTIVE DATE.This section is effective for taxable years beginning after
70.20December 31, 2012.

70.21    Sec. 7. Minnesota Statutes 2012, section 289A.08, subdivision 7, is amended to read:
70.22    Subd. 7. Composite income tax returns for nonresident partners, shareholders,
70.23and beneficiaries. (a) The commissioner may allow a partnership with nonresident
70.24partners to file a composite return and to pay the tax on behalf of nonresident partners who
70.25have no other Minnesota source income. This composite return must include the names,
70.26addresses, Social Security numbers, income allocation, and tax liability for the nonresident
70.27partners electing to be covered by the composite return.
70.28(b) The computation of a partner's tax liability must be determined by multiplying
70.29the income allocated to that partner by the highest rate used to determine the tax liability
70.30for individuals under section 290.06, subdivision 2c. Nonbusiness deductions, standard
70.31deductions, or personal exemptions are not allowed.
70.32(c) The partnership must submit a request to use this composite return filing method
70.33for nonresident partners. The requesting partnership must file a composite return in the
70.34form prescribed by the commissioner of revenue. The filing of a composite return is
70.35considered a request to use the composite return filing method.
71.1(d) The electing partner must not have any Minnesota source income other than the
71.2income from the partnership and other electing partnerships. If it is determined that the
71.3electing partner has other Minnesota source income, the inclusion of the income and tax
71.4liability for that partner under this provision will not constitute a return to satisfy the
71.5requirements of subdivision 1. The tax paid for the individual as part of the composite return
71.6is allowed as a payment of the tax by the individual on the date on which the composite
71.7return payment was made. If the electing nonresident partner has no other Minnesota
71.8source income, filing of the composite return is a return for purposes of subdivision 1.
71.9(e) This subdivision does not negate the requirement that an individual pay estimated
71.10tax if the individual's liability would exceed the requirements set forth in section 289A.25.
71.11The individual's liability to pay estimated tax is, however, satisfied when the partnership
71.12pays composite estimated tax in the manner prescribed in section 289A.25.
71.13(f) If an electing partner's share of the partnership's gross income from Minnesota
71.14sources is less than the filing requirements for a nonresident under this subdivision, the tax
71.15liability is zero. However, a statement showing the partner's share of gross income must
71.16be included as part of the composite return.
71.17(g) The election provided in this subdivision is only available to a partner who has
71.18no other Minnesota source income and who is either (1) a full-year nonresident individual
71.19or (2) a trust or estate that does not claim a deduction under either section 651 or 661 of
71.20the Internal Revenue Code.
71.21(h) A corporation defined in section 290.9725 and its nonresident shareholders may
71.22make an election under this paragraph. The provisions covering the partnership apply to
71.23the corporation and the provisions applying to the partner apply to the shareholder.
71.24(i) Estates and trusts distributing current income only and the nonresident individual
71.25beneficiaries of the estates or trusts may make an election under this paragraph. The
71.26provisions covering the partnership apply to the estate or trust. The provisions applying to
71.27the partner apply to the beneficiary.
71.28(j) For the purposes of this subdivision, "income" means the partner's share of
71.29federal adjusted gross income from the partnership modified by the additions provided in
71.30section 290.01, subdivision 19a, clauses (6) to (10) (9), and the subtractions provided in:
71.31(i) section 290.01, subdivision 19b, clause (8), to the extent the amount is assignable or
71.32allocable to Minnesota under section 290.17; and (ii) section 290.01, subdivision 19b,
71.33clause (13). The subtraction allowed under section 290.01, subdivision 19b, clause (8), is
71.34only allowed on the composite tax computation to the extent the electing partner would
71.35have been allowed the subtraction.

72.1    Sec. 8. Minnesota Statutes 2012, section 290.01, subdivision 5, is amended to read:
72.2    Subd. 5. Domestic corporation. The term "domestic" when applied to a corporation
72.3means a corporation:
72.4(1) created or organized in the United States, or under the laws of the United States or
72.5of any state, the District of Columbia, or any political subdivision of any of the foregoing
72.6but not including the Commonwealth of Puerto Rico, or any possession of the United States;
72.7(2) which qualifies as a DISC, as defined in section 992(a) of the Internal Revenue
72.8Code; or
72.9(3) which qualifies as a FSC, as defined in section 922 of the Internal Revenue Code.
72.10    (2) which, regardless of the place where the corporation was incorporated:
72.11    (i) has the average of its property, payroll, and sales factors, as defined under section
72.12290.191, within the territorial limits of the 50 states of the United States and the District of
72.13Columbia of 20 percent or more; or
72.14    (ii) derives less than 80 percent of its income from foreign sources;
72.15(3) which is:
72.16(i) a foreign corporation, foreign partnership, or other foreign entity that has its
72.17income included in the federal taxable income, as defined in section 63 of the Internal
72.18Revenue Code, of an entity as defined in clause (1) or an individual who is a United States
72.19resident, as defined in section 865(g) of the Internal Revenue Code; and
72.20(ii) not treated as a corporation for federal income tax purposes;
72.21(4) which is incorporated in a tax haven; or
72.22(5) which is engaged in activity in a tax haven sufficient for the tax haven to impose a
72.23net income tax under United States constitutional standards and section 290.015, and which
72.24reports that 20 percent or more of its income is attributable to business in the tax haven.
72.25EFFECTIVE DATE.This section is effective for taxable years beginning after
72.26December 31, 2012.

72.27    Sec. 9. Minnesota Statutes 2012, section 290.01, is amended by adding a subdivision
72.28to read:
72.29    Subd. 5c. Tax haven. (a) "Tax haven" means the following foreign jurisdictions,
72.30unless the listing of the jurisdiction does not apply under paragraph (b):
72.31(1) Anguilla;
72.32(2) Antigua and Barbuda;
72.33(3) Aruba;
72.34(4) Bahamas;
72.35(5) Bahrain;
73.1(6) Belize;
73.2(7) Bermuda;
73.3(8) British Virgin Islands;
73.4(9) Cayman Islands;
73.5(10) Cook Islands;
73.6(11) Costa Rica;
73.7(12) Cyprus;
73.8(13) Dominica;
73.9(14) Gibraltar;
73.10(15) Grenada;
73.11(16) Guernsey-Sark-Alderney;
73.12(17) Isle of Man;
73.13(18) Jersey;
73.14(19) Jordan;
73.15(20) Lebanon;
73.16(21) Liberia;
73.17(22) Liechtenstein;
73.18(23) Malta;
73.19(24) Marshall Islands;
73.20(25) Monaco;
73.21(26) Nauru;
73.22(27) Netherlands Antilles;
73.23(28) Niue;
73.24(29) Panama;
73.25(30) St. Kitts and Nevis;
73.26(31) St. Lucia;
73.27(32) St. Vincent and Grenadines;
73.28(33) Samoa;
73.29(34) Turks and Caicos; and
73.30(35) Vanuatu.
73.31(b) A foreign jurisdiction's listing under paragraph (a) does not apply to the first
73.32taxable year after:
73.33(1) the United States enters into a tax treaty or other agreement with the foreign
73.34jurisdiction that provides for prompt, obligatory, and automatic exchange of information
73.35with the United States government relevant to enforcing the provisions of federal tax laws
74.1applicable to both individuals and all corporations and other entities and the treaty or other
74.2agreement was in effect for the taxable year; and
74.3(2) the foreign jurisdiction imposes a tax rate of at least ten percent on a tax base
74.4equal to at least 90 percent of the tax base that applies to corporations under the Internal
74.5Revenue Code.
74.6EFFECTIVE DATE.This section is effective for returns filed for taxable years
74.7beginning after December 31, 2012.

74.8    Sec. 10. Minnesota Statutes 2012, section 290.01, subdivision 19, as amended by Laws
74.92013, chapter 3, section 3, is amended to read:
74.10    Subd. 19. Net income. The term "net income" means the federal taxable income,
74.11as defined in section 63 of the Internal Revenue Code of 1986, as amended through the
74.12date named in this subdivision, incorporating the federal effective dates of changes to the
74.13Internal Revenue Code and any elections made by the taxpayer in accordance with the
74.14Internal Revenue Code in determining federal taxable income for federal income tax
74.15purposes, and with the modifications provided in subdivisions 19a to 19f.
74.16    In the case of a regulated investment company or a fund thereof, as defined in section
74.17851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
74.18company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
74.19except that:
74.20    (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
74.21Revenue Code does not apply;
74.22    (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
74.23Revenue Code must be applied by allowing a deduction for capital gain dividends and
74.24exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
74.25Revenue Code; and
74.26    (3) the deduction for dividends paid must also be applied in the amount of any
74.27undistributed capital gains which the regulated investment company elects to have treated
74.28as provided in section 852(b)(3)(D) of the Internal Revenue Code.
74.29    The net income of a real estate investment trust as defined and limited by section
74.30856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
74.31taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
74.32    The net income of a designated settlement fund as defined in section 468B(d) of
74.33the Internal Revenue Code means the gross income as defined in section 468B(b) of the
74.34Internal Revenue Code.
75.1    The Internal Revenue Code of 1986, as amended through April 14, 2011 January 3,
75.22013, shall be in effect for taxable years beginning after December 31, 1996, and before
75.3January 1, 2012, and for taxable years beginning after December 31, 2012. The Internal
75.4Revenue Code of 1986, as amended through January 3, 2013, is in effect for taxable years
75.5beginning after December 31, 2011, and before January 1, 2013.
75.6    Except as otherwise provided, references to the Internal Revenue Code in
75.7subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
75.8the applicable year.
75.9EFFECTIVE DATE.This section is effective the day following final enactment,
75.10except the changes incorporated by federal changes are effective at the same time as the
75.11changes were effective for federal purposes.

75.12    Sec. 11. Minnesota Statutes 2012, section 290.01, subdivision 19a, is amended to read:
75.13    Subd. 19a. Additions to federal taxable income. For individuals, estates, and
75.14trusts, there shall be added to federal taxable income:
75.15    (1)(i) interest income on obligations of any state other than Minnesota or a political
75.16or governmental subdivision, municipality, or governmental agency or instrumentality
75.17of any state other than Minnesota exempt from federal income taxes under the Internal
75.18Revenue Code or any other federal statute; and
75.19    (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
75.20Code, except:
75.21(A) the portion of the exempt-interest dividends exempt from state taxation under
75.22the laws of the United States; and
75.23(B) the portion of the exempt-interest dividends derived from interest income
75.24on obligations of the state of Minnesota or its political or governmental subdivisions,
75.25municipalities, governmental agencies or instrumentalities, but only if the portion of the
75.26exempt-interest dividends from such Minnesota sources paid to all shareholders represents
75.2795 percent or more of the exempt-interest dividends, including any dividends exempt
75.28under subitem (A), that are paid by the regulated investment company as defined in section
75.29851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
75.30defined in section 851(g) of the Internal Revenue Code, making the payment; and
75.31    (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
75.32government described in section 7871(c) of the Internal Revenue Code shall be treated as
75.33interest income on obligations of the state in which the tribe is located;
75.34    (2) to the extent allowed as a deduction under section 63(d) of the Internal Revenue
75.35Code the amount of:
76.1    (i) income, sales and use, motor vehicle sales, or excise taxes paid or accrued within
76.2the taxable year under this chapter and the amount of;
76.3    (ii) taxes based on net income paid, sales and use, motor vehicle sales, or excise
76.4taxes paid to any other state or to any province or territory of Canada, to the extent allowed
76.5as a deduction under section 63(d) of the Internal Revenue Code,; and
76.6(iii) charitable contributions, as defined in section 170(c) of the Internal Revenue
76.7Code, to the extent allowed as a deduction under section 170(a) of the Internal Revenue
76.8Code.
76.9 but The addition sum of the additions under items (i) to (iii) may not be more
76.10than the amount by which the itemized deductions as allowed under section 63(d) of
76.11the Internal Revenue Code state itemized deduction exceeds the amount of the standard
76.12deduction as defined in section 63(c) of the Internal Revenue Code, disregarding the
76.13amounts allowed under sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue
76.14Code, minus any addition that would have been required under clause (21) if the taxpayer
76.15had claimed the standard deduction. For the purpose of this paragraph, the disallowance of
76.16itemized deductions under section 68 of the Internal Revenue Code of 1986, income, sales
76.17and use, motor vehicle sales, or excise taxes are the last itemized deductions disallowed.
76.18For purposes of this clause, income, sales and use, and charitable contributions are the last
76.19itemized deductions disallowed under clause (13);
76.20    (3) the capital gain amount of a lump-sum distribution to which the special tax under
76.21section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
76.22    (4) the amount of income taxes paid or accrued within the taxable year under this
76.23chapter and taxes based on net income paid to any other state or any province or territory
76.24of Canada, to the extent allowed as a deduction in determining federal adjusted gross
76.25income. For the purpose of this paragraph, income taxes do not include the taxes imposed
76.26by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
76.27    (5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10
76.28other than expenses or interest used in computing net interest income for the subtraction
76.29allowed under subdivision 19b, clause (1);
76.30    (6) the amount of a partner's pro rata share of net income which does not flow
76.31through to the partner because the partnership elected to pay the tax on the income under
76.32section 6242(a)(2) of the Internal Revenue Code;
76.33    (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
76.34Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
76.35in the taxable year generates a deduction for depreciation under section 168(k) and the
76.36activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
77.1the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
77.2limited to excess of the depreciation claimed by the activity under section 168(k) over the
77.3amount of the loss from the activity that is not allowed in the taxable year. In succeeding
77.4taxable years when the losses not allowed in the taxable year are allowed, the depreciation
77.5under section 168(k) is allowed;
77.6    (8) 80 percent of the amount by which the deduction allowed by section 179 of the
77.7Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
77.8Revenue Code of 1986, as amended through December 31, 2003;
77.9    (9) to the extent deducted in computing federal taxable income, the amount of the
77.10deduction allowable under section 199 of the Internal Revenue Code;
77.11    (10) for taxable years beginning before January 1, 2013, the exclusion allowed under
77.12section 139A of the Internal Revenue Code for federal subsidies for prescription drug plans;
77.13(11) (10) the amount of expenses disallowed under section 290.10, subdivision 2;
77.14    (12) for taxable years beginning before January 1, 2010, the amount deducted for
77.15qualified tuition and related expenses under section 222 of the Internal Revenue Code, to
77.16the extent deducted from gross income;
77.17    (13) for taxable years beginning before January 1, 2010, the amount deducted for
77.18certain expenses of elementary and secondary school teachers under section 62(a)(2)(D)
77.19of the Internal Revenue Code, to the extent deducted from gross income;
77.20(14) the additional standard deduction for property taxes payable that is allowable
77.21under section 63(c)(1)(C) of the Internal Revenue Code;
77.22(15) the additional standard deduction for qualified motor vehicle sales taxes
77.23allowable under section 63(c)(1)(E) of the Internal Revenue Code;
77.24(16) (11) discharge of indebtedness income resulting from reacquisition of business
77.25indebtedness and deferred under section 108(i) of the Internal Revenue Code;
77.26(17) the amount of unemployment compensation exempt from tax under section
77.2785(c) of the Internal Revenue Code;
77.28(18) (12) changes to federal taxable income attributable to a net operating loss that
77.29the taxpayer elected to carry back for more than two years for federal purposes but for
77.30which the losses can be carried back for only two years under section 290.095, subdivision
77.3111, paragraph (c);
77.32(19) (13) to the extent included in the computation of federal taxable income in
77.33taxable years beginning after December 31, 2010, the amount of disallowed itemized
77.34deductions, but the amount of disallowed itemized deductions plus the addition required
77.35under clause (2) may not be more than the amount by which the itemized deductions as
77.36allowed under section 63(d) of the Internal Revenue Code exceeds the amount of the
78.1standard deduction as defined in section 63(c) of the Internal Revenue Code, disregarding
78.2the amounts allowed under sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue
78.3Code, and reduced by any addition that would have been required under clause (21) if the
78.4taxpayer had claimed the standard deduction:
78.5(i) the amount of disallowed itemized deductions is equal to the lesser of:
78.6(A) three percent of the excess of the taxpayer's federal adjusted gross income
78.7over the applicable amount; or
78.8(B) 80 percent of the amount of the itemized deductions otherwise allowable to the
78.9taxpayer under the Internal Revenue Code for the taxable year;
78.10(ii) the term "applicable amount" means $100,000, or $50,000 in the case of a
78.11married individual filing a separate return. Each dollar amount shall be increased by
78.12an amount equal to:
78.13(A) such dollar amount, multiplied by
78.14(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
78.15Revenue Code for the calendar year in which the taxable year begins, by substituting
78.16"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof;
78.17(iii) the term "itemized deductions" does not include:
78.18(A) the deduction for medical expenses under section 213 of the Internal Revenue
78.19Code;
78.20(B) any deduction for investment interest as defined in section 163(d) of the Internal
78.21Revenue Code; and
78.22(C) the deduction under section 165(a) of the Internal Revenue Code for casualty or
78.23theft losses described in paragraph (2) or (3) of section 165(c) of the Internal Revenue
78.24Code or for losses described in section 165(d) of the Internal Revenue Code; and
78.25(20) (14) to the extent included in federal taxable income in taxable years beginning
78.26after December 31, 2010, the amount of disallowed personal exemptions for taxpayers
78.27with federal adjusted gross income over the threshold amount:
78.28(i) the disallowed personal exemption amount is equal to the dollar amount of the
78.29personal exemptions claimed by the taxpayer in the computation of federal taxable income
78.30multiplied by the applicable percentage;
78.31(ii) "applicable percentage" means two percentage points for each $2,500 (or
78.32fraction thereof) by which the taxpayer's federal adjusted gross income for the taxable
78.33year exceeds the threshold amount. In the case of a married individual filing a separate
78.34return, the preceding sentence shall be applied by substituting "$1,250" for "$2,500." In
78.35no event shall the applicable percentage exceed 100 percent;
78.36(iii) the term "threshold amount" means:
79.1(A) $150,000 in the case of a joint return or a surviving spouse;
79.2(B) $125,000 in the case of a head of a household;
79.3(C) $100,000 in the case of an individual who is not married and who is not a
79.4surviving spouse or head of a household; and
79.5(D) $75,000 in the case of a married individual filing a separate return; and
79.6(iv) the thresholds shall be increased by an amount equal to:
79.7(A) such dollar amount, multiplied by
79.8(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
79.9Revenue Code for the calendar year in which the taxable year begins, by substituting
79.10"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof; and.
79.11(21) to the extent deducted in the computation of federal taxable income, for taxable
79.12years beginning after December 31, 2010, and before January 1, 2013, the difference
79.13between the standard deduction allowed under section 63(c) of the Internal Revenue Code
79.14and the standard deduction allowed for 2011 and 2012 under the Internal Revenue Code
79.15as amended through December 1, 2010.
79.16EFFECTIVE DATE.This section is effective for taxable years beginning after
79.17December 31, 2012.

79.18    Sec. 12. Minnesota Statutes 2012, section 290.01, subdivision 19b, is amended to read:
79.19    Subd. 19b. Subtractions from federal taxable income. For individuals, estates,
79.20and trusts, there shall be subtracted from federal taxable income:
79.21    (1) net interest income on obligations of any authority, commission, or
79.22instrumentality of the United States to the extent includable in taxable income for federal
79.23income tax purposes but exempt from state income tax under the laws of the United States;
79.24    (2) if included in federal taxable income, the amount of any overpayment of income
79.25tax to Minnesota or to any other state, for any previous taxable year, whether the amount
79.26is received as a refund or as a credit to another taxable year's income tax liability;
79.27    (3) the amount paid to others, less the amount used to claim the credit allowed under
79.28section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten
79.29to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
79.30transportation of each qualifying child in attending an elementary or secondary school
79.31situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
79.32resident of this state may legally fulfill the state's compulsory attendance laws, which
79.33is not operated for profit, and which adheres to the provisions of the Civil Rights Act
79.34of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
79.35tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause,
80.1"textbooks" includes books and other instructional materials and equipment purchased
80.2or leased for use in elementary and secondary schools in teaching only those subjects
80.3legally and commonly taught in public elementary and secondary schools in this state.
80.4Equipment expenses qualifying for deduction includes expenses as defined and limited in
80.5section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional
80.6books and materials used in the teaching of religious tenets, doctrines, or worship, the
80.7purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
80.8or materials for, or transportation to, extracurricular activities including sporting events,
80.9musical or dramatic events, speech activities, driver's education, or similar programs. No
80.10deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or
80.11the qualifying child's vehicle to provide such transportation for a qualifying child. For
80.12purposes of the subtraction provided by this clause, "qualifying child" has the meaning
80.13given in section 32(c)(3) of the Internal Revenue Code;
80.14    (4) income as provided under section 290.0802;
80.15    (5) to the extent included in federal adjusted gross income, income realized on
80.16disposition of property exempt from tax under section 290.491;
80.17    (6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E)
80.18of the Internal Revenue Code in determining federal taxable income by an individual
80.19who does not itemize deductions for federal income tax purposes for the taxable year, an
80.20amount equal to 50 percent of the excess of charitable contributions over $500 allowable
80.21as a deduction for the taxable year under section 170(a) of the Internal Revenue Code,
80.22under the provisions of Public Law 109-1 and Public Law 111-126;
80.23    (7) for individuals who are allowed a federal foreign tax credit for taxes that do not
80.24qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover
80.25of subnational foreign taxes for the taxable year, but not to exceed the total subnational
80.26foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
80.27"federal foreign tax credit" means the credit allowed under section 27 of the Internal
80.28Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
80.29under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
80.30the extent they exceed the federal foreign tax credit;
80.31    (8) (6) in each of the five tax years immediately following the tax year in which an
80.32addition is required under subdivision 19a, clause (7), or 19c, clause (15) (12), in the case
80.33of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
80.34delayed depreciation. For purposes of this clause, "delayed depreciation" means the amount
80.35of the addition made by the taxpayer under subdivision 19a, clause (7), or subdivision 19c,
80.36clause (15) (12), in the case of a shareholder of an S corporation, minus the positive value
81.1of any net operating loss under section 172 of the Internal Revenue Code generated for the
81.2tax year of the addition. The resulting delayed depreciation cannot be less than zero;
81.3    (9) (7) job opportunity building zone income as provided under section 469.316;
81.4    (10) (8) to the extent included in federal taxable income, the amount of compensation
81.5paid to members of the Minnesota National Guard or other reserve components of the
81.6United States military for active service, excluding compensation for services performed
81.7under the Active Guard Reserve (AGR) program. For purposes of this clause, "active
81.8service" means (i) state active service as defined in section 190.05, subdivision 5a, clause
81.9(1); or (ii) federally funded state active service as defined in section 190.05, subdivision
81.105b
, but "active service" excludes service performed in accordance with section 190.08,
81.11subdivision 3
;
81.12    (11) (9) to the extent included in federal taxable income, the amount of compensation
81.13paid to Minnesota residents who are members of the armed forces of the United States
81.14or United Nations for active duty performed under United States Code, title 10; or the
81.15authority of the United Nations;
81.16    (12) (10) an amount, not to exceed $10,000, equal to qualified expenses related to a
81.17qualified donor's donation, while living, of one or more of the qualified donor's organs
81.18to another person for human organ transplantation. For purposes of this clause, "organ"
81.19means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
81.20"human organ transplantation" means the medical procedure by which transfer of a human
81.21organ is made from the body of one person to the body of another person; "qualified
81.22expenses" means unreimbursed expenses for both the individual and the qualified donor
81.23for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
81.24may be subtracted under this clause only once; and "qualified donor" means the individual
81.25or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
81.26individual may claim the subtraction in this clause for each instance of organ donation for
81.27transplantation during the taxable year in which the qualified expenses occur;
81.28    (13) (11) in each of the five tax years immediately following the tax year in which an
81.29addition is required under subdivision 19a, clause (8), or 19c, clause (16) (13), in the case
81.30of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth of
81.31the addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16)
81.32 (13), in the case of a shareholder of a corporation that is an S corporation, minus the
81.33positive value of any net operating loss under section 172 of the Internal Revenue Code
81.34generated for the tax year of the addition. If the net operating loss exceeds the addition for
81.35the tax year, a subtraction is not allowed under this clause;
82.1    (14) (12) to the extent included in the federal taxable income of a nonresident of
82.2Minnesota, compensation paid to a service member as defined in United States Code, title
82.310, section 101(a)(5), for military service as defined in the Servicemembers Civil Relief
82.4Act, Public Law 108-189, section 101(2);
82.5    (15) (13) to the extent included in federal taxable income, the amount of national
82.6service educational awards received from the National Service Trust under United States
82.7Code, title 42, sections 12601 to 12604, for service in an approved Americorps National
82.8Service program;
82.9(16) (14) to the extent included in federal taxable income, discharge of indebtedness
82.10income resulting from reacquisition of business indebtedness included in federal taxable
82.11income under section 108(i) of the Internal Revenue Code. This subtraction applies only
82.12to the extent that the income was included in net income in a prior year as a result of the
82.13addition under section 290.01, subdivision 19a, clause (16) (11); and
82.14(17) (15) the amount of the net operating loss allowed under section 290.095,
82.15subdivision 11
, paragraph (c).;
82.16(16) the amount of the limitation on itemized deductions under section 68(b) of the
82.17Internal Revenue Code;
82.18(17) the amount of the phase-out of personal exemptions under section 151(d) of
82.19the Internal Revenue Code; and
82.20(18) in the year that the expenditures are made for railroad track maintenance, as
82.21defined in section 45G(d) of the Internal Revenue Code, in the case of a shareholder of a
82.22corporation that is an S corporation or a partner in a partnership, an amount equal to the
82.23credit awarded under section 45G(a) of the Internal Revenue Code. The subtraction is
82.24reduced to an amount equal to the percentage of the shareholder's or partner's share of the
82.25net income of the S corporation or partnership.
82.26EFFECTIVE DATE.This section is effective for taxable years beginning after
82.27December 31, 2012.

82.28    Sec. 13. Minnesota Statutes 2012, section 290.01, subdivision 19c, is amended to read:
82.29    Subd. 19c. Corporations; additions to federal taxable income. For corporations,
82.30there shall be added to federal taxable income:
82.31    (1) the amount of any deduction taken for federal income tax purposes for income,
82.32excise, or franchise taxes based on net income or related minimum taxes, including but not
82.33limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
82.34another state, a political subdivision of another state, the District of Columbia, or any
82.35foreign country or possession of the United States;
83.1    (2) interest not subject to federal tax upon obligations of: the United States, its
83.2possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
83.3state, any of its political or governmental subdivisions, any of its municipalities, or any
83.4of its governmental agencies or instrumentalities; the District of Columbia; or Indian
83.5tribal governments;
83.6    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
83.7Revenue Code;
83.8    (4) the amount of any net operating loss deduction taken for federal income tax
83.9purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
83.10deduction under section 810 of the Internal Revenue Code;
83.11    (5) the amount of any special deductions taken for federal income tax purposes
83.12under sections 241 to 247 and 965 of the Internal Revenue Code;
83.13    (6) losses from the business of mining, as defined in section 290.05, subdivision 1,
83.14clause (a), that are not subject to Minnesota income tax;
83.15    (7) the amount of any capital losses deducted for federal income tax purposes under
83.16sections 1211 and 1212 of the Internal Revenue Code;
83.17    (8) the exempt foreign trade income of a foreign sales corporation under sections
83.18921(a) and 291 of the Internal Revenue Code;
83.19    (9) (8) the amount of percentage depletion deducted under sections 611 through
83.20614 and 291 of the Internal Revenue Code;
83.21    (10) (9) for certified pollution control facilities placed in service in a taxable year
83.22beginning before December 31, 1986, and for which amortization deductions were elected
83.23under section 169 of the Internal Revenue Code of 1954, as amended through December
83.2431, 1985, the amount of the amortization deduction allowed in computing federal taxable
83.25income for those facilities;
83.26    (11) the amount of any deemed dividend from a foreign operating corporation
83.27determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend
83.28shall be reduced by the amount of the addition to income required by clauses (20), (21),
83.29(22), and (23);
83.30    (12) (10) the amount of a partner's pro rata share of net income which does not flow
83.31through to the partner because the partnership elected to pay the tax on the income under
83.32section 6242(a)(2) of the Internal Revenue Code;
83.33    (13) the amount of net income excluded under section 114 of the Internal Revenue
83.34Code;
84.1    (14) (11) any increase in subpart F income, as defined in section 952(a) of the
84.2Internal Revenue Code, for the taxable year when subpart F income is calculated without
84.3regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
84.4    (15) (12) 80 percent of the depreciation deduction allowed under section
84.5168(k)(1)(A) and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if
84.6the taxpayer has an activity that in the taxable year generates a deduction for depreciation
84.7under section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable
84.8year that the taxpayer is not allowed to claim for the taxable year, "the depreciation
84.9allowed under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess
84.10of the depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A)
84.11over the amount of the loss from the activity that is not allowed in the taxable year. In
84.12succeeding taxable years when the losses not allowed in the taxable year are allowed, the
84.13depreciation under section 168(k)(1)(A) and (k)(4)(A) is allowed;
84.14    (16) (13) 80 percent of the amount by which the deduction allowed by section 179 of
84.15the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
84.16Revenue Code of 1986, as amended through December 31, 2003;
84.17    (17) (14) to the extent deducted in computing federal taxable income, the amount of
84.18the deduction allowable under section 199 of the Internal Revenue Code;
84.19    (18) for taxable years beginning before January 1, 2013, the exclusion allowed under
84.20section 139A of the Internal Revenue Code for federal subsidies for prescription drug plans;
84.21    (19) (15) the amount of expenses disallowed under section 290.10, subdivision 2; and
84.22    (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
84.23accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
84.24of a corporation that is a member of the taxpayer's unitary business group that qualifies
84.25as a foreign operating corporation. For purposes of this clause, intangible expenses and
84.26costs include:
84.27    (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
84.28use, maintenance or management, ownership, sale, exchange, or any other disposition of
84.29intangible property;
84.30    (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
84.31transactions;
84.32    (iii) royalty, patent, technical, and copyright fees;
84.33    (iv) licensing fees; and
84.34    (v) other similar expenses and costs.
85.1For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
85.2applications, trade names, trademarks, service marks, copyrights, mask works, trade
85.3secrets, and similar types of intangible assets.
85.4This clause does not apply to any item of interest or intangible expenses or costs paid,
85.5accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
85.6to such item of income to the extent that the income to the foreign operating corporation
85.7is income from sources without the United States as defined in subtitle A, chapter 1,
85.8subchapter N, part 1, of the Internal Revenue Code;
85.9    (21) except as already included in the taxpayer's taxable income pursuant to clause
85.10(20), any interest income and income generated from intangible property received or
85.11accrued by a foreign operating corporation that is a member of the taxpayer's unitary
85.12group. For purposes of this clause, income generated from intangible property includes:
85.13    (i) income related to the direct or indirect acquisition, use, maintenance or
85.14management, ownership, sale, exchange, or any other disposition of intangible property;
85.15    (ii) income from factoring transactions or discounting transactions;
85.16    (iii) royalty, patent, technical, and copyright fees;
85.17    (iv) licensing fees; and
85.18    (v) other similar income.
85.19For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
85.20applications, trade names, trademarks, service marks, copyrights, mask works, trade
85.21secrets, and similar types of intangible assets.
85.22This clause does not apply to any item of interest or intangible income received or accrued
85.23by a foreign operating corporation with respect to such item of income to the extent that
85.24the income is income from sources without the United States as defined in subtitle A,
85.25chapter 1, subchapter N, part 1, of the Internal Revenue Code;
85.26    (22) the dividends attributable to the income of a foreign operating corporation that
85.27is a member of the taxpayer's unitary group in an amount that is equal to the dividends
85.28paid deduction of a real estate investment trust under section 561(a) of the Internal
85.29Revenue Code for amounts paid or accrued by the real estate investment trust to the
85.30foreign operating corporation;
85.31    (23) the income of a foreign operating corporation that is a member of the taxpayer's
85.32unitary group in an amount that is equal to gains derived from the sale of real or personal
85.33property located in the United States;
86.1    (24) for taxable years beginning before January 1, 2010, the additional amount
86.2allowed as a deduction for donation of computer technology and equipment under section
86.3170(e)(6) of the Internal Revenue Code, to the extent deducted from taxable income; and
86.4(25) (16) discharge of indebtedness income resulting from reacquisition of business
86.5indebtedness and deferred under section 108(i) of the Internal Revenue Code.
86.6EFFECTIVE DATE.This section is effective for taxable years beginning after
86.7December 31, 2012.

