HF 760

as introduced - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; making policy and administrative 
  1.3             changes to income, estate, property, sales and use, 
  1.4             cigarette and tobacco products, and other taxes and 
  1.5             tax provisions; conforming to certain changes in the 
  1.6             Internal Revenue Code; providing tax collection, 
  1.7             administration, and examination powers and procedures; 
  1.8             providing for civil and criminal penalties; amending 
  1.9             Minnesota Statutes 2002, sections 270.06; 270.701, 
  1.10            subdivision 2, by adding a subdivision; 270.72, 
  1.11            subdivision 2; 270A.03, subdivision 2; 273.05, 
  1.12            subdivision 1; 273.061, subdivision 1; 274.01, 
  1.13            subdivision 1; 274.13, subdivision 1; 275.025, 
  1.14            subdivision 4; 276.10; 276.11, subdivision 1; 282.01, 
  1.15            subdivisions 1b, 7a; 282.08; 289A.02, subdivision 7; 
  1.16            289A.10, subdivision 1; 289A.19, subdivision 4; 
  1.17            289A.31, by adding a subdivision; 289A.36, subdivision 
  1.18            7, by adding subdivisions; 289A.56, subdivision 3; 
  1.19            289A.60, subdivision 7, by adding a subdivision; 
  1.20            290.01, subdivisions 19, 31; 290.0679, subdivision 2; 
  1.21            290A.03, subdivision 15; 291.005, subdivision 1; 
  1.22            291.03, subdivision 1; 297A.61, subdivisions 3, 12, by 
  1.23            adding a subdivision; 297A.68, subdivision 5, by 
  1.24            adding a subdivision; 297A.69, subdivisions 2, 3, 4; 
  1.25            297B.025, subdivisions 1, 2; 297B.035, subdivision 1; 
  1.26            297F.01, subdivision 21a; 297F.06, subdivision 4; 
  1.27            297F.20, subdivisions 1, 2, 3, 6, 9; 352.15, 
  1.28            subdivision 1; 353.15, subdivision 1; 354.10, 
  1.29            subdivision 1; 354B.30; 354C.165; 469.1792, 
  1.30            subdivision 3; 477A.011, subdivision 30; Laws 2001, 
  1.31            First Special Session chapter 5, article 3, sections 
  1.32            61, 63; Laws 2001, First Special Session chapter 5, 
  1.33            article 9, section 12; proposing coding for new law in 
  1.34            Minnesota Statutes, chapters 270; 276; 290C; repealing 
  1.35            Minnesota Statutes 2002, section 270.691, subdivision 
  1.36            8. 
  1.37  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.38                             ARTICLE 1
  1.39                      INCOME AND ESTATE TAXES
  1.40     Section 1.  Minnesota Statutes 2002, section 289A.10, 
  1.41  subdivision 1, is amended to read: 
  2.1      Subdivision 1.  [RETURN REQUIRED.] In the case of a 
  2.2   decedent who has an interest in property with a situs in 
  2.3   Minnesota, the personal representative must submit a Minnesota 
  2.4   estate tax return to the commissioner, on a form prescribed by 
  2.5   the commissioner, if: 
  2.6      (1) a federal estate tax return is required to be filed; or 
  2.7      (2) the federal gross estate exceeds $700,000 for estates 
  2.8   of decedents dying after December 31, 2001, and before January 
  2.9   1, 2004; $850,000 for estates of decedents dying after December 
  2.10  31, 2003, and before January 1, 2005; $950,000 for estates of 
  2.11  decedents dying after December 31, 2004, and before January 1, 
  2.12  2006; and $1,000,000 for estates of decedents dying after 
  2.13  December 31, 2005. 
  2.14     The return must contain a computation of the Minnesota 
  2.15  estate tax due.  The return must be signed by the personal 
  2.16  representative. 
  2.17     [EFFECTIVE DATE.] This section is effective for estates of 
  2.18  decedents dying after December 31, 2002. 
  2.19     Sec. 2.  Minnesota Statutes 2002, section 289A.19, 
  2.20  subdivision 4, is amended to read: 
  2.21     Subd. 4.  [ESTATE TAX RETURNS.] When in the commissioner's 
  2.22  judgment good cause exists, the commissioner may extend the time 
  2.23  for filing an estate tax return for not more than six months.  
  2.24  When an extension to file the federal estate tax return has been 
  2.25  granted under section 6081 of the Internal Revenue Code, the 
  2.26  time for filing the estate tax return is extended for that 
  2.27  period.  
  2.28     [EFFECTIVE DATE.] This section is effective for estates of 
  2.29  decedents dying after December 31, 2001. 
  2.30     Sec. 3.  Minnesota Statutes 2002, section 289A.31, is 
  2.31  amended by adding a subdivision to read: 
  2.32     Subd. 8.  [LIABILITY OF VENDOR FOR REPAYMENT OF REFUND.] If 
  2.33  an individual income tax refund resulting from claiming an 
  2.34  education credit under section 290.0674 is paid by means of 
  2.35  directly depositing the proceeds of the refund into a bank 
  2.36  account controlled by the vendor of the product or service upon 
  3.1   which the education credit is based, and the commissioner 
  3.2   subsequently disallows the credit, the commissioner may seek 
  3.3   repayment of the refund from the vendor.  The amount of the 
  3.4   repayment must be assessed and collected in the same time and 
  3.5   manner as an erroneous refund under section 289A.37, subdivision 
  3.6   2. 
  3.7      [EFFECTIVE DATE.] This section is effective for refunds 
  3.8   paid to accounts controlled by a vendor on or after the day 
  3.9   following final enactment. 
  3.10     Sec. 4.  Minnesota Statutes 2002, section 289A.56, 
  3.11  subdivision 3, is amended to read: 
  3.12     Subd. 3.  [WITHHOLDING TAX, ENTERTAINER WITHHOLDING TAX, 
  3.13  WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, ESTATE 
  3.14  TAX, AND SALES TAX OVERPAYMENTS.] When a refund is due for 
  3.15  overpayments of withholding tax, entertainer withholding tax, or 
  3.16  withholding from payments to out-of-state contractors, or estate 
  3.17  tax, interest is computed from the date of payment to the date 
  3.18  the refund is paid or credited.  For purposes of this 
  3.19  subdivision, the date of payment is the later of the date the 
  3.20  tax was finally due or was paid. 
  3.21     For the purposes of computing interest on estate tax 
  3.22  refunds, interest is paid from the later of the date of 
  3.23  overpayment, the date the estate tax return is due, or the date 
  3.24  the original estate tax return is filed to the date the refund 
  3.25  is paid. 
  3.26     For purposes of computing interest on sales and use tax 
  3.27  refunds, interest is paid from the date of payment to the date 
  3.28  the refund is paid or credited, if the refund claim includes a 
  3.29  detailed schedule reflecting the tax periods covered in the 
  3.30  claim.  If the refund claim submitted does not include a 
  3.31  detailed schedule reflecting the tax periods covered in the 
  3.32  claim, interest is computed from the date the claim was filed. 
  3.33     [EFFECTIVE DATE.] This section is effective for estates of 
  3.34  decedents dying after December 31, 2003. 
  3.35     Sec. 5.  Minnesota Statutes 2002, section 289A.60, 
  3.36  subdivision 7, is amended to read: 
  4.1      Subd. 7.  [PENALTY FOR FRIVOLOUS RETURN.] If a taxpayer 
  4.2   files what purports to be a tax return or a claim for refund but 
  4.3   which does not contain information on which the substantial 
  4.4   correctness of the purported return or claim for refund may be 
  4.5   judged or contains information that on its face shows that the 
  4.6   purported return or claim for refund is substantially incorrect 
  4.7   and the conduct is due to a position that is frivolous or a 
  4.8   desire that appears on the purported return or claim for refund 
  4.9   to delay or impede the administration of Minnesota tax laws, 
  4.10  then the individual shall pay a penalty of $500 the greater of 
  4.11  $1,000 or 25 percent of the amount of tax required to be shown 
  4.12  on the return.  In a proceeding involving the issue of whether 
  4.13  or not a person is liable for this penalty, the burden of proof 
  4.14  is on the commissioner.  
  4.15     [EFFECTIVE DATE.] This section is effective for returns 
  4.16  filed after December 31, 2003. 
  4.17     Sec. 6.  Minnesota Statutes 2002, section 290.0679, 
  4.18  subdivision 2, is amended to read: 
  4.19     Subd. 2.  [CONDITIONS FOR ASSIGNMENT.] A qualifying 
  4.20  taxpayer may assign all or part of an anticipated refund for the 
  4.21  current and future taxable years to a financial institution or a 
  4.22  qualifying organization.  A financial institution or qualifying 
  4.23  organization accepting assignment must pay the amount secured by 
  4.24  the assignment to a third-party vendor.  The commissioner of 
  4.25  children, families, and learning shall provide a list of 
  4.26  categories of, upon request from a third-party vendor, certify 
  4.27  that the vendor's products and services that qualify for the 
  4.28  education credit to financial institutions and qualifying 
  4.29  organizations.  A denial of a certification is subject to the 
  4.30  contested case procedure under chapter 14.  A financial 
  4.31  institution or qualifying organization that accepts assignments 
  4.32  under this section must verify as part of the assignment 
  4.33  documentation that the product or service to be provided by the 
  4.34  third-party vendor qualifies has been certified by the 
  4.35  commissioner of children, families, and learning as qualifying 
  4.36  for the education credit.  The amount assigned for the current 
  5.1   and future taxable years may not exceed the maximum allowable 
  5.2   education credit for the current taxable year.  Both the 
  5.3   taxpayer and spouse must consent to the assignment of a refund 
  5.4   from a joint return. 
  5.5      [EFFECTIVE DATE.] This section is effective for assignments 
  5.6   made on or after the day following final enactment. 
  5.7      Sec. 7.  Minnesota Statutes 2002, section 291.005, 
  5.8   subdivision 1, is amended to read: 
  5.9      Subdivision 1.  Unless the context otherwise clearly 
  5.10  requires, the following terms used in this chapter shall have 
  5.11  the following meanings: 
  5.12     (1) "Federal gross estate" means the gross estate of a 
  5.13  decedent as valued and otherwise determined for federal estate 
  5.14  tax purposes by federal taxing authorities pursuant to the 
  5.15  provisions of the Internal Revenue Code. 
  5.16     (2) "Minnesota gross estate" means the federal gross estate 
  5.17  of a decedent after (a) excluding therefrom any property 
  5.18  included therein which has its situs outside Minnesota and 
  5.19  pensions exempt from tax under this chapter pursuant to section 
  5.20  352.15, subdivision 1; 353.15, subdivision 1; 354.10, 
  5.21  subdivision 1; 354B.30; or 354C.165, and (b) including therein 
  5.22  any property omitted from the federal gross estate which is 
  5.23  includable therein, has its situs in Minnesota, and was not 
  5.24  disclosed to federal taxing authorities.  
  5.25     (3) "Personal representative" means the executor, 
  5.26  administrator or other person appointed by the court to 
  5.27  administer and dispose of the property of the decedent.  If 
  5.28  there is no executor, administrator or other person appointed, 
  5.29  qualified, and acting within this state, then any person in 
  5.30  actual or constructive possession of any property having a situs 
  5.31  in this state which is included in the federal gross estate of 
  5.32  the decedent shall be deemed to be a personal representative to 
  5.33  the extent of the property and the Minnesota estate tax due with 
  5.34  respect to the property. 
  5.35     (4) "Resident decedent" means an individual whose domicile 
  5.36  at the time of death was in Minnesota. 
  6.1      (5) "Nonresident decedent" means an individual whose 
  6.2   domicile at the time of death was not in Minnesota. 
  6.3      (6) "Situs of property" means, with respect to real 
  6.4   property, the state or country in which it is located; with 
  6.5   respect to tangible personal property, the state or country in 
  6.6   which it was normally kept or located at the time of the 
  6.7   decedent's death; and with respect to intangible personal 
  6.8   property, the state or country in which the decedent was 
  6.9   domiciled at death. 
  6.10     (7) "Commissioner" means the commissioner of revenue or any 
  6.11  person to whom the commissioner has delegated functions under 
  6.12  this chapter. 
  6.13     (8) "Internal Revenue Code" means the United States 
  6.14  Internal Revenue Code of 1986, as amended through December 31, 
  6.15  2000 2002. 
  6.16     [EFFECTIVE DATE.] This section is effective for estates of 
  6.17  decedents dying after December 31, 2002. 
  6.18     Sec. 8.  Minnesota Statutes 2002, section 291.03, 
  6.19  subdivision 1, is amended to read: 
  6.20     Subdivision 1.  [TAX AMOUNT.] The tax imposed shall be an 
  6.21  amount equal to the proportion of the maximum credit computed 
  6.22  under section 2011 of the Internal Revenue Code, as amended 
  6.23  through December 31, 2000, for state death taxes as the 
  6.24  Minnesota gross estate bears to the value of the federal gross 
  6.25  estate.  For a resident decedent, the tax shall be the maximum 
  6.26  credit computed under section 2011 of the Internal Revenue Code 
  6.27  reduced by the amount of the death tax paid the other state and 
  6.28  credited against the federal estate tax if this results in a 
  6.29  larger amount of tax than the proportionate amount of the 
  6.30  credit.  The tax determined under this paragraph shall not be 
  6.31  greater than the federal estate tax computed under section 2001 
  6.32  of the Internal Revenue Code after the allowance of the federal 
  6.33  credits allowed under section 2010 of the Internal Revenue Code 
  6.34  of 1986, as amended through December 31, 2000.  For the purposes 
  6.35  of this section, expenses which are deducted for federal income 
  6.36  tax purposes under section 642(g) of the Internal Revenue Code 
  7.1   as amended through December 31, 2002, are not allowable in 
  7.2   computing the tax under this chapter. 
  7.3      [EFFECTIVE DATE.] This section is effective for estates of 
  7.4   decedents dying after December 31, 2002. 
  7.5      Sec. 9.  Minnesota Statutes 2002, section 352.15, 
  7.6   subdivision 1, is amended to read: 
  7.7      Subdivision 1.  [EXEMPTION; EXCEPTIONS.] None of the money, 
  7.8   annuities, or other benefits mentioned in this chapter is 
  7.9   assignable either in law or in equity or subject to state estate 
  7.10  tax, or to execution, levy, attachment, garnishment, or other 
  7.11  legal process, except as provided in subdivision 1a or section 
  7.12  518.58, 518.581, or 518.6111.  
  7.13     [EFFECTIVE DATE.] This section is effective for estates of 
  7.14  decedents dying after December 31, 2002. 
  7.15     Sec. 10.  Minnesota Statutes 2002, section 353.15, 
  7.16  subdivision 1, is amended to read: 
  7.17     Subdivision 1.  [EXEMPTION; EXCEPTIONS.] No money, annuity, 
  7.18  or benefit provided for in this chapter is assignable or subject 
  7.19  to any state estate tax, or to execution, levy, attachment, 
  7.20  garnishment, or legal process, except as provided in subdivision 
  7.21  2 or section 518.58, 518.581, or 518.6111.  
