as introduced - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to taxation; making technical corrections and 1.3 administrative changes to income and franchise, 1.4 property, sales and use, petroleum, deed, cigarette 1.5 and tobacco, liquor, MinnesotaCare, and other taxes; 1.6 making administrative and technical changes to 1.7 property tax refund and local government aid 1.8 provisions; clarifying abandoned personal property 1.9 sale procedures; providing that certain water service 1.10 connection fees be paid to the commissioner of health; 1.11 making technical changes to the Revenue Recapture Act; 1.12 amending Minnesota Statutes 2000, sections 144.3831, 1.13 subdivision 2; 270.06; 270A.03, subdivision 5; 1.14 273.072, subdivision 1; 273.1104, subdivision 2; 1.15 273.111, subdivision 4; 273.124, subdivision 13; 1.16 282.04, subdivision 2; 287.20, subdivision 9; 289A.12, 1.17 subdivision 3; 289A.50, subdivision 2a; 290.067, 1.18 subdivisions 2 and 2b; 290.0671, subdivisions 1 and 7; 1.19 290.0921, subdivision 3; 290.35, subdivision 2; 1.20 290A.04, subdivision 4; 295.50, subdivisions 3 and 15; 1.21 295.52, subdivision 4; 295.57, subdivision 1; 296A.16, 1.22 subdivision 2; 296A.21, subdivisions 1 and 4; 297A.01, 1.23 subdivision 3; 297A.25, subdivisions 3 and 11; 1.24 297F.16, subdivision 4; 297G.15, subdivision 4; 1.25 297G.16, subdivisions 5 and 7; and 477A.011, 1.26 subdivision 36; proposing coding for new law in 1.27 Minnesota Statutes, chapter 296A; repealing Minnesota 1.28 Statutes 2000, sections 290.095, subdivision 7; 1.29 290.23; 290.25; 290.31, subdivisions 2, 2a, 3, 4, 5, 1.30 and 19; 296A.16, subdivision 6; and 297B.032. 1.31 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.32 ARTICLE 1 1.33 INCOME AND FRANCHISE TAXES 1.34 Section 1. Minnesota Statutes 2000, section 270A.03, 1.35 subdivision 5, is amended to read: 1.36 Subd. 5. [DEBT.] "Debt" means a legal obligation of a 1.37 natural person to pay a fixed and certain amount of money, which 1.38 equals or exceeds $25 and which is due and payable to a claimant 2.1 agency. The term includes criminal fines imposed under section 2.2 609.10 or 609.125 and restitution. A debt may arise under a 2.3 contractual or statutory obligation, a court order, or other 2.4 legal obligation, but need not have been reduced to judgment. 2.5 A debt includes any legal obligation of a current recipient 2.6 of assistance which is based on overpayment of an assistance 2.7 grant where that payment is based on a client waiver or an 2.8 administrative or judicial finding of an intentional program 2.9 violation; or where the debt is owed to a program wherein the 2.10 debtor is not a client at the time notification is provided to 2.11 initiate recovery under this chapter and the debtor is not a 2.12 current recipient of food stamps, transitional child care, or 2.13 transitional medical assistance. 2.14 A debt does not include any legal obligation to pay a 2.15 claimant agency for medical care, including hospitalization if 2.16 the income of the debtor at the time when the medical care was 2.17 rendered does not exceed the following amount: 2.18 (1) for an unmarried debtor, an income of$6,400$8,800 or 2.19 less; 2.20 (2) for a debtor with one dependent, an income 2.21 of$8,200$11,270 or less; 2.22 (3) for a debtor with two dependents, an income 2.23 of$9,700$13,330 or less; 2.24 (4) for a debtor with three dependents, an income of 2.25$11,000$15,120 or less; 2.26 (5) for a debtor with four dependents, an income 2.27 of$11,600$15,950 or less; and 2.28 (6) for a debtor with five or more dependents, an income of 2.29$12,100$16,630 or less. 2.30 The income amounts in this subdivision shall be adjusted 2.31 for inflation for debts incurred in calendar years19912001 and 2.32 thereafter. The dollar amount of each income level that applied 2.33 to debts incurred in the prior year shall be increased in the 2.34 same manner as provided in section290.06, subdivision 2d, for2.35the expansion of the tax rate brackets1f of the Internal 2.36 Revenue Code of 1986, as amended through December 31, 2000, 3.1 except that for the purposes of this subdivision the percentage 3.2 increase shall be determined from the year starting September 1, 3.3 1999, and ending August 31, 2000, as the base year for adjusting 3.4 for inflation for debts incurred after December 31, 2000. 3.5 Debt also includes an agreement to pay a MinnesotaCare 3.6 premium, regardless of the dollar amount of the premium 3.7 authorized under section 256L.15, subdivision 1a. 3.8 [EFFECTIVE DATE.] This section is effective for debts 3.9 incurred after December 31, 2000. 3.10 Sec. 2. Minnesota Statutes 2000, section 289A.12, 3.11 subdivision 3, is amended to read: 3.12 Subd. 3. [RETURNS OR REPORTS BY PARTNERSHIPS, FIDUCIARIES, 3.13 AND S CORPORATIONS.] (a) Partnerships must file a return with 3.14 the commissioner for each taxable year. The return must conform 3.15 to the requirements of section290.31290.311, and must include 3.16 the names and addresses of the partners entitled to a 3.17 distributive share in their taxable net income, gain, loss, or 3.18 credit, and the amount of the distributive share to which each 3.19 is entitled. A partnership required to file a return for a 3.20 partnership taxable year must furnish a copy of the information 3.21 required to be shown on the return to a person who is a partner 3.22 at any time during the taxable year, on or before the day on 3.23 which the return for the taxable year was filed. 3.24 (b) The fiduciary of an estate or trust making the return 3.25 required to be filed under section 289A.08, subdivision 2, for a 3.26 taxable year must give a beneficiary who receives a distribution 3.27 from the estate or trust with respect to the taxable year or to 3.28 whom any item with respect to the taxable year is allocated, a 3.29 statement containing the information required to be shown on the 3.30 return, on or before the date on which the return was filed. 3.31 (c) An S corporation must file a return with the 3.32 commissioner for a taxable year during which an election under 3.33 section 290.9725 is in effect, stating specifically the names 3.34 and addresses of the persons owning stock in the corporation at 3.35 any time during the taxable year, the number of shares of stock 3.36 owned by a shareholder at all times during the taxable year, the 4.1 shareholder's pro rata share of each item of the corporation for 4.2 the taxable year, and other information the commissioner 4.3 requires. An S corporation required to file a return under this 4.4 paragraph for any taxable year must furnish a copy of the 4.5 information shown on the return to the person who is a 4.6 shareholder at any time during the taxable year, on or before 4.7 the day on which the return for the taxable year was filed. 4.8 (d) The partnership or S corporation return must be signed 4.9 by someone designated by the partnership or S corporation. 4.10 [EFFECTIVE DATE.] This section is effective for tax years 4.11 beginning after December 31, 2000. 4.12 Sec. 3. Minnesota Statutes 2000, section 290.067, 4.13 subdivision 2, is amended to read: 4.14 Subd. 2. [LIMITATIONS.] The credit for expenses incurred 4.15 for the care of each dependent shall not exceed $720 in any 4.16 taxable year, and the total credit for all dependents of a 4.17 claimant shall not exceed $1,440 in a taxable year. The maximum 4.18 total credit shall be reduced according to the amount of the 4.19 income of the claimant and a spouse, if any, as follows: 4.20 income up to$13,350$18,040, $720 maximum for one 4.21 dependent, $1,440 for all dependents; 4.22 income over$13,350$18,040, the maximum credit for one 4.23 dependent shall be reduced by $18 for every $350 of additional 4.24 income, $36 for all dependents. 4.25 The commissioner shall construct and make available to 4.26 taxpayers tables showing the amount of the credit at various 4.27 levels of income and expenses. The tables shall follow the 4.28 schedule contained in this subdivision, except that the 4.29 commissioner may graduate the transitions between expenses and 4.30 income brackets. 4.31 [EFFECTIVE DATE.] This section is effective for tax years 4.32 beginning after December 31, 1999. 4.33 Sec. 4. Minnesota Statutes 2000, section 290.067, 4.34 subdivision 2b, is amended to read: 4.35 Subd. 2b. [INFLATION ADJUSTMENT.] The dollar amount of the 4.36 income threshold at which the maximum credit begins to be 5.1 reduced under subdivision 2 must be adjusted for inflation. The 5.2 commissioner shalladjust the threshold amount by the percentage5.3determined under section 290.06, subdivision 2d, for the taxable5.4year.make the inflation adjustments in accordance with section 5.5 1f of the Internal Revenue Code except that for the purposes of 5.6 this subdivision the percentage increase must be determined from 5.7 the year starting September 1, 1999, and ending August 31, 2000, 5.8 as the base year for adjusting for inflation for the tax year 5.9 beginning after December 31, 2000. The determination of the 5.10 commissioner under this subdivision is not a rule under the 5.11 Administrative Procedures Act. 5.12 [EFFECTIVE DATE.] This section is effective for tax years 5.13 beginning after December 31, 2000. 5.14 Sec. 5. Minnesota Statutes 2000, section 290.0671, 5.15 subdivision 1, is amended to read: 5.16 Subdivision 1. [CREDIT ALLOWED.] (a) An individual is 5.17 allowed a credit against the tax imposed by this chapter equal 5.18 to a percentage of earned income. To receive a credit, a 5.19 taxpayer must be eligible for a credit under section 32 of the 5.20 Internal Revenue Code. 5.21 (b) For individuals with no qualifying children, the credit 5.22 equals 1.9125 percent of the first$4,460$4,620 of earned 5.23 income. The credit is reduced by 1.9125 percent of earned 5.24 income or modified adjusted gross income, whichever is greater, 5.25 in excess of$5,570$5,770, but in no case is the credit less 5.26 than zero. 5.27 (c) For individuals with one qualifying child, the credit 5.28 equals 8.5 percent of the first$6,680$6,920 of earned income 5.29 and 8.5 percent of earned income over$11,650$12,080 but less 5.30 than$12,990$13,450. The credit is reduced by 5.73 percent of 5.31 earned income or modified adjusted gross income, whichever is 5.32 greater, in excess of$14,560$15,080, but in no case is the 5.33 credit less than zero. 5.34 (d) For individuals with two or more qualifying children, 5.35 the credit equals ten percent of the first$9,390$9,720 of 5.36 earned income and 20 percent of earned income 6.1 over$14,350$14,860 but less than$16,230$16,800. The credit 6.2 is reduced by 10.3 percent of earned income or modified adjusted 6.3 gross income, whichever is greater, in excess 6.4 of$17,280$17,890, but in no case is the credit less than zero. 6.5 (e) For a nonresident or part-year resident, the credit 6.6 must be allocated based on the percentage calculated under 6.7 section 290.06, subdivision 2c, paragraph (e). 6.8 (f) For a person who was a resident for the entire tax year 6.9 and has earned income not subject to tax under this chapter, the 6.10 credit must be allocated based on the ratio of federal adjusted 6.11 gross income reduced by the earned income not subject to tax 6.12 under this chapter over federal adjusted gross income. 6.13 (g) The commissioner shall construct tables showing the 6.14 amount of the credit at various income levels and make them 6.15 available to taxpayers. The tables shall follow the schedule 6.16 contained in this subdivision, except that the commissioner may 6.17 graduate the transition between income brackets. 6.18 [EFFECTIVE DATE.] This section is effective for taxable 6.19 years beginning after December 31, 1999. 6.20 Sec. 6. Minnesota Statutes 2000, section 290.0671, 6.21 subdivision 7, is amended to read: 6.22 Subd. 7. [INFLATION ADJUSTMENT.] The earned income amounts 6.23 used to calculate the credit and the income thresholds at which 6.24 the maximum credit begins to be reduced in subdivision 1 must be 6.25 adjusted for inflation. The commissioner shalladjust the6.26earned income and threshold amounts by the percentage determined6.27under section 290.06, subdivision 2d, for the taxable year.make 6.28 the inflation adjustments in accordance with section 1f of the 6.29 Internal Revenue Code except that for the purposes of this 6.30 subdivision the percentage increase shall be determined from the 6.31 year starting September 1, 1999, and ending August 31, 2000, as 6.32 the base year for adjusting for inflation for the tax year 6.33 beginning after December 31, 2000. The determination of the 6.34 commissioner under this subdivision is not a rule under the 6.35 Administrative Procedures Act. 6.36 [EFFECTIVE DATE.] This section is effective for tax years 7.1 beginning after December 31, 2000. 