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SF 552

1st Engrossment - 88th Legislature (2013 - 2014) Posted on 04/29/2013 08:42am

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Current Version - 1st Engrossment

A bill for an act
relating to financing and operation of state and local government; making
changes to individual income, corporate franchise, property, sales and use, estate,
mineral, tobacco, local, and other taxes and tax-related provisions; modifying the
property tax refund for renters; changing property tax aids and credits; modifying
pension aids; providing pension funding; changing provisions of the Sustainable
Forest Incentive Act; modifying definitions and distributions for property
taxes; providing exemptions; modifying education aids and levies; imposing a
sports memorabilia gross receipts tax; changing tax rates on tobacco; providing
reimbursement for certain property tax abatements; modifying the small business
investment tax credit; making changes to additions and subtractions from federal
taxable income; changing rates for individuals, estates, and trusts; providing
income tax credits; modifying estate tax exclusions for qualifying small business
and farm property; expanding the sales tax base and reducing the sales tax
rate; modifying the definition of sale and purchase; changing the tax rate and
modifying provisions for the rental motor vehicle tax; providing for multiple
points of use certificates; modifying exemptions; authorizing local sales taxes;
authorizing economic development powers; providing authority, organization,
powers, and duties for development of a Destination Medical Center; authorizing
state infrastructure aid; modifying the distribution of taconite production taxes;
authorizing taconite production tax bonds for grants to school districts; modifying
and providing provisions for public finance; providing funding for capitol
renovations; modifying the definition of market value for tax, debt, and other
purposes; making conforming, policy, and technical changes to tax provisions;
requiring studies and reports; appropriating money;amending Minnesota Statutes
2012, sections 13.4965, subdivision 3; 16A.46; 16C.03, subdivision 18; 38.18;
40A.15, subdivision 2; 69.011, subdivision 1; 69.021, subdivisions 7, 8, by
adding a subdivision; 88.51, subdivision 3; 103B.102, subdivision 3; 103B.245,
subdivision 3; 103B.251, subdivision 8; 103B.335; 103B.3369, subdivision 5;
103B.635, subdivision 2; 103B.691, subdivision 2; 103C.501, subdivision 4;
103D.905, subdivisions 2, 3, 8; 103F.405, subdivision 1; 116J.8737, subdivisions
1, 2, 5, 7, 9, 12, by adding a subdivision; 117.025, subdivision 7; 118A.04,
subdivision 3; 118A.05, subdivision 5; 123A.455, subdivision 1; 124D.11,
subdivision 1; 126C.10, subdivisions 1, 27, by adding subdivisions; 126C.13,
subdivision 4, by adding a subdivision; 126C.17; 126C.48, subdivision 8;
127A.48, subdivision 1; 138.053; 144F.01, subdivision 4; 162.07, subdivisions
3, 4; 163.04, subdivision 3; 163.06, subdivision 6; 165.10, subdivision 1;
168.012, subdivision 9, by adding a subdivision; 237.52, subdivision 3, by
adding a subdivision; 270.077; 270.41, subdivision 5; 270B.01, subdivision
8; 270B.12, subdivision 4; 270C.03, subdivision 1; 270C.34, subdivision 1;
270C.38, subdivision 1; 270C.42, subdivision 2; 270C.56, subdivision 1; 272.01,
subdivision 2; 272.02, subdivisions 10, 97, by adding subdivisions; 272.025,
subdivision 1; 272.03, subdivision 9, by adding subdivisions; 273.032; 273.11,
subdivision 1; 273.114, subdivision 6; 273.117; 273.124, subdivisions 3a, 13,
14, 21; 273.128, by adding a subdivision; 273.13, subdivisions 21b, 23, 25;
273.1315, subdivisions 1, 2; 273.1398, subdivisions 3, 4; 273.19, subdivision 1;
273.372, subdivision 4; 273.39; 275.011, subdivision 1; 275.025, subdivisions 1,
2; 275.077, subdivision 2; 275.71, subdivision 4; 276.04, subdivision 2; 276A.01,
subdivisions 10, 12, 13, 15; 276A.06, subdivision 10; 279.06, subdivision 1;
279.37, subdivisions 1a, 2; 281.14; 281.17; 287.05, by adding a subdivision;
287.08; 287.20, by adding a subdivision; 287.23, subdivision 1; 287.385,
subdivision 7; 289A.08, subdivision 3; 289A.10, by adding a subdivision;
289A.12, subdivision 14, by adding a subdivision; 289A.18, by adding a
subdivision; 289A.20, subdivisions 3, 4, by adding a subdivision; 289A.26,
subdivisions 3, 4, 7, 9; 289A.55, subdivision 9; 289A.60, subdivision 4; 290.01,
subdivisions 6b, 19b, 19c, 19d; 290.06, subdivisions 1, 2c, 2d, by adding a
subdivision; 290.0677, subdivisions 1, 1a, 2; 290.068, subdivision 1; 290.0681,
subdivisions 1, 3, 4, 5, 7, 10; 290.091, subdivision 2; 290.0921, subdivisions
1, 3; 290.0922, subdivision 1; 290.095, subdivision 2; 290.17, subdivision 4;
290.191, subdivision 5; 290.21, subdivision 4; 290.9705, subdivision 1; 290A.03,
subdivision 3; 290A.04, subdivisions 2a, 4; 290A.25; 290B.04, subdivision 2;
290C.02, subdivision 6; 290C.03; 290C.055; 290C.07; 291.03, subdivisions 8, 9,
10, 11; 296A.01, subdivision 19; 296A.09, subdivision 2; 296A.17, subdivision
3; 296A.22, subdivisions 1, 3; 297A.61, subdivisions 3, 4, 10, 17a, 25, 38, 45,
by adding subdivisions; 297A.62, subdivisions 1, 1a; 297A.64, subdivision
1; 297A.65; 297A.66, subdivisions 1, 3, by adding a subdivision; 297A.665;
297A.668, by adding a subdivision; 297A.67, subdivision 7, by adding a
subdivision; 297A.68, subdivisions 2, 5, 10, 42, by adding a subdivision;
297A.70, subdivisions 2, 4, 5, 7, 13, 14, by adding subdivisions; 297A.71, by
adding subdivisions; 297A.75, subdivisions 1, 2, 3; 297A.815, subdivision
3; 297A.82, subdivision 4, by adding a subdivision; 297A.99, subdivision
1; 297B.11; 297E.02, subdivisions 1, 6; 297E.14, subdivision 7; 297F.01,
subdivisions 19, 23, by adding subdivisions; 297F.05, subdivisions 1, 3, 4, by
adding subdivisions; 297F.09, subdivision 9; 297F.18, subdivision 7; 297F.24,
subdivision 1; 297F.25, subdivision 1; 297G.04, subdivision 2; 297G.09,
subdivision 8; 297G.17, subdivision 7; 297I.05, subdivisions 7, 11, 12; 297I.30,
subdivisions 1, 2; 297I.80, subdivision 1; 298.01, subdivisions 3, 3b; 298.018;
298.17; 298.227, as amended; 298.24, subdivision 1; 298.28, subdivisions 4, 6;
325F.781, subdivision 1; 349.166; 353G.08, subdivision 2; 360.531; 360.66;
365.025, subdivision 4; 366.095, subdivision 1; 366.27; 368.01, subdivision
23; 368.47; 370.01; 373.01, subdivision 1; 373.40, subdivisions 1, 2, 4;
375.167, subdivision 1; 375.18, subdivision 3; 375.555; 383A.80, subdivision 4;
383B.152; 383B.245; 383B.73, subdivision 1; 383B.80, subdivision 4; 383D.41,
by adding a subdivision; 383E.20; 383E.23; 385.31; 394.36, subdivision 1;
398A.04, subdivision 8; 401.05, subdivision 3; 403.02, subdivision 21, by
adding subdivisions; 403.06, subdivision 1a; 403.11, subdivision 1, by adding a
subdivision; 410.32; 412.221, subdivision 2; 412.301; 428A.02, subdivision 1;
428A.101; 428A.21; 430.102, subdivision 2; 435.19, subdivision 2, by adding a
subdivision; 447.10; 450.19; 450.25; 458A.10; 458A.31, subdivision 1; 465.04;
469.033, subdivision 6; 469.034, subdivision 2; 469.053, subdivisions 4, 4a, 6;
469.107, subdivision 1; 469.174, subdivision 2, by adding subdivisions; 469.175,
subdivision 3; 469.176, subdivisions 1b, 4b, 4c, 4m, 6, by adding a subdivision;
469.1763, subdivisions 3, 4; 469.177, subdivision 1a; 469.180, subdivision 2;
469.187; 469.190, by adding a subdivision; 469.206; 469.319, subdivision 4;
469.340, subdivision 4; 471.24; 471.571, subdivisions 1, 2; 471.73; 473.325,
subdivision 2; 473.606, subdivision 3; 473.629; 473.661, subdivision 3; 473.667,
subdivision 9; 473.671; 473.711, subdivision 2a; 473F.02, subdivisions 12, 14,
15, 23; 473F.08, subdivision 10, by adding a subdivision; 474A.04, subdivision
1a; 474A.062; 474A.091, subdivision 3a; 475.521, subdivisions 1, 2, 4;
475.53, subdivisions 1, 3, 4; 475.58, subdivisions 2, 3b; 475.73, subdivision 1;
477A.011, subdivisions 20, 30, 32, 34, 42, by adding subdivisions; 477A.0124,
subdivision 2; 477A.013, subdivisions 1, 8, 9, by adding a subdivision; 477A.03,
subdivisions 2a, 2b, by adding a subdivision; 477A.11, subdivisions 3, 4, by
adding subdivisions; 477A.12, subdivisions 1, 2, 3; 477A.14, subdivision 1, by
adding a subdivision; 641.23; 641.24; 645.44, by adding a subdivision; Laws
1971, chapter 773, section 1, subdivision 2, as amended; Laws 1988, chapter 645,
section 3, as amended; Laws 1993, chapter 375, article 9, section 46, subdivisions
2, as amended, 5, as amended; Laws 1998, chapter 389, article 8, section 43,
subdivisions 1, 3, as amended, 5, as amended; Laws 1999, chapter 243, article 6,
section 11; Laws 2002, chapter 377, article 3, section 25, as amended; Laws 2005,
First Special Session chapter 3, article 5, section 37, subdivisions 2, 4; Laws 2006,
chapter 259, article 11, section 3, as amended; Laws 2008, chapter 366, article 5,
sections 26; 33; 34, as amended; article 7, section 19, subdivision 3, as amended;
Laws 2010, chapter 216, sections 11; 55; Laws 2010, chapter 389, article 1,
section 12; proposing coding for new law in Minnesota Statutes, chapters 116J;
124D; 136A; 270C; 273; 287; 290; 295; 403; 469; 477A; repealing Minnesota
Statutes 2012, sections 16A.725; 256.9658; 272.69; 273.11, subdivisions 1a,
22; 275.025, subdivision 4; 276A.01, subdivision 11; 289A.60, subdivision 31;
290.01, subdivision 6b; 290.0921, subdivision 7; 290.171; 290.173; 290.174;
297A.61, subdivision 27; 297A.66, subdivision 4; 297A.67, subdivision
8; 297A.68, subdivisions 9, 22, 35; 473F.02, subdivision 13; 477A.011,
subdivisions 2a, 19, 21, 29, 31, 32, 33, 36, 39, 40, 41, 42; 477A.013, subdivisions
11, 12; 477A.0133; 477A.0134; Minnesota Rules, part 8130.0500, subpart 2.

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

ARTICLE 1

AIDS AND CREDITS

Section 1.

Minnesota Statutes 2012, section 69.021, is amended by adding a
subdivision to read:


Subd. 12.

Pension aid accounts.

(a) $745,000 is appropriated from the general
fund, in fiscal year 2015 and each year thereafter, to the commissioner of revenue for the
purposes of pension aid. The commissioner shall administer the account and allocate
money in the account as follows:

(1) $130,065 as supplemental state pension funding paid to the executive director of
the Public Employees Retirement Association for deposit in the public employees police
and fire retirement fund established by section 353.65, subdivision 1;

(2) $64,935 to municipalities employing firefighters with retirement coverage by the
public employees police and fire retirement plan, allocated in proportion to the relationship
that the preceding June 30 number of firefighters employed by each municipality who have
public employees police and fire retirement plan coverage bears to the total preceding
June 30 number of municipal firefighters covered by the public employees police and
fire retirement plan; and

(3) $550,000 for municipalities other than the municipalities receiving a
disbursement under clause (2) which qualified to receive fire state aid in that calendar year,
allocated in proportion to the most recent amount of fire state aid paid under subdivision 7
for the municipality bears to the most recent total fire state aid for all municipalities other
than the municipalities receiving a disbursement under clause (2) paid under subdivision
7, with the allocated amount for fire departments participating in the voluntary statewide
lump-sum volunteer firefighter retirement plan paid to the executive director of the Public
Employees Retirement Association for deposit in the fund established by section 353G.02,
subdivision 3, and credited to the respective account and with the balance paid to the
treasurer of each municipality for transmittal within 30 days of receipt to the treasurer of
the applicable volunteer firefighter relief association for deposit in its special fund.

(b) $1,550,00 is appropriated from the general fund in fiscal year 2015 to the
commissioner of revenue for the purposes of pension aid. The commissioner shall
administer the account and allocate money in the account as follows:

(1) one-third to be distributed as police state aid as provided under subdivision 7a; and

(2) two-thirds to be apportioned, on the basis of the number of active police officers
certified for police state aid receipt under section 69.011, subdivisions 2 and 2b, between:

(i) the executive director of the Public Employees Retirement Association for
deposit as a supplemental state pension funding aid in the public employees police and fire
retirement fund established by section 353.65, subdivision 1; and

(ii) the executive director of the Minnesota State Retirement System for deposit as a
supplemental state pension funding aid in the state patrol retirement fund.

(c) On or before September 1, annually, the executive director of the Public
Employees Retirement Association shall report to the commissioner the following:

(1) the municipalities which employ firefighters with retirement coverage by the
public employees police and fire retirement plan;

(2) the number of firefighters with public employees police and fire retirement plan
employed by each municipality;

(3) the fire departments covered by the voluntary statewide lump-sum volunteer
firefighter retirement plan; and

(4) any other information requested by the commissioner to administer the surcharge
fire pension aid account.

(d) For this subdivision, (i) the number of firefighters employed by a municipality
who have public employees police and fire retirement plan coverage means the number
of firefighters with public employees police and fire retirement plan coverage that were
employed by the municipality for not less than 30 hours per week for a minimum of six
months prior to December 31 preceding the date of the payment under this section and, if
the person was employed for less than the full year, prorated to the number of full months
employed; and, (ii) the number of active police officers certified for police state aid receipt
under section 69.011, subdivisions 2 and 2b means, for each municipality, the number of
police officers meeting the definition of peace officer in section 69.011, subdivision 1,
counted as provided and limited by section 69.011, subdivisions 2 and 2b.

(e) The payments under this section shall be made on October 1 each year, based on
the amount in the temporary fire pension aid account and the amount in the temporary
police pension aid account on the preceding June 30, with interest at 1 percent for each
month, or portion of a month, that the amount remains unpaid after October 1. The
amounts necessary to make the payments under this subdivision are annually appropriated
to the commissioner from the temporary fire and police pension aid accounts. Any
necessary adjustments shall be made to subsequent payments.

(f) The provisions of this chapter that prevent municipalities and relief associations
from being eligible for, or receiving state aid under this chapter until the applicable
financial reporting requirements have been complied with, apply to the amounts payable
to municipalities and relief associations under this subdivision.

(g) The appropriations in paragraphs (a) and (b) end on (i) December 31, 2020, or
(ii), if earlier, on the December 31 next following the actuarial valuation date on which the
assets of the retirement plan on a market value equals or exceeds 90 percent of the total
actuarial accrued liabilities of the retirement plan as disclosed in an actuarial valuation
prepared under Minnesota Statutes, section 356.215, and the Standards for Actuarial Work
promulgated by the Legislative Commission on Pensions and Retirement, for the State
Patrol retirement plan or the public employees police and fire retirement plan, whichever
occurs last.

(h) The base for fiscal year 2016 and thereafter under paragraph (a) is $7,450,000
and the distribution in clauses (1) to (3) are adjusted accordingly. The base for fiscal year
2016 and thereafter, under paragraph (b), is $15,500,000.

EFFECTIVE DATE.

This section is effective beginning in the fiscal year beginning
July 1, 2014.

Sec. 2.

Minnesota Statutes 2012, section 477A.011, subdivision 30, is amended to read:


Subd. 30.

Pre-1940 housing percentage.

(a) Except as provided in paragraph (b),
"pre-1940 housing percentage" for a city is 100 times the most recent federal census count
by the United States Bureau of the Census of all housing units in the city built before
1940, divided by the total number of all housing units in the city. Housing units includes
both occupied and vacant housing units as defined by the federal census.

(b) For the city of East Grand Forks only, "pre-1940 housing percentage" is equal
to 100 times the 1990 federal census count of all housing units in the city built before
1940, divided by the most recent counts by the United States Bureau of the Census of all
housing units in the city. Housing units includes both occupied and vacant housing units
as defined by the federal census.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2014 and thereafter.

Sec. 3.

Minnesota Statutes 2012, section 477A.011, is amended by adding a
subdivision to read:


Subd. 30a.

Percent of housing built between 1940 and 1970.

"Percent of housing
built between 1940 and 1970" is equal to 100 times the most recent count by the United
States Bureau of the Census of all housing units in the city built after 1939 but before
1970, divided by the total number of all housing units in the city. Housing units includes
both occupied and vacant housing units as defined by the federal census.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2014 and thereafter.

Sec. 4.

Minnesota Statutes 2012, section 477A.011, subdivision 34, is amended to read:


Subd. 34.

City revenue need.

(a) For a city with a population equal to or greater
than 2,500 10,000, "city revenue need" is the greater of 285 or 1.15 times the sum of (1)
5.0734098 4.59 times the pre-1940 housing percentage; plus (2) 19.141678 times the
population decline percentage
0.622 times the percent of housing built between 1940 and
1970
; plus (3) 2504.06334 times the road accidents factor 169.415 times the jobs per
capita
; plus (4) 355.0547; minus (5) the metropolitan area factor; minus (6) 49.10638
times the household size
the sparsity adjustment, plus (5) 307.664.

(b) For a city with a population equal to or greater than 2,500 and less than 10,000,
"city revenue need" is 1.15 times the sum of (1) 572.62; plus (2) 5.026 times the pre-1940
housing percentage; minus (3) 53.768 times household size; plus (4) 14.022 times peak
population decline.

(b) (c) For a city with a population less than 2,500, "city revenue need" is the sum of
(1) 2.387 times the pre-1940 housing percentage; plus (2) 2.67591 times the commercial
industrial percentage; plus (3) 3.16042 times the population decline percentage; plus (4)
1.206 times the transformed population; minus (5) 62.772
410 plus 0.367 times the city's
population over 100. The city revenue need under this paragraph shall not exceed 630
.

(c) (d) For a city with a population of at least 2,500 or more and a population in one
of the most recently available five years that was less than 2,500, "city revenue need"
is the sum of (1) its city revenue need calculated under paragraph (a) multiplied by its
transition factor; plus (2) its city revenue need calculated under the formula in paragraph
(b) multiplied by the difference between one and its transition factor. For purposes of this
paragraph, a city's "transition factor" is equal to 0.2 multiplied by the number of years that
the city's population estimate has been 2,500 or more. This provision only applies for aids
payable in calendar years 2006 to 2008 to cities with a 2002 population of less than 2,500.
It applies to any city for aids payable in 2009 and thereafter
but less than 3,000, the "city
revenue need" equals (1) the transition factor times the city's revenue need calculated in
paragraph (b) plus (2) 630 times the difference between one and the transition factor. For
a city with a population of at least 10,000 but less than 10,500, the "city revenue need"
equals (1) the transition factor times the city's revenue need calculated in paragraph (a)
plus (2) the city's revenue need calculated under the formula in paragraph (b) times the
difference between one and the transition factor. For purposes of this paragraph "transition
factor" is 0.2 percent times the amount that the city's population exceeds the minimum
threshold in either of the first two sentences
.

(d) (e) The city revenue need cannot be less than zero.

(e) (f) For calendar year 2005 2015 and subsequent years, the city revenue need for
a city, as determined in paragraphs (a) to (d) (e), is multiplied by the ratio of the annual
implicit price deflator for government consumption expenditures and gross investment for
state and local governments as prepared by the United States Department of Commerce,
for the most recently available year to the 2003 2013 implicit price deflator for state
and local government purchases.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2014 and thereafter.

Sec. 5.

Minnesota Statutes 2012, section 477A.011, subdivision 42, is amended to read:


Subd. 42.

City jobs base Jobs per capita.

(a) "City jobs base" for a city with a
population of 5,000 or more is equal to the product of (1) $25.20, (2) the number of
jobs per capita in the city, and (3) its population. For cities with a population less than
5,000, the city jobs base is equal to zero. For a city receiving aid under subdivision 36,
paragraph (k), its city jobs base is reduced by the lesser of 36 percent of the amount of
aid received under that paragraph or $1,000,000. No city's city jobs base may exceed
$4,725,000 under this paragraph.

(b) For calendar year 2010 and subsequent years, the city jobs base for a city, as
determined in paragraph (a), is multiplied by the ratio of the appropriation under section
477A.03, subdivision 2a, for the year in which the aid is paid to the appropriation under
that section for aids payable in 2009.

(c) For purposes of this subdivision, "Jobs per capita in the city" means (1) the
average annual number of employees in the city based on the data from the Quarterly
Census of Employment and Wages, as reported by the Department of Employment and
Economic Development, for the most recent calendar year available as of May 1, 2008
November 1 of every odd-numbered year, divided by (2) the city's population for the
same calendar year as the employment data. The commissioner of the Department of
Employment and Economic Development shall certify to the city the average annual
number of employees for each city by June 1, 2008 January 15, of every even-numbered
year beginning with January 15, 2014.
. A city may challenge an estimate under this
paragraph by filing its specific objection, including the names of employers that it feels
may have misreported data, in writing with the commissioner by June 20, 2008 December
1 of every odd-numbered year
. The commissioner shall make every reasonable effort
to address the specific objection and adjust the data as necessary. The commissioner
shall certify the estimates of the annual employment to the commissioner of revenue by
July 15, 2008 January 15 of all even-numbered years, including any estimates still under
objection. For aids payable in 2014 "jobs per capita" shall be based on the annual number
of employees and population for calendar year 2010 without additional review.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2014 and thereafter.

Sec. 6.

Minnesota Statutes 2012, section 477A.011, is amended by adding a
subdivision to read:


Subd. 44.

Peak population decline.

"Peak population decline" is equal to 100
times the difference between one and the ratio of the city's current population, to the
highest city population reported in a federal census from the 1970 census or later. "Peak
population decline" shall not be less than zero.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2014 and thereafter.

Sec. 7.

Minnesota Statutes 2012, section 477A.011, is amended by adding a
subdivision to read:


Subd. 45.

Sparsity adjustment.

For a city with a population of 10,000 or more, the
sparsity adjustment is 100 for any city with an average population density less than 150
per square mile. The sparsity adjustment is zero for all other cities.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2014 and thereafter.

Sec. 8.

Minnesota Statutes 2012, section 477A.013, subdivision 1, is amended to read:


Subdivision 1.

Towns.

In 2002, no town is eligible for a distribution under this
subdivision.
In 2014 and thereafter, each town is eligible for a distribution under this
subdivision equal to the product of (i) its agricultural property factor, (ii) its town area
factor, (iii) its population factor, and (iv) 0.00225. As used in this subdivision, the
following terms have the meanings given them:

(1) "agricultural property factor" means the ratio of the adjusted net tax capacity of
agricultural property located in a town, divided by the adjusted net tax capacity of all other
property located in the town. The agricultural property factor cannot exceed eight;

(2) "agricultural property" means property classified under section 273.13, as
homestead and nonhomestead agricultural property, rural vacant land, and noncommercial
seasonal recreational property;

(3) "town area factor" means the most recent estimate of total acreage, not to exceed
50,000 acres, located in the township available as of July 1 in the aid calculation year,
estimated or established by:

(i) the United States Bureau of the Census;

(ii) the State Land Management Information Center; or

(iii) the secretary of state; and

(4) "population factor" means the square root of the towns population.

If the sum of the aids payable to all towns under this subdivision exceeds the limit
under section 477A.03, subdivision 2c, the distribution to each town must be reduced
proportionately so that the total amount of aids distributed under this section does not
exceed the limit in section 477A.03, subdivision 2c.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2014 and thereafter.

Sec. 9.

Minnesota Statutes 2012, section 477A.013, subdivision 8, is amended to read:


Subd. 8.

City formula aid.

(a) For aids payable in 2014 only, the formula aid for a
city is equal to the sum of (1) its 2013 certified aid and (2) the product of (i) the difference
between its unmet need and its 2013 certified aid and (ii) the aid gap percentage.

(b) For aids payable in 2015 and thereafter, the formula aid for a city is equal to
the sum of (1) its city jobs base, (2) its small city aid base, and (3) the need increase
percentage multiplied by the average of its unmet need for the most recently available two
years
formula aid in the previous year and (2) the product of (i) the difference between
its unmet need and its certified aid in the previous year under subdivision 9, and (ii)
the aid gap percentage
.

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

The applicable need increase aid gap percentage must be calculated by the
Department of Revenue so that the total of the aid under subdivision 9 equals the total
amount available for aid under section 477A.03. Data used in calculating aids to cities
under sections 477A.011 to 477A.013 shall be the most recently available data as of
January 1 in the year in which the aid is calculated except that the data used to compute "net
levy" in subdivision 9 is the data most recently available at the time of the aid computation.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2014 and thereafter.

Sec. 10.

Minnesota Statutes 2012, section 477A.013, subdivision 9, is amended to read:


Subd. 9.

City aid distribution.

(a) In calendar year 2013 2014 and thereafter, each
city shall receive an aid distribution equal to the sum of (1) the city formula aid under
subdivision 8, and (2) its city aid base aid adjustment under subdivision 13.

(b) For aids payable in 2013 and 2014 only, the total aid in the previous year for
any city shall mean the amount of aid it was certified to receive for aids payable in 2012
under this section. For aids payable in 2015 and thereafter, the total aid in the previous
year for any city means the amount of aid it was certified to receive under this section in
the previous payable year.

(c) For aids payable in 2010 and thereafter, the total aid for any city shall not exceed
the sum of (1) ten percent of the city's net levy for the year prior to the aid distribution
plus (2) its total aid in the previous year. For aids payable in 2009 and thereafter, the total
aid for any city with a population of 2,500 or more may not be less than its total aid under
this section in the previous year minus the lesser of $10 multiplied by its population, or ten
percent of its net levy in the year prior to the aid distribution.

(d) (b) For aids payable in 2014 only, the total aid for a city may not be less than the
amount it was certified to receive in 2013.
For aids payable in 2010 2015 and thereafter,
the total aid for a city with a population less than 2,500 must not be less than the amount
it was certified to receive in the previous year minus the lesser of $10 multiplied by its
population, or five percent of its 2003 certified aid amount. For aids payable in 2009 only,
the total aid for a city with a population less than 2,500 must not be less than what it
received under this section in the previous year unless its total aid in calendar year 2008
was aid under section 477A.011, subdivision 36, paragraph (s), in which case its minimum
aid is zero
its net levy in the year prior to the aid distribution.

(e) A city's aid loss under this section may not exceed $300,000 in any year in
which the total city aid appropriation under section 477A.03, subdivision 2a, is equal or
greater than the appropriation under that subdivision in the previous year, unless the
city has an adjustment in its city net tax capacity under the process described in section
469.174, subdivision 28.

(f) If a city's net tax capacity used in calculating aid under this section has decreased
in any year by more than 25 percent from its net tax capacity in the previous year due to
property becoming tax-exempt Indian land, the city's maximum allowed aid increase
under paragraph (c) shall be increased by an amount equal to (1) the city's tax rate in the
year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease
resulting from the property becoming tax exempt.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2014 and thereafter.

Sec. 11.

Minnesota Statutes 2012, section 477A.013, is amended by adding a
subdivision to read:


Subd. 13.

Certified aid adjustments.

(a) A city that received an aid base increase
under Minnesota Statutes 2012, section 477A.011, subdivision 36, paragraph (e), shall
have its total aid under subdivision 9 increased by an amount equal to $150,000 for aids
payable in 2014 through 2018.

(b) A city that received an aid base increase under section 477A.011, subdivision 36,
paragraph (r), shall have its total aid under subdivision 9 increased by an amount equal to
$160,000 for aids payable in 2014 and thereafter.

(c) A city that received a temporary aid increase under Minnesota Statutes 2012,
section 477A.011, subdivision 36, paragraph (m), (v), or (w), shall have its total aid under
subdivision 9 decreased by the amount of its aid base increase under those paragraphs in
calendar year 2013.

Sec. 12.

Minnesota Statutes 2012, section 477A.03, subdivision 2a, is amended to read:


Subd. 2a.

Cities.

For aids payable in 2013 2014 and thereafter, the total aid paid
under section 477A.013, subdivision 9, is $426,438,012 $506,438,012.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2014 and thereafter.

Sec. 13.

Minnesota Statutes 2012, section 477A.03, subdivision 2b, is amended to read:


Subd. 2b.

Counties.

(a) For aids payable in 2013 2014 and thereafter, the total aid
payable under section 477A.0124, subdivision 3, is $80,795,000 $100,795,000. Each
calendar year, $500,000 of this appropriation shall be retained by the commissioner
of revenue to make reimbursements to the commissioner of management and budget
for payments made under section 611.27. For calendar year 2004, the amount shall
be in addition to the payments authorized under section 477A.0124, subdivision 1.
For calendar year 2005 and subsequent years, the amount shall be deducted from the
appropriation under this paragraph.
The reimbursements shall be to defray the additional
costs associated with court-ordered counsel under section 611.27. Any retained amounts
not used for reimbursement in a year shall be included in the next distribution of county
need aid that is certified to the county auditors for the purpose of property tax reduction
for the next taxes payable year.

(b) For aids payable in 2013 2014 and thereafter, the total aid under section
477A.0124, subdivision 4, is $84,909,575 $104,909,575. The commissioner of
management and budget shall bill the commissioner of revenue for the cost of preparation
of local impact notes as required by section 3.987, not to exceed $207,000 in each fiscal
year 2004 and thereafter. The commissioner of education shall bill the commissioner of
revenue for the cost of preparation of local impact notes for school districts as required
by section 3.987, not to exceed $7,000 in each fiscal year 2004 and thereafter. The
commissioner of revenue shall deduct the amounts billed under this paragraph from
the appropriation under this paragraph. The amounts deducted are appropriated to the
commissioner of management and budget and the commissioner of education for the
preparation of local impact notes.

EFFECTIVE DATE.

This section is effective for aid payable in 2014 and thereafter.

Sec. 14.

Minnesota Statutes 2012, section 477A.03, is amended by adding a
subdivision to read:


Subd. 2c.

Towns.

For aids payable in 2014, the total aids paid under section
477A.013, subdivision 1, is limited to $5,000,000. For aids payable in 2015 and thereafter,
the total aids paid under section 477A.013, subdivision 1, is limited to the amount certified
to be paid in the previous year.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2014 and thereafter.

Sec. 15.

[477A.10] NATURAL RESOURCES LAND PAYMENTS IN LIEU;
PURPOSE.

The purposes of sections 477A.11 to 477A.14 are:

(1) to compensate local units of government for the loss of tax base from state
ownership of land and the need to provide services for state land;

(2) to address the disproportionate impact of state land ownership on local units of
government with a large proportion of state land; and

(3) to address the need to manage state lands held in trust for the local taxing districts.

Sec. 16.

Minnesota Statutes 2012, section 477A.11, subdivision 3, is amended to read:


Subd. 3.

Acquired natural resources land.

"Acquired natural resources land"
means:

(1) any land, other than wildlife management land, presently administered by the
commissioner in which the state acquired by purchase, condemnation, or gift, a fee title
interest in lands which were previously privately owned; and

(2) lands acquired by the state under chapter 84A that are designated as state parks,
state recreation areas, scientific and natural areas, or wildlife management areas.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2013 and thereafter.

Sec. 17.

Minnesota Statutes 2012, section 477A.11, subdivision 4, is amended to read:


Subd. 4.

Other natural resources land.

"Other natural resources land" means
any other land, other than acquired natural resource land or wildlife management land,
presently owned in fee title by the state and administered by the commissioner, or
any tax-forfeited land, other than platted lots within a city or those lands described
under subdivision 3, clause (2), which is owned by the state and administered by the
commissioner or by the county in which it is located.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2013 and thereafter.

Sec. 18.

Minnesota Statutes 2012, section 477A.11, is amended by adding a
subdivision to read:


Subd. 6.

Military game refuge.

"Military game refuge" means land owned in
fee by another state agency for military purposes and designated as a state game refuge
under section 97A.085.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2013 and thereafter.

Sec. 19.

Minnesota Statutes 2012, section 477A.11, is amended by adding a
subdivision to read:


Subd. 7.

Transportation wetland.

"Transportation wetland" means land
administered by the Department of Transportation in which the state acquired, by purchase
from a private owner, a fee title interest in over 500 acres of land within a county to
replace wetland losses from transportation projects.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2013 and thereafter.

Sec. 20.

Minnesota Statutes 2012, section 477A.11, is amended by adding a
subdivision to read:


Subd. 8.

Wildlife management land.

"Wildlife management land" means land
administered by the commissioner in which the state acquired, from a private owner by
purchase, condemnation, or gift, a fee interest under the authority granted in chapter 94 or
97A for wildlife management purposes and actually used as a wildlife management area.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2013 and thereafter.

Sec. 21.

Minnesota Statutes 2012, section 477A.12, subdivision 1, is amended to read:


Subdivision 1.

Types of land; payments.

(a) As an offset for expenses incurred
by counties and towns in support of natural resources lands,
The following amounts are
annually appropriated to the commissioner of natural resources from the general fund for
transfer to the commissioner of revenue. The commissioner of revenue shall pay the
transferred funds to counties as required by sections 477A.11 to 477A.14. The amounts,
based on the acreage as of July 1 of each year prior to the payment year,
are:

(1) for acquired natural resources land, $5.133 multiplied by the total number of acres
of acquired natural resources land or, at the county's option three-fourths of one percent of
the appraised value of all acquired natural resources land in the county, whichever is greater;

(2) $5.133, multiplied by the total number of acres of transportation wetland or, at
the county's option, three-fourths of one percent of the appraised value of all acquired
natural resources land in the county, whichever is greater;

(3) three-fourths of one percent of the appraised value of all wildlife management
land in the county;

(4) 50 percent of the dollar amount as determined under clause (1), multiplied by
the number of acres of military refuge land in the county;

$1.283 (5) $1.50, multiplied by the number of acres of county-administered other
natural resources land in the county;

(3) $1.283 (6) $5.133, multiplied by the total number of acres of land utilization
project land in the county; and

(4) 64.2 cents (7) $1.50, multiplied by the number of acres of
commissioner-administered other natural resources land located in each the county as of
July 1 of each year prior to the payment year.
; and

(8) without regard to acreage, $300,000 for local assessments under section 84A.55,
subdivision 9.