86.8    Sec. 14. Minnesota Statutes 2012, section 290.01, subdivision 19d, is amended to read:
86.9    Subd. 19d. Corporations; modifications decreasing federal taxable income. For
86.10corporations, there shall be subtracted from federal taxable income after the increases
86.11provided in subdivision 19c:
86.12    (1) the amount of foreign dividend gross-up added to gross income for federal
86.13income tax purposes under section 78 of the Internal Revenue Code;
86.14    (2) the amount of salary expense not allowed for federal income tax purposes due to
86.15claiming the work opportunity credit under section 51 of the Internal Revenue Code;
86.16    (3) any dividend (not including any distribution in liquidation) paid within the
86.17taxable year by a national or state bank to the United States, or to any instrumentality of
86.18the United States exempt from federal income taxes, on the preferred stock of the bank
86.19owned by the United States or the instrumentality;
86.20    (4) amounts disallowed for intangible drilling costs due to differences between
86.21this chapter and the Internal Revenue Code in taxable years beginning before January
86.221, 1987, as follows:
86.23    (i) to the extent the disallowed costs are represented by physical property, an amount
86.24equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09,
86.25subdivision 7
, subject to the modifications contained in subdivision 19e; and
86.26    (ii) to the extent the disallowed costs are not represented by physical property, an
86.27amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
86.28290.09, subdivision 8 ;
86.29    (5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
86.30Internal Revenue Code, except that:
86.31    (i) for capital losses incurred in taxable years beginning after December 31, 1986,
86.32capital loss carrybacks shall not be allowed;
86.33    (ii) for capital losses incurred in taxable years beginning after December 31, 1986,
86.34a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
86.35allowed;
87.1    (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
87.2capital loss carryback to each of the three taxable years preceding the loss year, subject to
87.3the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
87.4    (iv) for capital losses incurred in taxable years beginning before January 1, 1987,
87.5a capital loss carryover to each of the five taxable years succeeding the loss year to the
87.6extent such loss was not used in a prior taxable year and subject to the provisions of
87.7Minnesota Statutes 1986, section 290.16, shall be allowed;
87.8    (6) an amount for interest and expenses relating to income not taxable for federal
87.9income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
87.10expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
87.11291 of the Internal Revenue Code in computing federal taxable income;
87.12    (7) in the case of mines, oil and gas wells, other natural deposits, and timber for
87.13which percentage depletion was disallowed pursuant to subdivision 19c, clause (9) (8), a
87.14reasonable allowance for depletion based on actual cost. In the case of leases the deduction
87.15must be apportioned between the lessor and lessee in accordance with rules prescribed
87.16by the commissioner. In the case of property held in trust, the allowable deduction must
87.17be apportioned between the income beneficiaries and the trustee in accordance with the
87.18pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
87.19of the trust's income allocable to each;
87.20    (8) for certified pollution control facilities placed in service in a taxable year
87.21beginning before December 31, 1986, and for which amortization deductions were elected
87.22under section 169 of the Internal Revenue Code of 1954, as amended through December
87.2331, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
87.241986, section 290.09, subdivision 7;
87.25    (9) amounts included in federal taxable income that are due to refunds of income,
87.26excise, or franchise taxes based on net income or related minimum taxes paid by the
87.27corporation to Minnesota, another state, a political subdivision of another state, the
87.28District of Columbia, or a foreign country or possession of the United States to the extent
87.29that the taxes were added to federal taxable income under section 290.01, subdivision 19c,
87.30clause (1), in a prior taxable year;
87.31    (10) 80 50 percent of royalties, fees, or other like income accrued or received from a
87.32foreign operating corporation or a foreign corporation which is part of the same unitary
87.33business as the receiving corporation, unless the income resulting from such payments or
87.34accruals is income from sources within the United States as defined in subtitle A, chapter
87.351, subchapter N, part 1, of the Internal Revenue Code;
88.1    (11) income or gains from the business of mining as defined in section 290.05,
88.2subdivision 1
, clause (a), that are not subject to Minnesota franchise tax;
88.3    (12) the amount of disability access expenditures in the taxable year which are not
88.4allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
88.5    (13) the amount of qualified research expenses not allowed for federal income tax
88.6purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that
88.7the amount exceeds the amount of the credit allowed under section 290.068;
88.8    (14) the amount of salary expenses not allowed for federal income tax purposes due to
88.9claiming the Indian employment credit under section 45A(a) of the Internal Revenue Code;
88.10    (15) for a corporation whose foreign sales corporation, as defined in section 922
88.11of the Internal Revenue Code, constituted a foreign operating corporation during any
88.12taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
88.13claiming the deduction under section 290.21, subdivision 4, for income received from
88.14the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of
88.15income excluded under section 114 of the Internal Revenue Code, provided the income is
88.16not income of a foreign operating company;
88.17    (16) (15) any decrease in subpart F income, as defined in section 952(a) of the
88.18Internal Revenue Code, for the taxable year when subpart F income is calculated without
88.19regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
88.20    (17) (16) in each of the five tax years immediately following the tax year in which an
88.21addition is required under subdivision 19c, clause (15) (12), an amount equal to one-fifth
88.22of the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
88.23amount of the addition made by the taxpayer under subdivision 19c, clause (15) (12). The
88.24resulting delayed depreciation cannot be less than zero;
88.25    (18) (17) in each of the five tax years immediately following the tax year in which an
88.26addition is required under subdivision 19c, clause (16) (13), an amount equal to one-fifth
88.27of the amount of the addition; and
88.28(19) (18) to the extent included in federal taxable income, discharge of indebtedness
88.29income resulting from reacquisition of business indebtedness included in federal taxable
88.30income under section 108(i) of the Internal Revenue Code. This subtraction applies only
88.31to the extent that the income was included in net income in a prior year as a result of the
88.32addition under section 290.01, subdivision 19c, clause (25). (16); and
88.33(19) in the year that the expenditures are made for railroad track maintenance, as
88.34defined in section 45G(d) of the Internal Revenue Code, an amount equal to the credit
88.35awarded under section 45G(a) of the Internal Revenue Code.
89.1EFFECTIVE DATE.This section is effective for taxable years beginning after
89.2December 31, 2012.

89.3    Sec. 15. Minnesota Statutes 2012, section 290.01, is amended by adding a subdivision
89.4to read:
89.5    Subd. 29a. State itemized deduction. The term "state itemized deduction" means
89.6federal itemized deductions, as defined in section 63(d) of the Internal Revenue Code,
89.7disregarding any limitation under section 68 of the Internal Revenue Code, and reduced
89.8by the amount of the addition required under subdivision 19a, clause (13).
89.9EFFECTIVE DATE.This section is effective for taxable years beginning after
89.10December 31, 2012.

89.11    Sec. 16. Minnesota Statutes 2012, section 290.01, subdivision 31, as amended by Laws
89.122013, chapter 3, section 4, is amended to read:
89.13    Subd. 31. Internal Revenue Code. Unless specifically defined otherwise, for
89.14taxable years beginning before January 1, 2012, and after December 31, 2012, "Internal
89.15Revenue Code" means the Internal Revenue Code of 1986, as amended through April 14,
89.162011; and for taxable years beginning after December 31, 2011, and before January 1,
89.172013, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
89.18through January 3, 2013. Internal Revenue Code also includes any uncodified provision in
89.19federal law that relates to provisions of the Internal Revenue Code that are incorporated
89.20into Minnesota law. When used in this chapter, the reference to "subtitle A, chapter 1,
89.21subchapter N, part 1, of the Internal Revenue Code" is to the Internal Revenue Code as
89.22amended through March 18, 2010.
89.23EFFECTIVE DATE.This section is effective the day following final enactment,
89.24except the changes incorporated by federal changes are effective at the same time as the
89.25changes were effective for federal purposes.

89.26    Sec. 17. Minnesota Statutes 2012, section 290.01, is amended by adding a subdivision
89.27to read:
89.28    Subd. 33. Foreign source income; income from foreign sources. The terms
89.29"foreign source income" and "income from foreign sources" means income from sources
89.30without the United States as defined in subtitle A, chapter 1, subchapter N, part 1, of the
89.31Internal Revenue Code.
90.1EFFECTIVE DATE.This section is effective for taxable years beginning after
90.2December 31, 2012.

90.3    Sec. 18. Minnesota Statutes 2012, section 290.06, subdivision 2c, is amended to read:
90.4    Subd. 2c. Schedules of rates for individuals, estates, and trusts. (a) The income
90.5taxes imposed by this chapter upon married individuals filing joint returns and surviving
90.6spouses as defined in section 2(a) of the Internal Revenue Code must be computed by
90.7applying to their taxable net income the following schedule of rates:
90.8    (1) On the first $25,680 $31,650, 5.35 percent;
90.9    (2) On all over $25,680 $31,650, but not over $102,030 $130,000, 7.05 percent;
90.10    (3) On all over $102,030 $130,000, but not over $400,000, 7.85 percent.;
90.11(4) On all over $400,000, 8.49 percent.
90.12    Married individuals filing separate returns, estates, and trusts must compute their
90.13income tax by applying the above rates to their taxable income, except that the income
90.14brackets will be one-half of the above amounts.
90.15    (b) The income taxes imposed by this chapter upon unmarried individuals must be
90.16computed by applying to taxable net income the following schedule of rates:
90.17    (1) On the first $17,570 $21,650, 5.35 percent;
90.18    (2) On all over $17,570 $21,650, but not over $57,710 $73,500, 7.05 percent;
90.19    (3) On all over $57,710 $73,500, but not over $226,200, 7.85 percent.;
90.20(4) On all over $226,200, 8.49 percent.
90.21    (c) The income taxes imposed by this chapter upon unmarried individuals qualifying
90.22as a head of household as defined in section 2(b) of the Internal Revenue Code must be
90.23computed by applying to taxable net income the following schedule of rates:
90.24    (1) On the first $21,630 $26,650, 5.35 percent;
90.25    (2) On all over $21,630 $26,650, but not over $86,910 $110,700, 7.05 percent;
90.26    (3) On all over $86,910 $110,700, but not over $340,700, 7.85 percent.;
90.27(4) On all over $340,700, 8.49 percent.
90.28    (d) In lieu of a tax computed according to the rates set forth in this subdivision, the
90.29tax of any individual taxpayer whose taxable net income for the taxable year is less than
90.30an amount determined by the commissioner must be computed in accordance with tables
90.31prepared and issued by the commissioner of revenue based on income brackets of not
90.32more than $100. The amount of tax for each bracket shall be computed at the rates set
90.33forth in this subdivision, provided that the commissioner may disregard a fractional part of
90.34a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.
91.1    (e) An individual who is not a Minnesota resident for the entire year must compute
91.2the individual's Minnesota income tax as provided in this subdivision. After the
91.3application of the nonrefundable credits provided in this chapter, the tax liability must
91.4then be multiplied by a fraction in which:
91.5    (1) the numerator is the individual's Minnesota source federal adjusted gross income
91.6as defined in section 62 of the Internal Revenue Code and increased by the additions
91.7required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12),
91.8(13), and (16) to (18) (5) to (9), (11), and (12), and reduced by the Minnesota assignable
91.9portion of the subtraction for United States government interest under section 290.01,
91.10subdivision 19b
, clause (1), and the subtractions under section 290.01, subdivision 19b,
91.11clauses (8), (9), (13), (14), (16), and (17) (6), (7), (11), (12), (14), and (15), after applying
91.12the allocation and assignability provisions of section 290.081, clause (a), or 290.17; and
91.13    (2) the denominator is the individual's federal adjusted gross income as defined in
91.14section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in
91.15section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), (13), and (16) to
91.16(18) (5) to (9), (11), and (12), and reduced by the amounts specified in section 290.01,
91.17subdivision 19b
, clauses (1), (8), (9), (13), (14), (16), and (17) (6), (7), (11), (12), (14),
91.18and (15).
91.19EFFECTIVE DATE.This section is effective for taxable years beginning after
91.20December 31, 2012.

91.21    Sec. 19. Minnesota Statutes 2012, section 290.06, subdivision 2d, is amended to read:
91.22    Subd. 2d. Inflation adjustment of brackets. (a) For taxable years beginning after
91.23December 31, 2000 2013, the minimum and maximum dollar amounts for each rate
91.24bracket for which a tax is imposed in subdivision 2c shall be adjusted for inflation by the
91.25percentage determined under paragraph (b). For the purpose of making the adjustment as
91.26provided in this subdivision all of the rate brackets provided in subdivision 2c shall be the
91.27rate brackets as they existed for taxable years beginning after December 31, 1999 2012,
91.28and before January 1, 2001 2014. The rate applicable to any rate bracket must not be
91.29changed. The dollar amounts setting forth the tax shall be adjusted to reflect the changes
91.30in the rate brackets. The rate brackets as adjusted must be rounded to the nearest $10
91.31amount. If the rate bracket ends in $5, it must be rounded up to the nearest $10 amount.
91.32(b) The commissioner shall adjust the rate brackets and by the percentage determined
91.33pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in
91.34section 1(f)(3)(B) the word "1999" "2012" shall be substituted for the word "1992." For
91.352001 2014, the commissioner shall then determine the percent change from the 12 months
92.1ending on August 31, 1999 2012, to the 12 months ending on August 31, 2000 2013, and
92.2in each subsequent year, from the 12 months ending on August 31, 1999 2012, to the 12
92.3months ending on August 31 of the year preceding the taxable year. The determination of
92.4the commissioner pursuant to this subdivision shall not be considered a "rule" and shall
92.5not be subject to the Administrative Procedure Act contained in chapter 14.
92.6No later than December 15 of each year, the commissioner shall announce the
92.7specific percentage that will be used to adjust the tax rate brackets.
92.8EFFECTIVE DATE.This section is effective for taxable years beginning after
92.9December 31, 2012.

92.10    Sec. 20. Minnesota Statutes 2012, section 290.06, is amended by adding a subdivision
92.11to read:
92.12    Subd. 36. Charitable contributions credit. (a) A taxpayer, other than a corporation,
92.13estate, or trust, is allowed a credit against the tax imposed by this chapter equal to eight
92.14percent of the amount by which eligible charitable contributions exceed the greater of:
92.15(1) two percent of the taxpayer's adjusted gross income for the taxable year; or
92.16(2) $400 ($800 for married filing jointly).
92.17(b) For purposes of this subdivision, "eligible charitable contributions" means
92.18charitable contributions allowable as a deduction for the taxable year under section 170(a)
92.19of the Internal Revenue Code, subject to the limitations of section 170(b) of the Internal
92.20Revenue Code, and determined without regard to whether or not the taxpayer itemizes
92.21deductions.
92.22(c) For purposes of this subdivision, "adjusted gross income" has the meaning given
92.23in section 62 of the Internal Revenue Code.
92.24(d) For a nonresident or part-year resident, the credit must be allocated based on the
92.25percentage calculated under subdivision 2c, paragraph (e).
92.26EFFECTIVE DATE.This section is effective for taxable years beginning after
92.27December 31, 2012.

92.28    Sec. 21. Minnesota Statutes 2012, section 290.067, subdivision 1, is amended to read:
92.29    Subdivision 1. Amount of credit. (a) A taxpayer may take as a credit against the
92.30tax due from the taxpayer and a spouse, if any, under this chapter an amount equal to the
92.31dependent care credit for which the taxpayer is eligible pursuant to the provisions of
92.32section 21 of the Internal Revenue Code subject to the limitations provided in subdivision
92.332 except that in determining whether the child qualified as a dependent, income received
93.1as a Minnesota family investment program grant or allowance to or on behalf of the child
93.2must not be taken into account in determining whether the child received more than half
93.3of the child's support from the taxpayer, and the provisions of section 32(b)(1)(D) of
93.4the Internal Revenue Code do not apply.
93.5(b) If a child who has not attained the age of six years at the close of the taxable year
93.6is cared for at a licensed family day care home operated by the child's parent, the taxpayer
93.7is deemed to have paid employment-related expenses. If the child is 16 months old or
93.8younger at the close of the taxable year, the amount of expenses deemed to have been paid
93.9equals the maximum limit for one qualified individual under section 21(c) and (d) of the
93.10Internal Revenue Code. If the child is older than 16 months of age but has not attained the
93.11age of six years at the close of the taxable year, the amount of expenses deemed to have
93.12been paid equals the amount the licensee would charge for the care of a child of the same
93.13age for the same number of hours of care.
93.14(c) If a married couple:
93.15(1) has a child who has not attained the age of one year at the close of the taxable year;
93.16(2) files a joint tax return for the taxable year; and
93.17(3) does not participate in a dependent care assistance program as defined in section
93.18129 of the Internal Revenue Code, in lieu of the actual employment related expenses paid
93.19for that child under paragraph (a) or the deemed amount under paragraph (b), the lesser of
93.20(i) the combined earned income of the couple or (ii) the amount of the maximum limit for
93.21one qualified individual under section 21(c) and (d) of the Internal Revenue Code will
93.22be deemed to be the employment related expense paid for that child. The earned income
93.23limitation of section 21(d) of the Internal Revenue Code shall not apply to this deemed
93.24amount. These deemed amounts apply regardless of whether any employment-related
93.25expenses have been paid.
93.26(d) If the taxpayer is not required and does not file a federal individual income tax
93.27return for the tax year, no credit is allowed for any amount paid to any person unless:
93.28(1) the name, address, and taxpayer identification number of the person are included
93.29on the return claiming the credit; or
93.30(2) if the person is an organization described in section 501(c)(3) of the Internal
93.31Revenue Code and exempt from tax under section 501(a) of the Internal Revenue Code,
93.32the name and address of the person are included on the return claiming the credit.
93.33In the case of a failure to provide the information required under the preceding sentence,
93.34the preceding sentence does not apply if it is shown that the taxpayer exercised due
93.35diligence in attempting to provide the information required.
94.1In the case of a nonresident, part-year resident, or a person who has earned income
94.2not subject to tax under this chapter including earned income excluded pursuant to section
94.3290.01, subdivision 19b , clause (9) (7), the credit determined under section 21 of the
94.4Internal Revenue Code must be allocated based on the ratio by which the earned income
94.5of the claimant and the claimant's spouse from Minnesota sources bears to the total earned
94.6income of the claimant and the claimant's spouse.
94.7For residents of Minnesota, the subtractions for military pay under section 290.01,
94.8subdivision 19b
, clauses (10) and (11) (8) and (9), are not considered "earned income not
94.9subject to tax under this chapter."
94.10For residents of Minnesota, the exclusion of combat pay under section 112 of the
94.11Internal Revenue Code is not considered "earned income not subject to tax under this
94.12chapter."
94.13EFFECTIVE DATE.This section is effective for taxable years beginning after
94.14December 31, 2012.

94.15    Sec. 22. Minnesota Statutes 2012, section 290.067, subdivision 2a, is amended to read:
94.16    Subd. 2a. Income. (a) For purposes of this section, "income" means the sum of
94.17the following:
94.18(1) federal adjusted gross income as defined in section 62 of the Internal Revenue
94.19Code; and
94.20(2) the sum of the following amounts to the extent not included in clause (1):
94.21(i) all nontaxable income;
94.22(ii) the amount of a passive activity loss that is not disallowed as a result of section
94.23469, paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity
94.24loss carryover allowed under section 469(b) of the Internal Revenue Code;
94.25(iii) an amount equal to the total of any discharge of qualified farm indebtedness
94.26of a solvent individual excluded from gross income under section 108(g) of the Internal
94.27Revenue Code;
94.28(iv) cash public assistance and relief;
94.29(v) any pension or annuity (including railroad retirement benefits, all payments
94.30received under the federal Social Security Act, supplemental security income, and veterans
94.31benefits), which was not exclusively funded by the claimant or spouse, or which was
94.32funded exclusively by the claimant or spouse and which funding payments were excluded
94.33from federal adjusted gross income in the years when the payments were made;
94.34(vi) interest received from the federal or a state government or any instrumentality
94.35or political subdivision thereof;
95.1(vii) workers' compensation;
95.2(viii) nontaxable strike benefits;
95.3(ix) the gross amounts of payments received in the nature of disability income or
95.4sick pay as a result of accident, sickness, or other disability, whether funded through
95.5insurance or otherwise;
95.6(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of
95.71986, as amended through December 31, 1995;
95.8(xi) contributions made by the claimant to an individual retirement account,
95.9including a qualified voluntary employee contribution; simplified employee pension plan;
95.10self-employed retirement plan; cash or deferred arrangement plan under section 401(k)
95.11of the Internal Revenue Code; or deferred compensation plan under section 457 of the
95.12Internal Revenue Code;
95.13(xii) nontaxable scholarship or fellowship grants;
95.14(xiii) the amount of deduction allowed under section 199 of the Internal Revenue
95.15Code;
95.16(xiv) the amount of deduction allowed under section 220 or 223 of the Internal
95.17Revenue Code;
95.18(xv) the amount of deducted for tuition expenses required to be added to income
95.19under section 290.01, subdivision 19a, clause (12) under section 222 of the Internal
95.20Revenue Code; and
95.21(xvi) the amount deducted for certain expenses of elementary and secondary school
95.22teachers under section 62(a)(2)(D) of the Internal Revenue Code; and.
95.23(xvii) unemployment compensation.
95.24In the case of an individual who files an income tax return on a fiscal year basis, the
95.25term "federal adjusted gross income" means federal adjusted gross income reflected in the
95.26fiscal year ending in the next calendar year. Federal adjusted gross income may not be
95.27reduced by the amount of a net operating loss carryback or carryforward or a capital loss
95.28carryback or carryforward allowed for the year.
95.29(b) "Income" does not include:
95.30(1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 102;
95.31(2) amounts of any pension or annuity that were exclusively funded by the claimant
95.32or spouse if the funding payments were not excluded from federal adjusted gross income
95.33in the years when the payments were made;
95.34(3) surplus food or other relief in kind supplied by a governmental agency;
95.35(4) relief granted under chapter 290A;
96.1(5) child support payments received under a temporary or final decree of dissolution
96.2or legal separation; and
96.3(6) restitution payments received by eligible individuals and excludable interest as
96.4defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of
96.52001, Public Law 107-16.
96.6EFFECTIVE DATE.This section is effective for taxable years beginning after
96.7December 31, 2012.

96.8    Sec. 23. Minnesota Statutes 2012, section 290.0671, subdivision 1, is amended to read:
96.9    Subdivision 1. Credit allowed. (a) An individual is allowed a credit against the tax
96.10imposed by this chapter equal to a percentage of earned income. To receive a credit, a
96.11taxpayer must be eligible for a credit under section 32 of the Internal Revenue Code.
96.12(b) For individuals with no qualifying children, the credit equals 1.9125 percent of
96.13the first $4,620 of earned income. The credit is reduced by 1.9125 percent of earned
96.14income or adjusted gross income, whichever is greater, in excess of $5,770, but in no
96.15case is the credit less than zero.
96.16(c) For individuals with one qualifying child, the credit equals 8.5 percent of the first
96.17$6,920 of earned income and 8.5 percent of earned income over $12,080 but less than
96.18$13,450. The credit is reduced by 5.73 percent of earned income or adjusted gross income,
96.19whichever is greater, in excess of $15,080, but in no case is the credit less than zero.
96.20(d) For individuals with two or more qualifying children, the credit equals ten percent
96.21of the first $9,720 of earned income and 20 percent of earned income over $14,860 but less
96.22than $16,800. The credit is reduced by 10.3 percent of earned income or adjusted gross
96.23income, whichever is greater, in excess of $17,890, but in no case is the credit less than zero.
96.24(e) For a nonresident or part-year resident, the credit must be allocated based on the
96.25percentage calculated under section 290.06, subdivision 2c, paragraph (e).
96.26(f) For a person who was a resident for the entire tax year and has earned income
96.27not subject to tax under this chapter, including income excluded under section 290.01,
96.28subdivision 19b
, clause (9), the credit must be allocated based on the ratio of federal
96.29adjusted gross income reduced by the earned income not subject to tax under this chapter
96.30over federal adjusted gross income. For purposes of this paragraph, the subtractions for
96.31military pay under section 290.01, subdivision 19b, clauses (10) and (11) (8) and (9), are
96.32not considered "earned income not subject to tax under this chapter."
96.33For the purposes of this paragraph, the exclusion of combat pay under section 112
96.34of the Internal Revenue Code is not considered "earned income not subject to tax under
96.35this chapter."
97.1(g) For tax years beginning after December 31, 2007, and before December 31,
97.22010, and for tax years beginning after December 31, 2017, the $5,770 in paragraph (b),
97.3the $15,080 in paragraph (c), and the $17,890 in paragraph (d), after being adjusted for
97.4inflation under subdivision 7, are each increased by $3,000 for married taxpayers filing joint
97.5returns. For tax years beginning after December 31, 2008, the commissioner shall annually
97.6adjust the $3,000 by the percentage determined pursuant to the provisions of section 1(f)
97.7of the Internal Revenue Code, except that in section 1(f)(3)(B), the word "2007" shall be
97.8substituted for the word "1992." For 2009, the commissioner shall then determine the
97.9percent change from the 12 months ending on August 31, 2007, to the 12 months ending on
97.10August 31, 2008, and in each subsequent year, from the 12 months ending on August 31,
97.112007, to the 12 months ending on August 31 of the year preceding the taxable year. The
97.12earned income thresholds as adjusted for inflation must be rounded to the nearest $10. If the
97.13amount ends in $5, the amount is rounded up to the nearest $10. The determination of the
97.14commissioner under this subdivision is not a rule under the Administrative Procedure Act.
97.15(h) For tax years beginning after December 31, 2010, and before January 1, 2012,
97.16 and for tax years beginning after December 31, 2012, and before January 1, 2018, the
97.17$5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph
97.18(d), after being adjusted for inflation under subdivision 7, are each increased by $5,000
97.19for married taxpayers filing joint returns. For tax years beginning after December 31,
97.202010, and before January 1, 2012, and for tax years beginning after December 31, 2012,
97.21and before January 1, 2018, the commissioner shall annually adjust the $5,000 by the
97.22percentage determined pursuant to the provisions of section 1(f) of the Internal Revenue
97.23Code, except that in section 1(f)(3)(B), the word "2008" shall be substituted for the word
97.24"1992." For 2011, the commissioner shall then determine the percent change from the 12
97.25months ending on August 31, 2008, to the 12 months ending on August 31, 2010, and in
97.26each subsequent year, from the 12 months ending on August 31, 2008, to the 12 months
97.27ending on August 31 of the year preceding the taxable year. The earned income thresholds
97.28as adjusted for inflation must be rounded to the nearest $10. If the amount ends in $5, the
97.29amount is rounded up to the nearest $10. The determination of the commissioner under
97.30this subdivision is not a rule under the Administrative Procedure Act.
97.31(i) The commissioner shall construct tables showing the amount of the credit at
97.32various income levels and make them available to taxpayers. The tables shall follow
97.33the schedule contained in this subdivision, except that the commissioner may graduate
97.34the transition between income brackets.
97.35EFFECTIVE DATE.This section is effective for taxable years beginning after
97.36December 31, 2012.

98.1    Sec. 24. Minnesota Statutes 2012, section 290.0675, subdivision 1, is amended to read:
98.2    Subdivision 1. Definitions. (a) For purposes of this section the following terms
98.3have the meanings given.
98.4(b) "Earned income" means the sum of the following, to the extent included in
98.5Minnesota taxable income:
98.6(1) earned income as defined in section 32(c)(2) of the Internal Revenue Code;
98.7(2) income received from a retirement pension, profit-sharing, stock bonus, or
98.8annuity plan; and
98.9(3) Social Security benefits as defined in section 86(d)(1) of the Internal Revenue
98.10Code.
98.11(c) "Taxable income" means net income as defined in section 290.01, subdivision 19.
98.12(d) "Earned income of lesser-earning spouse" means the earned income of the
98.13spouse with the lesser amount of earned income as defined in paragraph (b) for the taxable
98.14year minus the sum of (i) the amount for one exemption under section 151(d) of the
98.15Internal Revenue Code and (ii) one-half the amount of the standard deduction under
98.16section 63(c)(2)(A) and (4) of the Internal Revenue Code minus one-half of any addition
98.17required under section 290.01, subdivision 19a, clause (21), and one-half of the addition
98.18that would have been required under section 290.01, subdivision 19a, clause (21), if the
98.19taxpayer had claimed the standard deduction.
98.20EFFECTIVE DATE.This section is effective for taxable years beginning after
98.21December 31, 2012.

98.22    Sec. 25. Minnesota Statutes 2012, section 290.0677, subdivision 2, is amended to read:
98.23    Subd. 2. Definitions. (a) For purposes of this section, the following terms have
98.24the meanings given.
98.25    (b) "Designated area" means a:
98.26    (1) combat zone designated by Executive Order from the President of the United
98.27States;
98.28    (2) qualified hazardous duty area, designated in Public Law; or
98.29    (3) location certified by the U. S. Department of Defense as eligible for combat zone
98.30tax benefits due to the location's direct support of military operations.
98.31    (c) "Active military service" means active duty service in any of the United States
98.32armed forces, the National Guard, or reserves.
98.33    (d) "Qualified individual" means an individual who has:
98.34    (1) either (i) met one of the following criteria:
98.35    (i) has served at least 20 years in the military or;
99.1    (ii) has a service-connected disability rating of 100 percent for a total and permanent
99.2disability; or
99.3    (iii) has been determined by the military to be eligible for compensation from a
99.4pension or other retirement pay from the federal government for service in the military,
99.5as computed under United States Code, title 10, sections 1401 to 1414, 1447 to 1455,
99.6or 12733; and
99.7    (2) separated from military service before the end of the taxable year.
99.8    (e) "Adjusted gross income" has the meaning given in section 61 of the Internal
99.9Revenue Code.
99.10EFFECTIVE DATE.This section is effective for taxable years beginning after
99.11December 31, 2012.

99.12    Sec. 26. Minnesota Statutes 2012, section 290.068, subdivision 3, is amended to read:
99.13    Subd. 3. Limitation; carryover. (a)(1) The credit for a taxable year beginning
99.14before January 1, 2010, and after December 31, 2012, shall not exceed the liability for
99.15tax. "Liability for tax" for purposes of this section means the tax imposed under section
99.16290.06, subdivision 1 , for the taxable year reduced by the sum of the nonrefundable
99.17credits allowed under this chapter.
99.18    (2) In the case of a corporation which is a partner in a partnership, the credit allowed
99.19for the taxable year shall not exceed the lesser of the amount determined under clause (1)
99.20for the taxable year or an amount (separately computed with respect to the corporation's
99.21interest in the trade or business or entity) equal to the amount of tax attributable to that
99.22portion of taxable income which is allocable or apportionable to the corporation's interest
99.23in the trade or business or entity.
99.24    (b) If the amount of the credit determined under this section for any taxable year
99.25exceeds the limitation under clause (a), the excess shall be a research credit carryover to
99.26each of the 15 succeeding taxable years. The entire amount of the excess unused credit for
99.27the taxable year shall be carried first to the earliest of the taxable years to which the credit
99.28may be carried and then to each successive year to which the credit may be carried. The
99.29amount of the unused credit which may be added under this clause shall not exceed the
99.30taxpayer's liability for tax less the research credit for the taxable year.
99.31EFFECTIVE DATE.This section is effective for taxable years beginning after
99.32December 31, 2012.

99.33    Sec. 27. Minnesota Statutes 2012, section 290.068, subdivision 6a, is amended to read:
100.1    Subd. 6a. Credit to be refundable. If the amount of credit allowed in this section
100.2for qualified research expenses incurred in taxable years beginning after December 31,
100.32009, and before January 1, 2013, exceeds the taxpayer's tax liability under this chapter,
100.4the commissioner shall refund the excess amount. The credit allowed for qualified research
100.5expenses incurred in taxable years beginning after December 31, 2009, and before January
100.61, 2013, must be used before any research credit earned under subdivision 3.
100.7EFFECTIVE DATE.This section is effective for taxable years beginning after
100.8December 31, 2012.

100.9    Sec. 28. Minnesota Statutes 2012, section 290.0681, subdivision 1, is amended to read:
100.10    Subdivision 1. Definitions. (a) For purposes of this section, the following terms
100.11have the meanings given.
100.12(b) "Account" means the historic credit administration account in the special
100.13revenue fund.
100.14(c) "Office" means the State Historic Preservation Office of the Minnesota Historical
100.15Society.
100.16(d) "Project" means rehabilitation of a certified historic structure, as defined in
100.17section 47(c)(3)(A) of the Internal Revenue Code, that is located in Minnesota and is
100.18allowed a federal credit under section 47(a)(2) of the Internal Revenue Code.
100.19(e) "Society" means the Minnesota Historical Society.
100.20(f) "Federal credit" means the credit allowed under section 47(a)(2) of the Internal
100.21Revenue Code.
100.22(g) "Placed in service" has the meaning used in section 47 of the Internal Revenue
100.23Code.
100.24(h) "Qualified rehabilitation expenditures" has the meaning given in section 47 of
100.25the Internal Revenue Code.
100.26EFFECTIVE DATE.This section is effective the day following final enactment.

100.27    Sec. 29. Minnesota Statutes 2012, section 290.0681, subdivision 3, is amended to read:
100.28    Subd. 3. Applications; allocations. (a) To qualify for a credit or grant under this
100.29section, the developer of a project must apply to the office before the rehabilitation
100.30begins. The application must contain the information and be in the form prescribed by
100.31the office. The office may collect a fee for application of up to $5,000, based on 0.5
100.32percent of estimated qualified rehabilitation expenses, not to exceed $35,000, to offset
100.33costs associated with personnel and administrative expenses related to administering the
101.1credit and preparing the economic impact report in subdivision 9. Application fees are
101.2deposited in the account. The application must indicate if the application is for a credit
101.3or a grant in lieu of the credit or a combination of the two and designate the taxpayer
101.4qualifying for the credit or the recipient of the grant.
101.5    (b) Upon approving an application for credit, the office shall issue allocation
101.6certificates that:
101.7    (1) verify eligibility for the credit or grant;
101.8    (2) state the amount of credit or grant anticipated with the project, with the credit
101.9amount equal to 100 percent and the grant amount equal to 90 percent of the federal
101.10credit anticipated in the application;
101.11    (3) state that the credit or grant allowed may increase or decrease if the federal
101.12credit the project receives at the time it is placed in service is different than the amount
101.13anticipated at the time the allocation certificate is issued; and
101.14    (4) state the fiscal year in which the credit or grant is allocated, and that the taxpayer
101.15or grant recipient is entitled to receive the credit or grant at the time the project is placed
101.16in service, provided that date is within three calendar years following the issuance of
101.17the allocation certificate.
101.18    (c) The office, in consultation with the commissioner of revenue, shall determine
101.19if the project is eligible for a credit or a grant under this section and must notify the
101.20developer in writing of its determination. Eligibility for the credit is subject to review
101.21and audit by the commissioner of revenue.
101.22    (d) The federal credit recapture and repayment requirements under section 50 of the
101.23Internal Revenue Code do not apply to the credit allowed under this section.
101.24(e) Any decision of the office under paragraph (c) may be challenged as a contested
101.25case under chapter 14. The contested case proceeding must be initiated within 45 days of
101.26the date of written notification by the office.
101.27EFFECTIVE DATE.This section is effective the day following final enactment.