7.2 Sec. 7. Minnesota Statutes 2000, section 290.0921, 7.3 subdivision 3, is amended to read: 7.4 Subd. 3. [ALTERNATIVE MINIMUM TAXABLE INCOME.] 7.5 "Alternative minimum taxable income" is Minnesota net income as 7.6 defined in section 290.01, subdivision 19, and includes the 7.7 adjustments and tax preference items in sections 56, 57, 58, and 7.8 59(d), (e), (f), and (h) of the Internal Revenue Code. If a 7.9 corporation files a separate company Minnesota tax return, the 7.10 minimum tax must be computed on a separate company basis. If a 7.11 corporation is part of a tax group filing a unitary return, the 7.12 minimum tax must be computed on a unitary basis. The following 7.13 adjustments must be made. 7.14 (1) For purposes of the depreciation adjustments under 7.15 section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code, 7.16 the basis for depreciable property placed in service in a 7.17 taxable year beginning before January 1, 1990, is the adjusted 7.18 basis for federal income tax purposes, including any 7.19 modification made in a taxable year under section 290.01, 7.20 subdivision 19e, or Minnesota Statutes 1986, section 290.09, 7.21 subdivision 7, paragraph (c). 7.22 (2) For taxable years beginning after December 31, 2000, 7.23 the amount of any remaining modification made under section 7.24 290.01, subdivision 19e, or Minnesota Statutes 1986, section 7.25 290.09, subdivision 7, paragraph (c), not previously deducted is 7.26 a depreciation allowance in the first taxable year after 7.27 December 31, 2000. 7.28 (3) The alternative tax net operating loss deduction under 7.29 sections 56(a)(4) and 56(d) of the Internal Revenue Code does 7.30 not apply. 7.31(3)(4) The special rule for certain dividends under 7.32 section 56(g)(4)(C)(ii) of the Internal Revenue Code does not 7.33 apply. 7.34(4)(5) The special rule for dividends from section 936 7.35 companies under section 56(g)(4)(C)(iii) does not apply. 7.36(5)(6) The tax preference for depletion under section 8.1 57(a)(1) of the Internal Revenue Code does not apply. 8.2(6)(7) The tax preference for intangible drilling costs 8.3 under section 57(a)(2) of the Internal Revenue Code must be 8.4 calculated without regard to subparagraph (E) and the 8.5 subtraction under section 290.01, subdivision 19d, clause (4). 8.6(7)(8) The tax preference for tax exempt interest under 8.7 section 57(a)(5) of the Internal Revenue Code does not apply. 8.8(8)(9) The tax preference for charitable contributions of 8.9 appreciated property under section 57(a)(6) of the Internal 8.10 Revenue Code does not apply. 8.11(9)(10) For purposes of calculating the tax preference for 8.12 accelerated depreciation or amortization on certain property 8.13 placed in service before January 1, 1987, under section 57(a)(7) 8.14 of the Internal Revenue Code, the deduction allowable for the 8.15 taxable year is the deduction allowed under section 290.01, 8.16 subdivision 19e. 8.17 (11) For taxable years beginning after December 31, 2000, 8.18 the amount of any remaining modification made under section 8.19 290.01, subdivision 19e, not previously deducted is a 8.20 depreciation or amortization allowance in the first taxable year 8.21 after December 31, 2000. 8.22(10)(12) For purposes of calculating the adjustment for 8.23 adjusted current earnings in section 56(g) of the Internal 8.24 Revenue Code, the term "alternative minimum taxable income" as 8.25 it is used in section 56(g) of the Internal Revenue Code, means 8.26 alternative minimum taxable income as defined in this 8.27 subdivision, determined without regard to the adjustment for 8.28 adjusted current earnings in section 56(g) of the Internal 8.29 Revenue Code. 8.30(11)(13) For purposes of determining the amount of 8.31 adjusted current earnings under section 56(g)(3) of the Internal 8.32 Revenue Code, no adjustment shall be made under section 56(g)(4) 8.33 of the Internal Revenue Code with respect to (i) the amount of 8.34 foreign dividend gross-up subtracted as provided in section 8.35 290.01, subdivision 19d, clause (1), (ii) the amount of refunds 8.36 of income, excise, or franchise taxes subtracted as provided in 9.1 section 290.01, subdivision 19d, clause (10), or (iii) the 9.2 amount of royalties, fees or other like income subtracted as 9.3 provided in section 290.01, subdivision 19d, clause (11). 9.4 Items of tax preference must not be reduced below zero as a 9.5 result of the modifications in this subdivision. 9.6 [EFFECTIVE DATE.] This section is effective the day 9.7 following final enactment. 9.8 Sec. 8. Minnesota Statutes 2000, section 290.35, 9.9 subdivision 2, is amended to read: 9.10 Subd. 2. [APPORTIONMENT OF TAXABLE NET INCOME.] The 9.11commissionerinsurance company shall computetherefrom theits 9.12 taxable net incomeof such companiesby assigning to this state 9.13 that proportionthereofof net income which the gross premiums 9.14 collected by them during the taxable year from old and new 9.15 business within this state bears to the total gross premiums 9.16 collected by them during that year from their entire old and new 9.17 business, including reinsurance premiums; provided, the 9.18commissionerinsurance company shall add to the taxable net 9.19 incomesoapportioned to this state the amount of any taxes on 9.20 premiums paid by the company by virtue of any law of this state 9.21 (other than the surcharge on premiums imposed by section 297I.10 9.22 and the surcharge imposed by section 168A.40, subdivision 3) 9.23 which shall have been deducted from gross income by the company 9.24 in arriving at its total net income. 9.25 (a) For purposes of determining the Minnesota apportionment 9.26 percentage, premiums from reinsurance contracts in connection 9.27 with property in or liability arising out of activity in, or in 9.28 connection with the lives or health of Minnesota residents shall 9.29 be assigned to Minnesota and premiums from reinsurance contracts 9.30 in connection with property in or liability arising out of 9.31 activity in, or in connection with the lives or health of 9.32 non-Minnesota residents shall be assigned outside of Minnesota. 9.33 Reinsurance premiums are presumed to be received for a Minnesota 9.34 risk and are assigned to Minnesota, if: 9.35 (1) the reinsurance contract is assumed for a company 9.36 domiciled in Minnesota; and 10.1 (2) the taxpayer, upon request of the commissioner, fails 10.2 to provide reliable records indicating the reinsured contract 10.3 covered non-Minnesota risks. 10.4 For purposes of this paragraph, "Minnesota risk" means coverage 10.5 in connection with property in or liability arising out of 10.6 activity in Minnesota, or in connection with the lives or health 10.7 of Minnesota residents. 10.8 (b) The apportionment method prescribed by paragraph (a) 10.9 shall be presumed to fairly and correctly determine the 10.10 taxpayer's taxable net income. If the method prescribed in 10.11 paragraph (a) does not fairly reflect all or any part of taxable 10.12 net income, the taxpayer may petition for or the commissioner 10.13 may require the determination of taxable net income by use of 10.14 another method if that method fairly reflects taxable net 10.15 income. A petition within the meaning of this section must be 10.16 filed by the taxpayer on such form as the commissioner shall 10.17 require. 10.18 [EFFECTIVE DATE.] This section is effective the day 10.19 following final enactment. 10.20 Sec. 9. Minnesota Statutes 2000, section 290A.04, 10.21 subdivision 4, is amended to read: 10.22 Subd. 4. [INFLATION ADJUSTMENT.] Beginning for property 10.23 tax refunds payable in calendar year 1996, the commissioner 10.24 shall annually adjust the dollar amounts of the income 10.25 thresholds and the maximum refunds under subdivisions 2 and 2a 10.26 for inflation. The commissioner shall make the inflation 10.27 adjustments in accordance with section290.06, subdivision 2d1f 10.28 of the Internal Revenue Code, except that for purposes of this 10.29 subdivision the percentage increase shall be determined from the 10.30 year ending on June 30, 1994, to the year ending on June 30 of 10.31 the year preceding that in which the refund is payable. The 10.32 commissioner shall use the appropriate percentage increase to 10.33 annually adjust the income thresholds and maximum refunds under 10.34 subdivisions 2 and 2a for inflation without regard to whether or 10.35 not the income tax brackets are adjusted for inflation in that 10.36 year. The commissioner shall round the thresholds and the 11.1 maximum amounts, as adjusted to the nearest $10 amount. If the 11.2 amount ends in $5, the commissioner shall round it up to the 11.3 next $10 amount. 11.4 The commissioner shall annually announce the adjusted 11.5 refund schedule at the same time provided under section 290.06. 11.6 The determination of the commissioner under this subdivision is 11.7 not a rule under the Administrative Procedure Act. 11.8 Sec. 10. [REPEALER.] 11.9 Minnesota Statutes 2000, sections 290.095, subdivision 7; 11.10 290.23; 290.25; and 290.31, subdivisions 2, 2a, 3, 4, 5, and 19, 11.11 are repealed. 11.12 [EFFECTIVE DATE.] This section is effective for tax years 11.13 beginning after December 31, 2000. 11.14 ARTICLE 2 11.15 PROPERTY TAXES 11.16 Section 1. Minnesota Statutes 2000, section 273.072, 11.17 subdivision 1, is amended to read: 11.18 Subdivision 1. Any county and any city or town lying 11.19 wholly or partially within the county and constituting a 11.20 separate assessment district may, by agreement entered into 11.21 under section 471.59and approved by the commissioner of11.22revenue, provide for the assessment of property in the 11.23 municipality or town by the county assessor. Any two or more 11.24 cities or towns constituting separate assessment districts,11.25whether their assessors are elective or appointive,may enter 11.26 into an agreement under section 471.59 for the assessment of 11.27 property in the contracting units by the assessor of one of the 11.28 units or by an assessor who is jointly employed. 11.29 [EFFECTIVE DATE.] This section is effective the day 11.30 following final enactment. 11.31 Sec. 2. Minnesota Statutes 2000, section 273.1104, 11.32 subdivision 2, is amended to read: 11.33 Subd. 2. [NOTICE OF MARKET VALUE.] On or before May 1 in 11.34 each year, the commissioner shall send to each person subject to 11.35 the tax on unmined iron ores and to each taxing district 11.36 affected, a notice of the market value of the unmined ores as 12.1 determined by the commissionerprior to adjustment under12.2subdivision 1. Said notice shall be sent by mail directed to 12.3 such person at the address given in the report filed and the 12.4 assessor of such taxing district, but the validity of the tax 12.5 shall not be affected by the failure of the commissioner of 12.6 revenue to mail such notice or the failure of the person subject 12.7 to the tax to receive it. 12.8 On the first secular day following May 20, the commissioner 12.9 of revenue shall hold a hearing which may be adjourned from day 12.10 to day. All relevant and material evidence having probative 12.11 value with respect to the issues shall be submitted at the 12.12 hearing and such hearing shall not be a "contested case" within 12.13 the meaning of section 14.02, subdivision 3. Every person 12.14 subject to such tax may at such hearing present evidence and 12.15 argument on any matter bearing upon the validity or correctness 12.16 of the tax determined to be due, and the commissioner of revenue 12.17 shall review the determination of such tax. 12.18 [EFFECTIVE DATE.] This section is effective the day 12.19 following final enactment. 12.20 Sec. 3. Minnesota Statutes 2000, section 273.111, 12.21 subdivision 4, is amended to read: 12.22 Subd. 4. [DETERMINATION OF VALUE.] The value of any real 12.23 estate described in subdivision 3 shall upon timely application 12.24 by the owner, in the manner provided in subdivision 8, be 12.25 determined solely with reference to its appropriate agricultural 12.26 classification and value notwithstanding sections 272.03, 12.27 subdivision 8, and 273.11. In determining the value for ad 12.28 valorem tax purposes, the assessor shall use sales dataobtained12.29fromfor agricultural lands located outside the seven 12.30 metropolitan countiesbut within the region used for computing12.31the range of values under section 273.11, subdivision 10. The12.32sales shall havehaving similar soil types, number of degree 12.33 days, and other similar agricultural characteristicsas12.34contained in section 273.11, subdivision 10. Furthermore, the 12.35 assessor shall not consider any added values resulting from 12.36 nonagricultural factors. 13.1 [EFFECTIVE DATE.] This section is effective the day 13.2 following final enactment. 