  7.22     [EFFECTIVE DATE.] This section is effective for estates of 
  7.23  decedents dying after December 31, 2002. 
  7.24     Sec. 11.  Minnesota Statutes 2002, section 354.10, 
  7.25  subdivision 1, is amended to read: 
  7.26     Subdivision 1.  [EXEMPTION; EXCEPTIONS.] The right of a 
  7.27  teacher to take advantage of the benefits provided by this 
  7.28  chapter, is a personal right only and is not assignable.  All 
  7.29  money to the credit of a teacher's account in the fund or any 
  7.30  money payable to the teacher from the fund belongs to the state 
  7.31  of Minnesota until actually paid to the teacher or a beneficiary 
  7.32  under this chapter.  The association may acknowledge a properly 
  7.33  completed power of attorney form.  An assignment or attempted 
  7.34  assignment of a teacher's interest in the fund, or of the 
  7.35  beneficiary's interest in the fund, by a teacher or a 
  7.36  beneficiary is void and exempt from taxation under chapter 291 
  8.1   and from garnishment or levy under attachment or execution, 
  8.2   except as provided in subdivision 2 or 3, or section 518.58, 
  8.3   518.581, or 518.6111.  
  8.4      [EFFECTIVE DATE.] This section is effective for estates of 
  8.5   decedents dying after December 31, 2002. 
  8.6      Sec. 12.  Minnesota Statutes 2002, section 354B.30, is 
  8.7   amended to read: 
  8.8      354B.30 [PROHIBITION ON LOANS OR PRETERMINATION 
  8.9   DISTRIBUTIONS.] 
  8.10     (a) No participant may obtain a loan from the plan or 
  8.11  obtain any distribution from the plan at a time before the 
  8.12  participant terminates the employment that gave rise to plan 
  8.13  coverage. 
  8.14     (b) No amounts to the credit of the plan are assignable 
  8.15  either in law or in equity, are subject to state estate tax, or 
  8.16  are subject to execution, levy, attachment, garnishment, or 
  8.17  other legal process, except as provided in section 518.58, 
  8.18  518.581, or 518.6111.  
  8.19     [EFFECTIVE DATE.] This section is effective for estates of 
  8.20  decedents dying after December 31, 2002. 
  8.21     Sec. 13.  Minnesota Statutes 2002, section 354C.165, is 
  8.22  amended to read: 
  8.23     354C.165 [PROHIBITION ON LOANS OR PRETERMINATION 
  8.24  DISTRIBUTIONS.] 
  8.25     (a) Except as provided in paragraph (c), no participant may 
  8.26  obtain a loan or any distribution from the plan before the 
  8.27  participant terminates the employment that gave rise to plan 
  8.28  coverage. 
  8.29     (b) No amounts to the credit of the plan are assignable 
  8.30  either in law or in equity, are subject to state estate tax, or 
  8.31  are subject to execution, levy, attachment, garnishment, or 
  8.32  other legal process, except as provided in section 518.58, 
  8.33  518.581, or 518.6111.  
  8.34     (c) Unless prohibited by or subject to a penalty under 
  8.35  federal law, a teacher who is a participant in the supplemental 
  8.36  retirement plan may request, in writing, a transfer of all or a 
  9.1   portion of the funds accumulated in the person's supplemental 
  9.2   plan account to the teachers retirement association to purchase 
  9.3   service credit under sections 354.53, 354.533, 354.534, 354.535, 
  9.4   354.536, 354.537, and 354.538 or to the teachers retirement fund 
  9.5   association to purchase service credit under sections 354A.097, 
  9.6   354A.098, 354A.099, 354A.101, 354A.102, 354A.103, and 354A.104.  
  9.7   Upon receipt of a valid request, the board shall execute the 
  9.8   transfer.  The transfer must be a fund-to-fund transfer, and in 
  9.9   no event shall the participant directly receive any of the funds 
  9.10  while still employed by the board.  In no event may the board 
  9.11  transfer more than the participant's account balance.  The 
  9.12  board, in cooperation with the executive director of the 
  9.13  teachers retirement association, shall develop the forms for 
  9.14  requesting a transfer and the procedures for executing the 
  9.15  requested transfers. 
  9.16     [EFFECTIVE DATE.] This section is effective for estates of 
  9.17  decedents dying after December 31, 2002. 
  9.18     Sec. 14.  Laws 2001, First Special Session chapter 5, 
  9.19  article 9, section 12, the effective date, is amended to read: 
  9.20     [EFFECTIVE DATE.] This section is effective for assignment 
  9.21  of refunds filed with the commissioner after December 31, 2001.  
  9.22  The time period for filing assignments expires December 31, 
  9.23  2003, but assignments filed on or before that date remain in 
  9.24  effect until satisfied or canceled. 
  9.25                             ARTICLE 2 
  9.26                           FEDERAL UPDATE 
  9.27     Section 1.  Minnesota Statutes 2002, section 289A.02, 
  9.28  subdivision 7, is amended to read: 
  9.29     Subd. 7.  [INTERNAL REVENUE CODE.] Unless specifically 
  9.30  defined otherwise, "Internal Revenue Code" means the Internal 
  9.31  Revenue Code of 1986, as amended through March 15 December 31, 
  9.32  2002. 
  9.33     [EFFECTIVE DATE.] This section is effective the day 
  9.34  following final enactment. 
  9.35     Sec. 2.  Minnesota Statutes 2002, section 290.01, 
  9.36  subdivision 19, is amended to read: 
 10.1      Subd. 19.  [NET INCOME.] The term "net income" means the 
 10.2   federal taxable income, as defined in section 63 of the Internal 
 10.3   Revenue Code of 1986, as amended through the date named in this 
 10.4   subdivision, incorporating any elections made by the taxpayer in 
 10.5   accordance with the Internal Revenue Code in determining federal 
 10.6   taxable income for federal income tax purposes, and with the 
 10.7   modifications provided in subdivisions 19a to 19f. 
 10.8      In the case of a regulated investment company or a fund 
 10.9   thereof, as defined in section 851(a) or 851(g) of the Internal 
 10.10  Revenue Code, federal taxable income means investment company 
 10.11  taxable income as defined in section 852(b)(2) of the Internal 
 10.12  Revenue Code, except that:  
 10.13     (1) the exclusion of net capital gain provided in section 
 10.14  852(b)(2)(A) of the Internal Revenue Code does not apply; 
 10.15     (2) the deduction for dividends paid under section 
 10.16  852(b)(2)(D) of the Internal Revenue Code must be applied by 
 10.17  allowing a deduction for capital gain dividends and 
 10.18  exempt-interest dividends as defined in sections 852(b)(3)(C) 
 10.19  and 852(b)(5) of the Internal Revenue Code; and 
 10.20     (3) the deduction for dividends paid must also be applied 
 10.21  in the amount of any undistributed capital gains which the 
 10.22  regulated investment company elects to have treated as provided 
 10.23  in section 852(b)(3)(D) of the Internal Revenue Code.  
 10.24     The net income of a real estate investment trust as defined 
 10.25  and limited by section 856(a), (b), and (c) of the Internal 
 10.26  Revenue Code means the real estate investment trust taxable 
 10.27  income as defined in section 857(b)(2) of the Internal Revenue 
 10.28  Code.  
 10.29     The net income of a designated settlement fund as defined 
 10.30  in section 468B(d) of the Internal Revenue Code means the gross 
 10.31  income as defined in section 468B(b) of the Internal Revenue 
 10.32  Code. 
 10.33     The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
 10.34  1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
 10.35  1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
 10.36  Protection Act, Public Law Number 104-188, the provisions of 
 11.1   Public Law Number 104-117, the provisions of sections 313(a) and 
 11.2   (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 1002, 
 11.3   1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 
 11.4   1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) 
 11.5   and (h), and 1604(d)(1) of the Taxpayer Relief Act of 1997, 
 11.6   Public Law Number 105-34, the provisions of section 6010 of the 
 11.7   Internal Revenue Service Restructuring and Reform Act of 1998, 
 11.8   Public Law Number 105-206, the provisions of section 4003 of the 
 11.9   Omnibus Consolidated and Emergency Supplemental Appropriations 
 11.10  Act, 1999, Public Law Number 105-277, and the provisions of 
 11.11  section 318 of the Consolidated Appropriation Act of 2001, 
 11.12  Public Law Number 106-554, shall become effective at the time 
 11.13  they become effective for federal purposes. 
 11.14     The Internal Revenue Code of 1986, as amended through 
 11.15  December 31, 1996, shall be in effect for taxable years 
 11.16  beginning after December 31, 1996. 
 11.17     The provisions of sections 202(a) and (b), 221(a), 225, 
 11.18  312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 
 11.19  (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 
 11.20  1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 
 11.21  1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 
 11.22  of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 
 11.23  the provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 
 11.24  7002, and 7003 of the Internal Revenue Service Restructuring and 
 11.25  Reform Act of 1998, Public Law Number 105-206, the provisions of 
 11.26  section 3001 of the Omnibus Consolidated and Emergency 
 11.27  Supplemental Appropriations Act, 1999, Public Law Number 
 11.28  105-277, the provisions of section 3001 of the Miscellaneous 
 11.29  Trade and Technical Corrections Act of 1999, Public Law Number 
 11.30  106-36, and the provisions of section 316 of the Consolidated 
 11.31  Appropriation Act of 2001, Public Law Number 106-554, shall 
 11.32  become effective at the time they become effective for federal 
 11.33  purposes. 
 11.34     The Internal Revenue Code of 1986, as amended through 
 11.35  December 31, 1997, shall be in effect for taxable years 
 11.36  beginning after December 31, 1997. 
 12.1      The provisions of sections 5002, 6009, 6011, and 7001 of 
 12.2   the Internal Revenue Service Restructuring and Reform Act of 
 12.3   1998, Public Law Number 105-206, the provisions of section 9010 
 12.4   of the Transportation Equity Act for the 21st Century, Public 
 12.5   Law Number 105-178, the provisions of sections 1004, 4002, and 
 12.6   5301 of the Omnibus Consolidation and Emergency Supplemental 
 12.7   Appropriations Act, 1999, Public Law Number 105-277, the 
 12.8   provision of section 303 of the Ricky Ray Hemophilia Relief Fund 
 12.9   Act of 1998, Public Law Number 105-369, the provisions of 
 12.10  sections 532, 534, 536, 537, and 538 of the Ticket to Work and 
 12.11  Work Incentives Improvement Act of 1999, Public Law Number 
 12.12  106-170, the provisions of the Installment Tax Correction Act of 
 12.13  2000, Public Law Number 106-573, and the provisions of section 
 12.14  309 of the Consolidated Appropriation Act of 2001, Public Law 
 12.15  Number 106-554, shall become effective at the time they become 
 12.16  effective for federal purposes. 
 12.17     The Internal Revenue Code of 1986, as amended through 
 12.18  December 31, 1998, shall be in effect for taxable years 
 12.19  beginning after December 31, 1998.  
 12.20     The provisions of the FSC Repeal and Extraterritorial 
 12.21  Income Exclusion Act of 2000, Public Law Number 106-519, and the 
 12.22  provision of section 412 of the Job Creation and Worker 
 12.23  Assistance Act of 2002, Public Law Number 107-147, shall become 
 12.24  effective at the time it became effective for federal purposes. 
 12.25     The Internal Revenue Code of 1986, as amended through 
 12.26  December 31, 1999, shall be in effect for taxable years 
 12.27  beginning after December 31, 1999.  The provisions of sections 
 12.28  306 and 401 of the Consolidated Appropriation Act of 2001, 
 12.29  Public Law Number 106-554, and the provision of section 
 12.30  632(b)(2)(A) of the Economic Growth and Tax Relief 
 12.31  Reconciliation Act of 2001, Public Law Number 107-16, and 
 12.32  provisions of sections 101 and 402 of the Job Creation and 
 12.33  Worker Assistance Act of 2002, Public Law Number 107-147, shall 
 12.34  become effective at the same time it became effective for 
 12.35  federal purposes. 
 12.36     The Internal Revenue Code of 1986, as amended through 
 13.1   December 31, 2000, shall be in effect for taxable years 
 13.2   beginning after December 31, 2000.  The provisions of sections 
 13.3   659a and 671 of the Economic Growth and Tax Relief 
 13.4   Reconciliation Act of 2001, Public Law Number 107-16, the 
 13.5   provisions of sections 104, 105, and 111 of the Victims of 
 13.6   Terrorism Tax Relief Act of 2001, Public Law Number 107-134, and 
 13.7   the provisions of sections 201, 403, 413, and 606 of the Job 
 13.8   Creation and Worker Assistance Act of 2002, Public Law Number 
 13.9   107-147, shall become effective at the same time it became 
 13.10  effective for federal purposes. 
 13.11     The Internal Revenue Code of 1986, as amended through March 
 13.12  15, 2002, shall be in effect for taxable years beginning after 
 13.13  December 31, 2001. 
 13.14     The provisions of sections 101 and 102 of the Victims of 
 13.15  Terrorism Tax Relief Act of 2001, Public Law Number 107-134, 
 13.16  shall become effective at the same time it becomes effective for 
 13.17  federal purposes. 
 13.18     The Internal Revenue Code of 1986, as amended through 
 13.19  December 31, 2002, shall be in effect for taxable years 
 13.20  beginning after December 31, 2002. 
 13.21     Except as otherwise provided, references to the Internal 
 13.22  Revenue Code in subdivisions 19a to 19g mean the code in effect 
 13.23  for purposes of determining net income for the applicable year. 
 13.24     [EFFECTIVE DATE.] This section is effective the day 
 13.25  following final enactment. 
 13.26     Sec. 3.  Minnesota Statutes 2002, section 290.01, 
 13.27  subdivision 31, is amended to read: 
 13.28     Subd. 31.  [INTERNAL REVENUE CODE.] Unless specifically 
 13.29  defined otherwise, "Internal Revenue Code" means the Internal 
 13.30  Revenue Code of 1986, as amended through March 15 December 31, 
 13.31  2002. 
 13.32     [EFFECTIVE DATE.] This section is effective the day 
 13.33  following final enactment. 
 13.34     Sec. 4.  Minnesota Statutes 2002, section 290A.03, 
 13.35  subdivision 15, is amended to read: 
 13.36     Subd. 15.  [INTERNAL REVENUE CODE.] "Internal Revenue Code" 
 14.1   means the Internal Revenue Code of 1986, as amended 
 14.2   through March 15 December 31, 2002. 
 14.3      [EFFECTIVE DATE.] This section is effective for refunds 
 14.4   payable for rents paid in 2003 and thereafter and property taxes 
 14.5   payable in 2004 and thereafter. 