101.28    Sec. 30. Minnesota Statutes 2012, section 290.0681, subdivision 4, is amended to read:
101.29    Subd. 4. Credit certificates; grants. (a)(1) The developer of a project for which the
101.30office has issued an allocation certificate must notify the office when the project is placed
101.31in service. Upon verifying that the project has been placed in service, and was allowed a
101.32federal credit, the office must issue a credit certificate to the taxpayer designated in the
101.33application or must issue a grant to the recipient designated in the application. The credit
101.34certificate must state the amount of the credit.
101.35    (2) The credit amount equals the federal credit allowed for the project.
102.1    (3) The grant amount equals 90 percent of the federal credit allowed for the project.
102.2    (b) The recipient of a credit certificate may assign the certificate to another taxpayer,
102.3which is then allowed the credit under this section or section 297I.20, subdivision 3. An
102.4assignment is not valid unless the assignee notifies the commissioner within 30 days of the
102.5date that the assignment is made. The commissioner shall prescribe the forms necessary
102.6for notifying the commissioner of the assignment of a credit certificate and for claiming
102.7a credit by assignment.
102.8    (c) Credits passed through to partners, members, shareholders, or owners pursuant to
102.9subdivision 5 are not an assignment of a credit certificate under this subdivision.
102.10    (d) A grant agreement between the office and the recipient of a grant may allow the
102.11grant to be issued to another individual or entity.
102.12EFFECTIVE DATE.This section is effective the day following final enactment.

102.13    Sec. 31. Minnesota Statutes 2012, section 290.0681, subdivision 5, is amended to read:
102.14    Subd. 5. Partnerships; multiple owners. Credits granted to a partnership, a limited
102.15liability company taxed as a partnership, S corporation, or multiple owners of property
102.16are passed through to the partners, members, shareholders, or owners, respectively, pro
102.17rata to each partner, member, shareholder, or owner based on their share of the entity's
102.18assets or as specially allocated in their organizational documents or any other executed
102.19agreement, as of the last day of the taxable year.
102.20EFFECTIVE DATE.This section is effective the day following final enactment.

102.21    Sec. 32. [290.0693] VETERANS JOBS TAX CREDIT.
102.22    Subdivision 1. Definitions. (a) For the purposes of this section, the following terms
102.23have the meanings given.
102.24(b) "Date of hire" means the day that the qualified employee begins performing
102.25services as an employee of the qualified employer.
102.26(c) "Disabled veteran" is a veteran who has had a service-connected disability rating
102.27as adjudicated by the United States Veterans Administration, or by the retirement board of
102.28one of the several branches of the armed forces.
102.29(d)(1) "Qualified employee" means an employee as defined in section 290.92,
102.30subdivision 1, who meets the following criteria:
102.31(i) the employee is a resident of Minnesota on the date of hire;
102.32(ii) the employee is paid wages as defined in section 290.92, subdivision 1; and
103.1(iii) the employee's wages are attributable to Minnesota under section 290.191,
103.2subdivision 12;
103.3(2) Qualified employee does not include:
103.4(i) any employee who bears any of the relationships to the employer described in
103.5subparagraphs (A) to (G) of section 152(d)(2) of the Internal Revenue Code;
103.6(ii) if the employer is a corporation, an employee who owns, directly or indirectly,
103.7more than 50 percent in value of the outstanding stock of the corporation, or if the
103.8employer is an entity other than a corporation, an employee who owns, directly or
103.9indirectly, more than 50 percent of the capital and profits interests in the entity, as
103.10determined with the application of section 267(c) of the Internal Revenue Code; or
103.11(iii) if the employer is an estate or trust, any employee who is a fiduciary of the estate
103.12or trust, or is an individual who bears any of the relationships described in subparagraphs
103.13(A) to (G) of section 152(d)(2) of the Internal Revenue Code to a grantor, beneficiary,
103.14or fiduciary of the estate or trust.
103.15(e) "Qualified employer" means an employer that hired a disabled veteran, or an
103.16unemployed veteran as a qualified employee.
103.17(f) "Unemployed veteran" is a veteran who:
103.18(1) received unemployment compensation under state or federal law at any time
103.19during the two-year period prior to the date of hire; and
103.20(2) was unemployed on the date of hire.
103.21(g) "Veteran" has the meaning given in section 197.447.
103.22    Subd. 2. Credit allowed. (a) A qualified employer is allowed a credit for each of
103.23the following individuals that the qualified employer hires as a qualified employee during
103.24taxable years beginning after December 31, 2012, and before January 1, 2017:
103.25(1) a disabled veteran; or
103.26(2) an unemployed veteran.
103.27(b) Subject to the requirements of this section, there is no limit to the number of
103.28credits that a qualified employer may claim under this section during a taxable year.
103.29(c) A qualified employer may claim the credit either for the taxable year in which
103.30the qualified employee is hired, or in the next taxable year, but may claim the credit only
103.31once for each qualified employee.
103.32    Subd. 3. Credit amount for hiring certain veterans. (a) A qualified employer who
103.33is required to file a return under section 289A.08, subdivision 1, 2, or 3, is allowed a credit
103.34against the tax imposed by this chapter as determined under this subdivision.
104.1(b) For hiring a disabled veteran as a qualified employee, the credit equals ten
104.2percent of the wages paid to the qualified employee during the taxable year, but the
104.3amount of the credit shall not exceed $1,200.
104.4(c) For hiring an unemployed veteran as a qualified employee, the credit equals
104.5ten percent of the wages paid to the qualified employee during the taxable year, but the
104.6amount of the credit shall not exceed $600.
104.7(d) The credit is limited to the liability for tax under this chapter for the taxable year.
104.8(e) A qualified employer is allowed only one of the credits authorized under
104.9paragraphs (b) and (c) upon hiring a disabled veteran, or an unemployed veteran as a
104.10qualified employee.
104.11(f) A qualified employer may not claim a credit under this subdivision for hiring
104.12a disabled veteran, or an unemployed veteran as a qualified employee if the qualified
104.13employer currently employs or has previously employed the disabled veteran, or
104.14unemployed veteran.
104.15    Subd. 4. Flow-through entities. Credits granted to a partnership, limited liability
104.16company taxed as a partnership, S corporation, or multiple owners of a business are passed
104.17through to the partners, members, shareholders, or owners, respectively, pro rata to each
104.18partner, member, shareholder, or owner based on their share of the entity's assets or as
104.19specially allocated in their organizational documents, as of the last day of the taxable year.
104.20EFFECTIVE DATE.This section is effective for taxable years beginning after
104.21December 31, 2012.

104.22    Sec. 33. Minnesota Statutes 2012, section 290.091, subdivision 2, is amended to read:
104.23    Subd. 2. Definitions. For purposes of the tax imposed by this section, the following
104.24terms have the meanings given:
104.25    (a) "Alternative minimum taxable income" means the sum of the following for
104.26the taxable year:
104.27    (1) the taxpayer's federal alternative minimum taxable income as defined in section
104.2855(b)(2) of the Internal Revenue Code;
104.29    (2) the taxpayer's itemized deductions allowed in computing federal alternative
104.30minimum taxable income, but excluding:
104.31    (i) the charitable contribution deduction under section 170 of the Internal Revenue
104.32Code;
104.33    (ii) (i) the medical expense deduction;
104.34    (iii) (ii) the casualty, theft, and disaster loss deduction; and
104.35    (iv) (iii) the impairment-related work expenses of a disabled person;
105.1    (3) for depletion allowances computed under section 613A(c) of the Internal
105.2Revenue Code, with respect to each property (as defined in section 614 of the Internal
105.3Revenue Code), to the extent not included in federal alternative minimum taxable income,
105.4the excess of the deduction for depletion allowable under section 611 of the Internal
105.5Revenue Code for the taxable year over the adjusted basis of the property at the end of the
105.6taxable year (determined without regard to the depletion deduction for the taxable year);
105.7    (4) to the extent not included in federal alternative minimum taxable income, the
105.8amount of the tax preference for intangible drilling cost under section 57(a)(2) of the
105.9Internal Revenue Code determined without regard to subparagraph (E);
105.10    (5) to the extent not included in federal alternative minimum taxable income, the
105.11amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and
105.12    (6) the amount of addition required by section 290.01, subdivision 19a, clauses (7)
105.13to (9), (12), (13), and (16) to (18) (7) to (9), (11), and (12);
105.14    less the sum of the amounts determined under the following:
105.15    (1) interest income as defined in section 290.01, subdivision 19b, clause (1);
105.16    (2) an overpayment of state income tax as provided by section 290.01, subdivision
105.1719b
, clause (2), to the extent included in federal alternative minimum taxable income;
105.18    (3) the amount of investment interest paid or accrued within the taxable year on
105.19indebtedness to the extent that the amount does not exceed net investment income, as
105.20defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include
105.21amounts deducted in computing federal adjusted gross income;
105.22    (4) amounts subtracted from federal taxable income as provided by section 290.01,
105.23subdivision 19b
, clauses (6), (8) to (14), and (16) (6) to (12), (14), and (18); and
105.24(5) the amount of the net operating loss allowed under section 290.095, subdivision
105.2511
, paragraph (c).
105.26    In the case of an estate or trust, alternative minimum taxable income must be
105.27computed as provided in section 59(c) of the Internal Revenue Code.
105.28    (b) "Investment interest" means investment interest as defined in section 163(d)(3)
105.29of the Internal Revenue Code.
105.30    (c) "Net minimum tax" means the minimum tax imposed by this section.
105.31    (d) "Regular tax" means the tax that would be imposed under this chapter (without
105.32regard to this section and section 290.032), reduced by the sum of the nonrefundable
105.33credits allowed under this chapter.
105.34    (e) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable
105.35income after subtracting the exemption amount determined under subdivision 3.
106.1EFFECTIVE DATE.This section is effective for taxable years beginning after
106.2December 31, 2012.

106.3    Sec. 34. Minnesota Statutes 2012, section 290.0921, subdivision 3, is amended to read:
106.4    Subd. 3. Alternative minimum taxable income. "Alternative minimum taxable
106.5income" is Minnesota net income as defined in section 290.01, subdivision 19, and
106.6includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e),
106.7(f), and (h) of the Internal Revenue Code. If a corporation files a separate company
106.8Minnesota tax return, the minimum tax must be computed on a separate company basis.
106.9If a corporation is part of a tax group filing a unitary return, the minimum tax must be
106.10computed on a unitary basis. The following adjustments must be made.
106.11(1) For purposes of the depreciation adjustments under section 56(a)(1) and
106.1256(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in
106.13service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal
106.14income tax purposes, including any modification made in a taxable year under section
106.15290.01, subdivision 19e , or Minnesota Statutes 1986, section 290.09, subdivision 7,
106.16paragraph (c).
106.17For taxable years beginning after December 31, 2000, the amount of any remaining
106.18modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986,
106.19section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation
106.20allowance in the first taxable year after December 31, 2000.
106.21(2) The portion of the depreciation deduction allowed for federal income tax
106.22purposes under section 168(k) of the Internal Revenue Code that is required as an addition
106.23under section 290.01, subdivision 19c, clause (15) (12), is disallowed in determining
106.24alternative minimum taxable income.
106.25(3) The subtraction for depreciation allowed under section 290.01, subdivision
106.2619d
, clause (17) (16), is allowed as a depreciation deduction in determining alternative
106.27minimum taxable income.
106.28(4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d)
106.29of the Internal Revenue Code does not apply.
106.30(5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal
106.31Revenue Code does not apply.
106.32(6) The special rule for dividends from section 936 companies under section
106.3356(g)(4)(C)(iii) does not apply.
106.34(7) (6) The tax preference for depletion under section 57(a)(1) of the Internal
106.35Revenue Code does not apply.
107.1(8) (7) The tax preference for intangible drilling costs under section 57(a)(2) of the
107.2Internal Revenue Code must be calculated without regard to subparagraph (E) and the
107.3subtraction under section 290.01, subdivision 19d, clause (4).
107.4(9) (8) The tax preference for tax exempt interest under section 57(a)(5) of the
107.5Internal Revenue Code does not apply.
107.6(10) (9) The tax preference for charitable contributions of appreciated property
107.7under section 57(a)(6) of the Internal Revenue Code does not apply.
107.8(11) (10) For purposes of calculating the tax preference for accelerated depreciation
107.9or amortization on certain property placed in service before January 1, 1987, under section
107.1057(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the
107.11deduction allowed under section 290.01, subdivision 19e.
107.12For taxable years beginning after December 31, 2000, the amount of any remaining
107.13modification made under section 290.01, subdivision 19e, not previously deducted is a
107.14depreciation or amortization allowance in the first taxable year after December 31, 2004.
107.15(12) (11) For purposes of calculating the adjustment for adjusted current earnings
107.16in section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable
107.17income" as it is used in section 56(g) of the Internal Revenue Code, means alternative
107.18minimum taxable income as defined in this subdivision, determined without regard to the
107.19adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code.
107.20(13) (12) For purposes of determining the amount of adjusted current earnings
107.21under section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under
107.22section 56(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign
107.23dividend gross-up subtracted as provided in section 290.01, subdivision 19d, clause (1),
107.24(ii) the amount of refunds of income, excise, or franchise taxes subtracted as provided in
107.25section 290.01, subdivision 19d, clause (9), or (iii) the amount of royalties, fees or other
107.26like income subtracted as provided in section 290.01, subdivision 19d, clause (10).
107.27(14) (13) Alternative minimum taxable income excludes the income from operating
107.28in a job opportunity building zone as provided under section 469.317.
107.29(15) (14) Alternative minimum taxable income excludes the income from operating
107.30in a biotechnology and health sciences industry zone as provided under section 469.337.
107.31Items of tax preference must not be reduced below zero as a result of the
107.32modifications in this subdivision.
107.33EFFECTIVE DATE.This section is effective for taxable years beginning after
107.34December 31, 2012.

107.35    Sec. 35. Minnesota Statutes 2012, section 290.0922, subdivision 1, is amended to read:
108.1    Subdivision 1. Imposition. (a) In addition to the tax imposed by this chapter without
108.2regard to this section, the franchise tax imposed on a corporation required to file under
108.3section 289A.08, subdivision 3, other than a corporation treated as an "S" corporation
108.4under section 290.9725 for the taxable year includes a tax equal to the following amounts:
108.5
108.6
If the sum of the corporation's Minnesota
property, payrolls, and sales or receipts is:
the tax equals:
108.7
less than
$
500,000
$
0
108.8
$
500,000
to
$
999,999
$
100
108.9
$
1,000,000
to
$
4,999,999
$
300
108.10
$
5,000,000
to
$
9,999,999
$
1,000
108.11
$
10,000,000
to
$
19,999,999
$
2,000
108.12
$
20,000,000
or
more
$
5,000
108.13
less than
$
930,000
$
0
108.14
$
930,000
to
$
1,869,999
$
190
108.15
$
1,870,000
to
$
9,339,999
$
560
108.16
$
9,340,000
to
$
18,679,999
$
1,870
108.17
$
18,680,000
to
$
37,359,999
$
3,740
108.18
$
37,360,000
or
more
$
9,340
108.19    (b) A tax is imposed for each taxable year on a corporation required to file a return
108.20under section 289A.12, subdivision 3, that is treated as an "S" corporation under section
108.21290.9725 and on a partnership required to file a return under section 289A.12, subdivision
108.223
, other than a partnership that derives over 80 percent of its income from farming. The
108.23tax imposed under this paragraph is due on or before the due date of the return for the
108.24taxpayer due under section 289A.18, subdivision 1. The commissioner shall prescribe
108.25the return to be used for payment of this tax. The tax under this paragraph is equal to
108.26the following amounts:
108.27
108.28
108.29
108.30
If the sum of the S corporation's
or partnership's Minnesota
property, payrolls, and sales or
receipts is:
the tax equals:
108.31
less than
$
500,000
$
0
108.32
$
500,000
to
$
999,999
$
100
108.33
$
1,000,000
to
$
4,999,999
$
300
108.34
$
5,000,000
to
$
9,999,999
$
1,000
108.35
$
10,000,000
to
$
19,999,999
$
2,000
108.36
$
20,000,000
or
more
$
5,000
108.37
less than
$
930,000
$
0
108.38
$
930,000
to
$
1,869,999
$
190
108.39
$
1,870,000
to
$
9,339,999
$
560
108.40
$
9,340,000
to
$
18,679,999
$
1,870
109.1
$
18,680,000
to
$
37,359,999
$
3,740
109.2
$
37,360,000
or
more
$
9,340
109.3    (c) The commissioner shall adjust the dollar amounts of both the tax and the property,
109.4payrolls, and sales or receipts thresholds in paragraphs (a) and (b) by the percentage
109.5determined pursuant to the provisions of section 1(f) of the Internal Revenue Code, except
109.6that in section 1(f)(3)(B) the word "2012" must be substituted for the word "1992." For
109.72014, the commissioner shall determine the percentage change from the 12 months ending
109.8on August 31, 2012, to the 12 months ending on August 31, 2013, and in each subsequent
109.9year, from the 12 months ending on August 31, 2012, to the 12 months ending on August
109.1031 of the year preceding the taxable year. The determination of the commissioner pursuant
109.11to this subdivision is not a "rule" subject to the Administrative Procedure Act contained in
109.12chapter 14. The tax amounts as adjusted must be rounded to the nearest $10 amount and
109.13the threshold amounts must be adjusted to the nearest $10,000 amount. For tax amounts
109.14that end in $5, the amount is rounded up to the nearest $10 amount and for the threshold
109.15amounts that end in $5,000, the amount is rounded up to the nearest $10,000.
109.16EFFECTIVE DATE.This section is effective for taxable years beginning after
109.17December 31, 2012.

109.18    Sec. 36. Minnesota Statutes 2012, section 290.17, subdivision 4, is amended to read:
109.19    Subd. 4. Unitary business principle. (a) If a trade or business conducted wholly
109.20within this state or partly within and partly without this state is part of a unitary business,
109.21the entire income of the unitary business is subject to apportionment pursuant to section
109.22290.191 . Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary
109.23business is considered to be derived from any particular source and none may be allocated
109.24to a particular place except as provided by the applicable apportionment formula. The
109.25provisions of this subdivision do not apply to business income subject to subdivision 5,
109.26income of an insurance company, or income of an investment company determined under
109.27section 290.36.
109.28(b) The term "unitary business" means business activities or operations which
109.29result in a flow of value between them. The term may be applied within a single legal
109.30entity or between multiple entities and without regard to whether each entity is a sole
109.31proprietorship, a corporation, a partnership or a trust.
109.32(c) Unity is presumed whenever there is unity of ownership, operation, and use,
109.33evidenced by centralized management or executive force, centralized purchasing,
109.34advertising, accounting, or other controlled interaction, but the absence of these
110.1centralized activities will not necessarily evidence a nonunitary business. Unity is also
110.2presumed when business activities or operations are of mutual benefit, dependent upon or
110.3contributory to one another, either individually or as a group.
110.4(d) Where a business operation conducted in Minnesota is owned by a business
110.5entity that carries on business activity outside the state different in kind from that
110.6conducted within this state, and the other business is conducted entirely outside the state, it
110.7is presumed that the two business operations are unitary in nature, interrelated, connected,
110.8and interdependent unless it can be shown to the contrary.
110.9(e) Unity of ownership is does not deemed to exist when a corporation is two or
110.10more corporations are involved unless that corporation is a member of a group of two or
110.11more business entities and more than 50 percent of the voting stock of each member of
110.12the group corporation is directly or indirectly owned by a common owner or by common
110.13owners, either corporate or noncorporate, or by one or more of the member corporations
110.14of the group. For this purpose, the term "voting stock" shall include membership interests
110.15of mutual insurance holding companies formed under section 66A.40.
110.16(f) The net income and apportionment factors under section 290.191 or 290.20 of
110.17foreign corporations and other foreign entities which are part of a unitary business shall
110.18not be included in the net income or the apportionment factors of the unitary business. A
110.19foreign corporation or other foreign entity which is not included on a combined report and
110.20which is required to file a return under this chapter shall file on a separate return basis.
110.21The net income and apportionment factors under section 290.191 or 290.20 of foreign
110.22operating corporations shall not be included in the net income or the apportionment
110.23factors of the unitary business except as provided in paragraph (g). The legislature intends
110.24that the provisions of this paragraph are not severable from the provisions of section
110.25290.01, subdivision 5, clauses (4) and (5), and if any of those provisions are found to be
110.26unconstitutional, the provisions of this paragraph are void for the respective taxable years.
110.27(g) The adjusted net income of a foreign operating corporation shall be deemed to
110.28be paid as a dividend on the last day of its taxable year to each shareholder thereof, in
110.29proportion to each shareholder's ownership, with which such corporation is engaged in
110.30a unitary business. Such deemed dividend shall be treated as a dividend under section
110.31290.21, subdivision 4.
110.32Dividends actually paid by a foreign operating corporation to a corporate shareholder
110.33which is a member of the same unitary business as the foreign operating corporation shall
110.34be eliminated from the net income of the unitary business in preparing a combined report
110.35for the unitary business. The adjusted net income of a foreign operating corporation
110.36shall be its net income adjusted as follows:
111.1(1) any taxes paid or accrued to a foreign country, the commonwealth of Puerto
111.2Rico, or a United States possession or political subdivision of any of the foregoing shall
111.3be a deduction; and
111.4(2) the subtraction from federal taxable income for payments received from foreign
111.5corporations or foreign operating corporations under section 290.01, subdivision 19d,
111.6clause (10), shall not be allowed.
111.7If a foreign operating corporation incurs a net loss, neither income nor deduction from
111.8that corporation shall be included in determining the net income of the unitary business.
111.9(h) (g) For purposes of determining the net income of a unitary business and the
111.10factors to be used in the apportionment of net income pursuant to section 290.191 or
111.11290.20 , there must be included only the income and apportionment factors of domestic
111.12corporations or other domestic entities other than foreign operating corporations that are
111.13determined to be part of the unitary business pursuant to this subdivision, notwithstanding
111.14that foreign corporations or other foreign entities might be included in the unitary business.
111.15(i) (h) Deductions for expenses, interest, or taxes otherwise allowable under
111.16this chapter that are connected with or allocable against dividends, deemed dividends
111.17described in paragraph (g), or royalties, fees, or other like income described in section
111.18290.01, subdivision 19d , clause (10), shall not be disallowed.
111.19(j) (i) Each corporation or other entity, except a sole proprietorship, that is part
111.20of a unitary business must file combined reports as the commissioner determines.
111.21On the reports, all intercompany transactions between entities included pursuant to
111.22paragraph (h) (g) must be eliminated and the entire net income of the unitary business
111.23determined in accordance with this subdivision is apportioned among the entities by
111.24using each entity's Minnesota factors for apportionment purposes in the numerators of
111.25the apportionment formula and the total factors for apportionment purposes of all entities
111.26included pursuant to paragraph (h) (g) in the denominators of the apportionment formula.
111.27 Except as otherwise provided by paragraph (f), all sales of the unitary business made
111.28within Minnesota pursuant to section 290.191 or 290.20 must be included on the separate
111.29combined report of a corporation that is a member of the unitary business and is subject to
111.30the jurisdiction of this state to impose tax under this chapter.
111.31(k) (j) If a corporation has been divested from a unitary business and is included in a
111.32combined report for a fractional part of the common accounting period of the combined
111.33report:
111.34(1) its income includable in the combined report is its income incurred for that part
111.35of the year determined by proration or separate accounting; and
112.1(2) its sales, property, and payroll included in the apportionment formula must
112.2be prorated or accounted for separately.
112.3EFFECTIVE DATE.This section is effective for taxable years beginning after
112.4December 31, 2012.

112.5    Sec. 37. Minnesota Statutes 2012, section 290.21, subdivision 4, is amended to read:
112.6    Subd. 4. Dividends received from another corporation. (a)(1) Eighty percent
112.7of dividends received by a corporation during the taxable year from another corporation,
112.8in which the recipient owns 20 percent or more of the stock, by vote and value, not
112.9including stock described in section 1504(a)(4) of the Internal Revenue Code when the
112.10corporate stock with respect to which dividends are paid does not constitute the stock in
112.11trade of the taxpayer or would not be included in the inventory of the taxpayer, or does not
112.12constitute property held by the taxpayer primarily for sale to customers in the ordinary
112.13course of the taxpayer's trade or business, or when the trade or business of the taxpayer
112.14does not consist principally of the holding of the stocks and the collection of the income
112.15and gains therefrom; and
112.16    (2)(i) the remaining 20 percent of dividends if the dividends received are the stock in
112.17an affiliated company transferred in an overall plan of reorganization and the dividend
112.18is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as
112.19amended through December 31, 1989;
112.20    (ii) the remaining 20 percent of dividends if the dividends are received from a
112.21corporation which is subject to tax under section 290.36 and which is a member of an
112.22affiliated group of corporations as defined by the Internal Revenue Code and the dividend
112.23is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as
112.24amended through December 31, 1989, or is deducted under an election under section
112.25243(b) of the Internal Revenue Code; or
112.26    (iii) the remaining 20 percent of the dividends if the dividends are received from a
112.27property and casualty insurer as defined under section 60A.60, subdivision 8, which is a
112.28member of an affiliated group of corporations as defined by the Internal Revenue Code
112.29and either: (A) the dividend is eliminated in consolidation under Treasury Regulation
112.301.1502-14(a), as amended through December 31, 1989; or (B) the dividend is deducted
112.31under an election under section 243(b) of the Internal Revenue Code.
112.32    (b) Seventy percent of dividends received by a corporation during the taxable year
112.33from another corporation in which the recipient owns less than 20 percent of the stock,
112.34by vote or value, not including stock described in section 1504(a)(4) of the Internal
112.35Revenue Code when the corporate stock with respect to which dividends are paid does not
113.1constitute the stock in trade of the taxpayer, or does not constitute property held by the
113.2taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or
113.3business, or when the trade or business of the taxpayer does not consist principally of the
113.4holding of the stocks and the collection of income and gain therefrom.
113.5    (c) The dividend deduction provided in this subdivision shall be allowed only with
113.6respect to dividends that are included in a corporation's Minnesota taxable net income
113.7for the taxable year.
113.8    The dividend deduction provided in this subdivision does not apply to a dividend
113.9from a corporation which, for the taxable year of the corporation in which the distribution
113.10is made or for the next preceding taxable year of the corporation, is a corporation exempt
113.11from tax under section 501 of the Internal Revenue Code.
113.12The dividend deduction provided in this subdivision does not apply to a dividend
113.13received from a real estate investment trust, as defined in section 856 of the Internal
113.14Revenue Code.
113.15    The dividend deduction provided in this subdivision applies to the amount of
113.16regulated investment company dividends only to the extent determined under section
113.17854(b) of the Internal Revenue Code.
113.18    The dividend deduction provided in this subdivision shall not be allowed with
113.19respect to any dividend for which a deduction is not allowed under the provisions of
113.20section 246(c) of the Internal Revenue Code.
113.21    (d) If dividends received by a corporation that does not have nexus with Minnesota
113.22under the provisions of Public Law 86-272 are included as income on the return of
113.23an affiliated corporation permitted or required to file a combined report under section
113.24290.17, subdivision 4 , or 290.34, subdivision 2, then for purposes of this subdivision the
113.25determination as to whether the trade or business of the corporation consists principally
113.26of the holding of stocks and the collection of income and gains therefrom shall be made
113.27with reference to the trade or business of the affiliated corporation having a nexus with
113.28Minnesota.
113.29    (e) The deduction provided by this subdivision does not apply if the dividends are
113.30paid by a FSC as defined in section 922 of the Internal Revenue Code.
113.31    (f) If one or more of the members of the unitary group whose income is included on
113.32the combined report received a dividend, the deduction under this subdivision for each
113.33member of the unitary business required to file a return under this chapter is the product
113.34of: (1) 100 percent of the dividends received by members of the group; (2) the percentage
113.35allowed pursuant to paragraph (a) or (b); and (3) the percentage of the taxpayer's business
113.36income apportionable to this state for the taxable year under section 290.191 or 290.20.
114.1EFFECTIVE DATE.This section is effective for taxable years beginning after
114.2December 31, 2012.

114.3    Sec. 38. Minnesota Statutes 2012, section 290A.03, subdivision 15, as amended by
114.4Laws 2013, chapter 3, section 5, is amended to read:
114.5    Subd. 15. Internal Revenue Code. For taxable years beginning before January 1,
114.62012, and after December 31, 2012, "Internal Revenue Code" means the Internal Revenue
114.7Code of 1986, as amended through April 14, 2011; and for taxable years beginning after
114.8December 31, 2011, and before January 1, 2013, "Internal Revenue Code" means the
114.9Internal Revenue Code of 1986, as amended through January 3, 2013.
114.10EFFECTIVE DATE.This section is effective for property tax refunds based on
114.11property taxes payable after December 31, 2013, and rent paid after December 31, 2012.

114.12    Sec. 39. Minnesota Statutes 2012, section 298.01, subdivision 3b, is amended to read:
114.13    Subd. 3b. Deductions. (a) For purposes of determining taxable income under
114.14subdivision 3, the deductions from gross income include only those expenses necessary
114.15to convert raw ores to marketable quality. Such expenses include costs associated with
114.16refinement but do not include expenses such as transportation, stockpiling, marketing, or
114.17marine insurance that are incurred after marketable ores are produced, unless the expenses
114.18are included in gross income. The allowable deductions from a mine or plant that mines
114.19and produces more than one mineral, metal, or energy resource must be determined
114.20separately for the purposes of computing the deduction in section 290.01, subdivision 19c,
114.21clause (9) (8). These deductions may be combined on one occupation tax return to arrive
114.22at the deduction from gross income for all production.
114.23(b) The provisions of section 290.01, subdivisions 19c, clauses (6) and (9), and 19d,
114.24clauses (7) and (11), are not used to determine taxable income.

114.25    Sec. 40. ESTIMATED TAXES; EXCEPTIONS.
114.26No addition to tax, penalties, or interest may be made under Minnesota Statutes,
114.27section 289A.25, for any period before September 15, 2013, with respect to an
114.28underpayment of estimated tax, to the extent that the underpayment was created or
114.29increased by the increase in income tax rates under this article.
114.30EFFECTIVE DATE.This section is effective for taxable years beginning after
114.31December 31, 2012.

115.1    Sec. 41. REPEALER.
115.2Minnesota Statutes 2012, sections 290.01, subdivision 6b; 290.06, subdivision 22a;
115.3290.0672; and 290.0921, subdivision 7, are repealed.
115.4EFFECTIVE DATE.This section is effective for taxable years beginning after
115.5December 31, 2012.

115.6ARTICLE 7
115.7ESTATE AND GIFT TAXES

115.8    Section 1. Minnesota Statutes 2012, section 289A.10, subdivision 1, is amended to read:
115.9    Subdivision 1. Return required. In the case of a decedent who has an interest in
115.10property with a situs in Minnesota, the personal representative must submit a Minnesota
115.11estate tax return to the commissioner, on a form prescribed by the commissioner, if:
115.12(1) a federal estate tax return is required to be filed; or
115.13(2) the sum of the federal gross estate and federal adjusted taxable gifts made within
115.14three years of the date of the decedent's death exceeds $1,000,000.
115.15The return must contain a computation of the Minnesota estate tax due. The return
115.16must be signed by the personal representative.
115.17EFFECTIVE DATE.This section is effective for estates of decedents dying after
115.18December 31, 2012.

115.19    Sec. 2. Minnesota Statutes 2012, section 291.005, subdivision 1, is amended to read:
115.20    Subdivision 1. Scope. Unless the context otherwise clearly requires, the following
115.21terms used in this chapter shall have the following meanings:
115.22    (1) "Commissioner" means the commissioner of revenue or any person to whom the
115.23commissioner has delegated functions under this chapter.
115.24    (2) "Federal gross estate" means the gross estate of a decedent as required to be valued
115.25and otherwise determined for federal estate tax purposes under the Internal Revenue Code.
115.26    (3) "Internal Revenue Code" means the United States Internal Revenue Code of
115.271986, as amended through April 14, 2011 January 3, 2013, but without regard to the
115.28provisions of sections 501 and 901 of Public Law 107-16, as amended by Public Law
115.29111-312, and section 301(c) of Public Law 111-312 section 2011, paragraph (f), of the
115.30Internal Revenue Code.
115.31    (4) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as
115.32defined by section 2011(b)(3) of the Internal Revenue Code, plus
116.1(i) the amount of deduction for state death taxes allowed under section 2058 of the
116.2Internal Revenue Code;
116.3(ii) the amount of taxable gifts, as defined in section 292.16, and made by the
116.4decedent within three years of the decedent's date of death; less
116.5(ii) (iii)(A) the value of qualified small business property under section 291.03,
116.6subdivision 9
, and the value of qualified farm property under section 291.03, subdivision
116.710
, or (B) $4,000,000, whichever is less.
116.8    (5) "Minnesota gross estate" means the federal gross estate of a decedent after (a)
116.9excluding therefrom any property included therein which has its situs outside Minnesota,
116.10and (b) including therein any property omitted from the federal gross estate which is
116.11includable therein, has its situs in Minnesota, and was not disclosed to federal taxing
116.12authorities.
116.13    (6) "Nonresident decedent" means an individual whose domicile at the time of
116.14death was not in Minnesota.
116.15    (7) "Personal representative" means the executor, administrator or other person
116.16appointed by the court to administer and dispose of the property of the decedent. If there
116.17is no executor, administrator or other person appointed, qualified, and acting within this
116.18state, then any person in actual or constructive possession of any property having a situs in
116.19this state which is included in the federal gross estate of the decedent shall be deemed
116.20to be a personal representative to the extent of the property and the Minnesota estate tax
116.21due with respect to the property.
116.22    (8) "Resident decedent" means an individual whose domicile at the time of death
116.23was in Minnesota.
116.24    (9) "Situs of property" means, with respect to:
116.25    (i) real property, the state or country in which it is located; with respect to
116.26    (ii) tangible personal property, the state or country in which it was normally kept or
116.27located at the time of the decedent's death or for a gift of tangible personal property within
116.28three years of death, the state or country in which it was normally kept or located when
116.29the gift was executed; and with respect to
116.30    (iii) intangible personal property, the state or country in which the decedent was
116.31domiciled at death or for a gift of intangible personal property within three years of death,
116.32the state or country in which the decedent was domiciled when the gift was executed.
116.33    For a nonresident decedent with an ownership interest in a pass-through entity
116.34with assets that include real or tangible personal property, situs of the real or tangible
116.35personal property is determined as if the pass-through entity does not exist and the real
116.36or tangible personal property is personally owned by the decedent. If the pass-through
117.1entity is owned by a person or persons in addition to the decedent, ownership of the
117.2property is attributed to the decedent in proportion to the decedent's capital ownership
117.3share of the pass-through entity.
117.4(10) "Pass-through entity" includes the following:
117.5(i) an entity electing S corporation status under section 1362 of the Internal Revenue
117.6Code;
117.7(ii) an entity taxed as a partnership under subchapter K of the Internal Revenue Code;
117.8(iii) a single-member limited liability company or similar entity, regardless of
117.9whether it is taxed as an association or is disregarded for federal income tax purposes
117.10under Code of Federal Regulations, title 26, section 301.7701-3; or
117.11(iv) a trust to the extent the property is includible in the decedent's federal gross estate.
117.12EFFECTIVE DATE.This section is effective for decedents dying after December
117.1331, 2012.