13.3 Sec. 4. Minnesota Statutes 2000, section 273.124, 13.4 subdivision 13, is amended to read: 13.5 Subd. 13. [HOMESTEAD APPLICATION.] (a) A person who meets 13.6 the homestead requirements under subdivision 1 must file a 13.7 homestead application with the county assessor to initially 13.8 obtain homestead classification. 13.9 (b) On or before January 2, 1993, each county assessor 13.10 shall mail a homestead application to the owner of each parcel 13.11 of property within the county which was classified as homestead 13.12 for the 1992 assessment year. The format and contents of a 13.13 uniform homestead application shall be prescribed by the 13.14 commissioner of revenue. The commissioner shall consult with 13.15 the chairs of the house and senate tax committees on the 13.16 contents of the homestead application form. The application 13.17 must clearly inform the taxpayer that this application must be 13.18 signed by all owners who occupy the property or by the 13.19 qualifying relative and returned to the county assessor in order 13.20 for the property to continue receiving homestead treatment. The 13.21 envelope containing the homestead application shall clearly 13.22 identify its contents and alert the taxpayer of its necessary 13.23 immediate response. 13.24 (c) Every property owner applying for homestead 13.25 classification must furnish to the county assessor the social 13.26 security number of each occupant who is listed as an owner of 13.27 the property on the deed of record, the name and address of each 13.28 owner who does not occupy the property, and the name and social 13.29 security number of each owner's spouse who occupies the 13.30 property. The application must be signed by each owner who 13.31 occupies the property and by each owner's spouse who occupies 13.32 the property, or, in the case of property that qualifies as a 13.33 homestead under subdivision 1, paragraph (c), by the qualifying 13.34 relative. 13.35 If a property owner occupies a homestead, the property 13.36 owner's spouse may not claim another property as a homestead 14.1 unless the property owner and the property owner's spouse file 14.2 with the assessor an affidavit or other proof required by the 14.3 assessor stating that the property qualifies as a homestead 14.4 under subdivision 1, paragraph (e). 14.5 Owners or spouses occupying residences owned by their 14.6 spouses and previously occupied with the other spouse, either of 14.7 whom fail to include the other spouse's name and social security 14.8 number on the homestead application or provide the affidavits or 14.9 other proof requested, will be deemed to have elected to receive 14.10 only partial homestead treatment of their residence. The 14.11 remainder of the residence will be classified as nonhomestead 14.12 residential. When an owner or spouse's name and social security 14.13 number appear on homestead applications for two separate 14.14 residences and only one application is signed, the owner or 14.15 spouse will be deemed to have elected to homestead the residence 14.16 for which the application was signed. 14.17 The social security numbers or affidavits or other proofs 14.18 of the property owners and spouses are private data on 14.19 individuals as defined by section 13.02, subdivision 12, but, 14.20 notwithstanding that section, the private data may be disclosed 14.21 to the commissioner of revenue, or, for purposes of proceeding 14.22 under the Revenue Recapture Act to recover personal property 14.23 taxes owing, to the county treasurer. 14.24 (d) If residential real estate is occupied and used for 14.25 purposes of a homestead by a relative of the owner and qualifies 14.26 for a homestead under subdivision 1, paragraph (c), in order for 14.27 the property to receive homestead status, a homestead 14.28 application must be filed with the assessor. The social 14.29 security number of each relative occupying the property and the 14.30 social security number of each owner who is related to an 14.31 occupant of the property shall be required on the homestead 14.32 application filed under this subdivision. If a different 14.33 relative of the owner subsequently occupies the property, the 14.34 owner of the property must notify the assessor within 30 days of 14.35 the change in occupancy. The social security number of a 14.36 relative occupying the property is private data on individuals 15.1 as defined by section 13.02, subdivision 12, but may be 15.2 disclosed to the commissioner of revenue. 15.3 (e) The homestead application shall also notify the 15.4 property owners that the application filed under this section 15.5 will not be mailed annually and that if the property is granted 15.6 homestead status for the 1993 assessment, or any assessment year 15.7 thereafter, that same property shall remain classified as 15.8 homestead until the property is sold or transferred to another 15.9 person, or the owners, the spouse of the owner, or the relatives 15.10 no longer use the property as their homestead. Upon the sale or 15.11 transfer of the homestead property, a certificate of value must 15.12 be timely filed with the county auditor as provided under 15.13 section 272.115. Failure to notify the assessor within 30 days 15.14 that the property has been sold, transferred, or that the owner, 15.15 the spouse of the owner, or the relative is no longer occupying 15.16 the property as a homestead, shall result in the penalty 15.17 provided under this subdivision and the property will lose its 15.18 current homestead status. 15.19 (f) If the homestead application is not returned within 30 15.20 days, the county will send a second application to the present 15.21 owners of record. The notice of proposed property taxes 15.22 prepared under section 275.065, subdivision 3, shall reflect the 15.23 property's classification. Beginning with assessment year 1993 15.24 for all properties, if a homestead application has not been 15.25 filed with the county by December 15, the assessor shall 15.26 classify the property as nonhomestead for the current assessment 15.27 year for taxes payable in the following year, provided that the 15.28 owner may be entitled to receive the homestead classification by 15.29 proper application under section 375.192. 15.30 (g) At the request of the commissioner, each county must 15.31 give the commissioner a list that includes the name and social 15.32 security number of each property owner and the property owner's 15.33 spouse occupying the property, or relative of a property owner, 15.34 applying for homestead classification under this subdivision. 15.35 The commissioner shall use the information provided on the lists 15.36 as appropriate under the law, including for the detection of 16.1 improper claims by owners, or relatives of owners, under chapter 16.2 290A. 16.3 (h) If the commissioner finds that a property owner may be 16.4 claiming a fraudulent homestead, the commissioner shall notify 16.5 the appropriate counties. Within 90 days of the notification, 16.6 the county assessor shall investigate to determine if the 16.7 homestead classification was properly claimed. If the property 16.8 owner does not qualify, the county assessor shall notify the 16.9 county auditor who will determine the amount of homestead 16.10 benefits that had been improperly allowed. For the purpose of 16.11 this section, "homestead benefits" means the tax reduction 16.12 resulting from the classification as a homestead under section 16.13 273.13, the taconite homestead credit under section 273.135, the 16.14 education homestead and agricultural credits under section 16.15 273.1382, and the supplemental homestead credit under section 16.16 273.1391. 16.17 The county auditor shall send a notice to the person who 16.18 owned the affected property at the time the homestead 16.19 application related to the improper homestead was filed, 16.20 demanding reimbursement of the homestead benefits plus a penalty 16.21 equal to 100 percent of the homestead benefits. The person 16.22 notified may appeal the county's determination by serving copies 16.23 of a petition for review with county officials as provided in 16.24 section 278.01 and filing proof of service as provided in 16.25 section 278.01 with the Minnesota tax court within 60 days of 16.26 the date of the notice from the county. Procedurally, the 16.27 appeal is governed by the provisions in chapter 271 which apply 16.28 to the appeal of a property tax assessment or levy, but without 16.29 requiring any prepayment of the amount in controversy. If the 16.30 amount of homestead benefits and penalty is not paid within 60 16.31 days, and if no appeal has been filed, the county auditor shall 16.32 certify the amount of taxes and penalty to the county 16.33 treasurer. The county treasurer will add interest to the unpaid 16.34 homestead benefits and penalty amounts at the rate provided in 16.35 section 279.03 for real property taxes becoming delinquent in 16.36 the calendar year during which the amount remains unpaid. 17.1 Interest may be assessed for the period beginning 60 days after 17.2 demand for payment was made. 17.3 If the person notified is the current owner of the 17.4 property, the treasurer may add the total amount of homestead 17.5 benefits, penalty, interest, and costs to the ad valorem taxes 17.6 otherwise payable on the property by including the amounts on 17.7 the property tax statements under section 276.04, subdivision 17.8 3. The amounts added under this paragraph to the ad valorem 17.9 taxes shall include interest accrued through December 31 of the 17.10 year preceding the taxes payable year for which the amounts are 17.11 first added. These amounts, when added to the property tax 17.12 statement, become subject to all the laws for the enforcement of 17.13 real or personal property taxes for that year, and for any 17.14 subsequent year. 17.15 If the person notified is not the current owner of the 17.16 property, the treasurer may collect the amounts due under the 17.17 Revenue Recapture Act in chapter 270A, or use any of the powers 17.18 granted in sections 277.20 and 277.21 without exclusion, to 17.19 enforce payment of the homestead benefits, penalty, interest, 17.20 and costs, as if those amounts were delinquent tax obligations 17.21 of the person who owned the property at the time the application 17.22 related to the improperly allowed homestead was filed. The 17.23 treasurer may relieve a prior owner of personal liability for 17.24 the homestead benefits, penalty, interest, and costs, and 17.25 instead extend those amounts on the tax lists against the 17.26 property as provided in this paragraph to the extent that the 17.27 current owner agrees in writing. On all demands, billings, 17.28 property tax statements, and related correspondence, the county 17.29 must list and state separately the amounts of homestead 17.30 benefits, penalty, interest and costs being demanded, billed or 17.31 assessed. 17.32 (i) Any amount of homestead benefits recovered by the 17.33 county from the property owner shall be distributed to the 17.34 county, city or town, and school district where the property is 17.35 located in the same proportion that each taxing district's levy 17.36 was to the total of the three taxing districts' levy for the 18.1 current year. Any amount recovered attributable to taconite 18.2 homestead credit shall be transmitted to the St. Louis county 18.3 auditor to be deposited in the taconite property tax relief 18.4 account. Any amount recovered that is attributable to 18.5 supplemental homestead credit is to be transmitted to the 18.6 commissioner of revenue for deposit in the general fund of the 18.7 state treasury. The total amount of penalty collected must be 18.8 deposited in the county general fund. 18.9 (j) If a property owner has applied for more than one 18.10 homestead and the county assessors cannot determine which 18.11 property should be classified as homestead, the county assessors 18.12 will refer the information to the commissioner. The 18.13 commissioner shall make the determination and notify the 18.14 counties within 60 days. 18.15 (k) In addition to lists of homestead properties, the 18.16 commissioner may ask the counties to furnish lists of all 18.17 properties and the record owners. The social security numbers 18.18 and federal identification numbers that are maintained by a 18.19 county or city assessor for property tax administration 18.20 purposes, and that may appear on the lists retain their 18.21 classification as private or nonpublic data; but may be viewed, 18.22 accessed, and used by the county auditor or treasurer of the 18.23 same county for the limited purpose of assisting the 18.24 commissioner in the preparation of microdata samples under 18.25 section 270.0681. 