 14.6                              ARTICLE 3 
 14.7                            PROPERTY TAXES 
 14.8      Section 1.  Minnesota Statutes 2002, section 270.06, is 
 14.9   amended to read: 
 14.10     270.06 [POWERS AND DUTIES.] 
 14.11     The commissioner of revenue shall: 
 14.12     (1) have and exercise general supervision over the 
 14.13  administration of the assessment and taxation laws of the state, 
 14.14  over assessors, town, county, and city boards of review and 
 14.15  equalization, and all other assessing officers in the 
 14.16  performance of their duties, to the end that all assessments of 
 14.17  property be made relatively just and equal in compliance with 
 14.18  the laws of the state; 
 14.19     (2) confer with, advise, and give the necessary 
 14.20  instructions and directions to local assessors and local boards 
 14.21  of review throughout the state as to their duties under the laws 
 14.22  of the state; 
 14.23     (3) direct proceedings, actions, and prosecutions to be 
 14.24  instituted to enforce the laws relating to the liability and 
 14.25  punishment of public officers and officers and agents of 
 14.26  corporations for failure or negligence to comply with the 
 14.27  provisions of the laws of this state governing returns of 
 14.28  assessment and taxation of property, and cause complaints to be 
 14.29  made against local assessors, members of boards of equalization, 
 14.30  members of boards of review, or any other assessing or taxing 
 14.31  officer, to the proper authority, for their removal from office 
 14.32  for misconduct or negligence of duty; 
 14.33     (4) require county attorneys to assist in the commencement 
 14.34  of prosecutions in actions or proceedings for removal, 
 14.35  forfeiture and punishment for violation of the laws of this 
 14.36  state in respect to the assessment and taxation of property in 
 15.1   their respective districts or counties; 
 15.2      (5) require town, city, county, and other public officers 
 15.3   to report information as to the assessment of property, 
 15.4   collection of taxes received from licenses and other sources, 
 15.5   and such other information as may be needful in the work of the 
 15.6   department of revenue, in such form and upon such blanks as the 
 15.7   commissioner may prescribe; 
 15.8      (6) require individuals, copartnerships, companies, 
 15.9   associations, and corporations to furnish information concerning 
 15.10  their capital, funded or other debt, current assets and 
 15.11  liabilities, earnings, operating expenses, taxes, as well as all 
 15.12  other statements now required by law for taxation purposes; 
 15.13     (7) subpoena witnesses, at a time and place reasonable 
 15.14  under the circumstances, to appear and give testimony, and to 
 15.15  produce books, records, papers and documents for inspection and 
 15.16  copying relating to any matter which the commissioner may have 
 15.17  authority to investigate or determine; 
 15.18     (8) issue a subpoena which does not identify the person or 
 15.19  persons with respect to whose liability the subpoena is issued, 
 15.20  but only if (a) the subpoena relates to the investigation of a 
 15.21  particular person or ascertainable group or class of persons, 
 15.22  (b) there is a reasonable basis for believing that such person 
 15.23  or group or class of persons may fail or may have failed to 
 15.24  comply with any law administered by the commissioner, (c) the 
 15.25  information sought to be obtained from the examination of the 
 15.26  records (and the identity of the person or persons with respect 
 15.27  to whose liability the subpoena is issued) is not readily 
 15.28  available from other sources, (d) the subpoena is clear and 
 15.29  specific as to the information sought to be obtained, and (e) 
 15.30  the information sought to be obtained is limited solely to the 
 15.31  scope of the investigation.  Provided further that the party 
 15.32  served with a subpoena which does not identify the person or 
 15.33  persons with respect to whose tax liability the subpoena is 
 15.34  issued shall have the right, within 20 days after service of the 
 15.35  subpoena, to petition the district court for the judicial 
 15.36  district in which lies the county in which that party is located 
 16.1   for a determination as to whether the commissioner of revenue 
 16.2   has complied with all the requirements in (a) to (e), and thus, 
 16.3   whether the subpoena is enforceable.  If no such petition is 
 16.4   made by the party served within the time prescribed, the 
 16.5   subpoena shall have the force and effect of a court order; 
 16.6      (9) cause the deposition of witnesses residing within or 
 16.7   without the state, or absent therefrom, to be taken, upon notice 
 16.8   to the interested party, if any, in like manner that depositions 
 16.9   of witnesses are taken in civil actions in the district court, 
 16.10  in any matter which the commissioner may have authority to 
 16.11  investigate or determine; 
 16.12     (10) investigate the tax laws of other states and countries 
 16.13  and to formulate and submit to the legislature such legislation 
 16.14  as the commissioner may deem expedient to prevent evasions of 
 16.15  assessment and taxing laws, and secure just and equal taxation 
 16.16  and improvement in the system of assessment and taxation in this 
 16.17  state; 
 16.18     (11) consult and confer with the governor upon the subject 
 16.19  of taxation, the administration of the laws in regard thereto, 
 16.20  and the progress of the work of the department of revenue, and 
 16.21  furnish the governor, from time to time, such assistance and 
 16.22  information as the governor may require relating to tax matters; 
 16.23     (12) transmit to the governor, on or before the third 
 16.24  Monday in December of each even-numbered year, and to each 
 16.25  member of the legislature, on or before November 15 of each 
 16.26  even-numbered year, the report of the department of revenue for 
 16.27  the preceding years, showing all the taxable property in the 
 16.28  state and the value of the same, in tabulated form; 
 16.29     (13) inquire into the methods of assessment and taxation 
 16.30  and ascertain whether the assessors faithfully discharge their 
 16.31  duties, particularly as to their compliance with the laws 
 16.32  requiring the assessment of all property not exempt from 
 16.33  taxation; 
 16.34     (14) administer and enforce the assessment and collection 
 16.35  of state taxes and fees, including the use of any remedy 
 16.36  available to nongovernmental creditors, and, from time to time, 
 17.1   make, publish, and distribute rules for the administration and 
 17.2   enforcement of assessments and fees laws administered by the 
 17.3   commissioner and state tax laws.  The rules have the force of 
 17.4   law; 
 17.5      (15) prepare blank forms for the returns required by state 
 17.6   tax law and distribute them throughout the state, furnishing 
 17.7   them subject to charge on application; 
 17.8      (16) prescribe rules governing the qualification and 
 17.9   practice of agents, attorneys, or other persons representing 
 17.10  taxpayers before the commissioner.  The rules may require that 
 17.11  those persons, agents, and attorneys show that they are of good 
 17.12  character and in good repute, have the necessary qualifications 
 17.13  to give taxpayers valuable services, and are otherwise competent 
 17.14  to advise and assist taxpayers in the presentation of their case 
 17.15  before being recognized as representatives of taxpayers.  After 
 17.16  due notice and opportunity for hearing, the commissioner may 
 17.17  suspend and bar from further practice before the commissioner 
 17.18  any person, agent, or attorney who is shown to be incompetent or 
 17.19  disreputable, who refuses to comply with the rules, or who with 
 17.20  intent to defraud, willfully or knowingly deceives, misleads, or 
 17.21  threatens a taxpayer or prospective taxpayer, by words, 
 17.22  circular, letter, or by advertisement.  This clause does not 
 17.23  curtail the rights of individuals to appear in their own behalf 
 17.24  or partners or corporations' officers to appear in behalf of 
 17.25  their respective partnerships or corporations; 
 17.26     (17) appoint agents as the commissioner considers necessary 
 17.27  to make examinations and determinations.  The agents have the 
 17.28  rights and powers conferred on the commissioner to subpoena, 
 17.29  examine, and copy books, records, papers, or memoranda, subpoena 
 17.30  witnesses, administer oaths and affirmations, and take 
 17.31  testimony.  In addition to administrative subpoenas of the 
 17.32  commissioner and the agents, upon demand of the commissioner or 
 17.33  an agent, the court administrator of any district court shall 
 17.34  issue a subpoena for the attendance of a witness or the 
 17.35  production of books, papers, records, or memoranda before the 
 17.36  agent for inspection and copying.  Disobedience of a court 
 18.1   administrator's subpoena shall be punished by the district court 
 18.2   of the district in which the subpoena is issued, or in the case 
 18.3   of a subpoena issued by the commissioner or an agent, by the 
 18.4   district court of the district in which the party served with 
 18.5   the subpoena is located, in the same manner as contempt of the 
 18.6   district court; 
 18.7      (18) appoint and employ additional help, purchase supplies 
 18.8   or materials, or incur other expenditures in the enforcement of 
 18.9   state tax laws as considered necessary.  The salaries of all 
 18.10  agents and employees provided for in this chapter shall be fixed 
 18.11  by the appointing authority, subject to the approval of the 
 18.12  commissioner of administration; 
 18.13     (19) execute and administer any agreement with the 
 18.14  secretary of the treasury of the United States or a 
 18.15  representative of another state regarding the exchange of 
 18.16  information and administration of the tax laws; 
 18.17     (20) authorize the use of unmarked motor vehicles to 
 18.18  conduct seizures or criminal investigations pursuant to the 
 18.19  commissioner's authority; and 
 18.20     (21) exercise other powers and perform other duties 
 18.21  required of or imposed upon the commissioner of revenue by law.  
 18.22     [EFFECTIVE DATE.] This section is effective the day 
 18.23  following final enactment. 
 18.24     Sec. 2.  Minnesota Statutes 2002, section 273.05, 
 18.25  subdivision 1, is amended to read: 
 18.26     Subdivision 1.  [APPOINTMENT OF TOWN AND CITY ASSESSORS.] 
 18.27  Notwithstanding any other provision of law all town assessors 
 18.28  shall be appointed by the town board, and notwithstanding any 
 18.29  charter provisions to the contrary, all city assessors shall be 
 18.30  appointed by the city council or other appointing authority as 
 18.31  provided by law or charter.  Such assessors shall be residents 
 18.32  of the state but need not be a resident of the town or city for 
 18.33  which they are appointed.  They shall be selected and appointed 
 18.34  because of their knowledge and training in the field of property 
 18.35  taxation.  All town and statutory city assessors shall be 
 18.36  appointed for indefinite terms.  A town or statutory city 
 19.1   assessor who is an employee may be dismissed by the appointing 
 19.2   authority for cause.  The term of the town or city assessors may 
 19.3   be terminated at any time by the town board or city council on 
 19.4   charges by the commissioner of revenue of inefficiency or 
 19.5   neglect of duty.  Vacancies in the office of town or city 
 19.6   assessor shall be filled within 90 days by appointment of the 
 19.7   respective appointing authority indicated above.  If the vacancy 
 19.8   is not filled within 90 days, the office shall be terminated.  
 19.9   When a vacancy in the office of town or city assessor is not 
 19.10  filled by appointment, and it is imperative that the office of 
 19.11  assessor be filled, the county auditor shall appoint some 
 19.12  resident of the county as assessor for such town or city.  The 
 19.13  county auditor may appoint the county assessor as assessor for 
 19.14  such town or city, in which case the town or city shall pay to 
 19.15  the county treasurer the amount determined by the county auditor 
 19.16  to be due for the services performed and expenses incurred by 
 19.17  the county assessor in acting as assessor for such town or 
 19.18  city.  The term of any town or statutory city assessor in a 
 19.19  county electing in accordance with section 273.052 shall be 
 19.20  terminated as provided in section 273.055. 
 19.21     The commissioner of revenue may recommend to the state 
 19.22  board of assessors the nonrenewal, suspension, or revocation of 
 19.23  an assessor's license as provided in sections 270.41 to 270.53. 
 19.24     [EFFECTIVE DATE.] This section is effective the day 
 19.25  following final enactment and applies to every town or city 
 19.26  assessor whether that assessor was appointed before, on, or 
 19.27  after the effective date. 
 19.28     Sec. 3.  Minnesota Statutes 2002, section 273.061, 
 19.29  subdivision 1, is amended to read: 
 19.30     Subdivision 1.  [OFFICE CREATED; APPOINTMENT, 
 19.31  QUALIFICATIONS.] Every county in this state shall have a county 
 19.32  assessor.  The county assessor shall be appointed by the board 
 19.33  of county commissioners.  The assessor shall be selected and 
 19.34  appointed because of knowledge and training in the field of 
 19.35  property taxation and appointment shall be approved by the 
 19.36  commissioner of revenue before the same shall become effective.  
 20.1   Upon receipt by the county commissioners of the commissioner of 
 20.2   revenue's refusal to approve an appointment, the term of the 
 20.3   appointee shall terminate at the end of that day.  
 20.4      The commissioner of revenue may grant approval on a 
 20.5   probationary basis for a period of two years.  The commissioner 
 20.6   must base the decision to impose a probationary period on 
 20.7   objective and consistent criteria.  At the end of the two-year 
 20.8   probationary period, the commissioner may either refuse to 
 20.9   approve the person's appointment for the remainder of the 
 20.10  person's four-year term, approve the person's appointment but 
 20.11  only for another two-year probationary period, or 
 20.12  unconditionally approve the person's appointment for the 
 20.13  remainder of the four-year term for which the person was 
 20.14  originally appointed by the county board.  The criteria shall 
 20.15  not be considered rules and are not subject to the 
 20.16  Administrative Procedure Act. 
 20.17     Notwithstanding any law to the contrary, a county assessor 
 20.18  must have senior accreditation from the state board of assessors 
 20.19  by January 1, 1992, or within two years of the assessor's first 
 20.20  appointment under this section, whichever is later. 
 20.21     The person appointed as the county assessor may not also be 
 20.22  the county auditor, the county attorney, or a county board 
 20.23  member for the same county.  The person appointed as the county 
 20.24  assessor may not also be a city council member for a city in the 
 20.25  same county.  The person appointed as the city assessor may not 
 20.26  also be a city council member for the same city.  An assessor 
 20.27  who accepts such a position is deemed to have resigned from the 
 20.28  assessor position on January 2, 2004, or on the day the person 
 20.29  takes the oath of office for the other office, whichever is 
 20.30  later. 
 20.31     [EFFECTIVE DATE.] This section is effective January 2, 
 20.32  2004, and thereafter. 
 20.33     Sec. 4.  Minnesota Statutes 2002, section 274.01, 
 20.34  subdivision 1, is amended to read: 
 20.35     Subdivision 1.  [ORDINARY BOARD; MEETINGS, DEADLINES, 
 20.36  GRIEVANCES.] (a) The town board of a town, or the council or 
 21.1   other governing body of a city, is the board of appeal and 
 21.2   equalization except (1) in cities whose charters provide for a 
 21.3   board of equalization or (2) in any city or town that has 
 21.4   transferred its local board of review power and duties to the 
 21.5   county board as provided in subdivision 3.  The county assessor 
 21.6   shall fix a day and time when the board or the board of 
 21.7   equalization shall meet in the assessment districts of the 
 21.8   county.  Notwithstanding any law or city charter to the 
 21.9   contrary, a city board of equalization shall be referred to as a 
 21.10  board of appeal and equalization.  On or before February 15 of 
 21.11  each year the assessor shall give written notice of the time to 
 21.12  the city or town clerk.  Notwithstanding the provisions of any 
 21.13  charter to the contrary, the meetings must be held between April 
 21.14  1 and May 31 each year.  The clerk shall give published and 
 21.15  posted notice of the meeting at least ten days before the date 
 21.16  of the meeting.  