(b) The amount determined under paragraph (a), clause (1), is payable for land
that is acquired from a private owner and owned by the Department of Transportation
for the purpose of replacing wetland losses caused by transportation projects, but only
if the county contains more than 500 acres of such land at the time the certification is
made under subdivision 2.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2013 and thereafter.

Sec. 22.

Minnesota Statutes 2012, section 477A.12, subdivision 2, is amended to read:


Subd. 2.

Procedure.

Lands for which payments in lieu are made pursuant to
section 97A.061, subdivision 3, and Laws 1973, chapter 567, shall not be eligible for
payments under this section.
Each county auditor shall certify to the Department of
Natural Resources during July of each year prior to the payment year the number of acres
of county-administered other natural resources land within the county. The Department of
Natural resources may, in addition to the certification of acreage, require descriptive lists
of land so certified. The commissioner of natural resources shall determine and certify to
the commissioner of revenue by March 1 of the payment year:

(1) the number of acres and most recent appraised value of acquired natural
resources land, wildlife management land, and military refuge land within each county;

(2) the number of acres of commissioner-administered natural resources land within
each county;

(3) the number of acres of county-administered other natural resources land within
each county, based on the reports filed by each county auditor with the commissioner
of natural resources; and

(4) the number of acres of land utilization project land within each county.

The commissioner of transportation shall determine and certify to the commissioner
of revenue by March 1 of the payment year the number of acres of land transportation
wetland
and the appraised value of the land described in subdivision 1, paragraph (b), but
only if it exceeds 500 acres in a county.

The commissioner of revenue shall determine the distributions provided for in this
section using the number of acres and appraised values certified by the commissioner of
natural resources and the commissioner of transportation by March 1 of the payment year.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2013 and thereafter.

Sec. 23.

Minnesota Statutes 2012, section 477A.12, subdivision 3, is amended to read:


Subd. 3.

Determination of appraised value.

For the purposes of this section, the
appraised value of acquired natural resources land is the purchase price for the first five
years after acquisition
until the next six-year appraisal required under this subdivision.
The appraised value of acquired natural resources land received as a donation is the value
determined for the commissioner of natural resources by a licensed appraiser, or the
county assessor's estimated market value if no appraisal is done. The appraised value must
be determined by the county assessor every five six years after the land is acquired. All
reappraisals shall be done in the same year as county assessors are required to assess
exempt land under section 273.18.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2013 and thereafter.

Sec. 24.

Minnesota Statutes 2012, section 477A.14, subdivision 1, is amended to read:


Subdivision 1.

General distribution.

Except as provided in subdivision 2 or in
section 97A.061, subdivision 5
subdivisions 2 and 3, 40 percent of the total payment to
the county shall be deposited in the county general revenue fund to be used to provide
property tax levy reduction. The remainder shall be distributed by the county in the
following priority:

(a) 64.2 cents, for each acre of county-administered other natural resources land shall
be deposited in a resource development fund to be created within the county treasury for
use in resource development, forest management, game and fish habitat improvement, and
recreational development and maintenance of county-administered other natural resources
land. Any county receiving less than $5,000 annually for the resource development fund
may elect to deposit that amount in the county general revenue fund;

(b) from the funds remaining, within 30 days of receipt of the payment to the county,
the county treasurer shall pay each organized township 51.3 cents for each acre of acquired
natural resources land and each acre of land described in section 477A.12, subdivision 1,
paragraph (b), and 12.8 cents for each acre of other natural resources land and each acre of
land utilization project land located within its boundaries
ten percent of the amount received
under section 477A.12, subdivision 1, clauses (1), (2), and (5) to (7)
. Payments for natural
resources lands not located in an organized township shall be deposited in the county
general revenue fund. Payments to counties and townships pursuant to this paragraph shall
be used to provide property tax levy reduction, except that of the payments for natural
resources lands not located in an organized township, the county may allocate the amount
determined to be necessary for maintenance of roads in unorganized townships. Provided
that, if the total payment to the county pursuant to section 477A.12 is not sufficient to fully
fund the distribution provided for in this clause, the amount available shall be distributed
to each township and the county general revenue fund on a pro rata basis; and

(c) any remaining funds shall be deposited in the county general revenue fund.
Provided that, if the distribution to the county general revenue fund exceeds $35,000, the
excess shall be used to provide property tax levy reduction.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2013 and thereafter.

Sec. 25.

Minnesota Statutes 2012, section 477A.14, is amended by adding a
subdivision to read:


Subd. 3.

Distribution for wildlife management lands and military refuge lands.

(a) The county treasurer shall allocate the payment for wildlife management land and
military game refuge land among the county, towns, and school districts on the same basis
as if the payments were taxes on the land received in the year. Payment of a town's or a
school district's allocation must be made by the county treasurer to the town or school
district within 30 days of receipt of the payment to the county. The county's share of the
payment shall be deposited in the county general revenue fund.

(b) The county treasurer of a county with a population over 39,000, but less than
42,000, in the 1950 federal census shall allocate the payment only among the towns and
school districts on the same basis as if the payments were taxes on the lands received
in the current year.

(c) If a town received a payment in calendar year 2006 or thereafter under this
subdivision, and subsequently incorporated as a city, the city shall continue to receive any
future year's allocations of wildlife land payments that would have been made to the town
had it not incorporated, provided that the payments shall terminate if the governing body
of the city passes an ordinance that prohibits hunting within the boundaries of the city.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2013 and thereafter.

Sec. 26.

Laws 2006, chapter 259, article 11, section 3, as amended by Laws 2008,
chapter 154, article 1, section 4, is amended to read:


Sec. 3. MAHNOMEN COUNTY; COUNTY, CITY, SCHOOL DISTRICT,
PROPERTY TAX REIMBURSEMENT.

Subdivision 1.

Aid appropriation.

$600,000 $1,200,000 is appropriated annually
from the general fund to the commissioner of revenue to be used to make payments to
compensate for the loss of property tax revenue related to the trust conversion application
of the Shooting Star Casino. The commissioner shall pay the county of Mahnomen,
$450,000 $900,000; the city of Mahnomen, $80,000 $160,000; and Independent School
District No. 432, Mahnomen, $70,000 $140,000. The payments shall be made on July 20,
of 2008 2013 and each subsequent year.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2013 and thereafter.

Sec. 27. REPEALER.

Minnesota Statutes 2012, sections 477A.011, subdivisions 2a, 19, 29, 31, 32, 33, 36,
39, 40, 41, and 42; 477A.013, subdivisions 11 and 12; 477A.0133; and 477A.0134,
are
repealed.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2014 and thereafter.

ARTICLE 2

PROPERTY TAX

Section 1.

Minnesota Statutes 2012, section 103B.102, subdivision 3, is amended to
read:


Subd. 3.

Evaluation and report.

The Board of Water and Soil Resources shall
evaluate performance, financial, and activity information for each local water management
entity. The board shall evaluate the entities' progress in accomplishing their adopted plans
on a regular basis as determined by the board based on budget and operations of the local
water management entity
, but not less than once every five ten years. The board shall
maintain a summary of local water management entity performance on the board's Web site.
Beginning February 1, 2008, and annually thereafter, the board shall provide an analysis
of local water management entity performance to the chairs of the house of representatives
and senate committees having jurisdiction over environment and natural resources policy.

Sec. 2.

Minnesota Statutes 2012, section 103B.335, is amended to read:


103B.335 TAX LEVY AUTHORITY.

Subdivision 1.

Local water planning and management.

The governing body of
any county, municipality, or township may levy a tax in an amount required to implement
sections 103B.301 to 103B.355 or a comprehensive watershed management plan as
defined in section 103B.3363
.

Subd. 2.

Priority programs; conservation and watershed districts.

A county
may levy amounts necessary to pay the reasonable increased costs to soil and water
conservation districts and watershed districts of administering and implementing priority
programs identified in an approved and adopted plan or a comprehensive watershed
management plan as defined in section 103B.3363
.

Sec. 3.

Minnesota Statutes 2012, section 103B.3369, subdivision 5, is amended to read:


Subd. 5.

Financial assistance.

A base grant may be awarded to a county that
provides a match utilizing a water implementation tax or other local source. A water
implementation tax that a county intends to use as a match to the base grant must be
levied at a rate sufficient to generate a minimum amount determined by the board.
The board may award performance-based grants to local units of government that are
responsible for implementing elements of applicable portions of watershed management
plans, comprehensive plans, local water management plans, or comprehensive watershed
management plans, developed or amended, adopted and approved, according to chapter
103B, 103C, or 103D. Upon request by a local government unit, the board may also
award performance-based grants to local units of government to carry out TMDL
implementation plans as provided in chapter 114D, if the TMDL implementation plan has
been incorporated into the local water management plan according to the procedures for
approving comprehensive plans, watershed management plans, local water management
plans, or comprehensive watershed management plans under chapter 103B, 103C, or
103D, or if the TMDL implementation plan has undergone a public review process.
Notwithstanding section 16A.41, the board may award performance-based grants on an
advanced basis. The fee authorized in section 40A.152 may be used as a local match
or as a supplement to state funding to accomplish implementation of comprehensive
plans, watershed management plans, local water management plans, or comprehensive
watershed management plans under chapter 103B, 103C, or 103D.

Sec. 4.

Minnesota Statutes 2012, section 103C.501, subdivision 4, is amended to read:


Subd. 4.

Cost-sharing funds.

(a) The state board shall allocate at least 70 percent
of
cost-sharing funds to areas with high priority erosion, sedimentation, or water quality
problems or water quantity problems due to altered hydrology. The areas must be selected
based on the statewide priorities established by the state board.

(b) The allocated funds must be used for conservation practices for high priority
problems identified in the comprehensive and annual work plans of the districts, for
the technical assistance portion of the grant funds to leverage federal or other nonstate
funds, or to address high-priority needs identified in local water management plans or
comprehensive watershed management plans
.

(b) The remaining cost-sharing funds may be allocated to districts as follows:

(1) for technical and administrative assistance, not more than 20 percent of the
funds; and

(2) for conservation practices for lower priority erosion, sedimentation, or water
quality problems.

Sec. 5.

Minnesota Statutes 2012, section 103F.405, subdivision 1, is amended to read:


Subdivision 1.

Authority.

Each statutory or home rule charter city, town, or
county that has planning and zoning authority under sections 366.10 to 366.19, 394.21
to 394.37, or 462.351 to 462.365 is encouraged to adopt a soil loss ordinance. The soil
loss ordinance must use the soil loss tolerance for each soil series described in the United
States Soil Natural Resources Conservation Service Field Office Technical Guide, or
another method approved by the Board of Water and Soil Resources,
to determine the
soil loss limits, but the soil loss limits must be attainable by the best practicable soil
conservation practice. Ordinances adopted by local governments within the metropolitan
area defined in section 473.121
must be consistent with local water management plans
adopted under section 103B.235
a comprehensive plan, local water management plan, or
watershed management plan developed or amended, adopted and approved, according
to chapter 103B, 103C, or 103D
.

Sec. 6.

Minnesota Statutes 2012, section 168.012, subdivision 9, is amended to read:


Subd. 9.

Manufactured homes and park trailers.

Manufactured homes and park
trailers shall not be taxed as motor vehicles using the public streets and highways and shall
be exempt from the motor vehicle tax provisions of this chapter. Except as provided in
section 273.125, manufactured homes and park trailers shall be taxed as personal property.
The provisions of Minnesota Statutes 1957, section 272.02 or any other act providing for
tax exemption shall be inapplicable to manufactured homes and park trailers, except
such manufactured homes as are held by a licensed dealer or limited dealer, as defined
in section 327B.04,
and exempted as inventory under subdivision 9a. Travel trailers not
conspicuously displaying current registration plates on the property tax assessment date
shall be taxed as manufactured homes if occupied as human dwelling places.

EFFECTIVE DATE.

This section is effective for taxes payable in 2014 and
thereafter.

Sec. 7.

Minnesota Statutes 2012, section 168.012, is amended by adding a subdivision
to read:


Subd. 9a.

Manufactured home as dealer inventory.

Manufactured homes as
defined in section 327.31, subdivision 6, shall be considered as dealer inventory, on the
January 2 assessment date, if the home:

(1) is listed as inventory and held by a licensed or limited dealer;

(2) is unoccupied and not available for rent;

(3) may or may not be permanently connected to utilities when located in a
manufactured park; and

(4) may or may not be temporarily connected to utilities when located at a dealer's
sales center.

The exemption under this subdivision is allowable for up to five assessment years after
the date a home is initially claimed as dealer inventory.

EFFECTIVE DATE.

This section is effective for taxes payable in 2014 and
thereafter.

Sec. 8.

[270C.9901] ASSESSOR ACCREDITATION.

Every individual that appraises or physically inspects real property for the purpose of
determining its valuation or classification for property tax purposes must obtain licensure
as an accredited assessor from the Minnesota State Board of Assessors by July 1, 2017, or
by the time the individual is licensed as a certified assessor, whichever is later.

EFFECTIVE DATE.

This section is effective beginning January 1, 2014.

Sec. 9.

Minnesota Statutes 2012, section 272.02, subdivision 10, is amended to read:


Subd. 10.

Personal property used for pollution control.

Personal property used
primarily for the abatement and control of air, water, or land pollution is exempt to the
extent that it is so used, and real but only if it is not required to be installed by a standard,
rule, criteria, guideline, policy, or order of the Minnesota Pollution Control Agency or if it
is part of a system for the abatement of pollution that was not required to be installed by
a standard, rule, criteria, guideline, policy, or order of the Minnesota Pollution Control
Agency when it was originally installed. Real
property is exempt if it is used primarily for
abatement and control of air, water, or land pollution as part of an agricultural operation,
as a part of a centralized treatment and recovery facility operating under a permit
issued by the Minnesota Pollution Control Agency pursuant to chapters 115 and 116
and Minnesota Rules, parts 7001.0500 to 7001.0730, and 7045.0020 to 7045.1260, as a
wastewater treatment facility and for the treatment, recovery, and stabilization of metals,
oils, chemicals, water, sludges, or inorganic materials from hazardous industrial wastes,
or as part of an electric generation system. For purposes of this subdivision, personal
property includes ponderous machinery and equipment used in a business or production
activity that at common law is considered real property.

Any taxpayer requesting exemption of all or a portion of any real property or any
equipment or device, or part thereof, operated primarily for the control or abatement of
air, water, or land pollution shall file an application with the commissioner of revenue.
The Minnesota Pollution Control Agency shall upon request of the commissioner furnish
information and advice to the commissioner.

The information and advice furnished by the Minnesota Pollution Control Agency
must include statements as to whether the equipment, device, or real property meets
a standard, rule, criteria, guideline, policy, or order of the Minnesota Pollution Control
Agency, and whether the equipment, device, or real property is installed or operated
in accordance with it. On determining that property qualifies for exemption, the
commissioner shall issue an order exempting the property from taxation. The equipment,
device, or real property shall continue to be exempt from taxation as long as the order
issued by the commissioner remains in effect.

Sec. 10.

Minnesota Statutes 2012, section 272.02, is amended by adding a subdivision
to read:


Subd. 98.

Certain property owned by an Indian tribe.

(a) Property is exempt that:

(1) was classified as 3a under section 273.13, subdivision 24, for taxes payable
in 2013;

(2) is located in a city of the first class with a population greater than 300,000 as of
the 2010 federal census;

(3) was, on January 2, 2012, and for the current assessment, is owned by a federally
recognized Indian tribe, or its instrumentality, that is located within the state of Minnesota;
and

(4) is used exclusively for tribal purposes or institutions of purely public charity as
defined in subdivision 7.

(b) For purposes of this subdivision, a "tribal purpose" means a public purpose
as defined in subdivision 8 and includes noncommercial tribal government activities.
Property that qualifies for the exemption under this subdivision is limited to no more than
two contiguous parcels and structures that do not exceed in the aggregate 20,000 square
feet. Property acquired for single-family housing, market-rate apartments, agricultural, or
forestry does not qualify for this exemption. The exemption created by this subdivision
expires with taxes payable in 2024.

EFFECTIVE DATE.

This section is effective beginning with taxes payable in 2014.

Sec. 11.

Minnesota Statutes 2012, section 272.02, is amended by adding a subdivision
to read:


Subd. 99.

Electric generation facility; personal property.

(a) Notwithstanding
subdivision 9, clause (a), and section 453.54, subdivision 20, attached machinery and
other personal property which is part of an electric generation facility that exceeds five
megawatts of installed capacity and meets the requirements of this subdivision is exempt.
At the time of construction, the facility must be:

(1) designed to utilize natural gas as a primary fuel;

(2) owned and operated by a municipal power agency as defined in section 453.52,
subdivision 8;

(3) designed to utilize reciprocating engines paired with generators to produce
electrical power;

(4) located within the service territory of a municipal power agency's electrical
municipal utility that serves load exclusively in a metropolitan county as defined in
section 473.121, subdivision 4; and

(5) designed to connect directly with a municipality's substation.

(b) Construction of the facility must be commenced after June 1, 2013, and before
June 1, 2017. Property eligible for this exemption does not include electric transmission
lines and interconnections or gas pipelines and interconnections appurtenant to the
property or the facility.

EFFECTIVE DATE.

This section is effective for assessment year 2013, taxes
payable in 2014, and thereafter.

Sec. 12.

Minnesota Statutes 2012, section 272.025, subdivision 1, is amended to read:


Subdivision 1.

Statement of exemption.

(a) Except in the case of property owned
by the state of Minnesota or any political subdivision thereof, and property exempt from
taxation under section 272.02, subdivisions 9, 10, 13, 15, 18, 20, and 22 to 25, and at
the times provided in subdivision 3, a taxpayer claiming an exemption from taxation
on property described in section 272.02, subdivisions 1 to 33, must file a statement of
exemption with the assessor of the assessment district in which the property is located.

(b) A taxpayer claiming an exemption from taxation on property described in section
272.02, subdivision 10, must file a statement of exemption with the commissioner of
revenue, and with the assessor of the assessment district in which the property is located,
on or before February 15 of each year for which the taxpayer claims an exemption.

(c) In case of sickness, absence or other disability or for good cause, the assessor
or the commissioner may extend the time for filing the statement of exemption for a
period not to exceed 60 days.

(d) The commissioner of revenue shall prescribe the form and contents of the
statement of exemption.

Sec. 13.

Minnesota Statutes 2012, section 273.117, is amended to read:


273.117 CONSERVATION PROPERTY TAX VALUATION.

The value of real property which is subject to a conservation restriction or easement
may be adjusted shall not be reduced by the assessor if:

(a) the restriction or easement is for a conservation purpose as defined in section
84.64, subdivision 2, and is recorded on the property; and

(b) the property is being used in accordance with the terms of the conservation
restriction or easement.

This section does not apply to (1) conservation restrictions or easements covering
riparian buffers along lakes, rivers, and streams that are used for water quantity or quality
control; or (2) parcels of land in excess of 1,920 acres that allow public motorized access.

EFFECTIVE DATE.

This section is effective for assessment year 2013 and
thereafter, and for taxes payable in 2014 and thereafter.

Sec. 14.

Minnesota Statutes 2012, section 273.124, subdivision 14, is amended to read:


Subd. 14.

Agricultural homesteads; special provisions.

(a) Real estate of less than
ten acres that is the homestead of its owner must be classified as class 2a under section
273.13, subdivision 23, paragraph (a), if:

(1) the parcel on which the house is located is contiguous on at least two sides to (i)
agricultural land, (ii) land owned or administered by the United States Fish and Wildlife
Service, or (iii) land administered by the Department of Natural Resources on which in
lieu taxes are paid under sections 477A.11 to 477A.14;

(2) its owner also owns a noncontiguous parcel of agricultural land that is at least
20 acres;

(3) the noncontiguous land is located not farther than four townships or cities, or a
combination of townships or cities from the homestead; and

(4) the agricultural use value of the noncontiguous land and farm buildings is equal
to at least 50 percent of the market value of the house, garage, and one acre of land.

Homesteads initially classified as class 2a under the provisions of this paragraph shall
remain classified as class 2a, irrespective of subsequent changes in the use of adjoining
properties, as long as the homestead remains under the same ownership, the owner owns a
noncontiguous parcel of agricultural land that is at least 20 acres, and the agricultural use
value qualifies under clause (4). Homestead classification under this paragraph is limited
to property that qualified under this paragraph for the 1998 assessment.

(b)(i) Agricultural property shall be classified as the owner's homestead, to the same
extent as other agricultural homestead property, if all of the following criteria are met:

(1) the agricultural property consists of at least 40 acres including undivided
government lots and correctional 40's;

(2) the owner, the owner's spouse, or a grandchild, child, sibling, or parent of the
owner or of the owner's spouse, is actively farming the agricultural property, either on the
person's own behalf as an individual or on behalf of a partnership operating a family farm,
family farm corporation, joint family farm venture, or limited liability company of which
the person is a partner, shareholder, or member;

(3) both the owner of the agricultural property and the person who is actively
farming the agricultural property under clause (2), are Minnesota residents;

(4) neither the owner nor the spouse of the owner claims another agricultural
homestead in Minnesota; and

(5) neither the owner nor the person actively farming the agricultural property lives
farther than four townships or cities, or a combination of four townships or cities, from the
agricultural property, except that if the owner or the owner's spouse is required to live in
employer-provided housing, the owner or owner's spouse, whichever is actively farming
the agricultural property, may live more than four townships or cities, or combination of
four townships or cities from the agricultural property.

The relationship under this paragraph may be either by blood or marriage.

(ii) Agricultural property held by a trustee under a trust is eligible for agricultural
homestead classification under this paragraph if the qualifications in clause (i) are met,
except that "owner" means the grantor of the trust.

(iii) Property containing the residence of an owner who owns qualified property
under clause (i) shall be classified as part of the owner's agricultural homestead, if that
property is also used for noncommercial storage or drying of agricultural crops.

(iv) As used in this paragraph, "agricultural property" means class 2a property and
any class 2b property that is contiguous to and under the same ownership as the class 2a
property.

(c) (b) Noncontiguous land shall be included as part of a homestead under section
273.13, subdivision 23, paragraph (a), only if the homestead is classified as class 2a
and the detached land is located in the same township or city, or not farther than four
townships or cities or combination thereof from the homestead. Any taxpayer of these
noncontiguous lands must notify the county assessor that the noncontiguous land is part of
the taxpayer's homestead, and, if the homestead is located in another county, the taxpayer
must also notify the assessor of the other county.

(d) (c) Agricultural land used for purposes of a homestead and actively farmed by a
person holding a vested remainder interest in it must be classified as a homestead under
section 273.13, subdivision 23, paragraph (a). If agricultural land is classified class 2a,
any other dwellings on the land used for purposes of a homestead by persons holding
vested remainder interests who are actively engaged in farming the property, and up to
one acre of the land surrounding each homestead and reasonably necessary for the use of
the dwelling as a home, must also be assessed class 2a.

(e) (d) Agricultural land and buildings that were class 2a homestead property under
section 273.13, subdivision 23, paragraph (a), for the 1997 assessment shall remain
classified as agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural
homestead as a result of the April 1997 floods;

(2) the property is located in the county of Polk, Clay, Kittson, Marshall, Norman,
or Wilkin;

(3) the agricultural land and buildings remain under the same ownership for the
current assessment year as existed for the 1997 assessment year and continue to be used
for agricultural purposes;

(4) the dwelling occupied by the owner is located in Minnesota and is within 30
miles of one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to the 1997
floods, and the owner furnishes the assessor any information deemed necessary by the
assessor in verifying the change in dwelling. Further notifications to the assessor are not
required if the property continues to meet all the requirements in this paragraph and any
dwellings on the agricultural land remain uninhabited.

(f) Agricultural land and buildings that were class 2a homestead property under
section 273.13, subdivision 23, paragraph (a), for the 1998 assessment shall remain
classified agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural
homestead as a result of damage caused by a March 29, 1998, tornado;

(2) the property is located in the county of Blue Earth, Brown, Cottonwood,
LeSueur, Nicollet, Nobles, or Rice;

(3) the agricultural land and buildings remain under the same ownership for the
current assessment year as existed for the 1998 assessment year;

(4) the dwelling occupied by the owner is located in this state and is within 50 miles
of one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to a March 29,
1998, tornado, and the owner furnishes the assessor any information deemed necessary by
the assessor in verifying the change in homestead dwelling. For taxes payable in 1999, the
owner must notify the assessor by December 1, 1998. Further notifications to the assessor
are not required if the property continues to meet all the requirements in this paragraph
and any dwellings on the agricultural land remain uninhabited.

(g) Agricultural property of a family farm corporation, joint family farm venture,
family farm limited liability company, or partnership operating a family farm as described
under subdivision 8 shall be classified homestead, to the same extent as other agricultural
homestead property, if all of the following criteria are met:

(1) the property consists of at least 40 acres including undivided government lots
and correctional 40's;

(2) a shareholder, member, or partner of that entity is actively farming the
agricultural property;

(3) that shareholder, member, or partner who is actively farming the agricultural
property is a Minnesota resident;

(4) neither that shareholder, member, or partner, nor the spouse of that shareholder,
member, or partner claims another agricultural homestead in Minnesota; and

(5) that shareholder, member, or partner does not live farther than four townships or
cities, or a combination of four townships or cities, from the agricultural property.

Homestead treatment applies under this paragraph for property leased to a family
farm corporation, joint farm venture, limited liability company, or partnership operating a
family farm if legal title to the property is in the name of an individual who is a member,
shareholder, or partner in the entity.

(h) (e) To be eligible for the special agricultural homestead under this subdivision,
an initial full application must be submitted to the county assessor where the property is
located. Owners and the persons who are actively farming the property shall be required
to complete only a one-page abbreviated version of the application in each subsequent
year provided that none of the following items have changed since the initial application:

(1) the day-to-day operation, administration, and financial risks remain the same;

(2) the owners and the persons actively farming the property continue to live within
the four townships or city criteria and are Minnesota residents;

(3) the same operator of the agricultural property is listed with the Farm Service
Agency;

(4) a Schedule F or equivalent income tax form was filed for the most recent year;

(5) the property's acreage is unchanged; and

(6) none of the property's acres have been enrolled in a federal or state farm program
since the initial application.

The owners and any persons who are actively farming the property must include
the appropriate Social Security numbers, and sign and date the application. If any of the
specified information has changed since the full application was filed, the owner must
notify the assessor, and must complete a new application to determine if the property
continues to qualify for the special agricultural homestead. The commissioner of revenue
shall prepare a standard reapplication form for use by the assessors.

(i) (f) Agricultural land and buildings that were class 2a homestead property under
section 273.13, subdivision 23, paragraph (a), for the 2007 assessment shall remain
classified agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural
homestead as a result of damage caused by the August 2007 floods;

(2) the property is located in the county of Dodge, Fillmore, Houston, Olmsted,
Steele, Wabasha, or Winona;

(3) the agricultural land and buildings remain under the same ownership for the
current assessment year as existed for the 2007 assessment year;

(4) the dwelling occupied by the owner is located in this state and is within 50 miles
of one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to the August
2007 floods, and the owner furnishes the assessor any information deemed necessary by
the assessor in verifying the change in homestead dwelling. For taxes payable in 2009, the
owner must notify the assessor by December 1, 2008. Further notifications to the assessor
are not required if the property continues to meet all the requirements in this paragraph
and any dwellings on the agricultural land remain uninhabited.

(j) Agricultural land and buildings that were class 2a homestead property under
section 273.13, subdivision 23, paragraph (a), for the 2008 assessment shall remain
classified as agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural
homestead as a result of the March 2009 floods;

(2) the property is located in the county of Marshall;

(3) the agricultural land and buildings remain under the same ownership for the
current assessment year as existed for the 2008 assessment year and continue to be used
for agricultural purposes;

(4) the dwelling occupied by the owner is located in Minnesota and is within 50
miles of one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to the 2009
floods, and the owner furnishes the assessor any information deemed necessary by the
assessor in verifying the change in dwelling. Further notifications to the assessor are not
required if the property continues to meet all the requirements in this paragraph and any
dwellings on the agricultural land remain uninhabited.

EFFECTIVE DATE.

This section is effective for taxes payable in 2015 and
thereafter.

Sec. 15.

Minnesota Statutes 2012, section 273.124, subdivision 21, is amended to read:


Subd. 21.

Trust property; homestead.

Real or personal property held by a trustee
under a trust is eligible for classification as homestead property if the property satisfies the
requirements of paragraph (a), (b), (c), or (d).

(a) The grantor or surviving spouse of the grantor of the trust occupies and uses the
property as a homestead.

(b) A relative or surviving relative of the grantor who meets the requirements
of subdivision 1, paragraph (c), in the case of residential real estate; or subdivision 1,
paragraph (d), in the case of agricultural property, occupies and uses the property as
a homestead.

(c) A family farm corporation, joint farm venture, limited liability company, or
partnership operating a family farm in which the grantor or the grantor's surviving spouse
is a shareholder, member, or partner rents the property; and, either (1) a shareholder,
member, or partner of the corporation, joint farm venture, limited liability company, or
partnership occupies and uses the property as a homestead; or (2) the property is at least
40 acres, including undivided government lots and correctional 40's, and a shareholder,
member, or partner of the tenant-entity is actively farming the property on behalf of the
corporation, joint farm venture, limited liability company, or partnership
.

(d) A person who has received homestead classification for property taxes payable in
2000 on the basis of an unqualified legal right under the terms of the trust agreement to
occupy the property as that person's homestead and who continues to use the property as
a homestead; or, a person who received the homestead classification for taxes payable
in 2005 under paragraph (c) who does not qualify under paragraph (c) for taxes payable
in 2006 or thereafter but who continues to qualify under paragraph (c) as it existed for
taxes payable in 2005
.

For purposes of this subdivision, "grantor" is defined as the person creating or
establishing a testamentary, inter Vivos, revocable or irrevocable trust by written
instrument or through the exercise of a power of appointment.

EFFECTIVE DATE.

This section is effective for taxes payable in 2015 and
thereafter.

Sec. 16.

Minnesota Statutes 2012, section 273.128, is amended by adding a subdivision
to read:


Subd. 1a.

Determination of property tax maximum.

(a) Property taxes on the
portion of a rental property certified as class 4d may not exceed ten percent of the gross
potential rent for the calendar year in which an application is filed for the units that qualify
for certification under this section. "Gross potential rent" means the maximum annual rent
the owner of a property is authorized to charge for rental housing units subject to a legally
binding rent restriction agreement, assuming that all of the units are occupied at all times.
The Housing Finance Agency will adjust gross potential rent annually to the extent of and
in accordance with changes in the rent restrictions set forth in the rent restriction agreement.

(b) In order to determine the gross potential rent for a rental property, a separate
application must be filed with the Housing Finance Agency by March 31 of the assessment
year to establish the maximum property taxes for the portion of a property certified under
this section. In addition to the information required in subdivision 2, the application
under this subdivision must include a true and correct copy of any regulatory agreements
or other documents establishing the rent restrictions for the units eligible for class 4d
classification, unless such documentation was provided to the Housing Finance Agency
in a previous year and the owner certifies that the rent restrictions have not changed.
The Housing Finance Agency may charge an application fee approximately equal to the
costs of determining the gross potential rent for the property, any annual adjustments and
processing, and reviewing the application. The applicant must pay the application fee to
the Housing Finance Agency for deposit in the housing development fund. The application
fee under this subdivision is in addition to the application fee under subdivision 2.

(c) By June 1 of each assessment year, the Housing Finance Agency must certify to
the appropriate county or city assessors, the specific properties that are qualified for the
maximum property tax limitation and the amount of the annual gross potential rent for the
units in the building that qualify for class 4d certification. The auditor shall calculate the
maximum property tax for the units that qualify based on the certification from the Housing
Finance Agency for taxes payable the year following the assessment year certification.

EFFECTIVE DATE.

This section is effective beginning with assessment year 2015.

Sec. 17.

Minnesota Statutes 2012, section 273.1398, subdivision 4, is amended to read:


Subd. 4.

Disparity reduction credit.

(a) Beginning with taxes payable in 1989,
class 4a and class 3a property qualifies for a disparity reduction credit if: (1) the property
is located in a border city that has an enterprise zone, as defined in section 469.166; (2)
the property is located in a city with a population greater than 2,500 and less than 35,000
according to the 1980 decennial census; (3) the city is adjacent to a city in another state or
immediately adjacent to a city adjacent to a city in another state; and (4) the adjacent city
in the other state has a population of greater than 5,000 and less than 75,000 according to
the 1980 decennial census.

(b) The credit is an amount sufficient to reduce (i) the taxes levied on class 4a
property to 2.3 1.9 percent of the property's market value and (ii) the tax on class 3a
property to 2.3 1.9 percent of market value.

(c) The county auditor shall annually certify the costs of the credits to the
Department of Revenue. The department shall reimburse local governments for the
property taxes forgone as the result of the credits in proportion to their total levies.

EFFECTIVE DATE.

This section is effective beginning with taxes payable in 2014.

Sec. 18.

Minnesota Statutes 2012, section 275.025, subdivision 1, is amended to read:


Subdivision 1.

Levy amount.

The state general levy is levied against
commercial-industrial property and seasonal residential recreational property, as defined
in this section. The state general levy base amount is $592,000,000 for taxes payable in
2002. For taxes payable in subsequent years on seasonal residential recreational property,
the levy base amount is increased each year by multiplying the levy base amount for that
class of property for
the prior year by the sum of one plus the rate of increase, if any, in the
implicit price deflator for government consumption expenditures and gross investment for
state and local governments prepared by the Bureau of Economic Analysts of the United
States Department of Commerce for the 12-month period ending March 31 of the year
prior to the year the taxes are payable. For taxes payable in 2014 and subsequent years
on commercial-industrial property, the tax is imposed under this subdivision at the rate
of the tax imposed under this subdivision for taxes payable in 2002.
The tax under this
section is not treated as a local tax rate under section 469.177 and is not the levy of a
governmental unit under chapters 276A and 473F.

The commissioner shall increase or decrease the preliminary or final rate for a year
as necessary to account for errors and tax base changes that affected a preliminary or final
rate for either of the two preceding years. Adjustments are allowed to the extent that the
necessary information is available to the commissioner at the time the rates for a year must
be certified, and for the following reasons:

(1) an erroneous report of taxable value by a local official;

(2) an erroneous calculation by the commissioner; and

(3) an increase or decrease in taxable value for commercial-industrial or seasonal
residential recreational property reported on the abstracts of tax lists submitted under
section 275.29 that was not reported on the abstracts of assessment submitted under
section 270C.89 for the same year.

The commissioner may, but need not, make adjustments if the total difference in the tax
levied for the year would be less than $100,000.

EFFECTIVE DATE.

This section is effective for taxes payable in 2014 and
thereafter.

Sec. 19.

Minnesota Statutes 2012, section 275.025, subdivision 2, is amended to read:


Subd. 2.

Commercial-industrial tax capacity.

For the purposes of this section,
"commercial-industrial tax capacity" means the tax capacity of all taxable property
classified as class 3 or class 5(1) under section 273.13, except for electric generation
attached machinery under class 3 and
property described in section 473.625. County
commercial-industrial tax capacity amounts are not adjusted for the captured net tax
capacity of a tax increment financing district under section 469.177, subdivision 2, the
net tax capacity of transmission lines deducted from a local government's total net tax
capacity under section 273.425, or fiscal disparities contribution and distribution net
tax capacities under chapter 276A or 473F.