18.26 [EFFECTIVE DATE.] This section is effective for homestead 18.27 applications submitted on or after the day following final 18.28 enactment. 18.29 Sec. 5. Minnesota Statutes 2000, section 282.04, 18.30 subdivision 2, is amended to read: 18.31 Subd. 2. [RIGHTS BEFORE SALE; IMPROVEMENTS, INSURANCE, 18.32 DEMOLITION.] Before the sale of a parcel of forfeited land the 18.33 county auditor may, with the approval of the county board of 18.34 commissioners, provide for the repair and improvement of any 18.35 building or structure located upon the parcel, and may provide 18.36 for maintenance of tax-forfeited lands, if it is determined by 19.1 the county board that such repairs, improvements, or maintenance 19.2 are necessary for the operation, use, preservation and safety of 19.3 the building or structure. If so authorized by the county 19.4 board, the county auditor may insure the building or structure 19.5 against loss or damage resulting from fire or windstorm, may 19.6 purchase workers' compensation insurance to insure the county 19.7 against claims for injury to the persons employed in the 19.8 building or structure by the county, and may insure the county, 19.9 its officers and employees against claims for injuries to 19.10 persons or property because of the management, use or operation 19.11 of the building or structure. The county auditor may, with the 19.12 approval of the county board, provide for the demolition of the 19.13 building or structure, which has been determined by the county 19.14 board to be within the purview of section 299F.10, and for the 19.15 sale of salvaged materials from the building or structure. The 19.16 county auditor, with the approval of the county board, may 19.17 provide for the sale of abandoned personal propertyunder either19.18chapter 345 or 566, as appropriate. The sale may be made by the 19.19 sheriff using the procedures for the sale of abandoned property 19.20 in section 345.15 or by the county auditor using the procedures 19.21 for the sale of abandoned property in section 504B.271. The net 19.22 proceeds from any sale of the personal property, salvaged 19.23 materials, timber or other products, or leases made under this 19.24 law must be deposited in the forfeited tax sale fund and must be 19.25 distributed in the same manner as if the parcel had been sold. 19.26 The county auditor, with the approval of the county board, 19.27 may provide for the demolition of any structure on tax-forfeited 19.28 lands, if in the opinion of the county board, the county 19.29 auditor, and the land commissioner, if there is one, the sale of 19.30 the land with the structure on it, or the continued existence of 19.31 the structure by reason of age, dilapidated condition or 19.32 excessive size as compared with nearby structures, will result 19.33 in a material lessening of net tax capacities of real estate in 19.34 the vicinity of the tax-forfeited lands, or if the demolition of 19.35 the structure or structures will aid in disposing of the 19.36 tax-forfeited property. 20.1 Before the sale of a parcel of forfeited land located in an 20.2 urban area, the county auditor may with the approval of the 20.3 county board provide for the grading of the land by filling or 20.4 the removal of any surplus material from it. If the physical 20.5 condition of forfeited lands is such that a reasonable grading 20.6 of the lands is necessary for the protection and preservation of 20.7 the property of any adjoining owner, the adjoining property 20.8 owner or owners may apply to the county board to have the 20.9 grading done. If, after considering the application, the county 20.10 board believes that the grading will enhance the value of the 20.11 forfeited lands commensurate with the cost involved, it may 20.12 approve it, and the work must be performed under the supervision 20.13 of the county or city engineer, as the case may be, and the 20.14 expense paid from the forfeited tax sale fund. 20.15 Sec. 6. Minnesota Statutes 2000, section 477A.011, 20.16 subdivision 36, is amended to read: 20.17 Subd. 36. [CITY AID BASE.] (a) Except as provided in 20.18 paragraphs (b) to (n), "city aid base" means, for each city, the 20.19 sum of the local government aid and equalization aid it was 20.20 originally certified to receive in calendar year 1993 under 20.21 Minnesota Statutes 1992, section 477A.013, subdivisions 3 and 5, 20.22 and the amount of disparity reduction aid it received in 20.23 calendar year 1993 under Minnesota Statutes 1992, section 20.24 273.1398, subdivision 3. 20.25 (b) For aids payable in 1996 and thereafter, a city that in 20.26 1992 or 1993 transferred an amount from governmental funds to 20.27 its sewer and water fund, which amount exceeded its net levy for 20.28 taxes payable in the year in which the transfer occurred, has a 20.29 "city aid base" equal to the sum of (i) its city aid base, as 20.30 calculated under paragraph (a), and (ii) one-half of the 20.31 difference between its city aid distribution under section 20.32 477A.013, subdivision 9, for aids payable in 1995 and its city 20.33 aid base for aids payable in 1995. 20.34 (c) The city aid base for any city with a population less 20.35 than 500 is increased by $40,000 for aids payable in calendar 20.36 year 1995 and thereafter, and the maximum amount of total aid it 21.1 may receive under section 477A.013, subdivision 9, paragraph 21.2 (c), is also increased by $40,000 for aids payable in calendar 21.3 year 1995 only, provided that: 21.4 (i) the average total tax capacity rate for taxes payable 21.5 in 1995 exceeds 200 percent; 21.6 (ii) the city portion of the tax capacity rate exceeds 100 21.7 percent; and 21.8 (iii) its city aid base is less than $60 per capita. 21.9 (d) The city aid base for a city is increased by $20,000 in 21.10 1998 and thereafter and the maximum amount of total aid it may 21.11 receive under section 477A.013, subdivision 9, paragraph (c), is 21.12 also increased by $20,000 in calendar year 1998 only, provided 21.13 that: 21.14 (i) the city has a population in 1994 of 2,500 or more; 21.15 (ii) the city is located in a county, outside of the 21.16 metropolitan area, which contains a city of the first class; 21.17 (iii) the city's net tax capacity used in calculating its 21.18 1996 aid under section 477A.013 is less than $400 per capita; 21.19 and 21.20 (iv) at least four percent of the total net tax capacity, 21.21 for taxes payable in 1996, of property located in the city is 21.22 classified as railroad property. 21.23 (e) The city aid base for a city is increased by $200,000 21.24 in 1999 and thereafter and the maximum amount of total aid it 21.25 may receive under section 477A.013, subdivision 9, paragraph 21.26 (c), is also increased by $200,000 in calendar year 1999 only, 21.27 provided that: 21.28 (i) the city was incorporated as a statutory city after 21.29 December 1, 1993; 21.30 (ii) its city aid base does not exceed $5,600; and 21.31 (iii) the city had a population in 1996 of 5,000 or more. 21.32 (f) The city aid base for a city is increased by $450,000 21.33 in 1999 to 2008 and the maximum amount of total aid it may 21.34 receive under section 477A.013, subdivision 9, paragraph (c), is 21.35 also increased by $450,000 in calendar year 1999 only, provided 21.36 that: 22.1 (i) the city had a population in 1996 of at least 50,000; 22.2 (ii) its population had increased by at least 40 percent in 22.3 the ten-year period ending in 1996; and 22.4 (iii) its city's net tax capacity for aids payable in 1998 22.5 is less than $700 per capita. 22.6 (g) Beginning in20022004, the city aid base for a city is 22.7 equal to the sum of its city aid base in20012003 and the 22.8 amount of additional aid it was certified to receive under 22.9 section 477A.06 in20012003. For20022004 only, the maximum 22.10 amount of total aid a city may receive under section 477A.013, 22.11 subdivision 9, paragraph (c), is also increased by the amount it 22.12 was certified to receive under section 477A.06 in20012003. 22.13 (h) The city aid base for a city is increased by $150,000 22.14 for aids payable in 2000 and thereafter, and the maximum amount 22.15 of total aid it may receive under section 477A.013, subdivision 22.16 9, paragraph (c), is also increased by $150,000 in calendar year 22.17 2000 only, provided that: 22.18 (1) the city has a population that is greater than 1,000 22.19 and less than 2,500; 22.20 (2) its commercial and industrial percentage for aids 22.21 payable in 1999 is greater than 45 percent; and 22.22 (3) the total market value of all commercial and industrial 22.23 property in the city for assessment year 1999 is at least 15 22.24 percent less than the total market value of all commercial and 22.25 industrial property in the city for assessment year 1998. 22.26 (i) The city aid base for a city is increased by $200,000 22.27 in 2000 and thereafter, and the maximum amount of total aid it 22.28 may receive under section 477A.013, subdivision 9, paragraph 22.29 (c), is also increased by $200,000 in calendar year 2000 only, 22.30 provided that: 22.31 (1) the city had a population in 1997 of 2,500 or more; 22.32 (2) the net tax capacity of the city used in calculating 22.33 its 1999 aid under section 477A.013 is less than $650 per 22.34 capita; 22.35 (3) the pre-1940 housing percentage of the city used in 22.36 calculating 1999 aid under section 477A.013 is greater than 12 23.1 percent; 23.2 (4) the 1999 local government aid of the city under section 23.3 477A.013 is less than 20 percent of the amount that the formula 23.4 aid of the city would have been if the need increase percentage 23.5 was 100 percent; and 23.6 (5) the city aid base of the city used in calculating aid 23.7 under section 477A.013 is less than $7 per capita. 23.8 (j) The city aid base for a city is increased by $225,000 23.9 in calendar years 2000 to 2002 and the maximum amount of total 23.10 aid it may receive under section 477A.013, subdivision 9, 23.11 paragraph (c), is also increased by $225,000 in calendar year 23.12 2000 only, provided that: 23.13 (1) the city had a population of at least 5,000; 23.14 (2) its population had increased by at least 50 percent in 23.15 the ten-year period ending in 1997; 23.16 (3) the city is located outside of the Minneapolis-St. Paul 23.17 metropolitan statistical area as defined by the United States 23.18 Bureau of the Census; and 23.19 (4) the city received less than $30 per capita in aid under 23.20 section 477A.013, subdivision 9, for aids payable in 1999. 23.21 (k) The city aid base for a city is increased by $102,000 23.22 in 2000 and thereafter, and the maximum amount of total aid it 23.23 may receive under section 477A.013, subdivision 9, paragraph 23.24 (c), is also increased by $102,000 in calendar year 2000 only, 23.25 provided that: 23.26 (1) the city has a population in 1997 of 2,000 or more; 23.27 (2) the net tax capacity of the city used in calculating 23.28 its 1999 aid under section 477A.013 is less than $455 per 23.29 capita; 23.30 (3) the net levy of the city used in calculating 1999 aid 23.31 under section 477A.013 is greater than $195 per capita; and 23.32 (4) the 1999 local government aid of the city under section 23.33 477A.013 is less than 38 percent of the amount that the formula 23.34 aid of the city would have been if the need increase percentage 23.35 was 100 percent. 23.36 (l) The city aid base for a city is increased by $32,000 in 24.1 2001 and thereafter, and the maximum amount of total aid it may 24.2 receive under section 477A.013, subdivision 9, paragraph (c), is 24.3 also increased by $32,000 in calendar year 2001 only, provided 24.4 that: 24.5 (1) the city has a population in 1998 that is greater than 24.6 200 but less than 500; 24.7 (2) the city's revenue need used in calculating aids 24.8 payable in 2000 was greater than $200 per capita; 24.9 (3) the city net tax capacity for the city used in 24.10 calculating aids available in 2000 was equal to or less than 24.11 $200 per capita; 24.12 (4) the city aid base of the city used in calculating aid 24.13 under section 477A.013 is less than $65 per capita; and 24.14 (5) the city's formula aid for aids payable in 2000 was 24.15 greater than zero. 24.16 (m) The city aid base for a city is increased by $7,200 in 24.17 2001 and thereafter, and the maximum amount of total aid it may 24.18 receive under section 477A.013, subdivision 9, paragraph (c), is 24.19 also increased by $7,200 in calendar year 2001 only, provided 24.20 that: 24.21 (1) the city had a population in 1998 that is greater than 24.22 200 but less than 500; 24.23 (2) the city's commercial industrial percentage used in 24.24 calculating aids payable in 2000 was less than ten percent; 24.25 (3) more than 25 percent of the city's population was 60 24.26 years old or older according to the 1990 census; 24.27 (4) the city aid base of the city used in calculating aid 24.28 under section 477A.013 is less than $15 per capita; and 24.29 (5) the city's formula aid for aids payable in 2000 was 24.30 greater than zero. 24.31 (n) The city aid base for a city is increased by $45,000 in 24.32 2001 and thereafter, and the maximum amount of total aid it may 24.33 receive under section 477A.013, subdivision 9, paragraph (c), is 24.34 also increased by $45,000 in calendar year 2001 only, provided 24.35 that: 24.36 (1) the net tax capacity of the city used in calculating 25.1 its 2000 aid under section 477A.013 is less than $810 per 25.2 capita; 25.3 (2) the population of the city declined more than two 25.4 percent between 1988 and 1998; 25.5 (3) the net levy of the city used in calculating 2000 aid 25.6 under section 477A.013 is greater than $240 per capita; and 25.7 (4) the city received less than $36 per capita in aid under 25.8 section 477A.013, subdivision 9, for aids payable in 2000. 