SF 823

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to financing and operation of state and local
government; making technical, policy, clarifying, and
administrative changes to certain taxes and tax
related provisions, tax-forfeited lands, state debt
collection procedures, and sustainable forest
incentive programs; conforming tax provisions to
certain changes in federal law; changing powers and
duties of commissioner of revenue and other state
agencies and departments; prohibiting certain local
officials from purchasing tax-forfeited lands;
providing for population estimates; changing and
imposing civil penalties; amending Minnesota Statutes
2004, sections 4A.02; 16D.10; 168A.05, subdivision 1a;
270.02, subdivision 3; 270.11, subdivision 2; 270.16,
subdivision 2; 270.65; 270.67, subdivision 4; 270.69,
subdivision 4; 270B.01, subdivision 5; 270B.03,
subdivision 1; 272.01, subdivision 2; 272.02,
subdivisions 1a, 7, by adding subdivisions; 272.029,
subdivisions 4, 6; 273.11, subdivision 8; 273.124,
subdivisions 3, 6, 8, 13, 14, 21; 273.1315; 273.19,
subdivision 1a; 273.372; 274.014, subdivisions 2, 3;
274.14; 275.065, subdivision 1a; 275.07, subdivisions
1, 4; 276.04, subdivision 2; 276.112; 276A.01,
subdivision 7; 282.016; 282.08; 282.15; 282.21;
282.224; 282.301; 287.04; 289A.08, subdivisions 3, 7;
289A.18, subdivision 1; 289A.19, subdivision 4;
289A.20, subdivisions 2, 4; 289A.31, subdivision 2;
289A.37, subdivision 5; 289A.38, subdivisions 6, 7, by
adding a subdivision; 289A.40, subdivision 2, by
adding subdivisions; 289A.50, subdivision 1a; 289A.60,
subdivisions 2a, 6, 11, 13, by adding a subdivision;
290.01, subdivisions 19a, 19b, 19c; 290.06,
subdivision 22; 290.0674, subdivision 1; 290.0922,
subdivision 2; 290.92, subdivision 1; 290A.19;
290B.05, subdivision 3; 290C.05; 290C.10; 291.005,
subdivision 1; 291.03, subdivision 1; 295.50,
subdivision 3, by adding a subdivision; 295.53,
subdivision 1; 295.60, subdivision 3; 296A.09, by
adding a subdivision; 296A.22, by adding a
subdivision; 297A.61, subdivisions 3, 4; 297A.64,
subdivision 4; 297A.668, subdivisions 1, 5; 297A.67,
subdivision 2; 297A.68, subdivisions 2, 5, 35, 39;
297A.99, subdivisions 4, 7, 9; 297E.01, subdivisions
5, 7, by adding subdivisions; 297E.02, subdivision 4;
297E.06, subdivision 2; 297E.07; 297F.08, subdivision
12, by adding a subdivision; 297F.09, subdivisions 1,
2; 297G.09, by adding a subdivision; 297I.01, by
adding a subdivision; 297I.05, subdivision 5; 325D.33,
subdivision 6; 373.45, subdivision 7; 469.1735,
subdivision 3; 473.843, subdivisions 3, 5; 473F.02,
subdivision 7; 477A.011, subdivisions 3, 36, 38;
477A.0124, subdivision 2; Laws 2003, chapter 127,
article 5, sections 27, 28; Laws 2003, First Special
Session chapter 21, article 5, section 13; Laws 2003,
First Special Session chapter 21, article 6, section
9; proposing coding for new law in Minnesota Statutes,
chapters 270; 290C; 473; repealing Minnesota Statutes
2004, sections 273.19, subdivision 5; 274.05; 275.15;
275.61, subdivision 2; 283.07; 289A.26, subdivision
2a; 289A.60, subdivision 21; 295.55, subdivision 4;
295.60, subdivision 4; 297E.12, subdivision 10;
297F.09, subdivision 7; 297G.09, subdivision 6;
297I.35, subdivision 2; 469.1794, subdivision 6; Laws
1975, chapter 287, section 5; Laws 2003, chapter 127,
article 9, section 9, subdivision 4; Minnesota Rules,
parts 8093.2000; 8093.3000; 8130.0110, subpart 4;
8130.0200, subparts 5, 6; 8130.0400, subpart 9;
8130.1200, subparts 5, 6; 8130.2900; 8130.3100,
subpart 1; 8130.4000, subparts 1, 2; 8130.4200,
subpart 1; 8130.4400, subpart 3; 8130.5200; 8130.5600,
subpart 3; 8130.5800, subpart 5; 8130.7300, subpart 5;
8130.8800, subpart 4.

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

ARTICLE 1

INCOME, CORPORATE FRANCHISE, AND ESTATE TAXES

Section 1.

Minnesota Statutes 2004, section 289A.08,
subdivision 3, is amended to read:

Subd. 3.

Corporations.

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. 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. new text begin 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.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for returns
filed after December 31, 2005.
new text end

Sec. 2.

Minnesota Statutes 2004, section 289A.08,
subdivision 7, is amended to read:

Subd. 7.

Composite income tax returns for nonresident
partners, shareholders, and beneficiaries.

(a) The commissioner
may allow a partnership with nonresident partners to file a
composite return and to pay the tax on behalf of nonresident
partners who have no other Minnesota source income. This
composite return must include the names, addresses, Social
Security numbers, income allocation, and tax liability for the
nonresident partners electing to be covered by the composite
return.

(b) The computation of a partner's tax liability must be
determined by multiplying the income allocated to that partner
by the highest rate used to determine the tax liability for
individuals under section 290.06, subdivision 2c. Nonbusiness
deductions, standard deductions, or personal exemptions are not
allowed.

(c) The partnership must submit a request to use this
composite return filing method for nonresident partners. The
requesting partnership must file a composite return in the form
prescribed by the commissioner of revenue. The filing of a
composite return is considered a request to use the composite
return filing method.

(d) The electing partner must not have any Minnesota source
income other than the income from the partnership and other
electing partnerships. If it is determined that the electing
partner has other Minnesota source income, the inclusion of the
income and tax liability for that partner under this provision
will not constitute a return to satisfy the requirements of
subdivision 1. The tax paid for the individual as part of the
composite return is allowed as a payment of the tax by the
individual on the date on which the composite return payment was
made. If the electing nonresident partner has no other
Minnesota source income, filing of the composite return is a
return for purposes of subdivision 1.

(e) This subdivision does not negate the requirement that
an individual pay estimated tax if the individual's liability
would exceed the requirements set forth in section 289A.25. A
composite estimate may, however, be filed in a manner similar to
and containing the information required under paragraph (a).

(f) If an electing partner's share of the partnership's
gross income from Minnesota sources is less than the filing
requirements for a nonresident under this subdivision, the tax
liability is zero. However, a statement showing the partner's
share of gross income must be included as part of the composite
return.

(g) The election provided in this subdivision is deleted text begin not deleted text end new text begin only
new text end available to deleted text begin any deleted text end new text begin a new text end partner deleted text begin other than deleted text end new text begin who has no other Minnesota
source income and who is either (1) new text end a full-year nonresident
individual deleted text begin who has no other Minnesota source income deleted text end new text begin or (2) a
trust or estate that does not claim a deduction under either
section 651 or 661 of the Internal Revenue Code new text end .

(h) A corporation defined in section 290.9725 and its
nonresident shareholders may make an election under this
paragraph. The provisions covering the partnership apply to the
corporation and the provisions applying to the partner apply to
the shareholder.

(i) Estates and trusts distributing current income only and
the nonresident individual beneficiaries of the estates or
trusts may make an election under this paragraph. The
provisions covering the partnership apply to the estate or
trust. The provisions applying to the partner apply to the
beneficiary.

new text begin (j) For the purposes of this subdivision, "income" means
the partner's share of federal adjusted gross income from the
partnership modified by the additions provided in section
290.01, subdivision 19a, clauses (6) and (7), and the
subtractions provided in section 290.01, subdivision 19b, clause
(11), to the extent the amount is assignable or allocable to
Minnesota under section 290.17. The subtraction allowed under
section 290.01, subdivision 19b, clause (11), is only allowed on
the composite tax computation to the extent the electing partner
would have been allowed the subtraction.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years
beginning after December 31, 2004.
new text end

Sec. 3.

Minnesota Statutes 2004, section 289A.18,
subdivision 1, is amended to read:

Subdivision 1.

Individual income, fiduciary income,
corporate franchise, and entertainment taxes; partnership and s
corporation returns; information returns; mining company
returns.

The returns required to be made under sections 289A.08
and 289A.12 must be filed at the following times:

(1) returns made on the basis of the calendar year must be
filed on April 15 following the close of the calendar year,
except that returns of corporations must be filed on March 15
following the close of the calendar year;

(2) returns made on the basis of the fiscal year must be
filed on the 15th day of the fourth month following the close of
the fiscal year, except that returns of corporations must be
filed on the 15th day of the third month following the close of
the fiscal year;

(3) returns for a fractional part of a year must be filed
on the 15th day of the fourth month following the end of the
month in which falls the last day of the period for which the
return is made, except that the returns of corporations must be
filed on the 15th day of the third month following the end of
the deleted text begin month deleted text end new text begin tax year of the unitary group new text end in which falls the last
day of the period for which the return is made;

(4) in the case of a final return of a decedent for a
fractional part of a year, the return must be filed on the 15th
day of the fourth month following the close of the 12-month
period that began with the first day of that fractional part of
a year;

(5) in the case of the return of a cooperative association,
returns must be filed on or before the 15th day of the ninth
month following the close of the taxable year;

(6) if a corporation has been divested from a unitary group
and files a return for a fractional part of a year in which it
was a member of a unitary business that files a combined report
under section 290.34, subdivision 2, the divested corporation's
return must be filed on the 15th day of the third month
following the close of the common accounting period that
includes the fractional year;

(7) returns of entertainment entities must be filed on
April 15 following the close of the calendar year;

(8) returns required to be filed under section 289A.08,
subdivision 4, must be filed on the 15th day of the fifth month
following the close of the taxable year;

(9) returns of mining companies must be filed on May 1
following the close of the calendar year; and

(10) returns required to be filed with the commissioner
under section 289A.12, subdivision 2, 4 to 10, or 14, must be
filed within 30 days after being demanded by the commissioner.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for fractional
years closing after December 31, 2004.
new text end

Sec. 4.

Minnesota Statutes 2004, section 289A.38,
subdivision 7, is amended to read:

Subd. 7.

Federal tax changes.

If the amount of income,
items of tax preference, deductions, or credits for any year of
a taxpayer as reported to the Internal Revenue Service is
changed or corrected by the commissioner of Internal Revenue or
other officer of the United States or other competent authority,
or where a renegotiation of a contract or subcontract with the
United States results in a change in income, items of tax
preference, deductions, credits, or withholding tax, or, in the
case of estate tax, where there are adjustments to the taxable
estate resulting in a change to the credit for state death
taxes, the taxpayer shall report the change or correction or
renegotiation results in writing to the commissioner. The
report must be submitted within 180 days after the final
determination and must be in the form of either an amended
Minnesota estate, withholding tax, new text begin corporate franchise tax, new text end or
income tax return conceding the accuracy of the federal
determination or a letter detailing how the federal
determination is incorrect or does not change the Minnesota
tax. An amended Minnesota income tax return must be accompanied
by an amended property tax refund return, if necessary. A
taxpayer filing an amended federal tax return must also file a
copy of the amended return with the commissioner of revenue
within 180 days after filing the amended return.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 5.

Minnesota Statutes 2004, section 289A.50,
subdivision 1a, is amended to read:

Subd. 1a.

Refund form.

On or before January 1, 2000, the
commissioner of revenue shall prepare and make available to
taxpayers a form for filing claims for refund of taxes paid in
excess of the amount due. deleted text begin If the commissioner fails to prepare
a form under this subdivision by January 1, 2000, any claims for
refund made after January 1, 2000, and up to ten days after the
form is made available to taxpayers are deemed to be made in
compliance with the requirement of the form. deleted text end new text begin The commissioner
may require corporate franchise taxpayers claiming a refund of
corporate franchise taxes paid in excess of the amount lawfully
due to include on the claim for refund or amended return
information necessary for payment of the taxes paid in excess of
taxes lawfully due by electronic means.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for claims for
refund filed after December 31, 2005.
new text end

Sec. 6.

Minnesota Statutes 2004, section 289A.60,
subdivision 13, is amended to read:

Subd. 13.

Penalties for tax return preparers.

(a) If an
understatement of liability with respect to a return or claim
for refund is due to a new text begin reckless disregard of laws and rules or
new text end willful attempt in any manner to understate the liability for a
tax by a person who is a tax return preparer with respect to the
return or claim, the person shall pay to the commissioner a
penalty of $500. If a part of a property tax refund claim is
excessive due to a new text begin reckless disregard or new text end willful attempt in any
manner to overstate the claim for relief allowed under chapter
290A by a person who is a tax refund or return preparer, the
person shall pay to the commissioner a penalty of $500 with
respect to the claim. These penalties may not be assessed
against the employer of a tax return preparer unless the
employer was actively involved in the new text begin reckless disregard or
new text end willful attempt to understate the liability for a tax or to
overstate the claim for refund. These penalties are income tax
liabilities and may be assessed at any time as provided in
section 289A.38, subdivision 5.

(b) A civil action in the name of the state of Minnesota
may be commenced to enjoin any person who is a tax return
preparer doing business in this state from further engaging in
any conduct described in paragraph (c). An action under this
paragraph must be brought by the attorney general in the
district court for the judicial district of the tax return
preparer's residence or principal place of business, or in which
the taxpayer with respect to whose tax return the action is
brought resides. The court may exercise its jurisdiction over
the action separate and apart from any other action brought by
the state of Minnesota against the tax return preparer or any
taxpayer.

(c) In an action under paragraph (b), if the court finds
that a tax return preparer has:

(1) engaged in any conduct subject to a civil penalty under
section 289A.60 or a criminal penalty under section 289A.63;

(2) misrepresented the preparer's eligibility to practice
before the Department of Revenue, or otherwise misrepresented
the preparer's experience or education as a tax return preparer;

(3) guaranteed the payment of any tax refund or the
allowance of any tax credit; or

(4) engaged in any other fraudulent or deceptive conduct
that substantially interferes with the proper administration of
state tax law, and injunctive relief is appropriate to prevent
the recurrence of that conduct,

the court may enjoin the person from further engaging in that
conduct.

(d) If the court finds that a tax return preparer has
continually or repeatedly engaged in conduct described in
paragraph (c), and that an injunction prohibiting that conduct
would not be sufficient to prevent the person's interference
with the proper administration of state tax laws, the court may
enjoin the person from acting as a tax return preparer. The
court may not enjoin the employer of a tax return preparer for
conduct described in paragraph (c) engaged in by one or more of
the employer's employees unless the employer was also actively
involved in that conduct.

(e) For purposes of this subdivision, the term
"understatement of liability" means an understatement of the net
amount payable with respect to a tax imposed by state tax law,
or an overstatement of the net amount creditable or refundable
with respect to a tax. The determination of whether or not
there is an understatement of liability must be made without
regard to any administrative or judicial action involving the
taxpayer. For purposes of this subdivision, the amount
determined for underpayment of estimated tax under either
section 289A.25 or 289A.26 is not considered an understatement
of liability.

(f) For purposes of this subdivision, the term
"overstatement of claim" means an overstatement of the net
amount refundable with respect to a claim for property tax
relief provided by chapter 290A. The determination of whether
or not there is an overstatement of a claim must be made without
regard to administrative or judicial action involving the
claimant.

(g) For purposes of this section, the term "tax refund or
return preparer" means an individual who prepares for
compensation, or who employs one or more individuals to prepare
for compensation, a return of tax, or a claim for refund of
tax. The preparation of a substantial part of a return or claim
for refund is treated as if it were the preparation of the
entire return or claim for refund. An individual is not
considered a tax return preparer merely because the individual:

(1) gives typing, reproducing, or other mechanical
assistance;

(2) prepares a return or claim for refund of the employer,
or an officer or employee of the employer, by whom the
individual is regularly and continuously employed;

(3) prepares a return or claim for refund of any person as
a fiduciary for that person; or

(4) prepares a claim for refund for a taxpayer in response
to a tax order issued to the taxpayer.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for returns
filed after December 31, 2005.
new text end

Sec. 7.

Minnesota Statutes 2004, section 289A.60, is
amended by adding a subdivision to read:

new text begin Subd. 26. new text end

new text begin Restrictions on taxpayers who improperly claim
refundable credits. new text end

new text begin (a) If a person claims a credit or refund
under section 290.067, 290.0671, 290.0674, or chapter 290A and
the claimed credit or refund is determined to be claimed
fraudulently or with reckless or intentional disregard of the
applicable provisions for the credit or refund, the person is
barred from claiming that credit or refund for the disallowance
period.
new text end

new text begin (b) For the purposes of paragraph (a), the "disallowance
period" is (1) ten taxable years from the taxable year the
credit or refund is claimed if the credit or refund was
fraudulently claimed; and (2) two taxable years from the taxable
year the credit or refund is claimed if the credit or refund was
not fraudulent but was claimed with reckless or intentional
disregard of the applicable provisions.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for credits or
refunds claimed after December 31, 2005.
new text end

Sec. 8.

Minnesota Statutes 2004, section 290.01,
subdivision 19a, is amended to read:

Subd. 19a.

Additions to federal taxable income.

For
individuals, estates, and trusts, there shall be added to
federal taxable income:

(1)(i) interest income on obligations of any state other
than Minnesota or a political or governmental subdivision,
municipality, or governmental agency or instrumentality of any
state other than Minnesota exempt from federal income taxes
under the Internal Revenue Code or any other federal statute;
and

(ii) exempt-interest dividends as defined in section
852(b)(5) of the Internal Revenue Code, except the portion of
the exempt-interest dividends derived from interest income on
obligations of the state of Minnesota or its political or
governmental subdivisions, municipalities, governmental agencies
or instrumentalities, but only if the portion of the
exempt-interest dividends from such Minnesota sources paid to
all shareholders represents 95 percent or more of the
exempt-interest dividends that are paid by the regulated
investment company as defined in section 851(a) of the Internal
Revenue Code, or the fund of the regulated investment company as
defined in section 851(g) of the Internal Revenue Code, making
the payment; and

(iii) for the purposes of items (i) and (ii), interest on
obligations of an Indian tribal government described in section
7871(c) of the Internal Revenue Code shall be treated as
interest income on obligations of the state in which the tribe
is located;

(2) the amount of income taxes paid or accrued within the
taxable year under this chapter and deleted text begin income deleted text end new text begin the amount of new text end taxes
new text begin based on net income new text end paid to any other state or to any province
or territory of Canada, to the extent allowed as a deduction
under section 63(d) of the Internal Revenue Code, but the
addition may not be more than the amount by which the itemized
deductions as allowed under section 63(d) of the Internal
Revenue Code exceeds the amount of the standard deduction as
defined in section 63(c) of the Internal Revenue Code. For the
purpose of this paragraph, the disallowance of itemized
deductions under section 68 of the Internal Revenue Code of
1986, income tax is the last itemized deduction disallowed;

(3) the capital gain amount of a lump sum distribution to
which the special tax under section 1122(h)(3)(B)(ii) of the Tax
Reform Act of 1986, Public Law 99-514, applies;

(4) the amount of income taxes paid or accrued within the
taxable year under this chapter and deleted text begin income deleted text end taxes new text begin based on net
income new text end paid to any other state or any province or territory of
Canada, to the extent allowed as a deduction in determining
federal adjusted gross income. For the purpose of this
paragraph, income taxes do not include the taxes imposed by
sections 290.0922, subdivision 1, paragraph (b), 290.9727,
290.9728, and 290.9729;

(5) the amount of expense, interest, or taxes disallowed
pursuant to section 290.10 new text begin other than expenses or interest used
in computing net interest income for the subtraction allowed
under subdivision 19b, clause (1) new text end ;

(6) 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; and

(7) 80 percent of the depreciation deduction allowed under
section 168(k) 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)
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)" for the taxable year
is limited to excess of the depreciation claimed by the activity
under section 168(k) 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) is allowed.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years
beginning after December 31, 2004.
new text end

Sec. 9.

Minnesota Statutes 2004, 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) new text begin net new text end 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. 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) deleted text begin to the extent included in federal taxable income,
postservice benefits for youth community service under section
124D.42 for volunteer service under United States Code, title
42, sections 12601 to 12604;
deleted text end

deleted text begin (7) deleted text end to the extent not deducted 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
allowable as a deduction for the taxable year under section
170(a) of the Internal Revenue Code over $500;

deleted text begin (8) deleted text end new text begin (7) new text end for taxable years beginning before January 1, 2008,
the amount of the federal small ethanol producer credit allowed
under section 40(a)(3) of the Internal Revenue Code which is
included in gross income under section 87 of the Internal
Revenue Code;

deleted text begin (9) deleted text end new text begin (8) new text end 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;

deleted text begin (10) deleted text end new text begin (9) new text end in each of the five tax years immediately
following the tax year in which an addition is required under
subdivision 19a, clause (7), new text begin or 19c, clause (16), in the case of
a shareholder of a corporation that is an S corporation, new text end 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), new text begin or subdivision 19c, clause (16), in the case of a
shareholder of an S corporation, new text end 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; and

deleted text begin (11) deleted text end new text begin (10) new text end job opportunity building zone income as provided
under section 469.316.

new text begin EFFECTIVE DATE. new text end

new text begin The amendment to clause (9) is effective
retroactively for tax years beginning after December 31, 2001.
The rest of this section is effective for the tax years
beginning after December 31, 2004.
new text end

Sec. 10.

Minnesota Statutes 2004, 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 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);

(12) deleted text begin the amount of any environmental tax paid under section
59(a) of the Internal Revenue Code;
deleted text end

deleted text begin (13) deleted text end 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;

deleted text begin (14) deleted text end new text begin (13) new text end the amount of net income excluded under section
114 of the Internal Revenue Code;

deleted text begin (15) deleted text end new text begin (14) new text end 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 section 614 of Public Law 107-147; and

deleted text begin (16) deleted text end new text begin (15) new text end 80 percent of the depreciation deduction allowed
under section 168(k) new text begin (1)(A) and (k)(4)(A) new text end 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) new text begin (1)(A) and (k)(4)(A) new text end 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) new text begin (1)(A) and (k)(4)(A) new text end " for the
taxable year is limited to excess of the depreciation claimed by
the activity under section 168(k) new text begin (1)(A) and (k)(4)(A) new text end 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) new text begin (1)(A) and (k)(4)(A) new text end is allowed.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 11.

Minnesota Statutes 2004, section 290.06,
subdivision 22, is amended to read:

Subd. 22.

Credit for taxes paid to another state.

(a) A
taxpayer who is liable for taxes new text begin based new text end on deleted text begin or measured by deleted text end net
income to another state, as provided in paragraphs (b) through
(f), upon income allocated or apportioned to Minnesota, is
entitled to a credit for the tax paid to another state if the
tax is actually paid in the taxable year or a subsequent taxable
year. A taxpayer who is a resident of this state pursuant to
section 290.01, subdivision 7, deleted text begin clause (2) deleted text end new text begin paragraph (b) new text end , and who
is subject to income tax as a resident in the state of the
individual's domicile is not allowed this credit unless the
state of domicile does not allow a similar credit.

