Minnesota Legislature
HF 807
2nd Engrossment - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am
KEY: stricken = removed, old language.
underscored = added, new language.
Current Version - 2nd Engrossment
1.1 A bill for an act 1.2 relating to taxation; making policy changes to income 1.3 and withholding taxes, property taxes, mortgage 1.4 registry and deed taxes, sales and use taxes, 1.5 MinnesotaCare taxes, and tax collections; providing 1.6 civil penalties; amending Minnesota Statutes 1996, 1.7 sections 8.30; 60A.15, subdivision 1; 270.02, 1.8 subdivision 3; 270.063; 270.10, subdivisions 1 and 5; 1.9 270.101, subdivisions 2, 3, and by adding a 1.10 subdivision; 270.271, by adding a subdivision; 1.11 270.273, subdivision 2; 270.276, subdivision 2; 1.12 270.67, subdivision 2; 270.68, subdivision 1; 270.69, 1.13 subdivision 11; 270.701, subdivisions 2 and 5; 1.14 270.708, subdivision 1; 270.721; 270.73, subdivision 1.15 1; 271.06, subdivision 2; 271.08, subdivision 1; 1.16 271.10, subdivision 2; 275.075; 287.08; 287.28; 1.17 287.31, subdivision 1; 289A.08, subdivision 3; 1.18 289A.09, subdivision 2; 289A.20, subdivisions 1 and 2; 1.19 289A.31, subdivision 1; 289A.36, subdivision 4; 1.20 289A.37, subdivision 1; 289A.40, subdivisions 1 and 2; 1.21 289A.60, subdivision 15; 290.095, subdivision 3; 1.22 290.17, subdivision 2; 290.35, subdivision 2; 290A.04, 1.23 subdivision 2h; 295.50, subdivisions 3 and 14; 295.52, 1.24 subdivision 4; 295.53, subdivision 4; 295.55, 1.25 subdivision 2; 297A.01, by adding a subdivision; 1.26 297A.041; 297A.07, subdivision 3; 297A.24, by adding a 1.27 subdivision; 297A.25, subdivisions 12 and 41; 297A.45, 1.28 subdivision 4; 297B.035, subdivision 3; 297B.11; 1.29 299F.21; 515B.1-105; and 515B.1-116; Laws 1995, 1.30 chapter 264, article 10, section 15; proposing coding 1.31 for new law in Minnesota Statutes, chapters 270; and 1.32 287. 1.33 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.34 ARTICLE 1 1.35 PROPERTY TAXES 1.36 Section 1. Minnesota Statutes 1996, section 275.075, is 1.37 amended to read: 1.38 275.075 [OMISSION BY INADVERTENCE; CORRECTION.] 1.39 Whenever the amount of taxes as levied and certified by the 2.1 tax levying body of any county, city, town, special taxing 2.2 district, or school district has not been, as the result of 2.3 error, inadvertence, or from the estimates as provided in 2.4 section 275.08, by the county auditor extended and spread in 2.5 conformity therewith, such tax levying body may include in its 2.6 tax levy for the year following, the whole or any part of the 2.7 amount so omitted through error, inadvertence, or from the 2.8 estimates as provided in section 275.08, in addition to its 2.9 current levy and in addition to and notwithstanding any 2.10 limitations to the contrary. 2.11 Sec. 2. Minnesota Statutes 1996, section 287.08, is 2.12 amended to read: 2.13 287.08 [TAX, HOW PAYABLE; RECEIPTS.] 2.14 (a) The tax imposed by sections 287.01 to 287.12 shall be 2.15 paid to the treasurer of the county in which the mortgaged land 2.16 or some part thereof is situated at or before the time of filing 2.17 the mortgage for record or registration. The treasurer shall 2.18 endorse receipt on the mortgage, countersigned by the county 2.19 auditor, who shall charge the amount to the treasurer and such 2.20 receipt shall be recorded with the mortgage, and such receipt of 2.21 the record thereof shall be conclusive proof that the tax has 2.22 been paid to the amount therein stated and authorize any county 2.23 recorder to record the mortgage. Its form, in substance, shall 2.24 be "registration tax hereon of ..................... dollars 2.25 paid." If the mortgages be exempt from taxation the endorsement 2.26 shall be "exempt from registration tax," to be signed in either 2.27 case by the treasurer as such, and in case of payment to be 2.28 countersigned by the auditor. In case the treasurer shall be 2.29 unable to determine whether a claim of exemption should be 2.30 allowed, the tax shall be paidto the court administrator ofas 2.31 in the case of a taxable mortgage. 2.32 (b) Upon written application of the taxpayer, the county 2.33 treasurer may refund in whole or in part any tax which has been 2.34 erroneously paid, or a person having paid a mortgage registry 2.35 tax amount may seek a refund of such tax, or other appropriate 2.36 relief, by bringing an action inthe districttax courtofin 3.1 the countyto abide the order of such court made upon motion of3.2the county attorney, or of the claimant upon notice as required3.3by the court.in which the tax was paid, within 60 days of the 3.4 payment. The action is commenced by the serving of a petition 3.5 for relief on the county treasurer, and by filing a copy with 3.6 the court. The county attorney shall defend the action. The 3.7 county treasurer shall notify the treasurer of each county that 3.8 has or would receive a portion of the tax as paid. 3.9 (c) If the county treasurer determines a refund should be 3.10 paid, or if a refund is ordered, the county treasurer of each 3.11 county that actually received a portion of the tax shall 3.12 immediately pay a proportionate share of three percent of the 3.13 refund using any available county funds. The county treasurer 3.14 of each county which received, or would have received, a portion 3.15 of the tax shall also pay their county's proportionate share of 3.16 the remaining 97 percent of the court-ordered refund on or 3.17 before the tenth day of the following month using solely the 3.18 mortgage registry tax funds that would be paid to the 3.19 commissioner of revenue on that date under section 287.12. If 3.20 the funds on hand under this procedure are insufficient to fully 3.21 fund 97 percent of the court ordered refund, the county 3.22 treasurer of the county in which the action was brought shall 3.23 file a claim with the commissioner of revenue under section 3.24 16A.48 for the remaining portion of 97 percent of the refund, 3.25 and shall pay over the remaining portion upon receipt of a 3.26 warrant from the state issued pursuant to the claim. 3.27 (d) When any such mortgage covers real property situate in 3.28 more than one county in this state the whole of such tax shall 3.29 be paid to the treasurer of the county where the mortgage is 3.30 first presented for record or registration, and the payment 3.31 shall be receipted and countersigned as above provided. The tax 3.32 shall be divided and paid over by the county treasurer receiving 3.33 the same, on or before the tenth day of each month after receipt 3.34 thereof, to the county or counties entitled thereto in the ratio 3.35 which the market value of the real property covered by the 3.36 mortgage in each county bears to the market value of all the 4.1 property described in the mortgage. In making such division and 4.2 payment the county treasurer shall send therewith a statement 4.3 giving the description of the property described in the mortgage 4.4 and the market value of the part thereof situate in each 4.5 county. For the purpose aforesaid, the treasurer of any county 4.6 may require the treasurer of any other county to certify to the 4.7 former the market valuation of any tract of land in any such 4.8 mortgage. 4.9 Sec. 3. Minnesota Statutes 1996, section 287.28, is 4.10 amended to read: 4.11 287.28 [REFUNDMENTSREFUNDS OR REDEMPTION.] 4.12 (a) The county treasurer mayorder the refundmentrefund in 4.13 whole or in partofany tax which has been erroneouslyor4.14unjustlypaid and may allow for or redeem such of the stamps, 4.15 issued under the authority of sections 287.21 to 287.36 as may 4.16 have been spoiled, destroyed, or rendered useless or unfit for 4.17 the purpose intended or for which the owner may have no use or 4.18 which through mistake may have been improperly or unnecessarily 4.19 used. Such order shall be made only upon written application of 4.20 the taxpayerand upon approval of the county board.Refunds4.21therefor shall be paid out of the general fund of the county.4.22 (b) A person having paid a deed tax amount may seek a 4.23 refund of the tax, or other appropriate relief, by commencing an 4.24 action in tax court in the county where the tax was paid, within 4.25 60 days of the payment. The action is commenced by serving a 4.26 petition for relief on the county treasurer, and filing a copy 4.27 with the court. The county attorney shall defend the action. 4.28 The county treasurer shall notify the treasurer of each county 4.29 that has, or would receive a portion of the tax as paid. Any 4.30 refund of deed tax which the county treasurer determines should 4.31 be made, and any court ordered refund of deed tax, shall be 4.32 accomplished using the refund procedures in section 287.08. 4.33 Sec. 4. Minnesota Statutes 1996, section 290A.04, 4.34 subdivision 2h, is amended to read: 4.35 Subd. 2h. (a) If the gross property taxes payable on a 4.36 homestead increase more than 12 percent over the net property 5.1 taxes payable in the prior year on the same property that is 5.2 owned and occupied by the same owner on January 2 of both years, 5.3 and the amount of that increase is $100 or morefor taxes5.4payable in 1996 and 1997, a claimant who is a homeowner shall be 5.5 allowed an additional refund equal to 60 percent of the amount 5.6 of the increase over the greater of 12 percent of the prior 5.7 year's net property taxes payable or $100for taxes payable in5.81996 and 1997. This subdivision shall not apply to any increase 5.9 in the gross property taxes payable attributable to improvements 5.10 made to the homestead after the assessment date for the prior 5.11 year's taxes. This subdivision shall not apply to any increase 5.12 in the gross property taxes payable attributable to the 5.13 termination of valuation exclusions under section 273.11, 5.14 subdivision 16. 5.15 The maximum refund allowed under this subdivision is $1,000. 5.16 (b) For purposes of this subdivision, the following terms 5.17 have the meanings given: 5.18 (1) "Net property taxes payable" means property taxes 5.19 payable minus refund amounts for which the claimant qualifies 5.20 pursuant to subdivision 2 and this subdivision. 5.21 (2) "Gross property taxes" means net property taxes payable 5.22 determined without regard to the refund allowed under this 5.23 subdivision. 5.24 (c) In addition to the other proofs required by this 5.25 chapter, each claimant under this subdivision shall file with 5.26 the property tax refund return a copy of the property tax 5.27 statement for taxes payable in the preceding year or other 5.28 documents required by the commissioner. 5.29 (d)On or before December 1, 1995, the commissioner shall5.30estimate the cost of making the payments provided by this5.31subdivision for taxes payable in 1996. Notwithstanding the open5.32appropriation provision of section 290A.23, if the estimated5.33total refund claims for taxes payable in 1996 exceed $5,500,000,5.34the commissioner shall first reduce the 60 percent refund rate5.35enough, but to no lower a rate than 50 percent, so that the5.36estimated total refund claims do not exceed $5,500,000. If the6.1commissioner estimates that total claims will exceed $5,500,0006.2at a 50 percent refund rate, the commissioner shall also reduce6.3the $1,000 maximum refund amount by enough so that total6.4estimated refund claims do not exceed $5,500,000.6.5The determinations of the revised thresholds by the6.6commissioner are not rules subject to chapter 14.6.7(e)Upon request, the appropriate county official shall 6.8 make available the names and addresses of the property taxpayers 6.9 who may be eligible for the additional property tax refund under 6.10 this section. The information shall be provided on a magnetic 6.11 computer disk. The county may recover its costs by charging the 6.12 person requesting the information the reasonable cost for 6.13 preparing the data. The information may not be used for any 6.14 purpose other than for notifying the homeowner of potential 6.15 eligibility and assisting the homeowner, without charge, in 6.16 preparing a refund claim. 6.17 Sec. 5. Minnesota Statutes 1996, section 515B.1-105, is 6.18 amended to read: 6.19 515B.1-105 [SEPARATE TITLES AND TAXATION.] 6.20 (a) In a cooperative: 6.21 (1) The unit owners' interests in units and their allocated 6.22 interests are wholly personal property, unless the declaration 6.23 provides that the interests are wholly real estate. The 6.24 characterization of these interests as real or personal property 6.25 shall not affect whether homestead exemptions or classifications 6.26 apply. 6.27 (2) The ownership interest in a unit which may be sold, 6.28 conveyed, voluntarily or involuntarily encumbered, or otherwise 6.29 transferred by a unit owner, is the right to possession of that 6.30 unit under a proprietary lease coupled with the allocated 6.31 interests of that unit, and the association's interest in that 6.32 unit is not affected by the transaction. 6.33 (b) In a condominium or planned community: 6.34 (1) Each unit, and its allocated interest in the common 6.35 elements, constitutes a separate parcel of real estate. 6.36 (2) If there is any unit owner other than a declarant, each 7.1 unit shall be separately taxed and assessed, and no separate tax 7.2 or assessment may be rendered against any common elements. 7.3 (c)If a declaration is recorded prior to 30 days before7.4any installment of real estate taxes becomes payable, the local7.5taxing authority shall split the taxes so payable on the common7.6interest community among the units. Interest and penalties7.7which would otherwise accrue shall not begin to accrue until at7.8least 30 days after the split is accomplished.7.9(d)A unit used for residential purposes together with not 7.10 more than three units used for vehicular parking, and their 7.11 common element interests, shall be treated as one parcel of real 7.12 estate in determining whether homestead exemptions or 7.13 classifications apply. 7.14 Sec. 6. Minnesota Statutes 1996, section 515B.1-116, is 7.15 amended to read: 7.16 515B.1-116 [RECORDING.] 7.17 (a) A declaration, bylaws, any amendment to a declaration 7.18 or bylaws, and any other instrument affecting a common interest 7.19 community shall be entitled to be recorded. In those counties 7.20 which have a tract index, the county recorder shall enter the 7.21 declaration in the tract index for each unit affected. The 7.22 registrar of titles shall file the declaration on the 7.23 certificate of title for each unit affected. 7.24 (b) The recording officer shall upon request promptly 7.25 assign a number (CIC number) to a common interest community to 7.26 be formed or to a common interest community resulting from the 7.27 merger of two or more common interest communities. 