25.9 ARTICLE 3 25.10 SALES AND USE TAXES 25.11 Section 1. Minnesota Statutes 2000, section 289A.50, 25.12 subdivision 2a, is amended to read: 25.13 Subd. 2a. [REFUND OF SALES TAX TO PURCHASERS.] If a vendor 25.14 has collected from a purchaser a tax on a transaction that is 25.15 not subject to the tax imposed by chapter 297A, the purchaser 25.16 may apply directly to the commissioner for a refund under this 25.17 section if: 25.18 (a) the purchaser is currently registered to collect and 25.19 remit the salesandtax or to remit the use tax; and 25.20 (b) the amount of the refund applied for exceeds $500. 25.21 The purchaser may not file more than two applications for 25.22 refund under this subdivision in a calendar year. 25.23 [EFFECTIVE DATE.] This section is effective the day 25.24 following final enactment. 25.25 Sec. 2. Minnesota Statutes 2000, section 297A.01, 25.26 subdivision 3, is amended to read: 25.27 Subd. 3. A "sale" and a "purchase" includes, but is not 25.28 limited to, each of the following transactions: 25.29 (a) Any transfer of title or possession, or both, of 25.30 tangible personal property, whether absolutely or conditionally, 25.31 and the leasing of or the granting of a license to use or 25.32 consume tangible personal property other than manufactured homes 25.33 used for residential purposes for a continuous period of 30 days 25.34 or more, for a consideration in money or by exchange or barter; 25.35 (b) The production, fabrication, printing, or processing of 25.36 tangible personal property for a consideration for consumers who 26.1 furnish either directly or indirectly the materials used in the 26.2 production, fabrication, printing, or processing; 26.3 (c) The furnishing, preparing, or serving for a 26.4 consideration of food, meals, or drinks. "Sale" or "purchase" 26.5 does not include: 26.6 (1) meals or drinks served to patients, inmates, or persons 26.7 residing at hospitals, sanitariums, nursing homes, senior 26.8 citizens homes, and correctional, detention, and detoxification 26.9 facilities; 26.10 (2) meals or drinks purchased for and served exclusively to 26.11 individuals who are 60 years of age or over and their spouses or 26.12 to the handicapped and their spouses by governmental agencies, 26.13 nonprofit organizations, agencies, or churches or pursuant to 26.14 any program funded in whole or part through 42 USCA sections 26.15 3001 through 3045, wherever delivered, prepared or served; or 26.16 (3) meals and lunches served at public and private schools, 26.17 universities, or colleges. 26.18 Notwithstanding section 297A.25, subdivision 2, taxable food or 26.19 meals include, but are not limited to, the following: 26.20 (i) food or drinks sold by the retailer for immediate 26.21 consumption on the retailer's premises. Food and drinks sold 26.22 within a building or grounds which require an admission charge 26.23 for entrance are presumed to be sold for consumption on the 26.24 premises; 26.25 (ii) food or drinks prepared by the retailer for immediate 26.26 consumption either on or off the retailer's premises. For 26.27 purposes of this subdivision, "food or drinks prepared for 26.28 immediate consumption" includes any food product upon which an 26.29 act of preparation including, but not limited to, cooking, 26.30 mixing, sandwich making, blending, heating, or pouring has been 26.31 performed by the retailer so the food product may be immediately 26.32 consumed by the purchaser; 26.33 (iii) ice cream, ice milk, frozen yogurt products, or 26.34 frozen novelties sold in single or individual servings including 26.35 cones, sundaes, and snow cones. For purposes of this 26.36 subdivision, "single or individual servings" does not include 27.1 products when sold in bulk containers or bulk packaging; 27.2 (iv) soft drinks and other beverages including all 27.3 carbonated and noncarbonated beverages or drinks sold in liquid 27.4 form except nonalcoholic beverages or drinks which contain milk 27.5 or milk products, nonalcoholic beverages or drinks containing 15 27.6 or more percent fruit juice, and noncarbonated and 27.7 noneffervescent bottled water sold in individual containers of 27.8 one-half gallon or more in size; 27.9 (v) gum, candy, and candy products, except when sold for 27.10 fundraising purposes by a nonprofit organization that provides 27.11 educational and social activities primarily for young people 18 27.12 years of age and under; 27.13 (vi) ice; 27.14 (vii) all food sold from vending machines; 27.15 (viii) all food for immediate consumption sold from 27.16 concession stands and vehicles; 27.17 (ix) party trays; 27.18 (x) all meals and single servings of packaged snack food 27.19 sold in restaurants and bars; and 27.20 (xi) bakery products: 27.21 (A) prepared by the retailer for consumption on the 27.22 retailer's premises; 27.23 (B) sold at a place that charges admission; 27.24 (C) sold from vending machines; or 27.25 (D) sold in single or individual servings from concession 27.26 stands, vehicles, bars, and restaurants. For purposes of this 27.27 subdivision, "single or individual servings" does not include 27.28 products when sold in bulk containers or bulk packaging. 27.29 For purposes of this subdivision, "premises" means the 27.30 total space and facilities, including buildings, grounds, and 27.31 parking lots that are made available or that are available for 27.32 use by the retailer or customer for the purpose of sale or 27.33 consumption of prepared food and drinks. The premises of a 27.34 caterer is the place where the catered food or drinks are 27.35 served; 27.36 (d) The granting of the privilege of admission to places of 28.1 amusement, recreational areas, or athletic events, except a 28.2 world championship football game sponsored by the national 28.3 football league, and the privilege of having access to and the 28.4 use of amusement devices, tanning facilities, reducing salons, 28.5 steam baths, turkish baths, health clubs, and spas or athletic 28.6 facilities; 28.7 (e) The furnishing for a consideration of lodging and 28.8 related services by a hotel, rooming house, tourist court, motel 28.9 or trailer camp and of the granting of any similar license to 28.10 use real property other than the renting or leasing thereof for 28.11 a continuous period of 30 days or more; 28.12 (f) The furnishing for a consideration of electricity, gas, 28.13 water, or steam for use or consumption within this state, or 28.14 local exchange telephone service, intrastate toll service, and 28.15 interstate toll service, if that service originates from and is 28.16 charged to a telephone located in this state. Telephone service 28.17 does not include services purchased with prepaid telephone 28.18 calling cards. Telephone service includes paging services and 28.19 private communication service, as defined in United States Code, 28.20 title 26, section 4252(d), as amended through December 31, 1991, 28.21 except for private communication service purchased by an agent 28.22 acting on behalf of the state lottery. The furnishing for a 28.23 consideration of access to telephone services by a hotel to its 28.24 guests is a sale under this clause. Sales by municipal 28.25 corporations in a proprietary capacity are included in the 28.26 provisions of this clause. The furnishing of water and sewer 28.27 services for residential use shall not be considered a sale. 28.28 The sale of natural gas to be used as a fuel in vehicles 28.29 propelled by natural gas shall not be considered a sale for the 28.30 purposes of this section; 28.31 (g) The furnishing for a consideration of cable television 28.32 services, including charges for basic service, charges for 28.33 premium service, and any other charges for any other 28.34 pay-per-view, monthly, or similar television services; 28.35 (h) The furnishing for a consideration of parking services, 28.36 whether on a contractual, hourly, or other periodic basis, 29.1 except for parking at a meter; 29.2 (i) The furnishing for a consideration of services listed 29.3 in this paragraph: 29.4 (i) laundry and dry cleaning services including cleaning, 29.5 pressing, repairing, altering, and storing clothes, linen 29.6 services and supply, cleaning and blocking hats, and carpet, 29.7 drapery, upholstery, and industrial cleaning. Laundry and dry 29.8 cleaning services do not include services provided by coin 29.9 operated facilities operated by the customer; 29.10 (ii) motor vehicle washing, waxing, and cleaning services, 29.11 including services provided by coin-operated facilities operated 29.12 by the customer, and rustproofing, undercoating, and towing of 29.13 motor vehicles; 29.14 (iii) building and residential cleaning, maintenance, and 29.15 disinfecting and exterminating services; 29.16 (iv) detective services, security services, burglar, fire 29.17 alarm, and armored car services; but not including services 29.18 performed within the jurisdiction they serve by off-duty 29.19 licensed peace officers as defined in section 626.84, 29.20 subdivision 1, or services provided by a nonprofit organization 29.21 for monitoring and electronic surveillance of persons placed on 29.22 in-home detention pursuant to court order or under the direction 29.23 of the Minnesota department of corrections; 29.24 (v) pet grooming services; 29.25 (vi) lawn care, fertilizing, mowing, spraying and sprigging 29.26 services; garden planting and maintenance; tree, bush, and shrub 29.27 pruning, bracing, spraying, and surgery; indoor plant care; 29.28 tree, bush, shrub and stump removal; and tree trimming for 29.29 public utility lines. Services performed under a construction 29.30 contract for the installation of shrubbery, plants, sod, trees, 29.31 bushes, and similar items are not taxable; 29.32 (vii) massages, except when provided by a licensed health 29.33 care facility or professional or upon written referral from a 29.34 licensed health care facility or professional for treatment of 29.35 illness, injury, or disease; and 29.36 (viii) the furnishing for consideration of lodging, board 30.1 and care services for animals in kennels and other similar 30.2 arrangements, but excluding veterinary and horse boarding 30.3 services. 30.4 The services listed in this paragraph are taxable under section 30.5 297A.02 if the service is performed wholly within Minnesota or 30.6 if the service is performed partly within and partly without 30.7 Minnesota and the greater proportion of the service is performed 30.8 in Minnesota, based on the cost of performance. In applying the 30.9 provisions of this chapter, the terms "tangible personal 30.10 property" and "sales at retail" include taxable services and the 30.11 provision of taxable services, unless specifically provided 30.12 otherwise. Services performed by an employee for an employer 30.13 are not taxable under this paragraph. Services performed by a 30.14 partnership or association for another partnership or 30.15 association are not taxable under this paragraph if one of the 30.16 entities owns or controls more than 80 percent of the voting 30.17 power of the equity interest in the other entity. Services 30.18 performed between members of an affiliated group of corporations 30.19 are not taxable. For purposes of this section, "affiliated 30.20 group of corporations" includes those entities that would be 30.21 classified as a member of an affiliated group under United 30.22 States Code, title 26, section 1504, as amended through December 30.23 31, 1987, and who are eligible to file a consolidated tax return 30.24 for federal income tax purposes; 30.25 (j) A "sale" and a "purchase" includes the transfer of 30.26 computer software, meaning information and directions that 30.27 dictate the function performed by data processing equipment. A 30.28 "sale" and a "purchase" does not include the design, 30.29 development, writing, translation, fabrication, lease, or 30.30 transfer for a consideration of title or possession of a custom 30.31 computer program; and 30.32 (k) The granting of membership in a club, association, or 30.33 other organization if: 30.34 (1) the club, association, or other organization makes 30.35 available for the use of its members sports and athletic 30.36 facilities (without regard to whether a separate charge is 31.1 assessed for use of the facilities); and 31.2 (2) use of the sports and athletic facilities is not made 31.3 available to the general public on the same basis as it is made 31.4 available to members. 