117.14    Sec. 3. Minnesota Statutes 2012, section 291.03, subdivision 1, is amended to read:
117.15    Subdivision 1. Tax amount. (a) The tax imposed shall be an amount equal to the
117.16proportion of the maximum credit for state death taxes computed under section 2011 of
117.17the Internal Revenue Code, but using Minnesota adjusted taxable estate instead of federal
117.18adjusted taxable estate, as the Minnesota gross estate bears to the value of the federal
117.19gross estate. The tax is reduced by:
117.20    (1) the gift tax paid by the decedent under section 292.17 on gifts included in the
117.21Minnesota adjusted gross estate and not subtracted as qualified farm or small business
117.22property; and
117.23    (2) any credit allowed under subdivision 1c.
117.24    (b) The tax determined under this subdivision must not be greater than the sum of
117.25the following amounts multiplied by a fraction, the numerator of which is the Minnesota
117.26gross estate and the denominator of which is the federal gross estate:
117.27    (1) the rates and brackets under section 2001(c) of the Internal Revenue Code
117.28multiplied by the sum of:
117.29    (i) the taxable estate, as defined under section 2051 of the Internal Revenue Code; plus
117.30    (ii) adjusted taxable gifts, as defined in section 2001(b) of the Internal Revenue
117.31Code; less
117.32(iii) the lesser of (A) the sum of the value of qualified small business property
117.33under subdivision 9, and the value of qualified farm property under subdivision 10, or
117.34(B) $4,000,000; less
118.1    (2) the amount of tax allowed under section 2001(b)(2) of the Internal Revenue
118.2Code; and less
118.3    (3) the federal credit allowed under section 2010 of the Internal Revenue Code.
118.4    (c) For purposes of this subdivision, "Internal Revenue Code" means the Internal
118.5Revenue Code of 1986, as amended through December 31, 2000.
118.6EFFECTIVE DATE.This section is effective for decedents dying after December
118.731, 2012.

118.8    Sec. 4. Minnesota Statutes 2012, section 291.03, is amended by adding a subdivision
118.9to read:
118.10    Subd. 1c. Nonresident decedent tax credit. (a) The estate of a nonresident
118.11decedent that is subject to tax under this chapter on the value of Minnesota situs property
118.12held in a pass-through entity is allowed a credit against the tax due under this section
118.13equal to the lesser of:
118.14(1) the amount of estate or inheritance tax paid to another state that is attributable to
118.15the Minnesota situs property held in the pass-through entity; or
118.16(2) the amount of tax paid under this section attributable to the Minnesota situs
118.17property held in the pass-through entity.
118.18(b) The amount of tax attributable to the Minnesota situs property held in the
118.19pass-through entity must be determined by the increase in the estate or inheritance tax that
118.20results from including the market value of the property in the estate or treating the value
118.21as a taxable inheritance to the recipient of the property.
118.22EFFECTIVE DATE.This section is effective for decedents dying after December
118.2331, 2012.

118.24    Sec. 5. Minnesota Statutes 2012, section 291.03, subdivision 8, is amended to read:
118.25    Subd. 8. Definitions. (a) For purposes of this section, the following terms have the
118.26meanings given in this subdivision.
118.27(b) "Family member" means a family member as defined in section 2032A(e)(2) of
118.28the Internal Revenue Code, or a trust whose present beneficiaries are all family members
118.29as defined in section 2032A(e)(2) of the Internal Revenue Code.
118.30(c) "Qualified heir" means a family member who acquired qualified property from
118.31 upon the death of the decedent and satisfies the requirement under subdivision 9, clause
118.32(6) (7), or subdivision 10, clause (4) (5), for the property.
119.1(d) "Qualified property" means qualified small business property under subdivision
119.29 and qualified farm property under subdivision 10.
119.3EFFECTIVE DATE.This section is effective retroactively for estates of decedents
119.4dying after June 30, 2011.

119.5    Sec. 6. Minnesota Statutes 2012, section 291.03, subdivision 9, is amended to read:
119.6    Subd. 9. Qualified small business property. Property satisfying all of the following
119.7requirements is qualified small business property:
119.8(1) The value of the property was included in the federal adjusted taxable estate.
119.9(2) The property consists of the assets of a trade or business or shares of stock or
119.10other ownership interests in a corporation or other entity engaged in a trade or business.
119.11The decedent or the decedent's spouse must have materially participated in the trade or
119.12business within the meaning of section 469 of the Internal Revenue Code during the
119.13taxable year that ended before the date of the decedent's death. Shares of stock in a
119.14corporation or an ownership interest in another type of entity do not qualify under this
119.15subdivision if the shares or ownership interests are traded on a public stock exchange at
119.16any time during the three-year period ending on the decedent's date of death. For purposes
119.17of this subdivision, an ownership interest includes the interest the decedent is deemed to
119.18own under sections 2036, 2037, and 2038 of the Internal Revenue Code.
119.19(3) During the taxable year that ended before the decedent's death, the trade or
119.20business must not have been a passive activity within the meaning of section 469(c) of the
119.21Internal Revenue Code, and the decedent or the decedent's spouse must have materially
119.22participated in the trade or business within the meaning of section 469(h) of the Internal
119.23Revenue Code, excluding section 469(h)(3) of the Internal Revenue Code and any other
119.24provision provided by United States Treasury Department regulation that substitutes
119.25material participation in prior taxable years for material participation in the taxable year
119.26that ended before the decedent's death.
119.27(4) The gross annual sales of the trade or business were $10,000,000 or less for the
119.28last taxable year that ended before the date of the death of the decedent.
119.29(4) (5) The property does not consist of cash or, cash equivalents, publicly traded
119.30securities, or assets not used in the operation of the trade or business. For property
119.31consisting of shares of stock or other ownership interests in an entity, the amount value of
119.32cash or, cash equivalents, publicly traded securities, or assets not used in the operation of
119.33the trade or business held by the corporation or other entity must be deducted from the
119.34value of the property qualifying under this subdivision in proportion to the decedent's
119.35share of ownership of the entity on the date of death.
120.1(5) (6) The decedent continuously owned the property, including property the
120.2decedent is deemed to own under sections 2036, 2037, and 2038 of the Internal Revenue
120.3Code, for the three-year period ending on the date of death of the decedent. In the case of
120.4a sole proprietor, if the property replaced similar property within the three-year period,
120.5the replacement property will be treated as having been owned for the three-year period
120.6ending on the date of death of the decedent.
120.7(6) A family member continuously uses the property in the operation of the trade or
120.8business for three years following the date of death of the decedent.
120.9(7) For three years following the date of death of the decedent, the trade or business
120.10is not a passive activity within the meaning of section 469(c) of the Internal Revenue Code,
120.11and a family member materially participates in the operation of the trade or business within
120.12the meaning of section 469(h) of the Internal Revenue Code, excluding section 469(h)(3)
120.13of the Internal Revenue Code and any other provision provided by United States Treasury
120.14Department regulation that substitutes material participation in prior taxable years for
120.15material participation in the three years following the date of death of the decedent.
120.16(8) The estate and the qualified heir elect to treat the property as qualified small
120.17business property and agree, in the form prescribed by the commissioner, to pay the
120.18recapture tax under subdivision 11, if applicable.
120.19EFFECTIVE DATE.This section is effective retroactively for estates of decedents
120.20dying after June 30, 2011.

120.21    Sec. 7. Minnesota Statutes 2012, section 291.03, subdivision 10, is amended to read:
120.22    Subd. 10. Qualified farm property. Property satisfying all of the following
120.23requirements is qualified farm property:
120.24(1) The value of the property was included in the federal adjusted taxable estate.
120.25(2) The property consists of a farm meeting the requirements of agricultural land as
120.26defined in section 500.24, subdivision 2, paragraph (g), and is owned by a person or entity
120.27that is not excluded from owning agricultural land by section 500.24, and was classified
120.28for property tax purposes as the homestead of the decedent or the decedent's spouse or
120.29both under section 273.124, and as class 2a property under section 273.13, subdivision 23.
120.30(3) For property taxes payable in the taxable year of decedent's death, the property is
120.31classified as class 2a property under section 273.13, subdivision 23, and is classified as
120.32agricultural homestead, agricultural relative homestead, or special agricultural homestead
120.33under section 273.124.
120.34(4) The decedent continuously owned the property, including property the decedent
120.35is deemed to own under sections 2036, 2037, and 2038 of the Internal Revenue Code, for
121.1the three-year period ending on the date of death of the decedent either by ownership of
121.2the agricultural land or pursuant to holding an interest in an entity that is not excluded
121.3from owning agricultural land under section 500.24.
121.4(4) A family member continuously uses the property in the operation of the trade or
121.5business (5) The property is classified for property tax purposes as class 2a property under
121.6section 273.13, subdivision 23, for three years following the date of death of the decedent.
121.7(5) (6) The estate and the qualified heir elect to treat the property as qualified farm
121.8property and agree, in a form prescribed by the commissioner, to pay the recapture tax
121.9under subdivision 11, if applicable.
121.10EFFECTIVE DATE.This section is effective retroactively for estates of decedents
121.11dying after June 30, 2011.

121.12    Sec. 8. Minnesota Statutes 2012, section 291.03, subdivision 11, is amended to read:
121.13    Subd. 11. Recapture tax. (a) If, within three years after the decedent's death and
121.14before the death of the qualified heir, the qualified heir disposes of any interest in the
121.15qualified property, other than by a disposition to a family member, or a family member
121.16ceases to use the qualified property which was acquired or passed from the decedent
121.17 satisfy the requirement under subdivision 9, clause (7); or 10, clause (5), an additional
121.18estate tax is imposed on the property. In the case of a sole proprietor, if the qualified heir
121.19replaces qualified small business property excluded under subdivision 9 with similar
121.20property, then the qualified heir will not be treated as having disposed of an interest in the
121.21qualified property.
121.22(b) The amount of the additional tax equals the amount of the exclusion claimed by
121.23the estate under subdivision 8, paragraph (d), multiplied by 16 percent.
121.24(c) The additional tax under this subdivision is due on the day which is six months
121.25after the date of the disposition or cessation in paragraph (a).
121.26EFFECTIVE DATE.This section is effective retroactively for estates of decedents
121.27dying after June 30, 2011.

121.28    Sec. 9. [292.16] DEFINITIONS.
121.29(a) For purposes of this chapter, the following definitions apply.
121.30(b) The definitions of terms defined in section 291.005 apply.
121.31(c) "Resident" has the meaning given in section 290.01.
121.32(d) "Taxable gifts" means:
122.1(1) the transfers by gift which are included in taxable gifts for federal gift tax
122.2purposes under the following sections of the Internal Revenue Code:
122.3(i) section 2503;
122.4(ii) sections 2511 to 2514; and
122.5(iii) sections 2516 to 2519; less
122.6(2) the deductions allowed in sections 2522 to 2524 of the Internal Revenue Code.
122.7EFFECTIVE DATE.This section is effective for taxable gifts made after June
122.830, 2013.

122.9    Sec. 10. [292.17] GIFT TAX.
122.10    Subdivision 1. Imposition. (a) A tax is imposed on the transfer of property by gift
122.11by any individual resident or nonresident in an amount equal to ten percent of the amount
122.12of the taxable gift.
122.13(b) The donor is liable for payment of the tax. If the gift tax is not paid when due,
122.14the donee of any gift is personally liable for the tax to the extent of the value of the gift.
122.15    Subd. 2. Lifetime credit. A credit is allowed against the tax imposed under this
122.16section equal to $100,000. This credit applies to the cumulative amount of taxable gifts
122.17made by the donor during the donor's lifetime.
122.18    Subd. 3. Out-of-state gifts. Taxable gifts exclude the transfer of:
122.19(1) real property located outside of this state;
122.20(2) tangible personal property that was normally kept at a location outside of the
122.21state on the date the gift was executed; and
122.22(3) intangible personal property made by an individual who is not a resident.
122.23EFFECTIVE DATE.This section is effective for taxable gifts made after June
122.2430, 2013.

122.25    Sec. 11. [292.18] RETURNS.
122.26(a) Any individual who makes a taxable gift during the taxable year shall file a gift
122.27tax return in the form and manner prescribed by the commissioner.
122.28(b) If the donor dies before filing the return, the executor of the donor's will or
122.29the administrator of the donor's estate shall file the return. If the donor becomes legally
122.30incompetent before filing the return, the guardian or conservator shall file the return.
122.31(c) The return must include:
122.32(1) each gift made during the calendar year which is to be included in computing the
122.33taxable gifts;
123.1(2) the deductions claimed and allowable under section 292.16, paragraph (d),
123.2clause (2);
123.3(3) a description of the gift, and the donee's name, address, and Social Security
123.4number;
123.5(4) the fair market value of gifts not made in money; and
123.6(5) any other information the commissioner requires to administer the gift tax.
123.7EFFECTIVE DATE.This section is effective for taxable gifts made after June
123.830, 2013.

123.9    Sec. 12. [292.19] FILING REQUIREMENTS.
123.10Gift tax returns must be filed by the April 15 following the close of the calendar
123.11year, except if a gift is made during the calendar year in which the donor dies, the return
123.12for the donor must be filed by the last date, including extensions, for filing the gift tax
123.13return for federal gift tax purposes for the donor.
123.14EFFECTIVE DATE.This section is effective for taxable gifts made after June
123.1530, 2013.

123.16    Sec. 13. [292.20] APPRAISAL OF PROPERTY; DECLARATION BY DONOR.
123.17The commissioner may require the donor or the donee to show the property subject to
123.18the tax under section 292.17 to the commissioner upon demand and may employ a suitable
123.19person to appraise the property. The donor shall submit a declaration, in a form prescribed
123.20by the commissioner and including any certification required by the commissioner, that the
123.21property shown by the donor on the gift tax return includes all of the property transferred by
123.22gift for the calendar year and not deductible under section 292.16, paragraph (d), clause (2).
123.23EFFECTIVE DATE.This section is effective for taxable gifts made after June
123.2430, 2013.

123.25    Sec. 14. [292.21] ADMINISTRATIVE PROVISIONS.
123.26    Subdivision 1. Payment of tax; penalty for late payment. The tax imposed under
123.27section 292.17 is due and payable to the commissioner by the April 15 following the close
123.28of the calendar year during which the gift was made. The return required under section
123.29292.19 must be included with the payment. If a taxable gift is made during the calendar
123.30year in which the donor dies, the due date is the last date, including extensions, for filing
123.31the gift tax return for federal gift tax purposes for the donor. If any person fails to pay the
123.32tax due within the time specified under this section, a penalty applies equal to ten percent
124.1of the amount due and unpaid or $100, whichever is greater. The unpaid tax and penalty
124.2bear interest at the rate under section 270C.40 from the due date of the return.
124.3    Subd. 2. Extensions. The commissioner may, for good cause, extend the time for
124.4filing a gift tax return, if a written request is filed with a tentative return accompanied by a
124.5payment of the tax, which is estimated in the tentative return, on or before the last day for
124.6filing the return. Any person to whom an extension is granted must pay, in addition to the
124.7tax, interest at the rate under section 270C.40 from the date on which the tax would have
124.8been due without the extension.
124.9    Subd. 3. Changes in federal gift tax. If the amount of a taxpayer's taxable gifts
124.10for federal gift tax purposes, as reported on the taxpayer's federal gift tax return for any
124.11calendar year, is changed or corrected by the Internal Revenue Service or other officer
124.12of the United States or other competent authority, the taxpayer shall report the change or
124.13correction in federal taxable gifts within 180 days after the final determination of the change
124.14or correction, and concede the accuracy of the determination or provide a letter detailing
124.15how the federal determination is incorrect or does not change the Minnesota gift tax. Any
124.16taxpayer filing an amended federal gift tax return shall also file within 180 days an amended
124.17return under this chapter and shall include any information the commissioner requires. The
124.18time for filing the report or amended return may be extended by the commissioner upon due
124.19cause shown. Notwithstanding any limitation of time in this chapter, if, upon examination,
124.20the commissioner finds that the taxpayer is liable for the payment of an additional tax, the
124.21commissioner shall, within a reasonable time from the receipt of the report or amended
124.22return, notify the taxpayer of the amount of additional tax, together with interest computed
124.23at the rate under section 270C.40 from the date when the original tax was due and payable.
124.24Within 30 days of the mailing of the notice, the taxpayer shall pay the commissioner the
124.25amount of the additional tax and interest. If, upon examination of the report or amended
124.26return and related information, the commissioner finds that the taxpayer has overpaid the
124.27tax due the state, the commissioner shall refund the overpayment to the taxpayer.
124.28    Subd. 4. Application of federal rules. In administering the tax under this chapter,
124.29the commissioner shall apply the provisions of sections 2701 to 2704 of the Internal
124.30Revenue Code. The words "secretary or his delegate," as used in those sections of the
124.31Internal Revenue Code, mean the commissioner.
124.32EFFECTIVE DATE.This section is effective for taxable gifts made after June
124.3330, 2013.

124.34    Sec. 15. [292.22] CREDIT AGAINST ESTATE TAX.
125.1A credit is allowed against the estate tax imposed under chapter 291 in the amount
125.2of any tax imposed and paid under this chapter for a gift includable in the Minnesota
125.3adjusted taxable estate of the donor under section 291.005.
125.4EFFECTIVE DATE.This section is effective for taxable gifts made after June
125.530, 2013.

125.6ARTICLE 8
125.7SALES AND USE TAX; LOCAL SALES TAXES

125.8    Section 1. Minnesota Statutes 2012, section 297A.61, subdivision 3, is amended to read:
125.9    Subd. 3. Sale and purchase. (a) "Sale" and "purchase" include, but are not limited
125.10to, each of the transactions listed in this subdivision.
125.11    (b) Sale and purchase include:
125.12    (1) any transfer of title or possession, or both, of tangible personal property, whether
125.13absolutely or conditionally, for a consideration in money or by exchange or barter; and
125.14    (2) the leasing of or the granting of a license to use or consume, for a consideration
125.15in money or by exchange or barter, tangible personal property, other than a manufactured
125.16home used for residential purposes for a continuous period of 30 days or more.
125.17    (c) Sale and purchase include the production, fabrication, printing, or processing of
125.18tangible personal property for a consideration for consumers who furnish either directly or
125.19indirectly the materials used in the production, fabrication, printing, or processing.
125.20    (d) Sale and purchase include the preparing for a consideration of food.
125.21Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited
125.22to, the following:
125.23    (1) prepared food sold by the retailer;
125.24    (2) soft drinks;
125.25    (3) candy;
125.26    (4) dietary supplements; and
125.27    (5) all food sold through vending machines.
125.28    (e) A sale and a purchase includes the furnishing for a consideration of electricity,
125.29gas, water, or steam for use or consumption within this state.
125.30    (f) A sale and a purchase includes the transfer for a consideration of prewritten
125.31computer software whether delivered electronically, by load and leave, or otherwise.
125.32    (g) A sale and a purchase includes the furnishing for a consideration of the following
125.33services:
126.1    (1) the privilege of admission to places of amusement, recreational areas, or athletic
126.2events, including seat licenses, the rental of box seats, suites, sky boxes, and similar
126.3facilities in stadiums and arenas and the making available of amusement devices, tanning
126.4facilities, reducing salons, steam baths, Turkish baths, health clubs, and spas or athletic
126.5facilities;
126.6    (2) lodging and related services by a hotel, rooming house, resort, campground,
126.7motel, or trailer camp, including furnishing the guest of the facility with access to
126.8telecommunication services, and the granting of any similar license to use real property in
126.9a specific facility, other than the renting or leasing of it for a continuous period of 30 days
126.10or more under an enforceable written agreement that may not be terminated without prior
126.11notice and including accommodations intermediary services provided in connection with
126.12other services provided under this clause;
126.13    (3) nonresidential parking services, whether on a contractual, hourly, or other
126.14periodic basis, except for parking at a meter;
126.15    (4) the granting of membership in a club, association, or other organization if:
126.16    (i) the club, association, or other organization makes available for the use of its
126.17members sports and athletic facilities, without regard to whether a separate charge is
126.18assessed for use of the facilities; and
126.19    (ii) use of the sports and athletic facility is not made available to the general public
126.20on the same basis as it is made available to members.
126.21Granting of membership means both onetime initiation fees and periodic membership
126.22dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and
126.23squash courts; basketball and volleyball facilities; running tracks; exercise equipment;
126.24swimming pools; and other similar athletic or sports facilities;
126.25    (5) delivery of aggregate materials by a third party, excluding delivery of aggregate
126.26material used in road construction; and delivery of concrete block by a third party if the
126.27delivery would be subject to the sales tax if provided by the seller of the concrete block; and
126.28    (6) services as provided in this clause:
126.29    (i) laundry and dry cleaning services including cleaning, pressing, repairing, altering,
126.30and storing clothes, linen services and supply, cleaning and blocking hats, and carpet,
126.31drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not
126.32include services provided by coin operated facilities operated by the customer;
126.33    (ii) motor vehicle washing, waxing, and cleaning services, including services
126.34provided by coin operated facilities operated by the customer, and rustproofing,
126.35undercoating, and towing of motor vehicles;
127.1    (iii) building and residential cleaning, maintenance, and disinfecting services and
127.2pest control and exterminating services;
127.3    (iv) detective, security, burglar, fire alarm, and armored car services; but not including
127.4services performed within the jurisdiction they serve by off-duty licensed peace officers as
127.5defined in section 626.84, subdivision 1, or services provided by a nonprofit organization
127.6for monitoring and electronic surveillance of persons placed on in-home detention
127.7pursuant to court order or under the direction of the Minnesota Department of Corrections;
127.8    (v) pet grooming services;
127.9    (vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting
127.10and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor
127.11plant care; tree, bush, shrub, and stump removal, except when performed as part of a land
127.12clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for
127.13public utility lines. Services performed under a construction contract for the installation of
127.14shrubbery, plants, sod, trees, bushes, and similar items are not taxable;
127.15    (vii) massages, except when provided by a licensed health care facility or
127.16professional or upon written referral from a licensed health care facility or professional for
127.17treatment of illness, injury, or disease; and
127.18    (viii) the furnishing of lodging, board, and care services for animals in kennels and
127.19other similar arrangements, but excluding veterinary and horse boarding services.
127.20    In applying the provisions of this chapter, the terms "tangible personal property"
127.21and "retail sale" include taxable services listed in clause (6), items (i) to (vi) and (viii),
127.22and the provision of these taxable services, unless specifically provided otherwise.
127.23Services performed by an employee for an employer are not taxable. Services performed
127.24by a partnership or association for another partnership or association are not taxable if
127.25one of the entities owns or controls more than 80 percent of the voting power of the
127.26equity interest in the other entity. Services performed between members of an affiliated
127.27group of corporations are not taxable. For purposes of the preceding sentence, "affiliated
127.28group of corporations" means those entities that would be classified as members of an
127.29affiliated group as defined under United States Code, title 26, section 1504, disregarding
127.30the exclusions in section 1504(b).
127.31    For purposes of clause (5), "road construction" means construction of (1) public
127.32roads, (2) cartways, and (3) private roads in townships located outside of the seven-county
127.33metropolitan area up to the point of the emergency response location sign.
127.34    (h) A sale and a purchase includes the furnishing for a consideration of tangible
127.35personal property or taxable services by the United States or any of its agencies or
128.1instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political
128.2subdivisions.
128.3    (i) A sale and a purchase includes the furnishing for a consideration of
128.4telecommunications services, ancillary services associated with telecommunication
128.5services, cable television services, and direct satellite services. Telecommunication
128.6services include, but are not limited to, the following services, as defined in section
128.7297A.669 : air-to-ground radiotelephone service, mobile telecommunication service,
128.8postpaid calling service, prepaid calling service, prepaid wireless calling service, and
128.9private communication services. The services in this paragraph are taxed to the extent
128.10allowed under federal law.
128.11    (j) A sale and a purchase includes the furnishing for a consideration of installation if
128.12the installation charges would be subject to the sales tax if the installation were provided
128.13by the seller of the item being installed.
128.14    (k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer
128.15to a customer when (1) the vehicle is rented by the customer for a consideration, or (2)
128.16the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section
128.1759B.02, subdivision 11.
128.18EFFECTIVE DATE.This section is effective for sales made after June 30, 2013.

128.19    Sec. 2. Minnesota Statutes 2012, section 297A.61, subdivision 4, is amended to read:
128.20    Subd. 4. Retail sale. (a) A "retail sale" means any sale, lease, or rental for any
128.21purpose, other than resale, sublease, or subrent of items by the purchaser in the normal
128.22course of business as defined in subdivision 21.
128.23    (b) A sale of property used by the owner only by leasing it to others or by holding it
128.24in an effort to lease it, and put to no use by the owner other than resale after the lease or
128.25effort to lease, is a sale of property for resale.
128.26    (c) A sale of master computer software that is purchased and used to make copies for
128.27sale or lease is a sale of property for resale.
128.28    (d) A sale of building materials, supplies, and equipment to owners, contractors,
128.29subcontractors, or builders for the erection of buildings or the alteration, repair, or
128.30improvement of real property is a retail sale in whatever quantity sold, whether the sale is
128.31for purposes of resale in the form of real property or otherwise.
128.32    (e) A sale of carpeting, linoleum, or similar floor covering to a person who provides
128.33for installation of the floor covering is a retail sale and not a sale for resale since a sale of
128.34floor covering which includes installation is a contract for the improvement of real property.
129.1    (f) A sale of shrubbery, plants, sod, trees, and similar items to a person who provides
129.2for installation of the items is a retail sale and not a sale for resale since a sale of
129.3shrubbery, plants, sod, trees, and similar items that includes installation is a contract for
129.4the improvement of real property.
129.5    (g) A sale of tangible personal property that is awarded as prizes is a retail sale and
129.6is not considered a sale of property for resale.
129.7    (h) A sale of tangible personal property utilized or employed in the furnishing or
129.8providing of services under subdivision 3, paragraph (g), clause (1), including, but not
129.9limited to, property given as promotional items, is a retail sale and is not considered a
129.10sale of property for resale.
129.11    (i) A sale of tangible personal property used in conducting lawful gambling under
129.12chapter 349 or the State Lottery under chapter 349A, including, but not limited to, property
129.13given as promotional items, is a retail sale and is not considered a sale of property for resale.
129.14    (j) Except as otherwise provided in this paragraph, a sale of machines, equipment,
129.15or devices that are used to furnish, provide, or dispense goods or services, including,
129.16but not limited to, coin-operated devices, is a retail sale and is not considered a sale of
129.17property for resale. A sale of coin-operated entertainment and amusement machines,
129.18including, but not limited to, fortune-telling machines, cranes, foosball and pool tables,
129.19video and pinball games, batting cages, rides, photo or video booths, and jukeboxes is a
129.20sale of property for resale.
129.21    (k) In the case of a lease, a retail sale occurs (1) when an obligation to make a lease
129.22payment becomes due under the terms of the agreement or the trade practices of the lessor
129.23or; (2) in the case of a lease of a motor vehicle, as defined in section 297B.01, subdivision
129.2411
, but excluding vehicles with a manufacturer's gross vehicle weight rating greater than
129.2510,000 pounds and rentals of vehicles for not more than 28 days, at the time the lease is
129.26executed; or (3) for rent-to-own or lease-to-own used vehicles where the lessee may
129.27purchase or return the vehicle at any time without penalty, at the time each payment is
129.28made under the terms of the agreement.
129.29    (l) In the case of a conditional sales contract, a retail sale occurs upon the transfer of
129.30title or possession of the tangible personal property.
129.31    (m) A sale of a bundled transaction in which one or more of the products included
129.32in the bundle is a taxable product is a retail sale, except that if one of the products
129.33is a telecommunication service, ancillary service, Internet access, or audio or video
129.34programming service, and the seller has maintained books and records identifying through
129.35reasonable and verifiable standards the portions of the price that are attributable to the
130.1distinct and separately identifiable products, then the products are not considered part of a
130.2bundled transaction. For purposes of this paragraph:
130.3    (1) the books and records maintained by the seller must be maintained in the regular
130.4course of business, and do not include books and records created and maintained by the
130.5seller primarily for tax purposes;
130.6    (2) books and records maintained in the regular course of business include, but are
130.7not limited to, financial statements, general ledgers, invoicing and billing systems and
130.8reports, and reports for regulatory tariffs and other regulatory matters; and
130.9    (3) books and records are maintained primarily for tax purposes when the books
130.10and records identify taxable and nontaxable portions of the price, but the seller maintains
130.11other books and records that identify different prices attributable to the distinct products
130.12included in the same bundled transaction.
130.13    (n) A sale of motor vehicle repair paint and materials by a motor vehicle repair or
130.14body shop business is a retail sale and the sales tax is imposed on the gross receipts from the
130.15retail sale of the paint and materials. The motor vehicle repair or body shop that purchases
130.16motor vehicle repair paint and motor vehicle repair materials for resale must either:
130.17    (1) separately state each item of paint and each item of materials, and the sales price
130.18of each, on the invoice to the purchaser; or
130.19    (2) in order to calculate the sales price of the paint and materials, use a method
130.20which estimates the amount and monetary value of the paint and materials used in
130.21the repair of the motor vehicle by multiplying the number of labor hours by a rate of
130.22consideration for the paint and materials used in the repair of the motor vehicle following
130.23industry standard practices that fairly calculate the gross receipts from the retail sale of
130.24the motor vehicle repair paint and motor vehicle repair materials. An industry standard
130.25practice fairly calculates the gross receipts if the sales price of the paint and materials used
130.26or consumed in the repair of a motor vehicle equals or exceeds the purchase price paid
130.27by the motor vehicle repair or body shop business. Under this clause, the invoice must
130.28either separately state the "paint and materials" as a single taxable item, or separately state
130.29"paint" as a taxable item and "materials" as a taxable item. This clause does not apply to
130.30wholesale transactions at an auto auction facility.
130.31    (o) A payment made to a cooperative electric association or public utility as a
130.32contribution in aid of construction is a contract for improvement to real property and
130.33is not a retail sale.
130.34EFFECTIVE DATE.This section is effective for sales and purchases made after
130.35June 30, 2013.

131.1    Sec. 3. Minnesota Statutes 2012, section 297A.61, is amended by adding a subdivision
131.2to read:
131.3    Subd. 49. Motor vehicle repair paint and motor vehicle repair materials. "Motor
131.4vehicle repair paint" means a substance composed of solid matter suspended in a liquid
131.5medium and applied as a protective or decorative coating to the surface of a motor vehicle in
131.6order to restore the motor vehicle to its original condition, and includes primer, body paint,
131.7clear coat, and paint thinner used to paint motor vehicles, as defined in section 297B.01.
131.8"Motor vehicle repair materials" means items, other than motor vehicle repair paint
131.9or motor vehicle parts, that become a part of a repaired motor vehicle or are consumed in
131.10repairing the motor vehicle at retail, and include abrasives, battery water, body filler or
131.11putty, bolts and nuts, brake fluid, buffing pads, chamois, cleaning compounds, degreasing
131.12compounds, glaze, grease, grinding discs, hydraulic jack oil, lubricants, masking tape,
131.13oxygen and acetylene, polishes, rags, razor blades, sandpaper, sanding discs, scuff pads,
131.14sealer, solder, solvents, striping tape, tack cloth, thinner, waxes, and welding rods. Motor
131.15vehicle repair materials do not include items that are not used directly on the motor vehicle,
131.16such as floor dry that is used to clean the shop, or cleaning compounds and rags that are
131.17used to clean tools, equipment, or the shop and are not used to clean the motor vehicle.
131.18EFFECTIVE DATE.This section is effective for sales and purchases made after
131.19June 30, 2013.

131.20    Sec. 4. Minnesota Statutes 2012, section 297A.64, subdivision 1, is amended to read:
131.21    Subdivision 1. Tax imposed. (a) A tax is imposed on the lease or rental in this
131.22state for not more than 28 days of a passenger automobile as defined in section 168.002,
131.23subdivision 24
, a van as defined in section 168.002, subdivision 40, or a pickup truck as
131.24defined in section 168.002, subdivision 26. The rate of tax is 6.2 9.2 percent of the sales
131.25price. The tax applies whether or not the vehicle is licensed in the state.
131.26(b) The provisions of this subdivision do not apply to the vehicles of a nonprofit
131.27corporation or similar entity, consisting of members who pay the organization for the
131.28use of a motor vehicle, if the organization:
131.29(1) owns or leases a fleet of vehicles of the type subject to the tax under paragraph (a)
131.30that are available to its members for use, priced on the basis of intervals of one hour or less;
131.31(2) parks its vehicles at unstaffed, self-service locations that are accessible to its
131.32members at any time; and
131.33(3) maintains its vehicles, insures its vehicles on behalf of its members, and
131.34purchases fuel for its fleet.
132.1EFFECTIVE DATE.This section is effective for sales and purchases made after
132.2June 30, 2013.