EFFECTIVE DATE.

This section is effective for taxes payable in 2014 and
thereafter.

Sec. 20.

Minnesota Statutes 2012, section 279.37, subdivision 1a, is amended to read:


Subd. 1a.

Class 3a property.

(a) The delinquent taxes upon a parcel of property
which was classified class 3a, for the previous year's assessment and had a total market
value of $500,000 or less for that same assessment
shall be eligible to be composed into a
confession of judgment with the approval of the county auditor. Property qualifying under
this subdivision shall be subject to the same provisions as provided in this section except
as provided in paragraphs (b) to (d) (f).

(b) Current year taxes and penalty due at the time the confession of judgment
is entered must be paid.

(c) The down payment must include all special assessments due in the current tax
year, all delinquent special assessments, and 20 percent of the ad valorem tax, penalties,
and interest accrued against the parcel. The balance remaining is payable in four equal
annual installments. A municipality as defined in section 429.011, cities of the first class,
and other special assessment authorities, who have certified special assessments against
any parcel of property, may, through resolution, waive the requirement of payment of all
current and delinquent special assessments at the time the confession is entered. If the
municipality, city, or authority grants the waiver, 100 percent of all current year taxes,
special assessments, and penalties due at the time, along with 20 percent of all delinquent
taxes, special assessments, penalties, interest, and fees must be paid. The balance
remaining shall be subject to and included in the installment plan.

(d) When there are current and delinquent special assessments certified and billed
against a parcel, the assessment authority or municipality as defined in section 429.011
may abate under section 375.192, subdivision 2, all special assessments and the penalty
and interest affiliated with the special assessments, and reassess the special assessments,
penalties, and interest accrued thereon, under section 429.071, subdivision 2. The
municipality shall notify the county auditor of its intent to reassess as a precondition
to the entry of the confession of judgment. Upon the notice to abate and reassess, the
municipality shall, through resolution, notify the county auditor to remove all current
and delinquent special assessments and the accrued penalty and interest on the special
assessments, and the payment of all or a portion of the current and delinquent assessments
shall not be required as part of the down payment due at the time the confession of
judgment is entered in accordance with paragraph (c).

(d) (e) The amounts entered in judgment bear interest at the rate provided in section
279.03, subdivision 1a, commencing with the date the judgment is entered. The interest
rate is subject to change each year on the unpaid balance in the manner provided in section
279.03, subdivision 1a.

(f) The county auditor may require conditions on properties including, but not
limited to, environmental remediation action plan requirements, restrictions, or covenants,
when considering a request for approval of eligibility for composition into a confession of
judgment for delinquent taxes upon a parcel of property which was classified class 3a, for
the previous year's assessment.

Sec. 21.

Minnesota Statutes 2012, section 279.37, subdivision 2, is amended to read:


Subd. 2.

Installment payments.

The owner of any such parcel, or any person to
whom the right to pay taxes has been given by statute, mortgage, or other agreement, may
make and file with the county auditor of the county in which the parcel is located a written
offer to pay the current taxes each year before they become delinquent, or to contest the
taxes under Minnesota Statutes 1941, sections 278.01 to 278.13, and agree to confess
judgment for the amount provided, as determined by the county auditor. By filing the
offer, the owner waives all irregularities in connection with the tax proceedings affecting
the parcel and any defense or objection which the owner may have to the proceedings, and
also waives the requirements of any notice of default in the payment of any installment or
interest to become due pursuant to the composite judgment to be so entered. Unless the
property is subject to subdivision 1a,
with the offer, the owner shall (i) tender one-tenth of
the amount of the delinquent taxes, costs, penalty, and interest, and shall (ii) tender all
current year taxes and penalty due at the time the confession of judgment is entered. In the
offer, the owner shall agree to pay the balance in nine equal installments, with interest as
provided in section 279.03, payable annually on installments remaining unpaid from time
to time, on or before December 31 of each year following the year in which judgment
was confessed. The offer must be substantially as follows:

"To the court administrator of the district court of ........... county, I, .....................,
am the owner of the following described parcel of real estate located in ....................
county, Minnesota:

.............................. Upon that real estate there are delinquent taxes for the year ........., and
prior years, as follows: (here insert year of delinquency and the total amount of delinquent
taxes, costs, interest, and penalty). By signing this document I offer to confess judgment in
the sum of $...... and waive all irregularities in the tax proceedings affecting these taxes and
any defense or objection which I may have to them, and direct judgment to be entered for
the amount stated above, minus the sum of $............, to be paid with this document, which
is one-tenth or one-fifth of the amount of the taxes, costs, penalty, and interest stated above.
I agree to pay the balance of the judgment in nine or four equal, annual installments, with
interest as provided in section 279.03, payable annually, on the installments remaining
unpaid. I agree to pay the installments and interest on or before December 31 of each year
following the year in which this judgment is confessed and current taxes each year before
they become delinquent, or within 30 days after the entry of final judgment in proceedings
to contest the taxes under Minnesota Statutes, sections 278.01 to 278.13.

Dated .............., ......."

Sec. 22.

Minnesota Statutes 2012, section 281.14, is amended to read:


281.14 EXPIRATION OF TIME FOR REDEMPTION.

The time for redemption from any tax sale, whether made to the state or to a private
person, shall not expire until notice of expiration of redemption, as provided in section
281.13 281.17, shall have been given.

Sec. 23.

Minnesota Statutes 2012, section 281.17, is amended to read:


281.17 PERIOD FOR REDEMPTION.

Except for properties for which the period of redemption has been limited under
sections 281.173 and 281.174, the following periods for redemption apply.

The period of redemption for all lands sold to the state at a tax judgment sale shall
be three years from the date of sale to the state of Minnesota if the land is within an
incorporated area unless it is: (a) nonagricultural homesteaded land as defined in section
273.13, subdivision 22; (b) homesteaded agricultural land as defined in section 273.13,
subdivision 23
, paragraph (a); or (c) seasonal residential recreational land as defined in
section 273.13, subdivision 22, paragraph (c), or 25, paragraph (d), clause (1), for which
the period of redemption is five years from the date of sale to the state of Minnesota
.

The period of redemption for homesteaded lands as defined in section 273.13,
subdivision 22
, located in a targeted neighborhood as defined in Laws 1987, chapter 386,
article 6, section 4, and sold to the state at a tax judgment sale is three years from the date
of sale. The period of redemption for all lands located in a targeted neighborhood as
defined in Laws 1987, chapter 386, article 6, section 4, except (1) homesteaded lands as
defined in section 273.13, subdivision 22, and (2) for periods of redemption beginning
after June 30, 1991, but before July 1, 1996, lands located in the Loring Park targeted
neighborhood on which a notice of lis pendens has been served, and sold to the state at a
tax judgment sale is one year from the date of sale.

The period of redemption for all real property constituting a mixed municipal solid
waste disposal facility that is a qualified facility under section 115B.39, subdivision 1, is
one year from the date of the sale to the state of Minnesota.

The period of redemption for all other lands sold to the state at a tax judgment
sale shall be five years from the date of sale, except that the period of redemption for
nonhomesteaded agricultural land as defined in section 273.13, subdivision 23, paragraph
(b), shall be two years from the date of sale if at that time that property is owned by a
person who owns one or more parcels of property on which taxes are delinquent, and the
delinquent taxes are more than 25 percent of the prior year's school district levy.

Sec. 24.

Minnesota Statutes 2012, section 290A.03, subdivision 3, is amended to read:


Subd. 3.

Income.

(1) "Income" means the sum of the following:

(a) federal adjusted gross income as defined in the Internal Revenue Code; and

(b) the sum of the following amounts to the extent not included in clause (a):

(i) all nontaxable income;

(ii) the amount of a passive activity loss that is not disallowed as a result of section
469, paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity
loss carryover allowed under section 469(b) of the Internal Revenue Code;

(iii) an amount equal to the total of any discharge of qualified farm indebtedness
of a solvent individual excluded from gross income under section 108(g) of the Internal
Revenue Code;

(iv) cash public assistance and relief;

(v) any pension or annuity (including railroad retirement benefits, all payments
received under the federal Social Security Act, Supplemental Security Income, and
veterans benefits), which was not exclusively funded by the claimant or spouse, or which
was funded exclusively by the claimant or spouse and which funding payments were
excluded from federal adjusted gross income in the years when the payments were made;

(vi) interest received from the federal or a state government or any instrumentality
or political subdivision thereof;

(vii) workers' compensation;

(viii) nontaxable strike benefits;

(ix) the gross amounts of payments received in the nature of disability income or
sick pay as a result of accident, sickness, or other disability, whether funded through
insurance or otherwise;

(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of
1986, as amended through December 31, 1995;

(xi) contributions made by the claimant to an individual retirement account,
including a qualified voluntary employee contribution; simplified employee pension plan;
self-employed retirement plan; cash or deferred arrangement plan under section 401(k)
of the Internal Revenue Code; or deferred compensation plan under section 457 of the
Internal Revenue Code;

(xii) nontaxable scholarship or fellowship grants;

(xiii) the amount of deduction allowed under section 199 of the Internal Revenue
Code;

(xiv) the amount of deduction allowed under section 220 or 223 of the Internal
Revenue Code;

(xv) the amount of tuition expenses required to be added to income under section
290.01, subdivision 19a, clause (12);

(xvi) the amount deducted for certain expenses of elementary and secondary school
teachers under section 62(a)(2)(D) of the Internal Revenue Code; and

(xvii) unemployment compensation.

In the case of an individual who files an income tax return on a fiscal year basis, the
term "federal adjusted gross income" shall mean federal adjusted gross income reflected
in the fiscal year ending in the calendar year. Federal adjusted gross income shall not be
reduced by the amount of a net operating loss carryback or carryforward or a capital loss
carryback or carryforward allowed for the year.

(2) "Income" does not include:

(a) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 102;

(b) amounts of any pension or annuity which was exclusively funded by the claimant
or spouse and which funding payments were not excluded from federal adjusted gross
income in the years when the payments were made;

(c) surplus food or other relief in kind supplied by a governmental agency;

(d) relief granted under this chapter;

(e) child support payments received under a temporary or final decree of dissolution
or legal separation; or

(f) restitution payments received by eligible individuals and excludable interest as
defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of
2001, Public Law 107-16.

(3) The sum of the following amounts may be subtracted from income A claimant,
other than one who has rent constituting property taxes, may subtract from income the
sum of the following amounts
:

(a) for the claimant's first dependent, the exemption amount multiplied by 1.4;

(b) for the claimant's second dependent, the exemption amount multiplied by 1.3;

(c) for the claimant's third dependent, the exemption amount multiplied by 1.2;

(d) for the claimant's fourth dependent, the exemption amount multiplied by 1.1;

(e) for the claimant's fifth dependent, the exemption amount; and

(f) if the claimant or claimant's spouse who occupies the homestead was disabled
or attained the age of 65 on or before December 31 of the year for which the taxes were
levied or rent paid, the exemption amount.

(4) A claimant who has rent constituting property taxes may subtract from income
the sum of the following amounts:

(a) for the claimant's first dependent, the exemption amount multiplied by 1.5;

(b) for the claimant's second dependent, the exemption amount multiplied by 1.4;

(c) for the claimant's third dependent, the exemption amount multiplied by 1.3;

(d) for the claimant's fourth dependent, the exemption amount multiplied by 1.2;

(e) for the claimant's fifth dependent, the exemption amount multiplied by 1.1;

(f) if the claimant was disabled or attained the age of 65 on or before December 31
of the year for which the rent constituting property taxes was paid, the exemption amount
times 1.5; and

(g) if the claimant's spouse who occupies the homestead was disabled or attained the
age of 65 on or before December 31 of the year for which the rent constituting property
taxes were paid, the exemption amount.

For purposes of this subdivision, the "exemption amount" means the exemption
amount under section 151(d) of the Internal Revenue Code for the taxable year for which
the income is reported.

EFFECTIVE DATE.

This section is effective beginning with refunds based on rent
constituting property taxes paid after December 31, 2012.

Sec. 25.

Minnesota Statutes 2012, section 290A.04, subdivision 2a, is amended to read:


Subd. 2a.

Renters.

A claimant whose rent constituting property taxes exceeds the
percentage of the household income stated below must pay an amount equal to the percent
of income shown for the appropriate household income level along with the percent to
be paid by the claimant of the remaining amount of rent constituting property taxes. The
state refund equals the amount of rent constituting property taxes that remain, up to the
maximum state refund amount shown below.

Household Income
Percent of Income
Percent Paid by
Claimant
Maximum
State
Refund
$0 to 3,589
4,910
1.0 percent
5 percent
$
1,190
1,790
3,590 to 4,779
4,911 to 6,530
1.0 percent
10
5 percent
$
1,190
1,790
4,780 to 5,969
6,531 to 8,160
1.1 percent
10
5 percent
$
1,190
1,790
5,970 to 8,369
8,161 to 11,440
1.2 percent
10
5 percent
$
1,190
1,790
8,370 to 10,759
11,441 to 14,710
1.3 percent
15
10 percent
$
1,190
1,790
10,760 to 11,949
14,711 to 16,340
1.4 percent
15
10 percent
$
1,190
1,790
11,950 to 13,139
16,341 to 17,960
1.4 percent
20
15 percent
$
1,190
1,790
13,140 to 15,539
17,961 to 21,240
1.5 percent
20
15 percent
$
1,190
1,790
15,540 to 16,729
21,241 to 22,870
1.6 percent
20
15 percent
$
1,190
1,790
16,730 to 17,919
22,871 to 24,500
1.7 percent
25
20 percent
$
1,190
1,790
17,920 to 20,319
24,501 to 27,780
1.8 percent
25
20 percent
$
1,190
1,790
20,320 to 21,509
27,781 to 29,400
1.9 percent
30
25 percent
$
1,190
1,790
21,510 to 22,699
29,401 to 31,030
2.0 percent
30
25 percent
$
1,190
1,790
22,700 to 23,899
31,031 to 32,670
2.2 percent
30
25 percent
$
1,190
1,790
23,900 to 25,089
32,671 to 34,300
2.4 percent
30
25 percent
$
1,190
1,790
25,090 to 26,289
34,301 to 35,940
2.6 percent
35
30 percent
$
1,190
1,790
26,290 to 27,489
35,941 to 37,580
2.7 percent
35
30 percent
$
1,190
1,790
27,490 to 28,679
37,581 to 39,200
2.8 percent
35
30 percent
$
1,190
1,790
28,680 to 29,869
39,201 to 40,830
2.9 percent
40
35 percent
$
1,190
1,790
29,870 to 31,079
40,831 to 42,490
3.0 percent
40
35 percent
$
1,190
1,790
31,080 to 32,269
42,491 to 44,110
3.1 percent
40
35 percent
$
1,190
1,790
32,270 to 33,459
44,111 to 45,740
3.2 percent
40
35 percent
$
1,190
1,790
33,460 to 34,649
45,741 to 47,370
3.3 percent
45
40 percent
$
1,080
1,630
34,650 to 35,849
47,371 to 49,010
3.4 percent
45
40 percent
$
960
1,440
35,850 to 37,049
49,011 to 50,650
3.5 percent
45
40 percent
$
830
1,240
37,050 to 38,239
50,651 to 52,270
3.5 percent
50
45 percent
$
720
1,080
38,240 to 39,439
52,271 to 53,910
3.5 percent
50
45 percent
$
600
900
38,440 to 40,629
53,911 to 55,540
3.5 percent
50
45 percent
$
360
540
40,630 to 41,819
55,541 to 57,170
3.5 percent
50
45 percent
$
120
180

The payment made to a claimant is the amount of the state refund calculated under
this subdivision. No payment is allowed if the claimant's household income is $41,820 or
more than $57,170.

EFFECTIVE DATE.

This section is effective beginning with refunds based on rent
constituting property taxes paid after December 31, 2012.

Sec. 26.

Minnesota Statutes 2012, section 290A.04, subdivision 4, is amended to read:


Subd. 4.

Inflation adjustment.

(a) Beginning for property tax refunds payable in
calendar year 2002, the commissioner shall annually adjust the dollar amounts of the
income thresholds and the maximum refunds under subdivisions 2 and 2a for inflation.
The commissioner shall make the inflation adjustments in accordance with section 1(f) of
the Internal Revenue Code, except that for purposes of this subdivision the percentage
increase shall be determined as provided in this subdivision.

(b) In adjusting the dollar amounts of the income thresholds and the maximum
refunds under subdivision 2 for inflation, the percentage increase shall be determined from
the year ending on June 30, 2011, to the year ending on June 30 of the year preceding that
in which the refund is payable.

(c) In adjusting the dollar amounts of the income thresholds and the maximum
refunds under subdivision 2a for inflation, the percentage increase shall be determined
from the year ending on June 30, 2000 2013, to the year ending on June 30 of the year
preceding that in which the refund is payable.

(d) The commissioner shall use the appropriate percentage increase to annually
adjust the income thresholds and maximum refunds under subdivisions 2 and 2a for
inflation without regard to whether or not the income tax brackets are adjusted for inflation
in that year. The commissioner shall round the thresholds and the maximum amounts,
as adjusted to the nearest $10 amount. If the amount ends in $5, the commissioner shall
round it up to the next $10 amount.

(e) The commissioner shall annually announce the adjusted refund schedule at the
same time provided under section 290.06. The determination of the commissioner under
this subdivision is not a rule under the Administrative Procedure Act.

EFFECTIVE DATE.

This section is effective beginning with refunds based on
rent paid after December 31, 2013.

Sec. 27.

Minnesota Statutes 2012, section 290C.02, subdivision 6, is amended to read:


Subd. 6.

Forest land.

"Forest land" means land containing a minimum of 20
contiguous acres for which the owner has implemented a forest management plan that was
prepared or updated within the past ten years by an approved plan writer. For purposes of
this subdivision, acres are considered to be contiguous even if they are separated by a road,
waterway, railroad track, or other similar intervening property. At least 50 percent of the
contiguous acreage must meet the definition of forest land in section 88.01, subdivision
7
. For the purposes of sections 290C.01 to 290C.11, forest land does not include (i)
land used for residential or agricultural purposes, (ii) land enrolled in the reinvest in
Minnesota program, a state or federal conservation reserve or easement reserve program
under sections 103F.501 to 103F.531, the Minnesota agricultural property tax law under
section 273.111, or land subject to agricultural land preservation controls or restrictions
as defined in section 40A.02 or under the Metropolitan Agricultural Preserves Act under
chapter 473H, or (iii) land exceeding 60,000 acres that is subject to a single conservation
easement funded under section 97A.056 or a comparable permanent easement conveyed
to a governmental nonprofit entity; or (iv) any land that becomes subject to a conservation
easement funded under section 97A.056 or a comparable permanent easement conveyed to
a governmental or nonprofit entity after the effective date of this act; or (v)
land improved
with a structure, pavement, sewer, campsite, or any road, other than a township road, used
for purposes not prescribed in the forest management plan.

EFFECTIVE DATE.

This section is effective for calculations made in 2013 and
thereafter.

Sec. 28.

Minnesota Statutes 2012, section 290C.03, is amended to read:


290C.03 ELIGIBILITY REQUIREMENTS.

(a) Land may be enrolled in the sustainable forest incentive program under this
chapter if all of the following conditions are met:

(1) the land consists of at least 20 contiguous acres and at least 50 percent of the
land must meet the definition of forest land in section 88.01, subdivision 7, during the
enrollment;

(2) a forest management plan for the land must be prepared by an approved plan
writer and implemented during the period in which the land is enrolled;

(3) timber harvesting and forest management guidelines must be used in conjunction
with any timber harvesting or forest management activities conducted on the land during
the period in which the land is enrolled;

(4) the land must be enrolled for a minimum of eight years;

(5) there are no delinquent property taxes on the land; and

(6) claimants enrolling more than 1,920 acres in the sustainable forest incentive
program must allow year-round, nonmotorized access to fish and wildlife resources and
motorized access on established and maintained roads and trails, unless the road or trail is
temporarily closed for safety, natural resource, or road damage reasons
on enrolled land
except within one-fourth mile of a permanent dwelling or during periods of high fire
hazard as determined by the commissioner of natural resources.

(b) Claimants required to allow access under paragraph (a), clause (6), do not by
that action:

(1) extend any assurance that the land is safe for any purpose;

(2) confer upon the person the legal status of an invitee or licensee to whom a duty
of care is owed; or

(3) assume responsibility for or incur liability for any injury to the person or property
caused by an act or omission of the person.

EFFECTIVE DATE.

This section is effective for calculations made in 2013 and
thereafter.

Sec. 29.

Minnesota Statutes 2012, section 290C.055, is amended to read:


290C.055 LENGTH OF COVENANT.

(a) The covenant remains in effect for a minimum of eight years. If land is removed
from the program before it has been enrolled for four years, the covenant remains in
effect for eight years from the date recorded.

(b) If land that has been enrolled for four years or more is removed from the program
for any reason, there is a waiting period before the covenant terminates. The covenant
terminates on January 1 of the fifth calendar year that begins after the date that:

(1) the commissioner receives notification from the claimant that the claimant wishes
to remove the land from the program under section 290C.10; or

(2) the date that the land is removed from the program under section 290C.11.

(c) Notwithstanding the other provisions of this section, the covenant is terminated:

(1) at the same time that the land is removed from the program due to acquisition of
title or possession for a public purpose under section 290C.10; or

(2) at the request of the claimant after a reduction in payments due to changes in the
payment formula under section 290C.07
.

EFFECTIVE DATE.

This section is effective for calculations made in 2013 and
thereafter.

Sec. 30.

Minnesota Statutes 2012, section 290C.07, is amended to read:


290C.07 CALCULATION OF INCENTIVE PAYMENT.

(a) An approved claimant under the sustainable forest incentive program is eligible
to receive an annual payment. The payment shall equal $7 $7.25 per acre for each acre
enrolled in the sustainable forest incentive program.

(b) The annual payment for each Social Security number or state or federal business
tax identification number must not exceed $100,000.

EFFECTIVE DATE.

This section is effective for calculations made in 2013 and
thereafter.

Sec. 31.

Minnesota Statutes 2012, section 428A.101, is amended to read:


428A.101 DEADLINE FOR SPECIAL SERVICE DISTRICT UNDER
GENERAL LAW.

The establishment of a new special service district after June 30, 2013 2018, requires
enactment of a special law authorizing the establishment.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 32.

Minnesota Statutes 2012, section 428A.21, is amended to read:


428A.21 DEADLINE FOR HOUSING IMPROVEMENT DISTRICTS UNDER
GENERAL LAW.

The establishment of a new housing improvement area after June 30, 2013 2018,
requires enactment of a special law authorizing the establishment of the area.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 33.

Minnesota Statutes 2012, section 435.19, subdivision 2, is amended to read:


Subd. 2.

State property.

In the case of property owned by the state or any
instrumentality thereof, the governing body of the city or town may must determine
the amount that would have been assessed had the land been privately owned. Such
The determination shall be made only after the governing body has held a hearing on
the proposed assessment after at least two weeks' notice of the hearing has been given
by registered or certified mail to the head of the instrumentality, department or agency
having jurisdiction over the property. The instrumentality, department, or agency may,
after consultation and agreement by the governing body of the city or town, pay an
amount less than the amount determined.
The amount thus determined may be paid by
the instrumentality, department or agency from available funds. If no funds are available
and such instrumentality, department or agency is supported in whole or in part by
appropriations from the general fund, then it shall include in its next budget request the
amount thus determined. No instrumentality, department or agency shall be bound by the
determination of the governing body and may pay from available funds or recommend
payment in such lesser amount as it determines is the measure of the benefit received by
the land from the improvement.

EFFECTIVE DATE.

This section is effective for assessment year 2013 and
thereafter, for taxes payable in 2014 and thereafter.

Sec. 34.

Minnesota Statutes 2012, section 435.19, is amended by adding a subdivision
to read:


Subd. 6.

Appropriation.

(a) There is annually appropriated from the general
fund and credited to the agency assessment account in the special revenue fund,
$5,000,000 in fiscal year 2014 and each year thereafter. Money in the agency assessment
account is appropriated annually to the commissioner of revenue for grants to reimburse
instrumentalities, departments, or agencies for payment of special assessments, as required
under subdivision 2.

(b) Of the amounts appropriated in paragraph (a), the commissioner shall first
allocate $2,000,000 in fiscal year 2014 only to the city of Moose Lake to reimburse for
payments related to connection of state facilities to the sewer line.

(c) Notwithstanding the allocation under paragraph (b), the commissioner shall
distribute the reimbursements equally between the metropolitan area and greater Minnesota.

EFFECTIVE DATE.

This section is effective July 1, 2013.

Sec. 35.

Minnesota Statutes 2012, section 473F.08, is amended by adding a subdivision
to read:


Subd. 3c.

Bloomington computation.

Effective for property taxes payable in
2014 through taxes payable in 2023, after the Hennepin County auditor has computed
the areawide portion of the levy for the city of Bloomington pursuant to subdivision 3,
clause (a), the auditor shall annually add $4,000,000 to the city of Bloomington's areawide
portion of the levy. The total areawide portion of the levy for the city of Bloomington,
including the additional $4,000,000 certified pursuant to this subdivision shall be certified
by the Hennepin County auditor to the administrative auditor pursuant to subdivision 5.
The Hennepin County auditor shall distribute to the city of Bloomington the additional
areawide portion of the levy computed pursuant to this subdivision at the same time
that payments are made to the other counties pursuant to subdivision 7a. The additional
distribution to the city of Bloomington under this subdivision terminates effective for
taxes payable year 2023.

EFFECTIVE DATE.

This section is effective for taxes payable years 2014 through
2023.

Sec. 36.

Laws 1988, chapter 645, section 3, as amended by Laws 1999, chapter 243,
article 6, section 9, Laws 2000, chapter 490, article 6, section 15, and Laws 2008, chapter
154, article 2, section 30, is amended to read:


Sec. 3. TAX; PAYMENT OF EXPENSES.

(a) The tax levied by the hospital district under Minnesota Statutes, section 447.34,
must not be levied at a rate that exceeds the amount authorized to be levied under that
section. The proceeds of the tax may be used for all purposes of the hospital district,
except as provided in paragraph (b).

(b) 0.015 percent of taxable market value of the tax in paragraph (a) may be used
solely by the Cook ambulance service and the Orr ambulance service for the purpose of
capital expenditures as it relates to:

(1) ambulance acquisitions for the Cook ambulance service and the Orr ambulance
service and not;

(2) attached and portable equipment for use in and for the ambulances; and

(3) parts and replacement parts for maintenance and repair of the ambulances.

The money may not be used for administrative, operation, or salary expenses.

(c) The part of the levy referred to in paragraph (b) must be administered by the
Cook Hospital and passed on in equal amounts directly to the Cook area ambulance
service board and the city of Orr to be held in trust until funding for a new ambulance is
needed by either the Cook ambulance service or the Orr ambulance service
used for the
purposes in paragraph (b)
.

Sec. 37.

Laws 1999, chapter 243, article 6, section 11, is amended to read:


Sec. 11. CEMETERY LEVY FOR SAWYER BY CARLTON COUNTY.

Subdivision 1.

Levy authorized.

Notwithstanding other law to the contrary, the
Carlton county board of commissioners may annually levy in and for the unorganized
township of Sawyer an amount up to $1,000 annually for cemetery purposes, beginning
with taxes payable in 2000 and ending with taxes payable in 2009
.

Subd. 2.

Effective date.

This section is effective June 1, 1999, without local
approval.

EFFECTIVE DATE.

This section applies to taxes payable in 2014 and thereafter,
and is effective the day after the Carlton county board of commissioners and its chief
clerical officer timely complete their compliance with Minnesota Statutes, section
645.021, subdivisions 2 and 3.

Sec. 38.

Laws 2008, chapter 366, article 5, section 33, the effective date, is amended to
read:


EFFECTIVE DATE.

This section is effective for taxes levied in 2008, payable in
2009, and is repealed effective for taxes levied in 2013 2018, payable in 2014 2019,
and thereafter.

EFFECTIVE DATE.

This section is effective beginning with taxes payable in 2014.

Sec. 39.

Laws 2010, chapter 389, article 1, section 12, the effective date, is amended to
read:


EFFECTIVE DATE.

This section is effective for assessment years 2010 and 2011
through 2016, for taxes payable in 2011 and 2012 through 2017.

EFFECTIVE DATE.

This section is effective for assessment years 2012 through
2016.

Sec. 40. REIMBURSEMENT FOR PROPERTY TAX ABATEMENTS;
APPROPRIATION.

Subdivision 1.

Reimbursement.

The commissioner of revenue shall reimburse
taxing jurisdictions for property tax abatements granted in Hennepin County under Laws
2011, First Special Session chapter 7, article 5, section 13, notwithstanding the time limits
contained in that section. The reimbursements must be made to each taxing jurisdiction
pursuant to the certification of the Hennepin County auditor.

Subd. 2.

Appropriation.

In fiscal year 2014 only, $336,000 is appropriated to the
commissioner of revenue from the general fund to make the payments required in this
section.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 41. ST. PAUL BALL PARK, PROPERTY TAX EXEMPTION; SPECIAL
ASSESSMENT.

Any real or personal property acquired, owned, leased, controlled, used, or occupied
by the city of St. Paul for the primary purpose of providing a ball park for a minor league
baseball team is declared to be acquired, owned, leased, controlled, used, and occupied for
public, governmental, and municipal purposes, and is exempt from ad valorem taxation
by the state or any political subdivision of the state, provided that the properties are
subject to special assessments levied by a political subdivision for a local improvement in
amounts proportionate to and not exceeding the special benefit received by the properties
from the improvement. In determining the special benefit received by the properties, no
possible use of any of the properties in any manner different from their intended use
for providing a minor league ballpark at the time may be considered. Notwithstanding
Minnesota Statutes, section 272.01, subdivision 2, or 273.19, real or personal property
subject to a lease or use agreement between the city and another person for uses related to
the purposes of the operation of the ballpark and related parking facilities is exempt from
taxation regardless of the length of the lease or use agreement. This section, insofar as it
provides an exemption or special treatment, does not apply to any real property that is
leased for residential, business, or commercial development or other purposes different
from those necessary to the provision and operation of the ball park.

EFFECTIVE DATE.

This section is effective the day after compliance by the
governing body of the city of St. Paul with Minnesota Statutes, section 645.021,
subdivisions 2 and 3.

Sec. 42. PUBLIC ENTERTAINMENT FACILITY; PROPERTY TAX
EXEMPTION; SPECIAL ASSESSMENT.

Any real or personal property acquired, owned, leased, controlled, used, or occupied
by the city of Minneapolis for the primary purpose of providing an arena for a professional
basketball team is declared to be acquired, owned, leased, controlled, used, and occupied
for public, governmental, and municipal purposes, and is exempt from ad valorem taxation
by the state or any political subdivision of the state, provided that the properties are
subject to special assessments levied by a political subdivision for a local improvement in
amounts proportionate to and not exceeding the special benefit received by the properties
from the improvement. In determining the special benefit received by the properties, no
possible use of any of the properties in any manner different from their intended use for
providing a professional basketball arena at the time may be considered. Notwithstanding
Minnesota Statutes, section 272.01, subdivision 2, or 273.19, real or personal property
subject to a lease or use agreement between the city and another person for uses related to
the purposes of the operation of the arena and related parking facilities is exempt from
taxation regardless of the length of the lease or use agreement. This section, insofar as
it provides an exemption or special treatment, does not apply to any real property that
is leased for residential, business, or commercial development, or for other purposes
different from those necessary to the provision and operation of the arena.

EFFECTIVE DATE.

This section is effective the day after compliance by the
governing body of the city of Minneapolis with Minnesota Statutes, section 645.021,
subdivisions 2 and 3.

Sec. 43. PUBLIC ENTERTAINMENT FACILITY; CONSTRUCTION
MANAGER AT RISK.

(a) For any real or personal property acquired, owned, leased, controlled, used, or
occupied by the city of Minneapolis for the primary purpose of providing an arena for
a professional basketball team, the city of Minneapolis may contract for construction,
materials, supplies, and equipment in accordance with Minnesota Statutes, section
471.345, except that the city may employ or contract with persons, firms, or corporations
to perform one or more or all of the functions of an engineer, architect, construction
manager, or program manager with respect to all or any part of a project to renovate,
refurbish, and remodel the arena under either the traditional design-bid-build or
construction manager at risk, or a combination thereof.

(b) The city may prepare a request for proposals for one or more of the functions
described in paragraph (a). The request must be published in a newspaper of general
circulation. The city may prequalify offerors by issuing a request for qualifications, in
advance of the request for proposals, and select a short list of responsible offerors to
submit proposals.

(c) As provided in the request for proposals, the city may conduct discussions and
negotiations with responsible offerors in order to determine which proposal is most
advantageous to the city and to negotiate the terms of an agreement. In conducting
discussions, there shall be no disclosure of any information derived from proposals
submitted by competing offerors and the content of all proposals is nonpublic data under
Minnesota Statutes, chapter 13, until such time as a notice to award a contract is given
by the city.

(d) Upon agreement on the guaranteed maximum price, the construction manager
or program manager may enter into contracts with subcontractors for labor, materials,
supplies, and equipment for the renovation project through the process of public bidding,
except that the construction manager or program manager may, with the consent of the city:

(1) narrow the listing of eligible bidders to those that the construction manager
or program manager determines to possess sufficient expertise to perform the intended
functions;

(2) award contracts to the subcontractors that the construction manager or program
manager determines provide the best value under a request for proposals, as described
in Minnesota Statutes, section 16C.28, subdivision 1, paragraph (a), clause (2)(c), that
are not required to be the lowest responsible bidder; and

(3) for work the construction manager or program manager determines to be
critical to the completion schedule, perform work with its own forces without soliciting
competitive bids or proposals, if the construction manager or program manager provides
evidence of competitive pricing.

EFFECTIVE DATE.

This section is effective the day after compliance by the
governing body of the city of Minneapolis with Minnesota Statutes, section 645.021,
subdivisions 2 and 3.

Sec. 44. MORATORIUM ON CHANGES IN ASSESSMENT PRACTICE.

(a) An assessor may not deviate from current practices or policies used generally in
assessing or determining the taxable status of property used in the production of biofuels,
wine, beer, distilled beverages, or dairy products.

(b) An assessor may not change the taxable status of any existing property involved
in the industrial processes identified in paragraph (a), unless the change is made as a result
of a change in the use of property, or to correct an error. For currently taxable properties,
the assessor may change the estimated market value of the property.

EFFECTIVE DATE.

This section is effective for assessment years 2013 and 2014
only.

Sec. 45. STUDY AND REPORT ON CERTAIN PROPERTY USED IN
BUSINESS AND PRODUCTION.