(b) For an individual, estate, or trust, the credit is
determined by multiplying the tax payable under this chapter by
the ratio derived by dividing the income subject to tax in the
other state that is also subject to tax in Minnesota while a
resident of Minnesota by the taxpayer's federal adjusted gross
income, as defined in section 62 of the Internal Revenue Code,
modified by the addition required by section 290.01, subdivision
19a, clause (1), and the subtraction allowed by section 290.01,
subdivision 19b, clause (1), to the extent the income is
allocated or assigned to Minnesota under sections 290.081 and
290.17.

(c) If the taxpayer is an athletic team that apportions all
of its income under section 290.17, subdivision 5, the credit is
determined by multiplying the tax payable under this chapter by
the ratio derived from dividing the total net income subject to
tax in the other state by the taxpayer's Minnesota taxable
income.

(d) The credit determined under paragraph (b) or (c) shall
not exceed the amount of tax so paid to the other state on the
gross income earned within the other state subject to tax under
this chapter, nor shall the allowance of the credit reduce the
taxes paid under this chapter to an amount less than what would
be assessed if such income amount was excluded from taxable net
income.

(e) In the case of the tax assessed on a lump sum
distribution under section 290.032, the credit allowed under
paragraph (a) is the tax assessed by the other state on the lump
sum distribution that is also subject to tax under section
290.032, and shall not exceed the tax assessed under section
290.032. To the extent the total lump sum distribution defined
in section 290.032, subdivision 1, includes lump sum
distributions received in prior years or is all or in part an
annuity contract, the reduction to the tax on the lump sum
distribution allowed under section 290.032, subdivision 2,
includes tax paid to another state that is properly apportioned
to that distribution.

(f) If a Minnesota resident reported an item of income to
Minnesota and is assessed tax in such other state on that same
income after the Minnesota statute of limitations has expired,
the taxpayer shall receive a credit for that year under
paragraph (a), notwithstanding any statute of limitations to the
contrary. The claim for the credit must be submitted within one
year from the date the taxes were paid to the other state. The
taxpayer must submit sufficient proof to show entitlement to a
credit.

(g) For the purposes of this subdivision, a resident
shareholder of a corporation treated as an "S" corporation under
section 290.9725, must be considered to have paid a tax imposed
on the shareholder in an amount equal to the shareholder's pro
rata share of any net income tax paid by the S corporation to
another state. For the purposes of the preceding sentence, the
term "net income tax" means any tax imposed on or measured by a
corporation's net income.

(h) For the purposes of this subdivision, a resident
partner of an entity taxed as a partnership under the Internal
Revenue Code must be considered to have paid a tax imposed on
the partner in an amount equal to the partner's pro rata share
of any net income tax paid by the partnership to another state.
For purposes of the preceding sentence, the term "net income"
tax means any tax imposed on or measured by a partnership's net
income.

(i) For the purposes of this subdivision, "another state":

(1) includes:

(i) the District of Columbia; and

(ii) a province or territory of Canada; but

(2) excludes Puerto Rico and the several territories
organized by Congress.

(j) The limitations on the credit in paragraphs (b), (c),
and (d), are imposed on a state by state basis.

(k) For a tax imposed by a province or territory of Canada,
the tax for purposes of this subdivision is the excess of the
tax over the amount of the foreign tax credit allowed under
section 27 of the Internal Revenue Code. In determining the
amount of the foreign tax credit allowed, the net income taxes
imposed by Canada on the income are deducted first. Any
remaining amount of the allowable foreign tax credit reduces the
provincial or territorial tax that qualifies for the credit
under this subdivision.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years
beginning after December 31, 2004.
new text end

Sec. 12.

Minnesota Statutes 2004, section 290.0674,
subdivision 1, is amended to read:

Subdivision 1.

Credit allowed.

An individual is allowed
a credit against the tax imposed by this chapter in an amount
equal to 75 percent of the amount paid for education-related
expenses for a qualifying child in kindergarten through grade
12. For purposes of this section, "education-related expenses"
means:

(1) fees or tuition for instruction by an instructor under
section 120A.22, subdivision 10, clause (1), (2), (3), (4), or
(5), or a member of the Minnesota Music Teachers Association,
and who is not a lineal ancestor or sibling of the dependent for
instruction outside the regular school day or school year,
including tutoring, driver's education offered as part of school
curriculum, regardless of whether it is taken from a public or
private entity or summer camps, in grade or age appropriate
curricula that supplement curricula and instruction available
during the regular school year, that assists a dependent to
improve knowledge of core curriculum areas or to expand
knowledge and skills under the deleted text begin graduation rule under section
120B.02, paragraph (e), clauses (1) to (7), (9), and (10)
deleted text end new text begin required academic standards under section 120B.021, subdivision
1, and the elective standard under section 120B.022, subdivision
1, clause (2) new text end , and that do not include the teaching of religious
tenets, doctrines, or worship, the purpose of which is to
instill such tenets, doctrines, or worship;

(2) expenses for textbooks, including 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. "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 extracurricular activities
including sporting events, musical or dramatic events, speech
activities, driver's education, or similar programs;

(3) a maximum expense of $200 per family for personal
computer hardware, excluding single purpose processors, and
educational software that assists a dependent to improve
knowledge of core curriculum areas or to expand knowledge and
skills under the deleted text begin graduation rule under section 120B.02 deleted text end new text begin required
academic standards under section 120B.021, subdivision 1, and
the elective standard under section 120B.022, subdivision 1,
clause (2), new text end purchased for use in the taxpayer's home and not
used in a trade or business regardless of whether the computer
is required by the dependent's school; and

(4) the amount paid to others for transportation of a
qualifying child 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 purposes of this section, "qualifying child" has the
meaning given in section 32(c)(3) of the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years
beginning after December 31, 2004.
new text end

Sec. 13.

Minnesota Statutes 2004, section 290.0922,
subdivision 2, is amended to read:

Subd. 2.

Exemptions.

The following entities are exempt
from the tax imposed by this section:

(1) corporations exempt from tax under section 290.05;

(2) real estate investment trusts;

(3) regulated investment companies or a fund thereof; and

(4) entities having a valid election in effect under
section 860D(b) of the Internal Revenue Code;

(5) town and farmers' mutual insurance companies;

(6) cooperatives organized under chapter 308A new text begin or 308B new text end that
provide housing exclusively to persons age 55 and over and are
classified as homesteads under section 273.124, subdivision 3;
and

(7) an entity, if for the taxable year all of its property
is located in a job opportunity building zone designated under
section 469.314 and all of its payroll is a job opportunity
building zone payroll under section 469.310.

Entities not specifically exempted by this subdivision are
subject to tax under this section, notwithstanding section
290.05.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years
beginning after December 31, 2004.
new text end

Sec. 14.

Minnesota Statutes 2004, section 291.005,
subdivision 1, is amended to read:

Subdivision 1.

Scope.

Unless the context otherwise
clearly requires, the following terms used in this chapter shall
have the following meanings:

(1) "Federal gross estate" means the gross estate of a
decedent as valued and otherwise determined for federal estate
tax purposes by federal taxing authorities pursuant to the
provisions of the Internal Revenue Code.

(2) "Minnesota gross estate" means the federal gross estate
of a decedent after (a) excluding therefrom any property
included therein which has its situs outside Minnesota, and (b)
including therein any property omitted from the federal gross
estate which is includable therein, has its situs in Minnesota,
and was not disclosed to federal taxing authorities.

(3) "Personal representative" means the executor,
administrator or other person appointed by the court to
administer and dispose of the property of the decedent. If
there is no executor, administrator or other person appointed,
qualified, and acting within this state, then any person in
actual or constructive possession of any property having a situs
in this state which is included in the federal gross estate of
the decedent shall be deemed to be a personal representative to
the extent of the property and the Minnesota estate tax due with
respect to the property.

(4) "Resident decedent" means an individual whose domicile
at the time of death was in Minnesota.

(5) "Nonresident decedent" means an individual whose
domicile at the time of death was not in Minnesota.

(6) "Situs of property" means, with respect to real
property, the state or country in which it is located; with
respect to tangible personal property, the state or country in
which it was normally kept or located at the time of the
decedent's death; and with respect to intangible personal
property, the state or country in which the decedent was
domiciled at death.

(7) "Commissioner" means the commissioner of revenue or any
person to whom the commissioner has delegated functions under
this chapter.

(8) "Internal Revenue Code" means the United States
Internal Revenue Code of 1986, as amended through December 31,
deleted text begin 2002 deleted text end new text begin 2004 new text end .

new text begin (9) "Minnesota adjusted taxable estate" means federal
adjusted taxable estate as defined by section 2011(b)(3) of the
Internal Revenue Code, increased by the amount of deduction for
state death taxes allowed under section 2058 of the Internal
Revenue Code.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for estates of
decedents dying after December 31, 2004.
new text end

Sec. 15.

Minnesota Statutes 2004, section 291.03,
subdivision 1, is amended to read:

Subdivision 1.

Tax amount.

The tax imposed shall be an
amount equal to the proportion of the maximum credit new text begin for state
death taxes new text end computed under section 2011 of the Internal Revenue
Code, as amended through December 31, 2000, deleted text begin for state death
taxes deleted text end new text begin but using Minnesota adjusted taxable estate instead of
federal adjusted taxable estate, new text end as the Minnesota gross estate
bears to the value of the federal gross estate. The tax
determined under this paragraph shall not be greater than the
deleted text begin federal estate tax deleted text end new text begin amount new text end computed new text begin by applying the rates and
brackets new text end under section 2001 new text begin (c) new text end of the Internal Revenue Code
deleted text begin after the allowance of deleted text end new text begin to the Minnesota adjusted gross estate
and subtracting new text end the federal deleted text begin credits deleted text end new text begin credit new text end allowed under section
2010 of the Internal Revenue Code of 1986, as amended through
December 31, 2000. For the purposes of this section, expenses
which are deducted for federal income tax purposes under section
642(g) of the Internal Revenue Code as amended through December
31, 2002, are not allowable in computing the tax under this
chapter.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for estates of
decedents dying after December 31, 2004.
new text end

Sec. 16. new text begin REPEALER.
new text end

new text begin Minnesota Rules, parts 8093.2000 and 8093.3000, are
repealed effective the day following final enactment.
new text end

ARTICLE 2

PROPERTY TAXES

Section 1.

Minnesota Statutes 2004, section 4A.02, is
amended to read:

4A.02 STATE DEMOGRAPHER.

(a) The director shall appoint a state demographer. The
demographer must be professionally competent in demography and
must possess demonstrated ability based upon past performance.

(b) The demographer shall:

(1) continuously gather and develop demographic data
relevant to the state;

(2) design and test methods of research and data
collection;

(3) periodically prepare population projections for the
state and designated regions and periodically prepare
projections for each county or other political subdivision of
the state as necessary to carry out the purposes of this
section;

(4) review, comment on, and prepare analysis of population
estimates and projections made by state agencies, political
subdivisions, other states, federal agencies, or nongovernmental
persons, institutions, or commissions;

(5) serve as the state liaison with the United States
Bureau of the Census, coordinate state and federal demographic
activities to the fullest extent possible, and aid the
legislature in preparing a census data plan and form for each
decennial census;

(6) compile an annual study of population estimates on the
basis of county, regional, or other political or geographical
subdivisions as necessary to carry out the purposes of this
section and section 4A.03;

(7) by January 1 of each year, issue a report to the
legislature containing an analysis of the demographic
implications of the annual population study and population
projections;

(8) prepare maps for all counties in the state, all
municipalities with a population of 10,000 or more, and other
municipalities as needed for census purposes, according to scale
and detail recommended by the United States Bureau of the
Census, with the maps of cities showing precinct boundaries;

(9) prepare an estimate of population and of the number of
households for each governmental subdivision for which the
Metropolitan Council does not prepare an annual estimate, and
convey the estimates to the governing body of each political
subdivision by deleted text begin May deleted text end new text begin June new text end 1 of each year;

(10) direct, under section 414.01, subdivision 14, and
certify population and household estimates of annexed or
detached areas of municipalities or towns after being notified
of the order or letter of approval by the director;

(11) prepare, for any purpose for which a population
estimate is required by law or needed to implement a law, a
population estimate of a municipality or town whose population
is affected by action under section 379.02 or 414.01,
subdivision 14; and

(12) prepare an estimate of average household size for each
statutory or home rule charter city with a population of 2,500
or more by deleted text begin May deleted text end new text begin June new text end 1 of each year.

(c) A governing body may challenge an estimate made under
paragraph (b) by filing their specific objections in writing
with the state demographer by June deleted text begin 10 deleted text end new text begin 24 new text end . If the challenge does
not result in an acceptable estimate deleted text begin by June 24 deleted text end , the governing
body may have a special census conducted by the United States
Bureau of the Census. The political subdivision must notify the
state demographer by July 1 of its intent to have the special
census conducted. The political subdivision must bear all costs
of the special census. Results of the special census must be
received by the state demographer by the next April 15 to be
used in that year's deleted text begin May deleted text end new text begin June new text end 1 estimate to the political
subdivision under paragraph (b).

new text begin (d) The state demographer shall certify the estimates of
population and household size to the commissioner of revenue by
July 15 each year, including any estimates still under objection.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2004, section 168A.05,
subdivision 1a, is amended to read:

Subd. 1a.

Manufactured home; statement of property tax
payment.

In the case of a manufactured home as defined in
section 327.31, subdivision 6, the department shall not issue a
certificate of title unless the application under section
168A.04 is accompanied with a statement from the county auditor
or county treasurer where the manufactured home is presently
located, stating that all manufactured home personal property
taxes levied on the unit in the name of the current owner at the
time of transfer have been paid. new text begin For this purpose, manufactured
home personal property taxes are treated as levied on January 1
of the payable year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2004, section 270.11,
subdivision 2, is amended to read:

Subd. 2.

County assessor's reports of assessment filed
with commissioner.

Each county assessor shall file by April 1
with the commissioner of revenue a copy of the abstract that
will be acted upon by the local and county boards of review.
The abstract must list the real and personal property in the
county itemized by assessment districts. The assessor of each
county in the state shall file with the commissioner, within ten
working days following final action of the local board of review
or equalization and within five days following final action of
the county board of equalization, any changes made by the local
or county board. The information must be filed in the manner
prescribed by the commissioner. It must be accompanied by a
printed or typewritten copy of the proceedings of the
appropriate board.

The final abstract of assessments after adjustments by the
State Board of Equalization and inclusion of any omitted
property shall be submitted to the commissioner of revenue on or
before September 1 of each calendar year. The final abstract
must separately report the captured tax capacity of tax
increment financing districts under section 469.177, subdivision
2, the deleted text begin metropolitan revenue deleted text end new text begin areawide net tax capacity
new text end contribution deleted text begin value deleted text end new text begin values determined new text end under deleted text begin section deleted text end new text begin sections
276A.05, subdivision 1, and new text end 473F.07, new text begin subdivision 1, new text end and the
value subject to the power line credit under section 273.42.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 4.

Minnesota Statutes 2004, section 270.16,
subdivision 2, is amended to read:

Subd. 2.

Failure to appraise.

When an assessor has
failed to properly appraise at least deleted text begin one-quarter deleted text end new text begin one-fifth new text end of
the parcels of property in a district or county as provided in
section 273.01, the commissioner of revenue shall appoint a
special assessor and deputy assessor as necessary and cause a
reappraisal to be made of the property due for reassessment in
accordance with law.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 5.

Minnesota Statutes 2004, section 272.01,
subdivision 2, is amended to read:

Subd. 2.

Effective date.

new text begin This section is effective the day
following final enactment.
new text end

Sec. 6. Minnesota Statutes 2004, section 272.02,
subdivision 1a, is amended to read:

Subd. 1a.

Limitations on exemptions.

The exemptions
granted by subdivision 1 are subject to the limits contained in
the other subdivisions of this section, section 272.025, deleted text begin or
273.13, subdivision 25, paragraph (c), clause (1) or (2), or
paragraph (d), clause (2) deleted text end new text begin and all other provisions of applicable
law new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 7. Minnesota Statutes 2004, section 272.02,
subdivision 7, is amended to read:

Subd. 7.

Institutions of public charity.

Institutions of
purely public charity are exempt deleted text begin except parcels of property
containing structures and the structures described in section
273.13, subdivision 25, paragraph (e), other than those that
qualify for exemption under subdivision 26 deleted text end . new text begin In determining
whether rental housing property qualifies for exemption under
this subdivision, the following are not gifts or donations to
the owner of the rental housing:
new text end

new text begin (1) rent assistance provided by the government to or on
behalf of tenants, and
new text end

new text begin (2) financing assistance or tax credits provided by the
government to the owner on condition that specific units or a
specific quantity of units be set aside for persons or families
with certain income characteristics.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes
payable in 2004 and thereafter.
new text end

Sec. 8. Minnesota Statutes 2004, section 272.02, is
amended by adding a subdivision to read:

new text begin Subd. 68. new text end

new text begin Property subject to taconite production tax or
net proceeds tax. new text end

new text begin (a) Real and personal property described in
section 298.25 is exempt to the extent the tax on taconite and
iron sulphides under section 298.24 is described in section
298.25 as being in lieu of other taxes on such property. This
exemption applies for taxes payable in each year that the tax
under section 298.24 is payable with respect to such property.
new text end

new text begin (b) Deposits of mineral, metal, or energy resources the
mining of which is subject to taxation under section 298.015 are
exempt. This exemption applies for taxes payable in each year
that the tax under section 298.015 is payable with respect to
such property.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 9. Minnesota Statutes 2004, section 272.02, is
amended by adding a subdivision to read:

new text begin Subd. 69. new text end

new text begin Religious corporations. new text end

new text begin Personal and real
property that a religious corporation, formed under section
317A.909, necessarily uses for a religious purpose is exempt to
the extent provided in section 317A.909, subdivision 3.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 10. Minnesota Statutes 2004, section 272.02, is
amended by adding a subdivision to read:

new text begin Subd. 70. new text end [CHILDREN'S HOMES.] new text begin Personal and real property
owned by a corporation formed under section 317A.907 is exempt
to the extent provided in section 317A.907, subdivision 7.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 11. Minnesota Statutes 2004, section 272.02, is
amended by adding a subdivision to read:

new text begin Subd. 71. new text end

new text begin Housing and redevelopment authority and tribal
housing authority property. new text end

new text begin Property owned by a housing and
redevelopment authority described in chapter 469, or by a
designated housing authority described in section 469.040,
subdivision 5, is exempt to the extent provided in chapter 469.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 12.

Minnesota Statutes 2004, section 272.02, is
amended by adding a subdivision to read:

new text begin Subd. 72. new text end

new text begin Property of housing and redevelopment
authorities. new text end

new text begin Property of projects of housing and redevelopment
authorities are exempt to the extent permitted by sections
469.042, subdivision 1, and 469.043, subdivisions 2 and 5.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 13.

Minnesota Statutes 2004, section 272.02, is
amended by adding a subdivision to read:

new text begin Subd. 73. new text end

new text begin Property of regional rail authority. new text end

new text begin Property
of a regional rail authority as defined in chapter 398A is
exempt to the extent permitted by section 398A.05.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 14.

Minnesota Statutes 2004, section 272.02, is
amended by adding a subdivision to read:

new text begin Subd. 74. new text end

new text begin Spirit mountain recreation area
authority. new text end

new text begin Property owned by the Spirit Mountain Recreation
Area Authority is exempt from taxation to the extent provided in
Laws 1973, chapter 327, section 6.
new text end

Sec. 15.

Minnesota Statutes 2004, section 272.02, is
amended by adding a subdivision to read:

new text begin Subd. 75. new text end

new text begin Installed capacity defined. new text end

new text begin For purposes of
this section, the term "installed capacity" means generator
nameplate capacity.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 16.

Minnesota Statutes 2004, section 272.029,
subdivision 4, is amended to read:

Subd. 4.

Reports.

(a) An owner of a wind energy
conversion system subject to tax under subdivision 3 shall file
a report with the commissioner of revenue annually on or before
deleted text begin March deleted text end new text begin February new text end 1 detailing the amount of electricity in
kilowatt-hours that was produced by the wind energy conversion
system for the previous calendar year. The commissioner shall
prescribe the form of the report. The report must contain the
information required by the commissioner to determine the tax
due to each county under this section for the current year. If
an owner of a wind energy conversion system subject to taxation
under this section fails to file the report by the due date, the
commissioner of revenue shall determine the tax based upon the
nameplate capacity of the system multiplied by a capacity factor
of 40 percent.

(b) On or before deleted text begin March 31 deleted text end new text begin February 28 new text end , the commissioner of
revenue shall notify the owner of the wind energy conversion
systems of the tax due to each county for the current year and
shall certify to the county auditor of each county in which the
systems are located the tax due from each owner for the current
year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for reports and
certifications due in 2006 and thereafter.
new text end

Sec. 17.

Minnesota Statutes 2004, section 272.029,
subdivision 6, is amended to read:

Subd. 6.

Distribution of revenues.

Revenues from the
taxes imposed under subdivision 5 must be part of the settlement
between the county treasurer and the county auditor under
section 276.09. The revenue must be distributed by the county
auditor or the county treasurer to deleted text begin all deleted text end new text begin local new text end taxing
jurisdictions in which the wind energy conversion system is
located deleted text begin , deleted text end new text begin as follows: beginning with distributions in 2006, 80
percent to counties; 14 percent to cities and townships; and six
percent to school districts; and for distributions occurring in
2004 and 2005 new text end in the same proportion that each of the new text begin local
new text end taxing jurisdiction's current year's net tax capacity based tax
rate is to the current year's total new text begin local new text end net tax capacity based
rate.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 18.

Minnesota Statutes 2004, section 273.11,
subdivision 8, is amended to read:

Subd. 8.

Limited equity cooperative apartments.

For the
purposes of this subdivision, the terms defined in this
subdivision have the meanings given them.