132.3    Sec. 5. Minnesota Statutes 2012, section 297A.64, subdivision 2, is amended to read:
132.4    Subd. 2. Fee imposed. (a) A fee equal to five percent of the sales price is imposed
132.5on leases or rentals of vehicles subject to the tax under subdivision 1, paragraph (a). The
132.6lessor on the invoice to the customer may designate the fee as "a fee imposed by the State
132.7of Minnesota for the registration of rental cars."
132.8(b) The provisions of this subdivision do not apply to the vehicles of a nonprofit
132.9corporation or similar entity, consisting of individual or group members who pay the
132.10organization for the use of a motor vehicle, if the organization:
132.11(1) owns or leases a fleet of vehicles of the type subject to the tax under subdivision 1
132.12that are available to its members for use, priced on the basis of intervals of one hour or less;
132.13(2) parks its vehicles at unstaffed, self-service locations that are accessible at any
132.14time of the day;
132.15(3) maintains its vehicles, insures its vehicles on behalf of its members, and
132.16purchases fuel for its fleet; and
132.17(4) does not charge usage rates that decline on a per unit basis, whether specified
132.18based on distance or time exempt from the tax imposed under subdivision 1, paragraph (b).
132.19EFFECTIVE DATE.This section is effective for sales and purchases made after
132.20June 30, 2013.

132.21    Sec. 6. Minnesota Statutes 2012, section 297A.66, is amended by adding a subdivision
132.22to read:
132.23    Subd. 4a. Solicitor. (a) "Solicitor," for purposes of subdivision 1, paragraph (a),
132.24means a person, whether an independent contractor or other representative, who directly
132.25or indirectly solicits business for the retailer.
132.26(b) A retailer is presumed to have a solicitor in this state if it enters into an agreement
132.27with a resident under which the resident, for a commission or other consideration, directly
132.28or indirectly refers potential customers, whether by a link on an Internet Web site, or
132.29otherwise, to the seller. This paragraph only applies if the total gross receipts are at least
132.30$10,000 in the 12-month period ending on the last day of the most recent calendar quarter
132.31before the calendar quarter in which the sale is made. For purposes of this paragraph,
132.32gross receipts means receipts from sales to customers located in the state who were
132.33referred to the retailer by all residents with this type of agreement with the retailer.
133.1(c) The presumption under paragraph (b) may be rebutted by proof that the resident
133.2with whom the seller has an agreement did not engage in any solicitation in the state
133.3on behalf of the retailer that would satisfy the nexus requirement of the United States
133.4Constitution during the 12-month period in question. Nothing in this section shall be
133.5construed to narrow the scope of the terms affiliate, agent, salesperson, canvasser, or other
133.6representative for purposes of subdivision 1, paragraph (a).
133.7(d) For purposes of this paragraph, "resident" includes an individual who is a
133.8resident of this state, as defined in section 290.01, or a business that owns tangible
133.9personal property located in this state or has one or more employees providing services for
133.10the business in this state.
133.11(e) This subdivision does not apply to chapter 290 and does not expand or contract
133.12the jurisdiction to tax a trade or business under chapter 290.
133.13EFFECTIVE DATE.This section is effective for sales and purchases made after
133.14June 30, 2013.

133.15    Sec. 7. Minnesota Statutes 2012, section 297A.668, is amended by adding a
133.16subdivision to read:
133.17    Subd. 6a. Multiple points of use. (a) Notwithstanding the provisions of subdivisions
133.182 to 5, a business purchaser that is not a holder of a direct pay permit that knows at the
133.19time of its purchase of a digital good, computer software delivered electronically, or a
133.20service that the digital good, computer software delivered electronically, or service will be
133.21concurrently available for use in more than one jurisdiction shall deliver to the seller in
133.22conjunction with its purchase a multiple points of use exemption certificate disclosing
133.23this fact.
133.24(b) Upon receipt of the multiple points of use certificate, the seller is relieved of the
133.25obligation to collect, pay, or remit the applicable tax and the purchaser is obligated to
133.26collect, pay, or remit the applicable tax on a direct pay basis.
133.27(c) A purchaser delivering the multiple points of use exemption certificate may use
133.28any reasonable, but consistent and uniform, method of apportionment that is supported by
133.29the purchaser's business records as they exist at the time of the consummation of the sale.
133.30(d) The multiple points of use exemption certificate remains in effect for all future
133.31sales by the seller to the purchaser until it is revoked in writing, except as to the subsequent
133.32sale's specific apportionment that is governed by the principle of paragraph (c) and the
133.33facts existing at the time of the sale.
133.34(e) A holder of a direct pay permit is not required to deliver a multiple points of use
133.35exemption certificate to the seller. A direct pay permit holder shall follow the provisions
134.1of paragraph (c) in apportioning the tax due on a digital good, computer software delivered
134.2electronically, or a service that will be concurrently available for use in more than one
134.3jurisdiction.
134.4EFFECTIVE DATE.This section is effective for sales and purchases made after
134.5June 30, 2013.

134.6    Sec. 8. Minnesota Statutes 2012, section 297A.67, subdivision 7, is amended to read:
134.7    Subd. 7. Drugs; medical devices. (a) Sales of the following drugs and medical
134.8devices for human use are exempt:
134.9    (1) drugs, including over-the-counter drugs;
134.10    (2) single-use finger-pricking devices for the extraction of blood and other single-use
134.11devices and single-use diagnostic agents used in diagnosing, monitoring, or treating
134.12diabetes;
134.13    (3) insulin and medical oxygen for human use, regardless of whether prescribed
134.14or sold over the counter;
134.15    (4) prosthetic devices;
134.16    (5) durable medical equipment for home use only;
134.17    (6) mobility enhancing equipment;
134.18    (7) prescription corrective eyeglasses; and
134.19    (8) kidney dialysis equipment, including repair and replacement parts.
134.20(b) Items purchased in transactions covered by:
134.21(1) Medicare as defined under title XVIII of the Social Security Act, United States
134.22Code, title 42, sections 1395, et seq.; or
134.23(2) Medicaid as defined under title XIX of the Social Security Act, United States
134.24Code, title 42, sections 1396, et seq.
134.25    (b) (c) For purposes of this subdivision:
134.26    (1) "Drug" means a compound, substance, or preparation, and any component of
134.27a compound, substance, or preparation, other than food and food ingredients, dietary
134.28supplements, or alcoholic beverages that is:
134.29    (i) recognized in the official United States Pharmacopoeia, official Homeopathic
134.30Pharmacopoeia of the United States, or official National Formulary, and supplement
134.31to any of them;
134.32    (ii) intended for use in the diagnosis, cure, mitigation, treatment, or prevention
134.33of disease; or
134.34    (iii) intended to affect the structure or any function of the body.
135.1    (2) "Durable medical equipment" means equipment, including repair and
135.2replacement parts and all accessories and supplies, including single patient use items
135.3required for the effective use of the durable medical equipment device, but not including
135.4mobility enhancing equipment, that:
135.5    (i) can withstand repeated use;
135.6    (ii) is primarily and customarily used to serve a medical purpose;
135.7    (iii) generally is not useful to a person in the absence of illness or injury; and
135.8    (iv) is not worn in or on the body.
135.9    For purposes of this clause, "repair and replacement parts" includes all components
135.10or attachments used in conjunction with the durable medical equipment, but does not
135.11include including repair and replacement parts which are for single patient use only.
135.12    (3) "Mobility enhancing equipment" means equipment, including repair and
135.13replacement parts, but not including durable medical equipment, that:
135.14    (i) is primarily and customarily used to provide or increase the ability to move from
135.15one place to another and that is appropriate for use either in a home or a motor vehicle;
135.16    (ii) is not generally used by persons with normal mobility; and
135.17    (iii) does not include any motor vehicle or equipment on a motor vehicle normally
135.18provided by a motor vehicle manufacturer.
135.19    (4) "Over-the-counter drug" means a drug that contains a label that identifies the
135.20product as a drug as required by Code of Federal Regulations, title 21, section 201.66. The
135.21label must include a "drug facts" panel or a statement of the active ingredients with a list of
135.22those ingredients contained in the compound, substance, or preparation. Over-the-counter
135.23drugs do not include grooming and hygiene products, regardless of whether they otherwise
135.24meet the definition. "Grooming and hygiene products" are soaps, cleaning solutions,
135.25shampoo, toothpaste, mouthwash, antiperspirants, and suntan lotions and sunscreens.
135.26    (5) "Prescribed" and "prescription" means a direction in the form of an order,
135.27formula, or recipe issued in any form of oral, written, electronic, or other means of
135.28transmission by a duly licensed health care professional.
135.29    (6) "Prosthetic device" means a replacement, corrective, or supportive device,
135.30including repair and replacement parts, and all necessary accessories, supplies, and items
135.31required for the effective use of the prosthetic device, worn on or in the body to:
135.32    (i) artificially replace a missing portion of the body;
135.33    (ii) prevent or correct physical deformity or malfunction; or
135.34    (iii) support a weak or deformed portion of the body.
135.35Prosthetic device does not include corrective eyeglasses.
135.36    (7) "Kidney dialysis equipment" means equipment that:
136.1    (i) is used to remove waste products that build up in the blood when the kidneys are
136.2not able to do so on their own; and
136.3    (ii) can withstand repeated use, including multiple use by a single patient,
136.4notwithstanding the provisions of clause (2).
136.5(8) A transaction is covered by Medicare or Medicaid if any portion of the cost of
136.6the item purchased in the transaction is paid for or reimbursed by the federal government
136.7or the state of Minnesota pursuant to the Medicare or Medicaid program, by a private
136.8insurance company administering the Medicare or Medicaid program on behalf of the
136.9federal government or the state of Minnesota, or by a managed care organization for the
136.10benefit of a patient enrolled in a prepaid program that furnishes medical services in lieu
136.11of conventional Medicare or Medicaid coverage pursuant to agreement with the federal
136.12government or the state of Minnesota.
136.13EFFECTIVE DATE.This section is effective for sales and purchases made after
136.14June 30, 2013.

136.15    Sec. 9. Minnesota Statutes 2012, section 297A.70, subdivision 4, is amended to read:
136.16    Subd. 4. Sales to nonprofit groups. (a) All sales, except those listed in paragraph
136.17(b), to the following "nonprofit organizations" are exempt:
136.18(1) a corporation, society, association, foundation, or institution organized and
136.19operated exclusively for charitable, religious, or educational purposes if the item
136.20purchased is used in the performance of charitable, religious, or educational functions; and
136.21(2) any senior citizen group or association of groups that:
136.22(i) in general limits membership to persons who are either age 55 or older, or
136.23physically disabled;
136.24(ii) is organized and operated exclusively for pleasure, recreation, and other
136.25nonprofit purposes, not including housing, no part of the net earnings of which inures to
136.26the benefit of any private shareholders; and
136.27(iii) is an exempt organization under section 501(c) of the Internal Revenue Code.
136.28For purposes of this subdivision, charitable purpose includes the maintenance of a
136.29cemetery owned by a religious organization.
136.30(b) This exemption does not apply to the following sales:
136.31(1) building, construction, or reconstruction materials purchased by a contractor
136.32or a subcontractor as a part of a lump-sum contract or similar type of contract with a
136.33guaranteed maximum price covering both labor and materials for use in the construction,
136.34alteration, or repair of a building or facility;
137.1(2) construction materials purchased by tax-exempt entities or their contractors to
137.2be used in constructing buildings or facilities that will not be used principally by the
137.3tax-exempt entities; and
137.4(3) lodging as defined under section 297A.61, subdivision 3, paragraph (g), clause
137.5(2), and prepared food, candy, soft drinks, and alcoholic beverages as defined in section
137.6297A.67, subdivision 2 , except wine purchased by an established religious organization
137.7for sacramental purposes or as allowed under subdivision 9a; and
137.8(4) leasing of a motor vehicle as defined in section 297B.01, subdivision 11, except
137.9as provided in paragraph (c).
137.10(c) This exemption applies to the leasing of a motor vehicle as defined in section
137.11297B.01, subdivision 11 , only if the vehicle is:
137.12(1) a truck, as defined in section 168.002, a bus, as defined in section 168.002, or a
137.13passenger automobile, as defined in section 168.002, if the automobile is designed and
137.14used for carrying more than nine persons including the driver; and
137.15(2) intended to be used primarily to transport tangible personal property or
137.16individuals, other than employees, to whom the organization provides service in
137.17performing its charitable, religious, or educational purpose.
137.18(d) A limited liability company also qualifies for exemption under this subdivision if
137.19(1) it consists of a sole member that would qualify for the exemption, and (2) the items
137.20purchased qualify for the exemption.
137.21EFFECTIVE DATE.This section is effective retroactively for sales and purchases
137.22made after June 30, 2012.

137.23    Sec. 10. Minnesota Statutes 2012, section 297A.70, subdivision 8, is amended to read:
137.24    Subd. 8. Regionwide Public safety radio communication system systems;
137.25products and services. (a) Products and services including, but not limited to, end user
137.26equipment used for construction, ownership, operation, maintenance, and enhancement
137.27of the backbone system of the regionwide public safety radio communication system
137.28established under sections 403.21 to 403.40, are exempt. For purposes of this subdivision,
137.29backbone system is defined in section 403.21, subdivision 9. This subdivision is effective
137.30for purchases, sales, storage, use, or consumption for use in the first and second phases of
137.31the system, as defined in section 403.21, subdivisions 3, 10, and 11, that portion of the
137.32third phase of the system that is located in the southeast district of the State Patrol and
137.33the counties of Benton, Sherburne, Stearns, and Wright, and that portion of the system
137.34that is located in Itasca County.
138.1(b) Products and services, including, but not limited to, end-user equipment used
138.2for construction, ownership, operation, maintenance, and enhancement of public safety
138.3radio communication systems not already exempt under paragraph (a), including public
138.4safety radio dispatch centers, are exempt.
138.5EFFECTIVE DATE.This section is effective for sales and purchases made after
138.6June 30, 2013.

138.7    Sec. 11. Minnesota Statutes 2012, section 297A.70, is amended by adding a
138.8subdivision to read:
138.9    Subd. 9a. Established religious orders. (a) Sales of lodging, prepared food, candy,
138.10soft drinks, and alcoholic beverages at noncatered events between an established religious
138.11order and an affiliated institution of higher education are exempt.
138.12(b) For purposes of this subdivision, "established religious order" means an
138.13organization directly or indirectly under the control or supervision of a church or
138.14convention or association of churches, where members of the organization:
138.15(1) normally live together as part of a community;
138.16(2) make long-term commitments to live under a strict set of moral and spiritual
138.17rules; and
138.18(3) work or engage full time in a combination of prayer, religious study, church
138.19reform or renewal, or other religious, educational, or charitable goals of the organization.
138.20(c) For purposes of this subdivision, an institution of higher education is "affiliated"
138.21with an established religious order if members of the religious order are represented
138.22on the governing board of the institution of higher education and the two organization
138.23share campus space and common facilities.
138.24EFFECTIVE DATE.This section is effective retroactively for sales and purchases
138.25made after June 30, 2012.

138.26    Sec. 12. Minnesota Statutes 2012, section 297A.70, is amended by adding a
138.27subdivision to read:
138.28    Subd. 18. Nursing homes and boarding care homes. (a) All sales, except those
138.29listed in paragraph (b), to a nursing home licensed under section 144A.02 or a boarding
138.30care home certified as a nursing facility under title 19 of the Social Security Act are
138.31exempt if the facility:
138.32(1) is exempt from federal income taxation pursuant to section 501(c)(3) of the
138.33Internal Revenue Code; and
139.1(2) is certified to participate in the medical assistance program under title 19 of the
139.2Social Security Act, or certifies to the commissioner that it does not discharge residents
139.3due to the inability to pay.
139.4(b) This exemption does not apply to the following sales:
139.5(1) building, construction, or reconstruction materials purchased by a contractor
139.6or a subcontractor as a part of a lump-sum contract or similar type of contract with a
139.7guaranteed maximum price covering both labor and materials for use in the construction,
139.8alteration, or repair of a building or facility;
139.9(2) construction materials purchased by tax-exempt entities or their contractors to
139.10be used in constructing buildings or facilities that will not be used principally by the
139.11tax-exempt entities;
139.12(3) lodging as defined under section 297A.61, subdivision 3, paragraph (g), clause
139.13(2), and prepared food, candy, soft drinks, and alcoholic beverages as defined in section
139.14297A.67, subdivision 2; and
139.15(4) leasing of a motor vehicle as defined in section 297B.01, subdivision 11, except
139.16as provided in paragraph (c).
139.17(c) This exemption applies to the leasing of a motor vehicle as defined in section
139.18297B.01, subdivision 11, only if the vehicle is:
139.19(1) a truck, as defined in section 168.002; a bus, as defined in section 168.002; or a
139.20passenger automobile, as defined in section 168.002, if the automobile is designed and
139.21used for carrying more than nine persons including the driver; and
139.22(2) intended to be used primarily to transport tangible personal property or residents
139.23of the nursing home or boarding care home.
139.24EFFECTIVE DATE.This section is effective for sales and purchases made after
139.25June 30, 2013.

139.26    Sec. 13. Minnesota Statutes 2012, section 297A.71, is amended by adding a
139.27subdivision to read:
139.28    Subd. 45. Industrial measurement manufacturing and controls facility. (a)
139.29Materials and supplies used or consumed in, capital equipment incorporated into,
139.30fixtures installed in, and privately owned infrastructure in support of the construction,
139.31improvement, or expansion of an industrial measurement manufacturing and controls
139.32facility are exempt if:
139.33(1) the total capital investment made at the facility is at least $60,000,000;
139.34(2) the facility employs at least 250 full-time equivalent employees that are not
139.35employees currently employed by the company in the state; and
140.1(3) the Department of Employment and Economic Development determines that
140.2the expansion, remodeling, or improvement of the facility has a significant impact on
140.3the state economy.
140.4(b) The tax must be imposed and collected as if the rate under section 297A.62,
140.5subdivisions 1 and 1a, applied and refunded in the manner provided in section 297A.75,
140.6only after the following criteria are met:
140.7(1) a refund may not be issued until the owner of the facility has received
140.8certification from the Department of Employment and Economic Development that the
140.9company meets the requirements in paragraph (a); and
140.10(2) to receive the refund, the owner of the industrial measurement manufacturing
140.11and controls facility must initially apply to the Department of Employment and Economic
140.12Development for certification no later than one year from the final completion date of
140.13construction, improvement, or expansion of the industrial measurement manufacturing
140.14and controls facility.
140.15EFFECTIVE DATE.This section is effective for sales and purchases made after
140.16June 30, 2013, and before December 31, 2015.

140.17    Sec. 14. Minnesota Statutes 2012, section 297A.71, is amended by adding a
140.18subdivision to read:
140.19    Subd. 46. Building materials; resorts and recreational camping areas. Materials
140.20and supplies used or consumed in, and equipment incorporated into, the improvement of
140.21an existing structure located at a resort, as defined in section 157.15, subdivision 11, or
140.22recreational camping area, as defined in section 327.14, are exempt. The tax on purchases
140.23exempt under this provision must be imposed and collected as if the rate under section
140.24297A.62, subdivision 1, applied and then refunded in the manner provided in section
140.25297A.75. For purposes of this subdivision, a structure includes a cabin located on resort
140.26property and any other structure available for use by guests of the resort or recreational
140.27camping area.
140.28EFFECTIVE DATE.This section is effective for sales and purchases made after
140.29June 30, 2013.

140.30    Sec. 15. Minnesota Statutes 2012, section 297A.71, is amended by adding a
140.31subdivision to read:
140.32    Subd. 47. Biopharmaceutical manufacturing facility. (a) Materials and
140.33supplies used or consumed in, capital equipment incorporated into, and privately
141.1owned infrastructure in support of the construction, improvement, or expansion of a
141.2biopharmaceutical manufacturing facility in the state are exempt if the following criteria
141.3are met:
141.4(1) the facility is used for the manufacturing of biologics;
141.5(2) the total capital investment made at the facility exceeds $50,000,000; and
141.6(3) the facility creates and maintains at least 190 full-time equivalent positions at the
141.7facility. These positions must be new jobs in Minnesota and not the result of relocating
141.8jobs that currently exist in Minnesota.
141.9(b) The tax must be imposed and collected as if the rate under section 297A.62,
141.10subdivision 1, applied, and refunded in the manner provided in section 297A.75.
141.11(c) To be eligible for a refund, the owner of the biopharmaceutical manufacturing
141.12facility must:
141.13(1) initially apply to the Department of Employment and Economic Development
141.14for certification no later than one year from the final completion date of construction,
141.15improvement, or expansion of the facility; and
141.16(2) for each year that the owner of the biopharmaceutical manufacturing facility
141.17applies for a refund, the owner must have received written certification from the
141.18Department of Employment and Economic Development that the facility has met the
141.19criteria of paragraph (a).
141.20(d) The refund is to be paid annually at a rate of 25 percent of the total allowable
141.21refund payable to date, with the commissioner making annual payments of the remaining
141.22refund until all of the refund has been paid.
141.23(e) For purposes of this subdivision, "biopharmaceutical" and "biologics" are
141.24interchangeable and mean medical drugs or medicinal preparations produced using
141.25technology that uses biological systems, living organisms or derivatives of living
141.26organisms, to make or modify products or processes for specific use. The medical drugs or
141.27medicinal preparations include but are not limited to proteins, antibodies, nucleic acids,
141.28and vaccines.
141.29EFFECTIVE DATE.This section is effective retroactively to investments entered
141.30into and jobs created after December 31, 2012, and effective retroactively for sales and
141.31purchases made after December 31, 2012, and before July 1, 2019.

141.32    Sec. 16. Minnesota Statutes 2012, section 297A.75, subdivision 1, is amended to read:
141.33    Subdivision 1. Tax collected. The tax on the gross receipts from the sale of the
141.34following exempt items must be imposed and collected as if the sale were taxable and the
141.35rate under section 297A.62, subdivision 1, applied. The exempt items include:
142.1    (1) capital equipment exempt under section 297A.68, subdivision 5;
142.2    (2) building materials for an agricultural processing facility exempt under section
142.3297A.71, subdivision 13 ;
142.4    (3) building materials for mineral production facilities exempt under section
142.5297A.71, subdivision 14 ;
142.6    (4) building materials for correctional facilities under section 297A.71, subdivision 3;
142.7    (5) building materials used in a residence for disabled veterans exempt under section
142.8297A.71, subdivision 11 ;
142.9    (6) elevators and building materials exempt under section 297A.71, subdivision 12;
142.10    (7) building materials for the Long Lake Conservation Center exempt under section
142.11297A.71, subdivision 17 ;
142.12    (8) materials and supplies for qualified low-income housing under section 297A.71,
142.13subdivision 23
;
142.14    (9) materials, supplies, and equipment for municipal electric utility facilities under
142.15section 297A.71, subdivision 35;
142.16    (10) equipment and materials used for the generation, transmission, and distribution
142.17of electrical energy and an aerial camera package exempt under section 297A.68,
142.18subdivision 37;
142.19    (11) commuter rail vehicle and repair parts under section 297A.70, subdivision 3,
142.20paragraph (a), clause (10);
142.21    (12) materials, supplies, and equipment for construction or improvement of projects
142.22and facilities under section 297A.71, subdivision 40;
142.23(13) materials, supplies, and equipment for construction or improvement of a meat
142.24processing facility exempt under section 297A.71, subdivision 41;
142.25(14) materials, supplies, and equipment for construction, improvement, or
142.26expansion of an aerospace defense manufacturing facility exempt under section 297A.71,
142.27subdivision 42, and construction, expansion, or improvement of an industrial measurement
142.28manufacturing and controls facility under section 297A.71, subdivision 45;
142.29(15) enterprise information technology equipment and computer software for use in
142.30a qualified data center exempt under section 297A.68, subdivision 42; and
142.31(16) materials, supplies, and equipment for qualifying capital projects under section
142.32297A.71, subdivision 44 .;
142.33(17) materials, supplies, and equipment for structure improvements at resort and
142.34camping areas under section 297A.71, subdivision 46; and
143.1(18) materials, supplies, and equipment for construction, improvement, or expansion
143.2of a biopharmaceutical manufacturing facility exempt under section 297A.71, subdivision
143.347.
143.4EFFECTIVE DATE.This section is effective the day following final enactment.

143.5    Sec. 17. Minnesota Statutes 2012, section 297A.75, subdivision 2, is amended to read:
143.6    Subd. 2. Refund; eligible persons. Upon application on forms prescribed by the
143.7commissioner, a refund equal to the tax paid on the gross receipts of the exempt items
143.8must be paid to the applicant. Only the following persons may apply for the refund:
143.9    (1) for subdivision 1, clauses (1) to (3), the applicant must be the purchaser;
143.10    (2) for subdivision 1, clauses (4) and (7), the applicant must be the governmental
143.11subdivision;
143.12    (3) for subdivision 1, clause (5), the applicant must be the recipient of the benefits
143.13provided in United States Code, title 38, chapter 21;
143.14    (4) for subdivision 1, clause (6), the applicant must be the owner of the homestead
143.15property;
143.16    (5) for subdivision 1, clause (8), the owner of the qualified low-income housing
143.17project;
143.18    (6) for subdivision 1, clause (9), the applicant must be a municipal electric utility or
143.19a joint venture of municipal electric utilities;
143.20    (7) for subdivision 1, clauses (10), (13), (14), and (15), and (18), the owner of the
143.21qualifying business; and
143.22    (8) for subdivision 1, clauses (11), (12), and (16), the applicant must be the
143.23governmental entity that owns or contracts for the project or facility.; and
143.24    (9) for subdivision 1, clause (17), the applicant must be the owner of the resort
143.25or recreational camping facility.
143.26EFFECTIVE DATE.This section is effective the day following final enactment.

143.27    Sec. 18. Minnesota Statutes 2012, section 297A.75, subdivision 3, is amended to read:
143.28    Subd. 3. Application. (a) The application must include sufficient information
143.29to permit the commissioner to verify the tax paid. If the tax was paid by a contractor,
143.30subcontractor, or builder, under subdivision 1, clause (4), (5), (6), (7), (8), (9), (10), (11),
143.31(12), (13), (14), (15), or (16), (17), or (18), the contractor, subcontractor, or builder must
143.32furnish to the refund applicant a statement including the cost of the exempt items and the
144.1taxes paid on the items unless otherwise specifically provided by this subdivision. The
144.2provisions of sections 289A.40 and 289A.50 apply to refunds under this section.
144.3    (b) An applicant may not file more than two applications per calendar year for
144.4refunds for taxes paid on capital equipment exempt under section 297A.68, subdivision 5.
144.5    (c) Total refunds for purchases of items in section 297A.71, subdivision 40, must not
144.6exceed $5,000,000 in fiscal years 2010 and 2011. Applications for refunds for purchases
144.7of items in sections 297A.70, subdivision 3, paragraph (a), clause (11), and 297A.71,
144.8subdivision 40, must not be filed until after June 30, 2009. Applications for refunds for
144.9purchases of items in section 297A.71, subdivision 47, must not be filed until after June
144.1030, 2016, and only one refund may be filed annually thereafter.
144.11EFFECTIVE DATE.This section is effective the day following final enactment.

144.12    Sec. 19. Minnesota Statutes 2012, section 297A.815, subdivision 3, is amended to read:
144.13    Subd. 3. Motor vehicle lease sales tax revenue. (a) For purposes of this
144.14subdivision, "net revenue" means an amount equal to:
144.15    (1) the revenues, including interest and penalties, collected under this section and
144.16on the leases under section 297A.61, subdivision 4, paragraph (k), clause (3), during
144.17the fiscal year; less
144.18    (2) in fiscal year 2011, $30,100,000; in fiscal year 2012, $31,100,000; and in fiscal
144.19year 2013 and following fiscal years, $32,000,000.
144.20    (b) On or before June 30 of each fiscal year, the commissioner of revenue shall
144.21estimate the amount of the revenues and subtraction under paragraph (a) for the current
144.22fiscal year.
144.23    (c) On or after July 1 of the subsequent fiscal year, the commissioner of management
144.24and budget shall transfer the net revenue as estimated in paragraph (b) from the general
144.25fund, as follows:
144.26    (1) 50 percent to the greater Minnesota transit account; and
144.27    (2) 50 percent to the county state-aid highway fund. Notwithstanding any other law
144.28to the contrary, the commissioner of transportation shall allocate the funds transferred
144.29under this clause to the counties in the metropolitan area, as defined in section 473.121,
144.30subdivision 4, excluding the counties of Hennepin and Ramsey, so that each county shall
144.31receive of such amount the percentage that its population, as defined in section 477A.011,
144.32subdivision 3, estimated or established by July 15 of the year prior to the current calendar
144.33year, bears to the total population of the counties receiving funds under this clause.
144.34    (d) For fiscal years 2010 and 2011, the amount under paragraph (a), clause (1), must
144.35be calculated using the following percentages of the total revenues:
145.1    (1) for fiscal year 2010, 83.75 percent; and
145.2    (2) for fiscal year 2011, 93.75 percent.
145.3EFFECTIVE DATE.This section is effective for leases entered into after June
145.430, 2013.

145.5    Sec. 20. Minnesota Statutes 2012, section 297A.993, subdivision 1, is amended to read:
145.6    Subdivision 1. Authorization; rates. Notwithstanding section 297A.99,
145.7subdivisions 1, 2, 3, 5, and 13, or 477A.016, or any other law, the board of a county outside
145.8the metropolitan transportation area, as defined under section 297A.992, subdivision 1, or
145.9more than one county outside the metropolitan transportation area acting under a joint
145.10powers agreement, may by resolution of the county board, or each of the county boards,
145.11following a public hearing impose (1) a transportation sales tax at a rate of up to one-half
145.12of one percent on retail sales and uses taxable under this chapter, and (2) an excise tax
145.13of $20 per motor vehicle, as defined in section 297B.01, subdivision 11, purchased or
145.14acquired from any person engaged in the business of selling motor vehicles at retail,
145.15occurring within the jurisdiction of the taxing authority. The taxes imposed under this
145.16section are subject to approval by a majority of the voters in each of the counties affected
145.17at a general election who vote on the question to impose the taxes.
145.18EFFECTIVE DATE.This section is effective the day following final enactment.

145.19    Sec. 21. Minnesota Statutes 2012, section 297A.993, subdivision 2, is amended to read:
145.20    Subd. 2. Allocation; termination. The proceeds of the taxes must be dedicated
145.21exclusively to: (1) payment of the capital cost of a specific transportation project or
145.22improvement; (2) payments of the costs, which may include both capital and operating
145.23costs, of a specific transit project or improvement; or (3) payment of transit operating
145.24costs. The transportation project or improvement must be designated by the board of the
145.25county, or more than one county acting under a joint powers agreement. Except for taxes
145.26for operating costs of a transit project or improvement, or for transit operations, the taxes
145.27must terminate after the project or improvement has been completed when revenues
145.28raised are sufficient to finance the project.
145.29EFFECTIVE DATE.This section is effective the day following final enactment.

145.30    Sec. 22. Minnesota Statutes 2012, section 469.190, is amended by adding a subdivision
145.31to read:
146.1    Subd. 1a. Tax base; locally collected taxes. A tax imposed on the gross receipts
146.2from lodging under this section or under a special law applies to the same base as taxes
146.3collected by the commissioner of revenue under subdivision 7 and section 270C.171.
146.4EFFECTIVE DATE.This section is effective the day following final enactment.
146.5In enacting this section, the legislature confirms its original intent in enacting Minnesota
146.6Statutes, section 469.190, its predecessor provisions, and any special laws authorizing
146.7political subdivisions to impose lodging taxes, and that those taxes were and are intended
146.8to apply to the entire consideration paid to obtain access to transient lodging, including
146.9ancillary or related services, such as services provided by accommodation intermediaries
146.10as defined in Minnesota Statutes, section 297A.61, and similar services. The provisions of
146.11this section must not be interpreted to imply a narrower construction of the tax base under
146.12lodging tax provisions of Minnesota law prior to the enactment of this section.

146.13    Sec. 23. Minnesota Statutes 2012, section 469.190, subdivision 7, is amended to read:
146.14    Subd. 7. Collection. (a) The statutory or home rule charter city may agree with the
146.15commissioner of revenue that a tax imposed pursuant to this section shall be collected
146.16by the commissioner together with the tax imposed by chapter 297A, and subject to the
146.17same interest, penalties, and other rules and that its proceeds, less the cost of collection,
146.18shall be remitted to the city.
146.19    (b) If a tax imposed under this section or under a special law is not collected by
146.20the commissioner of revenue, the local government imposing the tax may only require
146.21an accommodations intermediary, as defined in section 297A.61, subdivision 47, to file
146.22and remit the tax related to accommodations intermediary services once in every calendar
146.23year. The local government must inform the tax intermediary of the date when the return
146.24and remittance is due.
146.25EFFECTIVE DATE.This section is effective for sales and purchases made after
146.26June 30, 2013.