In order to provide the legislature with information and recommendations related
to the past, present, and future options for assessment of property used in business
and production activities, the commissioner of revenue with the cooperation of the
commissioners of agriculture and economic development must study the impact of
alternative interpretations and application related to the real and personal property
provisions contained in Minnesota Statutes, section 272.03, subdivisions 1 and 2. The
commissioner must report a summary of findings and recommendations to the chairs and
ranking minority members of the agriculture, energy, and tax committees of the senate and
house of representatives by February 1, 2014. The commissioner shall provide for the
involvement and participation stakeholders from the business and production industry in
the study and recommendations. The study and recommendations shall include, but not
be limited to:

(1) the past and present tax application to process in the production of a product;

(2) exemption from real property for process components of production such as
tanks or containment vessels or other devices wherein a molecular, chemical, or biological
change occurs such that the intended output from the production process is a different
substance from that which was introduced into the tanks, vessels, or other devices
and removal of a tank, device or vessel from the process that would stop or harm the
production of the final intended product;

(3) definitions for process equipment;

(4) the potential economic and competitive impact in relation to other midwestern
states;

(5) the impact on state and local taxes from 2009 to the present and into the future;

(6) the past, present, and future impact on business and production industries;

(7) impact on Minnesota's renewable energy goal attainment; and

(8) other elements considered important for legislative consideration.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 46. REENROLLMENT; SUSTAINABLE FOREST INCENTIVE
PROGRAM.

A person who elected to terminate participation in the sustainable forest incentive
program, as provided in Laws 2011, First Special Session chapter 7, article 6, section 12,
may reenroll lands for which the claimant terminated participation. A person must apply
for reenrollment under this section within 60 days after the effective date of this section.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 47. PROPERTY TAX SAVINGS REPORT.

(a) In addition to the certification of its proposed property tax levy under Minnesota
Statutes, section 275.065, each city that has a population over 500 and each county shall
also include the amount of sales and use tax paid, or was estimated to be paid, in 2012.

(b) At the time the notice of the proposed property taxes is mailed as required under
Minnesota Statutes, section 275.065, subdivision 3, the county treasurer shall also include
a separate statement providing a list of sales and use tax certified by the county and cities
within their jurisdiction.

(c) At the public hearing required under Minnesota Statutes, section 275.065,
subdivision 3, the county and city must discuss the estimated savings realized to their
budgets that resulted from the sales tax exemption authorized under Minnesota Statutes,
section 297A.70, subdivision 2, and how those savings will be used for property tax levy
reductions, fee reductions, and other purposes as deemed appropriate.

Reasonable costs of preparing the notice required in this section must be apportioned
between taxing jurisdictions as follows:

(1) one-half is allocated to the county; and

(2) one-half is allocated among the cities.

The amount allocated in clause (2) must be further apportioned among all the cities
in the proportion that the number of parcels in the city bears to the number of parcels in all
the cities that have populations over 500.

EFFECTIVE DATE.

This section is effective the day following final enactment,
for taxes levied in 2013 and payable in 2014.

Sec. 48. METROPOLITAN FISCAL DISPARITIES WORKING GROUP.

(a) The commissioner of revenue shall convene a working group of interested
individuals to examine the issues faced by local governments that are required to pay for
services which are otherwise generally provided throughout the seven-county metropolitan
area by the Metropolitan Council. The commissioner of revenue shall chair the initial
meeting, and the working group shall elect a chair at that initial meeting. The working
group will meet at the call of the chair, but must meet at least three times during the
legislative interim. Members of the working group shall serve without compensation. The
commissioner of revenue must provide administrative support to the working group.

(b) The working group may make its advisory recommendations to the chairs of
house of representatives and senate tax committees on or before February 1, 2014, at
which time the working group shall expire.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 49. REPEALER.

Minnesota Statutes 2012, section 275.025, subdivision 4, is repealed.

EFFECTIVE DATE.

This section is effective for taxes payable in 2014.

ARTICLE 3

EDUCATION AIDS AND LEVIES

Section 1.

Minnesota Statutes 2012, section 124D.11, subdivision 1, is amended to read:


Subdivision 1.

General education revenue.

(a) General education revenue must
be paid to a charter school as though it were a district. The general education revenue
for each adjusted marginal cost pupil unit is the state average general education revenue
per pupil unit, plus the referendum equalization aid allowance in the pupil's district of
residence, minus an amount equal to the product of the formula allowance according
to section 126C.10, subdivision 2, times .0485 .0465, calculated without basic skills
revenue, extended time revenue, alternative teacher compensation revenue, equity
revenue, pension adjustment revenue,
transition revenue, education advancement revenue,
and transportation sparsity revenue, plus basic skills revenue, extended time revenue,
basic alternative teacher compensation aid according to section 126C.10, subdivision 34,
equity revenue, pension adjustment revenue, and transition revenue as though the school
were a school district. The general education revenue for each extended time marginal
cost
pupil unit equals $4,378 $4,722.

(b) Notwithstanding paragraph (a), for charter schools in the first year of operation,
general education revenue shall be computed using the number of adjusted pupil units
in the current fiscal year.

EFFECTIVE DATE.

This section is effective for revenue for fiscal year 2015
and later.

Sec. 2.

[124D.862] ACHIEVEMENT AND INTEGRATION REVENUE.

Subdivision 1.

Eligibility.

A school district is eligible for achievement and
integration revenue under this section if the district has a biennial achievement and
integration plan approved by the department under section 124D.861. Priority for funding
must be given to eligible school districts that include methods that have been effective in
reducing disparities in student achievement in the district's biennial plan.

Subd. 2.

Achievement and integration revenue.

(a) For fiscal year 2014, initial
achievement and integration revenue for an eligible district equals the lesser of the
district's expenditure for the fiscal year under its budget according to subdivision 1a or the
greater of: (1) 90 percent of the district's integration revenue for fiscal year 2013 under
Minnesota Statutes 2012, section 124D.86, or (2) the sum of: (i) $327 times the district's
adjusted pupil units for the prior fiscal year computed using the pupil unit weights effective
under section 126C.05 for fiscal year 2015 and later, times the district's enrollment of
protected students as a percent of its total enrollment on October 1 of the prior fiscal year,
plus (ii) $100 times the district's adjusted pupil units for the prior fiscal year computed
using the pupil unit weights effective under section 126C.05 for fiscal year 2015 and later
times the district's enrollment of protected students as a percent of its total enrollment on
October 1 of the prior fiscal year times the district's focus rating for the prior fiscal year
under Minnesota's 2012 Elementary and Secondary Education Act flexibility request.

(b) For fiscal year 2015 and later, initial achievement and integration revenue for
an eligible district equals the lesser of the district's expenditure for the fiscal year under
its budget according to subdivision 1a or the greater of: (1) 63 percent of the district's
integration revenue for fiscal year 2013 under Minnesota Statutes 2012, section 124D.86,
or (2) the sum of: (i) $327 times the district's adjusted pupil units for the prior fiscal year
computed using the pupil unit weights effective under section 126C.05 for fiscal year 2015
and later, times the district's enrollment of protected students as a percent of its total
enrollment on October 1 of the prior fiscal year, plus (ii) $100 times the district's adjusted
pupil units for the prior fiscal year computed using the pupil unit weights effective under
section 126C.05 for fiscal year 2015 and later, times the district's enrollment of protected
students as a percent of its total enrollment on October 1 of the prior fiscal year times the
district's focus rating for the prior fiscal year under Minnesota's 2012 Elementary and
Secondary Education Act flexibility request.

(c) In each year, .02 percent of each district's initial achievement and integration
revenue is transferred to the Department of Education for the oversight and accountability
activities required under this section and section 124D.861.

(d) A district that did not meet its achievement goals established in section 124D.861
for the previous biennium must report to the commissioner the reasons why the goals were
not met. The district must submit a two-year improvement plan to achieve the unmet goals
from its achievement and integration plan. A district that does not meet its goals in the
improvement plan must have its initial achievement and integration revenue reduced by
20 percent for the current year.

(e) Any revenue saved by the reductions in paragraph (d) must be proportionately
reallocated on a per adjusted pupil unit basis to all districts that met their achievement
goals in the previous biennium.

Subd. 3.

Achievement and integration aid.

A district's achievement and
integration aid for fiscal year 2014 and later equals the difference between the district's
achievement and integration revenue and its achievement and integration levy.

Subd. 4.

Achievement and integration levy.

For fiscal year 2014 and later,
a district may levy an amount equal to 30 percent of the district's achievement and
integration revenue as defined in subdivision 2. The Department of Education must adjust
the levy for taxes payable in 2014 by the difference between the levy under this section
and the amount levied by the district under Laws 2011, First Special Session chapter 11,
article 2, section 49, paragraph (f).

Subd. 5.

Revenue reserved.

Integration revenue received under this section must
be reserved and used only for the programs authorized in subdivision 6.

Subd. 6.

Revenue uses.

At least 80 percent of a district's achievement and
integration revenue received under this section must be used for innovative and integrated
learning environments, family engagement activities, and other approved programs
providing direct services to students. Up to 20 percent of the revenue may be used for
professional development and staff development activities, and not more than ten percent
of this share of the revenue may be used for administrative expenditures.

EFFECTIVE DATE.

This section is effective for revenue for fiscal year 2014
and later.

Sec. 3.

Minnesota Statutes 2012, section 126C.10, subdivision 1, is amended to read:


Subdivision 1.

General education revenue.

(a) For fiscal years 2013 and 2014, the
general education revenue for each district equals the sum of the district's basic revenue,
extended time revenue, gifted and talented revenue, small schools revenue, basic skills
revenue, training and experience revenue, secondary sparsity revenue, elementary sparsity
revenue, transportation sparsity revenue, total operating capital revenue, equity revenue,
alternative teacher compensation revenue, and transition revenue.

(b) For fiscal year 2015 and later, the general education revenue for each district
equals the sum of the district's basic revenue, extended time revenue, gifted and talented
revenue, declining enrollment revenue, small schools revenue, basic supplemental
revenue, basic skills revenue, secondary sparsity revenue, elementary sparsity revenue,
transportation sparsity revenue, total operating capital revenue, education advancement
revenue, equity revenue, pension adjustment revenue, safe schools revenue, and transition
revenue.

Sec. 4.

Minnesota Statutes 2012, section 126C.10, subdivision 27, is amended to read:


Subd. 27.

District equity index.

(a) A district's equity index equals the greater
of zero or
the ratio of the sum of the district equity gap amount to the regional equity
gap amount
$1,600 minus the district's referendum revenue under section 126C.17,
subdivision 4, per adjusted pupil unit to $1,600
.

(b) A charter school's equity index equals the greater of zero or the ratio of $1,600
minus the school's general education revenue attributable to referendum equalization aid
under section 124D.11, subdivision 1, per adjusted pupil unit to $1,600.

EFFECTIVE DATE.

This section is effective for revenue for fiscal year 2015
and later.

Sec. 5.

Minnesota Statutes 2012, section 126C.10, is amended by adding a subdivision
to read:


Subd. 37.

Education advancement revenue.

The education advancement revenue
for each district equals the advancement allowance times the adjusted pupil units for the
school year. The advancement allowance for fiscal year 2015 and later years is $300.

EFFECTIVE DATE.

This section is effective for revenue for fiscal year 2015
and later.

Sec. 6.

Minnesota Statutes 2012, section 126C.10, is amended by adding a subdivision
to read:


Subd. 39.

Education advancement levy.

To obtain education advancement
revenue, a district may levy an amount not more than the product of its education
advancement revenue for the fiscal year times the lesser of one or the ratio of its
referendum market value per resident pupil unit to the education advancement revenue
equalizing factor. The education advancement revenue equalizing factor equals $785,000.
If a district adopts a board resolution to levy less than the permitted levy, the district's
education advancement aid shall be reduced proportionately.

EFFECTIVE DATE.

This section is effective for revenue for fiscal year 2015
and later.

Sec. 7.

Minnesota Statutes 2012, section 126C.10, is amended by adding a subdivision
to read:


Subd. 40.

Education advancement aid.

For fiscal year 2015 and later, a school
district's education advancement aid is the product of: (1) the difference between the
district's education advancement revenue and the education advancement levy; times (2)
the ratio of the actual amount levied to the permitted levy.

EFFECTIVE DATE.

This section is effective for revenue for fiscal year 2015
and later.

Sec. 8.

Minnesota Statutes 2012, section 126C.13, is amended by adding a subdivision
to read:


Subd. 3c.

General education levy; districts off the formula.

(a) If the amount of
the general education levy for a district exceeds the district's general education revenue,
excluding equity revenue, transition revenue, and education advancement revenue, the
amount of the general education levy must be limited to the district's general education
revenue, excluding equity revenue, transition revenue, and education advancement revenue.

(b) A levy made according to this subdivision shall also be construed to be the levy
made according to subdivision 3b.

Sec. 9.

Minnesota Statutes 2012, section 126C.13, subdivision 4, is amended to read:


Subd. 4.

General education aid.

(a) For fiscal years 2007 2013 and later 2014 only,
a district's general education aid is the sum of the following amounts:

(1) general education revenue, excluding equity revenue, total operating capital
revenue, alternative teacher compensation revenue, and transition revenue;

(2) operating capital aid under section 126C.10, subdivision 13b;

(3) equity aid under section 126C.10, subdivision 30;

(4) alternative teacher compensation aid under section 126C.10, subdivision 36;

(5) transition aid under section 126C.10, subdivision 33;

(6) shared time aid under section 126C.01, subdivision 7;

(7) referendum aid under section 126C.17, subdivisions 7 and 7a; and

(8) online learning aid according to section 124D.096.

(b) For fiscal year 2015 and later, a district's general education aid equals:

(1) general education revenue, excluding equity revenue, transition revenue, and
education advancement revenue, minus the general education levy, multiplied times the
ratio of the actual amount of general education levied to the permitted general education
levy; plus

(2) equity aid under section 126C.10, subdivision 30; plus

(3) transition aid under section 126C.10, subdivision 33; plus

(4) education advancement aid under section 126C.10, subdivision 40; plus

(5) shared time aid under section 126C.10, subdivision 7; plus

(6) referendum aid under section 126C.17, subdivisions 7 and 7a; plus

(7) online learning aid under section 124D.096.

Sec. 10.

Minnesota Statutes 2012, section 126C.17, is amended to read:


126C.17 REFERENDUM REVENUE.

Subdivision 1.

Referendum allowance.

(a) For fiscal year 2003 and later, a district's
initial referendum revenue allowance equals the sum of the allowance under section
126C.16, subdivision 2, plus any additional allowance per resident marginal cost pupil
unit authorized under subdivision 9 before May 1, 2001, for fiscal year 2002 and later,
plus the referendum conversion allowance approved under subdivision 13, minus $415.
For districts with more than one referendum authority, the reduction must be computed
separately for each authority. The reduction must be applied first to the referendum
conversion allowance and next to the authority with the earliest expiration date. A
district's initial referendum revenue allowance may not be less than zero.

(b) For fiscal year 2003, a district's referendum revenue allowance equals the initial
referendum allowance plus any additional allowance per resident marginal cost pupil unit
authorized under subdivision 9 between April 30, 2001, and December 30, 2001, for
fiscal year 2003 and later.

(c) For fiscal year 2004 and later, a district's referendum revenue allowance equals
the sum of:

(1) the product of (i) the ratio of the resident marginal cost pupil units the district
would have counted for fiscal year 2004 under Minnesota Statutes 2002, section 126C.05,
to the district's resident marginal cost pupil units for fiscal year 2004, times (ii) the initial
referendum allowance plus any additional allowance per resident marginal cost pupil unit
authorized under subdivision 9 between April 30, 2001, and May 30, 2003, for fiscal
year 2003 and later, plus

(2) any additional allowance per resident marginal cost pupil unit authorized under
subdivision 9 after May 30, 2003, for fiscal year 2005 and later.

(a) A district's initial referendum allowance for fiscal year 2015 equals the result of
the following calculations:

(1) multiply the referendum allowance the district would have received for fiscal
year 2015 under section 126C.17, subdivision 1, based on elections held before July 1,
2013, by the resident marginal cost pupil units the district would have counted for fiscal
year 2015 under section 126C.05;

(2) add to the result of clause (1) the adjustment the district would have received
under section 127A.47, subdivision 7, paragraphs (a), (b), and (c), based on elections
held before July 1, 2013;

(3) divide the result of clause (2) by the district's adjusted pupil units for fiscal
year 2015, notwithstanding section 126C.05, subdivision 1, paragraph (d), calculated as
though a kindergarten pupil not included in section 126C.05, subdivision 1, paragraph
(c), is counted as 0.55 pupil units, and subtract $300; and

(4) if the result of clause (3) is less than zero, set the allowance to zero.

(b) A district's referendum allowance equals the sum of the district's initial
referendum allowance for fiscal year 2015, plus any additional referendum allowance per
adjusted pupil unit authorized after June 30, 2013, minus any allowances expiring in fiscal
year 2016 or later. For a district with more than one referendum allowance for fiscal year
2015 under section 126C.17, the allowance calculated under paragraph (a) must be divided
into components such that the same percentage of the district's allowance expires at the
same time as the old allowances would have expired under section 126C.17.

Subd. 2.

Referendum allowance limit.

(a) Notwithstanding subdivision 1, for fiscal
year 2007 2015 and later, a district's referendum allowance must not exceed the greater of:

(1) the sum of: (i) a district's referendum allowance for fiscal year 1994 times 1.177
times the annual inflationary increase as calculated under paragraph (b) plus (ii) its
referendum conversion allowance for fiscal year 2003, minus (iii) $215;

(2) the greater of (i): 26 percent of the formula allowance or (ii) $1,294 times is the
base referendum amount calculated in paragraph (b) minus $300. A district's referendum
allowance under this subdivision must not be less than zero.

(b) The base referendum amount is the annual inflationary increase as calculated
under paragraph (b); or times the greatest of:

(1) $1,845;

(2) the sum of the referendum revenue the district would have received for fiscal year
2015 under section 126C.17, subdivision 4, based on elections held before July 1, 2013,
and the adjustment the district would have received under section 127A.47, subdivision
7, paragraphs (a), (b), and (c), based on elections held before July 1, 2013, divided by
the district's adjusted pupil units for fiscal year 2015, notwithstanding section 126C.05,
subdivision 1, paragraph (d), calculated as though a kindergarten pupil not included in
section 126C.05, subdivision 1, paragraph (c), is counted as 0.55 pupil units; or

(3) the product of the referendum allowance limit the district would have received
for fiscal year 2015 under section 126C.17, subdivision 2, and the resident marginal cost
pupil units the district would have received for fiscal year 2015 under section 126C.05,
subdivision 6, plus the adjustment the district would have received under section 127A.47,
subdivision 7, paragraphs (a), (b), and (c), based on elections held before July 1, 2013,
divided by the district's adjusted pupil units for fiscal year 2015, notwithstanding section
126C.05, subdivision 1, paragraph (d), calculated as though a kindergarten pupil not
included in section 126C.05, subdivision 1, paragraph (c), is counted as 0.55 pupil units; or

(3) (4) for a newly reorganized district created after July 1, 2006 2013, the referendum
revenue authority for each reorganizing district in the year preceding reorganization divided
by its resident marginal cost adjusted pupil units for the year preceding reorganization.

(b) (c) For purposes of this subdivision, for fiscal year 2005 2016 and later,
"inflationary increase" means one plus the percentage change in the Consumer Price Index
for urban consumers, as prepared by the United States Bureau of Labor Standards, for the
current fiscal year to fiscal year 2004 2015. For fiscal years 2009 year 2016 and later, for
purposes of paragraph (a), clause (1) (3), the inflationary increase equals the inflationary
increase for fiscal year 2008 plus
one-fourth of the percentage increase in the formula
allowance for that year compared with the formula allowance for fiscal year 2008 2015.

Subd. 3.

Sparsity exception.

A district that qualifies for sparsity revenue under
section 126C.10 is not subject to a referendum allowance limit.

Subd. 4.

Total referendum revenue.

The total referendum revenue for each district
equals the district's referendum allowance times the resident marginal cost adjusted pupil
units for the school year.

Subd. 5.

Referendum equalization revenue.

(a) For fiscal year 2003 and later,
A district's referendum equalization revenue equals the sum of the first tier referendum
equalization revenue and the second tier referendum equalization revenue.

(b) A district's first tier referendum equalization revenue equals the district's first
tier referendum equalization allowance times the district's resident marginal cost adjusted
pupil units for that year.

(c) For fiscal year 2006, a district's first tier referendum equalization allowance
equals the lesser of the district's referendum allowance under subdivision 1 or $500. For
fiscal year 2007, a district's first tier referendum equalization allowance equals the lesser
of the district's referendum allowance under subdivision 1 or $600.

For fiscal year 2008 and later, A district's first tier referendum equalization allowance
equals the lesser of the district's referendum allowance under subdivision 1 or $700 $775.

(d) A district's second tier referendum equalization revenue equals the district's
second tier referendum equalization allowance times the district's resident marginal cost
adjusted pupil units for that year.

(e) For fiscal year 2006, a district's second tier referendum equalization allowance
equals the lesser of the district's referendum allowance under subdivision 1 or 18.6 percent
of the formula allowance, minus the district's first tier referendum equalization allowance.
For fiscal year 2007 and later,
A district's second tier referendum equalization allowance
equals the lesser of the district's referendum allowance under subdivision 1 or 26 25 percent
of the formula allowance, minus the district's first tier referendum equalization allowance.

(f) Notwithstanding paragraph (e), the second tier referendum allowance for a
district qualifying for secondary sparsity revenue under section 126C.10, subdivision 7, or
elementary sparsity revenue under section 126C.10, subdivision 8, equals the district's
referendum allowance under subdivision 1 minus the district's first tier referendum
equalization allowance.

Subd. 6.

Referendum equalization levy.

(a) For fiscal year 2003 and later,
a district's referendum equalization levy equals the sum of the first tier referendum
equalization levy and the second tier referendum equalization levy.

(b) A district's first tier referendum equalization levy equals the district's first tier
referendum equalization revenue times the lesser of one or the ratio of the district's
referendum market value per resident marginal cost pupil unit to $476,000 $538,200.

(c) A district's second tier referendum equalization levy equals the district's second
tier referendum equalization revenue times the lesser of one or the ratio of the district's
referendum market value per resident marginal cost pupil unit to $270,000 $259,415.

Subd. 7.

Referendum equalization aid.

(a) A district's referendum equalization aid
equals the difference between its referendum equalization revenue and levy.

(b) If a district's actual levy for first or second tier referendum equalization revenue
is less than its maximum levy limit for that tier, aid shall be proportionately reduced.

(c) Notwithstanding paragraph (a), the referendum equalization aid for a district,
where the referendum equalization aid under paragraph (a) exceeds 90 percent of the
referendum revenue, must not exceed 26 25 percent of the formula allowance times the
district's resident marginal cost adjusted pupil units. A district's referendum levy is
increased by the amount of any reduction in referendum aid under this paragraph.

Subd. 7a.

Referendum tax base replacement aid.

For each school district that
had a referendum allowance for fiscal year 2002 exceeding $415, for each separately
authorized referendum levy, the commissioner of revenue, in consultation with the
commissioner of education, shall certify the amount of the referendum levy in taxes
payable year 2001 attributable to the portion of the referendum allowance exceeding $415
levied against property classified as class 2, noncommercial 4c(1), or 4c(4), under section
273.13, excluding the portion of the tax paid by the portion of class 2a property consisting
of the house, garage, and surrounding one acre of land. The resulting amount must be
used to reduce the district's referendum levy amount otherwise determined, and must be
paid to the district each year that the referendum authority remains in effect, is renewed,
or new referendum authority is approved. The aid payable under this subdivision must
be subtracted from the district's referendum equalization aid under subdivision 7. The
referendum equalization aid after the subtraction must not be less than zero.

Subd. 7b.

Referendum aid guarantee.

(a) Notwithstanding subdivision 7, a
district's referendum equalization aid for fiscal year 2015 must not be less than the sum of
the referendum equalization aid the district would have received for fiscal year 2015 under
section 126C.17, subdivision 7, and the adjustment the district would have received under
section 127A.47, subdivision 7, paragraphs (a), (b), and (c).

(b) Notwithstanding subdivision 7, referendum equalization aid for fiscal year 2016
and later, for a district qualifying for additional aid under paragraph (a) for fiscal year
2015, must not be less than the product of (1) the district's referendum equalization aid
for fiscal year 2015, times (2) the lesser of one or the ratio of the district's referendum
revenue for that school year to the district's referendum revenue for fiscal year 2015, times
(3) the lesser of one or the ratio of the district's referendum market value used for fiscal
year 2015 referendum equalization calculations to the district's referendum market value
used for that year's referendum equalization calculations.

Subd. 8.

Unequalized referendum levy.

Each year, a district may levy an amount
equal to the difference between its total referendum revenue according to subdivision 4
and its referendum equalization revenue according to subdivision 5.

Subd. 9.

Referendum revenue.

(a) The revenue authorized by section 126C.10,
subdivision 1
, may be increased in the amount approved by the voters of the district
at a referendum called for the purpose. The referendum may be called by the board.
The referendum must be conducted one or two calendar years before the increased levy
authority, if approved, first becomes payable. Only one election to approve an increase
may be held in a calendar year. Unless the referendum is conducted by mail under
subdivision 11, paragraph (a), the referendum must be held on the first Tuesday after the
first Monday in November. The ballot must state the maximum amount of the increased
revenue per resident marginal cost adjusted pupil unit. The ballot may state a schedule,
determined by the board, of increased revenue per resident marginal cost adjusted pupil
unit that differs from year to year over the number of years for which the increased revenue
is authorized or may state that the amount shall increase annually by the rate of inflation.
For this purpose, the rate of inflation shall be the annual inflationary increase calculated
under subdivision 2, paragraph (b). The ballot may state that existing referendum levy
authority is expiring. In this case, the ballot may also compare the proposed levy authority
to the existing expiring levy authority, and express the proposed increase as the amount, if
any, over the expiring referendum levy authority. The ballot must designate the specific
number of years, not to exceed ten, for which the referendum authorization applies. The
ballot, including a ballot on the question to revoke or reduce the increased revenue amount
under paragraph (c), must abbreviate the term "per resident marginal cost adjusted pupil
unit" as "per pupil." The notice required under section 275.60 may be modified to read, in
cases of renewing existing levies at the same amount per pupil as in the previous year:

"BY VOTING "YES" ON THIS BALLOT QUESTION, YOU ARE VOTING
TO EXTEND AN EXISTING PROPERTY TAX REFERENDUM THAT IS
SCHEDULED TO EXPIRE."

The ballot may contain a textual portion with the information required in this
subdivision and a question stating substantially the following:

"Shall the increase in the revenue proposed by (petition to) the board of .........,
School District No. .., be approved?"

If approved, an amount equal to the approved revenue per resident marginal cost
adjusted pupil unit times the resident marginal cost adjusted pupil units for the school
year beginning in the year after the levy is certified shall be authorized for certification
for the number of years approved, if applicable, or until revoked or reduced by the voters
of the district at a subsequent referendum.

(b) The board must prepare and deliver by first class mail at least 15 days but no more
than 30 days before the day of the referendum to each taxpayer a notice of the referendum
and the proposed revenue increase. The board need not mail more than one notice to any
taxpayer. For the purpose of giving mailed notice under this subdivision, owners must be
those shown to be owners on the records of the county auditor or, in any county where
tax statements are mailed by the county treasurer, on the records of the county treasurer.
Every property owner whose name does not appear on the records of the county auditor
or the county treasurer is deemed to have waived this mailed notice unless the owner
has requested in writing that the county auditor or county treasurer, as the case may be,
include the name on the records for this purpose. The notice must project the anticipated
amount of tax increase in annual dollars for typical residential homesteads, agricultural
homesteads, apartments, and commercial-industrial property within the school district.

The notice for a referendum may state that an existing referendum levy is expiring
and project the anticipated amount of increase over the existing referendum levy in
the first year, if any, in annual dollars for typical residential homesteads, agricultural
homesteads, apartments, and commercial-industrial property within the district.

The notice must include the following statement: "Passage of this referendum will
result in an increase in your property taxes." However, in cases of renewing existing levies,
the notice may include the following statement: "Passage of this referendum extends an
existing operating referendum at the same amount per pupil as in the previous year."

(c) A referendum on the question of revoking or reducing the increased revenue
amount authorized pursuant to paragraph (a) may be called by the board. A referendum to
revoke or reduce the revenue amount must state the amount per resident marginal cost
pupil unit by which the authority is to be reduced. Revenue authority approved by the
voters of the district pursuant to paragraph (a) must be available to the school district at
least once before it is subject to a referendum on its revocation or reduction for subsequent
years. Only one revocation or reduction referendum may be held to revoke or reduce
referendum revenue for any specific year and for years thereafter.

(d) The approval of 50 percent plus one of those voting on the question is required to
pass a referendum authorized by this subdivision.

(e) At least 15 days before the day of the referendum, the district must submit a
copy of the notice required under paragraph (b) to the commissioner and to the county
auditor of each county in which the district is located. Within 15 days after the results
of the referendum have been certified by the board, or in the case of a recount, the
certification of the results of the recount by the canvassing board, the district must notify
the commissioner of the results of the referendum.

Subd. 10.

School referendum levy; market value.

A school referendum levy must
be levied against the referendum market value of all taxable property as defined in section
126C.01, subdivision 3. Any referendum levy amount subject to the requirements of this
subdivision must be certified separately to the county auditor under section 275.07.

Subd. 11.

Referendum date.

(a) Except for a referendum held under paragraph (b),
any referendum under this section held on a day other than the first Tuesday after the first
Monday in November must be conducted by mail in accordance with section 204B.46.
Notwithstanding subdivision 9, paragraph (b), to the contrary, in the case of a referendum
conducted by mail under this paragraph, the notice required by subdivision 9, paragraph (b),
must be prepared and delivered by first-class mail at least 20 days before the referendum.

(b) In addition to the referenda allowed in subdivision 9, clause (a), the commissioner
may grant authority to a district to hold a referendum on a different day if the district is in
statutory operating debt and has an approved plan or has received an extension from the
department to file a plan to eliminate the statutory operating debt.

(c) The commissioner must approve, deny, or modify each district's request for a
referendum levy on a different day within 60 days of receiving the request from a district.

Subd. 13.

Referendum conversion allowance.

A school district that received
supplemental or transition revenue in fiscal year 2002 may convert its supplemental
revenue conversion allowance and transition revenue conversion allowance to additional
referendum allowance under subdivision 1 for fiscal year 2003 and thereafter. A majority
of the school board must approve the conversion at a public meeting before November 1,
2001. For a district with other referendum authority, the referendum conversion allowance
approved by the board continues until the portion of the district's other referendum
authority with the earliest expiration date after June 30, 2006, expires. For a district
with no other referendum authority, the referendum conversion allowance approved by
the board continues until June 30, 2012.

EFFECTIVE DATE.

This section is effective for revenue for fiscal year 2015
and later.

Sec. 11. DIRECTION TO THE COMMISSIONER.

In computing the reduction to a school district's referendum allowance, the
commissioner of education must first reduce a district's referendum allowance with the
earliest expiration date and then, if necessary, reduce additional referendum authority
allowances based on the next earliest expiration date.

Sec. 12. OPERATING REFERENDUM FREEZE, FISCAL YEAR 2015.

Notwithstanding Minnesota Statutes, section 126C.17, subdivision 9, a school district
may not authorize an increase to its operating referendum in fiscal year 2015. A school
district may reauthorize an operating referendum that is expiring in fiscal year 2015. If a
school district asks the voters to reauthorize operating referendum authority that is expiring
in fiscal year 2015, it may request a reauthorization of that expiring authority minus $300.

Sec. 13. CURRENT YEAR AID PERCENTAGE; APPROPRIATION
ADJUSTMENTS.

(a) Notwithstanding Minnesota Statutes, section 127A.45, subdivision 2, paragraph
(d), in fiscal year 2014 and later, the commissioner of education shall reduce the current
year aid payment percentage under Minnesota Statutes, section 127A.45, subdivision
2, paragraph (d), by 0.2.

(b) For fiscal year 2014 and later, the commissioner of education shall adjust all
appropriations in 2013 Senate File No. 453, if enacted, that are calculated based on a
current year aid payment percentage and a final adjustment payment to reflect the current
year aid payment percentage, under Minnesota Statutes, section 127A.45, subdivision 2,
paragraph (d), as modified by paragraph (a).

Sec. 14. APPROPRIATIONS.

Subdivision 1.

Department of Education.

The sums indicated in this section are
appropriated from the general fund to the Department of Education for the fiscal years
designated and are in addition to any amounts appropriated in any other bill for the same
purpose.

Subd. 2.

General education aid.

For general education aid under Minnesota
Statutes, section 126C.13, subdivision 4:

$
36,460,000
.....
2014
$
54,765,000
.....
2015

The 2014 appropriation includes $0 for fiscal year 2013 and $36,460,000 for fiscal
year 2014.

The 2015 appropriation includes $12,185,000 for fiscal year 2014 and $42,580,000
for fiscal year 2015.

ARTICLE 4

SPECIAL TAXES

Section 1.

Minnesota Statutes 2012, section 237.52, subdivision 3, is amended to read:


Subd. 3.

Collection.

Every provider of services capable of originating a TRS call,
including cellular communications and other nonwire access services, in this state shall,
except as provided in subdivision 3a,
collect the charges established by the commission
under subdivision 2 and transfer amounts collected to the commissioner of public
safety in the same manner as provided in section 403.11, subdivision 1, paragraph (d).
The commissioner of public safety must deposit the receipts in the fund established in
subdivision 1.

EFFECTIVE DATE.

This section is effective January 1, 2014.

Sec. 2.

Minnesota Statutes 2012, section 237.52, is amended by adding a subdivision
to read:


Subd. 3a.

Fee for prepaid wireless telecommunications service.

The fee
established in subdivision 2 does not apply to prepaid wireless telecommunications
services as defined in section 403.02, subdivision 17b, which are instead subject to the
prepaid wireless telecommunications access Minnesota fee established in section 403.161,
subdivision 1, paragraph (b). Collection, remittance, and deposit of prepaid wireless
telecommunications access Minnesota fees are governed by sections 403.161 and 403.162.

EFFECTIVE DATE.

This section is effective January 1, 2014.

Sec. 3.

Minnesota Statutes 2012, section 270B.01, subdivision 8, is amended to read:


Subd. 8.

Minnesota tax laws.

For purposes of this chapter only, unless expressly
stated otherwise, "Minnesota tax laws" means:

(1) the taxes, refunds, and fees administered by or paid to the commissioner under
chapters 115B, 289A (except taxes imposed under sections 298.01, 298.015, and 298.24),
290, 290A, 291, 295, 297A, 297B, and 297H, and 403, or any similar Indian tribal tax
administered by the commissioner pursuant to any tax agreement between the state and
the Indian tribal government, and includes any laws for the assessment, collection, and
enforcement of those taxes, refunds, and fees; and

(2) section 273.1315.

EFFECTIVE DATE.

This section is effective January 1, 2014.

Sec. 4.

Minnesota Statutes 2012, section 270B.12, subdivision 4, is amended to read:


Subd. 4.

Department of Public Safety.

The commissioner may disclose return
information to the Department of Public Safety for the purpose of and to the extent
necessary to administer section sections 270C.725 and 403.16 to 403.162.

EFFECTIVE DATE.

This section is effective January 1, 2014.

Sec. 5.

Minnesota Statutes 2012, section 270C.03, subdivision 1, is amended to read:


Subdivision 1.

Powers and duties.