A "limited equity cooperative" is a corporation organized
under chapter 308A new text begin or 308B new text end , which has as its primary purpose the
provision of housing and related services to its members which
meets one of the following criteria with respect to the income
of its members: (1) a minimum of 75 percent of members must
have incomes at or less than 90 percent of area median income,
(2) a minimum of 40 percent of members must have incomes at or
less than 60 percent of area median income, or (3) a minimum of
20 percent of members must have incomes at or less than 50
percent of area median income. For purposes of this clause,
"member income" shall mean the income of a member existing at
the time the member acquires cooperative membership, and median
income shall mean the St. Paul-Minneapolis metropolitan area
median income as determined by the United States Department of
Housing and Urban Development. It must also meet the following
requirements:

(a) The articles of incorporation set the sale price of
occupancy entitling cooperative shares or memberships at no more
than a transfer value determined as provided in the articles.
That value may not exceed the sum of the following:

(1) the consideration paid for the membership or shares by
the first occupant of the unit, as shown in the records of the
corporation;

(2) the fair market value, as shown in the records of the
corporation, of any improvements to the real property that were
installed at the sole expense of the member with the prior
approval of the board of directors;

(3) accumulated interest, or an inflation allowance not to
exceed the greater of a ten percent annual noncompounded
increase on the consideration paid for the membership or share
by the first occupant of the unit, or the amount that would have
been paid on that consideration if interest had been paid on it
at the rate of the percentage increase in the revised Consumer
Price Index for All Urban Consumers for the Minneapolis-St. Paul
metropolitan area prepared by the United States Department of
Labor, provided that the amount determined pursuant to this
clause may not exceed $500 for each year or fraction of a year
the membership or share was owned; plus

(4) real property capital contributions shown in the
records of the corporation to have been paid by the transferor
member and previous holders of the same membership, or of
separate memberships that had entitled occupancy to the unit of
the member involved. These contributions include contributions
to a corporate reserve account the use of which is restricted to
real property improvements or acquisitions, contributions to the
corporation which are used for real property improvements or
acquisitions, and the amount of principal amortized by the
corporation on its indebtedness due to the financing of real
property acquisition or improvement or the averaging of
principal paid by the corporation over the term of its real
property-related indebtedness.

(b) The articles of incorporation require that the board of
directors limit the purchase price of stock or membership
interests for new member-occupants or resident shareholders to
an amount which does not exceed the transfer value for the
membership or stock as defined in clause (a).

(c) The articles of incorporation require that the total
distribution out of capital to a member shall not exceed that
transfer value.

(d) The articles of incorporation require that upon
liquidation of the corporation any assets remaining after
retirement of corporate debts and distribution to members will
be conveyed to a charitable organization described in section
501(c)(3) of the Internal Revenue Code of 1986, as amended
through December 31, 1992, or a public agency.

A "limited equity cooperative apartment" is a dwelling unit
owned by a limited equity cooperative.

"Occupancy entitling cooperative share or membership" is
the ownership interest in a cooperative organization which
entitles the holder to an exclusive right to occupy a dwelling
unit owned or leased by the cooperative.

For purposes of taxation, the assessor shall value a unit
owned by a limited equity cooperative at the lesser of its
market value or the value determined by capitalizing the net
operating income of a comparable apartment operated on a rental
basis at the capitalization rate used in valuing comparable
buildings that are not limited equity cooperatives. If a
cooperative fails to operate in accordance with the provisions
of clauses (a) to (d), the property shall be subject to
additional property taxes in the amount of the difference
between the taxes determined in accordance with this subdivision
for the last ten years that the property had been assessed
pursuant to this subdivision and the amount that would have been
paid if the provisions of this subdivision had not applied to
it. The additional taxes, plus interest at the rate specified
in section 549.09, shall be extended against the property on the
tax list for the current year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes
payable in 2004 and thereafter.
new text end

Sec. 19.

Minnesota Statutes 2004, section 273.124,
subdivision 3, is amended to read:

Subd. 3.

Cooperatives and charitable corporations;
homestead and other property.

(a) When property is owned by a
corporation or association organized under chapter 308A new text begin or 308B new text end ,
and each person who owns a share or shares in the corporation or
association is entitled to occupy a building on the property, or
a unit within a building on the property, the corporation or
association may claim homestead treatment for each dwelling, or
for each unit in the case of a building containing several
dwelling units, or for the part of the value of the building
occupied by a shareholder. Each building or unit must be
designated by legal description or number. The net tax capacity
of each building or unit that qualifies for assessment as a
homestead under this subdivision must include not more than
one-half acre of land, if platted, nor more than 80 acres if
unplatted. The net tax capacity of the property is the sum of
the net tax capacities of each of the respective buildings or
units comprising the property, including the net tax capacity of
each unit's or building's proportionate share of the land and
any common buildings. To qualify for the treatment provided by
this subdivision, the corporation or association must be wholly
owned by persons having a right to occupy a building or unit
owned by the corporation or association. A charitable
corporation organized under the laws of Minnesota and not
otherwise exempt thereunder with no outstanding stock qualifies
for homestead treatment with respect to member residents of the
dwelling units who have purchased and hold residential
participation warrants entitling them to occupy the units.

(b) To the extent provided in paragraph (a), a cooperative
or corporation organized under chapter 308A may obtain separate
assessment and valuation, and separate property tax statements
for each residential homestead, residential nonhomestead, or for
each seasonal residential recreational building or unit not used
for commercial purposes. The appropriate class rates under
section 273.13 shall be applicable as if each building or unit
were a separate tax parcel; provided, however, that the tax
parcel which exists at the time the cooperative or corporation
makes application under this subdivision shall be a single
parcel for purposes of property taxes or the enforcement and
collection thereof, other than as provided in paragraph (a) or
this paragraph.

(c) A member of a corporation or association may initially
obtain the separate assessment and valuation and separate
property tax statements, as provided in paragraph (b), by
applying to the assessor by June 30 of the assessment year.

(d) When a building, or dwelling units within a building,
no longer qualify under paragraph (a) or (b), the current owner
must notify the assessor within 30 days. Failure to notify the
assessor within 30 days shall result in the loss of benefits
under paragraph (a) or (b) for taxes payable in the year that
the failure is discovered. For these purposes, "benefits under
paragraph (a) or (b)" means the difference in the net tax
capacity of the building or units which no longer qualify as
computed under paragraph (a) or (b) and as computed under the
otherwise applicable law, times the local tax rate applicable to
the building for that taxes payable year. Upon discovery of a
failure to notify, the assessor shall inform the auditor of the
difference in net tax capacity for the building or buildings in
which units no longer qualify, and the auditor shall calculate
the benefits under paragraph (a) or (b). Such amount, plus a
penalty equal to 100 percent of that amount, shall then be
demanded of the building's owner. The property owner may appeal
the county's determination by serving copies of a petition for
review with county officials as provided in section 278.01 and
filing a proof of service as provided in section 278.01 with the
Minnesota Tax Court within 60 days of the date of the notice
from the county. The appeal shall be governed by the Tax Court
procedures provided in chapter 271, for cases relating to the
tax laws as defined in section 271.01, subdivision 5;
disregarding sections 273.125, subdivision 5, and 278.03, but
including section 278.05, subdivision 2. If the amount of the
benefits under paragraph (a) or (b) and penalty are not paid
within 60 days, and if no appeal has been filed, the county
auditor shall certify the amount of the benefit and penalty to
the succeeding year's tax list to be collected as part of the
property taxes on the affected property.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes
payable in 2004 and thereafter.
new text end

Sec. 20.

Minnesota Statutes 2004, section 273.124,
subdivision 6, is amended to read:

Subd. 6.

Leasehold cooperatives.

When one or more
dwellings or one or more buildings which each contain several
dwelling units is owned by a nonprofit corporation subject to
the provisions of chapter 317A and qualifying under section
501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986, as
amended through December 31, 1990, or a limited partnership
which corporation or partnership operates the property in
conjunction with a cooperative association, and has received
public financing, homestead treatment may be claimed by the
cooperative association on behalf of the members of the
cooperative for each dwelling unit occupied by a member of the
cooperative. The cooperative association must provide the
assessor with the Social Security numbers of those members. To
qualify for the treatment provided by this subdivision, the
following conditions must be met:

(a) the cooperative association must be organized under
chapter 308A new text begin or 308B new text end and all voting members of the board of
directors must be resident tenants of the cooperative and must
be elected by the resident tenants of the cooperative;

(b) the cooperative association must have a lease for
occupancy of the property for a term of at least 20 years, which
permits the cooperative association, while not in default on the
lease, to participate materially in the management of the
property, including material participation in establishing
budgets, setting rent levels, and hiring and supervising a
management agent;

(c) to the extent permitted under state or federal law, the
cooperative association must have a right under a written
agreement with the owner to purchase the property if the owner
proposes to sell it; if the cooperative association does not
purchase the property it is offered for sale, the owner may not
subsequently sell the property to another purchaser at a price
lower than the price at which it was offered for sale to the
cooperative association unless the cooperative association
approves the sale;

(d) a minimum of 40 percent of the cooperative
association's members must have incomes at or less than 60
percent of area median gross income as determined by the United
States Secretary of Housing and Urban Development under section
142(d)(2)(B) of the Internal Revenue Code of 1986, as amended
through December 31, 1991. For purposes of this clause, "member
income" means the income of a member existing at the time the
member acquires cooperative membership;

(e) if a limited partnership owns the property, it must
include as the managing general partner a nonprofit organization
operating under the provisions of chapter 317A and qualifying
under section 501(c)(3) or 501(c)(4) of the Internal Revenue
Code of 1986, as amended through December 31, 1990, and the
limited partnership agreement must provide that the managing
general partner have sufficient powers so that it materially
participates in the management and control of the limited
partnership;

(f) prior to becoming a member of a leasehold cooperative
described in this subdivision, a person must have received
notice that (1) describes leasehold cooperative property in
plain language, including but not limited to the effects of
classification under this subdivision on rents, property taxes
and tax credits or refunds, and operating expenses, and (2)
states that copies of the articles of incorporation and bylaws
of the cooperative association, the lease between the owner and
the cooperative association, a sample sublease between the
cooperative association and a tenant, and, if the owner is a
partnership, a copy of the limited partnership agreement, can be
obtained upon written request at no charge from the owner, and
the owner must send or deliver the materials within seven days
after receiving any request;

(g) if a dwelling unit of a building was occupied on the
60th day prior to the date on which the unit became leasehold
cooperative property described in this subdivision, the notice
described in paragraph (f) must have been sent by first class
mail to the occupant of the unit at least 60 days prior to the
date on which the unit became leasehold cooperative property.
For purposes of the notice under this paragraph, the copies of
the documents referred to in paragraph (f) may be in proposed
version, provided that any subsequent material alteration of
those documents made after the occupant has requested a copy
shall be disclosed to any occupant who has requested a copy of
the document. Copies of the articles of incorporation and
certificate of limited partnership shall be filed with the
secretary of state after the expiration of the 60-day period
unless the change to leasehold cooperative status does not
proceed;

(h) the county attorney of the county in which the property
is located must certify to the assessor that the property meets
the requirements of this subdivision;

(i) the public financing received must be from at least one
of the following sources:

(1) tax increment financing proceeds used for the
acquisition or rehabilitation of the building or interest rate
write-downs relating to the acquisition of the building;

(2) government issued bonds exempt from taxes under section
103 of the Internal Revenue Code of 1986, as amended through
December 31, 1991, the proceeds of which are used for the
acquisition or rehabilitation of the building;

(3) programs under section 221(d)(3), 202, or 236, of Title
II of the National Housing Act;

(4) rental housing program funds under Section 8 of the
United States Housing Act of 1937 or the market rate family
graduated payment mortgage program funds administered by the
Minnesota Housing Finance Agency that are used for the
acquisition or rehabilitation of the building;

(5) low-income housing credit under section 42 of the
Internal Revenue Code of 1986, as amended through December 31,
1991;

(6) public financing provided by a local government used
for the acquisition or rehabilitation of the building, including
grants or loans from (i) federal community development block
grants; (ii) HOME block grants; or (iii) residential rental
bonds issued under chapter 474A; or

(7) other rental housing program funds provided by the
Minnesota Housing Finance Agency for the acquisition or
rehabilitation of the building;

(j) at the time of the initial request for homestead
classification or of any transfer of ownership of the property,
the governing body of the municipality in which the property is
located must hold a public hearing and make the following
findings:

(1) that the granting of the homestead treatment of the
apartment's units will facilitate safe, clean, affordable
housing for the cooperative members that would otherwise not be
available absent the homestead designation;

(2) that the owner has presented information satisfactory
to the governing body showing that the savings garnered from the
homestead designation of the units will be used to reduce
tenant's rents or provide a level of furnishing or maintenance
not possible absent the designation; and

(3) that the requirements of paragraphs (b), (d), and (i)
have been met.

Homestead treatment must be afforded to units occupied by
members of the cooperative association and the units must be
assessed as provided in subdivision 3, provided that any unit
not so occupied shall be classified and assessed pursuant to the
appropriate class. No more than three acres of land may, for
assessment purposes, be included with each dwelling unit that
qualifies for homestead treatment under this subdivision.

When dwelling units no longer qualify under this
subdivision, the current owner must notify the assessor within
60 days. Failure to notify the assessor within 60 days shall
result in the loss of benefits under this subdivision for taxes
payable in the year that the failure is discovered. For these
purposes, "benefits under this subdivision" means the difference
in the net tax capacity of the units which no longer qualify as
computed under this subdivision and as computed under the
otherwise applicable law, times the local tax rate applicable to
the building for that taxes payable year. Upon discovery of a
failure to notify, the assessor shall inform the auditor of the
difference in net tax capacity for the building or buildings in
which units no longer qualify, and the auditor shall calculate
the benefits under this subdivision. Such amount, plus a
penalty equal to 100 percent of that amount, shall then be
demanded of the building's owner. The property owner may appeal
the county's determination by serving copies of a petition for
review with county officials as provided in section 278.01 and
filing a proof of service as provided in section 278.01 with the
Minnesota Tax Court within 60 days of the date of the notice
from the county. The appeal shall be governed by the Tax Court
procedures provided in chapter 271, for cases relating to the
tax laws as defined in section 271.01, subdivision 5;
disregarding sections 273.125, subdivision 5, and 278.03, but
including section 278.05, subdivision 2. If the amount of the
benefits under this subdivision and penalty are not paid within
60 days, and if no appeal has been filed, the county auditor
shall certify the amount of the benefit and penalty to the
succeeding year's tax list to be collected as part of the
property taxes on the affected buildings.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes
payable in 2004 and thereafter.
new text end

Sec. 21.

Minnesota Statutes 2004, section 273.124,
subdivision 8, is amended to read:

Subd. 8.

Homestead owned by or leased to family farm
corporation, joint farm venture, limited liability company, or
partnership.

(a) Each family farm corporation deleted text begin , each deleted text end new text begin ; each new text end joint
family farm venture deleted text begin , deleted text end new text begin ; and new text end each limited liability company deleted text begin , and
each deleted text end new text begin or new text end partnership deleted text begin operating deleted text end new text begin which operates new text end a family farm new text begin ; new text end is
entitled to class 1b under section 273.13, subdivision 22,
paragraph (b), or class 2a assessment for one homestead occupied
by a shareholder, member, or partner thereof who is residing on
the land, and actively engaged in farming of the land owned by
the family farm corporation, joint family farm venture, limited
liability company, or partnership deleted text begin operating a family farm deleted text end .
Homestead treatment applies even if legal title to the property
is in the name of the family farm corporation, joint family farm
venture, limited liability company, or partnership deleted text begin operating the
family farm deleted text end , and not in the name of the person residing on it.

"Family farm corporation," "family farm," and "partnership
operating a family farm" have the meanings given in section
500.24, except that the number of allowable shareholders,
members, or partners under this subdivision shall not exceed
12. "Limited liability company" has the meaning contained in
sections 322B.03, subdivision 28, and 500.24, subdivision 2,
paragraphs (l) and (m). "Joint family farm venture" means a
cooperative agreement among two or more farm enterprises
authorized to operate a family farm under section 500.24.

(b) In addition to property specified in paragraph (a), any
other residences owned by family farm corporations, joint family
farm ventures, limited liability companies, or partnerships
deleted text begin operating a family farm deleted text end described in paragraph (a) which are
located on agricultural land and occupied as homesteads by its
shareholders, members, or partners who are actively engaged in
farming on behalf of that corporation, joint farm venture,
limited liability company, or partnership must also be assessed
as class 2a property or as class 1b property under section
273.13.

(c) Agricultural property that is owned by a member,
partner, or shareholder of a family farm corporation or joint
family farm venture, limited liability company new text begin operating a
family farm new text end , or by a partnership operating a family farm and
leased to the family farm corporation, limited liability
company, deleted text begin or deleted text end partnership deleted text begin operating a family farm deleted text end , or joint farm
venture, as defined in paragraph (a), is eligible for
classification as class 1b or class 2a under section 273.13, if
the owner is actually residing on the property, and is actually
engaged in farming the land on behalf of that corporation, joint
farm venture, limited liability company, or partnership. This
paragraph applies without regard to any legal possession rights
of the family farm corporation, joint family farm venture,
limited liability company, or partnership deleted text begin operating a family
farm deleted text end under the lease.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 22.

Minnesota Statutes 2004, section 273.124,
subdivision 13, is amended to read:

Subd. 13.

Homestead application.

(a) A person who meets
the homestead requirements under subdivision 1 must file a
homestead application with the county assessor to initially
obtain homestead classification.

(b) On or before January 2, 1993, each county assessor
shall mail a homestead application to the owner of each parcel
of property within the county which was classified as homestead
for the 1992 assessment year. The format and contents of a
uniform homestead application shall be prescribed by the
commissioner of revenue. The commissioner shall consult with
the chairs of the house and senate tax committees on the
contents of the homestead application form. The application
must clearly inform the taxpayer that this application must be
signed by all owners who occupy the property or by the
qualifying relative and returned to the county assessor in order
for the property to continue receiving homestead treatment. The
envelope containing the homestead application shall clearly
identify its contents and alert the taxpayer of its necessary
immediate response.

(c) Every property owner applying for homestead
classification must furnish to the county assessor the Social
Security number of each occupant who is listed as an owner of
the property on the deed of record, the name and address of each
owner who does not occupy the property, and the name and Social
Security number of each owner's spouse who occupies the
property. The application must be signed by each owner who
occupies the property and by each owner's spouse who occupies
the property, or, in the case of property that qualifies as a
homestead under subdivision 1, paragraph (c), by the qualifying
relative.

If a property owner occupies a homestead, the property
owner's spouse may not claim another property as a homestead
unless the property owner and the property owner's spouse file
with the assessor an affidavit or other proof required by the
assessor stating that the property qualifies as a homestead
under subdivision 1, paragraph (e).

Owners or spouses occupying residences owned by their
spouses and previously occupied with the other spouse, either of
whom fail to include the other spouse's name and Social Security
number on the homestead application or provide the affidavits or
other proof requested, will be deemed to have elected to receive
only partial homestead treatment of their residence. The
remainder of the residence will be classified as nonhomestead
residential. When an owner or spouse's name and Social Security
number appear on homestead applications for two separate
residences and only one application is signed, the owner or
spouse will be deemed to have elected to homestead the residence
for which the application was signed.

The Social Security numbers or affidavits or other proofs
of the property owners and spouses are private data on
individuals as defined by section 13.02, subdivision 12, but,
notwithstanding that section, the private data may be disclosed
to the commissioner of revenue, or, for purposes of proceeding
under the Revenue Recapture Act to recover personal property
taxes owing, to the county treasurer.

(d) If residential real estate is occupied and used for
purposes of a homestead by a relative of the owner and qualifies
for a homestead under subdivision 1, paragraph (c), in order for
the property to receive homestead status, a homestead
application must be filed with the assessor. The Social
Security number of each relative occupying the property and the
Social Security number of each owner who is related to an
occupant of the property shall be required on the homestead
application filed under this subdivision. If a different
relative of the owner subsequently occupies the property, the
owner of the property must notify the assessor within 30 days of
the change in occupancy. The Social Security number of a
relative occupying the property is private data on individuals
as defined by section 13.02, subdivision 12, but may be
disclosed to the commissioner of revenue.

(e) The homestead application shall also notify the
property owners that the application filed under this section
will not be mailed annually and that if the property is granted
homestead status for the 1993 assessment, or any assessment year
thereafter, that same property shall remain classified as
homestead until the property is sold or transferred to another
person, or the owners, the spouse of the owner, or the relatives
no longer use the property as their homestead. Upon the sale or
transfer of the homestead property, a certificate of value must
be timely filed with the county auditor as provided under
section 272.115. Failure to notify the assessor within 30 days
that the property has been sold, transferred, or that the owner,
the spouse of the owner, or the relative is no longer occupying
the property as a homestead, shall result in new text begin (i) a requirement
to repay homestead benefits related to assessment dates after
the ownership or occupancy change, except for years for which a
new and valid homestead application was effective, and limited
to benefits for taxes payable in the current year and the five
prior years; (ii) new text end the penalty provided under deleted text begin this subdivision
deleted text end new text begin paragraph (h) for each of the same years, if applicable; new text end and
new text begin (iii) new text end the property will lose its deleted text begin current deleted text end homestead status new text begin for
the current assessment year unless a new homestead application
is effective for that assessment new text end . new text begin The provisions of section
273.02 with regard to property erroneously classified as a
homestead do not apply. The person to be notified of the
reimbursement requirement and of the penalty under the
procedures in paragraph (h) is the owner who sold or transferred
the property or whose relative is no longer occupying the
property as a homestead.
new text end

(f) If the homestead application is not returned within 30
days, the county will send a second application to the present
owners of record. The notice of proposed property taxes
prepared under section 275.065, subdivision 3, shall reflect the
property's classification. Beginning with assessment year 1993
for all properties, if a homestead application has not been
filed with the county by December 15, the assessor shall
classify the property as nonhomestead for the current assessment
year for taxes payable in the following year, provided that the
owner may be entitled to receive the homestead classification by
proper application under section 375.192.

(g) At the request of the commissioner, each county must
give the commissioner a list that includes the name and Social
Security number of each property owner and the property owner's
spouse occupying the property, or relative of a property owner,
applying for homestead classification under this subdivision.
The commissioner shall use the information provided on the lists
as appropriate under the law, including for the detection of
improper claims by owners, or relatives of owners, under chapter
290A.

(h) If deleted text begin the commissioner deleted text end new text begin a city or county assessor new text end finds
that a property deleted text begin owner may be claiming a fraudulent deleted text end new text begin is receiving
new text end homestead new text begin benefits that are not allowable under the law new text end ,
the deleted text begin commissioner shall notify the appropriate counties. Within
90 days of the notification, the county assessor shall
investigate to determine if the homestead classification was
properly claimed. If the property owner does not qualify, the
county deleted text end assessor shall notify the county auditor who will
determine the amount of homestead benefits that had been
improperly allowed new text begin for taxes payable in the current year and in
each of the five prior years new text end . For the purpose of this section,
"homestead benefits" means the tax reduction resulting from the
classification as a homestead under section 273.13, the taconite
homestead credit under section 273.135, the residential
homestead and agricultural homestead credits under section
273.1384, and the supplemental homestead credit under section
273.1391.