146.27    Sec. 24. Laws 1993, chapter 375, article 9, section 46, subdivision 2, as amended by
146.28Laws 1997, chapter 231, article 7, section 40, Laws 1998, chapter 389, article 8, section
146.2930, Laws 2003, First Special Session chapter 21, article 8, section 13, Laws 2005, First
146.30Special Session chapter 3, article 5, section 26, and Laws 2009, chapter 88, article 4,
146.31section 15, is amended to read:
146.32    Subd. 2. Use of revenues. Revenues received from the tax authorized by subdivision
146.331 may only be used by the city to pay the cost of collecting the tax, and, except as provided in
147.1paragraph (e), to pay for the following projects or to secure or pay any principal, premium,
147.2or interest on bonds issued in accordance with subdivision 3 for the following projects.
147.3    (a) To pay all or a portion of the capital expenses of construction, equipment and
147.4acquisition costs for the expansion and remodeling of the St. Paul Civic Center complex,
147.5including the demolition of the existing arena and the construction and equipping of a
147.6new arena.
147.7    (b) Except as provided in paragraphs (e) and (f), the remainder of the funds must be
147.8spent for:
147.9    (1) capital projects to further residential, cultural, commercial, and economic
147.10development in both downtown St. Paul and St. Paul neighborhoods; and
147.11    (2) capital and operating expenses of cultural organizations in the city, provided
147.12that the amount spent under this clause must equal ten percent of the total amount spent
147.13under this paragraph in any year.
147.14    (c) The amount apportioned under paragraph (b) shall be no less than 60 percent
147.15of the revenues derived from the tax each year, except to the extent that a portion of that
147.16amount is required to pay debt service on (1) bonds issued for the purposes of paragraph (a)
147.17prior to March 1, 1998; or (2) bonds issued for the purposes of paragraph (a) after March 1,
147.181998, but only if the city council determines that 40 percent of the revenues derived from
147.19the tax together with other revenues pledged to the payment of the bonds, including the
147.20proceeds of definitive bonds, is expected to exceed the annual debt service on the bonds.
147.21    (d) If in any year more than 40 percent of the revenue derived from the tax authorized
147.22by subdivision 1 is used to pay debt service on the bonds issued for the purposes of
147.23paragraph (a) and to fund a reserve for the bonds, the amount of the debt service payment
147.24that exceeds 40 percent of the revenue must be determined for that year. In any year when
147.2540 percent of the revenue produced by the sales tax exceeds the amount required to pay
147.26debt service on the bonds and to fund a reserve for the bonds under paragraph (a), the
147.27amount of the excess must be made available for capital projects to further residential,
147.28cultural, commercial, and economic development in the neighborhoods and downtown
147.29until the cumulative amounts determined for all years under the preceding sentence have
147.30been made available under this sentence. The amount made available as reimbursement in
147.31the preceding sentence is not included in the 60 percent determined under paragraph (c).
147.32    (e) In each of calendar years 2006 to 2014, revenue not to exceed $3,500,000 may be
147.33used to pay the principal of bonds issued for capital projects of the city. After December
147.3431, 2014, revenue from the tax imposed under subdivision 1 may not be used for this
147.35purpose. If the amount necessary to meet obligations under paragraphs (a) and (d) are less
147.36than 40 percent of the revenue from the tax in any year, the city may place the difference
148.1between 40 percent of the revenue and the amounts allocated under paragraphs (a) and (d)
148.2in an economic development fund to be used for any economic development purposes.
148.3    (f) By January 15 of each year, the mayor and the city council must report to the
148.4legislature on the use of sales tax revenues during the preceding one-year period.
148.5EFFECTIVE DATE.This section is effective the day after compliance by the
148.6governing body of the city of St. Paul with Minnesota Statutes, section 645.021,
148.7subdivisions 2 and 3.

148.8    Sec. 25. Laws 1993, chapter 375, article 9, section 46, subdivision 5, as amended by
148.9Laws 1998, chapter 389, article 8, section 32, is amended to read:
148.10    Subd. 5. Expiration of taxing authority. The authority granted by subdivision 1 to
148.11the city to impose a sales tax shall expire on December 31, 2030 2042, or at an earlier
148.12time as the city shall, by ordinance, determine. Any funds remaining after completion of
148.13projects approved under subdivision 2, paragraph (a) and retirement or redemption of any
148.14bonds or other obligations may be placed in the general fund of the city.
148.15EFFECTIVE DATE.This section is effective the day after compliance by the
148.16governing body of the city of St. Paul with Minnesota Statutes, section 645.021,
148.17subdivisions 2 and 3.

148.18    Sec. 26. Laws 2002, chapter 377, article 3, section 25, as amended by Laws 2009,
148.19chapter 88, article 4, section 19, and Laws 2010, chapter 389, article 5, section 3, is
148.20amended to read:
148.21    Sec. 25. ROCHESTER LODGING TAX.
148.22    Subdivision 1. Authorization. Notwithstanding Minnesota Statutes, section
148.23469.190 or 477A.016, or any other law, the city of Rochester may impose an additional
148.24tax of one percent on the gross receipts from the furnishing for consideration of lodging at
148.25a hotel, motel, rooming house, tourist court, or resort, other than the renting or leasing of it
148.26for a continuous period of 30 days or more.
148.27    Subd. 1a. Authorization. Notwithstanding Minnesota Statutes, section 469.190 or
148.28477A.016 , or any other law, and in addition to the tax authorized by subdivision 1, the city
148.29of Rochester may impose an additional tax of one three percent on the gross receipts from
148.30the furnishing for consideration of lodging at a hotel, motel, rooming house, tourist court, or
148.31resort, other than the renting or leasing of it for a continuous period of 30 days or more only
148.32upon the approval of the city governing body of a total financial package for the project.
149.1    Subd. 2. Disposition of proceeds. (a) The gross proceeds from the tax imposed
149.2under subdivision 1 must be used by the city to fund a local convention or tourism bureau
149.3for the purpose of marketing and promoting the city as a tourist or convention center.
149.4(b) The gross proceeds from the one three percent tax imposed under subdivision
149.51a shall be used to pay for (1) design, construction, renovation, improvement, and
149.6expansion of the Mayo Civic Center Complex and related infrastructure, including but not
149.7limited to, skyway access, lighting, parking, or landscaping; and (2) for payment of any
149.8principal, interest, or premium on bonds issued to finance the construction, renovation,
149.9improvement, and expansion of the Mayo Civic Center Complex.
149.10    Subd. 2a. Bonds. The city of Rochester may issue, without an election, general
149.11obligation bonds of the city, in one or more series, in the aggregate principal amount not to
149.12exceed $43,500,000 $50,000,000, to pay for capital and administrative costs for the design,
149.13construction, renovation, improvement, and expansion of the Mayo Civic Center Complex,
149.14and related infrastructure, including but not limited to, skyway, access, lighting, parking,
149.15and landscaping. The city may pledge the lodging tax authorized by subdivision 1a and the
149.16food and beverage tax authorized under Laws 2009, chapter 88, article 4, section 23, to the
149.17payment of the bonds. The debt represented by the bonds is not included in computing any
149.18debt limitations applicable to the city, and the levy of taxes required by Minnesota Statutes,
149.19section 475.61, to pay the principal of and interest on the bonds is not subject to any levy
149.20limitation or included in computing or applying any levy limitation applicable to the city.
149.21    Subd. 3. Expiration of taxing authority. The authority of the city to impose a tax
149.22under subdivision 1a shall expire when the principal and interest on any bonds or other
149.23obligations issued prior to December 31, 2014, to finance the construction, renovation,
149.24improvement, and expansion of the Mayo Civic Center Complex and related skyway
149.25access, lighting, parking, or landscaping have been paid, including any bonds issued to
149.26refund such bonds, or at an earlier time as the city shall, by ordinance, determine. Any
149.27funds remaining after completion of the project and retirement or redemption of the bonds
149.28shall be placed in the general fund of the city. The city may, by ordinance, repeal the
149.29tax provided that:
149.30(1) the revenues raised before the repeal are sufficient to meet all bond or other
149.31obligations backed by revenues of the tax; and
149.32(2) the repeal date meets the requirements of section 297A.99, subdivision 12.
149.33EFFECTIVE DATE.This section is effective the day after the governing body of
149.34the city of Rochester and its chief fiscal officer comply with Minnesota Statutes, section
149.35645.021, subdivisions 2 and 3.

150.1    Sec. 27. Laws 2005, First Special Session chapter 3, article 5, section 37, subdivision
150.22, is amended to read:
150.3    Subd. 2. Use of revenues. (a) Revenues received from the tax authorized by
150.4subdivision 1 by the city of St. Cloud must be used for the cost of collecting and
150.5administering the tax and to pay all or part of the capital or administrative costs of the
150.6development, acquisition, construction, improvement, and securing and paying debt
150.7service on bonds or other obligations issued to finance the following regional projects as
150.8approved by the voters and specifically detailed in the referendum authorizing the tax or
150.9extending the tax:
150.10    (1) St. Cloud Regional Airport;
150.11    (2) regional transportation improvements;
150.12    (3) regional community and aquatics and recreation centers and facilities;
150.13    (4) regional public libraries; and
150.14    (5) acquisition and improvement of regional park land and open space.
150.15    (b) Revenues received from the tax authorized by subdivision 1 by the cities of St.
150.16Joseph, Waite Park, Sartell, Sauk Rapids, and St. Augusta must be used for the cost of
150.17collecting and administering the tax and to pay all or part of the capital or administrative
150.18costs of the development, acquisition, construction, improvement, and securing and paying
150.19debt service on bonds or other obligations issued to fund the projects specifically approved
150.20by the voters at the referendum authorizing the tax or extending the tax. The portion of
150.21revenues from the city going to fund the regional airport or regional library located in the
150.22city of St. Cloud will be as required under the applicable joint powers agreement.
150.23    (c) The use of revenues received from the taxes authorized in subdivision 1 for
150.24projects allowed under paragraphs (a) and (b) are limited to the amount authorized for
150.25each project under the enabling referendum.
150.26EFFECTIVE DATE.This section is effective for a city that approves it the day
150.27after compliance by the governing body of that city with Minnesota Statutes, section
150.28645.021, subdivision 3.

150.29    Sec. 28. Laws 2005, First Special Session chapter 3, article 5, section 37, subdivision
150.304, is amended to read:
150.31    Subd. 4. Termination of tax. The tax imposed in the cities of St. Joseph, St. Cloud,
150.32St. Augusta, Sartell, Sauk Rapids, and Waite Park under subdivision 1 expires when the
150.33city council determines that sufficient funds have been collected from the tax to retire or
150.34redeem the bonds and obligations authorized under subdivision 2, paragraph (a), but no
150.35later than December 31, 2018. Notwithstanding Minnesota Statutes, section 297A.99,
151.1subdivision 3, paragraphs (a), (c), and (d), a city may extend the tax imposed under
151.2subdivision 1 through December 31, 2038, if approved under the referendum authorizing
151.3the tax under subdivision 1 or if approved by voters of the city at a general election held
151.4no later than November 6, 2018.
151.5EFFECTIVE DATE.This section is effective for a city that approves it the day
151.6after compliance by the governing body of that city with Minnesota Statutes, section
151.7645.021, subdivision 3.

151.8    Sec. 29. Laws 2008, chapter 366, article 7, section 19, subdivision 3, as amended by
151.9Laws 2011, First Special Session chapter 7, article 4, section 8, is amended to read:
151.10    Subd. 3. Use of revenues. Notwithstanding Minnesota Statutes, section 297A.99,
151.11subdivision 3
, paragraph (b), the proceeds of the tax imposed under this section shall be
151.12used to pay for the costs of improvements to the Sportsman Park/Ballfields, Riverside
151.13Park, Lions Park/Pavilion, Cedar South Park also known as Eldorado Park, and Spring
151.14Street Park; improvements to and extension of the River County Bike Trail; acquisition,
151.15 and construction, improvement, and development of regional parks, bicycle trails, park
151.16land, open space, and of a pedestrian walkways, as described in the city improvement
151.17plan adopted by the city council by resolution on December 12, 2006, and walkway
151.18over Interstate 94 and State Highway 24; and the acquisition of land and construction of
151.19buildings for a community and recreation center. The total amount of revenues from the
151.20taxes in subdivisions 1 and 2 that may be used to fund these projects is $12,000,000
151.21plus any associated bond costs.
151.22EFFECTIVE DATE.This section is effective the day after compliance by the
151.23governing body of the city of Clearwater with Minnesota Statutes, section 645.021,
151.24subdivisions 2 and 3.

151.25    Sec. 30. Laws 2010, chapter 389, article 5, section 6, subdivision 4, is amended to read:
151.26    Subd. 4. Use of lodging tax revenues. The revenues derived from the tax imposed
151.27under subdivision 3 must be used by the city of Marshall to pay the costs of collecting
151.28and administering the lodging tax, to pay all or part of the operating costs of the new and
151.29existing facilities of the Minnesota Emergency Response and Industry Training Center,
151.30including the payment of debt service on bonds issued under subdivision 2, and to pay
151.31all or part of the operating costs of the facilities of the Southwest Minnesota Regional
151.32Amateur Sports Center, including the payment of debt service on bonds issued under
151.33subdivision 2. Authorized expenses include, but are not limited to, acquiring property;
152.1predesign; design; and paying construction, furnishing, and equipment costs related to
152.2these facilities and paying debt service on bonds or other obligations issued by the city.
152.3EFFECTIVE DATE.This section is effective the day following final enactment.

152.4    Sec. 31. Laws 2010, chapter 389, article 5, section 6, subdivision 6, is amended to read:
152.5    Subd. 6. Use of food and beverages tax. The revenues derived from the tax
152.6imposed under subdivision 5 must be used by the city of Marshall to pay the costs of
152.7collecting and administering the food and beverages tax, to pay all or part of the operating
152.8costs of the new and existing facilities of the Minnesota Emergency Response and
152.9Industry Training Center, including the payment of debt service on bonds issued under
152.10subdivision 2, and to pay all or part of the operating costs of the facilities of the Southwest
152.11Minnesota Regional Amateur Sports Center, including the payment of debt service on
152.12bonds issued under subdivision 2. Authorized expenses for each organization include,
152.13but are not limited to, acquiring property; predesign; design; and paying construction,
152.14furnishing, and equipment costs related to these facilities and paying debt service on
152.15bonds or other obligations issued by the city.
152.16EFFECTIVE DATE.This section is effective the day following final enactment.

152.17    Sec. 32. CITY OF MARSHALL; VALIDATION OF PRIOR ACT.
152.18    (a) Notwithstanding the time limits in Minnesota Statutes, section 645.021, the city
152.19of Marshall may approve Laws 2010, chapter 389, article 5, section 6, as amended by
152.20Laws 201l, First Special Session chapter 7, article 4, section 9, and file its approval with
152.21the secretary of state by June 15, 2013. If approved as authorized under this paragraph,
152.22actions undertaken by the city pursuant to the approval of the voters on November 6, 2012,
152.23and otherwise in accordance with Laws 2010, chapter 389, article 5, section 6, as amended
152.24by Laws 201l, First Special Session chapter 7, article 4, section 9, are validated.
152.25    (b) Notwithstanding the time limit on the imposition of tax under Laws 2010,
152.26chapter 389, article 5, section 6, subdivision 1, as amended by Laws 201l, First Special
152.27Session chapter 7, article 4, section 9, and subject to local approval under paragraph (a),
152.28the city of Marshall may impose the tax on or before July 1, 2013.
152.29EFFECTIVE DATE.This section is effective the day following final enactment.

152.30    Sec. 33. CITY OF PROCTOR; VALIDATION OF PRIOR ACT.
152.31    Notwithstanding the time limits in Minnesota Statutes, section 645.021, the city of
152.32Proctor may approve, by resolution, Laws 2008, chapter 366, article 7, section 13, and
153.1Laws 2010, chapter 389, article 5, sections 1 and 2, and file its approval with the secretary
153.2of state by January 1, 2014. If approved under this paragraph, actions undertaken by
153.3the city pursuant to the approval of the voters on November 2, 2010, and otherwise in
153.4accordance with those laws are validated.
153.5EFFECTIVE DATE.This section is effective the day following final enactment.

153.6    Sec. 34. CITY OF BEMIDJI; LOCAL TAXES AUTHORIZED.
153.7    Subdivision 1. Food and beverage tax authorized. Notwithstanding Minnesota
153.8Statutes, section 477A.016, or any ordinance, city charter, or other provision of law, the
153.9city of Bemidji may, by ordinance, impose a sales tax of up to one percent on the gross
153.10receipts of all food and beverages sold by a restaurant or place of refreshment located
153.11within the city. For purposes of this section, "food and beverages" include retail on-sale of
153.12intoxicating liquor and fermented malt beverages.
153.13    Subd. 2. Lodging tax. Notwithstanding Minnesota Statutes, section 469.190 or
153.14477A.016, or any other provision of law, ordinance, or city charter, the city of Bemidji
153.15may impose, by ordinance, a tax of up to one percent on the gross receipts for the
153.16furnishing for consideration of lodging at a hotel, motel, rooming house, tourist court, or
153.17resort, other than for the renting or leasing of it for a continuous period of 30 days or more.
153.18    Subd. 3. Use of proceeds from authorized taxes. The proceeds of the taxes
153.19imposed under subdivisions 1 and 2 must only be used by the city to fund the costs of
153.20operation, maintenance, and capital replacement costs for the Sanford Center.
153.21    Subd. 4. Collection, administration, and enforcement. The city may enter into
153.22an agreement with the commissioner of revenue to administer, collect, and enforce the
153.23taxes under subdivisions 1 and 2. If the commissioner agrees to collect the tax, the
153.24provisions of Minnesota Statutes, section 297A.99, related to collection, administration,
153.25and enforcement, and Minnesota Statutes, section 270C.171, apply.
153.26EFFECTIVE DATE.This section is effective the day after the governing body of
153.27the city of Bemidji and its chief clerical officer comply with Minnesota Statutes, section
153.28645.021, subdivisions 2 and 3.

153.29    Sec. 35. ROCHESTER SALES TAX SHARING.
153.30The city council may, after holding a public hearing and passing a resolution, use
153.31$5,000,000 of the $10,000,000 allocated to an economic development fund in Laws 1998,
153.32chapter 389, article 8, section 43, subdivision 3, as amended by Laws 2005, First Special
153.33Session chapter 3, article 5, section 28, and Laws 2011, First Special Session chapter 7,
154.1article 4, section 5, paragraph (c), clause (9), for grants to any or all of the cities of Altura,
154.2Byron, Chatfield, Dodge Center, Dover, Elgin, Eyota, Grand Meadow, Hayfield, Kasson,
154.3Mantorville, Mazeppa, Oronoco, Pine Island, Plainview, Spring Valley, St. Charles,
154.4Stewartville, Wanamingo, West Concord, and Zumbrota for economic development
154.5projects that these communities would fund through their economic development authority
154.6or housing and redevelopment authority. The public hearing may be part of a regular city
154.7council meeting. If the council does not pass the resolution by September 1, 2013, the
154.8$5,000,000 may not be used for grants to the other cities but shall instead be used to
154.9fund public infrastructure projects contained in the development plan under Minnesota
154.10Statutes, section 469.42.
154.11EFFECTIVE DATE.This section is effective the day following final enactment.

154.12    Sec. 36. REPEALER.
154.13Laws 2009, chapter 88, article 4, section 23, as amended by Laws 2010, chapter 389,
154.14article 5, section 4, is repealed.
154.15EFFECTIVE DATE.This section is effective the day following final enactment.

154.16ARTICLE 9
154.17ECONOMIC DEVELOPMENT

154.18    Section 1. Minnesota Statutes 2012, section 469.071, subdivision 5, is amended to read:
154.19    Subd. 5. Exception; parking facilities. Notwithstanding section 469.068, the
154.20Bloomington port authority need not require competitive bidding with respect to a
154.21structured parking facility or other public improvements constructed in conjunction with,
154.22and directly above or below, or adjacent and integrally related to, a development and
154.23financed with the proceeds of tax increment or, revenue bonds, or other funds of the
154.24port authority and the city of Bloomington.
154.25EFFECTIVE DATE.This section is effective upon compliance of the governing
154.26body of the city of Bloomington with the requirements of Minnesota Statutes, section
154.27645.021, subdivision 3.

154.28    Sec. 2. Minnesota Statutes 2012, section 469.169, is amended by adding a subdivision
154.29to read:
154.30    Subd. 19. Additional border city allocation; 2013. (a) In addition to the tax
154.31reductions authorized in subdivisions 12 to 18, the commissioner shall allocate $750,000
155.1for tax reductions to border city enterprise zones in cities located on the western border
155.2of the state. The commissioner shall allocate this amount among cities on a per capita
155.3basis. Allocations made under this subdivision may be used for tax reductions under
155.4section 469.171, or for other offsets of taxes imposed on or remitted by businesses located
155.5in the enterprise zone, but only if the municipality determines that the granting of the tax
155.6reduction or offset is necessary to retain a business within or attract a business to the zone.
155.7The city alternatively may elect to use any portion of the allocation under this paragraph
155.8for tax reductions under section 469.1732 or 469.1734.
155.9    (b) The commissioner shall allocate $750,000 for tax reductions under section
155.10469.1732 or 469.1734 to cities with border city enterprise zones located on the western
155.11border of the state. The commissioner shall allocate this amount among the cities on a per
155.12capita basis. The city alternatively may elect to use any portion of the allocation provided
155.13in this paragraph for tax reductions under section 469.171.
155.14EFFECTIVE DATE.This section is effective July 1, 2013.

155.15    Sec. 3. Minnesota Statutes 2012, section 469.176, subdivision 4c, is amended to read:
155.16    Subd. 4c. Economic development districts. (a) Revenue derived from tax increment
155.17from an economic development district may not be used to provide improvements, loans,
155.18subsidies, grants, interest rate subsidies, or assistance in any form to developments
155.19consisting of buildings and ancillary facilities, if more than 15 percent of the buildings and
155.20facilities (determined on the basis of square footage) are used for a purpose other than:
155.21    (1) the manufacturing or production of tangible personal property, including
155.22processing resulting in the change in condition of the property;
155.23    (2) warehousing, storage, and distribution of tangible personal property, excluding
155.24retail sales;
155.25    (3) research and development related to the activities listed in clause (1) or (2);
155.26    (4) telemarketing if that activity is the exclusive use of the property;
155.27    (5) tourism facilities; or
155.28    (6) qualified border retail facilities; or
155.29    (7) space necessary for and related to the activities listed in clauses (1) to (6) (5).
155.30    (b) Notwithstanding the provisions of this subdivision, revenues derived from tax
155.31increment from an economic development district may be used to provide improvements,
155.32loans, subsidies, grants, interest rate subsidies, or assistance in any form for up to 15,000
155.33square feet of any separately owned commercial facility located within the municipal
155.34jurisdiction of a small city, if the revenues derived from increments are spent only to
155.35assist the facility directly or for administrative expenses, the assistance is necessary to
156.1develop the facility, and all of the increments, except those for administrative expenses,
156.2are spent only for activities within the district.
156.3    (c) A city is a small city for purposes of this subdivision if the city was a small city
156.4in the year in which the request for certification was made and applies for the rest of
156.5the duration of the district, regardless of whether the city qualifies or ceases to qualify
156.6as a small city.
156.7    (d) Notwithstanding the requirements of paragraph (a) and the finding requirements
156.8of section 469.174, subdivision 12, tax increments from an economic development district
156.9may be used to provide improvements, loans, subsidies, grants, interest rate subsidies, or
156.10assistance in any form to developments consisting of buildings and ancillary facilities, if
156.11all the following conditions are met:
156.12    (1) the municipality finds that the project will create or retain jobs in this state,
156.13including construction jobs, and that construction of the project would not have
156.14commenced before July 1, 2012, without the authority providing assistance under the
156.15provisions of this paragraph;
156.16    (2) construction of the project begins no later than July 1, 2012;
156.17    (3) the request for certification of the district is made no later than June 30, 2012; and
156.18    (4) for development of housing under this paragraph, the construction must begin
156.19before January 1, 2012.
156.20    The provisions of this paragraph may not be used to assist housing that is developed
156.21to qualify under section 469.1761, subdivision 2 or 3, or similar requirements of other law,
156.22if construction of the project begins later than July 1, 2011.
156.23EFFECTIVE DATE.This section is effective for districts for which the request for
156.24certification was made after June 30, 2012.

156.25    Sec. 4. Minnesota Statutes 2012, section 469.176, subdivision 4g, is amended to read:
156.26    Subd. 4g. General government use prohibited. (a) Tax increments may not be
156.27used to circumvent existing levy limit law.
156.28    (b) No tax increment from any district may be used for the acquisition, construction,
156.29renovation, operation, or maintenance of a building to be used primarily and regularly
156.30for conducting the business of a municipality, county, school district, or any other local
156.31unit of government or the state or federal government. This provision does not prohibit
156.32the use of revenues derived from tax increments for the construction or renovation of
156.33a parking structure.
156.34    (c)(1) Tax increments may not be used to pay for the cost of public improvements,
156.35equipment, or other items, if:
157.1    (i) the improvements, equipment, or other items are located outside of the area of the
157.2tax increment financing district from which the increments were collected; and
157.3    (ii) the improvements, equipment, or items that (A) primarily serve a decorative or
157.4aesthetic purpose, or (B) serve a functional purpose, but their cost is increased by more than
157.5100 percent as a result of the selection of materials, design, or type as compared with more
157.6commonly used materials, designs, or types for similar improvements, equipment, or items.
157.7    (2) The provisions of this paragraph do not apply to expenditures related to the
157.8rehabilitation of historic structures that are:
157.9    (i) individually listed on the National Register of Historic Places; or
157.10    (ii) a contributing element to a historic district listed on the National Register
157.11of Historic Places.
157.12EFFECTIVE DATE.This section is effective the day following final enactment for
157.13all tax increment financing districts, regardless of when the request for certification was
157.14made, but applies only to amounts spent after final enactment.

157.15    Sec. 5. Minnesota Statutes 2012, section 469.176, subdivision 6, is amended to read:
157.16    Subd. 6. Action required. (a) If, after four years from the date of certification of
157.17the original net tax capacity of the tax increment financing district pursuant to section
157.18469.177 , no demolition, rehabilitation, or renovation of property or other site preparation,
157.19including qualified improvement of a street adjacent to a parcel but not installation
157.20of utility service including sewer or water systems, has been commenced on a parcel
157.21located within a tax increment financing district by the authority or by the owner of the
157.22parcel in accordance with the tax increment financing plan, no additional tax increment
157.23may be taken from that parcel, and the original net tax capacity of that parcel shall be
157.24excluded from the original net tax capacity of the tax increment financing district. If the
157.25authority or the owner of the parcel subsequently commences demolition, rehabilitation,
157.26or renovation or other site preparation on that parcel including qualified improvement of
157.27a street adjacent to that parcel, in accordance with the tax increment financing plan, the
157.28authority shall certify to the county auditor that the activity has commenced, and the
157.29county auditor shall certify the net tax capacity thereof as most recently certified by the
157.30commissioner of revenue and add it to the original net tax capacity of the tax increment
157.31financing district. The county auditor must enforce the provisions of this subdivision. The
157.32authority must submit to the county auditor evidence that the required activity has taken
157.33place for each parcel in the district. The evidence for a parcel must be submitted by
157.34February 1 of the fifth year following the year in which the parcel was certified as included
157.35in the district. For purposes of this subdivision, qualified improvements of a street are
158.1limited to (1) construction or opening of a new street, (2) relocation of a street, and (3)
158.2substantial reconstruction or rebuilding of an existing street.
158.3    (b) For districts which were certified on or after January 1, 2005, and before April
158.420, 2009, the four-year period under paragraph (a) is increased to six years deemed to end
158.5on December 31, 2016.
158.6EFFECTIVE DATE.This section is effective the day following final enactment
158.7and applies to districts certified on or after January 1, 2006, and before April 20, 2009.

158.8    Sec. 6. Minnesota Statutes 2012, section 469.177, is amended by adding a subdivision
158.9to read:
158.10    Subd. 1d. Original net tax capacity adjustment; homestead market value
158.11exclusion. (a) Upon approval by the municipality, by resolution, the authority may elect
158.12to reduce the net tax capacity of a qualified district by the amount of the tax capacity
158.13attributable to the market value exclusion under section 273.13, subdivision 35. The
158.14amount of the reduction may not reduce the original net tax capacity below zero.
158.15    (b) For purposes of this subdivision, a qualified district means a tax increment
158.16financing district that satisfies the following conditions:
158.17    (1) for taxes payable in 2011, the authority received a homestead market value credit
158.18reimbursement under section 273.1384 for the district of $10,000 or more;
158.19    (2) for taxes payable in 2013, the reduction in captured tax capacity resulting from
158.20the market value exclusion for the district was equal to or greater than 1.75 percent of the
158.21district's captured tax capacity; and
158.22    (3) either (i) the authority is permitted to expend increments on activities under the
158.23provisions of section 469.1763, subdivision 3, or an equivalent provision of special law
158.24on July 1, 2013, or (ii) the district's tax increments received for taxes payable in 2012
158.25exceeded the amount of debt service payments due during calendar year 2012 on bonds
158.26issued under section 469.178 to which the district's increments are pledged.
158.27The calculation of the amount under clause (2) must reflect any adjustments to original
158.28net tax capacity made under subdivision 1, paragraphs (d) and (e), for the homestead
158.29market value exclusion.
158.30    (c) The authority must notify the county auditor of its election under this section no
158.31later than July 1, 2014. Notifications made by July 1, 2013, are effective beginning for
158.32taxes payable in 2014, and notifications made after July 1, 2013, are effective beginning
158.33for taxes payable in 2015.
159.1EFFECTIVE DATE.This section is effective the day following final enactment
159.2and applies to all tax increment financing districts regardless of when the request for
159.3certification was made.

159.4    Sec. 7. Minnesota Statutes 2012, section 473F.08, is amended by adding a subdivision
159.5to read:
159.6    Subd. 3c. Mall of America. (a) When computing the net tax capacity under section
159.7473F.05, the Hennepin County auditor shall exclude the captured tax capacity of Tax
159.8Increment Financing Districts No. 1-C and No. 1-G in the city of Bloomington.
159.9    (b) Notwithstanding the provisions of subdivision 2, paragraph (a), the
159.10commercial-industrial contribution percentage for the city of Bloomington is the
159.11contribution net tax capacity divided by the total net tax capacity of commercial-industrial
159.12property in the city, excluding any commercial-industrial property that is captured tax
159.13capacity of Tax Increment Financing Districts No. 1-C and No. 1-G.
159.14    (c) The property taxes to be paid on commercial-industrial tax capacity that is
159.15included in the captured tax capacity of Tax Increment Financing Districts No. 1-C and
159.16No. 1-G in the city of Bloomington must be determined as described in subdivision 6,
159.17except that the portion of the tax that is based on the areawide tax rate is to be treated
159.18as tax increment under section 469.176.
159.19    (d) The provisions of this subdivision take effect only if the clerk of the city of
159.20Bloomington certifies to the Hennepin County auditor that the city has entered into a
159.21binding written agreement with the Metropolitan Council to repair and restore, or to
159.22replace, the old Cedar Avenue bridge for use by bicycle commuters and recreational users.
159.23    (e) This subdivision expires on the earliest of the following dates:
159.24    (1) when the tax increment financing districts have been decertified in 2024 or 2035,
159.25as provided by section 11, subdivision 2 or 4; or
159.26    (2) on January 1, 2014, if the city clerk fails to make the certification provided in
159.27paragraph (d) or if the city fails to file its local approval of section 18 with the secretary
159.28of state by December 31, 2013.
159.29EFFECTIVE DATE.This section is effective beginning for property taxes payable
159.30in 2014.

159.31    Sec. 8. Laws 2008, chapter 366, article 5, section 26, is amended to read:
159.32    Sec. 26. BLOOMINGTON TAX INCREMENT FINANCING; FIVE-YEAR
159.33RULE.
160.1    (a) The requirements of Minnesota Statutes, section 469.1763, subdivision 3, that
160.2activities must be undertaken within a five-year period from the date of certification of
160.3a tax increment financing district, are increased to a ten-year 15-year period for the
160.4Port Authority of the City of Bloomington's Tax Increment Financing District No. 1-I,
160.5Bloomington Central Station.
160.6    (b) Notwithstanding the provisions of Minnesota Statutes, section 469.176, or any
160.7other law to the contrary, the city of Bloomington and its port authority may extend the
160.8duration limits of the district for a period through December 31, 2039.
160.9    (c) Effective for taxes payable in 2014, tax increment for the district must be
160.10computed using the current local tax rate, notwithstanding the provisions of Minnesota
160.11Statutes, section 469.177, subdivision 1a.
160.12EFFECTIVE DATE.Paragraphs (a) and (c) are effective upon compliance by
160.13the governing body of the city of Bloomington with the requirements of Minnesota
160.14Statutes, section 645.021, subdivision 3. Paragraph (b) is effective upon compliance by
160.15the governing bodies of the city of Bloomington, Hennepin County, and Independent
160.16School District No. 271 with the requirements of Minnesota Statutes, sections 469.1782,
160.17subdivision 2, and 645.021, subdivision 3.

160.18    Sec. 9. Laws 2008, chapter 366, article 5, section 34, as amended by Laws 2009,
160.19chapter 88, article 5, section 11, is amended to read:
160.20    Sec. 34. CITY OF OAKDALE; ORIGINAL TAX CAPACITY PARCELS
160.21DEEMED OCCUPIED.
160.22    (a) The provisions of this section apply to redevelopment tax increment financing
160.23districts created by the Housing and Redevelopment Authority in and for the city of
160.24Oakdale in the areas comprised of the parcels with the following parcel identification
160.25numbers: (1) 3102921320053; 3102921320054; 3102921320055; 3102921320056;
160.263102921320057; 3102921320058; 3102921320062; 3102921320063; 3102921320059;
160.273102921320060; 3102921320061; 3102921330005; and 3102921330004; and (2)
160.282902921330001 and 2902921330005.
160.29    (b) For a district subject to this section, the Housing and Redevelopment Authority
160.30may, when requesting certification of the original tax capacity of the district under
160.31Minnesota Statutes, section 469.177, elect to have the original tax capacity of the district
160.32be certified as the tax capacity of the land.
160.33    (c) The authority to request certification of a district under this section expires on
160.34July 1, 2013.
161.1    (a) Parcel numbers 3102921320054, 3102921320055, 3102921320056,
161.23102921320057, 3102921320061, and 3102921330004 are deemed to meet the
161.3requirements of Minnesota Statutes, section 469.174, subdivision 10, paragraph (d),
161.4notwithstanding any contrary provisions of that paragraph, if the following conditions
161.5are met:
161.6    (1) a building located on any part of each of the specified parcels was demolished after
161.7the Housing and Redevelopment Authority for the city of Oakdale adopted a resolution
161.8under Minnesota Statutes, section 469.174, subdivision 10, paragraph (d), clause (3);
161.9    (2) the building was removed either by the authority, by a developer under a
161.10development agreement with the Housing and Redevelopment Authority for the city of
161.11Oakdale, or by the owner of the property without entering into a development agreement
161.12with the Housing and Redevelopment Authority for the city of Oakdale; and
161.13    (3) the request for certification of the parcel as part of a district is filed with the
161.14county auditor by December 31, 2017.
161.15    (b) The provisions of this section allow an election by the Housing and
161.16Redevelopment Authority for the city of Oakdale for the parcels deemed occupied under
161.17paragraph (a), notwithstanding the provisions of Minnesota Statutes, sections 469.174,
161.18subdivision 10, paragraph (d), and 469.177, subdivision 1, paragraph (f).
161.19    (c) The city may elect, in the tax increment financing plan, to collect increment from
161.20a redevelopment district created under the provisions of this section for an additional ten
161.21years beyond the limit in Minnesota Statutes, section 469.176, subdivision 1b.
161.22EFFECTIVE DATE.This section is effective upon compliance by the governing
161.23body of the city of Oakdale with the requirements of Minnesota Statutes, section 645.021,
161.24subdivision 3, except that the provisions of paragraph (c) are effective only upon
161.25compliance with Minnesota Statutes, section 469.1782, subdivision 2, by Ramsey County
161.26and Independent School District No. 622.