The commissioner shall have and exercise
the following powers and duties:

(1) administer and enforce the assessment and collection of taxes;

(2) make determinations, corrections, and assessments with respect to taxes,
including interest, additions to taxes, and assessable penalties;

(3) use statistical or other sampling techniques consistent with generally accepted
auditing standards in examining returns or records and making assessments;

(4) investigate the tax laws of other states and countries, and formulate and submit
to the legislature such legislation as the commissioner may deem expedient to prevent
evasions of state revenue laws and to secure just and equal taxation and improvement in
the system of state revenue laws;

(5) consult and confer with the governor upon the subject of taxation, the
administration of the laws in regard thereto, and the progress of the work of the
department, and furnish the governor, from time to time, such assistance and information
as the governor may require relating to tax matters;

(6) execute and administer any agreement with the secretary of the treasury or the
Bureau of Alcohol, Tobacco, Firearms and Explosives in the Department of Justice of the
United States or a representative of another state regarding the exchange of information
and administration of the state revenue laws;

(7) require town, city, county, and other public officers to report information as to the
collection of taxes received from licenses and other sources, and such other information
as may be needful in the work of the commissioner, in such form as the commissioner
may prescribe;

(8) authorize the use of unmarked motor vehicles to conduct seizures or criminal
investigations pursuant to the commissioner's authority;

(9) authorize the participation in audits performed by the Multistate Tax Commission.
For the purposes of chapter 270B, the Multistate Tax Commission will be considered to be
a state for the purposes of auditing corporate sales, excise, and income tax returns.

(10) maintain toll-free telephone access for taxpayer assistance for calls from
locations within the state; and

(10) (11) exercise other powers and authority and perform other duties required of or
imposed upon the commissioner by law.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 6.

Minnesota Statutes 2012, section 270C.56, subdivision 1, is amended to read:


Subdivision 1.

Liability imposed.

A person who, either singly or jointly with
others, has the control of, supervision of, or responsibility for filing returns or reports,
paying taxes, or collecting or withholding and remitting taxes and who fails to do so, or a
person who is liable under any other law, is liable for the payment of taxes arising under
chapters 295, 296A, 297A, 297F, and 297G, or sections 256.9658, 290.92, and 297E.02,
and the applicable penalties and interest on those taxes.

EFFECTIVE DATE.

This section is effective July 1, 2013.

Sec. 7.

Minnesota Statutes 2012, section 287.05, is amended by adding a subdivision
to read:


Subd. 10.

Hennepin and Ramsey County.

For properties located in Hennepin and
Ramsey County, the county may impose an additional mortgage registry tax as defined in
sections 383A.80 and 383B.80.

EFFECTIVE DATE.

This section is effective for all deeds and mortgages
acknowledged on or after July 1, 2013.

Sec. 8.

[287.40] HENNEPIN AND RAMSEY COUNTY.

For properties located in Hennepin or Ramsey County, the county may impose an
additional deed tax as defined in sections 383A.80 and 383B.80.

EFFECTIVE DATE.

This section is effective for all deeds and mortgages
acknowledged on or after July 1, 2013.

Sec. 9.

[295.61] SPORTS MEMORABILIA GROSS RECEIPTS TAX.

Subdivision 1.

Definitions.

(a) For purposes of this section, the following terms
have the meanings given, unless the context clearly indicates otherwise.

(b) "Commissioner" means the commissioner of revenue.

(c) "Sale" means a transfer of title or possession of tangible personal property,
whether absolutely or conditionally.

(d) "Sports memorabilia" means items available for sale to the public that are sold
under a license granted by any professional or Collegiate Division I sports league or
association, a team that is a franchise of a professional sports league or association, or
a team that is an affiliate or subsidiary of a professional sports league or association,
including:

(1) one-of-a-kind items related to sports figures, teams, or events;

(2) trading cards;

(3) photographs;

(4) clothing;

(5) sports event licensed items;

(6) sports equipment; and

(7) similar items, but not food or beverage items.

(e) "Wholesale" or "sale at wholesale" means a sale to a retailer, as defined in
section 297A.61, subdivision 9, for the purpose of reselling the property to a third party.
Wholesale does not mean a sale to a wholesaler.

(f) "Wholesaler" means any person making wholesale sales of sports memorabilia
to purchasers in the state.

Subd. 2.

Imposition.

A tax is imposed on each sale at wholesale of sports
memorabilia equal to 13 percent of the gross revenues from the sale.

Subd. 3.

Quarterly returns.

Each wholesaler must file quarterly returns and make
payments by April 18 for the quarter ending March 31; July 18 for the quarter ending June
30; October 18 for the quarter ending September 30; and January 18 of the following
calendar year for the quarter ending December 31.

Subd. 4.

Compensating use tax.

If the tax is not paid under subdivision 2, a
compensating tax is imposed on a retailer or possessor for sale of sports memorabilia in
the state. The rate of tax equals the rate under subdivision 2 and must be paid by the
retailer or possessor for sale of the items.

Subd. 5.

Allocation for youth sports.

Five percent of the revenue collected
under subdivision 2 is appropriated to the commissioner for grants to counties for youth
and amateur sports.

Subd. 6.

Administrative provisions.

Unless specifically provided otherwise by this
section, the relevant audit, assessment, refund, penalty, interest, enforcement, collection
remedies, appeal, and administrative provisions of chapters 270C and 289A apply to
taxes imposed under this section.

Subd. 7.

Disposition of revenues.

The commissioner shall deposit the revenues
from the tax, less the amount allocated in under subdivision 5, in the general fund.

EFFECTIVE DATE.

This section is effective for sales and purchases made after
June 30, 2013.

Sec. 10.

Minnesota Statutes 2012, section 296A.09, subdivision 2, is amended to read:


Subd. 2.

Jet fuel and special fuel tax imposed.

There is imposed an excise tax
of the same rate 15 cents per gallon as the aviation gasoline on all jet fuel or special
fuel received, sold, stored, or withdrawn from storage in this state, for use as substitutes
for aviation gasoline and not otherwise taxed as gasoline. Jet fuel is defined in section
296A.01, subdivision 8.

EFFECTIVE DATE.

This section is effective July 1, 2014, and applied to sales
and purchases made on or after that date.

Sec. 11.

Minnesota Statutes 2012, section 296A.17, subdivision 3, is amended to read:


Subd. 3.

Refund on graduated basis.

Any person who has directly or indirectly
paid the excise tax on aviation gasoline or special fuel for aircraft use provided for by this
chapter
under subdivision 2, and the airflight property tax under section 270.72, shall, as
to all such aviation gasoline and special fuel received, stored, or withdrawn from storage
by the person in this state in any calendar year and not sold or otherwise disposed of to
others, or intended for sale or other disposition to others, on which such tax has been so
paid, be entitled to the following graduated reductions in such tax for that calendar year, to
be obtained by means of the following refunds:

(1) on each gallon of such aviation gasoline or special fuel up to 50,000 gallons, all
but five cents per gallon;

(2) on each gallon of such aviation gasoline or special fuel above 50,000 gallons and
not more than 150,000 gallons, all but two cents per gallon;

(3) on each gallon of such aviation gasoline or special fuel above 150,000 gallons
and not more than 200,000 gallons, all but one cent per gallon;

(4) on each gallon of such aviation gasoline or special fuel above 200,000, all but
one-half cent per gallon.

EFFECTIVE DATE.

This section is effective July 1, 2014, and applied to sales
and purchases made on or after that date.

Sec. 12.

Minnesota Statutes 2012, section 297A.82, subdivision 4, is amended to read:


Subd. 4.

Exemptions.

(a) The following transactions are exempt from the tax
imposed in this chapter to the extent provided.

(b) The purchase or use of aircraft previously registered in Minnesota by a
corporation or partnership is exempt if the transfer constitutes a transfer within the
meaning of section 351 or 721 of the Internal Revenue Code.

(c) The sale to or purchase, storage, use, or consumption by a licensed aircraft dealer
of an aircraft for which a commercial use permit has been issued pursuant to section
360.654 is exempt, if the aircraft is resold while the permit is in effect.

(d) Air flight equipment when sold to, or purchased, stored, used, or consumed by
airline companies, as defined in section 270.071, subdivision 4, is exempt. For purposes
of this subdivision, "air flight equipment" includes airplanes and parts necessary for the
repair and maintenance of such air flight equipment, and flight simulators, but does
not include airplanes with a gross weight of less than 30,000 pounds that are used on
intermittent or irregularly timed flights.

(e) Sales of, and the storage, distribution, use, or consumption of aircraft, as defined
in section 360.511 and approved by the Federal Aviation Administration, and which the
seller delivers to a purchaser outside Minnesota or which, without intermediate use, is
shipped or transported outside Minnesota by the purchaser are exempt, but only if the
purchaser is not a resident of Minnesota and provided that the aircraft is not thereafter
returned to a point within Minnesota, except in the course of interstate commerce or
isolated and occasional use, and will be registered in another state or country upon its
removal from Minnesota. This exemption applies even if the purchaser takes possession of
the aircraft in Minnesota and uses the aircraft in the state exclusively for training purposes
for a period not to exceed ten days prior to removing the aircraft from this state.

(f) The sale or purchase of the following items that relate to aircraft operated under
Federal Aviation Regulations, Parts 91 and 135, and associated installation charges:
equipment and parts necessary for repair and maintenance of aircraft; and equipment
and parts to upgrade and improve aircraft.

EFFECTIVE DATE.

This section is effective July 1, 2014, and applied to sales
and purchases made on or after that date.

Sec. 13.

Minnesota Statutes 2012, section 297A.82, is amended by adding a
subdivision to read:


Subd. 4a.

Deposit in state airports fund.

Tax revenue collected from the sale or
purchase of an aircraft taxable under this chapter must be deposited in the state airports
fund, established in section 360.017.

EFFECTIVE DATE.

This section is effective July 1, 2014, and applied to sales
and purchases made on or after that date.

Sec. 14.

Minnesota Statutes 2012, section 297E.02, subdivision 1, is amended to read:


Subdivision 1.

Imposition.

(a) A tax is imposed on all lawful gambling other than
(1) paper or electronic pull-tab deals or games; (2) tipboard deals or games; (3) electronic
linked bingo; and (4) items listed in section 297E.01, subdivision 8, clauses (4) and (5), at
the rate of 8.5 percent on the gross receipts as defined in section 297E.01, subdivision 8,
less prizes actually paid.

(b) A tax is imposed on the conduct of paper pull-tabs, at the rate of 9 percent on
the gross receipts as defined in section 297E.01, subdivision 8, less prizes actually paid.
The tax imposed under this paragraph applies only to an organization that conducts lawful
gambling in a location where at least 50 percent of its annual gross receipts are received
from paper bingo as of January 1, 2013.

(c) The tax imposed by this subdivision is in lieu of the tax imposed by section
297A.62 and all local taxes and license fees except a fee authorized under section 349.16,
subdivision 8
, or a tax authorized under subdivision 5.

(d) The tax imposed under this subdivision is payable by the organization or party
conducting, directly or indirectly, the gambling.

EFFECTIVE DATE.

This section is effective July 1, 2013.

Sec. 15.

Minnesota Statutes 2012, section 297E.02, subdivision 6, is amended to read:


Subd. 6.

Combined net receipts tax.

(a) In addition to the taxes imposed under
subdivision 1, a tax is imposed on the combined receipts of the organization. As used in
this section, "combined net receipts" is the sum of the organization's gross receipts from
lawful gambling less gross receipts directly derived from the conduct of paper bingo,
raffles, and paddle wheels, as defined in section 297E.01, subdivision 8, and less the net
prizes actually paid, other than prizes actually paid for paper bingo, raffles, and paddle
wheels, for the fiscal year. The combined net receipts of an organization are subject to a
tax computed according to the following schedule:

If the combined net
receipts for the fiscal year
are:
The tax is:
Not over $87,500
nine percent
Over $87,500, but not over
$122,500
$7,875 plus 18 percent of the amount
over $87,500, but not over $122,500
Over $122,500, but not
over $157,500
$14,175 plus 27 percent of the amount
over $122,500, but not over $157,500
Over $157,500
$23,625 plus 36 percent of the
amount over $157,500

(b) On or before April 1, 2016, the commissioner shall estimate the total amount of
revenue, including interest and penalties, that will be collected for fiscal year 2016 from
taxes imposed under this chapter. If the amount estimated by the commissioner equals
or exceeds $94,800,000, the commissioner shall certify that effective July 1, 2016, the
rates under this paragraph apply in lieu of the rates under paragraph (a) and shall publish a
notice to that effect in the State Register and notify each taxpayer by June 1, 2016. If the
rates under this section apply, the combined net receipts of an organization are subject to a
tax computed according to the following schedule:

If the combined net
receipts for the fiscal year
are:
The tax is:
Not over $87,500
8.5 percent
Over $87,500, but not over
$122,500
$7,438 plus 17 percent of the amount
over $87,500, but not over $122,500
Over $122,500, but not
over $157,500
$13,388 plus 25.5 percent of the
amount over $122,500, but not over
$157,500
Over $157,500
$22,313 plus 34 percent of the
amount over $157,500

(c) Gross receipts derived from sports-themed tipboards are exempt from taxation
under this section. For purposes of this paragraph, a sports-themed tipboard means a
sports-themed tipboard as defined in section 349.12, subdivision 34, under which the
winning numbers are determined by the numerical outcome of a professional sporting event.

(d) If an organization conducts lawful gambling in a location where, as of January 1,
2013, at least 50 percent of its annual gross receipts are derived from paper bingo, the
organization is exempt from taxation under this subdivision with respect to its receipts
from paper pull-tabs.

EFFECTIVE DATE.

This section is effective July 1, 2013.

Sec. 16.

Minnesota Statutes 2012, section 297F.01, is amended by adding a subdivision
to read:


Subd. 9b.

Little cigar.

"Little cigar" means any roll for smoking made in whole or
in part of tobacco if the product is wrapped in a substance containing tobacco other than
natural leaf tobacco, uses an integrated cellulose acetate or other similar filter, and weighs
not more than 4-1/2 pounds per thousand.

EFFECTIVE DATE.

This section is effective July 1, 2013.

Sec. 17.

Minnesota Statutes 2012, section 297F.01, is amended by adding a subdivision
to read:


Subd. 10b.

Moist snuff.

"Moist snuff" means any finely cut, ground, or powdered
smokeless tobacco that is intended to be placed or dipped in the mouth.

EFFECTIVE DATE.

This section is effective July 1, 2013.

Sec. 18.

Minnesota Statutes 2012, section 297F.01, is amended by adding a subdivision
to read:


Subd. 13a.

Premium cigar.

"Premium cigar" means any cigar that is
hand-constructed and hand-rolled, has a wrapper that is made entirely from whole tobacco
leaf, has a filler and binder that is made entirely of tobacco, except for adhesives or other
materials used to maintain size, texture, or flavor, and has a wholesale price of no less
than $2.

EFFECTIVE DATE.

This section is effective July 1, 2013.

Sec. 19.

Minnesota Statutes 2012, section 297F.01, subdivision 19, is amended to read:


Subd. 19.

Tobacco products.

(a) "Tobacco products" means any product
containing, made, or derived from tobacco that is intended for human consumption,
whether chewed, smoked, absorbed, dissolved, inhaled, snorted, sniffed, or ingested by
any other means, or any component, part, or accessory of a tobacco product, including,
but not limited to, cigars; little cigars; cheroots; stogies; periques; granulated, plug cut,
crimp cut, ready rubbed, and other smoking tobacco; snuff; snuff flour; cavendish; plug
and twist tobacco; fine-cut and other chewing tobacco; shorts; refuse scraps, clippings,
cuttings and sweepings of tobacco, and other kinds and forms of tobacco; but does not
include cigarettes as defined in this section. Tobacco products excludes any tobacco
product that has been approved by the United States Food and Drug Administration for
sale as a tobacco cessation product, as a tobacco dependence product, or for other medical
purposes, and is being marketed and sold solely for such an approved purpose.

(b) Except for the imposition of tax under section 297F.05, subdivisions 3 and 4,
tobacco products includes a premium cigar, as defined in subdivision 13a.

EFFECTIVE DATE.

This section is effective July 1, 2013.

Sec. 20.

Minnesota Statutes 2012, section 297F.05, subdivision 1, is amended to read:


Subdivision 1.

Rates; cigarettes.

A tax is imposed upon the sale of cigarettes in
this state, upon having cigarettes in possession in this state with intent to sell, upon any
person engaged in business as a distributor, and upon the use or storage by consumers, at
the following rates:

(1) on cigarettes weighing not more than three pounds per thousand, 24 108.5 mills,
or 10.85 cents,
on each such cigarette; and

(2) on cigarettes weighing more than three pounds per thousand, 48 217 mills, or
21.7 cents,
on each such cigarette.

EFFECTIVE DATE.

This section is effective July 1, 2013.

Sec. 21.

Minnesota Statutes 2012, section 297F.05, is amended by adding a subdivision
to read:


Subd. 1a.

Annual indexing.

(a) Each year the commissioner shall adjust the
tax rates under subdivision 1, including any adjustment made in prior years under this
subdivision, by multiplying the mill rates for the current calendar year by an adjustment
factor. The adjustment factor equals the in-lieu sales tax rate that applies to the following
calendar year divided by the in-lieu sales tax rate for the current calendar year. For
purposes of this subdivision, "in-lieu sales tax rate" means the tax rate established under
section 297F.25, subdivision 1, rounded to 1/100 of one cent per cigarette.

(b) The commissioner shall publish the resulting rate by November 1 and the rate
applies to sales made on or after January 1 of the following year.

(c) The determination of the commissioner under this subdivision is not a rule and is
not subject to the Administrative Procedure Act in chapter 14.

EFFECTIVE DATE.

This section is effective July 1, 2013.

Sec. 22.

Minnesota Statutes 2012, section 297F.05, subdivision 3, is amended to read:


Subd. 3.

Rates; tobacco products.

(a) Except as provided in subdivision 3a, a tax is
imposed upon all tobacco products in this state and upon any person engaged in business
as a distributor, at the rate of 35 90 percent of the wholesale sales price of the tobacco
products. The tax is imposed at the time the distributor:

(1) brings, or causes to be brought, into this state from outside the state tobacco
products for sale;

(2) makes, manufactures, or fabricates tobacco products in this state for sale in
this state; or

(3) ships or transports tobacco products to retailers in this state, to be sold by those
retailers.

(b) Notwithstanding paragraph (a), a minimum tax equal to the rate imposed on a pack
of 20 cigarettes weighing not more than three pounds per thousand, as established under
subdivision 1, and adjusted by subdivision 1a, is imposed on each container of moist snuff.

For purposes of this subdivision, a "container" means the smallest consumer-size can,
package, or other container that is marketed or packaged by the manufacturer, distributor,
or retailer for separate sale to a retail purchaser.

(c) Notwithstanding paragraph (a), for little cigars, the tax on each little cigar shall
be equal to the tax imposed per cigarette under subdivision 1, clause (1), and adjusted by
subdivision 1a, and any successor provision taxing cigarettes.

EFFECTIVE DATE.

This section is effective July 1, 2013, except the minimum
tax under paragraph (b) is effective January 1, 2014.

Sec. 23.

Minnesota Statutes 2012, section 297F.05, is amended by adding a subdivision
to read:


Subd. 3a.

Rates; tobacco.

(a) A tax is imposed upon all premium cigars in this state
and upon any person engaged in business as a tobacco product distributor, at the lesser of:

(1) the rate of 70 percent of the wholesale sales price of the premium cigars; or

(2) $3.50 per premium cigar.

(b) The tax imposed under paragraph (a) is imposed at the time the tobacco products
distributor:

(1) brings, or causes to be brought, into this state from outside the state premium
cigars for sale;

(2) makes, manufactures, or fabricates premium cigars in this state for sale in this
state; or

(3) ships or transports premium cigars to retailers in this state, to be sold by those
retailers.

EFFECTIVE DATE.

This section is effective July 1, 2013.

Sec. 24.

Minnesota Statutes 2012, section 297F.05, subdivision 4, is amended to read:


Subd. 4.

Use tax; tobacco products.

(a) Except as provided in subdivision 4a, a tax
is imposed upon the use or storage by consumers of tobacco products in this state, and
upon such consumers, at the rate of 35 90 percent of the cost to the consumer of the tobacco
products or the minimum tax under subdivision 3, paragraph (b), whichever is greater.

(b) Notwithstanding paragraph (a), for little cigars, the tax on each little cigar
shall be equal to the tax imposed per cigarette under subdivision 1, clause (1), and any
successor provision taxing cigarettes.

EFFECTIVE DATE.

This section is effective July 1, 2013.

Sec. 25.

Minnesota Statutes 2012, section 297F.05, is amended by adding a subdivision
to read:


Subd. 4a.

Use tax; premium cigars.

A tax is imposed upon the use or storage by
consumers of all premium cigars in this state, and upon such consumers, at the lesser of:

(1) the rate of 70 percent of the cost to the consumer of the premium cigars; or

(2) $3.50 per premium cigar.

EFFECTIVE DATE.

This section is effective July 1, 2013.

Sec. 26.

Minnesota Statutes 2012, section 297F.24, subdivision 1, is amended to read:


Subdivision 1.

Fee imposed.

(a) A fee is imposed upon the sale of nonsettlement
cigarettes in this state, upon having nonsettlement cigarettes in possession in this state
with intent to sell, upon any person engaged in business as a distributor, and upon the use
or storage by consumers of nonsettlement cigarettes. The fee equals a rate of 1.75 2.5
cents per cigarette.

(b) The purpose of this fee is to:

(1) ensure that manufacturers of nonsettlement cigarettes pay fees to the state that
are comparable to costs attributable to the use of the cigarettes;

(2) prevent manufacturers of nonsettlement cigarettes from undermining the state's
policy of discouraging underage smoking by offering nonsettlement cigarettes at prices
substantially below the cigarettes of other manufacturers; and

(3) fund such other purposes as the legislature determines appropriate.

Sec. 27.

Minnesota Statutes 2012, section 297F.25, subdivision 1, is amended to read:


Subdivision 1.

Imposition.

(a) A tax is imposed on distributors on the sale of
cigarettes by a cigarette distributor to a retailer or cigarette subjobber for resale in this
state. The tax is equal to 6.5 percent of the weighted average retail price and must be
expressed in cents per pack rounded to the nearest one-tenth of a cent. The weighted
average retail price must be determined annually, with new rates published by November
1, and effective for sales on or after January 1 of the following year. The weighted average
retail price must be established by surveying cigarette retailers statewide in a manner
and time determined by the commissioner. The commissioner shall make an inflation
adjustment in accordance with the Consumer Price Index for all urban consumers inflation
indicator as published in the most recent state budget forecast. The commissioner shall use
the inflation factor for the calendar year in which the new tax rate takes effect. If the survey
indicates that the average retail price of cigarettes has not increased relative to the average
retail price in the previous year's survey, then the commissioner shall not make an inflation
adjustment. The determination of the commissioner pursuant to this subdivision is not a
"rule" and is not subject to the Administrative Procedure Act contained in chapter 14. For
packs of cigarettes with other than 20 cigarettes, the tax must be adjusted proportionally.

(b) Notwithstanding paragraph (a), and in lieu of a survey of cigarette retailers, the
tax calculation of the weighted average retail price for the sales of cigarettes from August
1, 2011, through December 31, 2011, shall be calculated by: (1) increasing the average
retail price per pack of 20 cigarettes from the most recent survey by the percentage change
in a weighted average of the presumed legal prices for cigarettes during the year after
completion of that survey, as reported and published by the Department of Commerce
under section 325D.371; (2) subtracting the sales tax included in the retail price; and (3)
adjusting for expected inflation. The rate must be published by May 1 and is effective for
sales after July 31. If the weighted average of the presumed legal prices indicates that the
average retail price of cigarettes has not increased relative to the average retail price in the
most recent survey, then no inflation adjustment must be made
for any period that a rate
change in section 297F.05, subdivision 1, is enacted after the current effective January 1
rate and prior to the following January 1, the commissioner of revenue shall make a
proportionate adjustment to the sales tax rate
. For packs of cigarettes with other than 20
cigarettes, the sales tax must be adjusted proportionally.

EFFECTIVE DATE.

This section is effective July 1, 2013.

Sec. 28.

Minnesota Statutes 2012, section 325F.781, subdivision 1, is amended to read:


Subdivision 1.

Definitions.

(a) For purposes of this section, the following terms
have the meanings given, unless the language or context clearly provides otherwise.

(b) "Consumer" means an individual who purchases, receives, or possesses tobacco
products for personal consumption and not for resale.

(c) "Delivery sale" means:

(1) a sale of tobacco products to a consumer in this state when:

(i) the purchaser submits the order for the sale by means of a telephonic or other
method of voice transmission, the mail or any other delivery service, or the Internet or
other online service; or

(ii) the tobacco products are delivered by use of the mail or other delivery service; or

(2) a sale of tobacco products that satisfies the criteria in clause (1), item (i),
regardless of whether the seller is located inside or outside of the state.

A sale of tobacco products to an individual in this state must be treated as a sale to a
consumer, unless the individual is licensed as a distributor or retailer of tobacco products.

(d) "Delivery service" means a person, including the United States Postal Service,
that is engaged in the commercial delivery of letters, packages, or other containers.

(e) "Distributor" means a person, whether located inside or outside of this state,
other than a retailer, who sells or distributes tobacco products in the state. Distributor does
not include a tobacco products manufacturer, export warehouse proprietor, or importer
with a valid permit under United States Code, title 26, section 5712 (1997), if the person
sells or distributes tobacco products in this state only to distributors who hold valid and
current licenses under the laws of a state, or to an export warehouse proprietor or another
manufacturer. Distributor does not include a common or contract carrier that is transporting
tobacco products under a proper bill of lading or freight bill that states the quantity, source,
and destination of tobacco products, or a person who ships tobacco products through this
state by common or contract carrier under a bill of lading or freight bill.

(f) "Retailer" means a person, whether located inside or outside this state, who sells
or distributes tobacco products to a consumer in this state.

(g) "Tobacco products" means:

(1) cigarettes, as defined in section 297F.01, subdivision 3; and

(2) smokeless tobacco as defined in section 325F.76.; and

(3) premium cigars as defined in section 297F.01, subdivision 13a.

EFFECTIVE DATE.

This section is effective July 1, 2013.

Sec. 29.

Minnesota Statutes 2012, section 349.166, is amended to read:


349.166 EXCLUSIONS; EXEMPTIONS.

Subdivision 1.

Exclusions.

(a) Bingo, with the exception of linked bingo games, may
be conducted without a license and without complying with sections 349.168, subdivisions
1 and 2; 349.17, subdivisions 4 and 5; 349.18, subdivision 1; and 349.19, if it is conducted:

(1) by an organization in connection with a county fair, the state fair, or a civic
celebration and is not conducted for more than 12 consecutive days and is limited to no more
than four separate applications for activities applied for and approved in a calendar year; or

(2) by an organization that conducts bingo on four or fewer days in a calendar year.

An organization that holds a license to conduct lawful gambling under this chapter
may not conduct bingo under this subdivision.

(b) Bingo may be conducted within a nursing home or a senior citizen housing
project or by a senior citizen organization if the prizes for a single bingo game do not
exceed $10, total prizes awarded at a single bingo occasion do not exceed $200, no more
than two bingo occasions are held by the organization or at the facility each week, only
members of the organization or residents of the nursing home or housing project are
allowed to play in a bingo game, no compensation is paid for any persons who conduct the
bingo, and a manager is appointed to supervise the bingo. Bingo conducted under this
paragraph is exempt from sections 349.11 to 349.23, and the board may not require an
organization that conducts bingo under this paragraph, or the manager who supervises the
bingo, to register or file a report with the board. The gross receipts from bingo conducted
under the limitations of this subdivision are exempt from taxation under chapter 297A.

(c) Raffles may be conducted by an organization without registering with the board
if the value of all raffle prizes awarded by the organization in a calendar year does not
exceed $1,500 or, if the organization is a 501(c)(3) organization, if the value of all raffle
prizes awarded by the organization in a calendar year does not exceed $50,000
.

(d) Except as provided in paragraph (b), the organization must maintain all required
records of excluded gambling activity for 3-1/2 years.

Subd. 2.

Exemptions.

(a) Lawful gambling, with the exception of linked bingo
games, may be conducted by an organization without a license and without complying
with sections 349.168, subdivisions 1 and 2; 349.17, subdivision 4; 349.18, subdivision 1;
and 349.19 if:

(1) the organization conducts lawful gambling on five or fewer days in a calendar year;

(2) the organization does not award more than $50,000 in prizes for lawful gambling
in a calendar year;

(3) (2) the organization submits a board-prescribed application and pays a fee of
$50 to the board for each gambling occasion, and receives an exempt permit number
from the board. If the application is postmarked or received less than 30 days before the
gambling occasion, the fee is $100 for that application. The application must include the
date and location of the occasion, the types of lawful gambling to be conducted, and
the prizes to be awarded;

(4) (3) the organization notifies the local government unit 30 days before the lawful
gambling occasion, or 60 days for an occasion held in a city of the first class;

(5) (4) the organization purchases all gambling equipment and supplies from a
licensed distributor; and

(6) (5) the organization reports to the board, on a single-page form prescribed by
the board, within 30 days of each gambling occasion, the gross receipts, prizes, expenses,
expenditures of net profits from the occasion, and the identification of the licensed
distributor from whom all gambling equipment was purchased.

(b) If the organization fails to file a timely report as required by paragraph (a), clause
(6), the board shall not issue any authorization, license, or permit to the organization to
conduct lawful gambling on an exempt, excluded, or licensed basis until the report has
been filed and the organization may be subject to penalty as determined by the board. The
board may refuse to issue any authorization, license, or permit if a report or application is
determined to be incomplete or knowingly contains false or inaccurate information.

(c) Merchandise prizes must be valued at their fair market value.

(d) Organizations that qualify to conduct exempt raffles under paragraph (a), are
exempt from section 349.173, paragraph (b), clause (2), if the raffle tickets are sold
only in combination with an organization's membership or a ticket for an organization's
membership dinner and are not included with any other raffle conducted under the exempt
permit.

(e) Unused pull-tab and tipboard deals must be returned to the distributor within
seven working days after the end of the lawful gambling occasion. The distributor must
accept and pay a refund for all returns of unopened and undamaged deals returned under
this paragraph.

(f) The organization must maintain all required records of exempt gambling activity
for 3-1/2 years.

EFFECTIVE DATE.

This section is effective July 1, 2013.

Sec. 30.

Minnesota Statutes 2012, section 360.531, is amended to read:


360.531 TAXATION.

Subdivision 1.

In lieu tax.

All aircraft using the air space overlying the state of
Minnesota or the airports thereof, except as set forth in section 360.55, shall be taxed in
lieu of all other taxes thereon, on the basis and at the rate for the period January 1, 1966, to
June 30, 1967, and for each fiscal year as follows.

Subd. 2.

Rate.

The tax shall be at the rate of one percent of value; provided that
the minimum tax on an aircraft subject to the provisions of sections 360.511 to 360.67
shall not be less than 25 percent of the tax on said aircraft computed on its base price or
$50 whichever is the higher.
as follows:

Base Price
Tax
Under $499,999
$100
$500,000 to $999,999
$200
$1,000,000 to $2,499,999
$2,000
$2,500,000 to $4,999,999
$4,000
$5,000,000 to $7,499,999
$7,500
$7,500,000 to $9,999,999
$10,000
$10,000,000 to $12,499,999
$12,500
$12,500,000 to $14,999,999
$15,000
$15,000,000 to $17,499,999
$17,500
$17,500,000 to $19,999,999
$20,000
$20,000,000 to $22,499,999
$22,500
$22,500,000 to $24,999,999
$25,000
$25,000,000 to $27,499,999
$27,500
$27,500,000 to $29,999,999
$30,000
$30,000,000 to $39,999,999
$50,000
$40,000,000 and over
$75,000

Subd. 3.

First year of life.

"First year of life" means the year the aircraft was
manufactured.

Subd. 4.

Base price for taxation.

For the purpose of fixing a base price for taxation
from which depreciation in value at a fixed percent per annum can be counted, such , the
base
price is defined as follows:

(a) The base price for taxation of an aircraft shall be the manufacturer's list price.

(b) The commissioner shall have authority to fix the base value for taxation purposes
of any aircraft of which no such similar or corresponding model has been manufactured,
and of any rebuilt or foreign aircraft, any aircraft on which a record of the list price is not
available, or any military aircraft converted for civilian use, using as a basis for such
valuation the list price of aircraft with comparable performance characteristics, and taking
into consideration the age and condition of the aircraft.

Subd. 5.

Similarity of corresponding model.

Models shall be deemed similar if
substantially alike and of the same make. Models shall be deemed to be corresponding
models for the purpose of taxation under sections 360.54 to 360.67 if of the same make
and having approximately the same weight and type of frame and the same style and
size of motor.

Subd. 6.

Depreciation.

After the first year of aircraft life the base value for taxation
purposes shall be reduced as follows: ten percent the second year, and 15 percent the third
and each succeeding year thereafter, but in no event shall such tax be reduced below
the minimum.

Subd. 7.

Prorating tax.

When an aircraft first becomes subject to taxation during the
period for which the tax is to be paid, the tax on it shall be for the remainder of that period,
prorated on a monthly basis of 1/12 of the annual tax for each calendar month counting the
month during which it becomes subject to the tax as the first month of such period.

Subd. 8.

Tax, fiscal year.

Every aircraft subject to the provisions of sections
360.511 to 360.67 which has at any time since April 19, 1945, used the air space overlying
the state of Minnesota or the airports thereof shall be taxed for the period from January 1,
1966, through June 30, 1967, and for each fiscal year thereafter in which it is so used. Any
aircraft which does not use the air space overlying the state of Minnesota or the airports
thereof at any time during the period of January 1, 1966, to and including June 30, 1967,
or at any time during any fiscal year thereafter shall not be subject to the tax provided by
sections 360.511 to 360.67 for such period. Rebuilt aircraft shall be subject to the tax
provided by sections 360.511 to 360.67 for that portion of the aforesaid periods remaining
after the aircraft has been rebuilt, prorated on a monthly basis.

Subd. 9.

Assessed as personal property in certain cases.

Aircraft subject to
taxation under the provisions of sections 360.54 to 360.67 shall not be assessed as personal
property and shall be subject to no tax except as provided for by these sections. Aircraft
not subject to taxation as provided in these sections, but subject to taxation as personal
property within the state of Minnesota shall be assessed and valued at 33-1/3 percent of
the market value thereof and taxed at the rate and in the manner provided by law for the
taxation of ordinary personal property. If the person against whom any tax has been levied
on the ad valorem basis because of any aircraft shall, during the calendar year for which
such ad valorem tax is levied, be also taxed under provisions of these sections, then and in
that event, upon proper showing, the commissioner of revenue shall grant to the person
against whom said ad valorem tax was levied, such reduction or abatement of net tax
capacity or taxes as was occasioned by the so-called ad valorem tax imposed. If the ad
valorem tax upon any aircraft has been assessed against a dealer in new and used aircraft,
and the tax imposed by these sections for the required period is thereafter paid by the
owner, then and in that event, upon proper showing, the commissioner of revenue, upon
the application of said dealer, shall grant to such dealer against whom said ad valorem tax
was levied such reduction or abatement of net tax capacity or taxes as was occasioned
by the so-called ad valorem tax imposed.

EFFECTIVE DATE.

This section is effective July 1, 2014, and applies to aircraft
tax due on or after that date.

Sec. 31.