The county auditor shall send a notice to the person who
owned the affected property at the time the homestead
application related to the improper homestead was filed,
demanding reimbursement of the homestead benefits new text begin not allowable
under the law for taxes payable in the current year and the five
prior years. The notice shall demand reimbursement of those
homestead benefits, new text end plus a penalty equal to deleted text begin 100 deleted text end new text begin either:
new text end

new text begin (i) ten percent of the homestead benefits if the owner
acted with negligent or intentional disregard of the applicable
tax laws and rules but without intent to defraud; or
new text end

new text begin (ii) 50 new text end percent of the homestead benefits new text begin if the owner
fraudulently attempted in any manner to evade or defeat the
proper tax new text end .

new text begin If the penalty provided in this paragraph is imposed and
the assessor becomes aware that the property is improperly
classified as a homestead for the current assessment year, the
assessor shall reclassify the property for that assessment, and
the provisions of section 273.02 with regard to property
erroneously classified as a homestead do not apply.
new text end

new text begin A penalty under this section may be abated under section
375.192 upon a determination that the owner exercised ordinary
care and that the improper classification occurred for reasons
beyond the owner's control. new text end The person notified may appeal the
county's determination by serving copies of a petition for
review with county officials as provided in section 278.01 and
filing proof of service as provided in section 278.01 with the
Minnesota Tax Court within 60 days of the date of the notice
from the county. Procedurally, the appeal is governed by the
provisions in chapter 271 which apply to the appeal of a
property tax assessment or levy, but without requiring any
prepayment of the amount in controversy. If the amount of
homestead benefits and penalty is not paid within 60 days, and
if no appeal has been filed, the county auditor shall certify
the amount of taxes and penalty to the county treasurer. The
county treasurer will add interest to the unpaid homestead
benefits and penalty amounts at the rate provided in section
279.03 for real property taxes becoming delinquent in the
calendar year during which the amount remains unpaid. Interest
may be assessed for the period beginning 60 days after demand
for payment was made.

If the person notified is the current owner of the
property, the treasurer may add the total amount of homestead
benefits, penalty, interest, and costs to the ad valorem taxes
otherwise payable on the property by including the amounts on
the property tax statements under section 276.04, subdivision
3. The amounts added under this paragraph to the ad valorem
taxes shall include interest accrued through December 31 of the
year preceding the taxes payable year for which the amounts are
first added. These amounts, when added to the property tax
statement, become subject to all the laws for the enforcement of
real or personal property taxes for that year, and for any
subsequent year.

If the person notified is not the current owner of the
property, the treasurer may collect the amounts due under the
Revenue Recapture Act in chapter 270A, or use any of the powers
granted in sections 277.20 and 277.21 without exclusion, to
enforce payment of the homestead benefits, penalty, interest,
and costs, as if those amounts were delinquent tax obligations
of the person who owned the property at the time the application
related to the improperly allowed homestead was filed. The
treasurer may relieve a prior owner of personal liability for
the homestead benefits, penalty, interest, and costs, and
instead extend those amounts on the tax lists against the
property as provided in this paragraph to the extent that the
current owner agrees in writing. On all demands, billings,
property tax statements, and related correspondence, the county
must list and state separately the amounts of homestead
benefits, penalty, interest and costs being demanded, billed or
assessed.

(i) Any amount of homestead benefits recovered by the
county from the property owner shall be distributed to the
county, city or town, and school district where the property is
located in the same proportion that each taxing district's levy
was to the total of the three taxing districts' levy for the
current year. Any amount recovered attributable to taconite
homestead credit shall be transmitted to the St. Louis County
auditor to be deposited in the taconite property tax relief
account. Any amount recovered that is attributable to
supplemental homestead credit is to be transmitted to the
commissioner of revenue for deposit in the general fund of the
state treasury. The total amount of penalty collected must be
deposited in the county general fund.

(j) If a property owner has applied for more than one
homestead and the county assessors cannot determine which
property should be classified as homestead, the county assessors
will refer the information to the commissioner. The
commissioner shall make the determination and notify the
counties within 60 days.

(k) In addition to lists of homestead properties, the
commissioner may ask the counties to furnish lists of all
properties and the record owners. The Social Security numbers
and federal identification numbers that are maintained by a
county or city assessor for property tax administration
purposes, and that may appear on the lists retain their
classification as private or nonpublic data; but may be viewed,
accessed, and used by the county auditor or treasurer of the
same county for the limited purpose of assisting the
commissioner in the preparation of microdata samples under
section 270.0681.

new text begin (l) On or before April 30 each year, each county must
provide the commissioner with the following data for each parcel
of homestead property by electronic means as defined in section
289A.02, subdivision 8:
new text end

new text begin (i) the property identification number assigned to the
parcel for purposes of taxes payable in the current year;
new text end

new text begin (ii) the name and Social Security number of each property
owner and property owner's spouse, as shown on the tax rolls for
the current and the prior assessment year;
new text end

new text begin (iii) the classification of the property under section
273.13 for taxes payable in the current year and in the prior
year;
new text end

new text begin (iv) an indication of whether the property was classified
as a homestead for taxes payable in the current year or for
taxes payable in the prior year because of occupancy by a
relative of the owner or by a spouse of a relative;
new text end

new text begin (v) the property taxes payable as defined in section
290A.03, subdivision 13, for the current year and the prior
year;
new text end

new text begin (vi) the market value of improvements to the property first
assessed for tax purposes for taxes payable in the current year;
new text end

new text begin (vii) the assessor's estimated market value assigned to the
property for taxes payable in the current year and the prior
year;
new text end

new text begin (viii) the taxable market value assigned to the property
for taxes payable in the current year and the prior year;
new text end

new text begin (ix) whether there are delinquent property taxes owing on
the homestead;
new text end

new text begin (x) the unique taxing district in which the property is
located; and
new text end

new text begin (xi) such other information as the commissioner decides is
necessary.
new text end

new text begin The commissioner shall use the information provided on the
lists as appropriate under the law, including for the detection
of improper claims by owners, or relatives of owners, under
chapter 290A.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is generally effective July
1, 2005, and thereafter, except the changes in paragraphs (e)
and (h) are effective only for notices initially sent out under
those paragraphs on or after July 1, 2005.
new text end

Sec. 23.

Minnesota Statutes 2004, section 273.124,
subdivision 14, is amended to read:

Subd. 14.

Agricultural homesteads; special provisions.

(a) new text begin For purposes of this subdivision, the term "farmable land"
means agricultural land that can be farmed. It includes
tillable land and pasture land. Farmable land does not include
land that is enrolled in the Reinvest in Minnesota Resources Law
under sections 103F.501 to 103F.531, the federal Conservation
Reserve Program as contained in Public Law 99-198 or the
Conservation Reserve Enhancement Program.
new text end

new text begin (b) new text end 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.

deleted text begin (b) deleted text end new text begin (c) new text end (i) Agricultural property consisting of at least 40
acres 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 owner, the owner's spouse, or the son or daughter
of the owner or 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;

(2) both the owner of the agricultural property and the
person who is actively farming the agricultural property under
clause (1), are Minnesota residents;

(3) neither the owner nor the spouse of the owner claims
another agricultural homestead in Minnesota; deleted text begin and
deleted text end

(4) neither the owner nor the person actively farming the
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 new text begin ; and
new text end

new text begin (5) agricultural lands are eligible for inclusion under
this paragraph only if more than 50 percent of the farmable land
is being farmed by the qualified applicant new text end .

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

(ii) Real 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.

deleted text begin (c) deleted text end new text begin (d) new text end 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.

deleted text begin (d) deleted text end new text begin (e) new text end 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.

deleted text begin (e) deleted text end new text begin (f) new text end 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.

deleted text begin (f) deleted text end new text begin (g) new text end 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.

deleted text begin (g) deleted text end new text begin (h) new text end Agricultural property consisting of at least 40
acres 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) a shareholder, member, or partner of that entity is
actively farming the agricultural property;

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

(3) neither that shareholder, member, or partner, nor the
spouse of that shareholder, member, or partner claims another
agricultural homestead in Minnesota; deleted text begin and
deleted text end

(4) 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 new text begin ; and
new text end

new text begin (5) agricultural lands are eligible for inclusion under
this paragraph only if more than 50 percent of the farmable land
is being farmed by the qualified applicant new text end .

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.

deleted text begin (h) deleted text end new text begin (i) new text end 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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 24.

Minnesota Statutes 2004, section 273.124,
subdivision 21, is amended to read:

Subd. 21.

Trust property; homestead.

Real property held
by a trustee under a trust is eligible for classification as
homestead property if:

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

(2) 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;

(3) a family farm corporation, joint farm venture, limited
liability company, or partnership operating a family farm rents
the property held by a trustee under a trust, and new text begin the grantor,
the spouse of the grantor, or the son or daughter of the
grantor, who is also new text end a shareholder, member, or partner of the
corporation, joint farm venture, limited liability company, or
partnership occupies and uses the property as a homestead, deleted text begin and
deleted text end new text begin or new text end is actively farming the property on behalf of the
corporation, joint farm venture, limited liability company, or
partnership; or

(4) 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 new text begin or a person who received the homestead
classification for taxes payable in 2005 under clause (3) who
does not qualify under clause (3) for taxes payable in 2006 or
thereafter but who continues to qualify under clause (3) as it
existed for taxes payable in 2005 new text end .

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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes
payable in 2006 and thereafter.
new text end

Sec. 25.

Minnesota Statutes 2004, section 273.1315, is
amended to read:

273.1315 CERTIFICATION OF 1B PROPERTY.

Any property owner seeking classification and assessment of
the owner's homestead as class 1b property pursuant to section
273.13, subdivision 22, paragraph (b), shall file with the
commissioner of revenue a 1b homestead declaration, on a form
prescribed by the commissioner. The declaration shall contain
the following information:

(a) the information necessary to verify that new text begin on or before
June 30 of the filing year, new text end the property owner or the owner's
spouse satisfies the requirements of section 273.13, subdivision
22, paragraph (b), for 1b classification; and

(b) any additional information prescribed by the
commissioner.

The declaration must be filed on or before October 1 to be
effective for property taxes payable during the succeeding
calendar year. The declaration and any supplementary
information received from the property owner pursuant to this
section shall be subject to chapter 270B. If approved by the
commissioner, the declaration remains in effect until the
property no longer qualifies under section 273.13, subdivision
22, paragraph (b). Failure to notify the commissioner within 30
days that the property no longer qualifies under that paragraph
because of a sale, change in occupancy, or change in the status
or condition of an occupant shall result in the penalty provided
in section 273.124, subdivision 13, computed on the basis of the
class 1b benefits for the property, and the property shall lose
its current class 1b classification.

The commissioner shall provide to the assessor on or before
November 1 a listing of the parcels of property qualifying for
1b classification.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 26.

Minnesota Statutes 2004, section 273.19,
subdivision 1a, is amended to read:

Subd. 1a.

Effective date.

new text begin This section is effective the day
following final enactment.
new text end

Sec. 27. Minnesota Statutes 2004, section 273.372, is
amended to read:

273.372 [PROCEEDINGS AND APPEALS; UTILITY OR RAILROAD
VALUATIONS.]

deleted text begin An appeal by a utility or railroad company concerning the
exemption, valuation, or classification of property for which
the commissioner of revenue has provided the city or county
assessor with valuations by order, or for which the commissioner
has recommended values to the city or county assessor, must be
brought against the commissioner in Tax Court or in district
court of the county where the property is located, and not
against the county or taxing district where the property is
located. deleted text end new text begin Subdivision 1. new text end [SCOPE.] new text begin This section governs judicial
review of a claim that public utility property or railroad
operating property has been partially, unfairly, or unequally
assessed, or assessed at a valuation greater than its real or
actual value, or that the property is exempt. However, this
section applies only to property described in sections 273.33,
273.35, and 273.37, and only if the net tax capacity has not
been changed from that provided to the city or a county by the
commissioner. If the net tax capacity being appealed is not the
net tax capacity established by the commissioner through order
or recommendation, or if the petition claims that the tax levied
against the parcel is illegal, in whole or in part, or if the
petition claims the tax has been paid, the action must be
brought under chapter 278 without regard to this section in each
county where the property is located and proper service must be
made upon the local officials specified in section 278.01,
subdivision 1.
new text end

new text begin Subd. 2. new text end

new text begin Contents and filing of petition. new text end

new text begin In all cases
under this section, the petition must be served on the
commissioner and must be filed with the Tax Court in Ramsey
County. In all cases under this section that directly challenge
an order of the commissioner, the petition must include all the
parcels encompassed by that order which the petitioner claims
have been partially, unfairly, or unequally assessed, assessed
at a valuation greater than their real or actual value, or are
exempt. In all cases under this section not directly
challenging a commissioner's order, the petition must include
either all the utility parcels or all the railroad parcels in
the state in which the petitioner claims an interest and which
the petitioner claims have been partially, unfairly, or
unequally assessed, assessed at a valuation greater than their
real or actual value, or are exempt.
new text end

new text begin Subd. 3. new text end

new text begin Applicability of other laws. new text end

If the appeal to
court deleted text begin is from deleted text end new text begin governed by this section directly challenges new text end an
order of the commissioner, deleted text begin it deleted text end new text begin the appeal new text end must be brought under
chapter 271 new text begin , except that when the provisions of this section
conflict with chapter 271, this section prevails new text end . If deleted text begin the deleted text end new text begin an
new text end appeal new text begin governed by this section new text end is from the deleted text begin exemption,
valuation, classification, or deleted text end tax that results from
implementation of deleted text begin the deleted text end new text begin a new text end commissioner's order or recommendation,
it must be brought under new text begin the provisions of new text end chapter 278, deleted text begin and the
provisions in that chapter apply, deleted text end except that service shall be
on the commissioner only and not on the deleted text begin county deleted text end new text begin local new text end officials
specified in section 278.01, subdivision 1 new text begin , and if any other
provision of this section conflicts with chapter 278, this
section prevails new text end .

deleted text begin This provision applies to the property described in
sections 273.33, 273.35, 273.36, and 273.37, but only if the
appealed values have remained unchanged from those provided to
the city or county by the commissioner. If the exemption,
valuation, or classification being appealed has been changed by
the city or county, then the action must be brought under
chapter 278 in the county where the property is located and
proper service must be made upon the county officials as
specified in section 278.01, subdivision 1.
deleted text end

new text begin Subd. 4. new text end

new text begin Notice. new text end

Upon filing of any appeal by a utility
company or railroad against the commissioner new text begin under this section new text end ,
the commissioner shall give notice by first class mail to each
county which would be affected by the appeal.

new text begin Subd. 5. new text end

new text begin Administrative appeals. new text end

Companies that submit
the reports under section 270.82 or 273.371 by the date
specified in that section, or by the date specified by the
commissioner in an extension, may appeal administratively to the
commissioner deleted text begin under the procedures in section 270.11, subdivision
6 deleted text end , prior to bringing an action in Tax Court deleted text begin or in district
court deleted text end , however, instituting an administrative appeal with the
commissioner does not change or modify the deadline in section
271.06 for appealing an order of the commissioner deleted text begin in Tax Court
deleted text end or the deadline in section 278.01 for filing a property tax
claim or objection deleted text begin in Tax Court or district court deleted text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for petitions
served and filed on or after September 1, 2005.
new text end

Sec. 28.

Minnesota Statutes 2004, section 274.014,
subdivision 2, is amended to read:

Subd. 2.

Appeals and equalization course.

deleted text begin By no later
than January 1, deleted text end new text begin Beginning in new text end 2006, and each year thereafter,
there must be at least one member at each meeting of a local
board of appeal and equalization who has attended an appeals and
equalization course developed or approved by the commissioner
within the last four years, as certified by the commissioner.
The course may be offered in conjunction with a meeting of the
Minnesota League of Cities or the Minnesota Association of
Townships. The course content must include, but need not be
limited to, a review of the handbook developed by the
commissioner under subdivision 1.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 29.

Minnesota Statutes 2004, section 274.014,
subdivision 3, is amended to read:

Subd. 3.

Proof of compliance; transfer of duties.

new text begin (a)
new text end Any city or town that deleted text begin does not deleted text end new text begin conducts local boards of appeal
and equalization meetings must new text end provide proof to the county
assessor by December 1, 2006, and each year thereafter, that it
is in compliance with the requirements of subdivision 2 deleted text begin , and
that it had deleted text end new text begin . Beginning in 2006, this notice must also verify
that there was new text end a quorum new text begin of voting members new text end at each meeting of the
board of appeal and equalization in the deleted text begin prior deleted text end new text begin current new text end year deleted text begin , deleted text end new text begin . A
city or town that does not comply with these requirements new text end is
deemed to have transferred its board of appeal and equalization
powers to the county deleted text begin under section 274.01, subdivision 3,
for deleted text end new text begin beginning with new text end the following year's assessment new text begin and
continuing unless the powers are reinstated under paragraph (c) new text end .

new text begin (b) new text end The county shall notify the taxpayers when the board of
appeal and equalization for a city or town has been transferred
to the county under this subdivision and, prior to the meeting
time of the county board of equalization, the county shall make
available to those taxpayers a procedure for a review of the
assessments, including, but not limited to, open book meetings.
This alternate review process shall take place in April and May.

new text begin (c) new text end A local board whose powers are transferred to the
county under this subdivision may be reinstated by resolution of
the governing body of the city or town and upon proof of
compliance with the requirements of subdivision 2. The
resolution and proofs must be provided to the county assessor by
December 1 in order to be effective for the following year's
assessment.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 30.

Minnesota Statutes 2004, section 274.14, is
amended to read:

274.14 LENGTH OF SESSION; RECORD.

deleted text begin The county board of equalization or the special board of
equalization appointed by it shall meet during the last ten
meeting days in June. For this purpose, "meeting days" are
defined as any day of the week excluding Saturday and Sunday.
deleted text end The board may meet on any ten consecutive meeting days in June,
after the second Friday in June deleted text begin , if deleted text end new text begin . new text end The actual meeting dates
deleted text begin are deleted text end new text begin must be new text end contained on the valuation notices mailed to each
property owner in the county deleted text begin under deleted text end new text begin as provided in new text end section
273.121. new text begin For this purpose, "meeting days" is defined as any day
of the week excluding Saturday and Sunday. new text end No action taken by
the county board of review after June 30 is valid, except for
corrections permitted in sections 273.01 and 274.01. The county
auditor shall keep an accurate record of the proceedings and
orders of the board. The record must be published like other
proceedings of county commissioners. A copy of the published
record must be sent to the commissioner of revenue, with the
abstract of assessment required by section 274.16.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 31.

Minnesota Statutes 2004, section 275.065,
subdivision 1a, is amended to read:

Subd. 1a.

Overlapping jurisdictions.

In the case of a
taxing authority lying in two or more counties, the home county
auditor shall certify the proposed levy and the proposed local
tax rate to the other county auditor by deleted text begin September 20 deleted text end new text begin October 5 new text end .
The home county auditor must estimate the levy or rate in
preparing the notices required in subdivision 3, if the other
county has not certified the appropriate information. If
requested by the home county auditor, the other county auditor
must furnish an estimate to the home county auditor.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 32.

Minnesota Statutes 2004, section 275.07,
subdivision 1, is amended to read:

Subdivision 1.

Certification of levy.

(a) Except as
provided under paragraph (b), the taxes voted by cities,
counties, school districts, and special districts shall be
certified by the proper authorities to the county auditor on or
before five working days after December 20 in each year. A town
must certify the levy adopted by the town board to the county
auditor by September 15 each year. If the town board modifies
the levy at a special town meeting after September 15, the town
board must recertify its levy to the county auditor on or before
five working days after December 20. deleted text begin The taxes certified shall
be reduced by the county auditor by the aid received under
section 273.1398, subdivision 3. deleted text end If a city, town, county,
school district, or special district fails to certify its levy
by that date, its levy shall be the amount levied by it for the
preceding year.

(b)(i) The taxes voted by counties under sections 103B.241,
103B.245, and 103B.251 shall be separately certified by the
county to the county auditor on or before five working days
after December 20 in each year. The taxes certified shall not
be reduced by the county auditor by the aid received under
section 273.1398, subdivision 3. If a county fails to certify
its levy by that date, its levy shall be the amount levied by it
for the preceding year.

(ii) For purposes of the proposed property tax notice under
section 275.065 and the property tax statement under section
276.04, for the first year in which the county implements the
provisions of this paragraph, the county auditor shall reduce
the county's levy for the preceding year to reflect any amount
levied for water management purposes under clause (i) included
in the county's levy.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 33.

Minnesota Statutes 2004, section 275.07,
subdivision 4, is amended to read:

Subd. 4.

Report to commissioner.

(a) On or before
October 8 of each year, the county auditor shall report to the
commissioner of revenue the proposed levy certified by local
units of government under section 275.065, subdivision 1. If
any taxing authorities have notified the county auditor that
they are in the process of negotiating an agreement for sharing,
merging, or consolidating services but that when the proposed
levy was certified under section 275.065, subdivision 1c, the
agreement was not yet finalized, the county auditor shall supply
that information to the commissioner when filing the report
under this section and shall recertify the affected levies as
soon as practical after October 10.

(b) On or before January 15 of each year, the county
auditor shall report to the commissioner of revenue the final
levy certified by local units of government under subdivision 1.

(c) The levies must be reported in the manner prescribed by
the commissioner. deleted text begin The reports must show a total levy and the
amount of each special levy.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 34.

Minnesota Statutes 2004, section 276.04,
subdivision 2, is amended to read:

Subd. 2.

Contents of tax statements.

(a) The treasurer
shall provide for the printing of the tax statements. The
commissioner of revenue shall prescribe the form of the property
tax statement and its contents. The statement must contain a
tabulated statement of the dollar amount due to each taxing
authority and the amount of the state tax from the parcel of
real property for which a particular tax statement is prepared.
The dollar amounts attributable to the county, the state tax,
the voter approved school tax, the other local school tax, the
township or municipality, and the total of the metropolitan
special taxing districts as defined in section 275.065,
subdivision 3, paragraph (i), must be separately stated. The
amounts due all other special taxing districts, if any, may be
aggregated. If the county levy under this paragraph includes an
amount for a lake improvement district as defined under sections
103B.501 to 103B.581, the amount attributable for that purpose
must be separately stated from the remaining county levy
amount. The amount of the tax on homesteads qualifying under
the senior citizens' property tax deferral program under chapter
290B is the total amount of property tax before subtraction of
the deferred property tax amount. The amount of the tax on
contamination value imposed under sections 270.91 to 270.98, if
any, must also be separately stated. The dollar amounts,
including the dollar amount of any special assessments, may be
rounded to the nearest even whole dollar. For purposes of this
section whole odd-numbered dollars may be adjusted to the next
higher even-numbered dollar. The amount of market value
excluded under section 273.11, subdivision 16, if any, must also
be listed on the tax statement.

(b) The property tax statements for manufactured homes and
sectional structures taxed as personal property shall contain
the same information that is required on the tax statements for
real property.

(c) Real and personal property tax statements must contain
the following information in the order given in this paragraph.
The information must contain the current year tax information in
the right column with the corresponding information for the
previous year in a column on the left:

(1) the property's estimated market value under section
273.11, subdivision 1;

(2) the property's taxable market value after reductions
under section 273.11, subdivisions 1a and 16;

(3) the property's gross tax, calculated by adding the
property's total property tax to the sum of the aids enumerated
in clause (4);

(4) a total of the following aids:

(i) education aids payable under chapters 122A, 123A, 123B,
124D, 125A, 126C, and 127A;

(ii) local government aids for cities, towns, and counties
under deleted text begin chapter 477A deleted text end new text begin sections 477A.011 to 477A.014 new text end ; and

(iii) disparity reduction aid under section 273.1398;

(5) for homestead residential and agricultural properties,
the credits under section 273.1384;

(6) any credits received under sections 273.119; 273.123;
273.135; 273.1391; 273.1398, subdivision 4; 469.171; and
473H.10, except that the amount of credit received under section
273.135 must be separately stated and identified as "taconite
tax relief"; and

(7) the net tax payable in the manner required in paragraph
(a).