 21.17     The board shall meet at the office of the clerk to review 
 21.18  the assessment and classification of property in the town or 
 21.19  city.  No changes in valuation or classification which are 
 21.20  intended to correct errors in judgment by the county assessor 
 21.21  may be made by the county assessor after the board has adjourned 
 21.22  in those cities or towns that hold a local board of review; 
 21.23  however, corrections of errors that are merely clerical in 
 21.24  nature or changes that extend homestead treatment to property 
 21.25  are permitted after adjournment until the tax extension date for 
 21.26  that assessment year.  The changes must be fully documented and 
 21.27  maintained in the assessor's office and must be available for 
 21.28  review by any person.  A copy of the changes made during this 
 21.29  period in those cities or towns that hold a local board of 
 21.30  review must be sent to the county board no later than December 
 21.31  31 of the assessment year.  
 21.32     (b) The board shall determine whether the taxable property 
 21.33  in the town or city has been properly placed on the list and 
 21.34  properly valued by the assessor.  If real or personal property 
 21.35  has been omitted, the board shall place it on the list with its 
 21.36  market value, and correct the assessment so that each tract or 
 22.1   lot of real property, and each article, parcel, or class of 
 22.2   personal property, is entered on the assessment list at its 
 22.3   market value.  No assessment of the property of any person may 
 22.4   be raised unless the person has been duly notified of the intent 
 22.5   of the board to do so.  On application of any person feeling 
 22.6   aggrieved, the board shall review the assessment or 
 22.7   classification, or both, and correct it as appears just.  The 
 22.8   board may not make an individual market value adjustment or 
 22.9   classification change that would benefit the property in cases 
 22.10  where the owner or other person having control over the property 
 22.11  will not permit the assessor to inspect the property and the 
 22.12  interior of any buildings or structures.  
 22.13     (c) A local board may reduce assessments upon petition of 
 22.14  the taxpayer but the total reductions must not reduce the 
 22.15  aggregate assessment made by the county assessor by more than 
 22.16  one percent.  If the total reductions would lower the aggregate 
 22.17  assessments made by the county assessor by more than one 
 22.18  percent, none of the adjustments may be made.  The assessor 
 22.19  shall correct any clerical errors or double assessments 
 22.20  discovered by the board without regard to the one percent 
 22.21  limitation.  
 22.22     (d) A local board does not have authority to grant an 
 22.23  exemption or to order property removed from the tax rolls. 
 22.24     (e) A majority of the members may act at the meeting, and 
 22.25  adjourn from day to day until they finish hearing the cases 
 22.26  presented.  The assessor shall attend, with the assessment books 
 22.27  and papers, and take part in the proceedings, but must not 
 22.28  vote.  The county assessor, or an assistant delegated by the 
 22.29  county assessor shall attend the meetings.  The board shall list 
 22.30  separately, on a form appended to the assessment book, all 
 22.31  omitted property added to the list by the board and all items of 
 22.32  property increased or decreased, with the market value of each 
 22.33  item of property, added or changed by the board, placed opposite 
 22.34  the item.  The county assessor shall enter all changes made by 
 22.35  the board in the assessment book.  
 22.36     (e) (f) Except as provided in subdivision 3, if a person 
 23.1   fails to appear in person, by counsel, or by written 
 23.2   communication before the board after being duly notified of the 
 23.3   board's intent to raise the assessment of the property, or if a 
 23.4   person feeling aggrieved by an assessment or classification 
 23.5   fails to apply for a review of the assessment or classification, 
 23.6   the person may not appear before the county board of appeal and 
 23.7   equalization for a review of the assessment or classification.  
 23.8   This paragraph does not apply if an assessment was made after 
 23.9   the local board meeting, as provided in section 273.01, or if 
 23.10  the person can establish not having received notice of market 
 23.11  value at least five days before the local board meeting.  
 23.12     (f) (g) The local board must complete its work and adjourn 
 23.13  within 20 days from the time of convening stated in the notice 
 23.14  of the clerk, unless a longer period is approved by the 
 23.15  commissioner of revenue.  No action taken after that date is 
 23.16  valid.  All complaints about an assessment or classification 
 23.17  made after the meeting of the board must be heard and determined 
 23.18  by the county board of equalization.  A nonresident may, at any 
 23.19  time, before the meeting of the board file written objections to 
 23.20  an assessment or classification with the county assessor.  The 
 23.21  objections must be presented to the board at its meeting by the 
 23.22  county assessor for its consideration. 
 23.23     [EFFECTIVE DATE.] This section is effective the day 
 23.24  following final enactment. 
 23.25     Sec. 5.  Minnesota Statutes 2002, section 274.13, 
 23.26  subdivision 1, is amended to read: 
 23.27     Subdivision 1.  [MEMBERS; MEETINGS; RULES FOR EQUALIZING 
 23.28  ASSESSMENTS.] The county commissioners, or a majority of them, 
 23.29  with the county auditor, or, if the auditor cannot be present, 
 23.30  the deputy county auditor, or, if there is no deputy, the court 
 23.31  administrator of the district court, shall form a board for the 
 23.32  equalization of the assessment of the property of the county, 
 23.33  including the property of all cities whose charters provide for 
 23.34  a board of equalization.  This board shall be referred to as the 
 23.35  county board of appeal and equalization.  The board shall meet 
 23.36  annually, on the date specified in section 274.14, at the office 
 24.1   of the auditor.  Each member shall take an oath to fairly and 
 24.2   impartially perform duties as a member.  The board shall examine 
 24.3   and compare the returns of the assessment of property of the 
 24.4   towns or districts, and equalize them so that each tract or lot 
 24.5   of real property and each article or class of personal property 
 24.6   is entered on the assessment list at its market value, subject 
 24.7   to the following rules: 
 24.8      (1) The board shall raise the valuation of each tract or 
 24.9   lot of real property which in its opinion is returned below its 
 24.10  market value to the sum believed to be its market value.  The 
 24.11  board must first give notice of intention to raise the valuation 
 24.12  to the person in whose name it is assessed, if the person is a 
 24.13  resident of the county.  The notice must fix a time and place 
 24.14  for a hearing.  
 24.15     (2) The board shall reduce the valuation of each tract or 
 24.16  lot which in its opinion is returned above its market value to 
 24.17  the sum believed to be its market value. 
 24.18     (3) The board shall raise the valuation of each class of 
 24.19  personal property which in its opinion is returned below its 
 24.20  market value to the sum believed to be its market value.  It 
 24.21  shall raise the aggregate value of the personal property of 
 24.22  individuals, firms, or corporations, when it believes that the 
 24.23  aggregate valuation, as returned, is less than the market value 
 24.24  of the taxable personal property possessed by the individuals, 
 24.25  firms, or corporations, to the sum it believes to be the market 
 24.26  value.  The board must first give notice to the persons of 
 24.27  intention to do so.  The notice must set a time and place for a 
 24.28  hearing. 
 24.29     (4) The board shall reduce the valuation of each class of 
 24.30  personal property that is returned above its market value to the 
 24.31  sum it believes to be its market value.  Upon complaint of a 
 24.32  party aggrieved, the board shall reduce the aggregate valuation 
 24.33  of the individual's personal property, or of any class of 
 24.34  personal property for which the individual is assessed, which in 
 24.35  its opinion has been assessed at too large a sum, to the sum it 
 24.36  believes was the market value of the individual's personal 
 25.1   property of that class.  
 25.2      (5) The board must not reduce the aggregate value of all 
 25.3   the property of its county, as submitted to the county board of 
 25.4   equalization, with the additions made by the auditor under this 
 25.5   chapter, by more than one percent of its whole valuation.  The 
 25.6   board may raise the aggregate valuation of real property, and of 
 25.7   each class of personal property, of the county, or of any town 
 25.8   or district of the county, when it believes it is below the 
 25.9   market value of the property, or class of property, to the 
 25.10  aggregate amount it believes to be its market value. 
 25.11     (6) The board shall change the classification of any 
 25.12  property which in its opinion is not properly classified. 
 25.13     (7) The board does not have the authority to grant an 
 25.14  exemption or to order property removed from the tax rolls. 
 25.15     [EFFECTIVE DATE.] This section is effective the day 
 25.16  following final enactment. 
 25.17     Sec. 6.  Minnesota Statutes 2002, section 275.025, 
 25.18  subdivision 4, is amended to read: 
 25.19     Subd. 4.  [APPORTIONMENT AND LEVY OF STATE GENERAL TAX.] 
 25.20  The state general tax must be distributed among the counties by 
 25.21  applying a uniform rate to each county's commercial-industrial 
 25.22  tax capacity and its seasonal residential recreational tax 
 25.23  capacity.  Within each county, the tax must be levied by 
 25.24  applying a uniform rate against commercial-industrial tax 
 25.25  capacity and seasonal residential recreational tax capacity.  By 
 25.26  On or before November 1 each year, the commissioner of revenue 
 25.27  shall certify the a preliminary state general levy rate to each 
 25.28  county auditor that must be used to prepare the notices of 
 25.29  proposed property taxes for taxes payable in the following 
 25.30  year.  By January 1 of each year, the commissioner shall certify 
 25.31  the final state general levy rate to each county auditor that 
 25.32  shall be used in spreading taxes.  
 25.33     [EFFECTIVE DATE.] This section is effective for taxes 
 25.34  payable in 2004 and thereafter, except that the change from 
 25.35  "seasonal recreational tax capacity" to "seasonal residential 
 25.36  recreational tax capacity" is effective the day following final 
 26.1   enactment. 
 26.2      Sec. 7.  Minnesota Statutes 2002, section 276.10, is 
 26.3   amended to read: 
 26.4      276.10 [APPORTIONMENT AND DISTRIBUTION OF FUNDS.] 
 26.5      On the settlement day determined in section 276.09 for each 
 26.6   year, the county auditor and county treasurer shall distribute 
 26.7   all undistributed funds in the treasury.  The funds must be 
 26.8   apportioned as provided by law, and credited to the state, town, 
 26.9   city, school district, special district and each county fund.  
 26.10  Within 20 days after the distribution is completed, the county 
 26.11  auditor shall report to the state auditor in the form prescribed 
 26.12  by the state auditor.  The county auditor shall issue a warrant 
 26.13  for the payment of money in the county treasury to the credit of 
 26.14  the state, town, city, school district, or special districts on 
 26.15  application of the persons entitled to receive the payment.  The 
 26.16  county auditor may apply the local tax rate from the year before 
 26.17  the year of distribution when apportioning and distributing 
 26.18  delinquent tax proceeds, if the composition of the previous 
 26.19  year's local tax rate between taxing districts is not 
 26.20  significantly different from the local tax rate that existed for 
 26.21  the year of the delinquency.  
 26.22     [EFFECTIVE DATE.] This section is effective for taxes 
 26.23  payable in 2004 and thereafter. 
 26.24     Sec. 8.  Minnesota Statutes 2002, section 276.11, 
 26.25  subdivision 1, is amended to read: 
 26.26     Subdivision 1.  [GENERALLY.] As soon as practical after the 
 26.27  settlement day determined in section 276.09, the county 
 26.28  treasurer shall pay to the state treasurer or the treasurer of a 
 26.29  town, city, school district, or special district, on the warrant 
 26.30  of the county auditor, all receipts of taxes levied by the 
 26.31  taxing district and deliver up all orders and other evidences of 
 26.32  indebtedness of the taxing district, taking triplicate receipts 
 26.33  for them.  The treasurer shall file one of the receipts with the 
 26.34  county auditor, and shall return one by mail on the day of its 
 26.35  receipt to the clerk of the town, city, school district, or 
 26.36  special district to which payment was made.  The clerk shall 
 27.1   keep the receipt in the clerk's office.  Upon written request of 
 27.2   the taxing district, to the extent practicable, the county 
 27.3   treasurer shall make partial payments of amounts collected 
 27.4   periodically in advance of the next settlement and 
 27.5   distribution.  A statement prepared by the county treasurer must 
 27.6   accompany each payment.  It must state the years for which taxes 
 27.7   included in the payment were collected and, for each year, the 
 27.8   amount of the taxes and any penalties on the tax.  Upon written 
 27.9   request of a taxing district, except school districts, the 
 27.10  county treasurer shall pay at least 70 percent of the estimated 
 27.11  collection within 30 days after the settlement date determined 
 27.12  in section 276.09.  Within seven business days after the due 
 27.13  date, or 28 calendar days after the postmark date on the 
 27.14  envelopes containing real or personal property tax statements, 
 27.15  whichever is latest, the county treasurer shall pay to the 
 27.16  treasurer of the school districts 50 percent of the estimated 
 27.17  collections arising from taxes levied by and belonging to the 
 27.18  school district, unless the school district elects to receive 50 
 27.19  percent of the estimated collections arising from taxes levied 
 27.20  by and belonging to the school district after making a 
 27.21  proportionate reduction to reflect any loss in collections as 
 27.22  the result of any delay in mailing tax statements.  In that 
 27.23  case, 50 percent of those adjusted, estimated collections shall 
 27.24  be paid by the county treasurer to the treasurer of the school 
 27.25  district within seven business days of the due date.  The 
 27.26  remaining 50 percent of the estimated collections must be paid 
 27.27  to the treasurer of the school district within the next seven 
 27.28  business days of the later of the dates in the preceding 
 27.29  sentence, unless the school district elects to receive the 
 27.30  remainder of its estimated collections after a proportionate 
 27.31  reduction has been made to reflect any loss in collections as 
 27.32  the result of any delay in mailing tax statements.  In that 
 27.33  case, the remaining 50 percent of those adjusted, estimated 
 27.34  collections shall be paid by the county treasurer to the 
 27.35  treasurer of the school district within 14 days of the due 
 27.36  date.  The treasurer shall pay the balance of the amounts 
 28.1   collected to the state before June 30, or to a municipal 
 28.2   corporation or other body within 60 days after the settlement 
 28.3   date determined in section 276.09.  After 45 days interest at an 
 28.4   annual rate of eight percent accrues and must be paid to the 
 28.5   taxing district.  Interest must be paid upon appropriation from 
 28.6   the general revenue fund of the county.  If not paid, it may be 
 28.7   recovered by the taxing district, in a civil action. 
 28.8      [EFFECTIVE DATE.] This section is effective for taxes 
 28.9   payable in 2004 and thereafter. 
 28.10     Sec. 9.  [276.112] [STATE PROPERTY TAXES; COUNTY 
 28.11  TREASURER.] 
 28.12     On or before January 25 each year, for the period ending 
 28.13  December 31 of the prior year, and on or before June 29 each 
 28.14  year, for the period ending on the most recent settlement day 
 28.15  determined in section 276.09, the county treasurer must make 
 28.16  full settlement with the county auditor according to sections 
 28.17  276.09, 276.10, and 276.111 for all receipts of state property 
 28.18  taxes levied under section 275.025, and must transmit those 
 28.19  receipts to the commissioner of revenue by electronic means. 