Minnesota Statutes 2012, section 360.66, is amended to read:


360.66 STATE AIRPORTS FUND.

Subdivision 1.

Tax credited to fund.

The proceeds of the tax imposed on aircraft
under sections 360.54 360.531 to 360.67 and all fees and penalties provided for therein
shall be collected by the commissioner and paid into the state treasury and credited to the
state airports fund created by other statutes of this state.

Subd. 2.

Reimbursement for expenses.

There shall be transferred by the
commissioner of management and budget each year from the state airports fund to the
general fund in the state treasury the amount expended from the latter fund for expenses of
administering the provisions of sections 360.54 360.531 to 360.67.

EFFECTIVE DATE.

This section is effective July 1, 2014, and applies to aircraft
tax due on or after that date.

Sec. 32.

Minnesota Statutes 2012, section 383A.80, subdivision 4, is amended to read:


Subd. 4.

Expiration.

The authority to impose the tax under this section expires
January 1, 2013 2023.

EFFECTIVE DATE.

This section is effective for all deeds and mortgages
acknowledged on or after July 1, 2013.

Sec. 33.

Minnesota Statutes 2012, section 383B.80, subdivision 4, is amended to read:


Subd. 4.

Expiration.

The authority to impose the tax under this section expires
January 1, 2013 2023.

EFFECTIVE DATE.

This section is effective for all deeds and mortgages
acknowledged on or after July 1, 2013.

Sec. 34.

Minnesota Statutes 2012, section 403.02, is amended by adding a subdivision
to read:


Subd. 17b.

Prepaid wireless telecommunications service.

"Prepaid wireless
telecommunications service" means a wireless telecommunications service that allows the
caller to dial 911 to access the 911 system, which service must be paid for in advance and is:

(1) sold in predetermined units or dollars of which the number declines with use in a
known amount; or

(2) provides unlimited use for a predetermined time period.

The inclusion of nontelecommunications services, including the download of digital
products delivered electronically, content, and ancillary services, with a prepaid wireless
telephone service does not preclude that service from being considered a prepaid wireless
telephone service under this chapter.

EFFECTIVE DATE.

This section is effective January 1, 2014.

Sec. 35.

Minnesota Statutes 2012, section 403.02, is amended by adding a subdivision
to read:


Subd. 20a.

Wireless telecommunications service.

"Wireless telecommunications
service" means a commercial mobile radio service, as that term is defined in United
States Code, title 47, section 332, subsection (d), including all broadband personal
communication services, wireless radio telephone services, and geographic area
specialized mobile radio licensees, that offer real-time, two-way voice service
interconnected with the public switched telephone network.

EFFECTIVE DATE.

This section is effective January 1, 2014.

Sec. 36.

Minnesota Statutes 2012, section 403.02, subdivision 21, is amended to read:


Subd. 21.

Wireless telecommunications service provider.

"Wireless
telecommunications service provider" means a provider of commercial mobile radio
services, as that term is defined in United States Code, title 47, section 332, subsection
(d), including all broadband personal communications services, wireless radio telephone
services, geographic area specialized and enhanced specialized mobile radio services, and
incumbent wide area specialized mobile radio licensees, that offers real-time, two-way
voice service interconnected with the public switched telephone network and that is doing
business in the state of Minnesota
wireless telecommunications service.

EFFECTIVE DATE.

This section is effective January 1, 2014.

Sec. 37.

Minnesota Statutes 2012, section 403.06, subdivision 1a, is amended to read:


Subd. 1a.

Biennial budget; annual financial report.

The commissioner shall
prepare a biennial budget for maintaining the 911 system. By December 15 of each year,
the commissioner shall submit a report to the legislature detailing the expenditures for
maintaining the 911 system, the 911 fees collected, the balance of the 911 fund, and the
911-related administrative expenses of the commissioner, and of a separate accounting
of E911 fees from prepaid wireless customers
. The commissioner is authorized to
expend money that has been appropriated to pay for the maintenance, enhancements,
and expansion of the 911 system.

EFFECTIVE DATE.

This section is effective January 1, 2014.

Sec. 38.

Minnesota Statutes 2012, section 403.11, subdivision 1, is amended to read:


Subdivision 1.

Emergency telecommunications service fee; account.

(a) Each
customer of a wireless or wire-line switched or packet-based telecommunications service
provider connected to the public switched telephone network that furnishes service capable
of originating a 911 emergency telephone call is assessed a fee based upon the number
of wired or wireless telephone lines, or their equivalent, to cover the costs of ongoing
maintenance and related improvements for trunking and central office switching equipment
for 911 emergency telecommunications service, to offset administrative and staffing costs
of the commissioner related to managing the 911 emergency telecommunications service
program, to make distributions provided for in section 403.113, and to offset the costs,
including administrative and staffing costs, incurred by the State Patrol Division of the
Department of Public Safety in handling 911 emergency calls made from wireless phones.

(b) Money remaining in the 911 emergency telecommunications service account
after all other obligations are paid must not cancel and is carried forward to subsequent
years and may be appropriated from time to time to the commissioner to provide financial
assistance to counties for the improvement of local emergency telecommunications
services. The improvements may include providing access to 911 service for
telecommunications service subscribers currently without access and upgrading existing
911 service to include automatic number identification, local location identification,
automatic location identification, and other improvements specified in revised county
911 plans approved by the commissioner.

(c) The fee may not be less than eight cents nor more than 65 cents a month until
June 30, 2008, not less than eight cents nor more than 75 cents a month until June 30,
2009, not less than eight cents nor more than 85 cents a month until June 30, 2010, and
not less than eight cents nor more than 95 cents a month on or after July 1, 2010, for
each customer access line or other basic access service, including trunk equivalents as
designated by the Public Utilities Commission for access charge purposes and including
wireless telecommunications services. With the approval of the commissioner of
management and budget, the commissioner of public safety shall establish the amount of
the fee within the limits specified and inform the companies and carriers of the amount to
be collected. When the revenue bonds authorized under section 403.27, subdivision 1,
have been fully paid or defeased, the commissioner shall reduce the fee to reflect that debt
service on the bonds is no longer needed. The commissioner shall provide companies and
carriers a minimum of 45 days' notice of each fee change. The fee must be the same for all
customers, except that the fee imposed under this subdivision does not apply to prepaid
wireless telecommunications service, which is instead subject to the fee imposed under
section 403.161, subdivision 1, paragraph (a)
.

(d) The fee must be collected by each wireless or wire-line telecommunications
service provider subject to the fee. Fees are payable to and must be submitted to the
commissioner monthly before the 25th of each month following the month of collection,
except that fees may be submitted quarterly if less than $250 a month is due, or annually if
less than $25 a month is due. Receipts must be deposited in the state treasury and credited
to a 911 emergency telecommunications service account in the special revenue fund. The
money in the account may only be used for 911 telecommunications services.

(e) This subdivision does not apply to customers of interexchange carriers.

(f) The installation and recurring charges for integrating wireless 911 calls into
enhanced 911 systems are eligible for payment by the commissioner if the 911 service
provider is included in the statewide design plan and the charges are made pursuant to
contract.

(g) Competitive local exchanges carriers holding certificates of authority from the
Public Utilities Commission are eligible to receive payment for recurring 911 services.

EFFECTIVE DATE.

This section is effective January 1, 2014.

Sec. 39.

Minnesota Statutes 2012, section 403.11, is amended by adding a subdivision
to read:


Subd. 6.

Report.

(a) Beginning September 1, 2013, and continuing semiannually
thereafter, each wireless telecommunications service provider shall report to the
commissioner, based on the mobile telephone number, both the total number of prepaid
wireless telecommunications subscribers sourced to Minnesota and the total number of
wireless telecommunications subscribers sourced to Minnesota. The report must be filed
on the same schedule as Federal Communications Commission Form 477.

(b) The commissioner shall make a standard form available to all wireless
telecommunications service providers for submitting information required to compile
the report required under this subdivision.

(c) The information provided to the commissioner under this subdivision is
considered trade secret data under section 13.37 and may only be used for purposes of
administering this chapter.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 40.

[403.16] DEFINITIONS.

Subdivision 1.

Scope.

For the purposes of sections 403.16 to 403.164, the terms
defined in this section have the meanings given them.

Subd. 2.

Consumer.

"Consumer" means a person who purchases prepaid wireless
telecommunications service in a retail transaction.

Subd. 3.

Department.

"Department" means the Department of Revenue.

Subd. 4.

Prepaid wireless E911 fee.

"Prepaid wireless E911 fee" means the fee that
is required to be collected by a seller from a consumer as established in section 403.161,
subdivision 1, paragraph (a).

Subd. 5.

Prepaid wireless telecommunications access Minnesota fee.

"Prepaid
wireless telecommunications access Minnesota fee" means the fee that is required to be
collected by a seller from a consumer as established in section 403.161, subdivision 1,
paragraph (b).

Subd. 6.

Provider.

"Provider" means a person that provides prepaid wireless
telecommunications service under a license issued by the Federal Communications
Commission.

Subd. 7.

Retail transaction.

"Retail transaction" means the purchase of prepaid
wireless telecommunications service from a seller for any purpose other than resale.

Subd. 8.

Seller.

"Seller" means a person who sells prepaid wireless
telecommunications service to another person.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 41.

[403.161] PREPAID WIRELESS FEES IMPOSED; COLLECTION;
REMITTANCE.

Subdivision 1.

Fees imposed.

(a) A prepaid wireless E911 fee of 80 cents per retail
transaction is imposed on prepaid wireless telecommunications service until the fee is
adjusted as an amount per retail transaction under subdivision 6.

(b) A prepaid wireless telecommunications access Minnesota fee, in the amount of
the monthly charge provided for in section 237.52, subdivision 2, is imposed on each
retail transaction for prepaid wireless telecommunications service until the fee is adjusted
as an amount per retail transaction under subdivision 6.

Subd. 2.

Exemption.

The fees established under subdivision 1 are not imposed on a
minimal amount of prepaid wireless telecommunications service that is sold with a prepaid
wireless device and is charged a single nonitemized price, and a seller may not apply the
fees to such a transaction. For purposes of this subdivision, a minimal amount of service
means an amount of service denominated as either ten minutes or less or $5 or less.

Subd. 3.

Fee collected.

The prepaid wireless E911 and telecommunications
access Minnesota fees must be collected by the seller from the consumer for each retail
transaction occurring in this state. The amount of each fee must be combined into one
amount, which must be separately stated on an invoice, receipt, or other similar document
that is provided to the consumer by the seller, or otherwise disclosed to the consumer.

Subd. 4.

Sales and use tax treatment.

For purposes of this section, a retail
transaction conducted in person by a consumer at a business location of the seller must
be treated as occurring in this state if that business location is in this state, and any other
retail transaction must be treated as occurring in this state if the retail transaction is treated
as occurring in this state for purposes of the sales and use tax as specified in section
297A.669, subdivision 3, paragraph (c).

Subd. 5.

Remittance.

The prepaid wireless E911 and telecommunications access
Minnesota fees are the liability of the consumer and not of the seller or of any provider,
except that the seller is liable to remit all fees that the seller collects from consumers as
provided in section 403.162, including all fees that the seller is deemed to collect in which
the amount of the fee has not been separately stated on an invoice, receipt, or other similar
document provided to the consumer by the seller.

Subd. 6.

Exclusion for calculating other charges.

The combined amount of the
prepaid wireless E911 and telecommunications access Minnesota fees collected by a seller
from a consumer must not be included in the base for measuring any tax, fee, surcharge,
or other charge that is imposed by this state, any political subdivision of this state, or
any intergovernmental agency.

Subd. 7.

Fee changes.

(a) The prepaid wireless E911 and telecommunications
access Minnesota fee must be proportionately increased or reduced upon any change to
the fee imposed under section 403.11, subdivision 1, paragraph (c), after July 1, 2013, or
the fee imposed under section 237.52, subdivision 2, as applicable.

(b) The department shall post notice of any fee changes on its Web site at least 30
days in advance of the effective date of the fee changes. It is the responsibility of sellers to
monitor the department's Web site for notice of fee changes.

(c) Fee changes are effective 60 days after the first day of the first calendar month
after the commissioner of public safety or the Public Utilities Commission, as applicable,
changes the fee.

EFFECTIVE DATE.

This section is effective January 1, 2014.

Sec. 42.

[403.162] ADMINISTRATION OF PREPAID WIRELESS E911 FEES.

Subdivision 1.

Remittance.

Prepaid wireless E911 and telecommunications access
Minnesota fees collected by sellers must be remitted to the commissioner of revenue
at the times and in the manner provided by chapter 297A with respect to the general
sales and use tax. The commissioner of revenue shall establish registration and payment
procedures that substantially coincide with the registration and payment procedures that
apply in chapter 297A.

Subd. 2.

Seller's fee retention.

A seller may deduct and retain three percent of
prepaid wireless E911 and telecommunications access Minnesota fees collected by the
seller from consumers.

Subd. 3.

Audit; appeal.

The audit and appeal procedures applicable under chapter
297A apply to any fee imposed under section 403.161.

Subd. 4.

Procedures for resale transactions.

The commissioner of revenue shall
establish procedures by which a seller of prepaid wireless telecommunications service
may document that a sale is not a retail transaction. These procedures must substantially
coincide with the procedures for documenting sale for resale transactions as provided in
chapter 297A.

Subd. 5.

Fees deposited.

(a) The commissioner of revenue shall, based on
the relative proportion of the prepaid wireless E911 fee and the prepaid wireless
telecommunications access Minnesota fee imposed per retail transaction, divide the fees
collected in corresponding proportions. Within 30 days of receipt of the collected fees,
the commissioner shall:

(1) deposit the proportion of the collected fees attributable to the prepaid wireless
E911 fee in the 911 emergency telecommunications service account in the special revenue
fund; and

(2) deposit the proportion of collected fees attributable to the prepaid wireless
telecommunications access Minnesota fee in the telecommunications access fund
established in section 237.52, subdivision 1.

(b) The department may deduct and retain an amount, not to exceed two percent of
collected fees, to reimburse its direct costs of administering the collection and remittance
of prepaid wireless E911 fees and prepaid wireless telecommunications access Minnesota
fees.

EFFECTIVE DATE.

This section is effective January 1, 2014.

Sec. 43.

[403.163] LIABILITY PROTECTION FOR SELLERS AND
PROVIDERS.

(a) A provider or seller of prepaid wireless telecommunications service is not liable
for damages to any person resulting from or incurred in connection with providing any
lawful assistance in good faith to any investigative or law enforcement officer of the
United States, this or any other state, or any political subdivision of this or any other state.

(b) In addition to the protection from liability provided by paragraphs (a) and (b),
section 403.08, subdivision 11, applies to sellers and providers.

EFFECTIVE DATE.

This section is effective January 1, 2014.

Sec. 44.

[403.164] EXCLUSIVITY OF PREPAID WIRELESS E911 FEE.

The prepaid wireless E911 fee imposed by section 403.161 is the only E911 funding
obligation imposed with respect to prepaid wireless telecommunications service in this
state, and no tax, fee, surcharge, or other charge may be imposed by this state, any political
subdivision of this state, or any intergovernmental agency, for E911 funding purposes,
upon any provider, seller, or consumer with respect to the sale, purchase, use, or provision
of prepaid wireless telecommunications service.

EFFECTIVE DATE.

This section is effective January 1, 2014.

Sec. 45. FLOOR STOCKS TAX.

(a) A floor stocks cigarette tax is imposed on every person engaged in the business
in this state as a distributor, retailer, subjobber, vendor, manufacturer, or manufacturer's
representative of cigarettes, on the stamped cigarettes and unaffixed stamps in the person's
possession or under the person's control at 12:01 a.m. on July 1, 2013. The tax is imposed
at the following rates:

(1) on cigarettes weighing not more than three pounds per thousand, 47 mills on
each cigarette; and

(2) on cigarettes weighing more than three pounds per thousand, 94 mills on each
cigarette.

(b) Each distributor, on or before July 10, 2013, shall file a return with the
commissioner of revenue, in the form the commissioner prescribes, showing the stamped
cigarettes and unaffixed stamps on hand at 12:01 a.m. on July 1, 2013, and the amount of
tax due on the cigarettes and unaffixed stamps.

(c) Each retailer, subjobber, vendor, manufacturer, or manufacturer's representative,
on or before July 10, 2013, shall file a return with the commissioner of revenue, in the
form the commissioner prescribes, showing the cigarettes on hand at 12:01 a.m. on July 1,
2013, and the amount of tax due on the cigarettes.

(d) The tax imposed by this section is due and payable on or before September 4,
2013, and after that date bears interest at the rate of one percent per month.

EFFECTIVE DATE.

This section is effective July 1, 2013.

Sec. 46. TAXES AND FEES PAID BY INDIANS AND INDIAN TRIBES.

Subdivision 1.

Health impact fees imposed from 2005 through 2009.

(a) The
commissioner of revenue shall recompute all cigarette and tobacco products excise tax
refunds and payments for periods after July 31, 2005, but before January 1, 2010, that
were made to Indian tribes under agreements entered into under Minnesota Statutes,
section 270C.19.

(b) In making the recomputation for each year, the commissioner must (1) use a per
capita amount, as that phrase is used in the agreements, equal to the sum of (i) the average
statewide per capita cigarette and tobacco products excise tax paid during the applicable
state fiscal year plus (ii) the statewide average per capita health impact fee paid on cigarette
and tobacco products during the applicable state fiscal year, and (2) add the health impact
fees collected on cigarettes and tobacco products delivered onto the reservation to the total
cigarette and tobacco products excise tax collected on cigarettes and tobacco products
delivered onto the reservation to determine the tax base to share under the agreements.

(c) The additional payments to each tribe payable under this section are equal to the
amount determined under the recomputation for the tribe minus the amount previously
paid as a cigarette and tobacco products excise tax or health impact fee refund or payment
to the tribe under any agreement entered into under Minnesota Statutes, section 270C.19.

(d) The commissioner shall compute the additional payments required under this
section based on information available to the commissioner. The tribe does not need to
file a claim for payment.

(e) The additional payments under this subdivision must only be paid to a tribe that
has entered into an agreement under Minnesota Statutes, section 270C.19, subdivision 5,
that covers health impact fees imposed on cigarettes and tobacco products delivered onto
the reservation after December 31, 2009.

Subd. 2.

Limited authority to enter into health impact fee agreements.

(a)
Notwithstanding Minnesota Statutes, section 270C.19, or any other law, the commissioner
must not enter into any agreement covering health impact fees imposed on cigarettes and
tobacco products sold, purchased, or delivered onto a reservation before January 1, 2010.

(b) Notwithstanding Minnesota Statutes, section 270C.19, or any other law, the
commissioner is not authorized to enter into any agreement covering the health impact
fee imposed on cigarettes and tobacco products sold, purchased, or delivered onto a
reservation after December 31, 2009.

Subd. 3.

Payments to tribes under existing agreements.

(a) The commissioner
must not make refunds and payments of health impact fees required under any agreement
entered into under Minnesota Statutes, section 270C.19, subdivision 5, for any period after
the health impact fee has been repealed.

(b) The commissioner must adjust all annual cigarette and tobacco products excise
tax per capita amounts under existing tax agreements entered into under Minnesota
Statutes, section 270C.19, subdivisions 1 and 2, to $95, effective for refunds due for the
quarter ending September 30, 2013. This amount may be changed upon mutual agreement
of the parties to the agreement to more accurately reflect taxes paid on the reservation
by tribal members.

Subd. 4.

Appropriation.

An amount necessary to make refunds and payments
under this section is appropriated to the commissioner from the general fund.

EFFECTIVE DATE.

This section is effective the day following final enactment,
except that subdivision 2, paragraph (b), is effective January 2, 2014.

Sec. 47. REPORT.

On or before June 30, 2016, and every four years thereafter, the commissioner of
transportation, in consultation with the commissioner of revenue, shall prepare and submit
to the chairs and ranking minority members of the senate and house of representatives
committees with jurisdiction over transportation policy and budget, a report that identifies
the amount and sources of annual revenues attributable to each type of aviation tax, along
with annual expenditures from the state airports fund, and any other transfers out of the
fund, during the previous four years. The report must include draft legislation for any
recommended statutory changes to ensure the future adequacy of the state airports fund.

EFFECTIVE DATE.

This section is effective July 1, 2014, and applies to aircraft
tax due on or after that date.

Sec. 48. ARMER GRANTS.

$1,500,000 in fiscal year 2014 and $1,500,000 in fiscal year 2015 is appropriated
from the 911 account of the state government special revenue fund to the commissioner of
public safety for grants to counties to reimburse for the sales tax costs associated with
upgrading public safety radio systems prior to January 1, 2013. The commissioner of
public safety shall give preference to counties that did not receive state or federal grants to
upgrade their public safety radio systems. This is a onetime appropriation.

EFFECTIVE DATE.

This section is effective January 1, 2014.

Sec. 49. TOBACCO TAX COLLECTION REPORT.

Subdivision 1.

Report to legislature.

(a) The commissioner of revenue shall report
to the 2014 legislature on the tobacco tax collection system, including recommendations
to improve compliance under the excise tax for both cigarettes and other tobacco products.
The purpose of the report is to provide information and guidance to the legislature on
improvements to the tobacco tax collection system to:

(1) provide a unified system of collecting both the cigarette and other tobacco
taxes, regardless of category, size, or shape, that ensures the highest reasonable rates of
tax collection;

(2) discourage tax evasion; and

(3) help to prevent illegal sale of tobacco products, which may make these products
more accessible to youth.

(b) In the report, the commissioner shall:

(1) provide a detailed review of the present excise tax collection and compliance
system as it applies to both cigarettes and other tobacco products. This must include
an assessment of the levels of compliance for each category of products and the effect
of the stamping requirement on compliance for each category of products and the effect
of the stamping requirement on compliance rates for cigarettes relative to other tobacco
products. It also must identify any weaknesses in the system;

(2) survey the methods of collection and enforcement used by other states or nations,
including identifying and discussing emerging best practices that ensure tracking of both
cigarettes and other tobacco products and result in the highest rates of tax collection and
compliance. These best practices must consider high-technology alternatives, such as use
of bar codes, radio-frequency identification tags, or similar mechanisms for tracking
compliance;

(3) evaluate the adequacy and effectiveness of the existing penalties and other
sanctions for noncompliance;

(4) evaluate the adequacy of the resources allocated by the state to enforce the
tobacco tax and prevention laws; and

(5) make recommendations on implementation of a comprehensive tobacco tax
collection system for Minnesota that can be implemented by January 1, 2014, including:

(i) recommendations on the specific steps needed to institute and implement the new
system, including estimates of the state's costs of doing so and any additional personnel
requirements;

(ii) recommendations on methods to recover the cost of implementing the system
from the industry;

(iii) evaluation of the extent to which the proposed system is sufficiently flexible
and adaptable to adjust to modifications in the construction, packaging, formatting, and
marketing of tobacco products by the industry; and

(iv) recommendations to modify existing penalties or to impose new penalties or
other sanctions to ensure compliance with the system.

Subd. 2.

Due date.

The report required by subdivision 1 is due January 1, 2014.

Subd. 3.

Procedure.

The report required under this section must be made in the
manner provided under Minnesota Statutes, section 3.195. In addition, copies must be
provided to the chairs and ranking minority members of the legislative committees and
divisions with jurisdiction over taxation.

Subd. 4.

Appropriation.

(a) $100,000 is appropriated from the general fund to the
commissioner of revenue for fiscal year 2014 for the cost of preparing the report under
subdivision 1.

(b) The appropriation under this subdivision is a onetime appropriation and is not
included in the base budget.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 50. REPEALER.

Minnesota Statutes 2012, sections 16A.725; 256.9658; 290.171; 290.173; and
290.174,
are repealed.

EFFECTIVE DATE.

This section is effective July 1, 2013.

ARTICLE 5

INDIVIDUAL INCOME AND CORPORATE FRANCHISE TAXES

Section 1.

[116J.3738] QUALIFIED EXPANSIONS OF GREATER MINNESOTA
BUSINESSES.

Subdivision 1.

Definitions.

(a) For purposes of this section, the following terms
have the meanings given unless the context clearly indicates otherwise.

(b) "Agricultural processing facility" means one or more facilities or operations
that transform, package, sort, or grade livestock or livestock products, agricultural
commodities, or plants or plant products into goods that are used for intermediate or final
consumption including goods for nonfood use, and surrounding property.

(c) "Business" means an individual, corporation, partnership, limited liability
company, association, or any other entity engaged in operating a trade or business located
in greater Minnesota.

(d) "City" means a statutory or home rule charter city.

(e) "Greater Minnesota" means the area of the state that excludes the metropolitan
area, as defined in section 473.121, subdivision 2.

(f) "Qualified business" means a business that satisfies the requirements of subdivision
2, has been certified under subdivision 3, and has not been terminated under subdivision 5.

Subd. 2.

Qualified business.

(a) A business is a qualified business if it satisfies the
requirement of this paragraph and is not disqualified under the provisions of paragraph
(b). To qualify, the business must:

(1) have operated its trade or business in a city or cities in greater Minnesota for at
least one year before applying under subdivision 3;

(2) pay or agree to pay in the future each employee compensation, including benefits
not mandated by law, that on an annualized basis equal at least 120 percent of the federal
poverty level for a family of four;

(3) plan and agree to expand its employment in one or more cities in greater Minnesota
by the minimum number of employees required under subdivision 3, paragraph (c); and

(4) received certification from the commissioner under subdivision 3 that it is a
qualified business.

(b) A business is not a qualified business if it is either:

(1) primarily engaged in making retail sales to purchasers who are physically present
at the business's location or locations in greater Minnesota; or

(2) a public utility, as defined in section 336B.01.

(c) The requirements in paragraph (a) that the business' operations and expansion be
located in a city do not apply to an agricultural processing facility.

Subd. 3.

Certification of qualified business.

(a) A business may apply to
the commissioner for certification as a qualified business under this section. The
commissioner shall specify the form of the application, the manner and times for applying,
and the information required to be included in the application. The commissioner may
impose an application fee in an amount sufficient to defray the commissioner's cost of
processing certifications. A business must file a copy of its application with the chief
clerical officer of the city at the same it applies to the commissioner. For an agricultural
processing facility located outside the boundaries of a city, the business must file a copy
of the application with the county auditor.

(b) The commissioner shall certify each business as a qualified business that:

(1) satisfies the requirements of subdivision 2;

(2) the commissioner determines would not expand its operations in greater
Minnesota without the tax incentives available under subdivision 4; and

(3) enters a business subsidy agreement with the commissioner that pledges to
satisfy the minimum expansion requirements of paragraph (c) within three years or less
following execution of the agreement.

The commissioner must act on an application within 60 days after its filing. Failure
by the commissioner to take action within the 60-day period is deemed approval of the
application.

(c) The following minimum expansion requirements apply, based on the number of
employees of the business at locations in greater Minnesota:

(1) a business that employees 50 or fewer full-time equivalent employees in greater
Minnesota when the agreement is executed must increase its employment by five or more
full-time equivalent employees;

(2) a business that employees more than 50 but fewer than 200 full-time equivalent
employees in greater Minnesota when the agreement is executed must increase the number
of its full-time equivalent employees in greater Minnesota by at least ten percent; or

(3) a business that employees 200 or more full-time equivalent employees in greater
Minnesota when the agreement is executed must increase its employment by at least 21
full-time equivalent employees.

(d) The city, or a county for an agricultural processing facility located outside the
boundaries of a city, in which the business proposes to expand its operations may file
comments supporting or opposing the application with the commissioner. The comments
must be filed within 30 days after receipt by the city of the application and may include a
notice of any contribution the city or county intends to make to encourage or support the
business expansion, such as the use of tax increment financing, property tax abatement,
additional city or county services, or other financial assistance.

(e) Certification of a qualified business is effective for the 12-year period beginning
on the first day of the calendar month immediately following execution of the business
subsidy agreement.

Subd. 4.

Available tax incentives.

A qualified business is entitled to one or more
of the following tax incentives as provided under its business subsidy agreement with
the commissioner:

(1) a sales tax exemption, as provided in section 297A.68, subdivision 44, for
purchases made during the period the business was certified as a qualified business under
this section; and

(2) the jobs credit, as provided in section 290.0682, effective for taxable years
beginning during a calendar year in which certification of the business as a qualified
business applies under this section.

Subd. 5.

Termination of status as a qualified business.

(a) The commissioner shall
put in place a system for monitoring and ensuring that each certified business meets within
three years or less the minimum expansion requirement in its business subsidy agreement
and continues to satisfy those requirements for the rest of the duration of the certification
under subdivision 3. This system must include regular reporting by the business to the
commissioner of its baseline and current employment levels and any other information
the commissioner determines may be useful to ensure compliance and for legislative
evaluation of the effectiveness of the tax incentives.

(b) A business ceases to be a qualified business and to qualify for the sales tax
exemption under section 297A.68, subdivision 49, under this subdivision upon the earlier
of the following dates:

(1) the end of the duration of its designation under subdivision 3, paragraph (e),
effective as provided under this subdivision or other provision of law for the tax incentive;
or

(2) the date the commissioner finds that the business has breached its business
subsidy agreement and failed to satisfy the minimum expansion required by subdivision 3
and its agreement.

(c) A business may contest the commissioner's finding that it breached its business
subsidy agreement under paragraph (b), clause (2), under the contested case procedures in
the Administrative Procedure Act, chapter 14.

(d) The commissioner, after consulting with the commissioner of revenue, may
waive a breach of the business subsidy agreement and permit continued receipt of tax
incentives, if the commissioner determines that termination of the tax incentives is not in
the best interest of the state or the local government units and the business' breach of the
agreement is a result of circumstances beyond its control including, but not limited to:

(1) a natural disaster;

(2) unforeseen industry trends;

(3) a decline in economic activity in the overall or greater Minnesota economy; or

(4) loss of a major supplier or customer of the business.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 2.

Minnesota Statutes 2012, section 116J.8737, subdivision 1, is amended to read:


Subdivision 1.

Definitions.

(a) For the purposes of this section, the following terms
have the meanings given.

(b) "Qualified small business" means a business that has been certified by the
commissioner under subdivision 2.

(c) "Qualified investor" means an investor who has been certified by the
commissioner under subdivision 3.

(d) "Qualified fund" means a pooled angel investment network fund that has been
certified by the commissioner under subdivision 4.

(e) "Qualified investment" means a cash investment in a qualified small business
of a minimum of:

(1) $10,000 in a calendar year by a qualified investor; or

(2) $30,000 in a calendar year by a qualified fund.

A qualified investment must be made in exchange for common stock, a partnership
or membership interest, preferred stock, debt with mandatory conversion to equity, or an
equivalent ownership interest as determined by the commissioner.

(f) "Family" means a family member within the meaning of the Internal Revenue
Code, section 267(c)(4).

(g) "Pass-through entity" means a corporation that for the applicable taxable year is
treated as an S corporation or a general partnership, limited partnership, limited liability
partnership, trust, or limited liability company and which for the applicable taxable year is
not taxed as a corporation under chapter 290.

(h) "Intern" means a student of an accredited institution of higher education, or a
former student who has graduated in the past six months from an accredited institution
of higher education, who is employed by a qualified small business in a nonpermanent
position for a duration of nine months or less that provides training and experience in the
primary business activity of the business.

(i) "Qualified greater Minnesota business" means a qualified small business that
is also certified by the commissioner as a qualified greater Minnesota business under
subdivision 2, paragraph (h).

(j) "Liquidation event" means a conversion of qualified investment for cash, cash
and other consideration, or any other form of equity or debt interest.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 3.

Minnesota Statutes 2012, section 116J.8737, subdivision 2, is amended to read:


Subd. 2.

Certification of qualified small businesses.

(a) Businesses may apply
to the commissioner for certification as a qualified small business for a calendar year.
In addition, the business' application may request certification as a qualified greater
Minnesota business under paragraph (h).
The application must be in the form and
be made under the procedures specified by the commissioner, accompanied by an
application fee of $150. Application fees are deposited in the small business investment
tax credit administration account in the special revenue fund. The application for
certification for 2010 must be made available on the department's Web site by August 1,
2010. Applications for subsequent years' certification must be made available on the
department's Web site by November 1 of the preceding year.

(b) Within 30 days of receiving an application for certification under this
subdivision, the commissioner must either certify the business as satisfying the conditions
required of a qualified small business or a qualified greater Minnesota business, request
additional information from the business, or reject the application for certification. If
the commissioner requests additional information from the business, the commissioner
must either certify the business or reject the application within 30 days of receiving the
additional information. If the commissioner neither certifies the business nor rejects
the application within 30 days of receiving the original application or within 30 days of
receiving the additional information requested, whichever is later, then the application is
deemed rejected, and the commissioner must refund the $150 application fee. A business
that applies for certification and is rejected may reapply.

(c) To receive certification as a qualified small business, a business must satisfy
all of the following conditions:

(1) the business has its headquarters in Minnesota;

(2) at least 51 percent of the business's employees are employed in Minnesota, and
51 percent of the business's total payroll is paid or incurred in the state;

(3) the business is engaged in, or is committed to engage in, innovation in Minnesota
in one of the following as its primary business activity:

(i) using proprietary technology to add value to a product, process, or service in a
qualified high-technology field;

(ii) researching or developing a proprietary product, process, or service in a qualified
high-technology field; or

(iii) researching, developing, or producing a new proprietary technology for use in
the fields of agriculture, tourism, forestry, mining, manufacturing, or transportation;

(4) other than the activities specifically listed in clause (3), the business is not
engaged in real estate development, insurance, banking, lending, lobbying, political
consulting, information technology consulting, wholesale or retail trade, leisure,
hospitality, transportation, construction, ethanol production from corn, or professional
services provided by attorneys, accountants, business consultants, physicians, or health
care consultants;

(5) the business has fewer than 25 employees;

(6) the business must pay its employees annual wages of at least 175 percent of the
federal poverty guideline for the year for a family of four and must pay its interns annual
wages of at least 175 percent of the federal minimum wage used for federally covered
employers, except that this requirement must be reduced proportionately for employees
and interns who work less than full-time, and does not apply to an executive, officer, or
member of the board of the business, or to any employee who owns, controls, or holds
power to vote more than 20 percent of the outstanding securities of the business;

(7) the business has not been in operation for more than ten years;

(8) the business has not previously received private equity investments of more
than $4,000,000; and

(9) the business is not an entity disqualified under section 80A.50, paragraph (b),
clause (3); and

(10) the business has not issued securities that are traded on a public exchange.

(d) In applying the limit under paragraph (c), clause (5), the employees in all members
of the unitary business, as defined in section 290.17, subdivision 4, must be included.

(e) In order for a qualified investment in a business to be eligible for tax credits, the
business:

(1) the business must have applied for and received certification for the calendar
year in which the investment was made prior to the date on which the qualified investment
was made;

(2) must not have issued securities that are traded on a public exchange;

(3) must not issue securities that are traded on a public exchange within 180 days
after the date on which the qualified investment was made; and

(4) must not have a liquidation event within 180 days after the date on which a
qualified investment was made
.

(f) The commissioner must maintain a list of qualified small businesses and qualified
greater Minnesota businesses
certified under this subdivision for the calendar year and
make the list accessible to the public on the department's Web site.