7.28 (c) Documents recorded pursuant to this chapter shall in 7.29 the case of registered land be filed, and references to the 7.30 recording of documents shall mean filed in the case of 7.31 registered land. 7.32 (d) Subject to any specific requirements of this chapter, 7.33 if any document to be recorded pursuant to this chapter requires 7.34 approval by a certain vote or agreement of the unit owners or 7.35 secured parties, an affidavit of the secretary of the 7.36 association stating that the required vote or agreement has 8.1 occurred shall be attached to the document and shall constitute 8.2 prima facie evidence of the representations contained therein. 8.3 (e) If a common interest community is located on registered 8.4 land, the recording fee for any document affecting two or more 8.5 units shall be the then-current fee for registering the document 8.6 on the certificates of title for the first ten affected 8.7 certificates and one-third of the then-current fee for each 8.8 additional affected certificate. This provision shall not apply 8.9 to recording fees for deeds of conveyance, with the exception of 8.10 deeds given pursuant to sections 515B.2-119 and 515B.3-112. 8.11 (f) Except as permitted under this subsection, a recording 8.12 officer shall not file or record a declaration creating a new 8.13 common interest community, unless the county treasurer has 8.14 certified that the property taxes payable in the current year 8.15 for the real estate included in the proposed common interest 8.16 community have been paid. This certification is in addition to 8.17 the certification for delinquent taxes required by section 8.18 272.12. In the case of preexisting common interest communities, 8.19 the recording officer shall accept, file, and record the 8.20 following instruments, without requiring a certification as to 8.21 the current or delinquent taxes on any of the units in the 8.22 common interest community: (i) a declaration subjecting the 8.23 common interest community to this chapter; (ii) a declaration 8.24 changing the form of a common interest community pursuant to 8.25 section 515B.2-123; or (iii) an amendment to or restatement ofa8.26 the declarationor, bylaws, oran amendedCIC plat, approved8.27by the required vote of unit owners of an association may be8.28recorded without the necessity of paying the current or8.29delinquent taxes on any of the units in the common interest8.30community. In order for the instruments to be accepted and 8.31 recorded under the preceding sentence, the assessor must certify 8.32 or otherwise inform the recording officer that, for taxes 8.33 payable in the current year, the assessor has allocated taxable 8.34 values to each unit or has separately assessed each unit. 8.35 (g) The registrar of titles shall not require the filing on 8.36 certificates of title previously issued for units in a flexible 9.1 common interest community of an amendment to a declaration 9.2 pursuant to section 515B.2-111 made solely to add additional 9.3 real estate. 9.4 Sec. 7. [EFFECTIVE DATE.] 9.5 Section 1 is effective for taxes payable in 1998 and 9.6 thereafter. Sections 2, 3, and 4 are effective the day 9.7 following final enactment. Sections 5 and 6 are effective for 9.8 declarations submitted for recording on or after July 1, 1997. 9.9 ARTICLE 2 9.10 INCOME AND WITHHOLDING 9.11 Section 1. Minnesota Statutes 1996, section 289A.08, 9.12 subdivision 3, is amended to read: 9.13 Subd. 3. [CORPORATIONS.] A corporation that is subject to 9.14 the state's jurisdiction to tax under section 290.014, 9.15 subdivision 5, must file a return, except that a foreign 9.16 operating corporation as defined in section 290.01, subdivision 9.17 6b, is not required to file a return. The commissioner shall 9.18 adopt rules for the filing of one return on behalf of the 9.19 members of an affiliated group of corporations that are required 9.20 to file a combined report. All members of an affiliated group 9.21 thatelect toare required to file a combined report must file 9.22 one return on behalf of the members of the group under rules 9.23 adopted by the commissionermay change or rescind the election9.24by filing the form required by the commissioner. 9.25 Sec. 2. Minnesota Statutes 1996, section 290.095, 9.26 subdivision 3, is amended to read: 9.27 Subd. 3. [CARRYOVER.] (a) A net operating loss incurred in 9.28 a taxable year: (i) beginning after December 31, 1986, shall be 9.29 a net operating loss carryover to each of the 15 taxable years 9.30 following the taxable year of such loss; (ii) beginning before 9.31 January 1, 1987, shall be a net operating loss carryover to each 9.32 of the five taxable years following the taxable year of such 9.33 loss subject to the provisions of Minnesota Statutes 1986, 9.34 section 290.095; and (iii) beginning before January 1, 1987, 9.35 shall be a net operating loss carryback to each of the three 9.36 taxable years preceding the loss year subject to the provisions 10.1 of Minnesota Statutes 1986, section 290.095. 10.2 (b) The entire amount of the net operating loss for any 10.3 taxable year shall be carried to the earliest of the taxable 10.4 years to which such loss may be carried. The portion of such 10.5 loss which shall be carried to each of the other taxable years 10.6 shall be the excess, if any, of the amount of such loss over the 10.7 sum of the taxable net income, adjusted by the modifications 10.8 specified in subdivision 4, for each of the taxable years to 10.9 which such loss may be carried. 10.10 (c) Where a corporation does business both within and 10.11 without Minnesota, and apportions its income under the 10.12 provisions of section 290.191, the net operating loss deduction 10.13 incurred in any taxable year shall be allowed to the extent of 10.14 the apportionment ratio of the loss year. 10.15 (d) The provisions of sections 381, 382, and 384 of the 10.16 Internal Revenue Code apply to carryovers in certain corporate 10.17 acquisitions and special limitations on net operating loss 10.18 carryovers. The limitation amount determined under section 382 10.19 shall be applied to net income, before apportionment, in each 10.20 post change year to which a loss is carried. 10.21 Sec. 3. Minnesota Statutes 1996, section 290.17, 10.22 subdivision 2, is amended to read: 10.23 Subd. 2. [INCOME NOT DERIVED FROM CONDUCT OF A TRADE OR 10.24 BUSINESS.] The income of a taxpayer subject to the allocation 10.25 rules that is not derived from the conduct of a trade or 10.26 business must be assigned in accordance with paragraphs (a) to 10.27 (f): 10.28 (a)(1) Subject to paragraphs (a)(2) and (a)(3), income from 10.29 labor or personal or professional services is assigned to this 10.30 state if, and to the extent that, the labor or services are 10.31 performed within it; all other income from such sources is 10.32 treated as income from sources without this state. 10.33 Severance pay shall be considered income from labor or 10.34 personal or professional services. 10.35 (2) In the case of an individual who is a nonresident of 10.36 Minnesota and who is an athlete or entertainer, income from 11.1 compensation for labor or personal services performed within 11.2 this state shall be determined in the following manner: 11.3 (i) The amount of income to be assigned to Minnesota for an 11.4 individual who is a nonresident salaried athletic team employee 11.5 shall be determined by using a fraction in which the denominator 11.6 contains the total number of days in which the individual is 11.7 under a duty to perform for the employer, and the numerator is 11.8 the total number of those days spent in Minnesota. For purposes 11.9 of this paragraph, off-season training activities, unless 11.10 conducted at the team's facilities as part of a team imposed 11.11 program, are not included in the total number of duty days. 11.12 Bonuses earned as a result of play during the regular season or 11.13 for participation in championship, play-off, or all-star games 11.14 must be allocated under the formula. Signing bonuses are not 11.15 subject to allocation under the formula if they are not 11.16 conditional on playing any games for the team, are payable 11.17 separately from any other compensation, and are nonrefundable; 11.18 and 11.19 (ii) The amount of income to be assigned to Minnesota for 11.20 an individual who is a nonresident, and who is an athlete or 11.21 entertainer not listed in clause (i), for that person's athletic 11.22 or entertainment performance in Minnesota shall be determined by 11.23 assigning to this state all income from performances or athletic 11.24 contests in this state. 11.25 (3) For purposes of this section, amounts received by a 11.26 nonresidentfrom the United States, its agencies or11.27instrumentalities, the Federal Reserve Bank, the state of11.28Minnesota or any of its political or governmental subdivisions,11.29or a Minnesota volunteer firefighters' relief association, by11.30way of payment as a pension, public employee retirement benefit,11.31or any combination of these, or as a retirement or survivor's11.32benefit made from a plan qualifying under section 401, 403, 408,11.33or 409, or as defined in section 403(b) or 457 of the Internal11.34Revenue Codeas "retirement income" as defined in section (b)(1) 11.35 of the State Income Taxation of Pension Income Act, Public Law 11.36 Number 104-95, are not considered income derived from carrying 12.1 on a trade or business or from performing personal or 12.2 professional services in Minnesota, and are not taxable under 12.3 this chapter. 12.4 (b) Income or gains from tangible property located in this 12.5 state that is not employed in the business of the recipient of 12.6 the income or gains must be assigned to this state. 12.7 (c) Income or gains from intangible personal property not 12.8 employed in the business of the recipient of the income or gains 12.9 must be assigned to this state if the recipient of the income or 12.10 gains is a resident of this state or is a resident trust or 12.11 estate. 12.12 Gain on the sale of a partnership interest is allocable to 12.13 this state in the ratio of the original cost of partnership 12.14 tangible property in this state to the original cost of 12.15 partnership tangible property everywhere, determined at the time 12.16 of the sale. If more than 50 percent of the value of the 12.17 partnership's assets consists of intangibles, gain or loss from 12.18 the sale of the partnership interest is allocated to this state 12.19 in accordance with the sales factor of the partnership for its 12.20 first full tax period immediately preceding the tax period of 12.21 the partnership during which the partnership interest was sold. 12.22 Gain on the sale of goodwill or income from a covenant not 12.23 to compete that is connected with a business operating all or 12.24 partially in Minnesota is allocated to this state to the extent 12.25 that the income from the business in the year preceding the year 12.26 of sale was assignable to Minnesota under subdivision 3. 12.27 When an employer pays an employee for a covenant not to 12.28 compete, the income allocated to this state is in the ratio of 12.29 the employee's service in Minnesota in the calendar year 12.30 preceding leaving the employment of the employer over the total 12.31 services performed by the employee for the employer in that year. 12.32 (d) Income from the operation of a farm shall be assigned 12.33 to this state if the farm is located within this state and to 12.34 other states only if the farm is not located in this state. 12.35 (e) Income from winnings on Minnesota pari-mutuel betting 12.36 tickets, the Minnesota state lottery, and lawful gambling as 13.1 defined in section 349.12, subdivision 24, conducted within the 13.2 boundaries of the state of Minnesota shall be assigned to this 13.3 state. 13.4 (f) All items of gross income not covered in paragraphs (a) 13.5 to (e) and not part of the taxpayer's income from a trade or 13.6 business shall be assigned to the taxpayer's domicile. 13.7 Sec. 4. Minnesota Statutes 1996, section 290.35, 13.8 subdivision 2, is amended to read: 13.9 Subd. 2. [APPORTIONMENT OF TAXABLE NET INCOME.] The 13.10 commissioner shall compute therefrom the taxable net income of 13.11 such companies by assigning to this state that proportion 13.12 thereof which the gross premiums collected by them during the 13.13 taxable year from old and new business within this state bears 13.14 to the total gross premiums collected by them during that year 13.15 from their entire old and new business, including reinsurance 13.16 premiums; provided, the commissioner shall add to the taxable 13.17 net income so apportioned to this state the amount of any taxes 13.18 on premiums paid by the company by virtue of any law of this 13.19 state (other than the surcharge on premiums imposed by sections 13.20 69.54 to 69.56 and the surcharge imposed by section 168A.40, 13.21 subdivision 3) which shall have been deducted from gross income 13.22 by the company in arriving at its total net income under the 13.23 provisions of such act of Congress. 13.24 (a) For purposes of determining the Minnesota apportionment 13.25 percentage, premiums from reinsurance contracts in connection 13.26 with property in or liability arising out of activity in, or in 13.27 connection with the lives or health of Minnesota residents shall 13.28 be assigned to Minnesota and premiums from reinsurance contracts 13.29 in connection with property in or liability arising out of 13.30 activity in, or in connection with the lives or health of 13.31 non-Minnesota residents shall be assigned outside of Minnesota. 13.32 Reinsurance premiums are presumed to be received for a Minnesota 13.33 risk and are assigned to Minnesota, if: 13.34 (1) the reinsurance contract is assumed for a company 13.35 domiciled in Minnesota; and 13.36 (2) the taxpayer, upon request of the commissioner, fails 14.1 to provide reliable records indicating the reinsured contract 14.2 covered non-Minnesota risks. 14.3 For purposes of this paragraph, "Minnesota risk" means coverage 14.4 in connection with property in or liability arising out of 14.5 activity in Minnesota, or in connection with the lives or health 14.6 of Minnesota residents. 14.7 (b) The apportionment method prescribed by paragraph (a) 14.8 shall be presumed to fairly and correctly determine the 14.9 taxpayer's taxable net income. If the method prescribed in 14.10 paragraph (a) does not fairly reflect all or any part of taxable 14.11 net income, the taxpayer may petition for or the commissioner 14.12 may require the determination of taxable net income by use of 14.13 another method if that method fairly reflects taxable net 14.14 income. A petition within the meaning of this section must be 14.15 filed by the taxpayer on such form as the commissioner shall 14.16 require. 