(d) If the county uses envelopes for mailing property tax
statements and if the county agrees, a taxing district may
include a notice with the property tax statement notifying
taxpayers when the taxing district will begin its budget
deliberations for the current year, and encouraging taxpayers to
attend the hearings. If the county allows notices to be
included in the envelope containing the property tax statement,
and if more than one taxing district relative to a given
property decides to include a notice with the tax statement, the
county treasurer or auditor must coordinate the process and may
combine the information on a single announcement.

The commissioner of revenue shall certify to the county
auditor the actual or estimated aids enumerated in clause (4)
that local governments will receive in the following year. The
commissioner must certify this amount by January 1 of each year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 35.

Minnesota Statutes 2004, section 276.112, is
amended to read:

276.112 STATE PROPERTY TAXES; COUNTY TREASURER.

On or before January 25 each year, for the period ending
December 31 of the prior year, and on or before June deleted text begin 29 deleted text end new text begin 28 new text end each
year, for the period ending on the most recent settlement day
determined in section 276.09, and on or before December 2 each
year, for the period ending November 20, the county treasurer
must make full settlement with the county auditor according to
sections 276.09, 276.10, and 276.111 for all receipts of state
property taxes levied under section 275.025, and must transmit
those receipts to the commissioner of revenue by electronic
means.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 36.

Minnesota Statutes 2004, section 276A.01,
subdivision 7, is amended to read:

Subd. 7.

Population.

"Population" means the most recent
estimate of the population of a municipality made by the state
demographer and filed with the commissioner of revenue as of
July deleted text begin 1 deleted text end new text begin 15 new text end of the year in which a municipality's distribution net
tax capacity is calculated. The state demographer shall
annually estimate the population of each municipality and, in
the case of a municipality which is located partly within and
partly without the area, the proportion of the total which
resides within the area, and shall file the estimates with the
commissioner of revenue.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 37.

Minnesota Statutes 2004, section 282.016, is
amended to read:

282.016 PROHIBITED PURCHASERS.

deleted text begin No deleted text end new text begin (a) A new text end county auditor, county treasurer, new text begin county attorney,
new text end court administrator of the district court, deleted text begin or deleted text end county assessor
deleted text begin or deleted text end new text begin , new text end supervisor of assessments, deleted text begin or deleted text end deputy or clerk or new text begin an new text end employee
of such officer, deleted text begin and no deleted text end new text begin a new text end commissioner for tax-forfeited lands
or new text begin an new text end assistant to such commissioner deleted text begin may deleted text end new text begin , must not new text end become a
purchaser new text begin , either personally or as an agent or attorney for
another person, new text end of the properties offered for sale under the
provisions of this chapter deleted text begin , either personally, or as agent or
attorney for any other person, except that deleted text end new text begin in the county for
which the person performs duties.
new text end

new text begin (b) Notwithstanding paragraph (a), new text end such officer, deputy,
deleted text begin court administrator deleted text end new text begin clerk new text end , new text begin or new text end employee or commissioner for
tax-forfeited lands or assistant to such commissioner may (1)
purchase lands owned by that official at the time the state
became the absolute owner thereof or (2) bid upon and purchase
forfeited property offered for sale under the alternate sale
procedure described in section 282.01, subdivision 7a.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 38.

Minnesota Statutes 2004, section 282.08, is
amended to read:

282.08 APPORTIONMENT OF PROCEEDS TO TAXING DISTRICTS.

The net proceeds from the sale or rental of any parcel of
forfeited land, or from the sale of products from the forfeited
land, must be apportioned by the county auditor to the taxing
districts interested in the land, as follows:

(1) deleted text begin the amounts necessary to pay the state general tax levy
against the parcel for taxes payable in the year for which the
tax judgment was entered, and for each subsequent payable year
up to and including the year of forfeiture, must be apportioned
to the state;
deleted text end

deleted text begin (2) deleted text end the portion required to pay any amounts included in the
appraised value under section 282.01, subdivision 3, as
representing increased value due to any public improvement made
after forfeiture of the parcel to the state, but not exceeding
the amount certified by the clerk of the municipality must be
apportioned to the municipal subdivision entitled to it;

deleted text begin (3) deleted text end new text begin (2) new text end the portion required to pay any amount included in
the appraised value under section 282.019, subdivision 5,
representing increased value due to response actions taken after
forfeiture of the parcel to the state, but not exceeding the
amount of expenses certified by the Pollution Control Agency or
the commissioner of agriculture, must be apportioned to the
agency or the commissioner of agriculture and deposited in the
fund from which the expenses were paid;

deleted text begin (4) deleted text end new text begin (3) new text end the portion of the remainder required to discharge
any special assessment chargeable against the parcel for
drainage or other purpose whether due or deferred at the time of
forfeiture, must be apportioned to the municipal subdivision
entitled to it; and

deleted text begin (5) deleted text end new text begin (4) new text end any balance must be apportioned as follows:

(i) The county board may annually by resolution set aside
no more than 30 percent of the receipts remaining to be used for
timber development on tax-forfeited land and dedicated memorial
forests, to be expended under the supervision of the county
board. It must be expended only on projects approved by the
commissioner of natural resources.

(ii) The county board may annually by resolution set aside
no more than 20 percent of the receipts remaining to be used for
the acquisition and maintenance of county parks or recreational
areas as defined in sections 398.31 to 398.36, to be expended
under the supervision of the county board.

(iii) Any balance remaining must be apportioned as
follows: county, 40 percent; town or city, 20 percent; and
school district, 40 percent, provided, however, that in
unorganized territory that portion which would have accrued to
the township must be administered by the county board of
commissioners.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment for state general tax levy amounts
payable in 2004 and thereafter.
new text end

Sec. 39.

Minnesota Statutes 2004, section 282.15, is
amended to read:

282.15 SALES OF FORFEITED AGRICULTURAL LANDS.

The sale shall be conducted by the auditor of the county in
which the parcels lie. The parcels shall be sold to the highest
bidder but not for less than the appraised value. The sales
shall be for cash or on the following terms: The appraised
value of all merchantable timber on agricultural lands shall be
paid for in full at the date of sale. At least 15 percent of
the purchase price of the land shall be paid in cash at the time
of purchase. The balance shall be paid in not more than 20
equal annual installments, with interest at a rate equal to the
rate in effect at the time under section 549.09 on the unpaid
balance each year. Both principal and interest are due and
payable on December 31 each year following that in which the
purchase was made. The purchaser may pay any number of
installments of principal and interest on or before their due
date. When the sale is on terms other than for cash in full,
the purchaser shall receive from the county auditor a contract
for deed, in a form prescribed by the attorney general. The
county auditor shall make a report to the commissioner of
natural resources not more than 30 days after each public sale
showing the lands sold at the sales, and submit a copy of each
contract of sale.

All lands sold pursuant to this section deleted text begin shall, on the
second day of January following the date of the sale, deleted text end new text begin must new text end be
restored to the tax rolls and become subject to taxation in the
same manner as they were assessed and taxed before becoming the
absolute property of the state new text begin for the assessment year
determined under section 272.02, subdivision 38, paragraph (c) new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales
occurring on or after July 1, 2005.
new text end

Sec. 40.

Minnesota Statutes 2004, section 282.21, is
amended to read:

282.21 FORM OF CONVEYANCE.

new text begin When any sale has been made under sections 282.14 to
282.22, new text end upon payment in full of the purchase price, appropriate
conveyance in fee in such form as may be prescribed by the
attorney general shall be issued by the commissioner of finance
to the purchaser or the purchaser's assigns and this conveyance
shall have the force and effect of a patent from the state.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 41.

Minnesota Statutes 2004, section 282.224, is
amended to read:

282.224 FORM OF CONVEYANCE.

new text begin When any sale has been made under sections 282.221 to
282.226, new text end upon payment in full of the purchase price new text begin , new text end appropriate
conveyance in fee, in such form as may be prescribed by the
attorney general, shall be issued by the commissioner of natural
resources to the purchaser or the purchaser's assignee, and the
conveyance shall have the force and effect of a patent from the
state.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 42.

Minnesota Statutes 2004, section 282.301, is
amended to read:

282.301 RECEIPTS FOR PAYMENTS.

new text begin When any sale has been made under sections 282.012 and
282.241 to 282.324, new text end the purchaser shall receive from the county
auditor at the time of repurchase a receipt, in such form as may
be prescribed by the attorney general. When the purchase price
of a parcel of land shall be paid in full, the following facts
shall be certified by the county auditor to the commissioner of
revenue of the state of Minnesota: the description of land, the
date of sale, the name of the purchaser or the purchaser's
assignee, and the date when the final installment of the
purchase price was paid. Upon payment in full of the purchase
price, the purchaser or the assignee shall receive a quitclaim
deed from the state, to be executed by the commissioner of
revenue. The deed must be sent to the county auditor who shall
have it recorded before it is forwarded to the purchaser.
Failure to make any payment herein required shall constitute
default and upon such default and cancellation in accord with
section 282.40, the right, title and interest of the purchaser
or the purchaser's heirs, representatives, or assigns in such
parcel shall terminate.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 43.

Minnesota Statutes 2004, section 290A.19, is
amended to read:

290A.19 OWNER OR MANAGING AGENT TO FURNISH RENT
CERTIFICATE.

new text begin (a) new text end The owner or managing agent of any property for which
rent is paid for occupancy as a homestead must furnish a
certificate of rent paid to a person who is a renter on December
31, in the form prescribed by the commissioner. If the renter
moves before December 31, the owner or managing agent may give
the certificate to the renter at the time of moving, or mail the
certificate to the forwarding address if an address has been
provided by the renter. The certificate must be made available
to the renter before February 1 of the year following the year
in which the rent was paid. The owner or managing agent must
retain a duplicate of each certificate or an equivalent record
showing the same information for a period of three years. The
duplicate or other record must be made available to the
commissioner upon request. For the purposes of this section,
"owner" includes a park owner as defined under section 327C.01,
subdivision 6, and "property" includes a lot as defined under
section 327C.01, subdivision 3.

new text begin (b) The commissioner may require the owner or managing
agent to file a copy of the certificate of rent paid with the
commissioner by April 15 of the year following the year in which
the rent was paid. The copy must be submitted to the
commissioner by electronic means as that term is defined in
section 289A.02, subdivision 8. This paragraph does not apply
to any owner or managing agent that is required to issue fewer
than 100 certificates based on rent paid in 2006, fewer than 25
certificates based on rent paid in 2007, or fewer than five
certificates based on rent paid in 2008 or thereafter.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for
certificates of rent paid that are issued for rent paid after
December 31, 2005.
new text end

Sec. 44.

Minnesota Statutes 2004, section 290B.05,
subdivision 3, is amended to read:

Subd. 3.

Calculation of deferred property tax amount.

When final property tax amounts for the following year have been
determined, the county auditor shall calculate the "deferred
property tax amount." The deferred property tax amount is equal
to the lesser of (1) the maximum allowable deferral for the
year; or (2) the difference between new text begin (i) new text end the total amount of
property taxes new text begin and special assessments new text end levied upon the
qualifying homestead by all taxing jurisdictions and new text begin (ii) new text end the
maximum property tax amount. deleted text begin Any special assessments levied by
any local unit of government must not be included in the total
tax used to calculate the deferred tax amount. deleted text end new text begin For this purpose
"special assessments" includes any assessment, fee, or other
charge that may by law, and which does, appear on the property
tax statement for the property for collection under the laws
applicable to the enforcement of real estate taxes. new text end Any tax
attributable to new improvements made to the property after the
initial application has been approved under section 290B.04,
subdivision 2, must be excluded when determining any subsequent
deferred property tax amount. The county auditor shall
annually, on or before April 15, certify to the commissioner of
revenue the property tax deferral amounts determined under this
subdivision by property and by owner.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for amounts
deferred in 2006 and thereafter.
new text end

Sec. 45.

Minnesota Statutes 2004, section 373.45,
subdivision 7, is amended to read:

Subd. 7.

Aid reduction for repayment.

(a) Except as
provided in paragraph (b), the commissioner may reduce, by the
amount paid by the state under this section on behalf of the
county, plus the interest due on the state payments, the
deleted text begin following aids payable to the county:
deleted text end

deleted text begin (1) homestead and agricultural credit aid and disparity
reduction aid payable under section 273.1398;
deleted text end

deleted text begin (2) county criminal justice aid payable under section
477A.0121; and
deleted text end

deleted text begin (3) family preservation aid payable under section 477A.0122
deleted text end new text begin county program aid under section 477A.0124 new text end .

The amount of any aid reduction reverts from the appropriate
account to the state general fund.

(b) If, after review of the financial situation of the
county, the authority advises the commissioner that a total
reduction of the aids would cause an undue hardship on the
county, the authority, with the approval of the commissioner,
may establish a different schedule for reduction of aids to
repay the state. The amount of aids to be reduced are decreased
by any amounts repaid to the state by the county from other
revenue sources.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aid payable
in 2005 and thereafter.
new text end

Sec. 46.

Minnesota Statutes 2004, section 469.1735,
subdivision 3, is amended to read:

Subd. 3.

Transfer authority for property tax.

(a) A city
may elect to use all or part of its allocation under subdivision
2 to reimburse the city or county or both for property tax
reductions under section 272.0212. To elect this option, the
city must notify the commissioner of revenue by October 1 of
each calendar year of the amount of the property tax
reductions new text begin for which new text end it seeks reimbursements for taxes payable
during the deleted text begin following deleted text end new text begin current new text end year and the governmental units to
which the amounts will be paid. The commissioner may require
the city to provide information substantiating the amount of the
reductions granted or any other information necessary to
administer this provision. The commissioner shall pay the
reimbursements by December 26 new text begin of the taxes payable year new text end . Any
amount transferred under this authority reduces the amount of
tax credit certificates available under subdivisions 1 and 2.

(b) The amount elected by the city under paragraph (a) is
appropriated to the commissioner of revenue from the general
fund to reimburse the city or county for tax reductions under
section 272.0212. The amount appropriated may not exceed the
maximum amounts allocated to a city under subdivision 2,
paragraph (b), less the amount of certificates issued by the
city under subdivision 1, and is available until expended.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for
reimbursements of taxes payable in 2005 and thereafter.
new text end

Sec. 47.

new text begin [473.24] POPULATION ESTIMATES.
new text end

new text begin (a) The Metropolitan Council shall annually prepare an
estimate of population and of population over age 65 for each
city and town in the metropolitan area and an estimate of
average household size for each city in the metropolitan area
with a population of 2,500 or more, and convey the estimates to
the governing body of each city or town by June 1 each year. In
the case of a city or town that is located partly within and
partly without the metropolitan area, the Metropolitan Council
shall estimate the proportion of the total population and the
average size of households that reside within the area. The
Metropolitan Council may prepare an estimate of the population
and of the average household size for any other political
subdivision located in the metropolitan area.
new text end

new text begin (b) A governing body may challenge an estimate made under
this section by filing its specific objections in writing with
the Metropolitan Council by June 24. If the challenge does not
result in an acceptable estimate, the governing body may have a
special census conducted by the United States Bureau of the
Census. The political subdivision must notify the Metropolitan
Council on or before July 1 of its intent to have the special
census conducted. The political subdivision must bear all costs
of the special census. Results of the special census must be
received by the Metropolitan Council by the next April 15 to be
used in that year's June 1 estimate under this section. The
Metropolitan Council shall certify the estimates of population
and the average household size to the state demographer and to
the commissioner of revenue by July 15 each year, including any
estimates still under objection.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 48.

Minnesota Statutes 2004, section 473F.02,
subdivision 7, is amended to read:

Subd. 7.

Population.

"Population" means the most recent
estimate of the population of a municipality made by the
Metropolitan Council new text begin under section 473.24 new text end and filed with the
commissioner of revenue as of July deleted text begin 1 deleted text end new text begin 15 new text end of the year in which a
municipality's distribution net tax capacity is calculated. deleted text begin The
council shall annually estimate the population of each
municipality as of a date which it determines and, in the case
of a municipality which is located partly within and partly
without the area, the proportion of the total which resides
within the area, and shall promptly thereafter file its
estimates with the commissioner of revenue.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 49.

Minnesota Statutes 2004, section 477A.011,
subdivision 3, is amended to read:

Subd. 3.

Population.

"Population" means the
population new text begin estimated or new text end established as of July deleted text begin 1 deleted text end new text begin 15 new text end in an aid
calculation year by the most recent federal census, by a special
census conducted under contract with the United States Bureau of
the Census, by a population estimate made by the Metropolitan
Council new text begin pursuant to section 473.24 new text end , or by a population estimate
of the state demographer made pursuant to section 4A.02,
whichever is the most recent as to the stated date of the count
or estimate for the preceding calendar year new text begin , and which has been
certified to the commissioner of revenue on or before July 15 of
the aid calculation year new text end . The term "per capita" refers to
population as defined by this subdivision. new text begin A revision of an
estimate or count is effective for these purposes only if it is
certified to the commissioner on or before July 15 of the aid
calculation year. Clerical errors in the certification or use
of the estimates and counts established as of July 15 in the aid
calculation year are subject to correction within the time
periods allowed under section 477A.014.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 50.

Minnesota Statutes 2004, section 477A.011,
subdivision 36, is amended to read:

Subd. 36.

City aid base.

(a) Except as otherwise
provided in this subdivision, "city aid base" is zero.

(b) The city aid base for any city with a population less
than 500 is increased by $40,000 for aids payable in calendar
year 1995 and thereafter, and the maximum amount of total aid it
may receive under section 477A.013, subdivision 9, paragraph
(c), is also increased by $40,000 for aids payable in calendar
year 1995 only, provided that:

(i) the average total tax capacity rate for taxes payable
in 1995 exceeds 200 percent;

(ii) the city portion of the tax capacity rate exceeds 100
percent; and

(iii) its city aid base is less than $60 per capita.

(c) The city aid base for a city is increased by $20,000 in
1998 and thereafter and the maximum amount of total aid it may
receive under section 477A.013, subdivision 9, paragraph (c), is
also increased by $20,000 in calendar year 1998 only, provided
that:

(i) the city has a population in 1994 of 2,500 or more;

(ii) the city is located in a county, outside of the
metropolitan area, which contains a city of the first class;

(iii) the city's net tax capacity used in calculating its
1996 aid under section 477A.013 is less than $400 per capita;
and

(iv) at least four percent of the total net tax capacity,
for taxes payable in 1996, of property located in the city is
classified as railroad property.

(d) The city aid base for a city is increased by $200,000
in 1999 and thereafter and the maximum amount of total aid it
may receive under section 477A.013, subdivision 9, paragraph
(c), is also increased by $200,000 in calendar year 1999 only,
provided that:

(i) the city was incorporated as a statutory city after
December 1, 1993;

(ii) its city aid base does not exceed $5,600; and

(iii) the city had a population in 1996 of 5,000 or more.

(e) The city aid base for a city is increased by $450,000
in 1999 to 2008 and the maximum amount of total aid it may
receive under section 477A.013, subdivision 9, paragraph (c), is
also increased by $450,000 in calendar year 1999 only, provided
that:

(i) the city had a population in 1996 of at least 50,000;

(ii) its population had increased by at least 40 percent in
the ten-year period ending in 1996; and

(iii) its city's net tax capacity for aids payable in 1998
is less than $700 per capita.

(f) deleted text begin Beginning in 2004, the city aid base for a city is
equal to the sum of its city aid base in 2003 and the amount of
additional aid it was certified to receive under section 477A.06
in 2003. For 2004 only, the maximum amount of total aid a city
may receive under section 477A.013, subdivision 9, paragraph
(c), is also increased by the amount it was certified to receive
under section 477A.06 in 2003.
deleted text end

deleted text begin (g) deleted text end The city aid base for a city is increased by $150,000
for aids payable in 2000 and thereafter, and the maximum amount
of total aid it may receive under section 477A.013, subdivision
9, paragraph (c), is also increased by $150,000 in calendar year
2000 only, provided that:

(1) the city has a population that is greater than 1,000
and less than 2,500;

(2) its commercial and industrial percentage for aids
payable in 1999 is greater than 45 percent; and

(3) the total market value of all commercial and industrial
property in the city for assessment year 1999 is at least 15
percent less than the total market value of all commercial and
industrial property in the city for assessment year 1998.

deleted text begin (h) deleted text end new text begin (g) new text end The city aid base for a city is increased by
$200,000 in 2000 and thereafter, and the maximum amount of total
aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $200,000 in calendar year
2000 only, provided that:

(1) the city had a population in 1997 of 2,500 or more;

(2) the net tax capacity of the city used in calculating
its 1999 aid under section 477A.013 is less than $650 per
capita;

(3) the pre-1940 housing percentage of the city used in
calculating 1999 aid under section 477A.013 is greater than 12
percent;

(4) the 1999 local government aid of the city under section
477A.013 is less than 20 percent of the amount that the formula
aid of the city would have been if the need increase percentage
was 100 percent; and

(5) the city aid base of the city used in calculating aid
under section 477A.013 is less than $7 per capita.

deleted text begin (i) deleted text end new text begin (h) new text end The city aid base for a city is increased by
$102,000 in 2000 and thereafter, and the maximum amount of total
aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $102,000 in calendar year
2000 only, provided that:

(1) the city has a population in 1997 of 2,000 or more;

(2) the net tax capacity of the city used in calculating
its 1999 aid under section 477A.013 is less than $455 per
capita;

(3) the net levy of the city used in calculating 1999 aid
under section 477A.013 is greater than $195 per capita; and

(4) the 1999 local government aid of the city under section
477A.013 is less than 38 percent of the amount that the formula
aid of the city would have been if the need increase percentage
was 100 percent.

deleted text begin (j) deleted text end new text begin (i) new text end The city aid base for a city is increased by
$32,000 in 2001 and thereafter, and the maximum amount of total
aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $32,000 in calendar year
2001 only, provided that:

(1) the city has a population in 1998 that is greater than
200 but less than 500;

(2) the city's revenue need used in calculating aids
payable in 2000 was greater than $200 per capita;

(3) the city net tax capacity for the city used in
calculating aids available in 2000 was equal to or less than
$200 per capita;

(4) the city aid base of the city used in calculating aid
under section 477A.013 is less than $65 per capita; and

(5) the city's formula aid for aids payable in 2000 was
greater than zero.

deleted text begin (k) deleted text end new text begin (j) new text end The city aid base for a city is increased by $7,200
in 2001 and thereafter, and the maximum amount of total aid it
may receive under section 477A.013, subdivision 9, paragraph
(c), is also increased by $7,200 in calendar year 2001 only,
provided that:

(1) the city had a population in 1998 that is greater than
200 but less than 500;

(2) the city's commercial industrial percentage used in
calculating aids payable in 2000 was less than ten percent;

(3) more than 25 percent of the city's population was 60
years old or older according to the 1990 census;

(4) the city aid base of the city used in calculating aid
under section 477A.013 is less than $15 per capita; and