(g) For purposes of this subdivision, the following terms have the meanings given:

(1) "qualified high-technology field" includes aerospace, agricultural processing,
renewable energy, energy efficiency and conservation, environmental engineering, food
technology, cellulosic ethanol, information technology, materials science technology,
nanotechnology, telecommunications, biotechnology, medical device products,
pharmaceuticals, diagnostics, biologicals, chemistry, veterinary science, and similar
fields; and

(2) "proprietary technology" means the technical innovations that are unique and
legally owned or licensed by a business and includes, without limitation, those innovations
that are patented, patent pending, a subject of trade secrets, or copyrighted.; and

(3) "greater Minnesota" means the area of Minnesota located outside of the
metropolitan area as defined in section 473.121, subdivision 2.

(h) To receive certification as a qualified greater Minnesota business, a business must
satisfy all of the requirements of paragraph (c) and must satisfy the following conditions:

(1) the business has its headquarters in greater Minnesota; and

(2) at least 51 percent of the business's employees are employed in greater Minnesota,
and 51 percent of the business's total payroll is paid or incurred in greater Minnesota.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 4.

Minnesota Statutes 2012, section 116J.8737, subdivision 5, is amended to read:


Subd. 5.

Credit allowed.

(a) A qualified investor or qualified fund is eligible for a
credit equal to 25 percent of the qualified investment in a qualified small business.

Investments made by a pass-through entity qualify for a credit only if the entity is a
qualified fund. The commissioner must not allocate more than $11,000,000 in credits to
qualified investors or qualified funds for taxable years beginning after December 31, 2009,
and before January 1, 2011, and must not allocate more than $12,000,000 in credits per
year for taxable years beginning after December 31, 2010, and before January 1, 2015
2013, or more than $17,000,000 in credits per year for taxable years beginning after
December 31, 2012, and before January 1, 2016
. Any portion of a taxable year's credits
that is not allocated by the commissioner does not cancel and may be carried forward to
subsequent taxable years until all credits have been allocated.

(b) The commissioner may not allocate more than a total maximum amount in credits
for a taxable year to a qualified investor for the investor's cumulative qualified investments
as an individual qualified investor and as an investor in a qualified fund; for married
couples filing joint returns the maximum is $250,000, and for all other filers the maximum
is $125,000. The commissioner may not allocate more than a total of $1,000,000 in credits
over all taxable years for qualified investments in any one qualified small business.

(c) The commissioner may not allocate a credit to a qualified investor either as an
individual qualified investor or as an investor in a qualified fund if the investor receives
more than 50 percent of the investor's gross annual income from the qualified small
business in which the qualified investment is proposed. A member of the family of an
individual disqualified by this paragraph is not eligible for a credit under this section. For
a married couple filing a joint return, the limitations in this paragraph apply collectively
to the investor and spouse. For purposes of determining the ownership interest of an
investor under this paragraph, the rules under section 267(c) and 267(e) of the Internal
Revenue Code apply.

(d) Applications for tax credits for 2010 must be made available on the department's
Web site by September 1, 2010, and the department must begin accepting applications
by September 1, 2010. Applications for subsequent years must be made available by
November 1 of the preceding year.

(e) Qualified investors and qualified funds must apply to the commissioner for tax
credits. Tax credits must be allocated to qualified investors or qualified funds in the order
that the tax credit request applications are filed with the department. The commissioner
must approve or reject tax credit request applications within 15 days of receiving the
application. The investment specified in the application must be made within 60 days of
the allocation of the credits. If the investment is not made within 60 days, the credit
allocation is canceled and available for reallocation. A qualified investor or qualified fund
that fails to invest as specified in the application, within 60 days of allocation of the
credits, must notify the commissioner of the failure to invest within five business days of
the expiration of the 60-day investment period.

(f) All tax credit request applications filed with the department on the same day must
be treated as having been filed contemporaneously. If two or more qualified investors or
qualified funds file tax credit request applications on the same day, and the aggregate
amount of credit allocation claims exceeds the aggregate limit of credits under this section
or the lesser amount of credits that remain unallocated on that day, then the credits must
be allocated among the qualified investors or qualified funds who filed on that day on a
pro rata basis with respect to the amounts claimed. The pro rata allocation for any one
qualified investor or qualified fund is the product obtained by multiplying a fraction,
the numerator of which is the amount of the credit allocation claim filed on behalf of
a qualified investor and the denominator of which is the total of all credit allocation
claims filed on behalf of all applicants on that day, by the amount of credits that remain
unallocated on that day for the taxable year.

(g) A qualified investor or qualified fund, or a qualified small business acting on their
behalf, must notify the commissioner when an investment for which credits were allocated
has been made, and the taxable year in which the investment was made. A qualified fund
must also provide the commissioner with a statement indicating the amount invested by
each investor in the qualified fund based on each investor's share of the assets of the
qualified fund at the time of the qualified investment. After receiving notification that the
investment was made, the commissioner must issue credit certificates for the taxable year
in which the investment was made to the qualified investor or, for an investment made by
a qualified fund, to each qualified investor who is an investor in the fund. The certificate
must state that the credit is subject to revocation if the qualified investor or qualified
fund does not hold the investment in the qualified small business for at least three years,
consisting of the calendar year in which the investment was made and the two following
years. The three-year holding period does not apply if:

(1) the investment by the qualified investor or qualified fund becomes worthless
before the end of the three-year period;

(2) 80 percent or more of the assets of the qualified small business is sold before
the end of the three-year period;

(3) the qualified small business is sold before the end of the three-year period; or

(4) the qualified small business's common stock begins trading on a public exchange
before the end of the three-year period.

(h) The commissioner must notify the commissioner of revenue of credit certificates
issued under this section.

EFFECTIVE DATE.

This section is effective the day following final enactment for
taxable years beginning after December 31, 2012.

Sec. 5.

Minnesota Statutes 2012, section 116J.8737, is amended by adding a
subdivision to read:


Subd. 5a.

Promotion of credit in greater Minnesota.

(a) By July 1, 2013, the
commissioner shall develop a plan to increase awareness of and use of the credit for
investments in greater Minnesota businesses with a target goal that a minimum of 30
percent of the credit will be awarded for those investments during the second half
of calendar year 2013 and for each full calendar year thereafter. Beginning with the
legislative report due on March 15, 2014, under subdivision 9, the commissioner shall
report on its plan under this subdivision and the results achieved.

(b) If the target goal of 30 percent under paragraph (a) is not achieved for the
six-month period ending on December 31, 2013, the credit percentage under subdivision
5, paragraph (a), is increased to 40 percent for a qualified investment made after December
31, 2013, in a greater Minnesota business. This paragraph does not apply and the credit
percentage for all qualified investments is the rate provided under subdivision 5 for any
calendar year beginning after a calendar year for which the commissioner determines the
30 percent target has been satisfied. The commissioner shall timely post notification of
changes in the credit rate under this paragraph on the department's Web site.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 6.

Minnesota Statutes 2012, section 116J.8737, subdivision 7, is amended to read:


Subd. 7.

Revocation of credits.

(a) If the commissioner determines that a
qualified investor or qualified fund did not meet the three-year holding period required in
subdivision 5, paragraph (g), any credit allocated and certified to the investor or fund is
revoked and must be repaid by the investor.

(b) If the commissioner determines that a business did not meet the employment
and payroll requirements in subdivision 2, paragraph (c), clause (2), or paragraph (h), as
applicable
, in any of the five calendar years following the year in which an investment in the
business that qualified for a tax credit under this section was made, the business must repay
the following percentage of the credits allowed for qualified investments in the business:

Year following the year in which
Percentage of credit required
the investment was made:
to be repaid:
First
100%
Second
80%
Third
60%
Fourth
40%
Fifth
20%
Sixth and later
0

(c) The commissioner must notify the commissioner of revenue of every credit
revoked and subject to full or partial repayment under this section.

(d) For the repayment of credits allowed under this section and section 290.0692,
a qualified small business, qualified investor, or investor in a qualified fund must file an
amended return with the commissioner of revenue and pay any amounts required to be
repaid within 30 days after becoming subject to repayment under this section.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 7.

Minnesota Statutes 2012, section 116J.8737, subdivision 9, is amended to read:


Subd. 9.

Report to legislature.

Beginning in 2011, the commissioner must
annually report by March 15 to the chairs and ranking minority members of the legislative
committees having jurisdiction over taxes and economic development in the senate and
the house of representatives, in compliance with sections 3.195 and 3.197, on the tax
credits issued under this section. The report must include:

(1) the number and amount of the credits issued;

(2) the recipients of the credits;

(3) for each qualified small business, its location, line of business, and if it received
an investment resulting in certification of tax credits;

(4) the total amount of investment in each qualified small business resulting in
certification of tax credits;

(5) for each qualified small business that received investments resulting in tax
credits, the total amount of additional investment that did not qualify for the tax credit;

(6) the number and amount of credits revoked under subdivision 7;

(7) the number and amount of credits that are no longer subject to the three-year
holding period because of the exceptions under subdivision 5, paragraph (g), clauses
(1) to (4); and

(8) the number of qualified small businesses that are women or minority-owned; and

(9) any other information relevant to evaluating the effect of these credits.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 8.

Minnesota Statutes 2012, section 116J.8737, subdivision 12, is amended to read:


Subd. 12.

Sunset.

This section expires for taxable years beginning after December
31, 2014 2015, except that reporting requirements under subdivision 6 and revocation
of credits under subdivision 7 remain in effect through 2016 2017 for qualified
investors and qualified funds, and through 2018 2019 for qualified small businesses,
reporting requirements under subdivision 9 remain in effect through 2019 2020, and the
appropriation in subdivision 11 remains in effect through 2018 2019.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 9.

[136A.129] GREATER MINNESOTA INTERNSHIP PROGRAM.

Subdivision 1.

Definitions.

(a) For the purposes of this section, the terms defined in
this subdivision have the meanings given to them.

(b) "Eligible employer" means a taxpayer under section 290.01 with employees
located in greater Minnesota.

(c) "Eligible institution" means a Minnesota public postsecondary institution or a
Minnesota private, nonprofit, baccalaureate degree-granting college or university.

(d) "Eligible student" means a student enrolled in an eligible institution who has
completed one-half of the credits necessary for the respective degree or certification.

(e) "Greater Minnesota" means the area of the state outside of the counties of Anoka,
Carver, Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, Sherburne, Washington, and
Wright.

Subd. 2.

Program established.

The Office of Higher Education shall administer
a greater Minnesota internship program through eligible institutions to provide credit at
the eligible institution for internships and tax credits for eligible employers who hire
interns for employment in greater Minnesota. The purpose of the program is to encourage
Minnesota businesses to:

(1) employ and provide valuable experience to Minnesota students; and

(2) foster long-term relationships between the students and greater Minnesota
employers.

Subd. 3.

Program components.

(a) An intern must be an eligible student who has
been admitted to a major program that is related to the intern experience as determined
by the eligible institution.

(b) To participate in the program, an eligible institution must:

(1) enter into written agreements with eligible employers to provide internships that
are at least 12 weeks long and located in greater Minnesota;

(2) determine that the work experience of the internship is related to the eligible
student's course of study; and

(3) provide academic credit for the successful completion of the internship or ensure
that it fulfills requirements necessary to complete a vocational technical education program.

(c) To participate in the program, an eligible employer must enter into a written
agreement with an eligible institution specifying that the intern:

(1) would not have been hired without the tax credit described in subdivision 4;

(2) did not work for the employer in the same or a similar job prior to entering
the agreement;

(3) does not replace an existing employee;

(4) has not previously participated in the program;

(5) will be employed at a location in greater Minnesota;

(6) will be paid at least minimum wage for a minimum of 16 hours per week for a
period of at least 12 weeks; and

(7) will be supervised and evaluated by the employer.

(d) Participating eligible institutions and eligible employers must report annually to
the office. The report must include at least the following:

(1) the number of interns hired;

(2) the number of hours and weeks worked by interns; and

(3) the compensation paid to interns.

(e) An internship required to complete an academic program does not qualify for the
greater Minnesota internship program under this section.

Subd. 4.

Tax credit allowed.

An employer is entitled to a tax credit as provided
in section 290.06, subdivision 3b. The office shall allocate tax credits authorized in
subdivision 4 to eligible institutions. The office shall determine relevant criteria to
allocate the tax credits including the geographic distribution of credits to work locations
outside the metropolitan area. Any credits allocated to an institution but not used may be
reallocated to eligible institutions. The office shall allocate a portion of the administrative
fee under section 290.06, subdivision 36, to participating eligible institutions for their
administrative costs.

Subd. 5.

Reports to the legislature.

(a) By February 1, 2015, the office and the
Department of Revenue shall report to the legislature on the greater Minnesota internship
program. The report must include at least the following:

(1) the number and dollar amount of credits allowed;

(2) the number of interns employed under the program; and

(3) the cost of administering the program.

(b) By February 1, 2016, the office and the Department of Revenue shall report to the
legislature with an analysis of the effectiveness of the program in stimulating businesses
to hire interns and in assisting participating interns in finding permanent career positions.
This report must include the number of students who participated in the program who
were subsequently employed full-time by the employer.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2013.

Sec. 10.

Minnesota Statutes 2012, section 289A.08, subdivision 3, is amended to read:


Subd. 3.

Corporations.

(a) A corporation that is subject to the state's jurisdiction to
tax under section 290.014, subdivision 5, must file a return, except that a foreign operating
corporation as defined in section 290.01, subdivision 6b, is not required to file a return
.

(b) Members of a unitary business that are required to file a combined report on one
return must designate a member of the unitary business to be responsible for tax matters,
including the filing of returns, the payment of taxes, additions to tax, penalties, interest,
or any other payment, and for the receipt of refunds of taxes or interest paid in excess of
taxes lawfully due. The designated member must be a member of the unitary business that
is filing the single combined report and either:

(1) a corporation that is subject to the taxes imposed by chapter 290; or

(2) a corporation that is not subject to the taxes imposed by chapter 290:

(i) Such corporation consents by filing the return as a designated member under this
clause to remit taxes, penalties, interest, or additions to tax due from the members of the
unitary business subject to tax, and receive refunds or other payments on behalf of other
members of the unitary business. The member designated under this clause is a "taxpayer"
for the purposes of this chapter and chapter 270C, and is liable for any liability imposed
on the unitary business under this chapter and chapter 290.

(ii) If the state does not otherwise have the jurisdiction to tax the member designated
under this clause, consenting to be the designated member does not create the jurisdiction
to impose tax on the designated member, other than as described in item (i).

(iii) The member designated under this clause must apply for a business tax account
identification number.

(c) The commissioner shall adopt rules for the filing of one return on behalf of the
members of an affiliated group of corporations that are required to file a combined report.
All members of an affiliated group that are required to file a combined report must file one
return on behalf of the members of the group under rules adopted by the commissioner.

(d) If a corporation claims on a return that it has paid tax in excess of the amount of
taxes lawfully due, that corporation must include on that return information necessary for
payment of the tax in excess of the amount lawfully due by electronic means.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2012.

Sec. 11.

Minnesota Statutes 2012, section 290.01, subdivision 19b, is amended to read:


Subd. 19b.

Subtractions from federal taxable income.

For individuals, estates,
and trusts, there shall be subtracted from federal taxable income:

(1) net interest income on obligations of any authority, commission, or
instrumentality of the United States to the extent includable in taxable income for federal
income tax purposes but exempt from state income tax under the laws of the United States;

(2) if included in federal taxable income, the amount of any overpayment of income
tax to Minnesota or to any other state, for any previous taxable year, whether the amount
is received as a refund or as a credit to another taxable year's income tax liability;

(3) the amount paid to others, less the amount used to claim the credit allowed under
section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten
to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
transportation of each qualifying child in attending an elementary or secondary school
situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
resident of this state may legally fulfill the state's compulsory attendance laws, which
is not operated for profit, and which adheres to the provisions of the Civil Rights Act
of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause,
"textbooks" includes books and other instructional materials and equipment purchased
or leased for use in elementary and secondary schools in teaching only those subjects
legally and commonly taught in public elementary and secondary schools in this state.
Equipment expenses qualifying for deduction includes expenses as defined and limited in
section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional
books and materials used in the teaching of religious tenets, doctrines, or worship, the
purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
or materials for, or transportation to, extracurricular activities including sporting events,
musical or dramatic events, speech activities, driver's education, or similar programs. No
deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or
the qualifying child's vehicle to provide such transportation for a qualifying child. For
purposes of the subtraction provided by this clause, "qualifying child" has the meaning
given in section 32(c)(3) of the Internal Revenue Code;

(4) income as provided under section 290.0802;

(5) to the extent included in federal adjusted gross income, income realized on
disposition of property exempt from tax under section 290.491;

(6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E)
of the Internal Revenue Code in determining federal taxable income by an individual
who does not itemize deductions for federal income tax purposes for the taxable year, an
amount equal to 50 percent of the excess of charitable contributions over $500 allowable
as a deduction for the taxable year under section 170(a) of the Internal Revenue Code,
under the provisions of Public Law 109-1 and Public Law 111-126;

(7) for individuals who are allowed a federal foreign tax credit for taxes that do not
qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover
of subnational foreign taxes for the taxable year, but not to exceed the total subnational
foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
"federal foreign tax credit" means the credit allowed under section 27 of the Internal
Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
the extent they exceed the federal foreign tax credit;

(8) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (7), or 19c, clause (15) (14), in the case
of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
delayed depreciation. For purposes of this clause, "delayed depreciation" means the amount
of the addition made by the taxpayer under subdivision 19a, clause (7), or subdivision 19c,
clause (15) (14), in the case of a shareholder of an S corporation, minus the positive value
of any net operating loss under section 172 of the Internal Revenue Code generated for the
tax year of the addition. The resulting delayed depreciation cannot be less than zero;

(9) job opportunity building zone income as provided under section 469.316;

(10) to the extent included in federal taxable income, the amount of compensation
paid to members of the Minnesota National Guard or other reserve components of the
United States military for active service, excluding compensation for services performed
under the Active Guard Reserve (AGR) program. For purposes of this clause, "active
service" means (i) state active service as defined in section 190.05, subdivision 5a, clause
(1); or (ii) federally funded state active service as defined in section 190.05, subdivision
5b
, but "active service" excludes service performed in accordance with section 190.08,
subdivision 3
;

(11) to the extent included in federal taxable income, the amount of compensation
paid to Minnesota residents who are members of the armed forces of the United States
or United Nations for active duty performed under United States Code, title 10; or the
authority of the United Nations;

(12) an amount, not to exceed $10,000, equal to qualified expenses related to a
qualified donor's donation, while living, of one or more of the qualified donor's organs
to another person for human organ transplantation. For purposes of this clause, "organ"
means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
"human organ transplantation" means the medical procedure by which transfer of a human
organ is made from the body of one person to the body of another person; "qualified
expenses" means unreimbursed expenses for both the individual and the qualified donor
for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
may be subtracted under this clause only once; and "qualified donor" means the individual
or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
individual may claim the subtraction in this clause for each instance of organ donation for
transplantation during the taxable year in which the qualified expenses occur;

(13) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (8), or 19c, clause (16) (15), in the case
of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth of
the addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16)
(15), in the case of a shareholder of a corporation that is an S corporation, minus the
positive value of any net operating loss under section 172 of the Internal Revenue Code
generated for the tax year of the addition. If the net operating loss exceeds the addition for
the tax year, a subtraction is not allowed under this clause;

(14) to the extent included in the federal taxable income of a nonresident of
Minnesota, compensation paid to a service member as defined in United States Code, title
10, section 101(a)(5), for military service as defined in the Servicemembers Civil Relief
Act, Public Law 108-189, section 101(2);

(15) to the extent included in federal taxable income, the amount of national service
educational awards received from the National Service Trust under United States Code,
title 42, sections 12601 to 12604, for service in an approved Americorps National Service
program;

(16) to the extent included in federal taxable income, discharge of indebtedness
income resulting from reacquisition of business indebtedness included in federal taxable
income under section 108(i) of the Internal Revenue Code. This subtraction applies only
to the extent that the income was included in net income in a prior year as a result of the
addition under section 290.01, subdivision 19a, clause (16); and

(17) the amount of the net operating loss allowed under section 290.095, subdivision
11
, paragraph (c); and

(18) in the year that the expenditures are made for railroad track maintenance, as
defined in section 45G(d) of the Internal Revenue Code, in the case of a shareholder of a
corporation that is an S corporation or a partner in a partnership, an amount equal to the
credit awarded pursuant to section 45G(a) of the Internal Revenue Code. The subtraction
shall be reduced to an amount equal to the percentage of the shareholder's or partner's
share of the net income of the S corporation or partnership
.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2012.

Sec. 12.

Minnesota Statutes 2012, section 290.01, subdivision 19c, is amended to read:


Subd. 19c.

Corporations; additions to federal taxable income.

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

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

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

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

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

(5) the amount of any special deductions taken for federal income tax purposes
under sections 241 to 247 and 965 of the Internal Revenue Code;

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

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

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

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

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

(11) the amount of any deemed dividend from a foreign operating corporation
determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend
shall be reduced by the amount of the addition to income required by clauses (20), (21),
(22), and (23);

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

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

(14) (13) any increase in subpart F income, as defined in section 952(a) of the
Internal Revenue Code, for the taxable year when subpart F income is calculated without
regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;

(15) (14) 80 percent of the depreciation deduction allowed under section
168(k)(1)(A) and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if
the taxpayer has an activity that in the taxable year generates a deduction for depreciation
under section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable
year that the taxpayer is not allowed to claim for the taxable year, "the depreciation
allowed under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess
of the depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A)
over the amount of the loss from the activity that is not allowed in the taxable year. In
succeeding taxable years when the losses not allowed in the taxable year are allowed, the
depreciation under section 168(k)(1)(A) and (k)(4)(A) is allowed;

(16) (15) 80 percent of the amount by which the deduction allowed by section 179 of
the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
Revenue Code of 1986, as amended through December 31, 2003;

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

(18) (17) for taxable years beginning before January 1, 2013, the exclusion allowed
under section 139A of the Internal Revenue Code for federal subsidies for prescription
drug plans;

(19) (18) the amount of expenses disallowed under section 290.10, subdivision 2;

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

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

(ii) losses incurred, directly or indirectly, from factoring transactions or discounting
transactions;

(iii) royalty, patent, technical, and copyright fees;

(iv) licensing fees; and

(v) other similar expenses and costs.

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

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

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

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

(ii) income from factoring transactions or discounting transactions;

(iii) royalty, patent, technical, and copyright fees;

(iv) licensing fees; and

(v) other similar income.

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

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

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

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

(24) (19) for taxable years beginning before January 1, 2010, the additional amount
allowed as a deduction for donation of computer technology and equipment under section
170(e)(6) of the Internal Revenue Code, to the extent deducted from taxable income; and

(25) (20) discharge of indebtedness income resulting from reacquisition of business
indebtedness and deferred under section 108(i) of the Internal Revenue Code.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2012.

Sec. 13.

Minnesota Statutes 2012, section 290.01, subdivision 19d, is amended to read:


Subd. 19d.

Corporations; modifications decreasing federal taxable income.

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

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

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

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

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

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

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

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

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

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

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

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

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

(7) in the case of mines, oil and gas wells, other natural deposits, and timber for
which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a
reasonable allowance for depletion based on actual cost. In the case of leases the deduction
must be apportioned between the lessor and lessee in accordance with rules prescribed
by the commissioner. In the case of property held in trust, the allowable deduction must
be apportioned between the income beneficiaries and the trustee in accordance with the
pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
of the trust's income allocable to each;

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

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

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

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

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

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

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

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

(16) (15) any decrease in subpart F income, as defined in section 952(a) of the
Internal Revenue Code, for the taxable year when subpart F income is calculated without
regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;

(17) (16) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19c, clause (15) (14), an amount equal to one-fifth
of the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
amount of the addition made by the taxpayer under subdivision 19c, clause (15) (14). The
resulting delayed depreciation cannot be less than zero;

(18) (17) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19c, clause (16) (15), an amount equal to one-fifth
of the amount of the addition; and

(19) (18) to the extent included in federal taxable income, discharge of indebtedness
income resulting from reacquisition of business indebtedness included in federal taxable
income under section 108(i) of the Internal Revenue Code. This subtraction applies only
to the extent that the income was included in net income in a prior year as a result of the
addition under section 290.01, subdivision 19c, clause (25) (20); and

(19) in the year that the expenditures are made for railroad track maintenance, as
defined in section 45G(d) of the Internal Revenue Code, an amount equal to the credit
awarded pursuant to section 45G(a) of the Internal Revenue Code
.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2012.

Sec. 14.

Minnesota Statutes 2012, section 290.06, subdivision 1, is amended to read:


Subdivision 1.

Computation, corporations.

The franchise tax imposed upon
corporations shall be computed by applying to their taxable income the rate of 9.8 9.0
percent.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2012.

Sec. 15.

Minnesota Statutes 2012, section 290.06, subdivision 2c, is amended to read:


Subd. 2c.

Schedules of rates for individuals, estates, and trusts.

(a) The income
taxes imposed by this chapter upon married individuals filing joint returns and surviving
spouses as defined in section 2(a) of the Internal Revenue Code must be computed by
applying to their taxable net income the following schedule of rates:

(1) On the first $25,680 $35,480, 5.35 percent;

(2) On all over $25,680 $35,480, but not over $102,030 $140,960, 7.05 percent;

(3) On all over $102,030 $140,960, 7.85 9.4 percent.

Married individuals filing separate returns, estates, and trusts must compute their
income tax by applying the above rates to their taxable income, except that the income
brackets will be one-half of the above amounts.

(b) The income taxes imposed by this chapter upon unmarried individuals must be
computed by applying to taxable net income the following schedule of rates:

(1) On the first $17,570 $24,270, 5.35 percent;

(2) On all over $17,570 $24,270, but not over $57,710 $79,730, 7.05 percent;

(3) On all over $57,710 $79,730, 7.85 9.4 percent.

(c) The income taxes imposed by this chapter upon unmarried individuals qualifying
as a head of household as defined in section 2(b) of the Internal Revenue Code must be
computed by applying to taxable net income the following schedule of rates:

(1) On the first $21,630 $29,880, 5.35 percent;

(2) On all over $21,630 $29,880, but not over $86,910 $120,070, 7.05 percent;

(3) On all over $86,910 $120,070, 7.85 9.4 percent.

(d) In lieu of a tax computed according to the rates set forth in this subdivision, the
tax of any individual taxpayer whose taxable net income for the taxable year is less than
an amount determined by the commissioner must be computed in accordance with tables
prepared and issued by the commissioner of revenue based on income brackets of not
more than $100. The amount of tax for each bracket shall be computed at the rates set
forth in this subdivision, provided that the commissioner may disregard a fractional part of
a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.

(e) An individual who is not a Minnesota resident for the entire year must compute
the individual's Minnesota income tax as provided in this subdivision. After the
application of the nonrefundable credits provided in this chapter, the tax liability must
then be multiplied by a fraction in which:

(1) the numerator is the individual's Minnesota source federal adjusted gross income
as defined in section 62 of the Internal Revenue Code and increased by the additions
required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12),
(13), and (16) to (18), and reduced by the Minnesota assignable portion of the subtraction
for United States government interest under section 290.01, subdivision 19b, clause
(1), and the subtractions under section 290.01, subdivision 19b, clauses (8), (9), (13),
(14), (16), and (17), after applying the allocation and assignability provisions of section
290.081, clause (a), or 290.17; and

(2) the denominator is the individual's federal adjusted gross income as defined in
section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in
section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), (13), and (16) to
(18), and reduced by the amounts specified in section 290.01, subdivision 19b, clauses (1),
(8), (9), (13), (14), (16), and (17).

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2012.

Sec. 16.

Minnesota Statutes 2012, section 290.06, subdivision 2d, is amended to read:


Subd. 2d.

Inflation adjustment of brackets.

(a) For taxable years beginning after
December 31, 2000 2013, the minimum and maximum dollar amounts for each rate
bracket for which a tax is imposed in subdivision 2c shall be adjusted for inflation by the
percentage determined under paragraph (b). For the purpose of making the adjustment as
provided in this subdivision all of the rate brackets provided in subdivision 2c shall be the
rate brackets as they existed for taxable years beginning after December 31, 1999 2012,
and before January 1, 2001 2014. The rate applicable to any rate bracket must not be
changed. The dollar amounts setting forth the tax shall be adjusted to reflect the changes
in the rate brackets. The rate brackets as adjusted must be rounded to the nearest $10
amount. If the rate bracket ends in $5, it must be rounded up to the nearest $10 amount.

(b) The commissioner shall adjust the rate brackets and by the percentage determined
pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in
section 1(f)(3)(B) the word "1999" "2012" shall be substituted for the word "1992." For
2001 2014, the commissioner shall then determine the percent change from the 12 months
ending on August 31, 1999 2012, to the 12 months ending on August 31, 2000 2013, and
in each subsequent year, from the 12 months ending on August 31, 1999 2012, to the 12
months ending on August 31 of the year preceding the taxable year. The determination of
the commissioner pursuant to this subdivision shall not be considered a "rule" and shall
not be subject to the Administrative Procedure Act contained in chapter 14.

No later than December 15 of each year, the commissioner shall announce the
specific percentage that will be used to adjust the tax rate brackets.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2012.

Sec. 17.

Minnesota Statutes 2012, section 290.06, is amended by adding a subdivision
to read:


Subd. 36.

Greater Minnesota internship credit.

(a) A taxpayer may take a credit
against the tax due under this chapter equal to the lesser of:

(1) 40 percent of the compensation paid to an intern qualifying under the program
established under section 136A.129, but not to exceed $2,000 per intern; or

(2) the amount certified by the Office of Higher Education under section 136A.129
to the taxpayer.

(b) Credits allowed to a partnership, a limited liability company taxed as a
partnership, an S corporation, or multiple owners of property are passed through to the
partners, members, shareholders, or owners, respectively, pro rata to each partner, member,
shareholder, or owner based on their share of the entity's income for the taxable year.

(c) If the amount of credit which the taxpayer is eligible to receive under this
subdivision exceeds the taxpayer's tax liability under this chapter, the commissioner of
revenue shall refund the excess to the taxpayer.

(d) The amount necessary to:

(1) pay claims for the refund provided in this subdivision; and

(2) an amount equal to one percent of the total amount of the credits authorized
under this subdivision for an administrative fee for the Office of Higher Education
and participating eligible institutions is appropriated from the general fund to the
commissioner of revenue, not to exceed $2,020,000.

The commissioner of revenue shall transfer the amount of the administrative fee to
the Office of Higher Education.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2013.

Sec. 18.

Minnesota Statutes 2012, section 290.0677, subdivision 1, is amended to read:


Subdivision 1.

Credit allowed; current military service.

(a) An individual is
allowed a credit against the tax due under this chapter equal to $59 for each month or
portion thereof that the individual was in active military service in a designated area after
September 11, 2001, and before January 1, 2009, while a Minnesota domiciliary.

(b) An individual is allowed a credit against the tax due under this chapter equal
to $120 $200 for each month or portion thereof that the individual was in active military
service in a designated area after December 31, 2008, while a Minnesota domiciliary.

(c) For active service performed after September 11, 2001, and before December 31,
2006, the individual may claim the credit in the taxable year beginning after December 31,
2005, and before January 1, 2007.

(d) For active service performed after December 31, 2006, the individual may claim
the credit for the taxable year in which the active service was performed.

(e) If an individual entitled to the credit died prior to January 1, 2006, the individual's
estate or heirs at law, if the individual's probate estate has closed or the estate was not
probated, may claim the credit.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2012.

Sec. 19.

Minnesota Statutes 2012, section 290.0677, subdivision 1a, is amended to read:


Subd. 1a.

Credit allowed; past military service.

(a) A qualified individual is
allowed a credit against the tax imposed under this chapter for past military service. The
credit equals $750 $1,500. The credit allowed under this subdivision is reduced by ten
percent of adjusted gross income in excess of $30,000, but in no case is the credit less
than zero.

(b) For a nonresident or a part-year resident, the credit under this subdivision
must be allocated based on the percentage calculated under section 290.06, subdivision
2c
, paragraph (e).

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2012.

Sec. 20.

Minnesota Statutes 2012, section 290.0677, subdivision 2, is amended to read:


Subd. 2.

Definitions.

(a) For purposes of this section, the following terms have
the meanings given.

(b) "Designated area" means a:

(1) combat zone designated by Executive Order from the President of the United
States;

(2) qualified hazardous duty area, designated in Public Law; or

(3) location certified by the U. S. Department of Defense as eligible for combat zone
tax benefits due to the location's direct support of military operations.

(c) "Active military service" means active duty service in any of the United States
armed forces, the National Guard, or reserves.

(d) "Qualified individual" means an individual who has:

(1) either (i) met one of the following criteria:

(i) has served at least 20 years in the military or;

(ii) has a service-connected disability rating of 100 percent for a total and permanent
disability; or

(iii) has been determined by the military to be eligible for compensation from a
pension or other retirement pay from the federal government for service in the military,
as computed under United States Code, title 10, sections 1401 to 1414, 1447 to 1455,
or 12733;
and

(2) separated from military service before the end of the taxable year.

(e) "Adjusted gross income" has the meaning given in section 61 of the Internal
Revenue Code.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2012.

Sec. 21.

Minnesota Statutes 2012, section 290.068, subdivision 1, is amended to read:


Subdivision 1.

Credit allowed.

A corporation, partners in a partnership, or
shareholders in a corporation treated as an "S" corporation under section 290.9725 are
allowed a credit against the tax computed under this chapter for the taxable year equal to:

(a) ten percent of the first $2,000,000 of the excess (if any) of

(1) the qualified research expenses for the taxable year, over

(2) the base amount; and

(b) 2.5 4.5 percent on all of such excess expenses over $2,000,000.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2012.

Sec. 22.

Minnesota Statutes 2012, section 290.0681, subdivision 1, is amended to read:


Subdivision 1.

Definitions.

(a) For purposes of this section, the following terms
have the meanings given.

(b) "Account" means the historic credit administration account in the special
revenue fund.

(c) "Office" means the State Historic Preservation Office of the Minnesota Historical
Society.

(d) "Project" means rehabilitation of a certified historic structure, as defined in
section 47(c)(3)(A) of the Internal Revenue Code, that is located in Minnesota and is
allowed a federal credit under section 47(a)(2) of the Internal Revenue Code.

(e) "Society" means the Minnesota Historical Society.

(f) "Federal credit" means the credit allowed under section 47(a)(2) of the Internal
Revenue Code.

(g) "Placed in service" has the meaning used in section 47 of the Internal Revenue
Code.

(h) "Qualified rehabilitation expenditures" has the meaning given in section 47 of
the Internal Revenue Code.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 23.

Minnesota Statutes 2012, section 290.0681, subdivision 3, is amended to read:


Subd. 3.

Applications; allocations.

(a) To qualify for a credit or grant under this
section, the developer of a project must apply to the office before the rehabilitation begins.
The application must contain the information and be in the form prescribed by the office.
The office may collect a fee for application of up to $5,000 0.5 percent of qualified
rehabilitation expenditures, up to $45,000
, based on estimated qualified rehabilitation
expenses expenditures, to offset costs associated with personnel and administrative
expenses related to administering the credit and preparing the economic impact report
in subdivision 9. Application fees are deposited in the account. The application must
indicate if the application is for a credit or a grant in lieu of the credit or a combination of
the two and designate the taxpayer qualifying for the credit or the recipient of the grant.