 28.20     [EFFECTIVE DATE.] This section is effective the day 
 28.21  following final enactment. 
 28.22     Sec. 10.  Minnesota Statutes 2002, section 282.01, 
 28.23  subdivision 1b, is amended to read: 
 28.24     Subd. 1b.  [CONVEYANCE; TARGETED NEIGHBORHOOD LANDS.] (a) 
 28.25  Notwithstanding subdivision 1a, in the case of tax-forfeited 
 28.26  lands located in a targeted neighborhood, as defined in section 
 28.27  469.201, subdivision 10, and section 473.121, subdivision 2, the 
 28.28  commissioner of revenue shall convey by deed in the name of the 
 28.29  state any tract of tax-forfeited land held in trust in favor of 
 28.30  the taxing districts, to a political subdivision that submits an 
 28.31  application to the commissioner of revenue and, in the case of 
 28.32  targeted neighborhoods located outside of the metropolitan area 
 28.33  as defined in section 473.121, the recommendation of the county 
 28.34  board. 
 28.35     (b) The application under paragraph (a) must include a 
 28.36  statement of facts as to the use to be made of the tract, the 
 29.1   need therefor, and a resolution, adopted by the governing body 
 29.2   of the political subdivision, finding that the conveyance of a 
 29.3   tract of tax-forfeited land to the political subdivision is 
 29.4   necessary to provide for the redevelopment of land as productive 
 29.5   taxable property.  Deeds of conveyance issued under paragraph 
 29.6   (a) are not conditioned on continued use of the property for the 
 29.7   use stated in the application.  
 29.8      [EFFECTIVE DATE.] This section is effective for deeds 
 29.9   issued on or after July 1, 2003. 
 29.10     Sec. 11.  Minnesota Statutes 2002, section 282.01, 
 29.11  subdivision 7a, is amended to read: 
 29.12     Subd. 7a.  [CITY SALES; ALTERNATE PROCEDURES.] Land located 
 29.13  in a home rule charter or statutory city, or in a town which 
 29.14  cannot be improved because of noncompliance with local 
 29.15  ordinances regarding minimum area, shape, frontage or access may 
 29.16  be sold by the county auditor pursuant to this subdivision if 
 29.17  the auditor determines that a nonpublic sale will encourage the 
 29.18  approval of sale of the land by the city or town and promote its 
 29.19  return to the tax rolls.  If the physical characteristics of the 
 29.20  land indicate that its highest and best use will be achieved by 
 29.21  combining it with an adjoining parcel and the city or town has 
 29.22  not adopted a local ordinance governing minimum area, shape, 
 29.23  frontage, or access, the land may also be sold pursuant to this 
 29.24  subdivision.  If the property consists of an undivided interest 
 29.25  in land or land and improvements, the property may also be sold 
 29.26  to the other owners under this subdivision.  The sale of land 
 29.27  pursuant to this subdivision shall be subject to any conditions 
 29.28  imposed by the county board pursuant to section 282.03.  The 
 29.29  governing body of the city or town may recommend to the county 
 29.30  board conditions to be imposed on the sale.  The county auditor 
 29.31  may restrict the sale to owners of lands adjoining the land to 
 29.32  be sold.  The county auditor shall conduct the sale by sealed 
 29.33  bid or may select another means of sale.  The land shall be sold 
 29.34  to the highest bidder but in no event shall the land be sold for 
 29.35  less than its appraised value.  All owners of land adjoining the 
 29.36  land to be sold shall be given a written notice at least 30 days 
 30.1   prior to the sale.  
 30.2      This subdivision shall be liberally construed to encourage 
 30.3   the sale and utilization of tax-forfeited land, to eliminate 
 30.4   nuisances and dangerous conditions and to increase compliance 
 30.5   with land use ordinances. 
 30.6      [EFFECTIVE DATE.] This section is effective for sales 
 30.7   occurring on or after the day following final enactment. 
 30.8      Sec. 12.  Minnesota Statutes 2002, section 282.08, is 
 30.9   amended to read: 
 30.10     282.08 [APPORTIONMENT OF PROCEEDS TO TAXING DISTRICTS.] 
 30.11     The net proceeds from the sale or rental of any parcel of 
 30.12  forfeited land, or from the sale of products from the forfeited 
 30.13  land, must be apportioned by the county auditor to the taxing 
 30.14  districts interested in the land, as follows: 
 30.15     (1) the amounts necessary to pay the state general tax levy 
 30.16  against the parcel for taxes payable in the year for which the 
 30.17  tax judgment was entered, and for each subsequent payable year 
 30.18  up to and including the year of forfeiture, must be apportioned 
 30.19  to the state; 
 30.20     (2) the portion required to pay any amounts included in the 
 30.21  appraised value under section 282.01, subdivision 3, as 
 30.22  representing increased value due to any public improvement made 
 30.23  after forfeiture of the parcel to the state, but not exceeding 
 30.24  the amount certified by the clerk of the municipality must be 
 30.25  apportioned to the municipal subdivision entitled to it; 
 30.26     (2) (3) the portion required to pay any amount included in 
 30.27  the appraised value under section 282.019, subdivision 5, 
 30.28  representing increased value due to response actions taken after 
 30.29  forfeiture of the parcel to the state, but not exceeding the 
 30.30  amount of expenses certified by the pollution control agency or 
 30.31  the commissioner of agriculture, must be apportioned to the 
 30.32  agency or the commissioner of agriculture and deposited in the 
 30.33  fund from which the expenses were paid; 
 30.34     (3) (4) the portion of the remainder required to discharge 
 30.35  any special assessment chargeable against the parcel for 
 30.36  drainage or other purpose whether due or deferred at the time of 
 31.1   forfeiture, must be apportioned to the municipal subdivision 
 31.2   entitled to it; and 
 31.3      (4) (5) any balance must be apportioned as follows: 
 31.4      (i) The county board may annually by resolution set aside 
 31.5   no more than 30 percent of the receipts remaining to be used for 
 31.6   timber development on tax-forfeited land and dedicated memorial 
 31.7   forests, to be expended under the supervision of the county 
 31.8   board.  It must be expended only on projects approved by the 
 31.9   commissioner of natural resources. 
 31.10     (ii) The county board may annually by resolution set aside 
 31.11  no more than 20 percent of the receipts remaining to be used for 
 31.12  the acquisition and maintenance of county parks or recreational 
 31.13  areas as defined in sections 398.31 to 398.36, to be expended 
 31.14  under the supervision of the county board. 
 31.15     (iii) Any balance remaining must be apportioned as 
 31.16  follows:  county, 40 percent; town or city, 20 percent; and 
 31.17  school district, 40 percent, provided, however, that in 
 31.18  unorganized territory that portion which would have accrued to 
 31.19  the township must be administered by the county board of 
 31.20  commissioners. 
 31.21     [EFFECTIVE DATE.] This section is effective for taxes 
 31.22  payable in 2004 and thereafter. 
 31.23     Sec. 13.  [290C.12] [DEATH OF CLAIMANT.] 
 31.24     Within one year after the death of the claimant, the 
 31.25  claimant's heir, devisee, or estate must either: 
 31.26     (1) notify the commissioner of election to terminate 
 31.27  enrollment in the sustainable forest incentive program; or 
 31.28     (2) make an application under this chapter to continue 
 31.29  enrollment of the land in the program.  
 31.30     Upon notification under clause (1), the commissioner shall 
 31.31  terminate the enrollment and issue a document releasing the land 
 31.32  from the covenant as provided in section 290C.04, paragraph 
 31.33  (c).  Penalties under section 290C.11 shall not apply.  If the 
 31.34  application under clause (2) is approved, the land is enrolled 
 31.35  in the program without a break.  If the commissioner does not 
 31.36  receive notification within one year after the date of death, 
 32.1   enrollment in the program shall be terminated and penalties 
 32.2   under section 290C.11 shall not apply. 
 32.3      [EFFECTIVE DATE.] This section is effective the day 
 32.4   following final enactment, except in the case of claimants dying 
 32.5   prior to the day following final enactment, heirs, devisees, or 
 32.6   estates may make the election either six months after the 
 32.7   effective date of this provision or one year after the death of 
 32.8   the claimant, whichever is later. 
 32.9      Sec. 14.  Minnesota Statutes 2002, section 469.1792, 
 32.10  subdivision 3, is amended to read: 
 32.11     Subd. 3.  [ACTIONS AUTHORIZED.] (a) An authority with a 
 32.12  district qualifying under this section may take either or both 
 32.13  of the following actions for any or all of its preexisting 
 32.14  districts: 
 32.15     (1) the authority may elect that the original local tax 
 32.16  rate under section 469.177, subdivision 1a, does not apply to 
 32.17  the district; and 
 32.18     (2) the authority may elect the fiscal disparities 
 32.19  contribution will be computed under section 469.177, subdivision 
 32.20  3, paragraph (a), regardless of the election that was made for 
 32.21  the district. 
 32.22     (b) The authority may take action under this subdivision 
 32.23  only after the municipality approves the action, by resolution, 
 32.24  after notice and public hearing in the manner provided under 
 32.25  section 469.175, subdivision 2.  To be effective for taxes 
 32.26  payable in the following year, the resolution must be adopted 
 32.27  and the county auditor must be notified of the adoption on or 
 32.28  before July 1. 
 32.29     [EFFECTIVE DATE.] This section is effective for taxes 
 32.30  payable in 2004 and thereafter. 
 32.31     Sec. 15.  Minnesota Statutes 2002, section 477A.011, 
 32.32  subdivision 30, is amended to read: 
 32.33     Subd. 30.  [PRE-1940 HOUSING PERCENTAGE.] "Pre-1940 housing 
 32.34  percentage" for a city is 100 times the most recent 1990 federal 
 32.35  census count of all housing units in the city built before 1940, 
 32.36  divided by the total number of all housing units in the city.  
 33.1   Housing units includes both occupied and vacant housing units as 
 33.2   defined by the federal census. 
 33.3      [EFFECTIVE DATE.] This section is effective for aids 
 33.4   payable in 2003 and thereafter. 
 33.5      Sec. 16.  Laws 2001, First Special Session chapter 5, 
 33.6   article 3, section 61, the effective date, is amended to read: 
 33.7      [EFFECTIVE DATE.] This section is effective August 1, 2001, 
 33.8   for deeds issued on or after August 1, 2001.  This section is 
 33.9   effective August 1, 2003, for deeds issued before August 1, 2001.
 33.10     Sec. 17.  Laws 2001, First Special Session chapter 5, 
 33.11  article 3, section 63, the effective date, is amended to read: 
 33.12     [EFFECTIVE DATE.] This section is effective August 1, 2001, 
 33.13  for deeds issued on or after August 1, 2001.  This section is 
 33.14  effective August 1, 2003, for deeds issued before August 1, 2001.
 33.15                             ARTICLE 4 
 33.16                        SALES AND USE TAXES 
 33.17     Section 1.  Minnesota Statutes 2002, section 289A.60, is 
 33.18  amended by adding a subdivision to read: 
 33.19     Subd. 25.  [PENALTY FOR FAILURE TO PROPERLY COMPLETE SALES 
 33.20  TAX RETURN.] A person who fails to report local sales tax on a 
 33.21  sales tax return or who fails to report local sales tax on 
 33.22  separate tax lines on the sales tax return is subject to a 
 33.23  penalty of five percent of the amount of tax not properly 
 33.24  reported on the return.  A person who files a consolidated tax 
 33.25  return but fails to report location information is subject to a 
 33.26  $500 penalty for each return not containing location 
 33.27  information.  In addition, the commissioner may revoke the 
 33.28  privilege for a taxpayer to file consolidated returns and may 
 33.29  require the taxpayer to separately register each location and to 
 33.30  file a tax return for each location. 
 33.31     [EFFECTIVE DATE.] This section is effective for returns 
 33.32  filed after June 30, 2003. 
 33.33     Sec. 2.  Minnesota Statutes 2002, section 297A.61, 
 33.34  subdivision 3, is amended to read: 
 33.35     Subd. 3.  [SALE AND PURCHASE.] (a) "Sale" and "purchase" 
 33.36  include, but are not limited to, each of the transactions listed 
 34.1   in this subdivision. 
 34.2      (b) Sale and purchase include: 
 34.3      (1) any transfer of title or possession, or both, of 
 34.4   tangible personal property, whether absolutely or conditionally, 
 34.5   for a consideration in money or by exchange or barter; and 
 34.6      (2) the leasing of or the granting of a license to use or 
 34.7   consume, for a consideration in money or by exchange or barter, 
 34.8   tangible personal property, other than a manufactured home used 
 34.9   for residential purposes for a continuous period of 30 days or 
 34.10  more. 
 34.11     (c) Sale and purchase include the production, fabrication, 
 34.12  printing, or processing of tangible personal property for a 
 34.13  consideration for consumers who furnish either directly or 
 34.14  indirectly the materials used in the production, fabrication, 
 34.15  printing, or processing. 
 34.16     (d) Sale and purchase include the preparing for a 
 34.17  consideration of food.  Notwithstanding section 297A.67, 
 34.18  subdivision 2, taxable food includes, but is not limited to, the 
 34.19  following: 
 34.20     (1) prepared food sold by the retailer; 
 34.21     (2) soft drinks; 
 34.22     (3) candy; and 
 34.23     (4) all food sold through vending machines. 
 34.24     (e) A sale and a purchase includes the furnishing for a 
 34.25  consideration of electricity, gas, water, or steam for use or 
 34.26  consumption within this state. 
 34.27     (f) A sale and a purchase includes the transfer for a 
 34.28  consideration of computer software.  
 34.29     (g) A sale and a purchase includes the furnishing for a 
 34.30  consideration of the following services: 
 34.31     (1) the privilege of admission to places of amusement, 
 34.32  recreational areas, or athletic events, and the making available 
 34.33  of amusement devices, tanning facilities, reducing salons, steam 
 34.34  baths, turkish baths, health clubs, and spas or athletic 
 34.35  facilities; 
 34.36     (2) lodging and related services by a hotel, rooming house, 
 35.1   resort, campground, motel, or trailer camp and the granting of 
 35.2   any similar license to use real property other than the renting 
 35.3   or leasing of it for a continuous period of 30 days or more; 
 35.4      (3) nonresidential parking services, whether on a 
 35.5   contractual, hourly, or other periodic basis, except for parking 
 35.6   at a meter; 
 35.7      (4) the granting of membership in a club, association, or 
 35.8   other organization if: 
 35.9      (i) the club, association, or other organization makes 
 35.10  available for the use of its members sports and athletic 
 35.11  facilities, without regard to whether a separate charge is 
 35.12  assessed for use of the facilities; and 
 35.13     (ii) use of the sports and athletic facility is not made 
 35.14  available to the general public on the same basis as it is made 
 35.15  available to members.  