(5) the city's formula aid for aids payable in 2000 was
greater than zero.

deleted text begin (l) deleted text end new text begin (k) new text end The city aid base for a city is increased by
$45,000 in 2001 and thereafter and by an additional $50,000 in
calendar years 2002 to 2011, and the maximum amount of total aid
it may receive under section 477A.013, subdivision 9, paragraph
(c), is also increased by $45,000 in calendar year 2001 only,
and by $50,000 in calendar year 2002 only, provided that:

(1) the net tax capacity of the city used in calculating
its 2000 aid under section 477A.013 is less than $810 per
capita;

(2) the population of the city declined more than two
percent between 1988 and 1998;

(3) the net levy of the city used in calculating 2000 aid
under section 477A.013 is greater than $240 per capita; and

(4) the city received less than $36 per capita in aid under
section 477A.013, subdivision 9, for aids payable in 2000.

deleted text begin (m) deleted text end new text begin (l) new text end The city aid base for a city with a population of
10,000 or more which is located outside of the seven-county
metropolitan area is increased in 2002 and thereafter, and the
maximum amount of total aid it may receive under section
477A.013, subdivision 9, paragraph (b) or (c), is also increased
in calendar year 2002 only, by an amount equal to the lesser of:

(1)(i) the total population of the city, as determined by
the United States Bureau of the Census, in the 2000 census, (ii)
minus 5,000, (iii) times 60; or

(2) $2,500,000.

deleted text begin (n) deleted text end new text begin (m) new text end The city aid base is increased by $50,000 in 2002
and thereafter, and the maximum amount of total aid it may
receive under section 477A.013, subdivision 9, paragraph (c), is
also increased by $50,000 in calendar year 2002 only, provided
that:

(1) the city is located in the seven-county metropolitan
area;

(2) its population in 2000 is between 10,000 and 20,000;
and

(3) its commercial industrial percentage, as calculated for
city aid payable in 2001, was greater than 25 percent.

deleted text begin (o) deleted text end new text begin (n) new text end The city aid base for a city is increased by
$150,000 in calendar years 2002 to 2011 and the maximum amount
of total aid it may receive under section 477A.013, subdivision
9, paragraph (c), is also increased by $150,000 in calendar year
2002 only, provided that:

(1) the city had a population of at least 3,000 but no more
than 4,000 in 1999;

(2) its home county is located within the seven-county
metropolitan area;

(3) its pre-1940 housing percentage is less than 15
percent; and

(4) its city net tax capacity per capita for taxes payable
in 2000 is less than $900 per capita.

deleted text begin (p) deleted text end new text begin (o) new text end The city aid base for a city is increased by
$200,000 beginning in calendar year 2003 and the maximum amount
of total aid it may receive under section 477A.013, subdivision
9, paragraph (c), is also increased by $200,000 in calendar year
2003 only, provided that the city qualified for an increase in
homestead and agricultural credit aid under Laws 1995, chapter
264, article 8, section 18.

deleted text begin (q) deleted text end new text begin (p) new text end The city aid base for a city is increased by
$200,000 in 2004 only and the maximum amount of total aid it may
receive under section 477A.013, subdivision 9, is also increased
by $200,000 in calendar year 2004 only, if the city is the site
of a nuclear dry cask storage facility.

deleted text begin (r) deleted text end new text begin (q) new text end The city aid base for a city is increased by
$10,000 in 2004 and thereafter and the maximum total aid it may
receive under section 477A.013, subdivision 9, is also increased
by $10,000 in calendar year 2004 only, if the city was included
in a federal major disaster designation issued on April 1, 1998,
and its pre-1940 housing stock was decreased by more than 40
percent between 1990 and 2000.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with
aids payable in 2004.
new text end

Sec. 51.

Minnesota Statutes 2004, section 477A.011,
subdivision 38, is amended to read:

Subd. 38.

Household size.

"Household size" means the
average number of persons per household in the jurisdiction as
most recently estimated and reported by the state
demographer new text begin and Metropolitan Council new text end as of July deleted text begin 1 deleted text end new text begin 15 new text end of the aid
calculation year. new text begin A revision to an estimate or enumeration is
effective for these purposes only if it is certified to the
commissioner on or before July 15 of the aid calculation year.
Clerical errors in the certification or use of estimates and
counts established as of July 15 in the aid calculation year are
subject to correction within the time periods allowed under
section 477A.014.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 52.

Minnesota Statutes 2004, section 477A.0124,
subdivision 2, is amended to read:

Subd. 2.

Definitions.

(a) For the purposes of this
section, the following terms have the meanings given them.

(b) "County program aid" means the sum of "county need aid,"
"county tax base equalization aid," and "county transition aid."

(c) "Age-adjusted population" means a county's population
multiplied by the county age index.

(d) "County age index" means the percentage of the
population over age 65 within the county divided by the
percentage of the population over age 65 within the state,
except that the age index for any county may not be greater than
1.8 nor less than 0.8.

(e) "Population over age 65" means the population over age
65 established as of July deleted text begin 1 deleted text end new text begin 15 new text end in an aid calculation year by the
most recent federal census, by a special census conducted under
contract with the United States Bureau of the Census, by a
population estimate made by the Metropolitan Council, or by a
population estimate of the state demographer made pursuant to
section 4A.02, whichever is the most recent as to the stated
date of the count or estimate for the preceding calendar
year new text begin and which has been certified to the commissioner of revenue
on or before July 15 of the aid calculation year new text end . new text begin A revision to
an estimate or count is effective for these purposes only if
certified to the commissioner on or before July 15 of the aid
calculation year. Clerical errors in the certification or use
of estimates and counts established as of July 15 in the aid
calculation year are subject to correction within the time
periods allowed under section 477A.014.
new text end

(f) "Part I crimes" means the three-year average annual
number of Part I crimes reported for each county by the
Department of Public Safety for the most recent years available.
By July 1 of each year, the commissioner of public safety shall
certify to the commissioner of revenue the number of Part I
crimes reported for each county for the three most recent
calendar years available.

(g) "Households receiving food stamps" means the average
monthly number of households receiving food stamps for the three
most recent years for which data is available. By July 1 of
each year, the commissioner of human services must certify to
the commissioner of revenue the average monthly number of
households in the state and in each county that receive food
stamps, for the three most recent calendar years available.

(h) "County net tax capacity" means the net tax capacity of
the county, computed analogously to city net tax capacity under
section 477A.011, subdivision 20.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 53.

Laws 2003, chapter 127, article 5, section 27,
the effective date, is amended to read:

new text begin EFFECTIVE DATE. new text end

This section is effective for deleted text begin taxes
payable in 2004 and thereafter deleted text end new text begin distributions occurring on or
after June 10, 2003 new text end .

Sec. 54.

Laws 2003, chapter 127, article 5, section 28,
the effective date, is amended to read:

new text begin EFFECTIVE DATE. new text end

This section is effective for deleted text begin taxes
payable in 2004 and thereafter deleted text end new text begin distributions occurring on or
after June 10, 2003 new text end .

Sec. 55.

Laws 2003, First Special Session chapter 21,
article 5, section 13, is amended to read:

Sec. 13. new text begin 2004 CITY AID REDUCTIONS.
new text end

The commissioner of revenue shall compute an aid reduction
amount for 2004 for each city as provided in this section.

The initial aid reduction amount for each city is the
amount by which the city's aid distribution under Minnesota
Statutes, section 477A.013, and related provisions payable in
2003 exceeds the city's 2004 distribution under those provisions.

The minimum aid reduction amount for a city is the amount
of its reduction in 2003 under section 12. If a city receives
an increase to its city aid base under Minnesota Statutes,
section 477A.011, subdivision 36, its minimum aid reduction is
reduced by an equal amount.

The maximum aid reduction amount for a city is an amount
equal to 14 percent of the city's total 2004 levy plus aid
revenue base, except that if the city has a city net tax
capacity for aids payable in 2004, as defined in Minnesota
Statutes, section 477A.011, subdivision 20, of $700 per capita
or less, the maximum aid reduction shall not exceed an amount
equal to 13 percent of the city's total 2004 levy plus aid
revenue base.

If the initial aid reduction amount for a city is less than
the minimum aid reduction amount for that city, the final aid
reduction amount for the city is the sum of the initial aid
reduction amount and the lesser of the amount of the city's
payable 2004 reimbursement under Minnesota Statutes, section
273.1384, or the difference between the minimum and initial aid
reduction amounts for the city new text begin , and the amount of the final aid
reduction in excess of the initial aid reduction is deducted
from the city's reimbursements pursuant to Minnesota Statutes,
section 273.1384 new text end .

If the initial aid reduction amount for a city is greater
than the maximum aid reduction amount for the city, the city
receives an additional distribution under this section equal to
the result of subtracting the maximum aid reduction amount from
the initial aid reduction amount. This distribution shall be
paid in equal installments in 2004 on the dates specified in
Minnesota Statutes, section 477A.015. The amount necessary for
these additional distributions is appropriated to the
commissioner of revenue from the general fund in fiscal year
2005.

deleted text begin The initial aid reduction is applied to the city's
distribution pursuant to Minnesota Statutes, section 477A.013,
and any aid reduction in excess of the initial aid reduction is
applied to the city's reimbursements pursuant to Minnesota
Statutes, section 273.1384.
deleted text end

To the extent that sufficient information is available on
each payment date in 2004, the commissioner of revenue shall pay
the reimbursements reduced under this section in equal
installments on the payment dates provided in law.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids
payable in 2004.
new text end

Sec. 56.

Laws 2003, First Special Session chapter 21,
article 6, section 9, is amended to read:

Sec. 9 new text begin DEFINITIONS.
new text end

(a) For purposes of sections 9 to 15, the following terms
have the meanings given them in this section.

(b) The 2003 and 2004 "levy plus aid revenue base" for a
county is the sum of that county's certified property tax levy
for taxes payable in 2003, plus the sum of the amounts the
county was certified to receive in the designated calendar year
as:

(1) homestead and agricultural credit aid under Minnesota
Statutes, section 273.1398, subdivision 2, plus any additional
aid under section 16, minus the amount calculated under section
273.1398, subdivision 4a, paragraph (b), for counties in
judicial districts one, three, six, and ten, and 25 percent of
the amount calculated under section 273.1398, subdivision 4a,
paragraph (b), for counties in judicial districts two and four;

(2) the amount of county manufactured home homestead and
agricultural credit aid computed for the county for payment in
2003 under section 273.166;

(3) criminal justice aid under Minnesota Statutes, section
477A.0121;

(4) family preservation aid under Minnesota Statutes,
section 477A.0122;

(5) taconite aids under Minnesota Statutes, sections 298.28
and 298.282, including any aid which was required to be placed
in a special fund for expenditure in the next succeeding year;
and

(6) county program aid under section 477A.0124 new text begin , exclusive
of the attached machinery aid component new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids
payable in 2004.
new text end

Sec. 57. new text begin LINCOLN AND PIPESTONE COUNTIES; TOWN LEVY
ADJUSTMENT FOR WIND ENERGY PRODUCTION TAX.
new text end

new text begin Notwithstanding the deadlines in Minnesota Statutes,
section 275.07, towns located in Lincoln or Pipestone County are
authorized to adjust their payable 2004 levy for all or a
portion of their estimated wind energy production tax amounts
for 2004, as computed by the commissioner of revenue from
reports filed under Minnesota Statutes, section 272.029,
subdivision 4. The Lincoln and Pipestone County auditors may
adjust the payable 2004 levy certifications under Minnesota
Statutes, section 275.07, subdivision 1, based upon the towns
that have recertified their levies under this section by March
15, 2004.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes
payable in 2004.
new text end

Sec. 58. new text begin REPEALER.
new text end

new text begin (a) Minnesota Statutes 2004, sections 273.19, subdivision
5; 274.05; 275.15; 275.61, subdivision 2; and 283.07, are
repealed effective the day following final enactment.
new text end

new text begin (b) Minnesota Statutes 2004, section 469.1794, subdivision
6, is repealed effective the day following final enactment and
applies to districts for which the request for certification was
made on, before, or after August 1, 1979, and before August 1,
2001.
new text end

new text begin (c) Laws 1975, chapter 287, section 5, and Laws 2003,
chapter 127, article 9, section 9, subdivision 4, are repealed
effective without local approval for taxes payable in 2006 and
thereafter.
new text end

ARTICLE 3

SALES AND USE TAXES

Section 1.

Minnesota Statutes 2004, section 289A.38,
subdivision 6, is amended to read:

Subd. 6.

Omission in excess of 25 percent.

Additional
taxes may be assessed within 6-1/2 years after the due date of
the return or the date the return was filed, whichever is later,
if:

(1) the taxpayer omits from gross income an amount properly
includable in it that is in excess of 25 percent of the amount
of gross income stated in the return;

(2) the taxpayer omits from a sales new text begin , use, new text end or withholding
tax return an amount new text begin of taxes new text end in excess of 25 percent of the
taxes reported in the return; or

(3) the taxpayer omits from the gross estate assets in
excess of 25 percent of the gross estate reported in the return.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2004, section 289A.38, is
amended by adding a subdivision to read:

new text begin Subd. 15. new text end

new text begin Purchaser filed refund claims. new text end

new text begin If a purchaser
refund claim is filed under section 289A.50, subdivision 2a, and
the basis for the claim is that the purchaser was improperly
charged tax on an improvement to real property or on the
purchase of nontaxable services, sales or use tax may be
assessed for the cost of materials used to make the real
property improvement or to perform the nontaxable service. The
assessment may be made against the person making the improvement
to real property or the sale of nontaxable services, within the
period prescribed in subdivision 1, or within one year after the
date of the refund order, whichever is later.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for purchaser
refund claims filed on or after July 1, 2005.
new text end

Sec. 3.

Minnesota Statutes 2004, section 289A.40,
subdivision 2, is amended to read:

Subd. 2.

Bad debt loss.

If a claim relates to an
overpayment because of a failure to deduct a loss due to a bad
debt or to a security becoming worthless, the claim is
considered timely if filed within seven years from the date
prescribed for the filing of the return. A claim relating to an
overpayment of taxes under chapter 297A must be filed within
3-1/2 years from the date prescribed for filing the return, plus
any extensions granted for filing the return, but only if filed
within the extended time. The refund or credit is limited to
the amount of overpayment attributable to the loss. "Bad debt"
for purposes of this subdivision, has the same meaning as that
term is used in United States Code, title 26, section 166,
except that new text begin for a claim relating to an overpayment of taxes
under chapter 297A new text end the following are excluded from the
calculation of bad debt: financing charges or interest; sales
or use taxes charged on the purchase price; uncollectible
amounts on property that remain in the possession of the seller
until the full purchase price is paid; expenses incurred in
attempting to collect any debt; and repossessed property.

new text begin EFFECTIVE DATE. new text end

new text begin For claims relating to an overpayment of
taxes under chapter 297A, this section is effective for sales
and purchases made on or after January 1, 2004; for all other
bad debts or claims, this section is effective on or after July
1, 2003.
new text end

Sec. 4.

Minnesota Statutes 2004, section 289A.40, is
amended by adding a subdivision to read:

new text begin Subd. 4. new text end

new text begin Purchaser filed refund claims. new text end

new text begin A claim for
refund of taxes paid on a transaction not subject to tax under
chapter 297A, where the purchaser may apply directly to the
commissioner under section 289A.50, subdivision 2a, must be
filed within 3-1/2 years from the 20th day of the month
following the month of the invoice date for the purchase.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for claims
filed on or after the day following final enactment.
new text end

Sec. 5.

Minnesota Statutes 2004, section 289A.40, is
amended by adding a subdivision to read:

new text begin Subd. 5. new text end

new text begin Capital equipment refund claims. new text end

new text begin A claim for
refund for taxes paid under chapter 297A on capital equipment
must be filed within 3-1/2 years from the 20th day of the month
following the month of the invoice date for the purchase of the
capital equipment. A claim for refund for taxes imposed on
capital equipment under section 297A.63 must be filed within
3-1/2 years from the date prescribed for filing the return, or
one year from the date of an order assessing tax under section
289A.37, subdivision 1, upon payment in full of the tax,
penalties, and interest shown on the order, whichever period
expires later.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for claims
filed on or after the day following final enactment.
new text end

Sec. 6.

Minnesota Statutes 2004, section 297A.61,
subdivision 3, is amended to read:

Subd. 3.

Sale and purchase.

(a) "Sale" and "purchase"
include, but are not limited to, each of the transactions listed
in this subdivision.

(b) Sale and purchase include:

(1) any transfer of title or possession, or both, of
tangible personal property, whether absolutely or conditionally,
for a consideration in money or by exchange or barter; and

(2) the leasing of or the granting of a license to use or
consume, for a consideration in money or by exchange or barter,
tangible personal property, other than a manufactured home used
for residential purposes for a continuous period of 30 days or
more.

(c) Sale and purchase include the production, fabrication,
printing, or processing of tangible personal property for a
consideration for consumers who furnish either directly or
indirectly the materials used in the production, fabrication,
printing, or processing.

(d) Sale and purchase include the preparing for a
consideration of food. Notwithstanding section 297A.67,
subdivision 2, taxable food includes, but is not limited to, the
following:

(1) prepared food sold by the retailer;

(2) soft drinks;

(3) candy; deleted text begin and
deleted text end

(4) new text begin dietary supplements; and
new text end

new text begin (5) new text end all food sold through vending machines.

(e) A sale and a purchase includes the furnishing for a
consideration of electricity, gas, water, or steam for use or
consumption within this state.

(f) A sale and a purchase includes the transfer for a
consideration of prewritten computer software whether delivered
electronically, by load and leave, or otherwise.

(g) A sale and a purchase includes the furnishing for a
consideration of the following services:

(1) the privilege of admission to places of amusement,
recreational areas, or athletic events, and the making available
of amusement devices, tanning facilities, reducing salons, steam
baths, turkish baths, health clubs, and spas or athletic
facilities;

(2) lodging and related services by a hotel, rooming house,
resort, campground, motel, or trailer camp and the granting of
any similar license to use real property new text begin in a specific facility,
new text end other than the renting or leasing of it for a continuous period
of 30 days or more new text begin under an enforceable written agreement that
may not be terminated without prior notice new text end ;

(3) nonresidential parking services, whether on a
contractual, hourly, or other periodic basis, except for parking
at a meter;

(4) the granting of membership in a club, association, or
other organization if:

(i) the club, association, or other organization makes
available for the use of its members sports and athletic
facilities, without regard to whether a separate charge is
assessed for use of the facilities; and

(ii) use of the sports and athletic facility is not made
available to the general public on the same basis as it is made
available to members.

Granting of membership means both onetime initiation fees and
periodic membership dues. Sports and athletic facilities
include golf courses; tennis, racquetball, handball, and squash
courts; basketball and volleyball facilities; running tracks;
exercise equipment; swimming pools; and other similar athletic
or sports facilities;

(5) delivery of aggregate materials and concrete block by a
third party if the delivery would be subject to the sales tax if
provided by the seller of the aggregate material or concrete
block; and

(6) services as provided in this clause:

(i) laundry and dry cleaning services including cleaning,
pressing, repairing, altering, and storing clothes, linen
services and supply, cleaning and blocking hats, and carpet,
drapery, upholstery, and industrial cleaning. Laundry and dry
cleaning services do not include services provided by coin
operated facilities operated by the customer;

(ii) motor vehicle washing, waxing, and cleaning services,
including services provided by coin operated facilities operated
by the customer, and rustproofing, undercoating, and towing of
motor vehicles;

(iii) building and residential cleaning, maintenance, and
disinfecting and exterminating services;

(iv) detective, security, burglar, fire alarm, and armored
car services; but not including services performed within the
jurisdiction they serve by off-duty licensed peace officers as
defined in section 626.84, subdivision 1, or services provided
by a nonprofit organization for monitoring and electronic
surveillance of persons placed on in-home detention pursuant to
court order or under the direction of the Minnesota Department
of Corrections;

(v) pet grooming services;

(vi) lawn care, fertilizing, mowing, spraying and sprigging
services; garden planting and maintenance; tree, bush, and shrub
pruning, bracing, spraying, and surgery; indoor plant care;
tree, bush, shrub, and stump removal; and tree trimming for
public utility lines. Services performed under a construction
contract for the installation of shrubbery, plants, sod, trees,
bushes, and similar items are not taxable;

(vii) massages, except when provided by a licensed health
care facility or professional or upon written referral from a
licensed health care facility or professional for treatment of
illness, injury, or disease; and

(viii) the furnishing of lodging, board, and care services
for animals in kennels and other similar arrangements, but
excluding veterinary and horse boarding services.

In applying the provisions of this chapter, the terms
"tangible personal property" and "sales at retail" include
taxable services listed in clause (6), items (i) to (vi) and
(viii), and the provision of these taxable services, unless
specifically provided otherwise. Services performed by an
employee for an employer are not taxable. Services performed by
a partnership or association for another partnership or
association are not taxable if one of the entities owns or
controls more than 80 percent of the voting power of the equity
interest in the other entity. Services performed between
members of an affiliated group of corporations are not taxable.
For purposes of the preceding sentence, "affiliated group of
corporations" includes those entities that would be classified
as members of an affiliated group under United States Code,
title 26, section 1504, and that are eligible to file a
consolidated tax return for federal income tax purposes.

(h) A sale and a purchase includes the furnishing for a
consideration of tangible personal property or taxable services
by the United States or any of its agencies or
instrumentalities, or the state of Minnesota, its agencies,
instrumentalities, or political subdivisions.

(i) A sale and a purchase includes the furnishing for a
consideration of telecommunications services, including cable
television services and direct satellite services.
Telecommunications services are taxed to the extent allowed
under federal law.

(j) A sale and a purchase includes the furnishing for a
consideration of installation if the installation charges would
be subject to the sales tax if the installation were provided by
the seller of the item being installed.

(k) A sale and a purchase includes the rental of a vehicle
by a motor vehicle dealer to a customer when (1) the vehicle is
rented by the customer for a consideration, or (2) the motor
vehicle dealer is reimbursed pursuant to a service contract as
defined in section 65B.29, subdivision 1, clause (1).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 7.

Minnesota Statutes 2004, section 297A.61,
subdivision 4, is amended to read:

Subd. 4.

Retail sale.

(a) A "retail sale" means any
sale, lease, or rental for any purpose new text begin , new text end other than resale,
sublease, or subrent new text begin of items by the purchaser in the normal
course of business as defined in subdivision 21 new text end .

(b) A sale of property used by the owner only by leasing it
to others or by holding it in an effort to lease it, and put to
no use by the owner other than resale after the lease or effort
to lease, is a sale of property for resale.

(c) A sale of master computer software that is purchased
and used to make copies for sale or lease is a sale of property
for resale.

(d) A sale of building materials, supplies, and equipment
to owners, contractors, subcontractors, or builders for the
erection of buildings or the alteration, repair, or improvement
of real property is a retail sale in whatever quantity sold,
whether the sale is for purposes of resale in the form of real
property or otherwise.