(b) Upon approving an application for credit, the office shall issue allocation
certificates that:

(1) verify eligibility for the credit or grant;

(2) state the amount of credit or grant anticipated with the project, with the credit
amount equal to 100 percent and the grant amount equal to 90 percent of the federal
credit anticipated in the application;

(3) state that the credit or grant allowed may increase or decrease if the federal
credit the project receives at the time it is placed in service is different than the amount
anticipated at the time the allocation certificate is issued; and

(4) state the fiscal year in which the credit or grant is allocated, and that the taxpayer
or grant recipient is entitled to receive the credit or grant at the time the project is placed
in service, provided that date is within three calendar years following the issuance of
the allocation certificate.

(c) The office, in consultation with the commissioner of revenue, shall determine
if the project is eligible for a credit or a grant under this section and must notify the
developer in writing of its determination
. Eligibility for the credit is subject to review
and audit by the commissioner of revenue.

(d) The federal credit recapture and repayment requirements under section 50 of the
Internal Revenue Code do not apply to the credit allowed under this section.

(e) Any decision of the office under paragraph (c) may be challenged as a contested
case under chapter 14. The contested case proceeding must be initiated within 45 days of
the date of written notification by the office.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 24.

Minnesota Statutes 2012, section 290.0681, subdivision 4, is amended to read:


Subd. 4.

Credit certificates; grants.

(a)(1) The developer of a project for which
the office has issued an allocation certificate must notify the office when the project is
placed in service. Upon verifying that the project has been placed in service, and was
allowed a federal credit, the office must issue a credit certificate to the taxpayer designated
in the application or must issue a grant to the recipient designated in the application.
Credit certificates will be issued on a first come, first served basis according to the date
and time of verification required under this clause.
The credit certificate must state the
amount of the credit.

(2) The credit amount equals the federal credit allowed for the project.

(3) The grant amount equals 90 percent of the federal credit allowed for the project.

(b) The recipient of a credit certificate may assign the certificate to another taxpayer,
which is then allowed the credit under this section or section 297I.20, subdivision 3. An
assignment is not valid unless the assignee notifies the commissioner within 30 days of the
date that the assignment is made.
The commissioner shall prescribe the forms necessary
for notifying the commissioner of the assignment of a credit certificate and for claiming
a credit by assignment.

(c) Credits passed through to partners, members, shareholders, or owners pursuant to
subdivision 5 are not an assignment of a credit certificate under this subdivision.

(d) A grant agreement between the office and the recipient of a grant may allow the
grant to be issued to another individual or entity.

EFFECTIVE DATE.

Paragraph (a) is effective beginning fiscal year 2016.
Paragraph (b) is effective the day following final enactment.

Sec. 25.

Minnesota Statutes 2012, section 290.0681, subdivision 5, is amended to read:


Subd. 5.

Partnerships; multiple owners.

Credits granted to a partnership, a limited
liability company taxed as a partnership, S corporation, or multiple owners of property
are passed through to the partners, members, shareholders, or owners, respectively, pro
rata to each partner, member, shareholder, or owner based on their share of the entity's
assets or as specially allocated in their organizational documents or any other executed
agreement
, as of the last day of the taxable year.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 26.

Minnesota Statutes 2012, section 290.0681, subdivision 7, is amended to read:


Subd. 7.

Appropriations.

(a) An amount sufficient to pay the refunds authorized
under this section is appropriated to the commissioner from the general fund, not to
exceed $15,000,000 per fiscal year
.

(b) Subject to the limitation in paragraph (a), an amount sufficient to pay the grants
authorized under this section is appropriated to the society from the general fund.

(c) Amounts in the account are appropriated to the society for costs associated with
personnel and administrative expenses related to administering the credit for historic
structure rehabilitation in this section, for refunding application fees under subdivision
3, and for costs associated with preparing the determination of economic impact report
required in subdivision 9.

EFFECTIVE DATE.

This section is effective beginning fiscal year 2016.

Sec. 27.

Minnesota Statutes 2012, section 290.0681, subdivision 10, is amended to read:


Subd. 10.

Sunset.

This section expires after fiscal year 2015 2021, except that
the office's authority to issue credit certificates under subdivision 4 based on allocation
certificates that were issued before fiscal year 2016 2022 remains in effect through 2018
2024, and the reporting requirements in subdivision 9 remain in effect through the year
following the year in which all allocation certificates have either been canceled or resulted
in issuance of credit certificates, or 2019 2025, whichever is earlier.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 28.

[290.0682] JOBS CREDIT; GREATER MINNESOTA BUSINESS
EXPANSIONS.

Subdivision 1.

Credit allowed.

If authorized by its business subsidy agreement, a
qualified business is allowed a credit against the taxes imposed under chapter 290. The
credit equals seven percent of the:

(1) lesser of:

(i) the greater Minnesota payroll for the taxable year, less the greater Minnesota
payroll for the base year; or

(ii) the total Minnesota payroll for the taxable year, less the total Minnesota payroll
for the base year; minus

(2)(i) $35,000 multiplied by (ii) the number of full-time equivalent employees that
the qualified business employs in greater Minnesota for the taxable year, minus the
number of full-time equivalent employees the business employed in greater Minnesota in
the base year, but not less than zero.

Subd. 2.

Definitions.

(a) For purposes of this section, the following terms have
the meanings given.

(b) "Base year" means the taxable year beginning during the calendar year prior to
the calendar year in which the qualified business was certified under section 116J.3738.

(c) "Full-time equivalent employees" means the equivalent of annualized expected
hours of work equal to 2,080 hours.

(d) "Greater Minnesota" has the meaning given in section 116J.3738.

(e) "Greater Minnesota payroll" is that portion of the payroll factor under section
290.191 that represents:

(1) wages or salaries paid to an individual for services performed in greater
Minnesota; plus

(2) wages or salaries paid to individuals working from offices within greater
Minnesota if their employment requires them to work outside of greater Minnesota and the
work is incidental to the work performed by the individual within greater Minnesota; less

(3) the amount of compensation attributable to any employee whose wages or salary
are included in clause (1) or (2) that exceeds $125,000.

(f) "Minnesota payroll" means the wages or salaries attributed to Minnesota under
section 290.191, subdivision 12, for the qualified business or the unitary business of which
the qualified business is a part, whichever is greater.

(g) "Qualified business" means a qualified business certified under section
116J.3738, subdivision 3.

Subd. 3.

Inflation adjustment.

For taxable years beginning after December 31,
2014, the dollar amounts in subdivision 1, clause (2), and subdivision 2, paragraph (e), are
annually adjusted for inflation. The commissioner of revenue shall adjust the amounts by
the percentage determined under section 290.06, subdivision 2d, for the taxable year.

Subd. 4.

Refundable.

If the amount of the credit exceeds the liability for tax under
this chapter, the commissioner of revenue shall refund the excess to the qualified business.

Subd. 5.

Appropriation.

An amount sufficient to pay the refunds authorized by
this section is appropriated to the commissioner of revenue from the general fund, not to
exceed $5,000,000 in a taxable year.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2013.

Sec. 29.

[290.0683] CLOTHING SALES TAX CREDIT.

Subdivision 1.

Definitions.

(a) For purposes of this section, the following terms
have the meanings given.

(b) "Income" has the meaning given in section 290.067, subdivision 2a.

(c) "Dependent" has the meaning given in section 152 of the Internal Revenue Code.

Subd. 2.

Credit allowed.

A taxpayer is allowed a refundable credit against the tax
imposed under this chapter. The credit is equal to $60 for a married couple filing a joint
return, and $30 for all other filers, plus $30 for the first dependent claimed on the return,
$15 for each of the second and third dependents claimed on the return, $10 for the fourth
dependent claimed on the return, and $5 for each subsequent dependent.

Subd. 3.

Limitations.

The credit allowed in this section is reduced by $10 for every
$1,000 of income in excess of 200 percent of the federal poverty guidelines.

Subd. 4.

Appropriation.

An amount sufficient to pay the refunds required by this
section is appropriated to the commissioner from the general fund.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2012.

Sec. 30.

Minnesota Statutes 2012, section 290.091, subdivision 2, is amended to read:


Subd. 2.

Definitions.

For purposes of the tax imposed by this section, the following
terms have the meanings given:

(a) "Alternative minimum taxable income" means the sum of the following for
the taxable year:

(1) the taxpayer's federal alternative minimum taxable income as defined in section
55(b)(2) of the Internal Revenue Code;

(2) the taxpayer's itemized deductions allowed in computing federal alternative
minimum taxable income, but excluding:

(i) the charitable contribution deduction under section 170 of the Internal Revenue
Code;

(ii) the medical expense deduction;

(iii) the casualty, theft, and disaster loss deduction; and

(iv) the impairment-related work expenses of a disabled person;

(3) for depletion allowances computed under section 613A(c) of the Internal
Revenue Code, with respect to each property (as defined in section 614 of the Internal
Revenue Code), to the extent not included in federal alternative minimum taxable income,
the excess of the deduction for depletion allowable under section 611 of the Internal
Revenue Code for the taxable year over the adjusted basis of the property at the end of the
taxable year (determined without regard to the depletion deduction for the taxable year);

(4) to the extent not included in federal alternative minimum taxable income, the
amount of the tax preference for intangible drilling cost under section 57(a)(2) of the
Internal Revenue Code determined without regard to subparagraph (E);

(5) to the extent not included in federal alternative minimum taxable income, the
amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and

(6) the amount of addition required by section 290.01, subdivision 19a, clauses (7)
to (9), (12), (13), and (16) to (18);

less the sum of the amounts determined under the following:

(1) interest income as defined in section 290.01, subdivision 19b, clause (1);

(2) an overpayment of state income tax as provided by section 290.01, subdivision
19b
, clause (2), to the extent included in federal alternative minimum taxable income;

(3) the amount of investment interest paid or accrued within the taxable year on
indebtedness to the extent that the amount does not exceed net investment income, as
defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include
amounts deducted in computing federal adjusted gross income;

(4) amounts subtracted from federal taxable income as provided by section 290.01,
subdivision 19b
, clauses (6), (8) to (14), and (16), and (18); and

(5) the amount of the net operating loss allowed under section 290.095, subdivision
11
, paragraph (c).

In the case of an estate or trust, alternative minimum taxable income must be
computed as provided in section 59(c) of the Internal Revenue Code.

(b) "Investment interest" means investment interest as defined in section 163(d)(3)
of the Internal Revenue Code.

(c) "Net minimum tax" means the minimum tax imposed by this section.

(d) "Regular tax" means the tax that would be imposed under this chapter (without
regard to this section and section 290.032), reduced by the sum of the nonrefundable
credits allowed under this chapter.

(e) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable
income after subtracting the exemption amount determined under subdivision 3.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2012.

Sec. 31.

Minnesota Statutes 2012, section 290.0921, subdivision 1, is amended to read:


Subdivision 1.

Tax imposed.

In addition to the taxes computed under this chapter
without regard to this section, the franchise tax imposed on corporations includes a tax
equal to the excess, if any, for the taxable year of:

(1) 5.8 5.3 percent of Minnesota alternative minimum taxable income; over

(2) the tax imposed under section 290.06, subdivision 1, without regard to this section.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2012.

Sec. 32.

Minnesota Statutes 2012, section 290.0921, subdivision 3, is amended to read:


Subd. 3.

Alternative minimum taxable income.

"Alternative minimum taxable
income" is Minnesota net income as defined in section 290.01, subdivision 19, and
includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e),
(f), and (h) of the Internal Revenue Code. If a corporation files a separate company
Minnesota tax return, the minimum tax must be computed on a separate company basis.
If a corporation is part of a tax group filing a unitary return, the minimum tax must be
computed on a unitary basis. The following adjustments must be made.

(1) For purposes of the depreciation adjustments under section 56(a)(1) and
56(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in
service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal
income tax purposes, including any modification made in a taxable year under section
290.01, subdivision 19e, or Minnesota Statutes 1986, section 290.09, subdivision 7,
paragraph (c).

For taxable years beginning after December 31, 2000, the amount of any remaining
modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986,
section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation
allowance in the first taxable year after December 31, 2000.

(2) The portion of the depreciation deduction allowed for federal income tax
purposes under section 168(k) of the Internal Revenue Code that is required as an addition
under section 290.01, subdivision 19c, clause (15) (14), is disallowed in determining
alternative minimum taxable income.

(3) The subtraction for depreciation allowed under section 290.01, subdivision
19d
, clause (17) (16), is allowed as a depreciation deduction in determining alternative
minimum taxable income.

(4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d)
of the Internal Revenue Code does not apply.

(5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal
Revenue Code does not apply.

(6) The special rule for dividends from section 936 companies under section
56(g)(4)(C)(iii) does not apply.

(7) The tax preference for depletion under section 57(a)(1) of the Internal Revenue
Code does not apply.

(8) The tax preference for intangible drilling costs under section 57(a)(2) of the
Internal Revenue Code must be calculated without regard to subparagraph (E) and the
subtraction under section 290.01, subdivision 19d, clause (4).

(9) The tax preference for tax exempt interest under section 57(a)(5) of the Internal
Revenue Code does not apply.

(10) The tax preference for charitable contributions of appreciated property under
section 57(a)(6) of the Internal Revenue Code does not apply.

(11) For purposes of calculating the tax preference for accelerated depreciation or
amortization on certain property placed in service before January 1, 1987, under section
57(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the
deduction allowed under section 290.01, subdivision 19e.

For taxable years beginning after December 31, 2000, the amount of any remaining
modification made under section 290.01, subdivision 19e, not previously deducted is a
depreciation or amortization allowance in the first taxable year after December 31, 2004.

(12) For purposes of calculating the adjustment for adjusted current earnings in
section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable
income" as it is used in section 56(g) of the Internal Revenue Code, means alternative
minimum taxable income as defined in this subdivision, determined without regard to the
adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code.

(13) For purposes of determining the amount of adjusted current earnings under
section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section
56(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign dividend
gross-up subtracted as provided in section 290.01, subdivision 19d, clause (1), (ii) the
amount of refunds of income, excise, or franchise taxes subtracted as provided in section
290.01, subdivision 19d, clause (9), or (iii) the amount of royalties, fees or other like
income subtracted as provided in section 290.01, subdivision 19d, clause (10)
.

(14) Alternative minimum taxable income excludes the income from operating in a
job opportunity building zone as provided under section 469.317.

(15) Alternative minimum taxable income excludes the income from operating in a
biotechnology and health sciences industry zone as provided under section 469.337.

Items of tax preference must not be reduced below zero as a result of the
modifications in this subdivision.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2012.

Sec. 33.

Minnesota Statutes 2012, section 290.0922, subdivision 1, is amended to read:


Subdivision 1.

Imposition.

(a) In addition to the tax imposed by this chapter without
regard to this section, the franchise tax imposed on a corporation required to file under
section 289A.08, subdivision 3, other than a corporation treated as an "S" corporation
under section 290.9725 for the taxable year includes a tax equal to the following amounts:

If the sum of the corporation's Minnesota
property, payrolls, and sales or receipts is:
the tax equals:
less than
$
500,000
930,000
$
0
$
500,000
930,000
to
$
999,999
1,869,999
$
100
190
$
1,000,000
1,870,000
to
$
4,999,999
9,339,999
$
300
560
$
5,000,000
9,340,000
to
$
9,999,999
18,679,999
$
1,000
1,870
$
10,000,000
18,680,000
to
$
19,999,999
37,359,999
$
2,000
3,740
$
20,000,000
37,360,000
or
more
$
5,000
9,340

(b) A tax is imposed for each taxable year on a corporation required to file a return
under section 289A.12, subdivision 3, that is treated as an "S" corporation under section
290.9725 and on a partnership required to file a return under section 289A.12, subdivision
3
, other than a partnership that derives over 80 percent of its income from farming. The
tax imposed under this paragraph is due on or before the due date of the return for the
taxpayer due under section 289A.18, subdivision 1. The commissioner shall prescribe
the return to be used for payment of this tax. The tax under this paragraph is equal to
the following amounts:

If the sum of the S corporation's
or partnership's Minnesota
property, payrolls, and sales or
receipts is:
the tax equals:
less than
$
500,000
930,000
$
0
$
500,000
930,000
to
$
999,999
1,869,999
$
100
190
$
1,000,000
1,870,000
to
$
4,999,999
9,339,999
$
300
560
$
5,000,000
9,340,000
to
$
9,999,999
18,679,999
$
1,000
1,870
$
10,000,000
18,680,000
to
$
19,999,999
37,359,999
$
2,000
3,740
$
20,000,000
37,360,000
or
more
$
5,000
9,340

(c) The commissioner shall adjust the dollar amounts of both the tax and the property,
payrolls, and sales or receipts thresholds in paragraphs (a) and (b) by the percentage
determined pursuant to the provisions of section 1(f) of the Internal Revenue Code, except
that in section 1(f)(3)(B) the year 2012 must be substituted for the year 1992. For 2014,
the commissioner shall determine the percentage change from the 12 months ending on
August 31, 2012, to the 12 months ending on August 31, 2013, and in each subsequent
year, from the 12 months ending on August 31, 2012, to the 12 months ending on August
31 of the year preceding the taxable year. The determination of the commissioner pursuant
to this subdivision is not a rule subject to the Administrative Procedure Act contained in
chapter 14. The tax amounts as adjusted must be rounded to the nearest $10 amount and
the threshold amounts must be adjusted to the nearest $10,000 amount. For tax amounts
that end in $5, the amount is rounded up to the nearest $10 amount and for threshold
amounts that end in $5,000, the amount is rounded up to the nearest $10,000.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2012.

Sec. 34.

Minnesota Statutes 2012, section 290.095, subdivision 2, is amended to read:


Subd. 2.

Defined and limited.

(a) The term "net operating loss" as used in this
section shall mean a net operating loss as defined in section 172(c) of the Internal Revenue
Code, with the modifications specified in subdivision 4. The deductions provided in
section 290.21 and the modification provided in section 290.01, subdivision 19d, clause
(10),
cannot be used in the determination of a net operating loss.

(b) The term "net operating loss deduction" as used in this section means the
aggregate of the net operating loss carryovers to the taxable year, computed in accordance
with subdivision 3. The provisions of section 172(b) of the Internal Revenue Code relating
to the carryback of net operating losses, do not apply.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2012.

Sec. 35.

Minnesota Statutes 2012, section 290.17, subdivision 4, is amended to read:


Subd. 4.

Unitary business principle.

(a) If a trade or business conducted wholly
within this state or partly within and partly without this state is part of a unitary business,
the entire income of the unitary business is subject to apportionment pursuant to section
290.191. Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary
business is considered to be derived from any particular source and none may be allocated
to a particular place except as provided by the applicable apportionment formula. The
provisions of this subdivision do not apply to business income subject to subdivision 5,
income of an insurance company, or income of an investment company determined under
section 290.36.

(b) The term "unitary business" means business activities or operations which
result in a flow of value between them. The term may be applied within a single legal
entity or between multiple entities and without regard to whether each entity is a sole
proprietorship, a corporation, a partnership or a trust.

(c) Unity is presumed whenever there is unity of ownership, operation, and use,
evidenced by centralized management or executive force, centralized purchasing,
advertising, accounting, or other controlled interaction, but the absence of these
centralized activities will not necessarily evidence a nonunitary business. Unity is also
presumed when business activities or operations are of mutual benefit, dependent upon or
contributory to one another, either individually or as a group.

(d) Where a business operation conducted in Minnesota is owned by a business
entity that carries on business activity outside the state different in kind from that
conducted within this state, and the other business is conducted entirely outside the state, it
is presumed that the two business operations are unitary in nature, interrelated, connected,
and interdependent unless it can be shown to the contrary.

(e) Unity of ownership is not deemed to exist when a corporation is involved unless
that corporation is a member of a group of two or more business entities and more than 50
percent of the voting stock of each member of the group is directly or indirectly owned
by a common owner or by common owners, either corporate or noncorporate, or by one
or more of the member corporations of the group. For this purpose, the term "voting
stock" shall include membership interests of mutual insurance holding companies formed
under section 66A.40.

(f) The net income and apportionment factors under section 290.191 or 290.20 of
foreign corporations and other foreign entities which are part of a unitary business shall not
be included in the net income or the apportionment factors of the unitary business; except
that the income and apportionment factors of a foreign corporation, foreign partnership, or
other foreign entity, that are included in the federal taxable income, as defined in section
63 of the Internal Revenue Code as amended through the date named in section 290.01,
subdivision 19, of a domestic corporation, domestic entity, or individual must be included
in determining net income and the factors to be used in the apportionment of net income
pursuant to section 290.191 or 290.20
. A foreign corporation or other foreign entity which
is not part of a unitary business and which is required to file a return under this chapter shall
file on a separate return basis. The net income and apportionment factors under section
290.191 or 290.20 of foreign operating corporations shall not be included in the net income
or the apportionment factors of the unitary business except as provided in paragraph (g).

(g) The adjusted net income of a foreign operating corporation shall be deemed to
be paid as a dividend on the last day of its taxable year to each shareholder thereof, in
proportion to each shareholder's ownership, with which such corporation is engaged in
a unitary business. Such deemed dividend shall be treated as a dividend under section
290.21, subdivision 4.

Dividends actually paid by a foreign operating corporation to a corporate shareholder
which is a member of the same unitary business as the foreign operating corporation shall
be eliminated from the net income of the unitary business in preparing a combined report
for the unitary business. The adjusted net income of a foreign operating corporation
shall be its net income adjusted as follows:

(1) any taxes paid or accrued to a foreign country, the commonwealth of Puerto
Rico, or a United States possession or political subdivision of any of the foregoing shall
be a deduction; and

(2) the subtraction from federal taxable income for payments received from foreign
corporations or foreign operating corporations under section 290.01, subdivision 19d,
clause (10), shall not be allowed.

If a foreign operating corporation incurs a net loss, neither income nor deduction from
that corporation shall be included in determining the net income of the unitary business.

(h) (g) For purposes of determining the net income of a unitary business and the
factors to be used in the apportionment of net income pursuant to section 290.191 or
290.20, there must be included only the income and apportionment factors of domestic
corporations or other domestic entities other than foreign operating corporations that are
determined to be part of the unitary business pursuant to this subdivision, notwithstanding
that foreign corporations or other foreign entities might be included in the unitary
business; except that the income and apportionment factors of a foreign corporation,
foreign partnership, or other foreign entity, that is included in the federal taxable income,
as defined in section 63 of the Internal Revenue Code as amended through the date
named in section 290.01, subdivision 19, of a domestic corporation, domestic entity, or
individual must be included in determining net income and the factors to be used in the
apportionment of net income pursuant to section 290.191 or 290.20
.

(i) Deductions for expenses, interest, or taxes otherwise allowable under this chapter
that are connected with or allocable against dividends, deemed dividends described
in paragraph (g), or royalties, fees, or other like income described in section 290.01,
subdivision 19d
, clause (10), shall not be disallowed.

(j) (h) Each corporation or other entity, except a sole proprietorship, that is part of
a unitary business must file combined reports as the commissioner determines. On the
reports, all intercompany transactions between entities included pursuant to paragraph (h)
(g) must be eliminated and the entire net income of the unitary business determined in
accordance with this subdivision is apportioned among the entities by using each entity's
Minnesota factors for apportionment purposes in the numerators of the apportionment
formula and the total factors for apportionment purposes of all entities included pursuant to
paragraph (h) (g) in the denominators of the apportionment formula. All sales of the unitary
business made within this state pursuant to section 290.191 or 290.20 must be included
on the combined report of a corporation or other entity that is a member of the unitary
business and is subject to the jurisdiction of this state to impose tax under this chapter.

(k) (i) If a corporation has been divested from a unitary business and is included in a
combined report for a fractional part of the common accounting period of the combined
report:

(1) its income includable in the combined report is its income incurred for that part
of the year determined by proration or separate accounting; and

(2) its sales, property, and payroll included in the apportionment formula must
be prorated or accounted for separately.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2012.

Sec. 36.

Minnesota Statutes 2012, section 290.191, subdivision 5, is amended to read:


Subd. 5.

Determination of sales factor.

For purposes of this section, the following
rules apply in determining the sales factor.

(a) The sales factor includes all sales, gross earnings, or receipts received in the
ordinary course of the business, except that the following types of income are not included
in the sales factor:

(1) interest;

(2) dividends;

(3) sales of capital assets as defined in section 1221 of the Internal Revenue Code;

(4) sales of property used in the trade or business, except sales of leased property of
a type which is regularly sold as well as leased; and

(5) sales of debt instruments as defined in section 1275(a)(1) of the Internal Revenue
Code or sales of stock; and.

(6) royalties, fees, or other like income of a type which qualify for a subtraction from
federal taxable income under section 290.01, subdivision 19d, clause (10).

(b) Sales of tangible personal property are made within this state if the property is
received by a purchaser at a point within this state, and the taxpayer is taxable in this state,
regardless of the f.o.b. point, other conditions of the sale, or the ultimate destination
of the property.

(c) Tangible personal property delivered to a common or contract carrier or foreign
vessel for delivery to a purchaser in another state or nation is a sale in that state or nation,
regardless of f.o.b. point or other conditions of the sale.

(d) Notwithstanding paragraphs (b) and (c), when intoxicating liquor, wine,
fermented malt beverages, cigarettes, or tobacco products are sold to a purchaser who is
licensed by a state or political subdivision to resell this property only within the state of
ultimate destination, the sale is made in that state.

(e) Sales made by or through a corporation that is qualified as a domestic
international sales corporation under section 992 of the Internal Revenue Code are not
considered to have been made within this state.

(f) Sales, rents, royalties, and other income in connection with real property is
attributed to the state in which the property is located.

(g) Receipts from the lease or rental of tangible personal property, including finance
leases and true leases, must be attributed to this state if the property is located in this
state and to other states if the property is not located in this state. Receipts from the
lease or rental of moving property including, but not limited to, motor vehicles, rolling
stock, aircraft, vessels, or mobile equipment are included in the numerator of the receipts
factor to the extent that the property is used in this state. The extent of the use of moving
property is determined as follows:

(1) A motor vehicle is used wholly in the state in which it is registered.

(2) The extent that rolling stock is used in this state is determined by multiplying
the receipts from the lease or rental of the rolling stock by a fraction, the numerator of
which is the miles traveled within this state by the leased or rented rolling stock and the
denominator of which is the total miles traveled by the leased or rented rolling stock.

(3) The extent that an aircraft is used in this state is determined by multiplying the
receipts from the lease or rental of the aircraft by a fraction, the numerator of which is
the number of landings of the aircraft in this state and the denominator of which is the
total number of landings of the aircraft.

(4) The extent that a vessel, mobile equipment, or other mobile property is used in
the state is determined by multiplying the receipts from the lease or rental of the property
by a fraction, the numerator of which is the number of days during the taxable year the
property was in this state and the denominator of which is the total days in the taxable year.

(h) Royalties and other income not described in paragraph (a), clause (6), received
for the use of or for the privilege of using intangible property, including patents,
know-how, formulas, designs, processes, patterns, copyrights, trade names, service names,
franchises, licenses, contracts, customer lists, or similar items, must be attributed to the
state in which the property is used by the purchaser. If the property is used in more
than one state, the royalties or other income must be apportioned to this state pro rata
according to the portion of use in this state. If the portion of use in this state cannot be
determined, the royalties or other income must be excluded from both the numerator
and the denominator. Intangible property is used in this state if the purchaser uses the
intangible property or the rights therein in the regular course of its business operations in
this state, regardless of the location of the purchaser's customers.

(i) Sales of intangible property are made within the state in which the property is
used by the purchaser. If the property is used in more than one state, the sales must be
apportioned to this state pro rata according to the portion of use in this state. If the
portion of use in this state cannot be determined, the sale must be excluded from both the
numerator and the denominator of the sales factor. Intangible property is used in this
state if the purchaser used the intangible property in the regular course of its business
operations in this state.

(j) Receipts from the performance of services must be attributed to the state where
the services are received. For the purposes of this section, receipts from the performance
of services provided to a corporation, partnership, or trust may only be attributed to a state
where it has a fixed place of doing business. If the state where the services are received is
not readily determinable or is a state where the corporation, partnership, or trust receiving
the service does not have a fixed place of doing business, the services shall be deemed
to be received at the location of the office of the customer from which the services were
ordered in the regular course of the customer's trade or business. If the ordering office
cannot be determined, the services shall be deemed to be received at the office of the
customer to which the services are billed.

(k) For the purposes of this subdivision and subdivision 6, paragraph (l), receipts
from management, distribution, or administrative services performed by a corporation
or trust for a fund of a corporation or trust regulated under United States Code, title 15,
sections 80a-1 through 80a-64, must be attributed to the state where the shareholder of
the fund resides. Under this paragraph, receipts for services attributed to shareholders are
determined on the basis of the ratio of: (1) the average of the outstanding shares in the
fund owned by shareholders residing within Minnesota at the beginning and end of each
year; and (2) the average of the total number of outstanding shares in the fund at the
beginning and end of each year. Residence of the shareholder, in the case of an individual,
is determined by the mailing address furnished by the shareholder to the fund. Residence
of the shareholder, when the shares are held by an insurance company as a depositor for
the insurance company policyholders, is the mailing address of the policyholders. In
the case of an insurance company holding the shares as a depositor for the insurance
company policyholders, if the mailing address of the policyholders cannot be determined
by the taxpayer, the receipts must be excluded from both the numerator and denominator.
Residence of other shareholders is the mailing address of the shareholder.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2012.

Sec. 37.

Minnesota Statutes 2012, section 290.21, subdivision 4, is amended to read:


Subd. 4.

Dividends received from another corporation.

(a)(1) Eighty percent
of dividends received by a corporation during the taxable year from another corporation,
in which the recipient owns 20 percent or more of the stock, by vote and value, not
including stock described in section 1504(a)(4) of the Internal Revenue Code when the
corporate stock with respect to which dividends are paid does not constitute the stock in
trade of the taxpayer or would not be included in the inventory of the taxpayer, or does not
constitute property held by the taxpayer primarily for sale to customers in the ordinary
course of the taxpayer's trade or business, or when the trade or business of the taxpayer
does not consist principally of the holding of the stocks and the collection of the income
and gains therefrom; and

(2)(i) the remaining 20 percent of dividends if the dividends received are the stock in
an affiliated company transferred in an overall plan of reorganization and the dividend
is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as
amended through December 31, 1989;

(ii) the remaining 20 percent of dividends if the dividends are received from a
corporation which is subject to tax under section 290.36 and which is a member of an
affiliated group of corporations as defined by the Internal Revenue Code and the dividend
is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as
amended through December 31, 1989, or is deducted under an election under section
243(b) of the Internal Revenue Code; or

(iii) the remaining 20 percent of the dividends if the dividends are received from a
property and casualty insurer as defined under section 60A.60, subdivision 8, which is a
member of an affiliated group of corporations as defined by the Internal Revenue Code
and either: (A) the dividend is eliminated in consolidation under Treasury Regulation
1.1502-14(a), as amended through December 31, 1989; or (B) the dividend is deducted
under an election under section 243(b) of the Internal Revenue Code.

(b) Seventy percent of dividends received by a corporation during the taxable year
from another corporation in which the recipient owns less than 20 percent of the stock,
by vote or value, not including stock described in section 1504(a)(4) of the Internal
Revenue Code when the corporate stock with respect to which dividends are paid does not
constitute the stock in trade of the taxpayer, or does not constitute property held by the
taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or
business, or when the trade or business of the taxpayer does not consist principally of the
holding of the stocks and the collection of income and gain therefrom.

(c) The dividend deduction provided in this subdivision shall be allowed only with
respect to dividends that are included in a corporation's Minnesota taxable net income
for the taxable year.

The dividend deduction provided in this subdivision does not apply to a dividend
from a corporation which, for the taxable year of the corporation in which the distribution
is made or for the next preceding taxable year of the corporation, is a corporation exempt
from tax under section 501 of the Internal Revenue Code.

The dividend deduction provided in this subdivision does not apply to a dividend
received from a real estate investment trust as defined in section 856 of the Internal
Revenue Code.

The dividend deduction provided in this subdivision applies to the amount of
regulated investment company dividends only to the extent determined under section
854(b) of the Internal Revenue Code.

The dividend deduction provided in this subdivision shall not be allowed with
respect to any dividend for which a deduction is not allowed under the provisions of
section 246(c) of the Internal Revenue Code.

(d) If dividends received by a corporation that does not have nexus with Minnesota
under the provisions of Public Law 86-272 are included as income on the return of
an affiliated corporation permitted or required to file a combined report under section
290.17, subdivision 4, or 290.34, subdivision 2, then for purposes of this subdivision the
determination as to whether the trade or business of the corporation consists principally
of the holding of stocks and the collection of income and gains therefrom shall be made
with reference to the trade or business of the affiliated corporation having a nexus with
Minnesota.

(e) The deduction provided by this subdivision does not apply if the dividends are
paid by a FSC as defined in section 922 of the Internal Revenue Code.

(f) If one or more of the members of the unitary group whose income is included on
the combined report received a dividend, the deduction under this subdivision for each
member of the unitary business required to file a return under this chapter is the product
of: (1) 100 percent of the dividends received by members of the group; (2) the percentage
allowed pursuant to paragraph (a) or (b); and (3) the percentage of the taxpayer's business
income apportionable to this state for the taxable year under section 290.191 or 290.20.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2012.

Sec. 38.

Minnesota Statutes 2012, section 297G.04, subdivision 2, is amended to read:


Subd. 2.

Tax credit.

A qualified brewer producing fermented malt beverages
is entitled to a tax credit of $4.60 per barrel on 25,000 barrels sold in any fiscal year
beginning July 1, regardless of the alcohol content of the product. Qualified brewers may
take the credit on the 18th day of each month, but the total credit allowed may not exceed
in any fiscal year the lesser of:

(1) the liability for tax; or

(2) $115,000.

For purposes of this subdivision, a "qualified brewer" means a brewer, whether or
not located in this state, manufacturing less than 100,000 250,000 barrels of fermented
malt beverages in the calendar year immediately preceding the calendar year for which
the credit under this subdivision is claimed. In determining the number of barrels, all
brands or labels of a brewer must be combined. All facilities for the manufacture of
fermented malt beverages owned or controlled by the same person, corporation, or other
entity must be treated as a single brewer.

EFFECTIVE DATE.

This section is effective for determinations based on calendar
year 2012 production and thereafter.

Sec. 39.

Minnesota Statutes 2012, section 298.01, subdivision 3b, is amended to read:


Subd. 3b.

Deductions.

(a) For purposes of determining taxable income under
subdivision 3, the deductions from gross income include only those expenses necessary
to convert raw ores to marketable quality. Such expenses include costs associated with
refinement but do not include expenses such as transportation, stockpiling, marketing, or
marine insurance that are incurred after marketable ores are produced, unless the expenses
are included in gross income. The allowable deductions from a mine or plant that mines
and produces more than one mineral, metal, or energy resource must be determined
separately for the purposes of computing the deduction in section 290.01, subdivision 19c,
clause (9). These deductions may be combined on one occupation tax return to arrive at
the deduction from gross income for all production.

(b) The provisions of section 290.01, subdivisions 19c, clauses (6) and (9), and 19d,
clauses (7) and (11) (10), are not used to determine taxable income.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2012.

Sec. 40.

Laws 2010, chapter 216, section 11, the effect