 35.16  Granting of membership means both onetime initiation fees and 
 35.17  periodic membership dues.  Sports and athletic facilities 
 35.18  include golf courses; tennis, racquetball, handball, and squash 
 35.19  courts; basketball and volleyball facilities; running tracks; 
 35.20  exercise equipment; swimming pools; and other similar athletic 
 35.21  or sports facilities; 
 35.22     (5) delivery of aggregate materials and concrete block by a 
 35.23  third party if the delivery would be subject to the sales tax if 
 35.24  provided by the seller of the aggregate material or concrete 
 35.25  block; and 
 35.26     (6) services as provided in this clause: 
 35.27     (i) laundry and dry cleaning services including cleaning, 
 35.28  pressing, repairing, altering, and storing clothes, linen 
 35.29  services and supply, cleaning and blocking hats, and carpet, 
 35.30  drapery, upholstery, and industrial cleaning.  Laundry and dry 
 35.31  cleaning services do not include services provided by coin 
 35.32  operated facilities operated by the customer; 
 35.33     (ii) motor vehicle washing, waxing, and cleaning services, 
 35.34  including services provided by coin operated facilities operated 
 35.35  by the customer, and rustproofing, undercoating, and towing of 
 35.36  motor vehicles; 
 36.1      (iii) building and residential cleaning, maintenance, and 
 36.2   disinfecting and exterminating services; 
 36.3      (iv) detective, security, burglar, fire alarm, and armored 
 36.4   car services; but not including services performed within the 
 36.5   jurisdiction they serve by off-duty licensed peace officers as 
 36.6   defined in section 626.84, subdivision 1, or services provided 
 36.7   by a nonprofit organization for monitoring and electronic 
 36.8   surveillance of persons placed on in-home detention pursuant to 
 36.9   court order or under the direction of the Minnesota department 
 36.10  of corrections; 
 36.11     (v) pet grooming services; 
 36.12     (vi) lawn care, fertilizing, mowing, spraying and sprigging 
 36.13  services; garden planting and maintenance; tree, bush, and shrub 
 36.14  pruning, bracing, spraying, and surgery; indoor plant care; 
 36.15  tree, bush, shrub, and stump removal; and tree trimming for 
 36.16  public utility lines.  Services performed under a construction 
 36.17  contract for the installation of shrubbery, plants, sod, trees, 
 36.18  bushes, and similar items are not taxable; 
 36.19     (vii) massages, except when provided by a licensed health 
 36.20  care facility or professional or upon written referral from a 
 36.21  licensed health care facility or professional for treatment of 
 36.22  illness, injury, or disease; and 
 36.23     (viii) the furnishing of lodging, board, and care services 
 36.24  for animals in kennels and other similar arrangements, but 
 36.25  excluding veterinary and horse boarding services. 
 36.26     In applying the provisions of this chapter, this clause 
 36.27  (6), items (i) to (vi) and (viii), the following conditions 
 36.28  apply.  The terms "tangible personal property" and "sales at 
 36.29  retail" include taxable services and the provision of taxable 
 36.30  services, unless specifically provided otherwise.  Services 
 36.31  performed by an employee for an employer are not taxable.  
 36.32  Services performed by a partnership or association for another 
 36.33  partnership or association are not taxable if one of the 
 36.34  entities owns or controls more than 80 percent of the voting 
 36.35  power of the equity interest in the other entity.  Services 
 36.36  performed between members of an affiliated group of corporations 
 37.1   are not taxable.  For purposes of this section the preceding 
 37.2   sentence, "affiliated group of corporations" includes those 
 37.3   entities that would be classified as members of an affiliated 
 37.4   group under United States Code, title 26, section 1504, and that 
 37.5   are eligible to file a consolidated tax return for federal 
 37.6   income tax purposes. 
 37.7      (h) A sale and a purchase includes the furnishing for a 
 37.8   consideration of tangible personal property or taxable services 
 37.9   by the United States or any of its agencies or 
 37.10  instrumentalities, or the state of Minnesota, its agencies, 
 37.11  instrumentalities, or political subdivisions. 
 37.12     (i) A sale and a purchase includes the furnishing for a 
 37.13  consideration of telecommunications services, including cable 
 37.14  television services and direct satellite services.  
 37.15  Telecommunications services are taxed to the extent allowed 
 37.16  under federal law if those services: 
 37.17     (1) either (i) originate and terminate in this state; or 
 37.18  (ii) originate in this state and terminate outside the state and 
 37.19  the service is charged to a telephone number telecommunications 
 37.20  customer located in this state or to the account of any 
 37.21  transmission instrument in this state; or (iii) originate 
 37.22  outside this state and terminate in this state and the service 
 37.23  is charged to a telephone number telecommunications customer 
 37.24  located in this state or to the account of any transmission 
 37.25  instrument in this state; or 
 37.26     (2) are rendered by providing a private communications 
 37.27  service for which the customer has one or more locations within 
 37.28  Minnesota connected to the service and the service is charged to 
 37.29  a telephone number telecommunications customer located in this 
 37.30  state or to the account of any transmission instrument in this 
 37.31  state. 
 37.32     All charges for mobile telecommunications services, as 
 37.33  defined in United States Code, title 4, section 124, are deemed 
 37.34  to be provided by the customer's home service provider and 
 37.35  sourced to the customer's place of primary use and are subject 
 37.36  to tax based upon the customer's place of primary use in 
 38.1   accordance with the Mobile Telecommunications Sourcing Act, 
 38.2   United States Code, title 4, sections 116 to 126.  All other 
 38.3   definitions and provisions of the Mobile Telecommunications 
 38.4   Sourcing Act as provided in United States Code, title 4, are 
 38.5   hereby adopted. 
 38.6      (j) A sale and a purchase includes the furnishing for a 
 38.7   consideration of installation if the installation charges would 
 38.8   be subject to the sales tax if the installation were provided by 
 38.9   the seller of the item being installed. 
 38.10     [EFFECTIVE DATE.] This section is effective the day 
 38.11  following final enactment. 
 38.12     Sec. 3.  Minnesota Statutes 2002, section 297A.61, 
 38.13  subdivision 12, is amended to read: 
 38.14     Subd. 12.  [FARM MACHINERY.] (a) "Farm machinery" means new 
 38.15  or used machinery, equipment, implements, accessories, and 
 38.16  contrivances used directly and principally in the agricultural 
 38.17  production for sale, but not including the processing, of 
 38.18  livestock, dairy animals, dairy products, poultry and poultry 
 38.19  products, fruits, vegetables, trees and shrubs, plants, forage, 
 38.20  grains, and bees and apiary products.  
 38.21     (b) Farm machinery includes including, but not limited to: 
 38.22     (1) machinery for the preparation, seeding, or cultivation 
 38.23  of soil for growing agricultural crops and sod, for the 
 38.24  harvesting and threshing of agricultural products, or for the 
 38.25  harvesting or mowing of sod; 
 38.26     (2) barn cleaners, milking systems, grain dryers, feeding 
 38.27  systems including stationary feed bunks, and similar 
 38.28  installations, whether or not the equipment is installed by the 
 38.29  seller and becomes part of the real property; and 
 38.30     (3) irrigation equipment sold for exclusively agricultural 
 38.31  use, including pumps, pipe fittings, valves, sprinklers, and 
 38.32  other equipment necessary to the operation of an irrigation 
 38.33  system when sold as part of an irrigation system, whether or not 
 38.34  the equipment is installed by the seller and becomes part of the 
 38.35  real property;. 
 38.36     (4) logging equipment, including chain saws used for 
 39.1   commercial logging; 
 39.2      (5) fencing used for the containment of farmed cervidae, as 
 39.3   defined in section 17.451, subdivision 2; 
 39.4      (6) primary and backup generator units used to generate 
 39.5   electricity for the purpose of operating farm machinery, as 
 39.6   defined in this subdivision, or providing light or space heating 
 39.7   necessary for the production of livestock, dairy animals, dairy 
 39.8   products, or poultry and poultry products; 
 39.9      (7) aquaculture production equipment as defined in 
 39.10  subdivision 13; and 
 39.11     (8) equipment used for maple syrup harvesting.  
 39.12     (c) (b) Farm machinery does not include: 
 39.13     (1) repair or replacement parts; 
 39.14     (2) tools, shop equipment, grain bins, fencing material 
 39.15  except fencing material covered by paragraph (b), clause (5), 
 39.16  communication equipment, and other farm supplies; 
 39.17     (3) motor vehicles taxed under chapter 297B; 
 39.18     (4) snowmobiles or snow blowers; or 
 39.19     (5) lawn mowers except those used in the production of sod 
 39.20  for sale, or garden-type tractors or garden tillers. 
 39.21     [EFFECTIVE DATE.] This section is effective for sales and 
 39.22  purchases made after June 30, 2003. 
 39.23     Sec. 4.  Minnesota Statutes 2002, section 297A.61, is 
 39.24  amended by adding a subdivision to read: 
 39.25     Subd. 35.  [AGRICULTURAL PRODUCTION.] "Agricultural 
 39.26  production" includes, but is not limited to, horticulture, 
 39.27  floriculture, maple syrup harvesting, and the raising of pets, 
 39.28  livestock as defined in section 17A.03, subdivision 5, poultry, 
 39.29  fur-bearing animals, research animals, and horses. 
 39.30     [EFFECTIVE DATE.] This section is effective for sales and 
 39.31  purchases made after June 30, 2003. 
 39.32     Sec. 5.  Minnesota Statutes 2002, section 297A.68, 
 39.33  subdivision 5, is amended to read: 
 39.34     Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
 39.35  exempt.  The tax must be imposed and collected as if the rate 
 39.36  under section 297A.62, subdivision 1, applied, and then refunded 
 40.1   in the manner provided in section 297A.75. 
 40.2      "Capital equipment" means machinery and equipment purchased 
 40.3   or leased, and used in this state by the purchaser or lessee 
 40.4   primarily for manufacturing, fabricating, mining, or refining 
 40.5   tangible personal property to be sold ultimately at retail if 
 40.6   the machinery and equipment are essential to the integrated 
 40.7   production process of manufacturing, fabricating, mining, or 
 40.8   refining.  Capital equipment also includes machinery and 
 40.9   equipment used to electronically transmit results retrieved by a 
 40.10  customer of an online computerized data retrieval system. 
 40.11     (b) Capital equipment includes, but is not limited to: 
 40.12     (1) machinery and equipment used to operate, control, or 
 40.13  regulate the production equipment; 
 40.14     (2) machinery and equipment used for research and 
 40.15  development, design, quality control, and testing activities; 
 40.16     (3) environmental control devices that are used to maintain 
 40.17  conditions such as temperature, humidity, light, or air pressure 
 40.18  when those conditions are essential to and are part of the 
 40.19  production process; 
 40.20     (4) materials and supplies used to construct and install 
 40.21  machinery or equipment; 
 40.22     (5) repair and replacement parts, including accessories, 
 40.23  whether purchased as spare parts, repair parts, or as upgrades 
 40.24  or modifications to machinery or equipment; 
 40.25     (6) materials used for foundations that support machinery 
 40.26  or equipment; 
 40.27     (7) materials used to construct and install special purpose 
 40.28  buildings used in the production process; and 
 40.29     (8) ready-mixed concrete trucks equipment in which the 
 40.30  ready-mixed concrete is mixed as part of the delivery 
 40.31  process regardless if mounted on a chassis and leases of 
 40.32  ready-mixed concrete trucks. 
 40.33     (c) Capital equipment does not include the following: 
 40.34     (1) motor vehicles taxed under chapter 297B; 
 40.35     (2) machinery or equipment used to receive or store raw 
 40.36  materials; 
 41.1      (3) building materials, except for materials included in 
 41.2   paragraph (b), clauses (6) and (7); 
 41.3      (4) machinery or equipment used for nonproduction purposes, 
 41.4   including, but not limited to, the following:  plant security, 
 41.5   fire prevention, first aid, and hospital stations; support 
 41.6   operations or administration; pollution control; and plant 
 41.7   cleaning, disposal of scrap and waste, plant communications, 
 41.8   space heating, cooling, lighting, or safety; 
 41.9      (5) farm machinery and aquaculture production equipment as 
 41.10  defined by section 297A.61, subdivisions 12 and 13; 
 41.11     (6) machinery or equipment purchased and installed by a 
 41.12  contractor as part of an improvement to real property; or 
 41.13     (7) any other item that is not essential to the integrated 
 41.14  process of manufacturing, fabricating, mining, or refining. 
 41.15     (d) For purposes of this subdivision: 
 41.16     (1) "Equipment" means independent devices or tools separate 
 41.17  from machinery but essential to an integrated production 
 41.18  process, including computers and computer software, used in 
 41.19  operating, controlling, or regulating machinery and equipment; 
 41.20  and any subunit or assembly comprising a component of any 
 41.21  machinery or accessory or attachment parts of machinery, such as 
 41.22  tools, dies, jigs, patterns, and molds.  
 41.23     (2) "Fabricating" means to make, build, create, produce, or 
 41.24  assemble components or property to work in a new or different 
 41.25  manner. 
 41.26     (3) "Integrated production process" means a process or 
 41.27  series of operations through which tangible personal property is 
 41.28  manufactured, fabricated, mined, or refined.  For purposes of 
 41.29  this clause, (i) manufacturing begins with the removal of raw 
 41.30  materials from inventory and ends when the last process prior to 
 41.31  loading for shipment has been completed; (ii) fabricating begins 
 41.32  with the removal from storage or inventory of the property to be 
 41.33  assembled, processed, altered, or modified and ends with the 
 41.34  creation or production of the new or changed product; (iii) 
 41.35  mining begins with the removal of overburden from the site of 
 41.36  the ores, minerals, stone, peat deposit, or surface materials 
 42.1   and ends when the last process before stockpiling is completed; 
 42.2   and (iv) refining begins with the removal from inventory or 
 42.3   storage of a natural resource and ends with the conversion of 
 42.4   the item to an intermediate or finished item of tangible 
 42.5   personal property. 
 42.6      (4) "Machinery" means mechanical, electronic, or electrical 
 42.7   devices, including computers and computer software, that are 
 42.8   purchased or constructed to be used for the activities set forth 
 42.9   in paragraph (a), beginning with the removal of raw materials 
 42.10  from inventory through completion of the product, including 
 42.11  packaging of the product. 
 42.12     (4) (5) "Machinery and equipment used for pollution control"
 42.13  means machinery and equipment used solely to eliminate, prevent, 
 42.14  or reduce pollution resulting from an activity described in 
 42.15  paragraph (a).  
 42.16     (5) (6) "Manufacturing" means an operation or series of 
 42.17  operations where raw materials are changed in form, composition, 
 42.18  or condition by machinery and equipment and which results in the 
 42.19  production of a new article of tangible personal property.  For 
 42.20  purposes of this subdivision, "manufacturing" includes the 
 42.21  generation of electricity or steam to be sold at retail. 