14.17 Sec. 5. Laws 1995, chapter 264, article 10, section 15, is 14.18 amended to read: 14.19 Sec. 15. [EFFECTIVE DATE.] 14.20 Section 1 is effective for returns due after December 31, 14.21 1995. Section 2 as it relates to quarterly withholding deposits 14.22 is effective for withholding done after December 31, 1995, and 14.23 the remainder of section 2 is effective for payments due after 14.24 December 31, 1995. Sections 3 and 5 are effective for federal 14.25 determinations after December 31, 1995. Section 4 is effective 14.26 for estates of decedents dying after the date of final 14.27 enactment. Section 6 is effective for deaths after December 31, 14.28 1995, and trusts that become irrevocable after December 31, 14.29 1995, or are first administered in Minnesota after December 31, 14.30 1995. Sections 7 and 9 to 11 are effective for tax years 14.31 beginning after December 31, 1995. Section 12 is effective for 14.32 wages paid after December 31, 1995. Sections 8 and 13 are 14.33 effective for tax years beginning after December 31, 1994. 14.34 Sec. 6. [INTEREST ON 1996 PENALTIES.] 14.35 Notwithstanding any law to the contrary, for calendar year 14.36 1996 individual income tax returns, the late payment penalty 15.1 under Minnesota Statutes, section 289A.60, subdivision 1, and 15.2 interest under Minnesota Statutes, section 289A.55, subdivisions 15.3 2, 4, and 9, will start on May 30, 1997 instead of April 15, 15.4 1997. 15.5 Sec. 7. [EFFECTIVE DATES.] 15.6 Section 1 is effective for tax years beginning after 15.7 December 31, 1997. 15.8 Sections 2 to 4 are effective for tax years beginning after 15.9 December 31, 1996. 15.10 Section 5 is effective for trusts first administered in 15.11 Minnesota after December 31, 1995, and tax years beginning after 15.12 December 31, 1996. 15.13 ARTICLE 3 15.14 SALES AND SPECIAL TAXES 15.15 Section 1. Minnesota Statutes 1996, section 289A.40, 15.16 subdivision 2, is amended to read: 15.17 Subd. 2. [BAD DEBT LOSS.] If a claim relates to an 15.18 overpayment because of a failure to deduct a loss due to a bad 15.19 debt or to a security becoming worthless, the claim is 15.20 considered timely if filed within seven years from the date 15.21 prescribed for the filing of the return. A claim relating to an 15.22 overpayment of taxes under chapter 297A must be filed within 15.23 3-1/2 years from the date prescribed for filing the return, plus 15.24 any extensions granted for filing the return, but only if filed 15.25 within the extended time, or within one year from the date the 15.26 taxpayer's federal income tax return is timely filed claiming 15.27 the bad debt deduction, whichever period expires later. The 15.28 refund or credit is limited to the amount of overpayment 15.29 attributable to the loss. 15.30 Sec. 2. Minnesota Statutes 1996, section 289A.60, 15.31 subdivision 15, is amended to read: 15.32 Subd. 15. [ACCELERATED PAYMENT OF JUNE SALES TAX 15.33 LIABILITY; PENALTY FOR UNDERPAYMENT.] If a vendor is required by 15.34 law to submit an estimation of June sales tax liabilities and 75 15.35 percent payment by a certain date, the vendor shall pay a 15.36 penalty equal to ten percent of the amount of actual June 16.1 liability required to be paid in June less the amount remitted 16.2 in June. The penalty must not be imposed, however, if the 16.3 amount remitted in June equals the lesser of: (1) 70 percent of16.4the actual June liability, (2)75 percent of the preceding May's 16.5 liability,or(3)75 percent of the average monthly liability 16.6 for the previous calendar year. 16.7 Sec. 3. Minnesota Statutes 1996, section 297A.01, is 16.8 amended by adding a subdivision to read: 16.9 Subd. 22. [LEASING.] "Leasing" includes all transfers of 16.10 possession of tangible personal property or the use thereof by 16.11 the lessee for a consideration when title remains with the 16.12 lessor at the end of the lease. If a contract designated as a 16.13 lease binds the lessee for a fixed term and the lessee is to 16.14 obtain title at the end of the term of the agreement or has the 16.15 option at that time to purchase the property for a nominal 16.16 amount, the contract is regarded as a sale and not as a lease. 16.17 For purposes of this chapter, a lease of tangible personal 16.18 property is a series of transactions that impose upon the lessee 16.19 multiple payment obligations. A taxable transaction is 16.20 considered to have occurred when an obligation to make a lease 16.21 payment becomes due under the terms of the agreement or trade 16.22 practices of the lessor. For purposes of this subdivision, 16.23 "nominal amount" means an amount so small, slight, or negligible 16.24 that it is not economically significant and bears no relation to 16.25 the real value of the item being purchased. 16.26 Sec. 4. Minnesota Statutes 1996, section 297A.041, is 16.27 amended to read: 16.28 297A.041 [OPERATOR OF FLEA MARKETS; SELLER'S PERMITS 16.29 REQUIRED.] 16.30 The operator of a flea market, craft show, antique show, 16.31 coin show, stamp show, comic book show, convention exhibit area, 16.32 or similar selling event, as a prerequisite to renting or 16.33 leasing space on the premises owned or controlled by the 16.34 operator to a person desiring to engage in or conduct business 16.35 as a seller, shall obtain evidence that the seller is the holder 16.36 of a valid seller's permit issued under section 297A.04, or a 17.1 written statement from the seller that the seller is not 17.2 offering for sale any item that is taxable under this chapter. 17.3 Flea market, craft show, antique show, coin show, stamp 17.4 show, comic book show, convention exhibit area, or similar 17.5 selling event, as used in this section, means an activity 17.6 involving a series of sales sufficient in number, scope, and 17.7 character to constitute a regular course of business, and that 17.8 would not qualify as an isolated or occasional sale under 17.9 section 297A.25, subdivision 12. 17.10This section does not apply to an operator of a flea17.11market, craft show, antique show, coin show, stamp show, comic17.12book show, convention exhibit area, or similar selling event17.13that is: (1) held in conjunction with a community sponsored17.14festival that has a duration of four or fewer consecutive days17.15no more than once a year; or (2) conducted by a nonprofit17.16organization annually or less frequently.17.17 Sec. 5. Minnesota Statutes 1996, section 297A.24, is 17.18 amended by adding a subdivision to read: 17.19 Subd. 3. [LOCAL TAXES.] If an item has been subjected to a 17.20 sales tax imposed by a political subdivision of this state and 17.21 is used, stored, or consumed in another political subdivision 17.22 imposing a local use tax, a credit shall be given for all 17.23 legally imposed sales taxes paid by the purchaser with respect 17.24 to that item. 17.25 Sec. 6. Minnesota Statutes 1996, section 297A.25, 17.26 subdivision 12, is amended to read: 17.27 Subd. 12. [OCCASIONAL SALES.] (a) The gross receipts from 17.28 the isolated or occasional sale of tangible personal property in 17.29 Minnesota not made in the normal course of business of selling 17.30 that kind of property, and the storage, use, or consumption of 17.31 property acquired as a result of such a sale are exempt. 17.32 (b) This exemption does not apply to sales of tangible 17.33 personal property primarily used in a trade or business unless 17.34 (1) the sale occurs in a transaction subject to or described in 17.35 section 118, 331, 332, 336, 337, 338, 351, 355, 368, 721, 731, 17.36 1031, or 1033 of the Internal Revenue Code of 1986, as amended 18.1 through December 31, 1990; (2) the sale is between members of a 18.2 controlled group as defined in section 1563(a) of the Internal 18.3 Revenue Code of 1986, as amended through December 31, 1990; (3) 18.4 the sale is a sale of farm machinery; (4) the sale is a farm 18.5 auction sale; (5) the sale is a sale of substantially all of the 18.6 assets of a trade or business; or (6) the total amount of gross 18.7 receipts from the sale of trade or business property made during 18.8 the calendar month of the sale and the preceding 11 calendar 18.9 months does not exceed $1,000. 18.10 (c) For purposes of this subdivision, the following terms 18.11 have the meanings given. 18.12 (1) A "farm auction" is a public auction conducted by a 18.13 licensed auctioneer if substantially all of the property sold 18.14 consists of property used in the trade or business of farming 18.15 and property not used primarily in a trade or business. 18.16 (2) "Trade or business" includes the assets of a separate 18.17 division, branch, or identifiable segment of a trade or business 18.18 if, before the sale, the income and expenses attributable to the 18.19 separate division, branch, or identifiable segment could be 18.20 separately ascertained from the books of account or record (the 18.21 lease or rental of an identifiable segment does not qualify for 18.22 the exemption). 18.23 (3) A "sale of substantially all of the assets of a trade 18.24 or business" must occur as a single transaction or a series of 18.25 related transactions occurring within the 12-month period 18.26 beginning on the date of the first sale of assets intended to 18.27 qualify for the exemption provided in paragraph (b), clause (5). 18.28 For purposes of this subdivision, "normal course of 18.29 business" means activities that demonstrate a commercial 18.30 continuity or consistency of making sales or performing services 18.31 for the purposes of attaining profit or producing income. 18.32 Factors that indicate that a person is acting in the normal 18.33 course of business include: 18.34 (1) systematic solicitation of sales through advertising 18.35 media; 18.36 (2) entering into contracts to perform services or provide 19.1 tangible personal property; 19.2 (3) maintaining a place of business; or 19.3 (4) use of exemption certificates to purchase goods exempt 19.4 from the sales tax. 19.5 Sec. 7. Minnesota Statutes 1996, section 297A.25, 19.6 subdivision 41, is amended to read: 19.7 Subd. 41. [BULLET-PROOF VESTS.] The gross receipts from 19.8 the sale of bullet-resistantsoftbody armor thatis flexible,19.9concealable, and custom-fitted to provideprovides the wearer 19.10 with ballistic and trauma protection are exempt if purchased by 19.11 a law enforcement agency of the state or a political subdivision 19.12 of the state, or a licensed peace officer, as defined in section 19.13 626.84, subdivision 1.The bullet-resistant soft body armor19.14must meet or exceed the requirements of standard 0101.01 of the19.15National Institute of Law Enforcement and Criminal Justice in19.16effect on December 30, 1986, or meet or exceed the requirements19.17of the standard except wet armor conditioning.19.18 Sec. 8. Minnesota Statutes 1996, section 297A.45, 19.19 subdivision 4, is amended to read: 19.20 Subd. 4. [CITYLOCAL SALES TAX MAY NOT BE IMPOSED.] 19.21 Notwithstanding any other law or charter provision to the 19.22 contrary, ahome rule charter or statutory citypolitical 19.23 subdivision that imposes a general sales taxmayshall not 19.24 impose the sales tax on solid waste management services that are 19.25 subject to the tax under this section. 19.26 Sec. 9. [EFFECTIVE DATE.] 19.27 Section 1 is effective for refund claims filed for bad 19.28 debts recognized for federal income tax purposes after June 30, 19.29 1997. 19.30 Section 2 is effective for returns filed after January 1, 19.31 1998. 19.32 Sections 3 to 5 and 8 are effective July 1, 1997. 19.33 Sections 6 and 7 are effective for sales and purchases 19.34 occurring after June 30, 1997. 19.35 ARTICLE 4 19.36 MINNESOTACARE 20.1 Section 1. Minnesota Statutes 1996, section 295.50, 20.2 subdivision 3, is amended to read: 20.3 Subd. 3. [GROSS REVENUES.] "Gross revenues" are total 20.4 amounts received in money or otherwise by: 20.5 (1) a hospital for patient services; 20.6 (2) a surgical center for patient services; 20.7 (3) a health care provider, other than a staff model health 20.8 carrier, for patient services; 20.9 (4) a wholesale drug distributor for sale or distribution 20.10 of legend drugs that are delivered: (i) to a Minnesota resident20.11by a wholesale drug distributor who is a nonresident pharmacy20.12directly, by common carrier, or by mail; or (ii)in Minnesota by 20.13 the wholesale drug distributor, by common carrier, or by mail, 20.14 unless the legend drugs are delivered to another wholesale drug 20.15 distributor who sells legend drugs exclusively at wholesale. 20.16 Legend drugs do not include nutritional products as defined in 20.17 Minnesota Rules, part 9505.0325; 20.18 (5) a staff model health plan company as gross premiums for 20.19 enrollees, copayments, deductibles, coinsurance, and fees for 20.20 patient services covered under its contracts with groups and 20.21 enrollees; and 20.22 (6) a pharmacy for medical supplies, appliances, and 20.23 equipment. 20.24 Sec. 2. Minnesota Statutes 1996, section 295.50, 20.25 subdivision 14, is amended to read: 20.26 Subd. 14. [WHOLESALE DRUG DISTRIBUTOR.] "Wholesale drug 20.27 distributor" means a wholesale drug distributor required to be 20.28 licensed under sections 151.42 to 151.51or a nonresident20.29pharmacy required to be registered under section 151.19. 20.30 Sec. 3. Minnesota Statutes 1996, section 295.52, 20.31 subdivision 4, is amended to read: 20.32 Subd. 4. [USE TAX; PRESCRIPTION DRUGS.] A person that 20.33 receives prescription drugs for resale or use in Minnesota, 20.34 other than from a wholesale drug distributor that paid the tax 20.35 under subdivision 3, is subject to a tax equal to two percent of 20.36 the price paid. Liability for the tax is incurred when 21.1 prescription drugs are received or delivered in Minnesota by the 21.2 person. 21.3 Sec. 4. Minnesota Statutes 1996, section 295.53, 21.4 subdivision 4, is amended to read: 21.5 Subd. 4. [DEDUCTION FOR RESEARCH.] (a) In addition to the 21.6 exemptions allowed under subdivision 1, a hospital or health 21.7 care providerwhich is exempt under section 501(c)(3) of the21.8Internal Revenue Code of 1986 or is owned and operated under21.9authority of a governmental unit,may deduct from its gross 21.10 revenues subject to the hospital or health care provider taxes 21.11 under sections 295.50 to 295.57 revenues equal to expenditures 21.12 for qualifying research conducted by an allowable research 21.13programsprogram. 