(e) A sale of carpeting, linoleum, or similar floor
covering to a person who provides for installation of the floor
covering is a retail sale and not a sale for resale since a sale
of floor covering which includes installation is a contract for
the improvement of real property.

(f) A sale of shrubbery, plants, sod, trees, and similar
items to a person who provides for installation of the items is
a retail sale and not a sale for resale since a sale of
shrubbery, plants, sod, trees, and similar items that includes
installation is a contract for the improvement of real property.

(g) A sale of tangible personal property that is awarded as
prizes is a retail sale and is not considered a sale of property
for resale.

(h) A sale of tangible personal property utilized or
employed in the furnishing or providing of services under
subdivision 3, paragraph (g), clause (1), including, but not
limited to, property given as promotional items, is a retail
sale and is not considered a sale of property for resale.

(i) A sale of tangible personal property used in conducting
lawful gambling under chapter 349 or the state lottery under
chapter 349A, including, but not limited to, property given as
promotional items, is a retail sale and is not considered a sale
of property for resale.

(j) A sale of machines, equipment, or devices that are used
to furnish, provide, or dispense goods or services, including,
but not limited to, coin-operated devices, is a retail sale and
is not considered a sale of property for resale.

(k) In the case of a lease, a retail sale occurs when an
obligation to make a lease payment becomes due under the terms
of the agreement or the trade practices of the lessor.

(l) In the case of a conditional sales contract, a retail
sale occurs upon the transfer of title or possession of the
tangible personal property.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 8.

Minnesota Statutes 2004, section 297A.64,
subdivision 4, is amended to read:

Subd. 4.

Exemptions.

(a) The tax and the fee imposed by
this section do not apply to a lease or rental of (1) a vehicle
to be used by the lessee to provide a licensed taxi service; (2)
a hearse or limousine used in connection with a burial or
funeral service; or (3) a van designed or adapted primarily for
transporting property rather than passengers. new text begin The tax and the
fee imposed under this section do not apply when the lease or
rental of a vehicle is exempt from the tax imposed under section
297A.62, subdivision 1.
new text end

(b) The lessor may elect not to charge the fee imposed in
subdivision 2 if in the previous calendar year the lessor had no
more than 20 vehicles available for lease that would have been
subject to tax under this section, or no more than $50,000 in
gross receipts that would have been subject to tax under this
section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 9.

Minnesota Statutes 2004, section 297A.668,
subdivision 1, is amended to read:

Subdivision 1.

applicability.

The provisions of this
section apply regardless of the characterization of a product as
tangible personal property, a digital good, or a service; but do
not apply to telecommunications services deleted text begin , deleted text end or the sales of motor
vehicles deleted text begin , watercraft, aircraft, modular homes, manufactured
homes, or mobile homes deleted text end . These provisions only apply to
determine a seller's obligation to pay or collect and remit a
sales or use tax with respect to the seller's sale of a
product. These provisions do not affect the obligation of a
seller as purchaser to remit tax on the use of the product.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 10.

Minnesota Statutes 2004, section 297A.668,
subdivision 5, is amended to read:

Subd. 5.

Transportation equipment.

(a) The retail sale,
including lease or rental, of transportation equipment shall be
sourced the same as a retail sale in accordance with the
provisions of subdivision 2, notwithstanding the exclusion of
lease or rental in subdivision 2.

(b) "Transportation equipment" means any of the following:

(1) locomotives and railcars that are utilized for the
carriage of persons or property in interstate commerce; deleted text begin and/or
deleted text end

(2) trucks and truck-tractors with a gross vehicle weight
rating (GVWR) of 10,001 pounds or greater, trailers,
semitrailers, or passenger buses that are:

(i) registered through the international registration plan;
and

(ii) operated under authority of a carrier authorized and
certified by the United States Department of Transportation or
another federal authority to engage in the carriage of persons
or property in interstate commerce new text begin ;
new text end

new text begin (3) aircraft that are operated by air carriers authorized
and certificated by the United States Department of
Transportation or another federal or a foreign authority to
engage in the carriage of persons or property in interstate
commerce; or
new text end

new text begin (4) containers designed for use on and component parts
attached or secured on the transportation equipment described in
items (1) through (3) new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and
purchases made on or after January 1, 2004.
new text end

Sec. 11.

Minnesota Statutes 2004, section 297A.67,
subdivision 2, is amended to read:

Subd. 2.

Food and food ingredients.

new text begin Except as otherwise
provided in this subdivision, new text end food and food ingredients are
exempt. For purposes of this subdivision, "food" and "food
ingredients" mean substances, whether in liquid, concentrated,
solid, frozen, dried, or dehydrated form, that are sold for
ingestion or chewing by humans and are consumed for their taste
or nutritional value. Food and food ingredients exempt under
this subdivision do not include candy, soft drinks, food sold
through vending machines, new text begin dietary supplements, new text end and prepared
foods. Food and food ingredients do not include alcoholic
beverages deleted text begin , dietary supplements, deleted text end and tobacco. For purposes of
this subdivision, "alcoholic beverages" means beverages that are
suitable for human consumption and contain one-half of one
percent or more of alcohol by volume. For purposes of this
subdivision, "tobacco" means cigarettes, cigars, chewing or pipe
tobacco, or any other item that contains tobacco. For purposes
of this subdivision, "dietary supplements" means any product,
other than tobacco, intended to supplement the diet that:

(1) contains one or more of the following dietary
ingredients:

(i) a vitamin;

(ii) a mineral;

(iii) an herb or other botanical;

(iv) an amino acid;

(v) a dietary substance for use by humans to supplement the
diet by increasing the total dietary intake; and

(vi) a concentrate, metabolite, constituent, extract, or
combination of any ingredient described in items (i) to (v);

(2) is intended for ingestion in tablet, capsule, powder,
softgel, gelcap, or liquid form, or if not intended for
ingestion in such form, is not represented as conventional food
and is not represented for use as a sole item of a meal or of
the diet; and

(3) is required to be labeled as a dietary supplement,
identifiable by the supplement facts box found on the label and
as required pursuant to Code of Federal Regulations, title 21,
section 101.36.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales made
on or after the day following final enactment.
new text end

Sec. 12.

Minnesota Statutes 2004, section 297A.68,
subdivision 2, is amended to read:

Subd. 2.

Materials consumed in industrial production.

(a) Materials stored, used, or consumed in industrial production
of personal property intended to be sold ultimately at retail
are exempt, whether or not the item so used becomes an
ingredient or constituent part of the property produced.
Materials that qualify for this exemption include, but are not
limited to, the following:

(1) chemicals, including chemicals used for cleaning food
processing machinery and equipment;

(2) materials, including chemicals, fuels, and electricity
purchased by persons engaged in industrial production to treat
waste generated as a result of the production process;

(3) fuels, electricity, gas, and steam used or consumed in
the production process, except that electricity, gas, or steam
used for space heating, cooling, or lighting is exempt if (i) it
is in excess of the average climate control or lighting for the
production area, and (ii) it is necessary to produce that
particular product;

(4) petroleum products and lubricants;

(5) packaging materials, including returnable containers
used in packaging food and beverage products;

(6) accessory tools, equipment, and other items that are
separate detachable units with an ordinary useful life of less
than 12 months used in producing a direct effect upon the
product; and

(7) the following materials, tools, and equipment used in
metalcasting: crucibles, thermocouple protection sheaths and
tubes, stalk tubes, refractory materials, molten metal filters
and filter boxes, degassing lances, and base blocks.

(b) This exemption does not include:

(1) machinery, equipment, implements, tools, accessories,
appliances, contrivances and furniture and fixtures, except
those listed in paragraph (a), clause (6); and

(2) petroleum and special fuels used in producing or
generating power for propelling ready-mixed concrete trucks on
the public highways of this state.

(c) Industrial production includes, but is not limited to,
research, development, design or production of any tangible
personal property, manufacturing, processing (other than by
restaurants and consumers) of agricultural products (whether
vegetable or animal), commercial fishing, refining, smelting,
reducing, brewing, distilling, printing, mining, quarrying,
lumbering, generating electricity, the production of road
building materials, and the research, development, design, or
production of computer software. Industrial production does not
include painting, cleaning, repairing or similar processing of
property except as part of the original manufacturing process.
new text begin Industrial production does not include the furnishing of
services listed in section 297A.61, subdivision 3, paragraph
(g), clause (6), items (i) to (vi) and (viii).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 13.

Minnesota Statutes 2004, section 297A.68,
subdivision 5, is amended to read:

Subd. 5.

Capital equipment.

(a) Capital equipment is
exempt. The tax must be imposed and collected as if the rate
under section 297A.62, subdivision 1, applied, and then refunded
in the manner provided in section 297A.75.

"Capital equipment" means machinery and equipment purchased
or leased, and used in this state by the purchaser or lessee
primarily for manufacturing, fabricating, mining, or refining
tangible personal property to be sold ultimately at retail if
the machinery and equipment are essential to the integrated
production process of manufacturing, fabricating, mining, or
refining. Capital equipment also includes machinery and
equipment used new text begin primarily new text end to electronically transmit results
retrieved by a customer of an on-line computerized data
retrieval system.

(b) Capital equipment includes, but is not limited to:

(1) machinery and equipment used to operate, control, or
regulate the production equipment;

(2) machinery and equipment used for research and
development, design, quality control, and testing activities;

(3) environmental control devices that are used to maintain
conditions such as temperature, humidity, light, or air pressure
when those conditions are essential to and are part of the
production process;

(4) materials and supplies used to construct and install
machinery or equipment;

(5) repair and replacement parts, including accessories,
whether purchased as spare parts, repair parts, or as upgrades
or modifications to machinery or equipment;

(6) materials used for foundations that support machinery
or equipment;

(7) materials used to construct and install special purpose
buildings used in the production process;

(8) ready-mixed concrete equipment in which the ready-mixed
concrete is mixed as part of the delivery process regardless if
mounted on a chassis new text begin , repair parts for ready-mixed concrete
trucks, new text end and leases of ready-mixed concrete trucks; and

(9) machinery or equipment used for research, development,
design, or production of computer software.

(c) Capital equipment does not include the following:

(1) motor vehicles taxed under chapter 297B;

(2) machinery or equipment used to receive or store raw
materials;

(3) building materials, except for materials included in
paragraph (b), clauses (6) and (7);

(4) machinery or equipment used for nonproduction purposes,
including, but not limited to, the following: plant security,
fire prevention, first aid, and hospital stations; support
operations or administration; pollution control; and plant
cleaning, disposal of scrap and waste, plant communications,
space heating, cooling, lighting, or safety;

(5) farm machinery and aquaculture production equipment as
defined by section 297A.61, subdivisions 12 and 13;

(6) machinery or equipment purchased and installed by a
contractor as part of an improvement to real property; deleted text begin or
deleted text end

(7) new text begin machinery and equipment used by restaurants in the
furnishing, preparing, or serving of prepared foods as defined
in section 297A.61, subdivision 31;
new text end

new text begin (8) machinery and equipment used to furnish the services
listed in section 297A.61, subdivision 3, paragraph (g), clause
(6), items (i) to (vi) and (viii); or
new text end

new text begin (9) new text end any other item that is not essential to the integrated
process of manufacturing, fabricating, mining, or refining.

(d) For purposes of this subdivision:

(1) "Equipment" means independent devices or tools separate
from machinery but essential to an integrated production
process, including computers and computer software, used in
operating, controlling, or regulating machinery and equipment;
and any subunit or assembly comprising a component of any
machinery or accessory or attachment parts of machinery, such as
tools, dies, jigs, patterns, and molds.

(2) "Fabricating" means to make, build, create, produce, or
assemble components or property to work in a new or different
manner.

(3) "Integrated production process" means a process or
series of operations through which tangible personal property is
manufactured, fabricated, mined, or refined. For purposes of
this clause, (i) manufacturing begins with the removal of raw
materials from inventory and ends when the last process prior to
loading for shipment has been completed; (ii) fabricating begins
with the removal from storage or inventory of the property to be
assembled, processed, altered, or modified and ends with the
creation or production of the new or changed product; (iii)
mining begins with the removal of overburden from the site of
the ores, minerals, stone, peat deposit, or surface materials
and ends when the last process before stockpiling is completed;
and (iv) refining begins with the removal from inventory or
storage of a natural resource and ends with the conversion of
the item to its completed form.

(4) "Machinery" means mechanical, electronic, or electrical
devices, including computers and computer software, that are
purchased or constructed to be used for the activities set forth
in paragraph (a), beginning with the removal of raw materials
from inventory through completion of the product, including
packaging of the product.

(5) "Machinery and equipment used for pollution control"
means machinery and equipment used solely to eliminate, prevent,
or reduce pollution resulting from an activity described in
paragraph (a).

(6) "Manufacturing" means an operation or series of
operations where raw materials are changed in form, composition,
or condition by machinery and equipment and which results in the
production of a new article of tangible personal property. For
purposes of this subdivision, "manufacturing" includes the
generation of electricity or steam to be sold at retail.

(7) "Mining" means the extraction of minerals, ores, stone,
or peat.

(8) "On-line data retrieval system" means a system whose
cumulation of information is equally available and accessible to
all its customers.

(9) "Primarily" means machinery and equipment used 50
percent or more of the time in an activity described in
paragraph (a).

(10) "Refining" means the process of converting a natural
resource to an intermediate or finished product, including the
treatment of water to be sold at retail.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 14.

Minnesota Statutes 2004, section 297A.68,
subdivision 35, is amended to read:

Subd. 35.

Telecommunications equipment.

(a)
Telecommunications machinery and equipment purchased or leased
for use directly by a telecommunications service provider
primarily in the provision of telecommunications services that
are ultimately to be sold at retail are exempt, regardless of
whether purchased by the owner, a contractor, or a subcontractor.

(b) For purposes of this subdivision, "telecommunications
machinery and equipment" includes, but is not limited to:

(1) machinery, equipment, and fixtures utilized in
receiving, initiating, amplifying, processing, transmitting,
retransmitting, recording, switching, or monitoring
telecommunications services, such as computers, transformers,
amplifiers, routers, bridges, repeaters, multiplexers, and other
items performing comparable functions;

(2) machinery, equipment, and fixtures used in the
transportation of telecommunications services, radio
transmitters and receivers, satellite equipment, microwave
equipment, and other transporting media, but not wire, cable,
fiber, poles, or conduit;

(3) ancillary machinery, equipment, and fixtures that
regulate, control, protect, or enable the machinery in clauses
(1) and (2) to accomplish its intended function, such as
auxiliary power supply, test equipment, towers, heating,
ventilating, and air conditioning equipment necessary to the
operation of the telecommunications equipment; and software
necessary to the operation of the telecommunications equipment;
and

(4) repair and replacement parts, including accessories,
whether purchased as spare parts, repair parts, or as upgrades
or modifications to qualified machinery or equipment.

(c) For purposes of this subdivision, "telecommunications
services" means telecommunications services as defined in
section 297A.61, subdivision 24, deleted text begin paragraph deleted text end new text begin paragraphs new text end (a), deleted text begin only
deleted text end new text begin (c), and (d) new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 15.

Minnesota Statutes 2004, section 297A.68,
subdivision 39, is amended to read:

Subd. 39.

Preexisting bids or contracts.

(a) The sale of
tangible personal property or services is exempt from tax new text begin or a
tax rate increase new text end for a period of six months from the effective
date of the law change that results in the imposition of the tax
new text begin or the tax rate increase new text end under this chapter if:

(1) the act imposing the tax new text begin or increasing the tax rate
new text end does not have transitional effective date language for existing
construction contracts and construction bids; and

(2) the requirements of paragraph (b) are met.

(b) A sale is tax exempt under paragraph (a) if it meets
the requirements of either clause (1) or (2):

(1) For a construction contract:

(i) the goods or services sold must be used for the
performance of a bona fide written lump sum or fixed price
construction contract;

(ii) the contract must be entered into before the date the
goods or services become subject to the sales tax new text begin or the tax
rate was increased new text end ;

(iii) the contract must not provide for allocation of
future taxes; and

(iv) for each qualifying contract the contractor must give
the seller documentation of the contract on which an exemption
is to be claimed.

(2) For a new text begin construction new text end bid:

(i) the goods or services sold must be used pursuant to an
obligation of a bid or bids;

(ii) the bid or bids must be submitted and accepted before
the date the goods or services became subject to the sales
tax new text begin or the tax rate was increased new text end ;

(iii) the bid or bids must not be able to be withdrawn,
modified, or changed without forfeiting a bond; and

(iv) for each qualifying bid, the contractor must give the
seller documentation of the bid on which an exemption is to be
claimed.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 16.

Minnesota Statutes 2004, section 297A.99,
subdivision 4, is amended to read:

Subd. 4.

Tax base.

(a) The tax applies to sales taxable
under this chapter that occur within the political subdivision.

(b) Taxable new text begin goods or new text end services are subject to a political
subdivision's sales tax, if they are deleted text begin performed either:
deleted text end

deleted text begin (1) within the political subdivision, or
deleted text end

deleted text begin (2) partly within and partly without the political
subdivision and more of the service is performed within the
political subdivision, based on the cost of performance deleted text end new text begin sourced
to the political subdivision pursuant to section 297A.668 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales made
on or after January 1, 2004.
new text end

Sec. 17.

Minnesota Statutes 2004, section 297A.99,
subdivision 7, is amended to read:

Subd. 7.

Exemptions.

(a) All goods or services that are
otherwise exempt from taxation under this chapter are exempt
from a political subdivision's tax.

(b) The gross receipts from the sale of tangible personal
property that meets the deleted text begin requirement deleted text end new text begin requirements new text end of section
297A.68, deleted text begin subdivision deleted text end new text begin subdivisions 11, new text end 15, new text begin and 16 new text end are exempt,
except the qualification test applies based on the boundaries of
the political subdivision instead of the state of Minnesota.

(c) All mobile transportation equipment, and parts and
accessories attached to or to be attached to the equipment are
exempt, if purchased by a holder of a motor carrier direct pay
permit under section 297A.90.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 18.

Minnesota Statutes 2004, section 297A.99,
subdivision 9, is amended to read:

Subd. 9.

Enforcement; collection; and administration.

(a) The commissioner of revenue shall collect the taxes subject
to this section. The commissioner may collect the tax with the
state sales and use tax. All taxes under this section are
subject to the same penalties, interest, and enforcement
provisions as apply to the state sales and use tax.

(b) A request for a refund of state sales tax paid in
excess of the amount of tax legally due includes a request for a
refund of the political subdivision taxes paid on the goods or
services. The commissioner shall refund to the taxpayer the
full amount of the political subdivision taxes paid on exempt
sales or use.

new text begin (c) A political subdivision shall incur a legal debt to the
state for refunds of local sales taxes made by the commissioner
after a tax has terminated when the amount of the refunds
exceeds the amount of local sales taxes collected for but not
remitted to the political subdivision. The commissioner of
revenue shall deduct the amount of the debt from the next
payment scheduled to be made to the political subdivision under
section 273.1384, 273.1398, or sections 477A.011 to 477A.014.
The commissioner shall deposit the money in the state treasury
and credit it to the general fund.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for all refunds
made on or after the day following final enactment.
new text end

Sec. 19. new text begin REPEALER.
new text end

new text begin Minnesota Rules, parts 8130.0110, subpart 4; 8130.0200,
subparts 5 and 6; 8130.0400, subpart 9; 8130.1200, subparts 5
and 6; 8130.2900; 8130.3100, subpart 1; 8130.4000, subparts 1
and 2; 8130.4200, subpart 1; 8130.4400, subpart 3; 8130.5200;
8130.5600, subpart 3; 8130.5800, subpart 5; 8130.7300, subpart
5; and 8130.8800, subpart 4, are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

ARTICLE 4

SPECIAL TAXES

Section 1.

Minnesota Statutes 2004, section 287.04, is
amended to read:

287.04 EXEMPTIONS.

The tax imposed by section 287.035 does not apply to:

(a) A decree of marriage dissolution or an instrument made
pursuant to it.

(b) A mortgage given to correct a misdescription of the
mortgaged property.

(c) A mortgage or other instrument that adds additional
security for the same debt for which mortgage registry tax has
been paid.

(d) A contract for the conveyance of any interest in real
property, including a contract for deed.

(e) A mortgage secured by real property subject to the
minerals production tax of sections 298.24 to 298.28.

(f) The principal amount of a mortgage loan made under a
low and moderate income or other affordable housing program, if
the mortgagee is a federal, state, or local government agency.

(g) Mortgages granted by fraternal benefit societies
subject to section 64B.24.

(h) A mortgage amendment or extension, as defined in
section 287.01.

(i) An agricultural mortgage if the proceeds of the loan
secured by the mortgage are used to acquire or improve real
property classified under section 273.13, subdivision 23,
paragraph (a), or (b), clause (1), (2), or (3).

new text begin (j) A mortgage on an armory building as set forth in
section 193.147.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2004, section 295.50, is
amended by adding a subdivision to read:

new text begin Subd. 1a. new text end

new text begin Blood components. new text end

new text begin "Blood components" means the
parts of the blood that are separated from blood by physical or
mechanical means and are intended for transfusion. Blood
components do not include blood derivatives.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for gross
revenues received after December 31, 2004.
new text end

Sec. 3.

Minnesota Statutes 2004, section 295.50,
subdivision 3, is amended to read:

Subd. 3.

Gross revenues.

"Gross revenues" are total
amounts received in money or otherwise by:

(1) a hospital for patient services;

(2) a surgical center for patient services;

(3) a health care provider, other than a staff model health
carrier, for patient services;

(4) a wholesale drug distributor for sale or distribution
of legend drugs that are delivered in Minnesota by the wholesale
drug distributor, by common carrier, or by mail, unless the
legend drugs are delivered to another wholesale drug distributor
who sells legend drugs exclusively at wholesale. Legend drugs
do not include nutritional products as defined in Minnesota
Rules, part 9505.0325 new text begin , and blood and blood components new text end ; and

(5) a staff model health plan company as gross premiums for
enrollees, co-payments, deductibles, coinsurance, and fees for
patient services.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for gross
revenues received after December 31, 2004.
new text end

Sec. 4.

Minnesota Statutes 2004, section 295.53,
subdivision 1, is amended to read:

Subdivision 1.

Exemptions.