 42.22     (6) (7) "Mining" means the extraction of minerals, ores, 
 42.23  stone, or peat. 
 42.24     (7) (8) "Online data retrieval system" means a system whose 
 42.25  cumulation of information is equally available and accessible to 
 42.26  all its customers. 
 42.27     (8) (9) "Primarily" means machinery and equipment used 50 
 42.28  percent or more of the time in an activity described in 
 42.29  paragraph (a). 
 42.30     (9) (10) "Refining" means the process of converting a 
 42.31  natural resource to a product, including the treatment of water 
 42.32  to be sold at retail. 
 42.33     [EFFECTIVE DATE.] This section is effective for sales and 
 42.34  purchases made after December 31, 2003. 
 42.35     Sec. 6.  Minnesota Statutes 2002, section 297A.68, is 
 42.36  amended by adding a subdivision to read: 
 43.1      Subd. 39.  [PREEXISTING BIDS OR CONTRACTS.] (a) The sale of 
 43.2   tangible personal property or services is exempt from tax for a 
 43.3   period of six months from the effective date of the law change 
 43.4   that results in the imposition of the tax under this chapter if: 
 43.5      (1) the act imposing the tax does not have transitional 
 43.6   effective date language for existing construction contracts and 
 43.7   construction bids; and 
 43.8      (2) the requirements of paragraph (b) are met. 
 43.9      (b) A sale is tax exempt under paragraph (a) if it meets 
 43.10  the requirements of either clause (1) or (2): 
 43.11     (1) For a construction contract: 
 43.12     (i) the goods or services sold must be used for the 
 43.13  performance of a bona fide written lump sum or fixed price 
 43.14  construction contract; 
 43.15     (ii) the contract must be entered into before the date the 
 43.16  goods or services become subject to the sales tax; 
 43.17     (iii) the contract must not provide for allocation of 
 43.18  future taxes; and 
 43.19     (iv) for each qualifying contract the contractor must give 
 43.20  the seller documentation of the contract on which an exemption 
 43.21  is to be claimed. 
 43.22     (2) For a bid: 
 43.23     (i) the goods or services sold must be used pursuant to an 
 43.24  obligation of a bid or bids; 
 43.25     (ii) the bid or bids must be submitted and accepted before 
 43.26  the date the goods or services became subject to the sales tax; 
 43.27     (iii) the bid or bids must not be able to be withdrawn, 
 43.28  modified, or changed without forfeiting a bond; and 
 43.29     (iv) for each qualifying bid, the contractor must give the 
 43.30  seller documentation of the bid on which an exemption is to be 
 43.31  claimed. 
 43.32     [EFFECTIVE DATE.] This section is effective the day 
 43.33  following final enactment. 
 43.34     Sec. 7.  Minnesota Statutes 2002, section 297A.69, 
 43.35  subdivision 2, is amended to read: 
 43.36     Subd. 2.  [MATERIALS CONSUMED IN AGRICULTURAL PRODUCTION.] 
 44.1   (a) Materials stored, used, or consumed in agricultural 
 44.2   production of personal property intended to be sold ultimately 
 44.3   at retail are exempt, whether or not the item becomes an 
 44.4   ingredient or constituent part of the property produced.  
 44.5   Materials that qualify for this exemption include, but are not 
 44.6   limited to, the following: 
 44.7      (1) feeds, seeds, trees, fertilizers, and herbicides, 
 44.8   including when purchased for use by farmers in a federal or 
 44.9   state farm or conservation program; 
 44.10     (2) materials sold to a veterinarian to be used or consumed 
 44.11  in the care, medication, and treatment of agricultural 
 44.12  production animals and horses; 
 44.13     (3) chemicals, including chemicals used for cleaning food 
 44.14  processing machinery and equipment; 
 44.15     (4) materials, including chemicals, fuels, and electricity 
 44.16  purchased by persons engaged in agricultural production to treat 
 44.17  waste generated as a result of the production process; 
 44.18     (5) fuels, electricity, gas, and steam used or consumed in 
 44.19  the production process, except that electricity, gas, or steam 
 44.20  used for space heating, cooling, or lighting is exempt if (i) it 
 44.21  is in excess of the average climate control or lighting for the 
 44.22  production area, and (ii) it is necessary to produce that 
 44.23  particular product; 
 44.24     (6) petroleum products and lubricants; 
 44.25     (7) packaging materials, including returnable containers 
 44.26  used in packaging food and beverage products; and 
 44.27     (8) accessory tools and equipment that are separate 
 44.28  detachable units with an ordinary useful life of less than 12 
 44.29  months used in producing a direct effect upon the product. 
 44.30  Machinery, equipment, implements, tools, accessories, 
 44.31  appliances, contrivances, and furniture and fixtures, except 
 44.32  those listed in this clause are not included within this 
 44.33  exemption. 
 44.34     (b) For purposes of this subdivision, "agricultural 
 44.35  production" includes, but is not limited to, horticulture, 
 44.36  floriculture, maple syrup harvesting, and the raising of pets, 
 45.1   fur-bearing animals, research animals, horses, farmed cervidae 
 45.2   as defined in section 17.451, subdivision 2, llamas as defined 
 45.3   in section 17.455, subdivision 2, and ratitae as defined in 
 45.4   section 17.453, subdivision 3. 
 45.5      [EFFECTIVE DATE.] This section is effective for sales and 
 45.6   purchases made after December 31, 2003. 
 45.7      Sec. 8.  Minnesota Statutes 2002, section 297A.69, 
 45.8   subdivision 3, is amended to read: 
 45.9      Subd. 3.  [FARM MACHINERY REPAIR AND REPLACEMENT PARTS.] 
 45.10  Repair and replacement parts, except tires, used for maintenance 
 45.11  or repair of farm machinery, logging equipment, maple syrup 
 45.12  harvesting equipment, and aquaculture production equipment are 
 45.13  exempt, if the part replaces a farm machinery part assigned a 
 45.14  specific or generic part number by the manufacturer of the farm 
 45.15  machinery.  
 45.16     [EFFECTIVE DATE.] This section is effective for sales and 
 45.17  purchases made after June 30, 2003. 
 45.18     Sec. 9.  Minnesota Statutes 2002, section 297A.69, 
 45.19  subdivision 4, is amended to read: 
 45.20     Subd. 4.  [FARM MACHINERY, EQUIPMENT, AND FENCING.] The 
 45.21  following machinery, equipment, and fencing is exempt: 
 45.22     (1) farm machinery is exempt.; 
 45.23     (2) logging equipment, including chain saws used for 
 45.24  commercial logging; 
 45.25     (3) fencing used for the containment of farmed cervidae, as 
 45.26  defined in section 17.451, subdivision 2; 
 45.27     (4) primary and backup generator units used to generate 
 45.28  electricity for the purpose of operating farm machinery, maple 
 45.29  syrup harvesting equipment, aquacultural production equipment, 
 45.30  or logging equipment, or providing light or space heating 
 45.31  necessary for the production of livestock, dairy animals, dairy 
 45.32  products, or poultry and poultry products; 
 45.33     (5) aquaculture production equipment; and 
 45.34     (6) equipment used for maple syrup harvesting. 
 45.35     [EFFECTIVE DATE.] This section is effective for sales and 
 45.36  purchases made after June 30, 2003. 
 46.1      Sec. 10.  Minnesota Statutes 2002, section 297B.025, 
 46.2   subdivision 1, is amended to read: 
 46.3      Subdivision 1.  [NONCOLLECTOR VEHICLE.] Purchase or use of 
 46.4   a passenger automobile as defined in section 168.011, 
 46.5   subdivision 7, shall be taxed pursuant to section 297B.02, 
 46.6   subdivision 2, if the passenger automobile is (1) is in the 
 46.7   tenth or subsequent year of vehicle life, and (2) is not an 
 46.8   above-market automobile as designated by the registrar of motor 
 46.9   vehicles does not have a resale value of $3,000 or more, as 
 46.10  determined using nationally recognized sources of information on 
 46.11  automobile resale values. 
 46.12     The registrar of motor vehicles shall prepare, and 
 46.13  distribute to all deputy motor vehicle registrars by July 15, 
 46.14  1985, a listing by make, model, and year of above-market 
 46.15  automobiles.  Except as provided by subdivision 2, the registrar 
 46.16  must include in the list all automobiles with a resale value of 
 46.17  $3,000 or more, as determined using nationally recognized 
 46.18  sources of information on automobile resale values.  The 
 46.19  registrar shall revise the list by February 1 of each year.  The 
 46.20  initial list and all subsequent revisions must include only 
 46.21  those automobiles which are in the tenth or subsequent year of 
 46.22  vehicle life.  
 46.23     [EFFECTIVE DATE.] This section is effective for vehicles 
 46.24  purchased after June 30, 2003. 
 46.25     Sec. 11.  Minnesota Statutes 2002, section 297B.025, 
 46.26  subdivision 2, is amended to read: 
 46.27     Subd. 2.  [COLLECTOR VEHICLE.] A passenger automobile that 
 46.28  is registered under section 168.10, subdivision 1a, 1b, 1c, 1d, 
 46.29  or 1h, or a fire truck registered under section 168.10, 
 46.30  subdivision 1c, shall be taxed under section 297B.02, 
 46.31  subdivision 3, and the registrar shall not designate as an 
 46.32  above-market automobile a passenger automobile or a fire truck 
 46.33  registered under those subdivisions.  If the vehicle is 
 46.34  subsequently registered in another class not under section 
 46.35  168.10, subdivision 1a, 1b, 1c, 1d, or 1h, within one year of 
 46.36  the date of registration under those subdivisions, it shall be 
 47.1   subject to the full excise tax imposed under subdivision 1. 
 47.2      [EFFECTIVE DATE.] This section is effective for vehicles 
 47.3   purchased after December 31, 2003. 
 47.4      Sec. 12.  Minnesota Statutes 2002, section 297B.035, 
 47.5   subdivision 1, is amended to read: 
 47.6      Subdivision 1.  [ORDINARY COURSE OF BUSINESS.] Except as 
 47.7   provided in this section, motor vehicles purchased for resale in 
 47.8   the ordinary course of business or used by any motor vehicle 
 47.9   dealer, as defined in section 168.011, subdivision 21, who is 
 47.10  licensed under section 168.27, subdivision 2 or 3, which bear 
 47.11  dealer plates as authorized by section 168.27, subdivision 16, 
 47.12  shall be exempt from the provisions of this chapter. 
 47.13     [EFFECTIVE DATE.] This section is effective the day 
 47.14  following final enactment. 
 47.15                             ARTICLE 5 
 47.16                CIGARETTE AND TOBACCO PRODUCTS TAXES 
 47.17     Section 1.  Minnesota Statutes 2002, section 297F.01, 
 47.18  subdivision 21a, is amended to read: 
 47.19     Subd. 21a.  [UNLICENSED SELLER.] "Unlicensed seller" means 
 47.20  anyone who is not licensed under section 297F.03 or 461.12 to 
 47.21  sell the particular product to the purchaser or possessor of the 
 47.22  product. 
 47.23     [EFFECTIVE DATE.] This section is effective July 1, 2003. 
 47.24     Sec. 2.  Minnesota Statutes 2002, section 297F.06, 
 47.25  subdivision 4, is amended to read: 
 47.26     Subd. 4.  [TOBACCO PRODUCTS USE TAX.] The tobacco products 
 47.27  use tax does not apply to the possession, use, or storage of 
 47.28  tobacco products in quantities of: that have an aggregate cost 
 47.29  in any calendar month to the consumer of $100 or less. 
 47.30     (1) not more than 50 cigars; 
 47.31     (2) not more than ten ounces snuff or snuff powder; 
 47.32     (3) not more than one pound smoking or chewing tobacco or 
 47.33  any other tobacco product in the possession of any one consumer. 
 47.34     [EFFECTIVE DATE.] This section is effective July 1, 2003. 
 47.35     Sec. 3.  Minnesota Statutes 2002, section 297F.20, 
 47.36  subdivision 1, is amended to read: 
 48.1      Subdivision 1.  [PENALTIES FOR FAILURE TO FILE OR PAY.] (a) 
 48.2   A person or consumer required to file a return, report, or other 
 48.3   document with the commissioner who fails to do so is guilty of a 
 48.4   misdemeanor. 
 48.5      (b) A person or consumer required to pay or to collect and 
 48.6   remit a tax under this chapter, who fails to do so when 
 48.7   required, is guilty of a misdemeanor. 
 48.8      [EFFECTIVE DATE.] This section is effective for acts 
 48.9   committed on or after July 1, 2003. 
 48.10     Sec. 4.  Minnesota Statutes 2002, section 297F.20, 
 48.11  subdivision 2, is amended to read: 
 48.12     Subd. 2.  [PENALTIES FOR KNOWING FAILURE TO FILE OR PAY.] 
 48.13  (a) A person or consumer required to file a return, report, or 
 48.14  other document with the commissioner, who knowingly, rather than 
 48.15  accidentally, inadvertently, or negligently, fails to file it 
 48.16  when required, is guilty of a gross misdemeanor.  
 48.17     (b) A person or consumer required to pay or to collect and 
 48.18  remit a tax under this chapter, who knowingly, rather than 
 48.19  accidentally, inadvertently, or negligently, fails to file it 
 48.20  when required, is guilty of a gross misdemeanor. 
 48.21     [EFFECTIVE DATE.] This section is effective for acts 
 48.22  committed on or after July 1, 2003. 
 48.23     Sec. 5.  Minnesota Statutes 2002, section 297F.20, 
 48.24  subdivision 3, is amended to read: 
 48.25     Subd. 3.  [FALSE OR FRAUDULENT RETURNS; PENALTIES.] (a) A 
 48.26  person or consumer who files with the commissioner a return, 
 48.27  report, or other document, or who maintains or provides invoices 
 48.28  subject to review by the commissioner under this chapter, known 
 48.29  by the person or consumer to be fraudulent or false concerning a 
 48.30  material matter, is guilty of a felony. 
 48.31     (b) A person or consumer who knowingly aids or assists in, 
 48.32  or advises in the preparation or presentation of a return, 
 48.33  report, invoice, or other document that is fraudulent or false 
 48.34  concerning a material matter, whether or not the falsity or 
 48.35  fraud is committed with the knowledge or consent of the 
 48.36  person or consumer authorized or required to present the return, 
 49.1   report, invoice, or other document, is guilty of a felony. 
 49.2      [EFFECTIVE DATE.] This section is effective for acts 
 49.3   committed on or after July 1, 2003. 
 49.4      Sec. 6.  Minnesota Statutes 2002, section 297F.20, 
 49.5   subdivision 6, is amended to read: 
 49.6      Subd. 6.  [UNSTAMPED CIGARETTES; UNTAXED TOBACCO PRODUCTS.] 
 49.7   (a) A person, other than a licensed distributor or a consumer, 
 49.8   who possesses, receives, or transports more than 200 but fewer 
 49.9   than 5,000 unstamped cigarettes, or up to $100 $350 worth of 
 49.10  untaxed tobacco products is guilty of a misdemeanor. 