161.27    Sec. 10. Laws 2010, chapter 216, section 55, is amended to read:
161.28    Sec. 55. OAKDALE; TAX INCREMENT FINANCING DISTRICT.
161.29    Subdivision 1. Duration of district. Notwithstanding the provisions of Minnesota
161.30Statutes, section 469.176, subdivision 1b, the city of Oakdale may collect tax increments
161.31from Tax Increment Financing District No. 6 (Bergen Plaza) through December 31, 2024
161.32 2040, subject to the conditions described in subdivision 2.
161.33    Subd. 2. Conditions for extension. (a) Subdivision 1 applies only if the following
161.34conditions are met:
162.1    (1) by July 1, 2011, the city of Oakdale has entered into a development agreement
162.2with a private developer for development or redevelopment of all or a substantial part of
162.3the area parcels described in clause (2); and
162.4    (2) by November 1, 2011, the city of Oakdale or a private developer commences
162.5construction of streets, traffic improvements, water, sewer, or related infrastructure that
162.6serves one or both of the parcels with the following parcel identification numbers:
162.72902921330001 and 2902921330005. For the purposes of this section, construction
162.8commences upon grading or other visible improvements that are part of the subject
162.9infrastructure.
162.10    (b) All tax increments received by the city of Oakdale under subdivision 1 after
162.11December 31, 2016, must be used only to pay costs that are both:
162.12    (1) related to redevelopment of the parcels specified in this subdivision or
162.13parcel numbers 3102921320053, 3102921320054, 3102921320055, 3102921320056,
162.143102921320057, 3102921320058, 3102921320059, 3102921320060, 3102921320061,
162.153102921320062, 3102921320063, 3102921330004, and 3102921330005, including,
162.16without limitation, any of the infrastructure referenced in this subdivision that serves
162.17any of the referenced parcels; and
162.18    (2) otherwise eligible under law to be paid with increments from the specified tax
162.19increment financing district, except the authority under this clause does not apply to
162.20increments collected after the conclusion of the duration limit under general law.
162.21EFFECTIVE DATE.This section is effective upon compliance by the governing
162.22body of the city of Oakdale with the requirements of Minnesota Statutes, section 645.021,
162.23subdivision 3, except that the amendments to subdivision 1 are effective only upon
162.24compliance with Minnesota Statutes, section 469.1782, subdivision 2, by Ramsey County
162.25and Independent School District No. 622.

162.26    Sec. 11. CITY OF BLOOMINGTON; TAX INCREMENT FINANCING.
162.27    Subdivision 1. Addition of property to Tax Increment Financing District
162.28No. 1-G. (a) Notwithstanding the provisions of Minnesota Statutes, section 469.175,
162.29subdivision 4, or any other law to the contrary, the governing bodies of the Port Authority
162.30of the city of Bloomington and the city of Bloomington may elect to eliminate the real
162.31property north of the existing building line on Lot 1, Block 1, Mall of America 7th
162.32Addition, exclusive of Lots 2 and 3 from Tax Increment Financing District No. 1-C
162.33within Industrial Development District No. 1 Airport South in the city of Bloomington,
162.34Minnesota, and expand the boundaries of Tax Increment Financing District No. 1-G
162.35to include that property.
163.1    (b) If the city elects to transfer parcels under this authority, the county auditor shall
163.2transfer the original tax capacity of the affected parcels from Tax Increment Financing
163.3District No. 1-C to Tax Increment Financing District No. 1-G.
163.4    Subd. 2. Authority to extend duration limit; computation of increment. (a)
163.5Notwithstanding Minnesota Statutes, section 469.176, or Laws 1996, chapter 464, article
163.61, section 8, or any other law to the contrary, the city of Bloomington and its port authority
163.7may extend the duration limits of Tax Increment Financing Districts No. 1-C and No.
163.81-G through December 31, 2034.
163.9    (b) Effective for property taxes payable in 2017 through 2034, the captured tax
163.10capacity of Tax Increment Financing District No. 1-C must be included in computing the
163.11tax rates of each local taxing district and the tax increment equals only the amount of tax
163.12computed under Minnesota Statutes, section 473F.08, subdivision 3c, paragraph (c).
163.13    (c) Effective for property taxes payable in 2019 through 2034, the captured tax
163.14capacity of Tax Increment Financing District No. 1-G must be included in computing the
163.15tax rates of each local taxing district and the tax increment for the district equals only
163.16the amount of tax computed under Minnesota Statutes, section 473F.08, subdivision
163.173c, paragraph (c).
163.18    Subd. 3. Treatment of increment. Increments received under the provisions
163.19of subdivision 2, paragraph (b) or (c), and Minnesota Statutes, section 473F.08,
163.20subdivision 3c, are deemed to be tax increments of Tax Increment Financing District No.
163.211-G, notwithstanding any law to the contrary, and without regard to whether they are
163.22attributable to captured tax capacity of Tax Increment Financing District No. 1-C.
163.23    Subd. 4. Condition. The authority under this section expires and Tax Increment
163.24Financing Districts No. 1-C and No. 1-G must be decertified for taxes payable in 2024
163.25and thereafter, if the total estimated market value of improvements for parcels located in
163.26Tax Increment Financing District No. 1-G, as modified, do not exceed $100,000,000
163.27by taxes payable in 2023.
163.28EFFECTIVE DATE.This section is effective upon compliance of the governing
163.29body of the city of Bloomington with the requirements of Minnesota Statutes, section
163.30645.021, subdivision 3, but only if the city enters into a binding written agreement with
163.31the Metropolitan Council to repair and restore, or to replace, the old Cedar Avenue bridge
163.32for use by bicycle commuters and recreational users. This section is effective without
163.33approval of the county and school district under Minnesota Statutes, section 469.1782,
163.34subdivision 2. The legislature finds that the county and school district are not "affected
163.35local government units" within the meaning of Minnesota Statutes, section 469.1782,
163.36because the provision allowing extended collection of increment by the tax increment
164.1financing districts does not affect their tax bases and tax rates dissimilarly to other counties
164.2and school districts in the metropolitan area.

164.3    Sec. 12. ST. CLOUD; TAX INCREMENT FINANCING.
164.4    The request for certification of Tax Increment Financing District No. 2, commonly
164.5referred to as the Norwest District, in the city of St. Cloud is deemed to have been made
164.6on or after August 1, 1979, and before July 1, 1982. Revenues derived from tax increment
164.7for that district must be treated for purposes of any law as revenue of a tax increment
164.8financing district for which the request for certification was made during that time period.
164.9EFFECTIVE DATE.This section is effective upon approval by the governing
164.10body of the city of St. Cloud and compliance with Minnesota Statutes, section 645.021,
164.11subdivision 3.

164.12    Sec. 13. DAKOTA COUNTY COMMUNITY DEVELOPMENT AGENCY; TAX
164.13INCREMENT FINANCING DISTRICT.
164.14    Subdivision 1. Authorization. Notwithstanding the provisions of any other law,
164.15the Dakota County Community Development Agency may establish a redevelopment tax
164.16increment financing district comprised of the properties that were:
164.17    (1) included in the CDA 10 Robert and South Street district in the city of West
164.18St. Paul; and
164.19    (2) not decertified before July 1, 2012.
164.20The district created under this section terminates no later than December 31, 2018.
164.21    Subd. 2. Special rules. The requirements for qualifying a redevelopment district
164.22under Minnesota Statutes, section 469.174, subdivision 10, do not apply to parcels located
164.23within the district. Minnesota Statutes, section 469.176, subdivision 4j, do not apply to the
164.24district. The original tax capacity of the district is $93,239.
164.25    Subd. 3. Authorized expenditures. Tax increment from the district may be
164.26expended to pay for any eligible activities authorized by Minnesota Statutes, chapter 469,
164.27within the redevelopment area that includes the district, provided that the boundaries of
164.28the redevelopment area may not be expanded to add new area after April 1, 2013. All
164.29expenditures for eligible activities are deemed to be activities within the district under
164.30Minnesota Statutes, section 469.1763, subdivisions 2 to 4.
164.31    Subd. 4. Adjusted net tax capacity. The captured tax capacity of the district must
164.32be included in the adjusted net tax capacity of the city, county, and school district for the
164.33purposes of determining local government aid, education aid, and county program aid.
165.1The county auditor shall report to the commissioner of revenue the amount of the captured
165.2tax capacity for the district at the time the assessment abstracts are filed.
165.3EFFECTIVE DATE.This section is effective upon compliance by the governing
165.4body of the Dakota County Community Development Agency with the requirements of
165.5Minnesota Statutes, section 645.021, subdivision 3.

165.6    Sec. 14. CITY OF GLENCOE; TAX INCREMENT FINANCING DISTRICT
165.7EXTENSION.
165.8    Subdivision 1. Duration of district. Notwithstanding the provisions of Minnesota
165.9Statutes, section 469.176, subdivision 1b, paragraph (a), clause (4), or any other law to the
165.10contrary, the city of Glencoe may collect tax increments from Tax Increment Financing
165.11District No. 4 (McLeod County District No. 007) through December 31, 2023, subject to
165.12the conditions in subdivision 2.
165.13    Subd. 2. Exclusive use of revenues. (a) All tax increments derived from Tax
165.14Increment Financing District No. 4 (McLeod County District No. 007) that are collected
165.15after December 31, 2013, must be used only to pay debt service on or to defease bonds that
165.16were outstanding on January 1, 2013 and that were issued to finance improvements serving:
165.17    (1) Tax Increment Financing District No. 14 (McLeod County District No. 033)
165.18(Downtown);
165.19    (2) Tax Increment Financing District No. 15 (McLeod County District No. 035)
165.20(Industrial Park); and
165.21    (3) benefited properties as further described in proceedings related to the city's series
165.222007A bonds, dated September 1, 2007, and any bonds issued to refund those bonds.
165.23    (b) Increments may also be used to pay debt service on or to defease bonds issued to
165.24refund the bonds described in paragraph (a), if the refunding bonds do not increase the
165.25present value of debt service due on the refunded bonds when the refunding is closed.
165.26    (c) When the bonds described in paragraphs (a) and (b) have been paid or defeased,
165.27the district must be decertified and any remaining increment returned to the city, county,
165.28and school district as provided in Minnesota Statutes, section 469.176, subdivision 2,
165.29paragraph (c), clause (4).
165.30EFFECTIVE DATE.This section is effective upon compliance by the governing
165.31bodies of the city of Glencoe, McLeod County, and Independent School District No.
165.322859 with the requirements of Minnesota Statutes, sections 469.1782, subdivision 2, and
165.33645.021, subdivision 3.

166.1    Sec. 15. CITY OF ELY; TAX INCREMENT FINANCING.
166.2    Subdivision 1. Extension of district. Notwithstanding Minnesota Statutes, section
166.3469.176, subdivision 1b, or any other law to the contrary, the city of Ely may collect
166.4tax increment from Tax Increment Financing District No. 1 through December 31,
166.52021. Increments from the district may only be used to pay binding obligations and
166.6administrative expenses.
166.7    Subd. 2. Binding obligations. For purposes of this section, "binding obligations"
166.8means the binding contractual or debt obligation of Tax Increment Financing District
166.9No. 1 entered into before January 1, 2013.
166.10    Subd. 3. Expenditures outside district. Notwithstanding Minnesota Statutes,
166.11section 469.1763, subdivision 2, the governing body of the city of Ely may elect to
166.12transfer revenues derived from increments from its Tax Increment Financing District No.
166.133 to the tax increment account established under Minnesota Statutes, section 469.177,
166.14subdivision 5, for Tax Increment Financing District No. 1. The amount that may be
166.15transferred is limited to the lesser of:
166.16    (1) $168,000; or
166.17    (2) the total amount due on binding obligations and outstanding on that date, less the
166.18amount of increment collected by Tax Increment Financing District No. 1 after December
166.1931, 2012, and administrative expenses of Tax Increment Financing District No. 1 incurred
166.20after December 31, 2012.
166.21EFFECTIVE DATE.This section is effective upon approval by the governing
166.22bodies of the city of Ely, St. Louis County, and Independent School District No. 696 with
166.23the requirements of Minnesota Statutes, sections 469.1782, subdivision 2, and 645.021,
166.24subdivision 3.

166.25    Sec. 16. CITY OF MAPLEWOOD; TAX INCREMENT FINANCING
166.26DISTRICT; SPECIAL RULES.
166.27    (a) If the city of Maplewood elects, upon the adoption of a tax increment financing
166.28plan for a district, the rules under this section apply to one or more redevelopment
166.29tax increment financing districts established by the city or the economic development
166.30authority of the city. The area within which the redevelopment tax increment districts may
166.31be created is parcel 362922240002 (the "parcel") or any replatted parcels constituting a
166.32part of the parcel and the adjacent rights-of-way. For purposes of this section, the parcel is
166.33the "3M Renovation and Retention Project Area" or "project area."
167.1    (b) The requirements for qualifying redevelopment tax increment districts under
167.2Minnesota Statutes, section 469.174, subdivision 10, do not apply to the parcel, which is
167.3deemed eligible for inclusion in a redevelopment tax increment district.
167.4    (c) The 90 percent rule under Minnesota Statutes, section 469.176, subdivision
167.54j, does not apply to the parcel.
167.6    (d) The expenditures outside district rule under Minnesota Statutes, section
167.7469.1763, subdivision 2, does not apply; the five-year rule under Minnesota Statutes,
167.8section 469.1763, subdivision 3, is extended to ten years; and expenditures must only
167.9be made within the project area.
167.10    (e) If, after one year from the date of certification of the original net tax capacity
167.11of the tax increment district, no demolition, rehabilitation, or renovation of property has
167.12been commenced on a parcel located within the tax increment district, no additional tax
167.13increment may be taken from that parcel, and the original net tax capacity of the parcel
167.14shall be excluded from the original net tax capacity of the tax increment district. If 3M
167.15Company subsequently commences demolition, rehabilitation, or renovation, the authority
167.16shall certify to the county auditor that the activity has commenced, and the county auditor
167.17shall certify the net tax capacity thereof as most recently certified by the commissioner
167.18of revenue and add it to the original net tax capacity of the tax increment district. The
167.19authority must submit to the county auditor evidence that the required activity has taken
167.20place for each parcel in the district.
167.21    (f) The authority to approve a tax increment financing plan and to establish a tax
167.22increment financing district under this section expires December 31, 2018.
167.23EFFECTIVE DATE.This section is effective upon approval by the governing
167.24body of the city of Maplewood and upon compliance with Minnesota Statutes, section
167.25645.021, subdivision 3.

167.26    Sec. 17. CITY OF MINNEAPOLIS; STREETCAR FINANCING.
167.27    Subdivision 1. Definitions. (a) For purposes of this section, the following terms
167.28have the meanings given them.
167.29    (b) "City" means the city of Minneapolis.
167.30    (c) "County" means Hennepin County.
167.31    (d) "District" means the areas certified by the city under subdivision 2 for collection
167.32of value capture taxes.
167.33    (e) "Project area" means the area including one city block on either side of a streetcar
167.34line designated by the city to serve the downtown and adjacent neighborhoods of the city.
168.1    Subd. 2. Authority to establish district. (a) The governing body of the city may, by
168.2resolution, establish a value capture district consisting of some or all of the taxable parcels
168.3located within one or more of the following areas of the city, as described in the resolution:
168.4    (1) the area bounded by Nicollet Avenue on the west, 16th Street East on the south,
168.5First Avenue South on the east, and 14th Street East on the north;
168.6    (2) the area bounded by Spruce Place on the west, 14th Street West on the south,
168.7LaSalle Avenue on the east, and Grant Street West on the north;
168.8    (3) the area bounded by Nicollet Avenue or Mall on the west, Fifth Street South on
168.9the south, Marquette Avenue on the east, and Fourth Street South on the north; and
168.10    (4) the area bounded by First Avenue North on the west, Washington Avenue on the
168.11south, Hennepin Avenue on the east, and Second Street North on the north.
168.12    (b) The city may establish the district and the project area only after holding a public
168.13hearing on its proposed creation after publishing notice of the hearing and the proposal at
168.14least once not less than ten days nor more than 30 days before the date of the hearing.
168.15    Subd. 3. Calculation of value capture district; administrative provisions. (a) If
168.16the city establishes a value capture district under subdivision 2, the city shall request the
168.17county auditor to certify the district for calculation of the district's tax revenues.
168.18    (b) For purposes of calculating the tax revenues of the district, the county auditor
168.19shall treat the district as if it were a request for certification of a tax increment financing
168.20district under the provisions of Minnesota Statutes, section 469.177, subdivision 1,
168.21and shall calculate the tax revenues of the district for each year of its duration under
168.22subdivision 4 as equaling the amount of tax increment that would be computed by
168.23applying the provisions of Minnesota Statutes, section 469.177, subdivisions 1, 2, and
168.243, to determine captured tax capacity and multiplying by the current tax rate, excluding
168.25the state general tax rate. The city shall provide the county auditor with the necessary
168.26information to certify the district, including the option for calculating revenues derived
168.27from the areawide tax rate under Minnesota Statutes, chapter 473F.
168.28    (c) The county auditor shall pay to the city at the same times provided for settlement
168.29of taxes and payment of tax increments the tax revenues of the district. The city must use
168.30the tax revenues as provided under subdivision 4.
168.31    Subd. 4. Permitted uses of district tax revenues. (a) In addition to paying for
168.32reasonable administrative costs of the district, the city may spend tax revenues of the
168.33district for property acquisition, improvements, and equipment to be used for operations
168.34within the project area, along with related costs, for:
168.35    (1) planning, design, and engineering services related to the construction of the
168.36streetcar line;
169.1    (2) acquiring property for, constructing, and installing a streetcar line;
169.2    (3) acquiring and maintaining equipment and rolling stock and related facilities, such
169.3as maintenance facilities, which need not be located in the project area;
169.4    (4) acquiring, constructing, or improving transit stations; and
169.5    (5) acquiring or improving public space, including the construction and installation
169.6of improvements to streets and sidewalks, decorative lighting and surfaces, and plantings
169.7related to the streetcar line.
169.8    (b) The city may issue bonds or other obligations under Minnesota Statutes, chapter
169.9475, without an election, to fund acquisition or improvement of property of a capital
169.10nature authorized by this section, including any costs of issuance. The city may also issue
169.11bonds or other obligations to refund those bonds or obligations. Payment of principal
169.12and interest on the bonds or other obligations issued under this paragraph is a permitted
169.13use of the district's tax revenues.
169.14    (c) Tax revenues of the district may not be used for the operation of the streetcar line.
169.15    Subd. 5. Duration of the district. A district established under this section is limited
169.16to the lesser of (1) 25 years of tax revenues, or (2) the time necessary to collect tax revenues
169.17equal to the amount of the capital costs permitted under subdivision 4 or the amount needed
169.18to pay or defease bonds or other obligations issued under subdivision 4, whichever is later.
169.19EFFECTIVE DATE.This section is effective the day following final enactment.

169.20    Sec. 18. CITY OF BLOOMINGTON; OLD CEDAR AVENUE BRIDGE.
169.21    (a) Notwithstanding any law to the contrary, the city of Bloomington shall transfer
169.22from the tax increment financing accounts for its Tax Increment Financing District No.
169.231-C and Tax Increment Financing District No. 1-G an amount equal to the tax increment
169.24for each district that is computed under the provisions of Minnesota Statutes, section
169.25473F.08, subdivision 3c, for taxes payable in 2014 to an account or fund established for
169.26the repair, restoration, or replacement of the Old Cedar Avenue bridge for use by bicycle
169.27commuters and recreational users. The city is authorized to and must use the transferred
169.28funds to complete the repair, renovation, or replacement of the bridge.
169.29    (b) No signs, plaques, or markers acknowledging or crediting donations for,
169.30sponsorships of, or naming rights may be posted on or in the vicinity of the Old Cedar
169.31Avenue bridge.
169.32EFFECTIVE DATE.This section is effective upon compliance by the city of
169.33Bloomington with the requirements of Minnesota Statutes, section 645.021, subdivision 3.

170.1    Sec. 19. LABOR PEACE AGREEMENTS.
170.2(a) The state recognizes the need to protect public investments made in certain
170.3capital projects which may involve hospitality operations such as hotels. The efficient and
170.4uninterrupted operation of these hospitality services, and the associated public investment,
170.5may be threatened by labor disputes. The state finds that labor peace agreements in which
170.6labor unions voluntarily agree not to engage in picketing, boycotts, work stoppages, or
170.7any other economic interference at a hospitality business are the most effective method of
170.8ensuring continuous operation of hospitality businesses receiving state or local government
170.9investment. It is the policy of the state that labor peace agreements are required as a
170.10prerequisite for receiving state or local government participation on any qualifying project
170.11in which the state or a local government has a proprietary interest, or acts as a market
170.12participant, if the project will result in the employment of hospitality workers.
170.13(b) For the purposes of this section:
170.14(1) the state or a local government has a proprietary interest in a project where
170.15it finances the project in whole or in part by any of the following: providing a grant,
170.16providing a loan, guaranteeing any payment under any loan, lease, or other obligation,
170.17providing tax increment financing, contributing revenue on general obligation bonds, or
170.18providing a tax abatement, reduction, deferral, or credit;
170.19(2) the state or a local government acts as a market participant in a project when it is
170.20the owner of the project, is an equity investor in the project, or donates, sells, or leases real
170.21property, personal property, or infrastructure in support of the project;
170.22(3) "qualifying project" means a project that is located in a county that contains a
170.23city of the first class as defined under Minnesota Statutes, section 410.01, and includes
170.24the construction or development of a hotel; a food and beverage operation that is integral
170.25to a hotel, a major league or minor league sports facility, a convention center, or a civic
170.26center; or a cultural venue with catering or cafeteria facilities;
170.27(4) "hospitality workers" means all full-time or regular part-time employees of
170.28hotels and their integral food and beverage operations as well as all full-time or regular
170.29part-time employees providing food and beverage, concession, catering, cafeteria, or
170.30merchandise services at sports facilities, convention centers, civic centers, or cultural
170.31venues, excluding supervisors, managers, and guards;
170.32(5) "employer of hospitality workers" means an employer of hospitality workers
170.33who will be employed as a result of a qualifying project, and includes a developer of a
170.34state or local government-owned facility that is all or part of a qualifying project and a
170.35developer of a facility benefiting from state or local government financial participation in
170.36a qualifying project;
171.1(6) "labor peace agreement" means a valid contract that sets forth agreements by
171.2and between an employer of hospitality workers and any labor organization seeking to
171.3represent hospitality workers on the process the employer and union will follow as the
171.4hospitality workers who will be employed as a result of the project choose whether or not
171.5to organize as a unit for collective bargaining with the employer; and
171.6(7) "local government" includes counties, cities, towns, and any development
171.7authority established under Minnesota Statutes, chapter 469.
171.8(c) Any employer of hospitality workers on a qualifying project must have
171.9negotiated and executed a labor peace agreement with any interested labor organization
171.10prior to, and as a condition precedent of, the approval of financial assistance that causes
171.11the state or local government to hold a proprietary interest in the project. When the state or
171.12a local government acts as a market participant in the project, any employer of hospitality
171.13workers must have a signed labor peace agreement with any interested labor organization
171.14prior to, and as a condition precedent to, its contract with the state or local government.
171.15(d) To fulfill the condition precedent to state or local government participation, a
171.16labor peace agreement must contain:
171.17(1) a provision prohibiting the labor organization and its members from engaging
171.18in any picketing, work stoppages, boycotts, or any other economic interference with the
171.19employer's hospitality operations on the qualifying project for the duration of the state or
171.20local government's ongoing financial interest in the qualifying project or for five years,
171.21whichever is greater;
171.22(2) a provision requiring that during the duration of the agreement all disputes
171.23relating to employment conditions or the negotiation thereof shall be submitted to final
171.24and binding arbitration; and
171.25(3) a provision requiring the employer of hospitality workers to incorporate the
171.26terms of the labor peace agreement in any contract, subcontract, lease, sublease, operating
171.27agreement, concessionaire agreement, franchise agreement, or other agreement or
171.28instrument giving a right to any other employer of hospitality workers to own or operate
171.29the project or activities within the project.
171.30(e) If an employer of hospitality workers has valid collective bargaining agreements
171.31with recognized unions that cover, or will cover, the hospitality workers that will be
171.32employed as a result of the qualifying project, those agreements satisfy the requirements
171.33of this section.
171.34(f) This section shall not apply to projects that receive less than $1,000,000 of the
171.35total cost of the project from state and local government sources.
172.1(g) Nothing in this section requires an employer to recognize a particular labor
172.2organization. This section is not intended to enact or express any generally applicable
172.3policy regarding labor management relations or to regulate those relations in any way.
172.4This section is not intended to favor any particular outcome in the determination of
172.5employee preference regarding union representation.
172.6(h) Nothing in this section denies any financial assistance approved prior to August
172.71, 2013.

172.8ARTICLE 10
172.9DESTINATION MEDICAL CENTER

172.10    Section 1. Minnesota Statutes 2012, section 297A.71, is amended by adding a
172.11subdivision to read:
172.12    Subd. 48. Construction materials, public infrastructure related to the
172.13Destination medical center. Materials and supplies used in, and equipment incorporated
172.14into, the construction and improvement of publicly owned buildings and infrastructure
172.15included in the development plan adopted under section 469.42, and financed with public
172.16funds, are exempt.
172.17EFFECTIVE DATE.This section is effective for sales and purchases made after
172.18June 30, 2015.

172.19    Sec. 2. [469.40] DEFINITIONS.
172.20    Subdivision 1. Application. For the purposes of section 469.40 to 469.46, the terms
172.21defined in this section have the meanings given them.
172.22    Subd. 2. City. "City" means the city of Rochester.
172.23    Subd. 3. County. "County" means Olmsted County.
172.24    Subd. 4. Destination Medical Center Corporation, corporation, DMCC.
172.25"Destination Medical Center Corporation," "corporation," or "DMCC" means the
172.26nonprofit corporation created by the city as provided in section 469.41, and organized
172.27under chapter 317A.
172.28    Subd. 5. Destination medical center development district. "Destination medical
172.29center development district" or "development district" means a geographic area in the
172.30city identified in the adopted DMCC development plan in which public infrastructure
172.31projects are implemented.
172.32    Subd. 6. Development plan. "Development plan" means the plan adopted by
172.33the DMCC under section 469.42.
173.1    Subd. 7. Medical business entity. "Medical business entity" means a medical
173.2business entity with its principal place of business in the city that, as of the effective date
173.3of this section, together with all business entities of which it is the sole member or sole
173.4shareholder, collectively employs more than 30,000 persons in the state.
173.5    Subd. 8. Public infrastructure project. (a) "Public infrastructure project" means
173.6a project financed in part or whole with public money in order to support the medical
173.7business entity's development plans, as identified in the adopted DMCC development
173.8plan. A project may be to:
173.9(1) acquire real property and other assets associated with the real property;
173.10(2) demolish, repair, or rehabilitate buildings;
173.11(3) remediate land and buildings as required to prepare the property for acquisition
173.12or development;
173.13(4) install, construct, or reconstruct elements of public infrastructure required to
173.14support the overall development of the destination medical center development district,
173.15including, but not limited to, streets, roadways, utilities systems and related facilities,
173.16utility relocations and replacements, network and communication systems, streetscape
173.17improvements, drainage systems, sewer and water systems, subgrade structures and
173.18associated improvements, landscaping, façade construction and restoration, wayfinding
173.19and signage, and other components of community infrastructure;
173.20(5) acquire, construct or reconstruct, and equip parking facilities and other facilities
173.21to encourage intermodal transportation and public transit;
173.22(6) install, construct or reconstruct, furnish, and equip parks, cultural, and
173.23recreational facilities, facilities to promote tourism and hospitality, conferencing and
173.24conventions, broadcast and related multimedia infrastructure;
173.25(7) make related site improvements, including, without limitation, excavation, earth
173.26retention, soil stabilization and correction, site improvements to support the destination
173.27medical center development district; and
173.28(8) prepare land for private development and to sell or lease land.
173.29    (b) A public infrastructure project is not a business subsidy under section 116J.993.

173.30    Sec. 3. [469.41] DESTINATION MEDICAL CENTER CORPORATION
173.31ESTABLISHED.
173.32    Subdivision 1. DMCC created. The city shall establish a destination medical
173.33center corporation as a nonprofit corporation under chapter 317A to provide the city with
173.34expertise in preparing and implementing the development plan to establish the city as a
174.1destination medical center. Except as provided in this article, the nonprofit corporation
174.2is not subject to laws governing the city.
174.3    Subd. 2. Membership. (a) The corporation's governing board consists of nine
174.4voting members, as follows:
174.5    (1) the mayor of the city, or the mayor's designee, subject to approval by the city
174.6council;
174.7    (2) a member of the city council, selected by the city council;
174.8    (3) a member of the county board, selected by the county board;
174.9    (4) two representatives of the medical business entity defined in section 469.40,
174.10subdivision 7, appointed by the city council from among five candidates nominated by the
174.11medical business entity;
174.12(5) one representative of labor, appointed by the city council from among three
174.13candidates nominated by the Southeast Minnesota Area Labor Council;
174.14(6) one representative of the city business community other than the medical
174.15business entity, appointed by the city council from among three candidates nominated by
174.16the Rochester Area Chamber of Commerce; and
174.17    (7) two members, appointed by the governor.
174.18    (b) Appointing authorities must make their appointments as soon as practicable after
174.19the effective date of this section.
174.20    Subd. 3. Bylaws. The corporation shall adopt bylaws governing the terms of
174.21members, filling vacancies, removal of members, selection of officers and other personnel
174.22and contractors, and other matters of organization and operation of the corporation.
174.23    Subd. 4. Open meeting law; data practices. Meetings of the corporation and any
174.24committee or subcommittee of the corporation are subject to the open meeting law in
174.25chapter 13D. The corporation is a government entity for purposes of chapter 13.
174.26    Subd. 5. Conflicts of interest. Except for the members appointed under subdivision
174.272, paragraph (a), clause (4), to represent the medical business entity, within one year
174.28prior to or at any time during a member's term of service on the corporation's governing
174.29board, a member must not be employed by, be a member of the board of directors of, or
174.30otherwise be a representative of the medical business entity. No member may serve as a
174.31lobbyist, as defined under section 10A.01, subdivision 21.
174.32    Subd. 6. Powers; gifts. The corporation may exercise any other powers that are
174.33granted by its articles of incorporation and bylaws to the extent that those powers are not
174.34inconsistent with the provisions of sections 469.40 to 469.46. Notwithstanding any law to
174.35the contrary, the corporation may accept and use gifts of money or in-kind and may use
175.1any of its money or assets, other than money or assets received from the city, county, or
175.2state, to develop and implement the adopted development plan.
175.3    Subd. 7. Dissolution. The city shall provide for the terms for dissolution of the
175.4corporation in the articles of incorporation.