31.5 Granting of membership includes both one-time initiation fees 31.6 and periodic membership dues. Sports and athletic facilities 31.7 include golf courses, tennis, racquetball, handball and squash 31.8 courts, basketball and volleyball facilities, running tracks, 31.9 exercise equipment, swimming pools, and other similar athletic 31.10 or sports facilities. The provisions of this paragraph do not 31.11 apply to camps or other recreation facilities owned and operated 31.12 by an exempt organization under section 501(c)(3) of the 31.13 Internal Revenue Code of 1986, as amended through December 31, 31.14 1992, for educational and social activities for young people 31.15 primarily age 18 and under. 31.16 [EFFECTIVE DATE; INSTRUCTION TO REVISOR.] This section is 31.17 effective the day following final enactment. In the next 31.18 edition of Minnesota Statutes, the revisor of statutes shall 31.19 codify the amendment in this section in Minnesota Statutes, 31.20 section 297A.61, subdivision 3. 31.21 Sec. 3. Minnesota Statutes 2000, section 297A.25, 31.22 subdivision 3, is amended to read: 31.23 Subd. 3. [MEDICINES; MEDICAL DEVICES.] The gross receipts 31.24 from the sale of and storage, use, or consumption of prescribed 31.25 drugs, prescribed medicine and insulin, intended for use, 31.26 internal or external, in the cure, mitigation, treatment or 31.27 prevention of illness or disease in human beings are exempt, 31.28 together with prescription glasses, fever thermometers, 31.29 therapeutic, and prosthetic devices. "Prescribed drugs" or 31.30 "prescribed medicine" includes over-the-counter drugs or 31.31 medicine prescribed by a licensedphysicianhealth care 31.32 professional. "Therapeutic devices" includes reusable finger 31.33 pricking devices for the extraction of blood, blood glucose 31.34 monitoring machines, and other diagnostic agents used in 31.35 diagnosing, monitoring, or treating diabetes. Nonprescription 31.36 analgesics consisting principally (determined by the weight of 32.1 all ingredients) of acetaminophen, acetylsalicylic acid, 32.2 ibuprofen, ketoprofen, naproxen, and other nonprescription 32.3 analgesics that are approved by the United States Food and Drug 32.4 Administration for internal use by human beings, or a 32.5 combination thereof, are exempt. 32.6 Medical supplies purchased by a licensed health care 32.7 facility or licensed health care professional to provide medical 32.8 treatment to residents or patients are exempt. The exemption 32.9 does not apply to medical equipment or components of medical 32.10 equipment, laboratory supplies, radiological supplies, and other 32.11 items used in providing medical services. For purposes of this 32.12 subdivision, "medical supplies" means adhesive and nonadhesive 32.13 bandages, gauze pads and strips, cotton applicators, 32.14 antiseptics, nonprescription drugs, eye solution, and other 32.15 similar supplies used directly on the resident or patient in 32.16 providing medical services. 32.17 [EFFECTIVE DATE; INSTRUCTION TO REVISOR.] This section is 32.18 effective the day following final enactment. In the next 32.19 edition of Minnesota Statutes, the revisor of statutes shall 32.20 codify the amendment in this section in Minnesota Statutes, 32.21 section 297A.67, subdivision 6. 32.22 Sec. 4. Minnesota Statutes 2000, section 297A.25, 32.23 subdivision 11, is amended to read: 32.24 Subd. 11. [SALES TO GOVERNMENT.] The gross receipts from 32.25 all sales, including sales in which title is retained by a 32.26 seller or a vendor or is assigned to a third party under an 32.27 installment sale or lease purchase agreement under section 32.28 465.71, of tangible personal property to, and all storage, use 32.29 or consumption of such property by, the United States and its 32.30 agencies and instrumentalities, the University of Minnesota, 32.31 state universities, community colleges, technical colleges, 32.32 state academies, the Perpich center for arts education, an 32.33 instrumentality of a political subdivision that is accredited as 32.34 an optional/special function school by the North Central 32.35 Association of Colleges and Schools, school districts, public 32.36 libraries, public library systems, multicounty, multitype 33.1 library systems as defined in section 134.001, county law 33.2 libraries under chapter 134A, state agency libraries, the state 33.3 library under section 480.09, and the legislative reference 33.4 library are exempt. 33.5 As used in this subdivision, "school districts" means 33.6 public school entities and districts of every kind and nature 33.7 organized under the laws of the state of Minnesota, including, 33.8 without limitation, school districts, intermediate school 33.9 districts, education districts, service cooperatives, secondary 33.10 vocational cooperative centers, special education cooperatives, 33.11 joint purchasing cooperatives, telecommunication cooperatives, 33.12 regional management information centers, and any instrumentality 33.13 of a school district, as defined in section 471.59. 33.14 Sales exempted by this subdivision include sales under 33.15 section 297A.01, subdivision 3, paragraph (f). 33.16 Sales to hospitals and nursing homes owned and operated by 33.17 political subdivisions of the state of tangible personal 33.18 property and taxable services used at or by the hospitals and 33.19 nursing homes are exempt under this subdivision. 33.20 Sales of supplies and equipment used in the operation of an 33.21 ambulance service owned and operated by a political subdivision 33.22 of the state are exempt under this subdivision provided that the 33.23 supplies and equipment are used in the course of providing 33.24 medical care. Sales to a political subdivision of repair and 33.25 replacement parts for emergency rescue vehicles and fire trucks 33.26 and apparatus are exempt under this subdivision. 33.27 Sales to a political subdivision of machinery and 33.28 equipment, except for motor vehicles, used directly for mixed 33.29 municipal solid waste management services at a solid waste 33.30 disposal facility as defined in section 115A.03, subdivision 10, 33.31 are exempt under this subdivision. 33.32 Sales to political subdivisions of chore and homemaking 33.33 services to be provided to elderly or disabled individuals are 33.34 exempt. 33.35 Sales to a town of gravel and of machinery, equipment, and 33.36 accessories, except motor vehicles, used exclusively for road 34.1 and bridge maintenance, and leases of motor vehicles exempt from 34.2 tax under section 297B.03, clause (10), are exempt. 34.3 Sales of telephone services to the department of 34.4 administration that are used to provide telecommunications 34.5 services through the intertechnologies revolving fund are exempt 34.6 under this subdivision. 34.7 This exemption shall not apply to building, construction or 34.8 reconstruction materials purchased by a contractor or a 34.9 subcontractor as a part of a lump-sum contract or similar type 34.10 of contract with a guaranteed maximum price covering both labor 34.11 and materials for use in the construction, alteration, or repair 34.12 of a building or facility. This exemption does not apply to 34.13 construction materials purchased by tax exempt entities or their 34.14 contractors to be used in constructing buildings or facilities 34.15 which will not be used principally by the tax exempt entities. 34.16 This exemption does not apply to the leasing of a motor 34.17 vehicle as defined in section 297B.01, subdivision 5, except for 34.18 leases entered into by the United States or its agencies or 34.19 instrumentalities. 34.20 The tax imposed on sales to political subdivisions of the 34.21 state under this section applies to all political subdivisions 34.22 other than those explicitly exempted under this subdivision, 34.23 notwithstanding section 115A.69, subdivision 6, 116A.25, 34.24 360.035, 458A.09, 458A.30, 458D.23, 469.101, subdivision 2, 34.25 469.127, 473.448, 473.545, or 473.608 or any other law to the 34.26 contrary enacted before 1992. 34.27 Sales exempted by this subdivision include sales made to 34.28 other states or political subdivisions of other states, if the 34.29 sale would be exempt from taxation if it occurred in that state, 34.30 but do not include sales under section 297A.01, subdivision 3, 34.31 paragraphs (c) and (e). 34.32 [EFFECTIVE DATE; INSTRUCTION TO REVISOR.] This section is 34.33 effective the day following final enactment. In the next 34.34 edition of Minnesota Statutes, the revisor of statutes shall 34.35 codify the amendment in this section in Minnesota Statutes, 34.36 section 297A.70, section 1. 35.1 Sec. 5. [REPEALER.] 35.2 Minnesota Statutes 2000, section 297B.032, is repealed. 35.3 [EFFECTIVE DATE.] This section is effective the day 35.4 following final enactment. 35.5 ARTICLE 4 35.6 SPECIAL TAXES 35.7 Section 1. Minnesota Statutes 2000, section 287.20, 35.8 subdivision 9, is amended to read: 35.9 Subd. 9. [REORGANIZATION.] "Reorganization" means the 35.10 transfer of substantially all of the assets of a corporation, a 35.11 limited liability company, or a partnership not in the usual or 35.12 regular course of business if at the time of the transfer the 35.13 transfer qualifies as: (i) a corporate reorganization under 35.14 section 368(a) of the Internal Revenue Code of 1986, as amended 35.15 through December 31, 2000; or (ii) a transfer pursuant to the 35.16 continuation of an existing partnership under section 708 of the 35.17 Internal Revenue Code of 1986, as amended through December 31, 35.18 2000. 35.19 [EFFECTIVE DATE.] This section is effective for taxable 35.20 deeds recorded or registered on or after July 1, 2001. 35.21 Sec. 2. Minnesota Statutes 2000, section 295.50, 35.22 subdivision 3, is amended to read: 35.23 Subd. 3. [GROSS REVENUES.] "Gross revenues" are total 35.24 amounts received in money or otherwise by: 35.25 (1) a hospital for patient services; 35.26 (2) a surgical center for patient services; 35.27 (3) a health care provider, other than a staff model health 35.28 carrier, for patient services; 35.29 (4) a wholesale drug distributor for sale or distribution 35.30 of legend drugs that are delivered in Minnesota by the wholesale 35.31 drug distributor, by common carrier, or by mail, unless the 35.32 legend drugs are delivered to another wholesale drug distributor 35.33 who sells legend drugs exclusively at wholesale. Legend drugs 35.34 do not include nutritional products as defined in Minnesota 35.35 Rules, part 9505.0325; and 35.36 (5) a staff model health plan company as gross premiums for 36.1 enrollees, copayments, deductibles, coinsurance, and fees for 36.2 patient servicescovered under its contracts with groups and36.3enrollees. 36.4 [EFFECTIVE DATE.] This section is effective the day 36.5 following final enactment. 36.6 Sec. 3. Minnesota Statutes 2000, section 295.50, 36.7 subdivision 15, is amended to read: 36.8 Subd. 15. [LEGEND DRUG.] "Legend drug" means alegenddrug 36.9as defined in section 151.01, subdivision 17that is required by 36.10 federal law to bear one of the following statements: "Caution: 36.11 Federal law prohibits dispensing without prescription" or "Rx 36.12 only". 36.13 [EFFECTIVE DATE.] This section is effective the day 36.14 following final enactment. 36.15 Sec. 4. Minnesota Statutes 2000, section 295.52, 36.16 subdivision 4, is amended to read: 36.17 Subd. 4. [USE TAX; PRESCRIPTION DRUGS.] (a) A person that 36.18 receives prescription drugs for resale or use in Minnesota, 36.19 other than from a wholesale drug distributor thatpaid theis 36.20 subject to tax under subdivision 3, is subject to a tax equal to 36.21 the price paid to the wholesale drug distributor multiplied by 36.22 the tax percentage specified in this section. Liability for the 36.23 tax is incurred when prescription drugs are received or 36.24 delivered in Minnesota by the person. 