21.14 (b) For purposes of this subdivision, the following 21.15 requirements apply: 21.16 (1) expendituresfor allowable research programs are the21.17direct and generalmust be for program costsfor activities21.18which are partof qualifying research conducted by an allowable 21.19 research program; 21.20 (2) an allowable research program must be a formal program 21.21 of medical and health care researchapproved by the governing21.22body of the hospital or health care provider which also includes21.23active solicitation of research funds from government and21.24private sources. Allowableconducted by an entity which is 21.25 exempt under section 501(c)(3) of the Internal Revenue Code of 21.26 1986 or is owned and operated under authority of a governmental 21.27 unit; 21.28 (3) qualifying research must: 21.29 (A) be approved in writing by the governing body of the 21.30 hospital or health care provider which is taking the deduction 21.31 under this subdivision; 21.32(1)(B) have as its purpose the development of new 21.33 knowledge in basic or applied science relating to the diagnosis 21.34 and treatment of conditions affecting the human body; 21.35(2)(C) be subject to review by individuals with expertise 21.36 in the subject matter of the proposed study but who have no 22.1 financial interest in the proposed study and are not involved in 22.2 the conduct of the proposed study; and 22.3(3)(D) be subject to review and supervision by an 22.4 institutional review board operating in conformity with federal 22.5 regulations if the research involves human subjects or an 22.6 institutional animal care and use committee operating in 22.7 conformity with federal regulations if the research involves 22.8 animal subjects. Research expenses are not exempt if the study 22.9 is a routine evaluation of health care methods or products used 22.10 in a particular setting conducted for the purpose of making a 22.11 management decision. Costs of clinical research activities paid 22.12 directly for the benefit of an individual patient are excluded 22.13 from this exemption. Basic research in fields including 22.14 biochemistry, molecular biology, and physiology are also 22.15 included if such programs are subject to a peer review process. 22.16 (c) No deduction shall be allowed under this subdivision 22.17 for any revenue received by the hospital or health care provider 22.18 in the form of a grant, gift, or otherwise, whether from a 22.19 government or nongovernment source, on which the tax liability 22.20 under section 295.52 is not imposedor for which the tax22.21liability under section 295.52 has been received from a third22.22party as provided for in section 295.582. 22.23 (d) Effective beginning with calendar year 1995, the 22.24 taxpayer shall not take the deduction under this section into 22.25 account in determining estimated tax payments or the payment 22.26 made with the annual return under section 295.55. The total 22.27 deduction allowable to all taxpayers under this section for 22.28 calendar years beginning after December 31, 1994, may not exceed 22.29 $65,000,000. To implement this limit, each qualifying hospital 22.30 and qualifying health care provider shall submit to the 22.31 commissioner by March 15 its total expenditures qualifying for 22.32 the deduction under this section for the previous calendar 22.33 year. The commissioner shall sum the total expenditures of all 22.34 taxpayers qualifying under this section for the calendar year. 22.35 If the resulting amount exceeds $65,000,000, the commissioner 22.36 shall allocate a part of the $65,000,000 deduction limit to each 23.1 qualifying hospital and health care provider in proportion to 23.2 its share of the total deductions. The commissioner shall pay a 23.3 refund to each qualifying hospital or provider equal to its 23.4 share of the deduction limit multiplied by two percent. The 23.5 commissioner shall pay the refund no later than May 15 of the 23.6 calendar year. 23.7 Sec. 5. Minnesota Statutes 1996, section 295.55, 23.8 subdivision 2, is amended to read: 23.9 Subd. 2. [ESTIMATED TAX; HOSPITALS; SURGICAL CENTERS.] (a) 23.10 Each hospital or surgical center must make estimated payments of 23.11 the taxes for the calendar year in monthly installments to the 23.12 commissioner withinten15 days after the end of the month. 23.13 (b) Estimated tax payments are not required of hospitals or 23.14 surgical centers if the tax for the calendar year is less than 23.15 $500 or if a hospital has been allowed a grant under section 23.16 144.1484, subdivision 2, for the year. 23.17 (c) Underpayment of estimated installments bear interest at 23.18 the rate specified in section 270.75, from the due date of the 23.19 payment until paid or until the due date of the annual return at 23.20 the rate specified in section 270.75. An underpayment of an 23.21 estimated installment is the difference between the amount paid 23.22 and the lesser of (1) 90 percent of one-twelfth of the tax for 23.23 the calendar year or (2) the tax for the actual gross revenues 23.24 received during the month. 23.25 Sec. 6. [EFFECTIVE DATE.] 23.26 Sections 1, 2, and 3 are effective for gross revenues 23.27 received on or after July 1, 1997. Section 4 is effective for 23.28 research expenditures incurred on or after January 1, 1997. 23.29 Section 5 is effective for estimated payments due after July 1, 23.30 1997. 23.31 ARTICLE 5 23.32 COLLECTIONS 23.33 Section 1. Minnesota Statutes 1996, section 270.063, is 23.34 amended to read: 23.35 270.063 [COLLECTION OF DELINQUENT TAXES; COSTS.] 23.36 Subdivision 1. [APPROPRIATION.] For the purpose of 24.1 collecting delinquent state tax liabilities, there is 24.2 appropriated to the commissioner of revenue an amount 24.3 representing the cost of collection by contract with collection 24.4 agencies, revenue departments of other states, or attorneys to 24.5 enable the commissioner to reimburse these agencies, 24.6 departments, or attorneys for this service. The commissioner 24.7 shall report quarterly on the status of this program to the 24.8 chair of the house tax and appropriation committees and senate 24.9 tax and finance committees. 24.10 Subd. 2. [PREPAYMENT.] Notwithstanding section 16A.15, 24.11 subdivision 3, the commissioner of revenue may authorize the 24.12 prepayment of sheriff's fees, attorney fees, fees charged by 24.13 revenue departments of other states, or court costs to be 24.14 incurred in connection with the collection of delinquent tax 24.15 liabilities owed to the commissioner of revenue. 24.16 Subd. 3. [COLLECTION OF FINANCIAL INSTITUTION FEES.] The 24.17 commissioner shall collect from a taxpayer any collection fees 24.18 or costs charged by financial institutions and incurred by the 24.19 commissioner. 24.20 Sec. 2. Minnesota Statutes 1996, section 270.101, 24.21 subdivision 3, is amended to read: 24.22 Subd. 3. [PROCEDURE FOR ASSESSMENT.] The commissioner may 24.23 assess liability for the taxes described in subdivision 1 24.24 against a person liable under this section. The assessment may 24.25 be based upon information available to the commissioner. It 24.26 must be made within the prescribed period of limitations for 24.27 assessing the underlying tax, or within one year after the date 24.28 of an order assessing underlying tax, whichever period expires 24.29 later. An order assessing personal liability under this section 24.30 is reviewable under section 289A.65 and is appealable to tax 24.31 court. 24.32 If a person has been assessed under this section for an 24.33 amount for a given period and the time for appeal has expired or 24.34 there has been a final determination that the person is liable, 24.35 collection action is not stayed pursuant to section 270.10, 24.36 subdivision 5, for subsequent assessments of additional amounts 25.1 for the same person for the same period and tax type. 25.2 Sec. 3. Minnesota Statutes 1996, section 270.68, 25.3 subdivision 1, is amended to read: 25.4 Subdivision 1. [LEGAL ACTION.] In addition to all other 25.5 methods authorized by law for the collection of tax, if any tax 25.6 payable to the commissioner of revenue or to the department of 25.7 revenue, including penalties and interest thereon, is not paid 25.8 within 60 days after it is required by law to be paid, the 25.9 commissioner of revenue may proceed under this subdivision. 25.10 Within five years after the date of assessment of the tax or at 25.11 any time a lien filed under section 270.69 is enforceable, or, 25.12 if the action is to renew or enforce a judgment, at any time 25.13 before the judgment's expiration, the commissioner may bring an 25.14 action at law against the person liable for the payment or 25.15 collection of the tax, in the name of the state, for the 25.16 recovery of the tax and interest and penalties due in respect 25.17 thereof. The action shall be brought in the district court of 25.18 the judicial district in which lies the county of the residence 25.19 or principal place of business within this state of the 25.20 taxpayer, or, in the case of an estate or trust, of the place of 25.21 its principal administration, and for this purpose the place 25.22 named as such in the return, if any, made by the taxpayer shall 25.23 be conclusive against the taxpayer in this matter. If no place 25.24 is named in the return, the action may be commenced in Ramsey 25.25 county. The action shall be commenced by filing with the court 25.26 administrator a statement showing the name and address of the 25.27 taxpayer, if known, an itemized summary of the taxable periods 25.28 and the type of tax, the tax due and unpaid and the interest and 25.29 penalties due with respect thereto under the provisions of law 25.30 applicable to the tax, and shall contain a prayer that the court 25.31 adjudge the taxpayer to be indebted on account of the taxes, 25.32 interest, and penalties in the amount specified in the 25.33 statement; a copy of the statement shall be furnished to the 25.34 court administrator therewith. The court administrator shall 25.35 mail a copy of the statement by certified mail to the taxpayer 25.36 at the address given in the return, if any; and to the 26.1 taxpayer's last known address, within five days after the same 26.2 is filed, except that, if the taxpayer's address is not known, 26.3 notice shall be made by posting a copy of the statement for ten 26.4 days in the place in the courthouse where public notices are 26.5 regularly posted. To litigate the claim, or any part of it, the 26.6 taxpayer shall serve an answer upon the commissioner on or 26.7 before the 20th day after the date of mailing the statement; or, 26.8 if notice has been given by posting, on or before the 20th day 26.9 after the expiration of the period during which the notice was 26.10 required to be posted. If no answer is served within the 26.11 specified time, the court administrator, upon the filing of an 26.12 affidavit of default, shall enter judgment for the state in the 26.13 amount prayed for, plus costs of $10. If an answer is filed, 26.14 the issues raised shall stand for trial as soon as possible 26.15 after the filing of the answer, and the court shall determine 26.16 the issues and direct judgment accordingly; and, if the taxes, 26.17 interest, or penalties are sustained to any extent over the 26.18 amount rendered by the taxpayer, shall assess $10 costs against 26.19 the taxpayer. The court shall disregard all technicalities and 26.20 matters of form not affecting the substantial merits. The 26.21 commissioner may call upon the county attorney or the attorney 26.22 general to conduct the proceedings on behalf of the state. If a 26.23 proceeding is referred to a county attorney, and the county 26.24 attorney fails to issue or cause to be issued an indictment or 26.25 criminal complaint within 30 days after the referral by the 26.26 commissioner, the attorney general may conduct the proceeding. 26.27 Execution shall be issued upon the judgment at the request of 26.28 the commissioner, and the execution shall, in all other 26.29 respects, be governed by the laws applicable to executions 26.30 issued on judgments. Only the homestead and household goods of 26.31 the judgment debtor shall be exempt from seizure and sale upon 26.32 the execution. 26.33 In addition to the procedure in this subdivision, legal 26.34 action may be commenced by the commissioner in district court in 26.35 the same manner or venue as any other civil action. 26.36 Sec. 4. Minnesota Statutes 1996, section 270.701, 27.1 subdivision 2, is amended to read: 27.2 Subd. 2. [NOTICE OF SALE.] The commissioner shall as soon 27.3 as practicable after the seizure of the property give notice of 27.4 sale of the property to the owner, in the manner of service 27.5 prescribed in subdivision 1. In the case of personal property, 27.6 the notice shall be served at least 10 days prior to the sale. 27.7 In the case of real property, the notice shall be served at 27.8 least four weeks prior to the sale. The commissioner shall also 27.9 cause public notice of each sale to be made. In the case of 27.10 personal property, notice shall be posted at least 10 days prior 27.11 to the sale at thepost office nearest the placecounty 27.12 courthouse for the county where the seizure is made, and in not 27.13 less than two other public places. In the case of real property, 27.14 six weeks' published notice shall be given prior to the sale, in 27.15 a newspaper published or generally circulated in the county. 27.16 The notice of sale provided in this subdivision shall specify 27.17 the property to be sold, and the time, place, manner and 27.18 conditions of the sale. Whenever levy is made without regard to 27.19 the ten-day period provided in section 270.70, subdivision 2, 27.20 public notice of sale of the property seized shall not be made 27.21 within the ten-day period unless section 270.702 (relating to 27.22 sale of perishable goods) is applicable. 27.23 Sec. 5. Minnesota Statutes 1996, section 270.701, 27.24 subdivision 5, is amended to read: 27.25 Subd. 5. [MANNER AND CONDITIONS OF SALE.] (a) Before the 27.26 sale the commissioner shall determine a minimum price for which 27.27 the property shall be sold, and if no person offers for the 27.28 property at the sale the amount of the minimum price, the 27.29 property shall be declared to be purchased at the minimum price 27.30 for the state of Minnesota; otherwise the property shall be 27.31 declared to be sold to the highest bidder. In determining the 27.32 minimum price, the commissioner shall take into account the 27.33 expense of making the levy and sale. The announcement of the 27.34 minimum price determined by the commissioner may be delayed 27.35 until the receipt of the highest bid. 27.36 (b) The sale shall not be conducted in any manner other 28.1 than: 28.2 (i) by public auction,or28.3 (ii) by public sale under sealed bids., or 28.4 (iii) in the case of items which individually or in usually 28.5 marketable units have a value of $50 or less, by public or 28.6 private proceedings as a unit or in parcels at any time and 28.7 place and on any terms, but every aspect of the disposition 28.8 including the method, manner, time, place, and terms must be 28.9 commercially reasonable. 