175.5    Sec. 4. [469.42] DEVELOPMENT PLAN.
175.6    Subdivision 1. Development plan; adoption by DMCC; notice; findings. (a)
175.7The corporation shall prepare and adopt a development plan. The corporation must
175.8hold a public hearing before adopting a development plan. At least 45 days before the
175.9hearing, the corporation shall make copies of the proposed plan available to the public at
175.10the corporation and city offices during normal business hours, on the corporation's and
175.11city's Web site, and as otherwise determined appropriate by the corporation. At least ten
175.12days before the hearing, the corporation shall publish notice of the hearing in a daily
175.13newspaper of general circulation in the city. The development plan may not be adopted
175.14unless the corporation finds by resolution that:
175.15(1) the plan provides an outline for the development of the city as a destination
175.16medical center, and the plan is sufficiently complete, including the identification of planned
175.17and anticipated projects, to indicate its relationship to definite state and local objectives;
175.18(2) the proposed development affords maximum opportunity, consistent with the
175.19needs of the city, county, and state, for the development of the city by private enterprise
175.20as a destination medical center;
175.21(3) the proposed development conforms to the general plan for the development of
175.22the city and is consistent with the city comprehensive plan;
175.23(4) the plan includes:
175.24(i) strategic planning consistent with a destination medical center in the core areas of
175.25commercial research and technology, learning environment, hospitality and convention,
175.26sports and recreation, livable communities, including mixed-use urban development
175.27and neighborhood residential development, retail/dining/entertainment, and health and
175.28wellness;
175.29(ii) estimates of short- and long-range fiscal and economic impacts;
175.30(iii) a framework to identify and prioritize short- and long-term public investment
175.31and public infrastructure project development and to facilitate private investment and
175.32development;
175.33(iv) land use planning;
175.34(v) transportation and transit planning;
176.1(vi) operational planning required to support the medical center development
176.2district; and
176.3(vii) ongoing market research plans; and
176.4(5) the city has approved the plan.
176.5(b) The identification of planned and anticipated projects under paragraph (a), clause
176.6(1), must give priority to projects that will pay wages at least equal to the basic cost of
176.7living wage as calculated by the commissioner of employment and economic development
176.8for the county in which the project is located. The calculation of the basic cost of living
176.9wage shall be done as provided for under Minnesota Statutes, section 116J.013, if enacted
176.10by the 2013 legislature.
176.11    Subd. 2. Modification of development plan. The corporation may modify the
176.12development plan at any time. The corporation must update the development plan not less
176.13than every five years. A modification or update under this subdivision must be adopted by
176.14the corporation upon the notice and after the public hearing and findings required for the
176.15original adoption of the development plan.
176.16    Subd. 3. Medical center development districts; creation; notice; findings. As
176.17part of the development plan, the corporation may create and define the boundaries of
176.18medical center development districts and subdistricts at any place or places within the
176.19city. Projects may be undertaken within defined medical center development districts
176.20consistent with the development plan.
176.21    Subd. 4. DMCC consultant. (a) The corporation may engage a business entity
176.22consultant to provide experience and expertise in developing the destination medical
176.23center. The consultant may assist the corporation in preparing the development plan and
176.24provide services to assist the corporation or city in implementing, consistent with the
176.25development plan, the goals, objectives, and strategies in the development plan, including,
176.26but not limited to:
176.27(1) developing and updating the criteria for evaluating and underwriting
176.28development proposals;
176.29(2) implementing the development plan, including soliciting and evaluating
176.30proposals for development and evaluating and making recommendations to the corporation
176.31and the city regarding those proposals;
176.32(3) providing transactional services in connection with approved projects;
176.33(4) developing patient, visitor, and community outreach programs for a destination
176.34medical center development district;
176.35(5) working with the corporation to acquire and facilitate the sale, lease, or other
176.36transactions involving land and real property;
177.1(6) seeking financial support for the corporation, the city, and a project;
177.2(7) partnering with other development agencies and organizations and the county in
177.3joint efforts to promote economic development and establish a destination medical center;
177.4(8) supporting and administering the planning and development activities required to
177.5implement the development plan;
177.6(9) preparing and supporting the marketing and promotion of the medical center
177.7development district;
177.8(10) preparing and implementing a program for community and public relations in
177.9support of the medical center development district;
177.10(11) assisting the corporation or city and others in applications for federal grants, tax
177.11credits, and other sources of funding to aid both private and public development; and
177.12(12) making other general advisory recommendations to the corporation and the
177.13city, as requested.
177.14(b) The corporation may contract with the consultant to provide administrative
177.15services to the corporation with regard to the destination medical center plan
177.16implementation. The corporation may pay for those services out of any revenue sources
177.17available to it.
177.18    Subd. 5. Audit of consultant contracts. Any contract for services between the
177.19corporation and a consultant paid, in whole or in part, with public money gives the
177.20corporation, the city, and the state auditor the right to audit the books and records of the
177.21consultant that are necessary to certify (1) the nature and extent of the services furnished
177.22pursuant to the contract, and (2) that the payment for services and related disbursements
177.23complies with all state laws, regulations, and the terms of the contract. Any contract for
177.24services between the corporation and the consultant paid, in whole or in part, with public
177.25money shall require the corporation to maintain for the life of the corporation accurate and
177.26complete books and records directly relating to the contract.
177.27    Subd. 6. Report. By January 15 of each year, the corporation and city must submit
177.28a report to the chairs and ranking minority members of the legislative committees with
177.29jurisdiction over local and state government operations, economic development, and taxes,
177.30and to the commissioners of revenue and employment and economic development, and
177.31the county. The corporation and city must also submit the report as provided in section
177.323.195. The report must include:
177.33(1) the adopted development plan and any proposed changes to the development plan;
177.34(2) progress of projects identified in the development plan;
178.1(3) actual costs and financing sources, including the amount paid with state aid under
178.2section 469.46 and required local contributions, of projects completed in the previous two
178.3years by the corporation, city, the county, and the medical business entity;
178.4(4) estimated costs and financing sources for projects to be begun in the next two
178.5years by the corporation, city, the county, and the medical business entity; and
178.6(5) debt service schedules for all outstanding obligations of the city for debt issued
178.7for projects identified in the plan.

178.8    Sec. 5. [469.43] CITY POWERS, DUTIES; AUTHORITY TO ISSUE BONDS.
178.9    Subdivision 1. Port authority powers. The city may exercise the powers of a
178.10port authority under sections 469.048 to 469.068, for the purposes of implementing the
178.11destination medical center development plan.
178.12    Subd. 2. Support to the corporation. The city may provide financial and
178.13administrative support and office and other space to the corporation. The city may
178.14appropriate money of the city to the corporation for its work.
178.15    Subd. 3. City to issue debt. The city may issue general obligation bonds, revenue
178.16bonds, or other obligations, as it determines appropriate, to finance public infrastructure
178.17projects, as provided by chapter 475. Notwithstanding section 475.53 obligations issued
178.18under this section are not subject to the limits on net debt, regardless of their source of
178.19security or payment. Notwithstanding section 475.58 or any other law or charter provision
178.20to the contrary, issuance of obligations under the provisions of this section are not subject
178.21to approval of the electors. The city may pledge any of its revenues, including property
178.22taxes, the taxes authorized by sections 469.44 and 469.45, and the state aid under section
178.23469.46, as security for and to pay the obligations. The city must not issue obligations that
178.24are only payable from or secured by state aid under section 469.46.
178.25    Subd. 4. American made steel. The city must require that a public infrastructure
178.26project use American steel products to the extent practicable. In determining whether it
178.27is practicable, the city may consider the exceptions to the requirement in Public Law
178.28111-5, section 1605.

178.29    Sec. 6. [469.44] CITY TAX AUTHORITY.
178.30    Subdivision 1. Rochester, other local taxes authorized. (a) Notwithstanding
178.31section 477A.016, or any other contrary provision of law, ordinance, or city charter, and in
178.32addition to any taxes the city may impose on these transactions under another statute or
178.33law, the city of Rochester may, by ordinance impose at a rate or rates, determined by the
178.34city, any of the following taxes:
179.1(1) a tax on the gross receipts from the furnishing for consideration of lodging and
179.2related services as defined in section 297A.61, subdivision 3, paragraph (g), clause (2); the
179.3city may choose to impose a differential tax based on the number of rooms in the facility;
179.4(2) a tax on the gross receipts of food and beverages sold primarily for consumption
179.5on the premises by restaurants and places of refreshment that occur in the city of
179.6Rochester; the city may elect to impose the tax in a defined district of the city; and
179.7(3) a tax on the admission receipts to entertainment and recreational facilities, as
179.8defined by ordinance, in the city of Rochester.
179.9(b) The provisions of section 297A.99, subdivisions 4 to 13, govern the
179.10administration, collection, and enforcement of any tax imposed by the city under
179.11paragraph (a).
179.12(c) The proceeds of any taxes imposed under this subdivision, less refunds and costs
179.13of collection, must be used by the city to fund obligations related to public infrastructure
179.14projects contained in the development plan, including any associated financing costs. Any
179.15tax imposed under paragraph (a) expires at the earlier of December 31, 2041, or when the
179.16city council determines that sufficient funds have been raised from the tax plus all other
179.17local funding sources authorized in this article to meet the city obligation for financing a
179.18public infrastructure project contained in the development plan, including any associated
179.19financing costs.
179.20    Subd. 2. General sales tax authority. The city may elect to extend the existing
179.21local sales and use tax under section 11 or to impose an additional rate of up to one-half of
179.22one percent tax on sales and use under section 9.
179.23    Subd. 3. Special abatement rules. (a) If the city or the county elects to use tax
179.24abatement under sections 469.1812 to 469.1815 to finance costs of public infrastructure
179.25projects, the special rules under this subdivision apply.
179.26(b) The limitations under section 469.1813, subdivision 6, do not apply to the city
179.27or the county.
179.28(c) The limitations under section 469.1813, subdivision 8, do not apply and property
179.29taxes abated by the city or the county to finance costs of public infrastructure projects are
179.30not included for purposes of applying section 469.1813, subdivision 8, to the use of tax
179.31abatement for other purposes of the city or the county; however, the total amount of property
179.32taxes abated by the city and the county under this authority must not exceed $87,750,000.
179.33    Subd. 4. Special tax increment financing rules. If the city elects to establish
179.34a redevelopment tax increment financing district or districts within the area of the
179.35destination medical center development district, the requirements of section 469.174,
179.36subdivision 10, restricting the geographic areas that may be designated as a district do not
180.1apply and increments from the district are not required to be spent in accordance with the
180.2requirements of section 469.176, subdivision 4j.

180.3    Sec. 7. [469.45] COUNTY TAX AUTHORITY.
180.4(a) Notwithstanding sections 297A.99, 297A.993, and 477A.016, or any other
180.5contrary provision of law, ordinance, or charter, and in addition to any taxes the county
180.6may impose under another law or statute, the board of commissioners of Olmsted County
180.7may, by resolution, impose a transit tax of up to one quarter of one percent on retail sales
180.8and uses taxable under chapter 297A. The provisions of section 297A.99, subdivisions
180.94 to 13, govern the imposition, administration, collection, and enforcement of the tax
180.10authorized under this paragraph.
180.11(b) The board of commissioners of Olmsted County may, by resolution, levy an
180.12annual wheelage tax of up to $10 on each motor vehicle kept in the county when not in
180.13operation which is subject to annual registration and taxation under chapter 168. The
180.14wheelage tax shall not be imposed on the vehicles exempt from wheelage tax under
180.15section 163.051, subdivision 1. The board by resolution may provide for collection of the
180.16wheelage tax by county officials or it may request that the tax be collected by the state
180.17registrar on behalf of the county. The provisions of section 163.051, subdivisions 2, 2a, 3,
180.18and 7, shall govern the administration, collection, and enforcement of the tax authorized
180.19under this paragraph. The tax authorized under this section is in addition to any tax the
180.20county may be authorized to impose under section 163.051, but until January 1, 2018,
180.21the county tax imposed under this paragraph, in combination with any tax imposed under
180.22section 163.051, must equal the specified rate under section 163.051.
180.23(c) The proceeds of any taxes imposed under this subdivision, less refunds and
180.24costs of collection, must be first used by the county to meet its share of obligations for
180.25financing transit infrastructure related to the public infrastructure projects contained in
180.26the development plan, including any associated financing costs. Revenues collected in
180.27any calendar year in excess of the county obligation to pay for projects contained in the
180.28development plan may be retained by the county and used for funding other transportation
180.29projects, including roads and bridges, airport and transit improvements.
180.30(d) Any taxes imposed under paragraph (a), expire December 31, 2041, or at an
180.31earlier time if approved by resolution of the county board of commissioners. However,
180.32the taxes may not terminate before the county board of commissioners determines that
180.33revenues from these taxes and any other revenue source the county dedicates are sufficient
180.34to pay the county share of transit project costs and associated financing costs under the
180.35adopted development plan.

181.1    Sec. 8. [469.46] STATE INFRASTRUCTURE AID.
181.2    Subdivision 1. Definitions. (a) For purposes of this section, the following terms
181.3have the meanings given them.
181.4(b) "Commissioner" means the commissioner of employment and economic
181.5development.
181.6(c) "Construction projects" means construction of buildings in the city for which the
181.7building permit was issued after June 30, 2013.
181.8(d) "Expenditures" means expenditures made by a medical business entity, including
181.9any affiliated entities, on construction projects for the capital cost of the project, including
181.10but not limited to:
181.11(1) design and predesign, including architectural, engineering, and similar services;
181.12(2) legal, regulatory, and other compliance costs of the project;
181.13(3) land acquisition, demolition of existing improvements, and other site preparation
181.14costs;
181.15(4) construction costs including all materials and supplies of the project; and
181.16(5) equipment and furnishings that are attached to or become part of the real property.
181.17Expenditures exclude supplies and other items with a useful life of less than a year that
181.18are not used or consumed in constructing improvements to real property or are otherwise
181.19chargeable to capital costs.
181.20(e) "Qualified expenditures" has the following meaning. In the first year in which
181.21aid is paid under this section "qualified expenditures" mean the total certified expenditures
181.22since June 30, 2013, through the end of the previous calendar year minus $200,000,000.
181.23For subsequent years "qualified expenditures" mean the certified expenditures for the
181.24previous calendar year.
181.25(f) "Transit costs" means the portions of a public infrastructure project that are for
181.26public transit intended primarily to serve the district, such as transit stations, equipment,
181.27right-of-way, and similar costs.
181.28    Subd. 2. Certification of expenditures. By April 1 of each year, the medical
181.29business entity must certify to the commissioner the amount of expenditures made in the
181.30prior calendar year. The certification must be made in the form that the commissioner
181.31prescribes and include any documentation of and supporting information regarding the
181.32expenditures that the commissioner requires. By August 1 of each year, the commissioner
181.33shall determine the amount of the expenditures for the prior calendar year.
181.34    Subd. 3. General state infrastructure aid. (a) General state infrastructure aid may
181.35not be paid out under this section until total expenditures exceed $200,000,000.
182.1(b) The amount of the general state infrastructure aid for a fiscal year equals the sum
182.2of qualified expenditures, multiplied by 2.75 percent. The maximum amount of general
182.3state aid payable in any year is limited to no more than $30,000,000. If the aid entitlement
182.4for the year exceeds the maximum annual limit, the excess is an aid carryover to later
182.5years. The carryover aid must be paid in the first year in which the aid entitlement for the
182.6current year is less than the maximum annual limit, but only to the extent the carryover,
182.7when added to the current year aid, is less than the maximum annual limit.
182.8(c) If the commissioner determines that the city has made the required matching
182.9local contribution under subdivision 4, the commissioner shall pay to the city the amount
182.10of general state infrastructure aid for the year by September 1.
182.11(d) The city must use general state infrastructure aid it receives under this
182.12subdivision for improvements and other capital costs related to the public infrastructure
182.13project, other than transit costs. The city shall maintain appropriate records to document
182.14the use of the funds under this requirement.
182.15(e) The commissioner, in consultation with the commissioner of management and
182.16budget and representatives of the city and the corporation, shall establish a total limit on
182.17the amount of state aid payable under this subdivision that is sufficient, in combination
182.18with the local contribution, to pay for $455,000,000 of general public infrastructure
182.19projects, plus financing costs.
182.20    Subd. 4. General aid; local matching contribution. In order to qualify for general
182.21state infrastructure aid, the city must enter a written agreement with the commissioner that
182.22requires the city to make a qualifying local matching contribution to pay for $128,000,000
182.23of the cost of public infrastructure projects, including associated financing costs, using
182.24funds other than state aid received under this section. This agreement must provide for the
182.25manner, timing, and amounts of the city contributions, including the city's commitment for
182.26each year. The commissioner and city may agree to amend the agreement at any time in
182.27light of new information or other appropriate factors. The city may enter arrangements
182.28with the county to pay for or otherwise meet the local matching contribution requirement.
182.29    Subd. 5. State transit aid. (a) The city qualifies for state transit aid under this
182.30section if:
182.31(1) the county has elected to impose the transit sales tax under section 469.45 for a
182.32calendar year; and
182.33(2) the county contributes the required local matching contribution under subdivision
182.346 or the city or county have agreed to make an equivalent contribution out of other funds.
182.35(b) The amount of the state transit aid for a fiscal year equals the sum of qualified
182.36expenditures, as certified by the commissioner for the prior calendar year, multiplied
183.1by 0.75 percent, reduced by the amount of the local contribution under subdivision 6.
183.2The maximum amount of state transit aid payable in any year is limited to no more than
183.3$7,500,000. If the aid entitlement for the year exceeds the maximum annual limit, the
183.4excess is an aid carryover to later years. The carryover aid must be paid in the first year
183.5in which the aid entitlement for the current year is less than the maximum annual limit,
183.6but only to the extent the carryover, when added to the current year aid, is less than the
183.7maximum annual limit.
183.8    (c) The commissioner, in consultation with the commissioner of management and
183.9budget and representatives of the city and the corporation, shall establish a total limit on
183.10the amount of state aid payable under this subdivision that is sufficient, in combination
183.11with the local contribution, to pay for $116,000,000 of general public infrastructure
183.12projects, plus financing costs.
183.13    Subd. 6. Transit aid; local matching contribution. (a) The required local matching
183.14contribution for state transit aid equals the lesser of (1) 40 percent of the state transit aid
183.15under subdivision 5, or (2) the amount that would be raised by a 0.15 percent sales tax
183.16imposed by the county in the prior calendar year. The county may impose the sales tax or
183.17the wheelage tax under section 469.45 to meet this obligation.
183.18(b) If the county elects not to impose any of the taxes authorized under section 469.45,
183.19the county or city or both may agree to make the local contribution out of other available
183.20funds, other than state aid payable under this section. The commissioner of revenue shall
183.21estimate the required amount and certify it to the commissioner, city, and county.
183.22    Subd. 7. Termination. No aid may be paid under this section after fiscal year 2041.
183.23    Subd. 8. Appropriation. An amount sufficient to pay the state general infrastructure
183.24and state transit aid authorized under this section is appropriated to the commissioner
183.25from the general fund.

183.26    Sec. 9. Laws 1998, chapter 389, article 8, section 43, subdivision 1, is amended to read:
183.27    Subdivision 1. Sales and use taxes authorized. (a) Notwithstanding Minnesota
183.28Statutes, section 477A.016, or any other contrary provision of law, ordinance, or city
183.29charter, upon termination of the taxes authorized under Laws 1992, chapter 511, article
183.308, section 33, subdivision 1, and if approved by the voters of the city at a general or
183.31special election held within one year of the date of final enactment of this act, the city of
183.32Rochester may, by ordinance, impose an additional sales and use tax of up to one-half
183.33of one percent. The provisions of Minnesota Statutes, section 297A.48, 297A.99 govern
183.34the imposition, administration, collection, and enforcement of the tax authorized under
183.35this subdivision paragraph.
184.1    (b) Notwithstanding Minnesota Statutes, sections 297A.99 and 477A.016, or any
184.2other contrary provision of law, ordinance, or charter, the city of Rochester may, by
184.3ordinance, impose an additional sales and use tax of up to one half of one percent. The
184.4provisions of Minnesota Statutes, section 297A.99, subdivisions 1 and 4 to 13, govern
184.5the imposition, administration, collection, and enforcement of the tax authorized under
184.6this paragraph.

184.7    Sec. 10. Laws 1998, chapter 389, article 8, section 43, subdivision 3, as amended by
184.8Laws 2005, First Special Session chapter 3, article 5, section 28, and Laws 2011, First
184.9Special Session chapter 7, article 4, section 5, is amended to read:
184.10    Subd. 3. Use of revenues. (a) Revenues received from the taxes authorized by
184.11subdivisions 1, paragraph (a), and 2 must be used by the city to pay for the cost of
184.12collecting and administering the taxes and to pay for the following projects:
184.13    (1) transportation infrastructure improvements including regional highway and
184.14airport improvements;
184.15    (2) improvements to the civic center complex;
184.16    (3) a municipal water, sewer, and storm sewer project necessary to improve regional
184.17ground water quality; and
184.18    (4) construction of a regional recreation and sports center and other higher education
184.19facilities available for both community and student use.
184.20    (b) The total amount of capital expenditures or bonds for projects listed in paragraph
184.21(a) that may be paid from the revenues raised from the taxes authorized in this section
184.22may not exceed $111,500,000. The total amount of capital expenditures or bonds for the
184.23project in clause (4) that may be paid from the revenues raised from the taxes authorized
184.24in this section may not exceed $28,000,000.
184.25(c) In addition to the projects authorized in paragraph (a) and not subject to the
184.26amount stated in paragraph (b), the city of Rochester may, if approved by the voters at an
184.27election under subdivision 5, paragraph (c), use the revenues received from the taxes and
184.28bonds authorized in this section to pay the costs of or bonds for the following purposes:
184.29(1) $17,000,000 for capital expenditures and bonds for the following Olmsted
184.30County transportation infrastructure improvements:
184.31(i) County State Aid Highway 34 reconstruction;
184.32(ii) Trunk Highway 63 and County State Aid Highway 16 interchange;
184.33(iii) phase II of the Trunk Highway 52 and County State Aid Highway 22 interchange;
184.34(iv) widening of County State Aid Highway 22 West Circle Drive; and
184.35(v) 60th Avenue Northwest corridor preservation;
185.1(2) $30,000,000 for city transportation projects including:
185.2(i) Trunk Highway 52 and 65th Street interchange;
185.3(ii) NW transportation corridor acquisition;
185.4(iii) Phase I of the Trunk Highway 52 and County State Aid Highway 22 interchange;
185.5(iv) Trunk Highway 14 and Trunk Highway 63 intersection;
185.6(v) Southeast transportation corridor acquisition;
185.7(vi) Rochester International Airport expansion; and
185.8(vii) a transit operations center bus facility;
185.9(3) $14,000,000 for the University of Minnesota Rochester academic and
185.10complementary facilities;
185.11(4) $6,500,000 for the Rochester Community and Technical College/Winona State
185.12University career technical education and science and math facilities;
185.13(5) $6,000,000 for the Rochester Community and Technical College regional
185.14recreation facilities at University Center Rochester;
185.15(6) $20,000,000 for the Destination Medical Community Initiative;
185.16(7) $8,000,000 for the regional public safety and 911 dispatch center facilities;
185.17(8) $20,000,000 for a regional recreation/senior center;
185.18(9) $10,000,000 for an economic development fund; and
185.19(10) $8,000,000 for downtown infrastructure.
185.20(d) No revenues from the taxes raised from the taxes authorized in subdivisions 1
185.21and 2 may be used to fund transportation improvements related to a railroad bypass that
185.22would divert traffic from the city of Rochester.
185.23(e) The city shall use $5,000,000 of the money allocated to the purpose in paragraph
185.24(c), clause (9), for grants to the cities of Byron, Chatfield, Dodge Center, Dover, Elgin,
185.25Eyota, Kasson, Mantorville, Oronoco, Pine Island, Plainview, St. Charles, Stewartville,
185.26Zumbrota, Spring Valley, West Concord, and Hayfield for economic development projects
185.27that these communities would fund through their economic development authority or
185.28housing and redevelopment authority.
185.29(e) Notwithstanding Minnesota Statutes, section 297A.99, subdivisions 2 and 3, if
185.30the city decides to extend the taxes in subdivisions 1, paragraph (a), and 2, as allowed
185.31under subdivision 5, paragraph (c), the city must use any amount in excess of the amount
185.32necessary to meet obligations under paragraphs (a) to (c) from those taxes to fund
185.33obligations, including associated financing costs, related to public infrastructure projects
185.34in the development plan adopted under Minnesota Statutes, section 469.42.
185.35(f) Revenues from the tax under subdivision 1, paragraph (b), must be used to fund
185.36obligations, including associated financing costs, related to the public infrastructure
186.1projects contained in the development plan adopted by the city under Minnesota Statutes,
186.2section 469.42.

186.3    Sec. 11. Laws 1998, chapter 389, article 8, section 43, subdivision 5, as amended by
186.4Laws 2005, First Special Session chapter 3, article 5, section 30, and Laws 2011, First
186.5Special Session chapter 7, article 4, section 7, is amended to read:
186.6    Subd. 5. Termination of taxes. (a) The taxes imposed under subdivisions 1 and 2
186.7expire at the later of (1) December 31, 2009, or (2) when the city council determines that
186.8sufficient funds have been received from the taxes to finance the first $71,500,000 of capital
186.9expenditures and bonds for the projects authorized in subdivision 3, including the amount to
186.10prepay or retire at maturity the principal, interest, and premium due on any bonds issued for
186.11the projects under subdivision 4, unless the taxes are extended as allowed in paragraph (b).
186.12Any funds remaining after completion of the project and retirement or redemption of the
186.13bonds shall also be used to fund the projects under subdivision 3. The taxes imposed under
186.14subdivisions 1 and 2 may expire at an earlier time if the city so determines by ordinance.
186.15    (b) Notwithstanding Minnesota Statutes, sections 297A.99 and 477A.016, or any
186.16other contrary provision of law, ordinance, or city charter, the city of Rochester may, by
186.17ordinance, extend the taxes authorized in subdivisions 1 and 2 beyond December 31, 2009,
186.18if approved by the voters of the city at a special election in 2005 or the general election in
186.192006. The question put to the voters must indicate that an affirmative vote would allow
186.20up to an additional $40,000,000 of sales tax revenues be raised and up to $40,000,000
186.21of bonds to be issued above the amount authorized in the June 23, 1998, referendum for
186.22the projects specified in subdivision 3. If the taxes authorized in subdivisions 1 and 2 are
186.23extended under this paragraph, the taxes expire when the city council determines that
186.24sufficient funds have been received from the taxes to finance the projects and to prepay
186.25or retire at maturity the principal, interest, and premium due on any bonds issued for the
186.26projects under subdivision 4. Any funds remaining after completion of the project and
186.27retirement or redemption of the bonds may be placed in the general fund of the city.
186.28(c) Notwithstanding Minnesota Statutes, sections 297A.99 and 477A.016, or any
186.29other contrary provision of law, ordinance, or city charter, the city of Rochester may,
186.30by ordinance, extend the taxes authorized in subdivisions 1, paragraph (a), and 2 up to
186.31December 31, 2041, provided that all additional revenues above those necessary to fund
186.32the projects and associated financing costs listed in subdivision 3, paragraphs (a) to (e),
186.33are committed to fund public infrastructure projects contained in the development plan
186.34adopted under Minnesota Statutes, section 469.42, including all associated financing
186.35costs; otherwise the taxes terminate when beyond the date the city council determines
187.1that sufficient funds have been received from the taxes to finance $111,500,000 of the
187.2expenditures and bonds for the projects authorized in subdivision 3, paragraph (a)
187.3 paragraphs (a) to (e), plus an amount equal to the costs of issuance of the bonds and
187.4including the amount to prepay or retire at maturity the principal, interest, and premiums
187.5due on any bonds issued for the projects under subdivision 4, paragraph (a), if approved
187.6by the voters of the city at the general election in 2012. If the election to authorize the
187.7additional $139,500,000 of bonds plus an amount equal to the costs of the issuance of the
187.8bonds is placed on the general election ballot in 2012, the city may continue to collect the
187.9taxes authorized in subdivisions 1 and 2 until December 31, 2012. The question put to
187.10the voters must indicate that an affirmative vote would allow sales tax revenues be raised
187.11for an extended period of time and an additional $139,500,000 of bonds plus an amount
187.12equal to the costs of issuance of the bonds, to be issued above the amount authorized in
187.13the previous elections required under paragraphs (a) and (b) for the projects and amounts
187.14specified in subdivision 3. If the taxes authorized in subdivisions 1 and 2 are extended
187.15under this paragraph, the taxes expire when the city council determines that $139,500,000
187.16has been received from the taxes to finance the projects plus an amount sufficient to
187.17prepay or retire at maturity the principal, interest, and premium due on any bonds issued
187.18for the projects under subdivision 4, including any bonds issued to refund the bonds. Any
187.19funds remaining after completion of the projects and retirement or redemption of the
187.20bonds may be placed in the general fund of the city.
187.21(d) The tax imposed under subdivision 1, paragraph (b), expires at the earlier of
187.222041, or when the city council determines that sufficient funds have been raised from the
187.23tax plus all other city funding sources authorized in this article to meet the city obligation
187.24for financing the public infrastructure projects contained in the development plan adopted
187.25under Minnesota Statutes, section 469.42, including all associated financing costs.

187.26    Sec. 12. ROCHESTER AREA DEVELOPMENT AND TRANSPORTATION
187.27IMPACTS STUDY.
187.28(a) From funds appropriated by law for the purposes of this section, the commissioner
187.29of transportation shall in consultation with the Rochester-Olmsted Council of Governments
187.30enter into an agreement with a consultant to perform a study of economic development
187.31and transportation impacts in the Rochester metropolitan area, including the feasibility of
187.32high-speed rail between Rochester and the seven-county metropolitan area. To be eligible,
187.33a consultant must have experience and expertise in a majority of the following: economics,
187.34economic development, demography, urban planning, engineering, and transportation.
187.35(b) At a minimum, the study under this section must:
188.1(1) utilize at least a 20-year planning horizon;
188.2(2) perform a comprehensive planning assessment of key transportation
188.3infrastructure throughout the Rochester metropolitan area based on (i) long-range
188.4transportation plans developed by the Rochester-Olmsted Council of Governments, and
188.5(ii) expected and potential economic development patterns;
188.6(3) analyze major roadways across all jurisdictions including, but not limited to,
188.7trunk highways; county highways; and arterial city streets; and interconnections with other
188.8modes in conjunction with ongoing rail and airports studies;
188.9(4) analyze the feasibility of a high-speed rail connection between Rochester and the
188.10Mall of America via Minnesota State Highway 77 with connections to the Minneapolis-St.
188.11Paul International Airport and the Union Depot in St. Paul;
188.12(5) to the extent feasible, take into account available data, forecasts, available
188.13transportation demand modeling information, and transportation impacts of major
188.14economic initiatives and proposals including, but not limited to, expansion of the Mayo
188.15Clinic; and
188.16(6) provide scenarios and identify revenue shortfalls to address both short-term and
188.17long-term deficiencies in safety, mobility, congestion, and transportation infrastructure
188.18condition.
188.19(c) By January 15, 2014, the commissioner shall provide an electronic copy of the
188.20study to the chairs and ranking minority members of the legislative committees with
188.21jurisdiction over transportation policy and finance, as provided in Minnesota Statutes,
188.22section 174.02, subdivision 8.

188.23    Sec. 13. EFFECTIVE DATE.
188.24Except as otherwise provided, this article is effective the day after the governing
188.25body of the city of Rochester and its chief clerical officer timely comply with Minnesota
188.26Statutes, section 645.021, subdivisions 2 and 3.

188.27ARTICLE 11
188.28MINING TAXES

188.29    Section 1. [116C.992] SILICA SAND MINING ACCOUNT.
188.30    A silica sand mining account is created in the special revenue fund. Money in the
188.31account is available for development of model standards, technical assistance to counties
188.32and other governments, other assistance to counties, and other purposes as appropriated
188.33by law.

189.1    Sec. 2. Minnesota Statutes 2012, section 126C.48, subdivision 8, is amended to read:
189.2    Subd. 8. Taconite payment and other reductions. (1) Reductions in levies
189.3pursuant to subdivision 1 must be made prior to the reductions in clause (2).
189.4(2) Notwithstanding any other law to the contrary, districts that have revenue
189.5pursuant to sections 298.018; 298.225; 298.24 to 298.28, except an amount distributed
189.6under sections 298.26; 298.28, subdivision 4, paragraphs (c), clause (ii), and (d); 298.34
189.7to 298.39; 298.391 to 298.396; 298.405; 477A.15; and any law imposing a tax upon
189.8severed mineral values must reduce the levies authorized by this chapter and chapters
189.9120B, 122A, 123A, 123B, 124A, 124D, 125A, and 127A by 95 percent of the sum of the
189.10previous year's revenue specified under this clause and the amount attributable to the same
189.11production year distributed to the cities and townships within the school district under
189.12section 298.28, subdivision 2, paragraph (c).
189.13(3) The amount of any voter approved referendum, facilities down payment, and
189.14debt levies shall not be reduced by more than 50 percent under this subdivision. In
189.15administering this paragraph, the commissioner shall first reduce the nonvoter approved
189.16levies of a district; then, if any payments, severed mineral value tax revenue or recognized
189.17revenue under paragraph (2) remains, the commissioner shall reduce any voter approved
189.18referendum levies authorized under section 126C.17; then, if any payments, severed
189.19mineral value tax revenue or recognized revenue under paragraph (2) remains, the
189.20commissioner shall reduce any voter approved facilities down payment levies authorized
189.21under section 123B.63 and then, if any payments, severed mineral value tax revenue or
189.22recognized revenue under paragraph (2) remains, the commissioner shall reduce any
189.23voter approved debt levies.
189.24(4) Before computing the reduction pursuant to this subdivision of the health and
189.25safety levy authorized by sections 123B.57 and 126C.40, subdivision 5, the commissioner
189.26shall ascertain from each affected school district the amount it proposes to levy under
189.27each section or subdivision. The reduction shall be computed on the basis of the amount
189.28so ascertained.
189.29(5) To the extent the levy reduction calculated under paragraph (2) exceeds the
189.30limitation in paragraph (3), an amount equal to the excess must be distributed from the
189.31school district's distribution under sections 298.225, 298.28, and 477A.15 in the following
189.32year to the cities and townships within the school district in the proportion that their
189.33taxable net tax capacity within the school district bears to the taxable net tax capacity of
189.34the school district for property taxes payable in the year prior to distribution. No city or
189.35township shall receive a distribution greater than its levy for taxes payable in the year prior
189.36to distribution. The commissioner of revenue shall certify the distributions of cities and
190.1towns under this paragraph to the county auditor by September 30 of the year preceding
190.2distribution. The county auditor shall reduce the proposed and final levies of cities and
190.3towns receiving distributions by the amount of their distribution. Distributions to the cities
190.4and towns shall be made at the times provided under section 298.27.
190.5EFFECTIVE DATE.This section is effective for levies certified in 2013 and later.

190.6    Sec. 3. [297J.01] DEFINITIONS.
190.7    Subdivision 1. Scope. Unless otherwise defined in this chapter, or unless the
190.8context clearly indicates otherwise, the terms used in this chapter have the meaning given
190.9them in this section. The definitions in this section are for tax administration purposes
190.10and apply to this chapter.
190.11    Subd. 2. Commissioner. "Commissioner" means the commissioner of revenue or a
190.12person to whom the commissioner has delegated functions.
190.13    Subd. 3. Mining. "Mining" means excavating and mining of silica sand by any
190.14process, including digging, excavating, drilling, blasting, tunneling, dredging, stripping,
190.15or by shaft.
190.16    Subd. 4. Person. "Person" means an individual, fiduciary, estate, trust, partnership,
190.17or corporation.
190.18    Subd. 5. Processing. "Processing" means washing, cleaning, screening, crushing,
190.19filtering, sorting, stockpiling, and storing silica sand at the mining site or at any other site.
190.20    Subd. 6. Qualified processor. "Qualified processor" means any person who
190.21operates a mining and processing facility at the same location and uses mean