36.25 (b) A person that receives prescription drugs for use in 36.26 Minnesota from a nonresident pharmacy required to be registered 36.27 under section 151.19 is subject to a tax equal to the price paid 36.28 by the nonresident pharmacy to the wholesale drug distributor or 36.29 the price received by the nonresident pharmacy, whichever is 36.30 lower, multiplied by the tax percentage specified in this 36.31 section. Liability for the tax is incurred when prescription 36.32 drugs are received in Minnesota by the person. 36.33 [EFFECTIVE DATE.] This section is effective the day 36.34 following final enactment. 36.35 Sec. 5. Minnesota Statutes 2000, section 295.57, 36.36 subdivision 1, is amended to read: 37.1 Subdivision 1. [APPLICATION OF OTHER CHAPTERS.] Unless 37.2 specifically provided otherwise by sections 295.50 to 295.59, 37.3 the enforcement, interest,and penalty provisions under chapter37.4294,appealprovisions in sections 289A.43 and 289A.65, criminal 37.5 penaltiesin section 289A.63, and refunds provisions insection37.6289A.50chapter 289A, civil penalty provisions applicable to 37.7 withholding and sales taxes under section 289A.60, and 37.8 collection and rulemaking provisions under chapter 270, apply to 37.9a liability for thetaxes imposed under sections 295.50 to 37.10 295.59. 37.11 [EFFECTIVE DATE.] This section is effective the day 37.12 following final enactment. 37.13 Sec. 6. Minnesota Statutes 2000, section 296A.16, 37.14 subdivision 2, is amended to read: 37.15 Subd. 2. [FUEL USED IN OTHER VEHICLE; CLAIM FOR REFUND.] 37.16 Any person whoshall buybuys anduseuses gasoline for a 37.17 qualifying purpose other than use in motor vehicles, snowmobiles 37.18 except as provided in clause (2), or motorboats, or special fuel 37.19 for a qualifying purpose other than use in licensed motor 37.20 vehicles, and whoshall havepaid the tax directly or indirectly 37.21 through the amount of the tax being included in the price of the 37.22 gasoline or special fuel, or otherwise, shall be reimbursed and 37.23 repaid the amount of the tax paid upon filing with the 37.24 commissioner a claim for refund in the form and manner 37.25 prescribed by the commissioner, and containing the information 37.26 the commissioner shall require. By signing any such claim which 37.27 is false or fraudulent, the applicant shall be subject to the 37.28 penalties provided in this chapter for knowingly making a false 37.29 claim. The claim shall set forth the total amount of the 37.30 gasoline so purchased and used by the applicant other than in 37.31 motor vehicles, or special fuel purchased and used by the 37.32 applicant other than in licensed motor vehicles, and shall state 37.33 when and for what purpose it was used. When a claim contains an 37.34 error in computation or preparation, the commissioner is 37.35 authorized to adjust the claim in accordance with the evidence 37.36 shown on the claim or other information available to the 38.1 commissioner. The commissioner, on being satisfied that the 38.2 claimant is entitled to the payments, shall approve the claim 38.3 and transmit it to the commissioner of finance. The words 38.4 "gasoline" or "special fuel" as used in this subdivision do not 38.5 include aviation gasoline or special fuel for aircraft. 38.6 Gasoline or special fuel bought and used for a "qualifying 38.7 purpose" means: 38.8 (1) Gasoline or special fuel used in carrying on a trade or 38.9 business, used on a farm situated in Minnesota, and used for a 38.10 farming purpose. "Farm" and "farming purpose" have the meanings 38.11 given them in section 6420(c)(2), (3), and (4) of the Internal 38.12 Revenue Code of 1986, as amended through December 31, 1997. 38.13 (2) Gasoline or special fuel used for off-highway business 38.14 use. "Off-highway business use" means any use off the public 38.15 highway by a person in that person's trade, business, or 38.16 activity for the production of income. Off-highway business use 38.17 includes: 38.18 (i) use of a passenger snowmobile off the public highways 38.19 as part of the operations of a resort as defined in section 38.20 157.15, subdivision 11; and 38.21 (ii) use of gasoline or special fuel to operate a power 38.22 takeoff unit on a vehicle, but not including fuel consumed 38.23 during idling time. 38.24 Off-highway business use does not include: 38.25 (i) use as a fuel in a motor vehicle which, at the time of 38.26 use, is registered or is required to be registered for highway 38.27 use under the laws of any state or foreign country; or 38.28 (ii) use of a licensed motor vehicle fuel tank in lieu of a 38.29 separate storage tank for storing fuel to be used for a 38.30 qualifying purpose, as defined in this section. Fuel purchased 38.31 to be used for a qualifying purpose cannot be placed in the fuel 38.32 tank of a licensed motor vehicle and must be stored in a 38.33 separate supply tank. 38.34 (3) Gasoline or special fuel placed in the fuel tanks of 38.35 new motor vehicles, manufactured in Minnesota, and shipped by 38.36 interstate carrier to destinations in other states or foreign 39.1 countries. 39.2By July 1, 1998, the commissioner shall adopt rules that39.3determine the rates and percentages necessary to develop39.4formulas for calculating the refund under clause (2), item (ii).39.5 [EFFECTIVE DATE.] This section is effective the day 39.6 following final enactment. 39.7 Sec. 7. [296A.201] [ASSESSMENTS.] 39.8 Subdivision 1. [GENERAL RULE.] The commissioner may make 39.9 determinations, corrections, and assessments with respect to any 39.10 tax or fee under this chapter, including interest, additions to 39.11 taxes and fees, and assessable penalties. 39.12 Subd. 2. [COMMISSIONER FILED RETURNS.] If a taxpayer fails 39.13 to file a required return, the commissioner, from information in 39.14 the commissioner's possession or obtainable by the commissioner, 39.15 may make a return for the taxpayer. The return is prima facie 39.16 correct and valid. The commissioner may use statistical or 39.17 other sampling techniques consistent with generally accepted 39.18 auditing standards in examining returns or records and making 39.19 assessments. 39.20 Subd. 3. [ORDER OF ASSESSMENT; NOTICE AND DEMAND TO 39.21 TAXPAYER.] (a) If a return has been filed and the commissioner 39.22 determines that the tax or fee disclosed by the return is 39.23 different than the tax or fee determined by the examination, the 39.24 commissioner shall send an order of assessment to the taxpayer. 39.25 If no return has been filed, the commissioner may make a return 39.26 for the taxpayer under subdivision 2 or may send an order of 39.27 assessment under this subdivision. The order must explain the 39.28 basis for the assessment and must explain the taxpayer's appeal 39.29 rights. An order of assessment is final when made but may be 39.30 reconsidered by the commissioner under section 296A.25. 39.31 (b) Penalties under this chapter are not imposed and no 39.32 collection action can be taken, including the filing of liens 39.33 under section 270.69, if the amount shown on the order is paid 39.34 to the commissioner: 39.35 (1) within 60 days after notice of the amount and demand 39.36 for its payment have been mailed to the taxpayer by the 40.1 commissioner; or 40.2 (2) if an administrative appeal is filed under this 40.3 chapter, or a tax court appeal is filed under chapter 271, 40.4 within 60 days following final determination of the appeal if 40.5 the appeal is based upon a constitutional challenge to the tax 40.6 or fee, and if not, when the decision of the tax court is made. 40.7 Subd. 4. [ERRONEOUS REFUNDS OR CREDITS.] An erroneous 40.8 refund or credit is considered an underpayment of tax or fee on 40.9 the date made. An assessment of a deficiency arising out of an 40.10 erroneous refund may be made at any time within two years from 40.11 the making of the refund. If part of the refund was induced by 40.12 fraud or misrepresentation of a material fact, the assessment 40.13 may be made at any time. 40.14 Subd. 5. [ASSESSMENT PRESUMED VALID.] A return or 40.15 assessment of tax or fee made by the commissioner is prima facie 40.16 correct and valid. The taxpayer has the burden of establishing 40.17 its incorrectness or invalidity in any related action or 40.18 proceeding. 40.19 Subd. 6. [AGGREGATE REFUND OR ASSESSMENT.] The 40.20 commissioner, on examining returns of a taxpayer for more than 40.21 one year or period, may issue one order covering the period 40.22 under examination that reflects the aggregate refund or 40.23 additional tax or fee due. 40.24 Subd. 7. [SUFFICIENCY OF NOTICE.] An order of assessment, 40.25 sent postage prepaid by United States mail to the taxpayer at 40.26 the taxpayer's last known address, is sufficient even if the 40.27 taxpayer is deceased or is under a legal disability, or, in the 40.28 case of a corporation, even if the corporation has terminated 40.29 its existence, unless the department has been provided with a 40.30 new address by a party authorized to receive notices of 40.31 assessment. 40.32 [EFFECTIVE DATE.] This section is effective the day 40.33 following final enactment. 40.34 Sec. 8. Minnesota Statutes 2000, section 296A.21, 40.35 subdivision 1, is amended to read: 40.36 Subdivision 1. [GENERALRULERULES.] (a) The commissioner 41.1 shall make determinations, corrections,andassessments, and 41.2 refunds with respect to taxes and fees under this chapter, 41.3 including interest, additions to taxes, and assessable 41.4 penalties. Except as otherwise provided in this section, the 41.5 amount of taxes assessable must be assessed within 3-1/2 years 41.6 after the date the return is filed. 41.7 (b) A claim for a refund of an overpayment of state tax or 41.8 fees must be filed within 3-1/2 years from the date prescribed 41.9 for filing the return, plus any extension of time granted for 41.10 filing the return, but only if filed within the extended time; 41.11 or the claim must be filed within one year from the date of an 41.12 order assessing tax or fees, or from the date of a return filed 41.13 by the commissioner, upon payment in full of the tax, fees, 41.14 penalties, and interest shown on the order or return, whichever 41.15 period expires later. 41.16 [EFFECTIVE DATE.] This section is effective the day 41.17 following final enactment. 41.18 Sec. 9. Minnesota Statutes 2000, section 296A.21, 41.19 subdivision 4, is amended to read: 41.20 Subd. 4. [TIME LIMIT FORREPAYMENTCERTAIN REFUNDS.]No41.21repaymentNotwithstanding subdivision 1, paragraph (b), no 41.22 refund under section 296A.16, subdivision 2, shall be made 41.23 unless the claim for refund and invoiceshall beare filed with 41.24 the commissioner within one year from the date of purchase.The41.25postmark on the envelope in which a written claim is mailed41.26shall determine its date of filing.41.27 [EFFECTIVE DATE.] This section is effective the day 41.28 following final enactment. 41.29 Sec. 10. Minnesota Statutes 2000, section 297F.16, 41.30 subdivision 4, is amended to read: 41.31 Subd. 4. [ERRONEOUS REFUNDSOR CREDITS.] An erroneous 41.32 refundor creditis considered an underpayment of tax on the 41.33 date made. An assessment of a deficiency arising out of an 41.34 erroneous refundor creditmust be made within3-1/2 years from41.35the date prescribed for filing the return, plus any extension of41.36time granted for filing the return, but only if filed within the42.1extended time, or two years from the time the tax is paid in42.2full, whichever period expires latertwo years from the making 42.3 of the refund. If part of the refund was induced by fraud or 42.4 misrepresentation of a material fact, the assessment may be made 42.5 at any time. 42.6 [EFFECTIVE DATE.] This section is effective the day 42.7 following final enactment. 42.8 Sec. 11. Minnesota Statutes 2000, section 297G.15, 42.9 subdivision 4, is amended to read: 42.10 Subd. 4. [ERRONEOUS REFUNDSOR CREDITS.] An erroneous 42.11 refundor creditis considered an underpayment of tax on the 42.12 date made. An assessment of a deficiency arising out of an 42.13 erroneous refundor creditmust be made within3-1/2 years from42.14the date prescribed for filing the return, plus any extension of42.15time granted for filing the return, but only if filed within the42.16extended time, or two years from the time the tax is paid in42.17full, whichever period expires latertwo years from the making 42.18 of the refund. If part of the refund was induced by fraud or 42.19 misrepresentation of a material fact, the assessment may be made 42.20 at any time. 42.21 [EFFECTIVE DATE.] This section is effective the day 42.22 following final enactment. 