28.10 (c) In the case of seizure of several items of property, 28.11 the items may be offered separately, in groups, or in the 28.12 aggregate, and shall be sold under whichever method produces the 28.13 highest aggregate amount, except that sales under paragraph (b), 28.14 item (iii), must produce a reasonable amount under the 28.15 circumstances. 28.16 (d) Payment in full shall be required at the time of 28.17 acceptance of a bid, except that a part of the payment may be 28.18 deferred by the commissioner for a period not to exceed 30 days. 28.19 (e) Other methods (including advertising) in addition to 28.20 those prescribed in subdivision 2 may be used in giving notice 28.21 of the sale. 28.22 (f) The commissioner may adjourn the sale from time to time 28.23 for a period not to exceed 30 days. 28.24 (g) If payment in full is required at the time of 28.25 acceptance of a bid and is not then and there paid, the 28.26 commissioner shall forthwith proceed to again sell the property 28.27 in the manner provided in this section. If the conditions of 28.28 the sale permit part of the payment to be deferred, and if the 28.29 part is not paid within the prescribed period, suit may be 28.30 instituted against the purchaser for the purchase price or that 28.31 part thereof as has not been paid, together with interest at the 28.32 rate specified in section 549.09 from the date of the sale; or, 28.33 in the discretion of the commissioner, the sale may be declared 28.34 by the commissioner to be null and void for failure to make full 28.35 payment of the purchase price and the property may again be 28.36 advertised and sold as provided in this section. In the event 29.1 of a readvertisement and sale, any new purchaser shall receive 29.2 the property or rights to property free and clear of any claim 29.3 or right of the former defaulting purchaser, of any nature 29.4 whatsoever, and the amount paid upon the bid price by the 29.5 defaulting purchaser shall be forfeited. 29.6 Sec. 6. Minnesota Statutes 1996, section 270.708, 29.7 subdivision 1, is amended to read: 29.8 Subdivision 1. [COLLECTION OF LIABILITY.] Any money 29.9 realized by proceedings under this chapter, whether by seizure, 29.10 by surrender under section 270.70 (except pursuant to 29.11 subdivision 9 thereof), by sale of seized property,orby sale 29.12 of property redeemed by the state of Minnesota (if the interest 29.13 of the state of Minnesota in the property was a lien arising 29.14 under the provisions of section 270.69), or by agreement, 29.15 arrangement, or any other means shall be applied as follows: 29.16 (a) First, against the expenses of the proceedings; then 29.17 (b) If the property seized and sold is subject to a tax 29.18 administered by the commissioner of revenue which has not been 29.19 paid, the amount remaining after applying clause (a) shall next 29.20 be applied against the tax liability (and, if the tax was not 29.21 previously assessed, it shall then be assessed); and 29.22 (c) The amount, if any, remaining after applying clauses 29.23 (a) and (b) shall be applied against the tax liability in 29.24 respect of which the levy was made or the sale was conducted. 29.25 Sec. 7. Minnesota Statutes 1996, section 270.721, is 29.26 amended to read: 29.27 270.721 [REVOCATION OFCORPORATECERTIFICATES OF AUTHORITY 29.28 TO DO BUSINESS IN THIS STATE.] 29.29 When a foreign corporation authorized to do business in 29.30 this state under chapter 303, or a foreign limited liability 29.31 company or partnership authorized to do business in this state 29.32 under chapter 322B, fails to comply with any tax laws 29.33 administered by the commissioner of revenue, the commissioner 29.34 may serve the secretary of state with a certified copy of an 29.35 order finding such failure to comply. The secretary of state, 29.36 upon receipt of the order, shall revoke the certificate of 30.1 authorityof the corporationto do business in this state, and 30.2 shall reinstate the certificate under section 303.19 or section 30.3 322B.960, subdivision 6, only when the corporation or limited 30.4 liability company or partnership has obtained from the 30.5 commissioner an order finding that the corporation or limited 30.6 liability company or partnership is in compliance with state tax 30.7 law. An order requiring revocation of a certificate shall not 30.8 be issued unless the commissioner gives the corporation or 30.9 limited liability company or partnership 30 days' written notice 30.10 of the proposed order, specifying the violations of state tax 30.11 law, and affordingthe corporationan opportunity to request a 30.12 contested case hearing under chapter 14. 30.13 Sec. 8. Minnesota Statutes 1996, section 270.73, 30.14 subdivision 1, is amended to read: 30.15 Subdivision 1. [POSTING, NOTICE.] Pursuant to the 30.16 authority to disclose under section 270B.12, subdivision 4, the 30.17 commissioner shall, by the 15th of each month, submit to the 30.18 commissioner of public safety a list of all taxpayers who are 30.19 required to pay, withhold, or collect the tax imposed by section 30.20 290.02, 290.92, or 297A.02, or local sales and use tax payable 30.21 to the commissioner of revenue, or a local option tax 30.22 administered and collected by the commissioner of revenue, and 30.23 who are30ten days or more delinquent in either filing a tax 30.24 return or paying the tax. 30.25 The commissioner of revenue is under no obligation to list 30.26 a taxpayer whose business is inactive. At least ten days before 30.27 notifying the commissioner of public safety, the commissioner of 30.28 revenue shall notify the taxpayer of the intended action. 30.29 The commissioner of public safety shall post the list in 30.30 the same manner as provided in section 340A.318, subdivision 3. 30.31 The list will prominently show the date of posting. If a 30.32 taxpayer previously listedcures the delinquency by filingfiles 30.33 all returns andpayingpays all taxes then due, the commissioner 30.34 shall notify the commissioner of public safety within two 30.35 business daysthat the delinquency was cured. 30.36 Sec. 9. Minnesota Statutes 1996, section 289A.36, 31.1 subdivision 4, is amended to read: 31.2 Subd. 4. [THIRD PARTY SUBPOENA WHERE TAXPAYER'S IDENTITY 31.3 IS KNOWN.] An investigation may extend to a person that the 31.4 commissioner determines has access to information that may be 31.5 relevant to the examination or investigation. When a subpoena 31.6 requiring the production of records as described in subdivision 31.7 2 is served on a third-party record keeper, written notice of 31.8 the subpoena must be mailed to the taxpayer and to any other 31.9 person who is identified in the subpoena. The notices must be 31.10 given within three days of the day on which the subpoena is 31.11 served. Notice to the taxpayer required by this section is 31.12 sufficient if it is mailed to the last address on record with 31.13 the commissioner. 31.14 The provisions of this subdivision relating to notice to 31.15 the taxpayer or other parties identified in the subpoena do not 31.16 apply if there is reasonable cause to believe that the giving of 31.17 notice may lead to attempts to conceal, destroy, or alter 31.18 records or assets relevant to the examination, to prevent the 31.19 communication of information from other persons through 31.20 intimidation, bribery, or collusion, or to flee to avoid 31.21 prosecution, testifying, or production of records. 31.22 Sec. 10. Minnesota Statutes 1996, section 297A.07, 31.23 subdivision 3, is amended to read: 31.24 Subd. 3. [NEW PERMITS AFTER REVOCATION.] The commissioner 31.25 shall not issue a new permit or reinstate a revoked permit after 31.26 revocation unless the taxpayer applies for a permit and provides 31.27 reasonable evidence of intention to comply with the sales and 31.28 use tax laws and rules. The commissioner may require the 31.29 applicant to supply security, in addition to that authorized by 31.30 section 297A.28, as is reasonably necessary to insure compliance 31.31 with the sales and use tax laws and rules. 31.32 If a taxpayer has had a permit or permits revoked three 31.33 times in a five-year period, the commissioner shall not issue a 31.34 new permit or reinstate the revoked permit until 24 months have 31.35 elapsed after revocation and the taxpayer has satisfied the 31.36 conditions for reinstatement of a revoked permit or issuance of 32.1 a new permit imposed by this section and rules adopted hereunder. 32.2 For purposes of this subdivision, the term "taxpayer" means 32.3 an individual, if a revoked permit was issued to or in the name 32.4 of an individual, or a corporation or partnership, if a revoked 32.5 permit was issued to or in the name of a corporation or 32.6 partnership. Taxpayer also means an officer of a corporation, a 32.7 member of a partnership, or an individual who is liable for 32.8 delinquent sales taxes, either for the entity for which the new 32.9 or reinstated permit is at issue, or for another entity for 32.10 which a permit was previously revoked, or personally as a permit 32.11 holder. 32.12 Sec. 11. [EFFECTIVE DATES.] 32.13 Section 1 is effective for fees and costs incurred on or 32.14 after the day following final enactment. 32.15 Section 2 as it pertains to the period of limitations for 32.16 orders assessing personal liability is effective for personal 32.17 liability assessments based on underlying taxes assessed on or 32.18 after the day following final enactment. Section 2 as it 32.19 pertains to the stay of collection action for subsequent 32.20 assessments is effective for personal liability assessments made 32.21 on or after the day following final enactment. 32.22 Section 3 is effective for causes of action arising before 32.23 the day following final enactment which are not barred by the 32.24 statute of limitations as of that date, and for causes of action 32.25 arising thereafter. 32.26 Section 4 is effective for notices posted on or after the 32.27 day following final enactment. 32.28 Section 5 is effective for sales of property seized on or 32.29 after the day following final enactment. 32.30 Section 6 is effective for money realized in connection 32.31 with property seized on or after the day following final 32.32 enactment. 32.33 Section 7 is effective for orders issued on or after July 32.34 1, 1997. 32.35 Section 8 is effective with respect to lists submitted to 32.36 the commissioner of public safety on or after July 1, 1997. 33.1 Section 9 is effective with respect to subpoenas served on 33.2 or after the day following final enactment. 33.3 Section 10 is effective for all cases in which the third 33.4 permit revocation occurs on or after July 1, 1997. 33.5 ARTICLE 6 33.6 MISCELLANEOUS 33.7 Section 1. Minnesota Statutes 1996, section 8.30, is 33.8 amended to read: 33.9 8.30 [COMPROMISE OF TAX CLAIMS.] 33.10 Notwithstanding any other provisions of law to the 33.11 contrary, the attorney general shall have authority to 33.12 compromise taxes, penalties, and interest in any case referred 33.13 to the attorney general, whether reduced to judgment or not, 33.14 where, in the attorney general's opinion, it shall be in the 33.15 best interests of the state to do so. A compromisemade33.16hereunderof a tax debt shall be in such form as the attorney 33.17 general shall prescribe and shall be in writing signed by the 33.18 attorney general, the taxpayer or taxpayer's representative, and 33.19 the commissioner of revenue. 33.20 Sec. 2. Minnesota Statutes 1996, section 60A.15, 33.21 subdivision 1, is amended to read: 33.22 Subdivision 1. [DOMESTIC AND FOREIGN COMPANIES.] (a) On or 33.23 before April 1, June 1, and December 1 of each year, every 33.24 domestic and foreign company, including town and farmers' mutual 33.25 insurance companies, domestic mutual insurance companies, marine 33.26 insurance companies, health maintenance organizations, 33.27 integrated service networks, community integrated service 33.28 networks, and nonprofit health service plan corporations, shall 33.29 pay to the commissioner of revenue installments equal to 33.30 one-third of the insurer's total estimated tax for the current 33.31 year. Except as provided in paragraphs (d) and (e), 33.32 installments must be based on a sum equal to two percent of the 33.33 premiums described in paragraph (b). 33.34 (b) Installments under paragraph (a), (d), or (e) are 33.35 percentages of gross premiums less return premiums on all direct 33.36 business received by the insurer in this state, or by its agents 34.1 for it, in cash or otherwise, during such year. 34.2 (c) Failure of a company to make payments of at least 34.3 one-third of either (1) the total tax paid during the previous 34.4 calendar year or (2) 80 percent of the actual tax for the 34.5 current calendar year shall subject the company to the penalty 34.6 and interest provided in this section, unless the total tax for 34.7 the current tax year is $500 or less. 34.8 (d) For health maintenance organizations, nonprofit health 34.9 services plan corporations, integrated service networks, and 34.10 community integrated service networks, the installments must be 34.11 based on an amount equal to one percent of premiums described in 34.12 paragraph (b) that are paid after December 31, 1995. 34.13 (e) For purposes of computing installments for town and 34.14 farmers' mutual insurance companies and for mutual property 34.15 casualty companies with total assets on December 31, 1989, of 34.16 $1,600,000,000 or less, the following rates apply: 34.17 (1) for all life insurance, two percent; 34.18 (2) for town and farmers' mutual insurance companies and 34.19 for mutual property and casualty companies with total assets of 34.20 $5,000,000 or less, on all other coverages, one percent; and 34.21 (3) for mutual property and casualty companies with total 34.22 assets on December 31, 1989, of $1,600,000,000 or less, on all 34.23 other coverages, 1.26 percent. 34.24 (f) If the aggregate amount of premium tax payments under 34.25 this section and the fire marshal tax payments under section 34.26 299F.21 made during a calendar year is equal to or exceeds 34.27 $120,000, all tax payments in the subsequent calendar year must 34.28 be paid by means of a funds transfer as defined in section 34.29 336.4A-104, paragraph (a). The funds transfer payment date, as 34.30 defined in section 336.4A-401, must be on or before the date the 34.31 payment is due. If the date the payment is due is not a funds 34.32 transfer business day, as defined in section 336.4A-105, 34.33 paragraph (a), clause (4), the payment date must be on or before 34.34 the funds transfer business day next following the date the 34.35 payment is due. 34.36 (g) Premiums under medical assistance, general assistance 35.1 medical care, the MinnesotaCare program, and the Minnesota 35.2 comprehensive health insurance plan are not subject to tax under 35.3 this section. 