 49.11     (b) A person, other than a licensed distributor or a 
 49.12  consumer, who possesses, receives, or transports 5,000 or more, 
 49.13  but fewer than 20,001 unstamped cigarettes, or up to $500 more 
 49.14  than $350 but less than $1,400 worth of untaxed tobacco products 
 49.15  is guilty of a gross misdemeanor. 
 49.16     (c) A person, other than a licensed distributor or a 
 49.17  consumer, who possesses, receives, or transports more than 
 49.18  20,000 unstamped cigarettes, or $500 $1,400 or more worth of 
 49.19  untaxed tobacco products is guilty of a felony. 
 49.20     (d) For purposes of this subdivision, an individual in 
 49.21  possession of more than 4,999 unstamped cigarettes, or more than 
 49.22  $350 worth of untaxed tobacco products, is presumed not to be a 
 49.23  consumer. 
 49.24     [EFFECTIVE DATE.] This section is effective for acts 
 49.25  committed on or after July 1, 2003. 
 49.26     Sec. 7.  Minnesota Statutes 2002, section 297F.20, 
 49.27  subdivision 9, is amended to read: 
 49.28     Subd. 9.  [PURCHASES FROM UNLICENSED SELLERS.] (a) No 
 49.29  retailer or subjobber shall purchase cigarettes or tobacco 
 49.30  products from any person who is not licensed under section 
 49.31  297F.03 as a licensed distributor or subjobber. 
 49.32     (b) A retailer, or subjobber, or consumer who purchases 
 49.33  from an unlicensed seller more than 200 but fewer than 5,000 
 49.34  cigarettes or up to $100 $350 worth of tobacco products is 
 49.35  guilty of a misdemeanor. 
 49.36     (b) (c) A retailer, or subjobber, or consumer who 
 50.1   purchases from an unlicensed seller 5,000 or more, but fewer 
 50.2   than 20,001 cigarettes or up to $500 more than $350 but less 
 50.3   than $1,400 worth of untaxed tobacco products is guilty of a 
 50.4   gross misdemeanor. 
 50.5      (c) (d) A retailer, or subjobber, or consumer who 
 50.6   purchases from an unlicensed seller more than 20,000 cigarettes 
 50.7   or $500 $1,400 or more worth of tobacco products is guilty of a 
 50.8   felony. 
 50.9      [EFFECTIVE DATE.] This section is effective for acts 
 50.10  committed on or after July 1, 2003. 
 50.11                             ARTICLE 6 
 50.12                     COLLECTIONS AND COMPLIANCE 
 50.13     Section 1.  [270.278] [PENALTY FOR FILING CERTAIN DOCUMENTS 
 50.14  AGAINST DEPARTMENT OF REVENUE EMPLOYEES.] 
 50.15     Subdivision 1.  [DEFINITIONS.] (a) "Recording office" means 
 50.16  a county recorder, registrar of titles, or secretary of state in 
 50.17  this state or another state. 
 50.18     (b) "Filing party" means the person or persons requesting 
 50.19  or causing another person to request that the recording office 
 50.20  accept documents or instruments for recording or filing. 
 50.21     Subd. 2.  [INVALID DOCUMENTS NAMING THE COMMISSIONER OR 
 50.22  DEPARTMENT OF REVENUE EMPLOYEES.] Filing a document, including a 
 50.23  nonconsensual common law lien under section 514.99, that 
 50.24  purports to create a claim against the commissioner of revenue 
 50.25  or an employee of the department of revenue based on performance 
 50.26  or nonperformance of duties by the commissioner or employee is 
 50.27  invalid unless accompanied by a specific order from a court of 
 50.28  competent jurisdiction authorizing the filing of the document or 
 50.29  unless a specific statute authorizes the filing of the document. 
 50.30     Subd. 3.  [CIVIL PENALTY.] If a filing party causes a 
 50.31  document described in subdivision 2 to be recorded in a 
 50.32  recording office, the commissioner may assess a penalty against 
 50.33  the filing party of $1,000 per document filed, payable to the 
 50.34  general fund.  An order assessing a penalty under this section 
 50.35  is reviewable administratively under section 289A.65 and is 
 50.36  appealable to tax court under chapter 271.  The penalty is 
 51.1   collected and paid in the same manner as income tax.  The 
 51.2   penalty is in addition to any other remedy available to the 
 51.3   commissioner of revenue or to an employee of the department of 
 51.4   revenue against whom the document has been filed.  
 51.5      [EFFECTIVE DATE.] This section is effective for documents 
 51.6   filed on or after July 1, 2003. 
 51.7      Sec. 2.  Minnesota Statutes 2002, section 270.701, 
 51.8   subdivision 2, is amended to read: 
 51.9      Subd. 2.  [NOTICE OF SALE.] The commissioner shall as soon 
 51.10  as practicable after the seizure of the property give notice of 
 51.11  sale of the property to the owner, in the manner of service 
 51.12  prescribed in subdivision 1.  In the case of personal property, 
 51.13  the notice shall be served at least 10 days prior to the sale.  
 51.14  In the case of real property, the notice shall be served at 
 51.15  least four weeks prior to the sale.  The commissioner shall also 
 51.16  cause public notice of each sale to be made.  In the case of 
 51.17  personal property, notice shall be posted at least 10 days prior 
 51.18  to the sale at the county courthouse for the county where the 
 51.19  seizure is made, and in not less than two other public 
 51.20  places.  For purposes of this requirement, the Internet is a 
 51.21  public place for posting the information.  In the case of real 
 51.22  property, six weeks' published notice shall be given prior to 
 51.23  the sale, in a newspaper published or generally circulated in 
 51.24  the county.  The notice of sale provided in this subdivision 
 51.25  shall specify the property to be sold, and the time, place, 
 51.26  manner and conditions of the sale.  Whenever levy is made 
 51.27  without regard to the 30-day period provided in section 270.70, 
 51.28  subdivision 2, public notice of sale of the property seized 
 51.29  shall not be made within the 30-day period unless section 
 51.30  270.702 (relating to sale of perishable goods) is applicable.  
 51.31     [EFFECTIVE DATE.] This section is effective for notices of 
 51.32  sales posted on or after the day following final enactment. 
 51.33     Sec. 3.  Minnesota Statutes 2002, section 270.701, is 
 51.34  amended by adding a subdivision to read: 
 51.35     Subd. 7.  [SALE OF SEIZED SECURITIES.] (a) At the time of 
 51.36  levy on securities, the commissioner shall provide notice to the 
 52.1   taxpayer that the securities may be sold after ten days from the 
 52.2   date of seizure.  
 52.3      (b) If the commissioner levies upon nonexempt publicly 
 52.4   traded securities and the value of the securities is less than 
 52.5   or equal to the total obligation for which the levy is done, 
 52.6   after ten days the person who possesses or controls the 
 52.7   securities shall liquidate the securities in a commercially 
 52.8   reasonable manner.  After liquidation, the person shall transfer 
 52.9   the proceeds to the commissioner, less any applicable 
 52.10  commissions or fees, or both, which are charged in the normal 
 52.11  course of business.  
 52.12     (c) If the commissioner levies upon nonexempt publicly 
 52.13  traded securities and the value of the securities exceeds the 
 52.14  total amount of the levy, the owner of the securities may, 
 52.15  within seven days after receipt of the department's notice of 
 52.16  levy given pursuant to subdivision 1, instruct the person who 
 52.17  possesses or controls the securities which securities are to be 
 52.18  sold to satisfy the obligation.  If the owner does not provide 
 52.19  instructions for liquidation, the person who possesses or 
 52.20  controls the securities shall liquidate the securities in an 
 52.21  amount sufficient to pay the obligation, plus any applicable 
 52.22  commissions or fees, or both, which are charged in the normal 
 52.23  course of business, beginning with the nonexempt securities 
 52.24  purchased most recently.  After liquidation, the person who 
 52.25  possesses or controls the securities shall transfer to the 
 52.26  commissioner the amount of money needed to satisfy the levy. 
 52.27     [EFFECTIVE DATE.] This section is effective for sales of 
 52.28  securities seized on or after the day following final enactment. 
 52.29     Sec. 4.  Minnesota Statutes 2002, section 270.72, 
 52.30  subdivision 2, is amended to read: 
 52.31     Subd. 2.  [DEFINITIONS.] For purposes of this section, the 
 52.32  following terms have the meanings given.  
 52.33     (a) "Taxes" are mean all taxes payable to the commissioner 
 52.34  including penalties and interest due on the taxes. 
 52.35     (b) "Delinquent taxes" do not include a tax liability if 
 52.36  (i) an administrative or court action which contests the amount 
 53.1   or validity of the liability has been filed or served, (ii) the 
 53.2   appeal period to contest the tax liability has not expired, or 
 53.3   (iii) the applicant has entered into a payment agreement and is 
 53.4   current with the payments.  
 53.5      (c) "Applicant" means an individual if the license is 
 53.6   issued to or in the name of an individual or the corporation or 
 53.7   partnership if the license is issued to or in the name of a 
 53.8   corporation or partnership.  "Applicant" also means an officer 
 53.9   of a corporation, a member of a partnership, or an individual 
 53.10  who is liable for delinquent taxes, either for the entity for 
 53.11  which the license is at issue or for another entity for which 
 53.12  the liability was incurred, or personally as a licensee.  In the 
 53.13  case of a license transfer, "applicant" also means both the 
 53.14  transferor and the transferee of the license.  "Applicant" also 
 53.15  means any holder of a license. 
 53.16     (d) "License" includes means any permit, registration, 
 53.17  certification, or other form of approval authorized by statute 
 53.18  or rule to be issued by the state or a political subdivision of 
 53.19  the state as a condition of doing business or conducting a 
 53.20  trade, profession, or occupation in Minnesota, specifically 
 53.21  including, but not limited to, a contract for space rental at 
 53.22  the Minnesota state fair and authorization to operate 
 53.23  concessions or rides at county and local fairs, festivals, or 
 53.24  events. 
 53.25     (e) "Licensing authority" includes the Minnesota state fair 
 53.26  board and county and local boards or governing bodies. 
 53.27     [EFFECTIVE DATE.] This section is effective the day 
 53.28  following final enactment. 
 53.29     Sec. 5.  Minnesota Statutes 2002, section 270A.03, 
 53.30  subdivision 2, is amended to read: 
 53.31     Subd. 2.  [CLAIMANT AGENCY.] "Claimant agency" means any 
 53.32  state agency, as defined by section 14.02, subdivision 2, the 
 53.33  regents of the University of Minnesota, any district court of 
 53.34  the state, any county, any statutory or home rule charter city 
 53.35  presenting a claim for a municipal hospital or a public library 
 53.36  or a municipal ambulance service, a hospital district, a private 
 54.1   nonprofit hospital that leases its building from the county in 
 54.2   which it is located, any public agency responsible for child 
 54.3   support enforcement, any public agency responsible for the 
 54.4   collection of court-ordered restitution, and any public agency 
 54.5   established by general or special law that is responsible for 
 54.6   the administration of a low-income housing program, and the 
 54.7   Minnesota collection enterprise as defined in section 16D.02, 
 54.8   subdivision 8, for the purpose of collecting the costs imposed 
 54.9   under section 16D.11. 
 54.10     [EFFECTIVE DATE.] This section is effective the day 
 54.11  following final enactment. 
 54.12     Sec. 6.  Minnesota Statutes 2002, section 289A.36, 
 54.13  subdivision 7, is amended to read: 
 54.14     Subd. 7.  [APPLICATION TO COURT FOR ENFORCEMENT OF 
 54.15  SUBPOENA.] (a) Disobedience of subpoenas issued under this 
 54.16  section shall be punished by the district court of the district 
 54.17  in which the party served with the subpoena is located, in the 
 54.18  same manner as contempt of the district court.  
 54.19     (b) Disobedience of a subpoena issued under subdivision 9 
 54.20  shall be punished by the district court for Ramsey County in the 
 54.21  same manner as contempt of the district court.  In addition to 
 54.22  contempt remedies, the court may issue any order the court deems 
 54.23  reasonably necessary to enforce compliance with the subpoena. 
 54.24     [EFFECTIVE DATE.] This section is effective the day 
 54.25  following final enactment. 
 54.26     Sec. 7.  Minnesota Statutes 2002, section 289A.36, is 
 54.27  amended by adding a subdivision to read: 
 54.28     Subd. 9.  [ACCESS TO RECORDS IN CONNECTION WITH EXAMINATION 
 54.29  OF BUSINESSES LOCATED OUTSIDE THE STATE.] (a) In order to 
 54.30  determine whether a business located outside the state of 
 54.31  Minnesota is required to file a return under this chapter, the 
 54.32  commissioner may examine the relevant records and files of the 
 54.33  business. 
 54.34     (b) To the full extent permitted by the Minnesota and 
 54.35  United States constitutions, the commissioner may compel 
 54.36  production of those relevant records and files by subpoena.  The 
 55.1   subpoena may be served on the secretary of state along with the 
 55.2   address to which service of the subpoena is to be sent and a fee 
 55.3   of $50.  The secretary of state shall forward a copy of the 
 55.4   subpoena to the business using the procedures for service of 
 55.5   process in section 5.25, subdivision 6.  
 55.6      (c) The commissioner shall pay the reasonable cost of 
 55.7   producing records subject to subpoena under this subdivision if: 
 55.8      (1) the subpoenaed party cannot produce the records without 
 55.9   undue burden; and 
 55.10     (2) the examination made pursuant to paragraph (a) shows 
 55.11  that the subpoenaed party is not required to file a return under 
 55.12  this chapter. 
 55.13     [EFFECTIVE DATE.] This section is effective the day 
 55.14  following final enactment. 
 55.15     Sec. 8.  Minnesota Statutes 2002, section 289A.36, is 
 55.16  amended by adding a subdivision to read: 
 55.17     Subd. 10.  [PENALTY.] In addition to sanctions imposed 
 55.18  under subdivision 7, a penalty of $250 per day is imposed on any 
 55.19  business that is in violation of a court order to comply with a 
 55.20  subpoena that is seeking information necessary for the 
 55.21  commissioner to be able to determine whether the business is 
 55.22  required to file a return or pay a tax.  The maximum penalty is 
 55.23  $25,000.  Upon the request of the commissioner, the court shall 
 55.24  determine the amount of the penalty and enter it as a judgment 
 55.25  in favor of the commissioner.  The penalty is not payable until 
 55.26  the judgment is entered. 
 55.27     [EFFECTIVE DATE.] This section is effective for violations 
 55.28  of court orders to enforce subpoenas issued on or after the day 
 55.29  following final enactment. 
 55.30     Sec. 9.  [REPEALER.] 
 55.31     Minnesota Statutes 2002, section 270.691, subdivision 8, is 
 55.32  repealed effective the day following final enactment.