42.23 Sec. 12. Minnesota Statutes 2000, section 297G.16, 42.24 subdivision 5, is amended to read: 42.25 Subd. 5. [TIME LIMIT FOR REFUNDS.] Unless otherwise 42.26 provided in this chapter, a claim for a refund of an overpayment 42.27 of tax must be filed within 3-1/2 years from the date prescribed 42.28 for filing the return, plus any extension of time granted for 42.29 filing the return, but only if filed within the extended time, 42.30or two years from the time the tax is paid in full, whichever42.31period expires later. Claimants under this section are subject42.32to the notice requirements of section 289A.38, subdivision 7or 42.33 within one year from the date of an order assessing tax or from 42.34 the date of a return filed by the commissioner, upon payment in 42.35 full of the tax, penalties, and interest shown on the order or 42.36 return made by the commissioner, whichever period expires later. 43.1 [EFFECTIVE DATE.] This section is effective for returns 43.2 becoming due or orders assessing tax issued on or after the day 43.3 following final enactment. 43.4 Sec. 13. Minnesota Statutes 2000, section 297G.16, 43.5 subdivision 7, is amended to read: 43.6 Subd. 7. [TIME LIMIT FOR A BAD DEBT DEDUCTION.] Claims for 43.7 refund must be filed with the commissioner within one year of 43.8 the filing of the taxpayer's income tax return containing the 43.9 bad debt deduction that is being claimed. Claimants under this 43.10 subdivision are subject to the notice requirements of section 43.11 289A.38, subdivision 7. 43.12 [EFFECTIVE DATE.] This section is effective the day 43.13 following final enactment. 43.14 Sec. 14. [REPEALER.] 43.15 Minnesota Statutes 2000, section 296A.16, subdivision 6, is 43.16 repealed. 43.17 [EFFECTIVE DATE.] This section is effective the day 43.18 following final enactment. 43.19 ARTICLE 5 43.20 MISCELLANEOUS 43.21 Section 1. Minnesota Statutes 2000, section 144.3831, 43.22 subdivision 2, is amended to read: 43.23 Subd. 2. [COLLECTION AND PAYMENT OF FEE.] The public water 43.24 supply described in subdivision 1 shall: 43.25 (1) collect the fees assessed on its service connections; 43.26 (2) pay the department ofrevenuehealth an amount 43.27 equivalent to the fees based on the total number of service 43.28 connections. The service connections for each public water 43.29 supply described in subdivision 1 shall be verified every four 43.30 years by the department of health; and 43.31 (3) pay one-fourth of the total yearly fee to the 43.32 department ofrevenuehealth each calendar quarter. The first 43.33 quarterly payment is due on or before September 30, 1992. In 43.34 lieu of quarterly payments, a public water supply described in 43.35 subdivision 1 with fewer than 50 service connections may make a 43.36 single annual payment by June 30 each year, starting in 1993. 44.1 The fees payable to the department ofrevenuehealth shall be 44.2 deposited in the state treasury as nondedicated state government 44.3 special revenue fund revenues. 44.4 [EFFECTIVE DATE.] This section is effective the day 44.5 following final enactment. 44.6 Sec. 2. Minnesota Statutes 2000, section 270.06, is 44.7 amended to read: 44.8 270.06 [POWERS AND DUTIES.] 44.9 The commissioner of revenue shall: 44.10 (1) have and exercise general supervision over the 44.11 administration of the assessment and taxation laws of the state, 44.12 over assessors, town, county, and city boards of review and 44.13 equalization, and all other assessing officers in the 44.14 performance of their duties, to the end that all assessments of 44.15 property be made relatively just and equal in compliance with 44.16 the laws of the state; 44.17 (2) confer with, advise, and give the necessary 44.18 instructions and directions to local assessors and local boards 44.19 of review throughout the state as to their duties under the laws 44.20 of the state; 44.21 (3) direct proceedings, actions, and prosecutions to be 44.22 instituted to enforce the laws relating to the liability and 44.23 punishment of public officers and officers and agents of 44.24 corporations for failure or negligence to comply with the 44.25 provisions of the laws of this state governing returns of 44.26 assessment and taxation of property, and cause complaints to be 44.27 made against local assessors, members of boards of equalization, 44.28 members of boards of review, or any other assessing or taxing 44.29 officer, to the proper authority, for their removal from office 44.30 for misconduct or negligence of duty; 44.31 (4) require county attorneys to assist in the commencement 44.32 of prosecutions in actions or proceedings for removal, 44.33 forfeiture and punishment for violation of the laws of this 44.34 state in respect to the assessment and taxation of property in 44.35 their respective districts or counties; 44.36 (5) require town, city, county, and other public officers 45.1 to report information as to the assessment of property, 45.2 collection of taxes received from licenses and other sources, 45.3 and such other information as may be needful in the work of the 45.4 department of revenue, in such form and upon such blanks as the 45.5 commissioner may prescribe; 45.6 (6) require individuals, copartnerships, companies, 45.7 associations, and corporations to furnish information concerning 45.8 their capital, funded or other debt, current assets and 45.9 liabilities, earnings, operating expenses, taxes, as well as all 45.10 other statements now required by law for taxation purposes; 45.11 (7) subpoena witnesses, at a time and place reasonable 45.12 under the circumstances, to appear and give testimony, and to 45.13 produce books, records, papers and documents for inspection and 45.14 copying relating to any matter which the commissioner may have 45.15 authority to investigate or determine; 45.16 (8) issue a subpoena which does not identify the person or 45.17 persons with respect to whose liability the subpoena is issued, 45.18 but only if (a) the subpoena relates to the investigation of a 45.19 particular person or ascertainable group or class of persons, 45.20 (b) there is a reasonable basis for believing that such person 45.21 or group or class of persons may fail or may have failed to 45.22 comply with any law administered by the commissioner, (c) the 45.23 information sought to be obtained from the examination of the 45.24 records (and the identity of the person or persons with respect 45.25 to whose liability the subpoena is issued) is not readily 45.26 available from other sources, (d) the subpoena is clear and 45.27 specific as to the information sought to be obtained, and (e) 45.28 the information sought to be obtained is limited solely to the 45.29 scope of the investigation. Provided further that the party 45.30 served with a subpoena which does not identify the person or 45.31 persons with respect to whose tax liability the subpoena is 45.32 issued shall have the right, within 20 days after service of the 45.33 subpoena, to petition the district court for the judicial 45.34 district in which lies the county in which that party is located 45.35 for a determination as to whether the commissioner of revenue 45.36 has complied with all the requirements in (a) to (e), and thus, 46.1 whether the subpoena is enforceable. If no such petition is 46.2 made by the party served within the time prescribed, the 46.3 subpoena shall have the force and effect of a court order; 46.4 (9) cause the deposition of witnesses residing within or 46.5 without the state, or absent therefrom, to be taken, upon notice 46.6 to the interested party, if any, in like manner that depositions 46.7 of witnesses are taken in civil actions in the district court, 46.8 in any matter which the commissioner may have authority to 46.9 investigate or determine; 46.10 (10) investigate the tax laws of other states and countries 46.11 and to formulate and submit to the legislature such legislation 46.12 as the commissioner may deem expedient to prevent evasions of 46.13 assessment and taxing laws, and secure just and equal taxation 46.14 and improvement in the system of assessment and taxation in this 46.15 state; 46.16 (11) consult and confer with the governor upon the subject 46.17 of taxation, the administration of the laws in regard thereto, 46.18 and the progress of the work of the department of revenue, and 46.19 furnish the governor, from time to time, such assistance and 46.20 information as the governor may require relating to tax matters; 46.21 (12) transmit to the governor, on or before the third 46.22 Monday in December of each even-numbered year, and to each 46.23 member of the legislature, on or before November 15 of each 46.24 even-numbered year, the report of the department of revenue for 46.25 the preceding years, showing all the taxable property in the 46.26 state and the value of the same, in tabulated form; 46.27 (13) inquire into the methods of assessment and taxation 46.28 and ascertain whether the assessors faithfully discharge their 46.29 duties, particularly as to their compliance with the laws 46.30 requiring the assessment of all property not exempt from 46.31 taxation; 46.32 (14) administer and enforce the assessment and collection 46.33 of state taxes and fees, including the use of any remedy 46.34 available to nongovernmental creditors, and, from time to time, 46.35 make, publish, and distribute rules for the administration and 46.36 enforcement of assessments and fees administered by the 47.1 commissioner and state tax laws. The rules have the force of 47.2 law; 47.3 (15) prepare blank forms for the returns required by state 47.4 tax law and distribute them throughout the state, furnishing 47.5 them subject to charge on application; 47.6 (16) prescribe rules governing the qualification and 47.7 practice of agents, attorneys, or other persons representing 47.8 taxpayers before the commissioner. The rules may require that 47.9 those persons, agents, and attorneys show that they are of good 47.10 character and in good repute, have the necessary qualifications 47.11 to give taxpayers valuable services, and are otherwise competent 47.12 to advise and assist taxpayers in the presentation of their case 47.13 before being recognized as representatives of taxpayers. After 47.14 due notice and opportunity for hearing, the commissioner may 47.15 suspend anddisbarbar from further practice before the 47.16 commissioner any person, agent, or attorney who is shown to be 47.17 incompetent or disreputable, who refuses to comply with the 47.18 rules, or who with intent to defraud, willfully or knowingly 47.19 deceives, misleads, or threatens a taxpayer or prospective 47.20 taxpayer, by words, circular, letter, or by advertisement. This 47.21 clause does not curtail the rights of individuals to appear in 47.22 their own behalf or partners or corporations' officers to appear 47.23 in behalf of their respective partnerships or corporations; 47.24 (17) appoint agents as the commissioner considers necessary 47.25 to make examinations and determinations. The agents have the 47.26 rights and powers conferred on the commissioner to subpoena, 47.27 examine, and copy books, records, papers, or memoranda, subpoena 47.28 witnesses, administer oaths and affirmations, and take 47.29 testimony. In addition to administrative subpoenas of the 47.30 commissioner and the agents, upon demand of the commissioner or 47.31 an agent, the court administrator of any district court shall 47.32 issue a subpoena for the attendance of a witness or the 47.33 production of books, papers, records, or memoranda before the 47.34 agent for inspection and copying. Disobedience of a court 47.35 administrator's subpoena shall be punished by the district court 47.36 of the district in which the subpoena is issued, or in the case 48.1 of a subpoena issued by the commissioner or an agent, by the 48.2 district court of the district in which the party served with 48.3 the subpoena is located, in the same manner as contempt of the 48.4 district court; 48.5 (18) appoint and employ additional help, purchase supplies 48.6 or materials, or incur other expenditures in the enforcement of 48.7 state tax laws as considered necessary. The salaries of all 48.8 agents and employees provided for in this chapter shall be fixed 48.9 by the appointing authority, subject to the approval of the 48.10 commissioner of administration; 48.11 (19) execute and administer any agreement with the 48.12 secretary of the treasury of the United States or a 48.13 representative of another state regarding the exchange of 48.14 information and administration of the tax laws; 48.15 (20) administer and enforce the provisions of sections 48.16 325D.30 to 325D.42, the Minnesota Unfair Cigarette Sales Act; 48.17 (21) authorize the use of unmarked motor vehicles to 48.18 conduct seizures or criminal investigations pursuant to the 48.19 commissioner's authority; and 48.20 (22) exercise other powers and perform other duties 48.21 required of or imposed upon the commissioner of revenue by law. 48.22 [EFFECTIVE DATE.] This section is effective the day 48.23 following final enactment.