35.4 Sec. 3. Minnesota Statutes 1996, section 270.02, 35.5 subdivision 3, is amended to read: 35.6 Subd. 3. [POWERS, ORGANIZATION, ASSISTANTS.] Subject to 35.7 the provisions of this chapter and other applicable laws the 35.8 commissioner shall have power to organize the department with 35.9 such divisions and other agencies as the commissioner deems 35.10 necessary and to appoint one deputy commissioner, a department 35.11 secretary, directors of divisions, and such other officers, 35.12 employees, and agents as the commissioner may deem necessary to 35.13 discharge the functions of the department, define the duties of 35.14 such officers, employees, and agents, and delegate to them any 35.15 of the commissioner's powers or duties, subject to the 35.16 commissioner's control and under such conditions as the 35.17 commissioner may prescribe. Appointments to exercise delegated 35.18 power to sign documents which require the signature of the 35.19 commissioner or a delegate by law shall be by written order 35.20 filed with the secretary of state. 35.21 Sec. 4. Minnesota Statutes 1996, section 270.10, 35.22 subdivision 1, is amended to read: 35.23 Subdivision 1. [IN WRITING; APPROVAL BY ATTORNEY GENERAL.] 35.24 All orders and decisions of the commissioner of revenue, or any 35.25 subordinates, respecting any tax, assessment, or other 35.26 obligation, shall be in writing, filed in the offices of the 35.27 department. Any order or decision increasing or decreasing any 35.28 tax, assessment, or other obligation by a sum exceeding $1,000 35.29 on real or personal property, or the net tax capacity thereof, 35.30 or other obligation relating thereto, the result of which is to 35.31 increase or decrease the total amount payable including 35.32 penalties and interest, by a sum exceeding $1,000, and any order 35.33 or decision increasing or decreasing any other tax by a sum 35.34 exceeding $1,000 exclusive of penalties and interest, must bear 35.35 the written signature or facsimile signature of the commissioner 35.36 or the commissioner's delegate.Written notice of every order36.1granting a reduction, abatement, or refundment exceeding $5,00036.2of any tax exclusive of penalties and interest, shall be given36.3within five days to the attorney general. The attorney general36.4shall forthwith examine the order, and if proper and legal,36.5approve it in writing.The attorney generalmay waive the right36.6of appeal from the order on behalf of the state ormay appeal 36.7 from the order on behalf of the state ashereinprovided in 36.8 chapter 271. Written approval of the commissioner or a delegate 36.9and written notice to the attorney generalshall not be required 36.10 with respect to the following orders: (1) orders reducing net 36.11 tax capacity of property by reason of its classification as a 36.12 homestead; (2) orders not involving refunds which have the 36.13 effect only of correcting income and franchise tax assessments 36.14 to conform to the amounts shown on final returns filed as 36.15 provided by section 289A.19, subdivisions 1 and 2; and (3) 36.16 original orders for the refundment of gasoline and special fuel 36.17 taxes. 36.18 Sec. 5. Minnesota Statutes 1996, section 270.10, 36.19 subdivision 5, is amended to read: 36.20 Subd. 5. [APPEAL; PAYMENT OF ORDER.] Except for orders 36.21 relating to property tax matters, no collection action may be 36.22 taken, including the filing of liens under section 270.69, and 36.23 no late payment penalties may be imposed when a return has been 36.24 filed for the tax type and period upon which the order is based, 36.25 if an order of the commissioner, excluding orders relating to36.26property tax matters,is paid: 36.27 (1) within 60 days afternotice and demand for payment of36.28 the orderhavehas been mailed to the taxpayer; or 36.29 (2) if an administrative appeal or a tax court appeal under 36.30 chapter 271 is timely filed, within 60 days following final 36.31 determination of the appeal if the appeal is based upon a 36.32 constitutional challenge to the tax, and if not, when the 36.33 decision of the tax court is made. 36.34 Sec. 6. Minnesota Statutes 1996, section 270.101, 36.35 subdivision 2, is amended to read: 36.36 Subd. 2. [PERSON DEFINED.] The term "person" includes, but 37.1 is not limited to, a corporation, estate, trust, organization, 37.2 or association, whether organized for profit or not, an officer 37.3 or director of a corporation, a member of a partnership, an 37.4 employee, a third party (including, but not limited to, a 37.5 financial institution, lender, or surety), and any other 37.6 individual or entity. "Person" does not include an unpaid, 37.7 volunteer member of a board of trustees or directors of an 37.8 organization exempt from taxation under section 290.05, if the 37.9 member is solely serving in an honorary capacity, does not 37.10 participate in the day-to-day or financial operations of the 37.11 organization, and has no actual knowledge of the failure to file 37.12 returns or remit taxes. 37.13 Sec. 7. Minnesota Statutes 1996, section 270.101, is 37.14 amended by adding a subdivision to read: 37.15 Subd. 4. [RIGHT OF CONTRIBUTION.] A person who has paid 37.16 all or part of a liability assessed under this section has a 37.17 cause of action against other liable persons to recover the 37.18 amount paid in excess of that person's share of the liability. 37.19 A claim for recovery of contribution may be made only in a 37.20 proceeding which is separate from, and cannot be joined or 37.21 consolidated with, an administrative or judicial proceeding or 37.22 investigation involving the commissioner's administration or 37.23 enforcement of this section. An order assessing liability under 37.24 this section against the person from whom contribution is being 37.25 sought is not a prerequisite for bringing an action for recovery 37.26 of contribution, nor is the issuance of an order binding on the 37.27 court in which the proceeding is brought. The court can 37.28 determine whether each person would be liable under this section 37.29 and the share of liability. The commissioner cannot be made a 37.30 party to any proceeding for recovery of contribution, nor is a 37.31 determination in such a proceeding binding on the commissioner 37.32 for the purpose of administering or enforcing this section. An 37.33 action for contribution arises when the liability under this 37.34 section is paid in full, or the liability of the person seeking 37.35 contribution has been determined by agreement between the 37.36 commissioner and such person and paid, and must be brought 38.1 within the time period prescribed in section 541.05. 38.2 Sec. 8. Minnesota Statutes 1996, section 270.271, is 38.3 amended by adding a subdivision to read: 38.4 Subd. 5. [PRIVATE DELIVERY SERVICES.] A reference in this 38.5 section to the United States mail shall be treated as including 38.6 a reference to any designated delivery service, and any 38.7 reference in this section to a postmark by the United States 38.8 Postal Service shall be treated as including a reference to any 38.9 date recorded or marked by any designated delivery service in 38.10 accordance with section 7502(f) of the Internal Revenue Code. 38.11 Sec. 9. Minnesota Statutes 1996, section 270.273, 38.12 subdivision 2, is amended to read: 38.13 Subd. 2. [TERMS OF A TAXPAYER ASSISTANCE ORDER.] A 38.14 taxpayer assistance order may require the department within a 38.15 specified time period to release property of the taxpayer levied 38.16 on, cease any action, take any action as permitted by law, or 38.17 refrain from taking any action to enforce the state tax laws 38.18 against the taxpayer, until the issue or issues giving rise to 38.19 the order have been resolved. 38.20 Sec. 10. Minnesota Statutes 1996, section 270.276, 38.21 subdivision 2, is amended to read: 38.22 Subd. 2. [DAMAGES.] On a finding of liability on the part 38.23 of the defendant in an action brought under subdivision 1, the 38.24 defendant is liable to the plaintiff in an amount equal to the 38.25 lesser of$100,000$200,000, or the sum of (1) actual, direct 38.26 economic damages sustained by the plaintiff as a proximate 38.27 result of the reckless or intentional actions of the employee 38.28 and (2) the costs of the action. Damages must be paid in 38.29 accordance with section 3.736, subdivision 7. 38.30 Sec. 11. Minnesota Statutes 1996, section 270.67, 38.31 subdivision 2, is amended to read: 38.32 Subd. 2. [EXTENSION AGREEMENTS.] When any portion of any 38.33 tax payable to the commissioner of revenue together with 38.34 interest and penalty thereon, if any, has not been paid, the 38.35 commissioner may extend the time for payment for a further 38.36 period. When the authority of this section is invoked, the 39.1 extension shall be evidenced by written agreement signed by the 39.2 taxpayer and the commissioner, stating the amount of the tax 39.3 with penalty and interest, if any, and providing for the payment 39.4 of the amount inregular weekly, semimonthly or monthly39.5 installments. The agreementshallmay contain a confession of 39.6 judgment for the amount and for any unpaid portion thereof and 39.7 shall provide that the commissioner may forthwith enter judgment 39.8 against the taxpayer in the district court of the county of 39.9 residence as shown upon the taxpayer's tax return for the unpaid 39.10 portion of the amount specified in the extension agreement. The 39.11 agreement shall provide that it can be terminated, after notice 39.12 by the commissioner, if information provided by the taxpayer 39.13 prior to the agreement was inaccurate or incomplete, collection 39.14 of the tax covered by the agreement is in jeopardy, there is a 39.15 subsequent change in the taxpayer's financial condition, the 39.16 taxpayer has failed to make a payment due under the agreement, 39.17 or has failed to pay any other tax or file a tax return coming 39.18 due after the agreement. The notice must be given at least 14 39.19 calendar days prior to termination, and shall advise the 39.20 taxpayer of the right to request a reconsideration from the 39.21 commissioner of whether termination is reasonable and 39.22 appropriate under the circumstances. A request for 39.23 reconsideration does not stay collection action beyond the 39.24 14-day notice period. The commissioner may accept other 39.25 collateral the commissioner considers appropriate to secure 39.26 satisfaction of the tax liability. The principal sum specified 39.27 in the agreement shall bear interest at the rate specified in 39.28 section 270.75 on all unpaid portions thereof until the same has 39.29 been fully paid or the unpaid portion thereof has been entered 39.30 as a judgment. The judgment shall bear interest at the rate 39.31 specified in section 270.75. If it appears to the commissioner 39.32 that the tax reported by the taxpayer is in excess of the amount 39.33 actually owing by the taxpayer, the extension agreement or the 39.34 judgment entered pursuant thereto shall be corrected. If after 39.35 making the extension agreement or entering judgment with respect 39.36 thereto, the commissioner determines that the tax as reported by 40.1 the taxpayer is less than the amount actually due, the 40.2 commissioner shall assess a further tax in accordance with the 40.3 provisions of law applicable to the tax. The authority granted 40.4 to the commissioner by this section is in addition to any other 40.5 authority granted to the commissioner by law to extend the time 40.6 of payment or the time for filing a return and shall not be 40.7 construed in limitation thereof. 40.8 Sec. 12. Minnesota Statutes 1996, section 270.69, 40.9 subdivision 11, is amended to read: 40.10 Subd. 11. [ERRONEOUS LIENS.] After the filing of a notice 40.11 of lien under this section on the property or rights to property 40.12 of a person, the person may appeal to the commissioner, in the 40.13 form and at the time prescribed by the commissioner, alleging an 40.14 error in the filing of the lien and requesting its release. If 40.15 the commissioner determines that the filing of the notice of any 40.16 lien was erroneous, within 14 days after the determination, the 40.17 commissioner must issue a certificate of release of the lien. 40.18 The certificate must include a statement that the filing of the 40.19 lien was erroneous. In the event that the lien is erroneous and 40.20 is not released within the 14-day period, reasonable attorney 40.21 fees shall be paid. Damages must be paid in accordance with 40.22 section 3.736, subdivision 7. Even if a lien is not erroneous, 40.23 the commissioner may withdraw the lien if the filing of the lien 40.24 was premature or not in accordance with administrative 40.25 procedures of the commissioner, or withdrawal of the lien will 40.26 facilitate the collection of the tax liability. 40.27 Sec. 13. [270.771] [PAYMENTS REQUIRED TO BE MADE BY 40.28 ELECTRONIC FUNDS TRANSFER.] 40.29 (a) If a taxpayer is required to make payment of a tax to 40.30 the commissioner by means of electronic funds transfer as 40.31 defined in section 336.4A-104, paragraph (a), the taxpayer shall 40.32 make all payments of all taxes and fees paid to the commissioner 40.33 by means of electronic funds transfer. 40.34 (b) Paragraph (a) does not apply to payments required to be 40.35 made for individual income taxes under section 289A.20, 40.36 subdivision 1, paragraph (a), or 289A.25. 41.1 Sec. 14. Minnesota Statutes 1996, section 271.06, 41.2 subdivision 2, is amended to read: 41.3 Subd. 2. [TIME; NOTICE; INTERVENTION.] Except as otherwise 41.4 provided by law, within 60 days after notice of the making and 41.5 filing of an order of the commissioner of revenue, the 41.6 appellant, or the appellant's attorney, shall serve a notice of 41.7 appeal upon the commissioner and file the original, with proof 41.8 of such service, with the tax court administrator or with the 41.9 court administrator of district court acting as court 41.10 administrator of the tax court; provided, that the tax court, 41.11 for cause shown, may by written order extend the time for 41.12 appealing for an additional period not exceeding 30 days. The 41.13 notice of appeal shall be in the form prescribed by the tax 41.14 court. Within five days after receipt, the commissioner shall 41.15 transmit a copy of the notice of appeal to the attorney general 41.16in all cases where the amount at issue exceeds $100. The 41.17 attorney general shall represent the commissioner, if requested, 41.18 upon all such appeals except in cases where the attorney general 41.19 has appealed in behalf of the state, or in other cases where the 41.20 attorney general deems it against the interests of the state to 41.21 represent the commissioner, in which event the attorney general 41.22 may intervene or be substituted as an appellant in behalf of the 41.23 state at any stage of the proceedings. 41.24 Upon a final determination of any other matter over which 41.25 the court is granted jurisdiction under section 271.01, 41.26 subdivision 5, the taxpayer or the taxpayer's attorney shall 41.27 file a petition or notice of appeal as provided by law with the 41.28 court administrator of district court, acting in the capacity of 41.29 court administrator of the tax court, with proof of service of 41.30 the petition or notice of appeal as required by law and within 41.31 the time required by law. As used in this subdivision, "final 41.32 determination" includes a notice of assessment and equalization 41.33 for the year in question received from the local assessor, an 41.34 order of the local board of equalization, or an order of a 41.35 county board of equalization. 41.36 The tax court shall prescribe a filing system so that the 42.1 notice of appeal or petition filed with the district court 42.2 administrator acting as court administrator of the tax court is 42.3 forwarded to the tax court administrator. In the case of an 42.4 appeal or a petition concerning property valuation for which the 42.5 assessor, a local board of equalization, a county board of 42.6 equalization or the commissioner of revenue has issued an order, 42.7 the officer issuing the order shall be notified of the filing of 42.8 the appeal. The notice of appeal or petition shall be in the 42.9 form prescribed by the tax court. 42.10 Sec. 15. Minnesota Statutes 1996, section 271.08, 42.11 subdivision 1, is amended to read: 42.12 Subdivision 1. [WRITTEN ORDER.] The tax court, except in 42.13 small claims division, shall determine every appeal by written 42.14 order containing findings of fact and the decision of the tax 42.15 court. A memorandum of the grounds of the decision shall be 42.16 appended.A certified copy of the order shall be transmitted to42.17the commissioner of revenue or the appropriate unit of42.18government and filed in that office.Notice of the entry of the 42.19 order and of the substance of the decision shall begiven by42.20otherpartieswho have appeared, and also, in42.21all cases where the amount at issue exceeds $100, to the42.22attorney general. A motion for rehearing, which includes a 42.23 motion for amended findings of fact, conclusions of law, or a 42.24 new trial, must be served by the moving party within 15 days 42.25 after mailing of the notice by the court as specified in this 42.26 subdivision, and the motion must be heard within 30 days 42.27 thereafter, unless the time for hearing is extended by the court 42.28 within the 30-day period for good cause shown. 42.29 Sec. 16. Minnesota Statutes 1996, section 271.10, 42.30 subdivision 2, is amended to read: 42.31 Subd. 2. [SERVICE OF WRIT.] Within 60 days after notice of 42.32 the making and filing of the order of the tax court, or the 42.33 making and filing of an order on apetitionmotion for 42.34 rehearing, which includes a motion for amended findings of fact, 42.35 conclusions of law, or a new trial, the petitioner for review 42.36 shall obtain from the supreme court a writ of certiorari, and 43.1 shall serve the same upon all other parties appearing in the 43.2 proceedings before the tax court, and shall file the original, 43.3 with proof of such service, with the court administrator of the 43.4 tax court. Every petitioner, except the attorney general, the 43.5 commissioner of revenue, the state and its political 43.6 subdivisions, shall also pay to the court administrator the fee 43.7 prescribed by rule 103.01 of the rules of civil appellate 43.8 procedure which shall be disposed of in the manner provided by 43.9 that rule, and file a bond or make a deposit in like manner and 43.10 amount as in case of an appeal from the district court. The fee 43.11 shall be disposed of as in such case. Return upon the writ 43.12 shall be made to the supreme court and the matter shall be heard 43.13 and determined by the court as in other certiorari cases, 43.14 subject to the provisions hereof and to such rules as the court 43.15 may prescribe for cases arising hereunder. 43.16 Sec. 17. [287.13] [VIOLATIONS; PENALTIES.] 43.17 Subdivision 1. [FAILURE TO PAY FULL AMOUNT.] Any person 43.18 liable for the tax imposed by section 287.05 who fails to pay 43.19 the full amount of tax imposed under sections 287.01 to 287.12, 43.20 unless such failure is shown to be due to reasonable cause, is 43.21 liable for a civil penalty of $250 for each such failure. 43.22 Subd. 2. [ADDITIONAL PENALTY.] Any person who willfully 43.23 attempts to evade or defeat the tax imposed under sections 43.24 287.01 to 287.12, or the payment thereof, shall, in addition to 43.25 the penalty provided in subdivision 1, be liable for a penalty 43.26 of 50 percent of the total amount of the underpayment of the tax. 43.27 Sec. 18. Minnesota Statutes 1996, section 287.31, 43.28 subdivision 1, is amended to read: 43.29 Subdivision 1. [FAILURE TO COMPLY.] Any person liable for 43.30 the tax imposed by section 287.21 who fails to comply with the 43.31 provisions of section 287.25relating to the attachment or43.32cancellation of documentary stamps, unless such failure is shown 43.33 to be due to reasonable cause, shall be liable to a civil 43.34 penalty of$50$250 for each such failure. 43.35 Sec. 19. Minnesota Statutes 1996, section 289A.09, 43.36 subdivision 2, is amended to read: 44.1 Subd. 2. [WITHHOLDING STATEMENT TO EMPLOYEE OR PAYEE AND 44.2 TO COMMISSIONER.] (a) A person required to deduct and withhold 44.3 from an employee a tax under section 290.92, subdivision 2a or 44.4 3, or 290.923, subdivision 2, or who would have been required to 44.5 deduct and withhold a tax under section 290.92, subdivision 2a 44.6 or 3, or persons required to withhold tax under section 290.923, 44.7 subdivision 2, determined without regard to section 290.92, 44.8 subdivision 19, if the employee or payee had claimed no more 44.9 than one withholding exemption, or who paid wages or made 44.10 payments not subject to withholding under section 290.92, 44.11 subdivision 2a or 3, or 290.923, subdivision 2, to an employee 44.12 or person receiving royalty payments in excess of $600, or who 44.13 has entered into a voluntary withholding agreement with a payee 44.14 under section 290.92, subdivision 20, must give every employee 44.15 or person receiving royalty payments in respect to the 44.16 remuneration paid by the person to the employee or person 44.17 receiving royalty payments during the calendar year, on or 44.18 before January 31 of the succeeding year, or, if employment is 44.19 terminated before the close of the calendar year, within 30 days 44.20 after the date of receipt of a written request from the employee 44.21 if the 30-day period ends before January 31, a written statement 44.22 showing the following: 44.23 (1) name of the person; 44.24 (2) the name of the employee or payee and the employee's or 44.25 payee's social security account number; 44.26 (3) the total amount of wages as that term is defined in 44.27 section 290.92, subdivision 1, paragraph (1); the total amount 44.28 of remuneration subject to withholding under section 290.92, 44.29 subdivision 20; the amount of sick pay as required under section 44.30 6051(f) of the Internal Revenue Code; and the amount of 44.31 royalties subject to withholding under section 290.923, 44.32 subdivision 2; and 44.33 (4) the total amount deducted and withheld as tax under 44.34 section 290.92, subdivision 2a or 3, or 290.923, subdivision 2. 44.35 (b) The statement required to be furnished by this 44.36 paragraph with respect to any remuneration must be furnished at 45.1 those times, must contain the information required, and must be 45.2 in the form the commissioner prescribes. 45.3 (c) The commissioner may prescribe rules providing for 45.4 reasonable extensions of time, not in excess of 30 days, to 45.5 employers or payers required to give the statements to their 45.6 employees or payees under this subdivision. 45.7 (d) A duplicate of any statement made under this 45.8 subdivision and in accordance with rules prescribed by the 45.9 commissioner, along with a reconciliation in the form the 45.10 commissioner prescribes of the statements for the calendar year, 45.11 including a reconciliation of the quarterly returns required to 45.12 be filed under subdivision 1, must be filed with the 45.13 commissioner on or before February 28 of the year after the 45.14 payments were made. 45.15 (e) The employer must submit the statements required to be 45.16 sent to the commissioner on magnetic media, if the magnetic 45.17 media was required to satisfy the federal reporting requirements 45.18 of section 6011(e) of the Internal Revenue Code and the 45.19 regulations issued under it. 45.20 (f) A "provider of payroll services" as defined in section 45.21 289A.20, subdivision 2, paragraph (f), must submit the returns 45.22 required by this subdivision and subdivision 1, paragraph (a), 45.23 with the commissioner by electronic means. 45.24 Sec. 20. Minnesota Statutes 1996, section 289A.20, 45.25 subdivision 1, is amended to read: 45.26 Subdivision 1. [INDIVIDUAL INCOME, FIDUCIARY INCOME, 45.27 MINING COMPANY, CORPORATE FRANCHISE, AND ENTERTAINMENT TAXES.] 45.28 (a) Individual income, fiduciary, mining company, and corporate 45.29 franchise taxes must be paid to the commissioner on or before 45.30 the date the return must be filed under section 289A.18, 45.31 subdivision 1, or the extended due date as provided in section 45.32 289A.19, unless an earlier date for payment is provided. 45.33 Notwithstanding any other law, a taxpayer whose unpaid 45.34 liability for income or corporate franchise taxes, as reflected 45.35 upon the return, is $1 or less need not pay the tax. 45.36 (b) Entertainment taxes must be paid on or before the date 46.1 the return must be filed under section 289A.18, subdivision 1. 46.2 (c) If a fiduciary administers 100 or more trusts, 46.3 fiduciary income taxes for all trusts administered by the 46.4 fiduciary must be paid by funds transfer as defined in section 46.5 336.4A-104, paragraph (a). The funds transfer payment date, as 46.6 defined in section 336.4A-401, must be on or before the date the 46.7 tax payment is due. If the date the payment is due is not a 46.8 funds transfer business day, as defined in section 336.4A-105, 46.9 paragraph (a), clause (4), the payment date must be on or before 46.10 the funds transfer business day next following the date the 46.11 payment is due. 46.12 Sec. 21. Minnesota Statutes 1996, section 289A.20, 46.13 subdivision 2, is amended to read: 46.14 Subd. 2. [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 46.15 WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 46.16 WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 46.17 (a) A tax required to be deducted and withheld during the 46.18 quarterly period must be paid on or before the last day of the 46.19 month following the close of the quarterly period, unless an 46.20 earlier time for payment is provided. A tax required to be 46.21 deducted and withheld from compensation of an entertainer and 46.22 from a payment to an out-of-state contractor must be paid on or 46.23 before the date the return for such tax must be filed under 46.24 section 289A.18, subdivision 2. Taxes required to be deducted 46.25 and withheld by partnerships and S corporations must be paid on 46.26 or before the date the return must be filed under section 46.27 289A.18, subdivision 2. 46.28 (b) An employer who, during the previous quarter, withheld 46.29 more than $1,500 of tax under section 290.92, subdivision 2a or 46.30 3, or 290.923, subdivision 2, must deposit tax withheld under 46.31 those sections with the commissioner within the time allowed to 46.32 deposit the employer's federal withheld employment taxes under 46.33 Treasury Regulation, section 31.6302-1, without regard to the 46.34 safe harbor or de minimus rules in subparagraph (f) or the 46.35 one-day rule in subsection (c), clause (3). Taxpayers must 46.36 submit a copy of their federal notice of deposit status to the 47.1 commissioner upon request by the commissioner. 47.2 (c) The commissioner may prescribe by rule other return 47.3 periods or deposit requirements. In prescribing the reporting 47.4 period, the commissioner may classify payors according to the 47.5 amount of their tax liability and may adopt an appropriate 47.6 reporting period for the class that the commissioner judges to 47.7 be consistent with efficient tax collection. In no event will 47.8 the duration of the reporting period be more than one year. 47.9 (d) If less than the correct amount of tax is paid to the 47.10 commissioner, proper adjustments with respect to both the tax 47.11 and the amount to be deducted must be made, without interest, in 47.12 the manner and at the times the commissioner prescribes. If the 47.13 underpayment cannot be adjusted, the amount of the underpayment 47.14 will be assessed and collected in the manner and at the times 47.15 the commissioner prescribes. 47.16 (e) If the aggregate amount of the tax withheld during a 47.17 fiscal year ending June 30 under section 290.92, subdivision 2a 47.18 or 3, is equal to or exceeds$50,000the amounts established for 47.19 remitting federal withheld taxes pursuant to the regulations 47.20 promulgated under section 6302(h) of the Internal Revenue Code, 47.21 the employer must remit each required deposit in the subsequent 47.22 calendar year by means of a funds transfer as defined in section 47.23 336.4A-104, paragraph (a). The funds transfer payment date, as 47.24 defined in section 336.4A-401, must be on or before the date the 47.25 deposit is due. If the date the deposit is due is not a funds 47.26 transfer business day, as defined in section 336.4A-105, 47.27 paragraph (a), clause (4), the payment date must be on or before 47.28 the funds transfer business day next following the date the 47.29 deposit is due. 47.30 (f) Providers of payroll services who remit withholding 47.31 depositson behalf of 50 or more employers, or on behalf of any47.32employer with aggregate amounts over the threshold in paragraph47.33(e),must remit all deposits by means of a funds transfer as 47.34 provided in paragraph (e), regardless of the aggregate amount of 47.35 tax withheld during a fiscal year for all of the employers. For 47.36 the purposes of this paragraph, "providers of payroll services" 48.1 means persons who have custody of or control over another 48.2 employer's funds for the purpose of paying on behalf of the 48.3 other employer's Minnesota withholding taxes. 48.4 Sec. 22. Minnesota Statutes 1996, section 289A.31, 48.5 subdivision 1, is amended to read: 48.6 Subdivision 1. [INDIVIDUAL INCOME, FIDUCIARY INCOME, 48.7 MINING COMPANY, CORPORATE FRANCHISE, AND ENTERTAINMENT TAXES.] 48.8 (a) Individual income, fiduciary income, mining company, and 48.9 corporate franchise taxes, and interest and penalties, must be 48.10 paid by the taxpayer upon whom the tax is imposed, except in the 48.11 following cases: 48.12 (1) The tax due from a decedent for that part of the 48.13 taxable year in which the decedent died during which the 48.14 decedent was alive and the taxes, interest, and penalty due for 48.15 the prior years must be paid by the decedent's personal 48.16 representative, if any. If there is no personal representative, 48.17 the taxes, interest, and penalty must be paid by the 48.18 transferees, as defined in section 289A.38, subdivision 13, to 48.19 the extent they receive property from the decedent; 48.20 (2) The tax due from an infant or other incompetent person 48.21 must be paid by the person's guardian or other person authorized 48.22 or permitted by law to act for the person; 48.23 (3) The tax due from the estate of a decedent must be paid 48.24 by the estate's personal representative; 48.25 (4) The tax due from a trust, including those within the 48.26 definition of a corporation, as defined in section 290.01, 48.27 subdivision 4, must be paid by a trustee; and 48.28 (5) The tax due from a taxpayer whose business or property 48.29 is in charge of a receiver, trustee in bankruptcy, assignee, or 48.30 other conservator, must be paid by the person in charge of the 48.31 business or property so far as the tax is due to the income from 48.32 the business or property. 48.33 (b) Entertainment taxes are the joint and several liability 48.34 of the entertainer and the entertainment entity. The payor is 48.35 liable to the state for the payment of the tax required to be 48.36 deducted and withheld under section 290.9201, subdivision 7, and 49.1 is not liable to the entertainer for the amount of the payment. 49.2 (c) The tax imposed under section 290.0922 on partnerships 49.3 is the joint and several liability of the partnership and the 49.4 general partners. 49.5 Sec. 23. Minnesota Statutes 1996, section 289A.37, 49.6 subdivision 1, is amended to read: 49.7 Subdivision 1. [ORDER OF ASSESSMENT; NOTICE AND DEMAND TO 49.8 TAXPAYER.] (a) When a return has been filed and the commissioner 49.9 determines that the tax disclosed by the return is different 49.10 than the tax determined by the examination, the commissioner 49.11 shall send an order of assessment to the taxpayer. When no 49.12 return has been filed, the commissioner may make a return for 49.13 the taxpayer under section 289A.35 or may send an order of 49.14 assessment under this subdivision. The order must explain the 49.15 basis for the assessment and must explain the taxpayer's appeal 49.16 rights. An order of assessment is final when made but may be 49.17 reconsidered by the commissioner under section 289A.65. 49.18 (b) No collection action can be taken, including the filing 49.19 of liens under section 270.69, and the penalty under section 49.20 289A.60, subdivision 1, is not imposedand no collection action49.21can be taken, including the filing of liens under section 270.6949.22 when a return has been filed for the tax type and period upon 49.23 which the order is based, if the amount shown on the order is 49.24 paid to the commissioner: (1) within 60 days afternotice of49.25the amount and demand for its payment havethe order has been 49.26 mailed to the taxpayer by the commissioner; or (2) if an 49.27 administrative appeal is filed under section 289A.65 or a tax 49.28 court appeal is filed under chapter 271, within 60 days 49.29 following final determination of the appeal if the appeal is 49.30 based upon a constitutional challenge to the tax, and if not, 49.31 when the decision of the tax court is made. 49.32 Sec. 24. Minnesota Statutes 1996, section 289A.40, 49.33 subdivision 1, is amended to read: 49.34 Subdivision 1. [TIME LIMIT; GENERALLY.] Unless otherwise 49.35 provided in this chapter, a claim for a refund of an overpayment 49.36 of state tax must be filed within 3-1/2 years from the date 50.1 prescribed for filing the return, plus any extension of time 50.2 granted for filing the return, but only if filed within the 50.3 extended time, or one year from the date of an order assessing 50.4 tax under section 289A.37, subdivision 1, or one year from the 50.5 date of a return made by the commissioner under section 289A.35, 50.6 upon payment in full of the tax, penalties, and interest shown 50.7 on the order or return made by the commissioner, whichever 50.8 period expires later. Claims for refund, except for taxes under 50.9 chapter 297A, filed after the 3-1/2 year period but within the 50.10 one-year period are limited to the amount of the tax, penalties, 50.11 and interest on the order or return made by the commissioner and 50.12 to issues determined by the order or return made by the 50.13 commissioner. 50.14 In the case of assessments under section 289A.38, 50.15 subdivision 5 or 6, claims for refund under chapter 297A filed 50.16 after the 3-1/2 year period but within the one-year period are 50.17 limited to the amount of the tax, penalties, and interest on the 50.18 order or return made by the commissioner that are due for the 50.19 period before the 3-1/2 year period. 50.20 Sec. 25. Minnesota Statutes 1996, section 297B.035, 50.21 subdivision 3, is amended to read: 50.22 Subd. 3. [SALES IN VIOLATION OF LICENSING REQUIREMENTS.] 50.23 Motor vehicles sold by a new motor vehicle dealer in 50.24 contravention of section 168.27, subdivision 10, clause (1)(b) 50.25 shall not be considered to have been acquired or purchased for 50.26 resale in the ordinary or regular course of business for the 50.27 purposes of this chapter, and the dealer shall be required to 50.28 pay the excise tax due on the purchase of those vehicles. The 50.29 sale by a lessor of a new motor vehicle under lease within 120 50.30 days of the commencement of the lease is deemed a sale in 50.31 contravention of section 168.27, subdivision 10, clause (1)(b) 50.32 unless the lessor holds a valid contract or franchise with the 50.33 manufacturer or distributor of the vehicle. Notwithstanding 50.34 section 297B.11, the rights of a dealer to appeal any amounts 50.35 owed by the dealer under this subdivision are governed 50.36 exclusively by the hearing procedure under section 168.27, 51.1 subdivision 13. 51.2 Sec. 26. Minnesota Statutes 1996, section 297B.11, is 51.3 amended to read: 51.4 297B.11 [REGISTRAR AS AGENT OF COMMISSIONER OF REVENUE; 51.5 POWERS.] 51.6 The state commissioner of revenue is charged with the 51.7 administration of the sales tax on motor vehicles. The 51.8 commissioner may prescribe all rules not inconsistent with the 51.9 provisions of this chapter, necessary and advisable for the 51.10 proper and efficient administration of the law. The collection 51.11 of this sales tax on motor vehicles shall be carried out by the 51.12 motor vehicle registrar who shall act as the agent of the 51.13 commissioner and who shall be subject to all rules not 51.14 inconsistent with the provisions of this chapter, that may be 51.15 prescribed by the commissioner. 51.16 The provisions of chapters 289A and 297A relating to the 51.17 commissioner's authority to audit, assess, and collect the tax, 51.18 and to refunds and appeals, are applicable to the sales tax on 51.19 motor vehicles. The commissioner may impose civil penalties as 51.20 provided in chapters 289A and 297A, and the additional tax and 51.21 penalties are subject to interest at the rate provided in 51.22 section 270.75. 51.23 Sec. 27. Minnesota Statutes 1996, section 299F.21, is 51.24 amended to read: 51.25 299F.21 [FIRE INSURANCE COMPANIES PAY TAX.] 51.26 Subdivision 1. [ESTIMATED INSTALLMENT PAYMENTS.] On or 51.27 before April 1, June 1, and December 1 of each year, every 51.28 licensed insurance company, including reciprocals or 51.29 interinsurance exchanges, doing business in the state, excepting 51.30 farmers' mutual fire insurance companies and township mutual 51.31 fire insurance companies, shall pay to the commissioner of 51.32 revenue installments equal to one-third of, a tax upon its fire 51.33 premiums or assessments or both, based on a sum equal to 51.34 one-half of one percent of the estimated fire premiums and 51.35 assessments, less return premiums and dividends, on all direct 51.36 business received by it in this state, or by its agents for it, 52.1 in cash or otherwise, during the year, including premiums on 52.2 policies covering fire risks only on automobiles, whether 52.3 written under floater form or otherwise. In the case of a 52.4 mutual company or reciprocal exchange the dividends or savings 52.5 paid or credited to members in this state shall be construed to 52.6 be return premiums. The money so received into the state 52.7 treasury shall be credited to the general fund. A company that 52.8 fails to make payments of at least one-third of either (1) the 52.9 total tax paid during the previous calendar year or (2) 80 52.10 percent of the actual tax for the current calendar year is 52.11 subject to the penalty and interest provided in this chapter, 52.12 unless the total tax for the current tax year is $500 or less. 52.13 Subd. 1a. [ELECTRONIC FUNDS TRANSFER PAYMENTS.] If the 52.14 aggregate amount of fire marshal tax payments under this section 52.15 and the premium tax payments under section 60A.15 made during a 52.16 calendar year is equal to or exceeds $120,000, all tax payments 52.17 in the subsequent calendar year must be paid by means of a funds 52.18 transfer as defined in section 336.4A-104, paragraph (a). The 52.19 funds transfer payment date, as defined in section 336.4A-401, 52.20 must be on or before the date the payment is due. If the date 52.21 the payment is due is not a funds transfer business day, as 52.22 defined in section 336.4A-105, paragraph (a), clause (4), the 52.23 payment date must be on or before the funds transfer business 52.24 day next following the date the payment is due. 52.25 Subd. 1b. [ADDITION TO TAX.] In case of an underpayment of 52.26 installments by an insurer, there must be added to the tax for 52.27 the taxable year an amount determined at the rate specified in 52.28 section 270.75 upon the amount of underpayment. 52.29 Subd.1b.1c. [AMOUNT OF UNDERPAYMENT.] For purposes of 52.30 subdivision 1a, the amount of the underpayment is the excess 52.31 of: (1) the amount of the installment; over (2) the amount, if 52.32 any, of the installment paid on or before the last date 52.33 prescribed for payment. 52.34 Subd.1c.1d. [PERIOD OF UNDERPAYMENT.] The period of the 52.35 underpayment runs from the date the installment was required to 52.36 be paid to the earliest of the following dates: 53.1 (1) on March 1 following the close of the taxable year; 53.2 (2) with respect to any portion of the underpayment, the 53.3 date on which that portion is paid. For purposes of this 53.4 clause, a payment of estimated tax on any installment date is 53.5 considered a payment of any previous underpayment only to the 53.6 extent the payment exceeds the amount of the installment 53.7 determined under clause (1), for the installment date. 53.8 Subd.1d.1e. [DEFINITION OF TAX.] The term "tax" means 53.9 the tax imposed by this chapter. 53.10 Subd.1e.1f. [FAILURE TO FILE ESTIMATE.] In the case of 53.11 an insurer that fails to file an estimated tax statement for a 53.12 taxable year when one is required, the period of the 53.13 underpayment runs from the installment dates as set forth in 53.14 subdivision 1 to whichever of the periods set forth in 53.15 subdivision 1c is the earlier. 53.16 Subd. 2. [ANNUAL RETURNS.] (a) Every insurer required to 53.17 pay a tax under this section shall make and file a statement of 53.18 estimated taxes for the period covered by the installment tax 53.19 payment. The statement shall be in the form prescribed by the 53.20 commissioner of revenue. 53.21 (b) On or before March 1, annually every insurer subject to 53.22 taxation under this section shall make an annual return for the 53.23 preceding calendar year setting forth information the 53.24 commissioner of revenue may reasonably require on forms 53.25 prescribed by the commissioner. 53.26 (c) On March 1, the insurer shall pay any additional amount 53.27 due for the preceding calendar year; if there has been an 53.28 overpayment, the overpayment may be credited without interest on 53.29 the estimated tax due April 15. 53.30 (d) If unpaid by this date, penalties as provided in 53.31 section 289A.60, subdivision 1, as related to withholding and 53.32 sales or use taxes, shall be imposed. 53.33 Sec. 28. [STATUS OF EXEMPT RULES.] 53.34 Notwithstanding Minnesota Statutes, section 14.387, the 53.35 following statutes, and any rules adopted or determinations, 53.36 actions, or positions taken pursuant to these statutes, have the 54.1 force and effect of law on and after July 1, 1997: Minnesota 54.2 Statutes, sections 124.2131, subdivision 1, paragraph (b); 54.3 270.75, subdivision 5; 270.76; 270.79, subdivision 4, paragraph 54.4 (f); 290.06, subdivision 2d; 290A.04, subdivision 6; and 54.5 297E.15, subdivision 11. 54.6 Sec. 29. [EFFECTIVE DATES.] 54.7 Sections 1, 3, 4, 6, 8 to 12, 14 to 16, 22, 25, 26, and 28 54.8 are effective the day following final enactment. 54.9 Sections 2, 13, and 27 are effective for all payments due 54.10 after December 31, 1997. 54.11 Sections 5 and 23 are effective for orders of assessment 54.12 issued on or after the day following final enactment. 54.13 Section 7 is effective for causes of action arising before 54.14 the day following final enactment which are not barred by the 54.15 statute of limitations as of that date, and for causes of action 54.16 arising thereafter. 54.17 Sections 17 and 18 are effective for mortgages submitted 54.18 for recording and deeds executed and delivered after June 30, 54.19 1997. 54.20 Section 19 is effective for returns for amounts withheld 54.21 for periods after December 31, 1997. 54.22 Section 20 is effective for tax payments for the taxable 54.23 years beginning after December 31, 1997. 54.24 Section 21 is effective for withholding on wages after 54.25 December 31, 1997. 54.26 Section 24 is effective for claims for refund filed on or 54.27 after the day following final enactment.