(a) The following payments
are excluded from the gross revenues subject to the hospital,
surgical center, or health care provider taxes under sections
295.50 to 295.59:

(1) payments received for services provided under the
Medicare program, including payments received from the
government, and organizations governed by sections 1833 and 1876
of title XVIII of the federal Social Security Act, United States
Code, title 42, section 1395, and enrollee deductibles,
coinsurance, and co-payments, whether paid by the Medicare
enrollee or by a Medicare supplemental coverage as defined in
section 62A.011, subdivision 3, clause (10), or by Medicaid
payments under title XIX of the federal Social Security Act.
Payments for services not covered by Medicare are taxable;

(2) payments received for home health care services;

(3) payments received from hospitals or surgical centers
for goods and services on which liability for tax is imposed
under section 295.52 or the source of funds for the payment is
exempt under clause (1), (7), (10), or (14);

(4) payments received from health care providers for goods
and services on which liability for tax is imposed under this
chapter or the source of funds for the payment is exempt under
clause (1), (7), (10), or (14);

(5) amounts paid for legend drugs, other than nutritional
products new text begin and blood and blood components new text end , to a wholesale drug
distributor who is subject to tax under section 295.52,
subdivision 3, reduced by reimbursements received for legend
drugs otherwise exempt under this chapter;

(6) payments received by a health care provider or the
wholly owned subsidiary of a health care provider for care
provided outside Minnesota;

(7) payments received from the chemical dependency fund
under chapter 254B;

(8) payments received in the nature of charitable donations
that are not designated for providing patient services to a
specific individual or group;

(9) payments received for providing patient services
incurred through a formal program of health care research
conducted in conformity with federal regulations governing
research on human subjects. Payments received from patients or
from other persons paying on behalf of the patients are subject
to tax;

(10) payments received from any governmental agency for
services benefiting the public, not including payments made by
the government in its capacity as an employer or insurer or
payments made by the government for services provided under
general assistance medical care, the MinnesotaCare program, or
the medical assistance program governed by title XIX of the
federal Social Security Act, United States Code, title 42,
sections 1396 to 1396v;

(11) government payments received by the commissioner of
human services for state-operated services;

(12) payments received by a health care provider for
hearing aids and related equipment or prescription eyewear
delivered outside of Minnesota;

(13) payments received by an educational institution from
student tuition, student activity fees, health care service
fees, government appropriations, donations, or grants, and for
services identified in and provided under an individualized
education plan as defined in section 256B.0625 or Code of
Federal Regulations, chapter 34, section 300.340(a). Fee for
service payments and payments for extended coverage are taxable;
and

(14) payments received under the federal Employees Health
Benefits Act, United States Code, title 5, section 8909(f), as
amended by the Omnibus Reconciliation Act of 1990. new text begin Enrollee
deductibles, coinsurance, and co-payments are subject to tax.
new text end

(b) Payments received by wholesale drug distributors for
legend drugs sold directly to veterinarians or veterinary bulk
purchasing organizations are excluded from the gross revenues
subject to the wholesale drug distributor tax under sections
295.50 to 295.59.

new text begin EFFECTIVE DATE. new text end

new text begin The change made to paragraph (a), clause
(5), of this section is effective for amounts paid for blood and
blood components after December 31, 2004. The change made to
paragraph (a), clause (14), of this section is effective for
enrollee deductibles, coinsurance, and co-payments received
under the federal Employees Health Benefits Act on or after the
day following final enactment.
new text end

Sec. 5.

Minnesota Statutes 2004, section 295.60,
subdivision 3, is amended to read:

Subd. 3.

Payment.

(a) Each furrier shall make estimated
payments of the taxes for the calendar year in quarterly
installments to the commissioner by April 15, July 15, October
15, and January 15 of the following calendar year.

(b) Estimated tax payments are not required if:

(1) the tax for the current calendar year is less than
$500; or

(2) the tax for the previous calendar year is less than
$500, if the taxpayer had a tax liability and was doing business
the entire year.

(c) Underpayment of estimated installments bear interest at
the rate specified in section 270.75, from the due date of the
payment until paid or until the due date of the annual return,
whichever comes first. An underpayment of an estimated
installment is the difference between the amount paid and the
lesser of (1) deleted text begin 90 percent of one-quarter of the tax for the
calendar year deleted text end new text begin the tax for the actual gross revenues received
during the quarter new text end , or (2) one-quarter of the total tax for the
previous calendar year if the taxpayer had a tax liability and
was doing business the entire year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for gross
revenues received after December 31, 2004.
new text end

Sec. 6.

Minnesota Statutes 2004, section 296A.09, is
amended by adding a subdivision to read:

new text begin Subd. 6. new text end

new text begin Exemptions. new text end

new text begin The provisions of subdivisions 1
and 2 do not apply to aviation gasoline or jet fuel purchased by
an ambulance service licensed under chapter 144E.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for purchases
made on or after July 1, 2005.
new text end

Sec. 7.

Minnesota Statutes 2004, section 296A.22, is
amended by adding a subdivision to read:

new text begin Subd. 9. new text end

new text begin Abatement of penalty. new text end

new text begin (a) The commissioner may
by written order abate any penalty imposed under this section,
if in the commissioner's opinion there is reasonable cause to do
so.
new text end

new text begin (b) A request for abatement of penalty must be filed with
the commissioner within 60 days of the date the notice stating
that a penalty has been imposed was mailed to the taxpayer's
last known address.
new text end

new text begin (c) If the commissioner issues an order denying a request
for abatement of penalty, the taxpayer may file an
administrative appeal as provided in section 296A.25 or appeal
to Tax Court as provided in section 271.06. If the commissioner
does not issue an order on the abatement request within 60 days
from the date the request is received, the taxpayer may appeal
to Tax Court as provided in section 271.06.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for penalties
imposed on or after the day following final enactment.
new text end

Sec. 8.

Minnesota Statutes 2004, section 297E.01,
subdivision 5, is amended to read:

Subd. 5.

Distributor.

"Distributor" means a distributor
as defined in section 349.12, subdivision 11, or a person new text begin or
linked bingo game provider new text end who markets, sells, or provides
gambling product to a person or entity for resale or use at the
retail level.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 9.

Minnesota Statutes 2004, section 297E.01,
subdivision 7, is amended to read:

Subd. 7.

Gambling product.

"Gambling product" means
bingo new text begin hard new text end cards, new text begin bingo new text end paper deleted text begin , or deleted text end sheets new text begin , or linked bingo paper
sheets new text end ; pull-tabs; tipboards; paddletickets and paddleticket
cards; raffle tickets; or any other ticket, card, board,
placard, device, or token that represents a chance, for which
consideration is paid, to win a prize.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 10.

Minnesota Statutes 2004, section 297E.01, is
amended by adding a subdivision to read:

new text begin Subd. 9a. new text end

new text begin Linked bingo game. new text end

new text begin "Linked bingo game" means a
bingo game played at two or more locations where licensed
organizations are authorized to conduct bingo, when there is a
common prize pool and a common selection of numbers or symbols
conducted at one location, and when the results of the selection
are transmitted to all participating locations by satellite,
telephone, or other means by a linked bingo game provider.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 11.

Minnesota Statutes 2004, section 297E.01, is
amended by adding a subdivision to read:

new text begin Subd. 9b. new text end

new text begin Linked bingo game provider. new text end

new text begin "Linked bingo game
provider" means any person who provides the means to link bingo
prizes in a linked bingo game, who provides linked bingo paper
sheets to the participating organizations, who provides linked
bingo prize management, and who provides the linked bingo game
system.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 12.

Minnesota Statutes 2004, section 297E.06,
subdivision 2, is amended to read:

Subd. 2.

Business records.

An organization shall
maintain records supporting the gambling activity reported to
the commissioner. Records include, but are not limited to, the
following items:

(1) all winning and unsold tickets, cards, or stubs for
pull-tab, tipboard, paddlewheel, and raffle games;

(2) all reports and statements, including checker's
records, for each bingo occasion;

(3) all cash journals and ledgers, deposit slips, register
tapes, and bank statements supporting gambling activity
receipts;

(4) all invoices that represent purchases of gambling
product;

(5) all canceled checks new text begin or copies of substitute checks as
defined in Public Law 108-100, section 3 new text end , check recorders,
journals and ledgers, vouchers, invoices, bank statements, and
other documents supporting gambling activity expenditures; and

(6) all organizational meeting minutes.

All records required to be kept by this section must be
preserved by the organization for at least 3-1/2 years and may
be inspected by the commissioner of revenue at any reasonable
time without notice or a search warrant.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2005.
new text end

Sec. 13.

Minnesota Statutes 2004, section 297E.07, is
amended to read:

297E.07 INSPECTION RIGHTS.

At any reasonable time, without notice and without a search
warrant, the commissioner may enter a place of business of a
manufacturer, distributor, deleted text begin or deleted text end organization new text begin , or linked bingo game
provider new text end ; any site from which pull-tabs or tipboards or other
gambling equipment or gambling product are being manufactured,
stored, or sold; or any site at which lawful gambling is being
conducted, and inspect the premises, books, records, and other
documents required to be kept under this chapter to determine
whether or not this chapter is being fully complied with. If
the commissioner is denied free access to or is hindered or
interfered with in making an inspection of the place of
business, books, or records, the permit of the distributor may
be revoked by the commissioner, and the license of the
manufacturer, the distributor, deleted text begin or deleted text end the organization new text begin , or linked
bingo game provider new text end may be revoked by the board.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 14.

Minnesota Statutes 2004, section 297F.08,
subdivision 12, is amended to read:

Subd. 12.

Cigarettes in interstate commerce.

(a) A
person may not transport or cause to be transported from this
state cigarettes for sale in another state without first
affixing to the cigarettes the stamp required by the state in
which the cigarettes are to be sold or paying any other excise
tax on the cigarettes imposed by the state in which the
cigarettes are to be sold.

(b) A person may not affix to cigarettes the stamp required
by another state or pay any other excise tax on the cigarettes
imposed by another state if the other state prohibits stamps
from being affixed to the cigarettes, prohibits the payment of
any other excise tax on the cigarettes, or prohibits the sale of
the cigarettes.

(c) Not later than 15 days after the end of each calendar
quarter, a person who transports or causes to be transported
from this state cigarettes for sale in another state shall
submit to the commissioner a report identifying the quantity and
style of each brand of the cigarettes transported or caused to
be transported in the preceding calendar quarter, and the name
and address of each recipient of the cigarettes. new text begin This reporting
requirement only applies to cigarettes manufactured by companies
that are not original or subsequent participating manufacturers
in the Master Settlement Agreement with other states.
new text end

(d) For purposes of this section, "person" has the meaning
given in section 297F.01, subdivision 12. Person does not
include any common or contract carrier, or public warehouse that
is not owned, in whole or in part, directly or indirectly by
such person, and does not include a manufacturer that deleted text begin has
entered into deleted text end new text begin is an original or subsequent participating
manufacturer in new text end the Master Settlement Agreement with other
states.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 15.

Minnesota Statutes 2004, section 297F.08, is
amended by adding a subdivision to read:

new text begin Subd. 12. new text end

new text begin Bond. new text end

new text begin The commissioner may require the
furnishing of a corporate surety bond or a certified check in an
amount suitable to guarantee payment of the tax stamps purchased
by a distributor. The bond or certified check may be required
when the commissioner determines that a distributor is (1)
delinquent in the filing of any return required under this
chapter, or (2) delinquent in the payment of any uncontested tax
liability under this chapter. The distributor shall furnish the
bond or certified check for a period of two years, after which,
if the distributor has not been delinquent in the filing of any
returns required under this chapter, or delinquent in the paying
of any tax under this chapter, a bond or certified check is no
longer required. The commissioner at any time may apply the
bond or certified check to any unpaid taxes or fees, including
interest and penalties, owed to the department by the
distributor.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 16.

Minnesota Statutes 2004, section 297F.09,
subdivision 1, is amended to read:

Subdivision 1.

Monthly return; cigarette distributor.

On
or before the 18th day of each calendar month, a distributor
with a place of business in this state shall file a return with
the commissioner showing the quantity of cigarettes manufactured
or brought in from outside the state or purchased during the
preceding calendar month and the quantity of cigarettes sold or
otherwise disposed of in this state and outside this state
during that month. A licensed distributor outside this state
shall in like manner file a return showing the quantity of
cigarettes shipped or transported into this state during the
preceding calendar month. Returns must be made in the form and
manner prescribed by the commissioner and must contain any other
information required by the commissioner. The return must be
accompanied by a remittance for the full unpaid tax liability
shown by it. deleted text begin The return for the May liability and 85 percent of
the estimated June liability is due on the date payment of the
tax is due. deleted text end new text begin For distributors subject to the accelerated tax
payment requirements in subdivision 10, the return for the May
liability is due two business days before June 30th of the year
and the return for the June liability is due on or before August
18th of the year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 17.

Minnesota Statutes 2004, section 297F.09,
subdivision 2, is amended to read:

Subd. 2.

Monthly return; tobacco products distributor.

On or before the 18th day of each calendar month, a distributor
with a place of business in this state shall file a return with
the commissioner showing the quantity and wholesale sales price
of each tobacco product:

(1) brought, or caused to be brought, into this state for
sale; and

(2) made, manufactured, or fabricated in this state for
sale in this state, during the preceding calendar month.

Every licensed distributor outside this state shall in like
manner file a return showing the quantity and wholesale sales
price of each tobacco product shipped or transported to
retailers in this state to be sold by those retailers, during
the preceding calendar month. Returns must be made in the form
and manner prescribed by the commissioner and must contain any
other information required by the commissioner. The return must
be accompanied by a remittance for the full tax liability
shown. deleted text begin The return for the May liability and 85 percent of the
estimated June liability is due on the date payment of the tax
is due. deleted text end new text begin For distributors subject to the accelerated tax payment
requirements in subdivision 10, the return for the May liability
is due two business days before June 30th of the year and the
return for the June liability is due on or before August 18th of
the year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 18.

Minnesota Statutes 2004, section 297G.09, is
amended by adding a subdivision to read:

new text begin Subd. 9. new text end

new text begin Quarterly and annual payments and returns. new text end

new text begin (a)
If a manufacturer, wholesaler, brewer, or importer has an
average liquor tax liability equal to or less than $500 per
month in any quarter of a calendar year, and has substantially
complied with the state tax laws during the preceding four
calendar quarters, the manufacturer, wholesaler, brewer, or
importer may request authorization to file and pay the taxes
quarterly in subsequent calendar quarters. The authorization
remains in effect during the period in which the manufacturer's,
wholesaler's, brewer's, or importer's quarterly returns reflect
liquor tax liabilities of less than $1,500 and there is
continued compliance with state tax laws.
new text end

new text begin (b) If a manufacturer, wholesaler, brewer, or importer has
an average liquor tax liability equal to or less than $100 per
month during a calendar year, and has substantially complied
with the state tax laws during that period, the manufacturer,
wholesaler, brewer, or importer may request authorization to
file and pay the taxes annually in subsequent years. The
authorization remains in effect during the period in which the
manufacturer's, wholesaler's, brewer's, or importer's annual
returns reflect liquor tax liabilities of less than $1,200 and
there is continued compliance with state tax laws.
new text end

new text begin (c) The commissioner may also grant quarterly or annual
filing and payment authorizations to manufacturers, wholesalers,
brewers, or importers if the commissioner concludes that the
manufacturer's, wholesaler's, brewer's, or importer's future tax
liabilities will be less than the monthly totals identified in
paragraphs (a) and (b). An authorization granted under this
paragraph is subject to the same conditions as an authorization
granted under paragraphs (a) and (b).
new text end

new text begin (d) The annual tax return and payments must be filed and
paid on or before the 18th day of January following the calendar
year. The quarterly returns and payments must be filed and paid
on or before April 18 for the quarter ending March 31, on or
before July 18 for the quarter ending June 30, on or before
October 18 for the quarter ending September 30, and on or before
January 18 for the quarter ending December 31.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax returns
and payments due on or after January 1, 2006.
new text end

Sec. 19.

Minnesota Statutes 2004, section 297I.01, is
amended by adding a subdivision to read:

new text begin Subd. 13a. new text end

new text begin Reinsurance. new text end

new text begin "Reinsurance" is insurance
whereby an insurance company, for a consideration, agrees to
indemnify another insurance company against all or part of the
loss which the latter may sustain under the policy or policies
which it has issued.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 20.

Minnesota Statutes 2004, section 297I.05,
subdivision 5, is amended to read:

Subd. 5.

Health maintenance organizations, nonprofit
health service plan corporations, and community integrated
service networks.

(a) deleted text begin Health maintenance organizations,
community integrated service networks, and nonprofit health care
service plan corporations are exempt from the tax imposed under
this section for premiums received in calendar years 2001 to
2003.
deleted text end

deleted text begin (b) For calendar years after 2003, deleted text end A tax is imposed on
health maintenance organizations, community integrated service
networks, and nonprofit health care service plan corporations.
The rate of tax is equal to one percent of gross premiums less
return premiums new text begin on all direct business new text end received new text begin by the
organization, network, or corporation or its agents in
Minnesota, in cash or otherwise, new text end in the calendar year.

deleted text begin (c) In approving the premium rates as required in sections
62L.08, subdivision 8, and 62A.65, subdivision 3, the
commissioners of health and commerce shall ensure that any
exemption from tax as described in paragraph (a) is reflected in
the premium rate.
deleted text end

deleted text begin (d) deleted text end new text begin (b) new text end The commissioner shall deposit all revenues,
including penalties and interest, collected under this chapter
from health maintenance organizations, community integrated
service networks, and nonprofit health service plan corporations
in the health care access fund. Refunds of overpayments of tax
imposed by this subdivision must be paid from the health care
access fund. There is annually appropriated from the health
care access fund to the commissioner the amount necessary to
make any refunds of the tax imposed under this subdivision.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2005.
new text end

Sec. 21. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2004, section 297E.12, subdivision 10,
is repealed effective the day following final enactment.
new text end

ARTICLE 5

ELECTRONIC PAYMENTS

Section 1.

new text begin [270.772] MINIMUM DOLLAR REQUIREMENT FOR
ELECTRONIC PAYMENT OF TAXES AND FEES.
new text end

new text begin (a) Except as provided in paragraph (b), payments of every
tax, fee, or surcharge administered by and payable to the
commissioner in a calendar year, including deposits and
estimated payments, must be remitted electronically if the
liability of the taxpayer or payer for the tax, fee, or
surcharge is:
new text end

new text begin (1) $20,000 or more in the preceding fiscal year ending
June 30, 2005; and
new text end

new text begin (2) $10,000 or more in the preceding fiscal year ending
June 30, 2006, and preceding fiscal years thereafter.
new text end

new text begin (b) This section does not apply to individual income,
estate, fiduciary, and airflight property taxes, and it does not
apply to any law requiring all payments for a specific type of
tax, fee, or surcharge, or from a specific group of taxpayers or
payers, to be made electronically regardless of dollar amount.
new text end

Sec. 2.

Minnesota Statutes 2004, section 289A.20,
subdivision 2, is amended to read:

Subd. 2.

Withholding from wages, entertainer withholding,
withholding from payments to out-of-state contractors, and
withholding by partnerships and small business corporations.

(a) A tax required to be deducted and withheld during the
quarterly period must be paid on or before the last day of the
month following the close of the quarterly period, unless an
earlier time for payment is provided. A tax required to be
deducted and withheld from compensation of an entertainer and
from a payment to an out-of-state contractor must be paid on or
before the date the return for such tax must be filed under
section 289A.18, subdivision 2. Taxes required to be deducted
and withheld by partnerships and S corporations must be paid on
or before the date the return must be filed under section
289A.18, subdivision 2.

(b) An employer who, during the previous quarter, withheld
more than $1,500 of tax under section 290.92, subdivision 2a or
3, or 290.923, subdivision 2, must deposit tax withheld under
those sections with the commissioner within the time allowed to
deposit the employer's federal withheld employment taxes under
Code of Federal Regulations, title 26, section 31.6302-1, as
amended through December 31, 2001, without regard to the safe
harbor or de minimis rules in subparagraph (f) or the one-day
rule in subsection (c), clause (3). Taxpayers must submit a
copy of their federal notice of deposit status to the
commissioner upon request by the commissioner.

(c) The commissioner may prescribe by rule other return
periods or deposit requirements. In prescribing the reporting
period, the commissioner may classify payors according to the
amount of their tax liability and may adopt an appropriate
reporting period for the class that the commissioner judges to
be consistent with efficient tax collection. In no event will
the duration of the reporting period be more than one year.

(d) If less than the correct amount of tax is paid to the
commissioner, proper adjustments with respect to both the tax
and the amount to be deducted must be made, without interest, in
the manner and at the times the commissioner prescribes. If the
underpayment cannot be adjusted, the amount of the underpayment
will be assessed and collected in the manner and at the times
the commissioner prescribes.

(e) deleted text begin If the aggregate amount of the tax withheld during a
fiscal year ending June 30 under section 290.92, subdivision 2a
or 3, is equal to or exceeds the amounts established for
remitting federal withheld taxes pursuant to the regulations
promulgated under section 6302(h) of the Internal Revenue Code,
the employer must remit each required deposit for wages paid in
the subsequent calendar year by electronic means.
deleted text end

deleted text begin (f) deleted text end A third-party bulk filer as defined in section 290.92,
subdivision 30, paragraph (a), clause (2), who remits
withholding deposits must remit all deposits by electronic means
deleted text begin as provided in paragraph (e) deleted text end , regardless of the aggregate amount
of tax withheld during a fiscal year for all of the employers.

Sec. 3.

Minnesota Statutes 2004, section 289A.20,
subdivision 4, is amended to read:

Subd. 4.

Sales and use tax.

(a) The taxes imposed by
chapter 297A are due and payable to the commissioner monthly on
or before the 20th day of the month following the month in which
the taxable event occurred, or following another reporting
period as the commissioner prescribes or as allowed under
section 289A.18, subdivision 4, paragraph (f) or (g), except
that use taxes due on an annual use tax return as provided under
section 289A.11, subdivision 1, are payable by April 15
following the close of the calendar year.

(b) A vendor having a liability of $120,000 or more during
a fiscal year ending June 30 must remit the June liability for
the next year in the following manner:

(1) Two business days before June 30 of the year, the
vendor must remit 85 percent of the estimated June liability to
the commissioner.

(2) On or before August 20 of the year, the vendor must pay
any additional amount of tax not remitted in June.

deleted text begin (c) A vendor having a liability of $120,000 or more during
a fiscal year ending June 30 must remit all liabilities on
returns due for periods beginning in the subsequent calendar
year by electronic means on or before the 20th day of the month
following the month in which the taxable event occurred, or on
or before the 20th day of the month following the month in which
the sale is reported under section 289A.18, subdivision 4,
except for 85 percent of the estimated June liability, which is
due two business days before June 30. The remaining amount of
the June liability is due on August 20.
deleted text end

Sec. 4.

Minnesota Statutes 2004, section 297E.02,
subdivision 4, is amended to read:

Subd. 4.

Pull-tab and tipboard tax.

(a) A tax is imposed
on the sale of each deal of pull-tabs and tipboards sold by a
distributor. The rate of the tax is 1.7 percent of the ideal
gross of the pull-tab or tipboard deal. The sales tax imposed
by chapter 297A on the sale of the pull-tabs and tipboards by
the distributor is imposed on the retail sales price less the
tax imposed by this subdivision. The retail sale of pull-tabs
or tipboards by the organization is exempt from taxes imposed by
chapter 297A and is exempt from all local taxes and license fees
except a fee authorized under section 349.16, subdivision 8.

(b) The liability for the tax imposed by this section is
incurred when the pull-tabs and tipboards are delivered by the
distributor to the customer or to a common or contract carrier
for delivery to the customer, or when received by the customer's
authorized representative at the distributor's place of
business, regardless of the distributor's method of accounting
or the terms of the sale.

The tax imposed by this subdivision is imposed on all sales
of pull-tabs and tipboards, except the following:

(1) sales to the governing body of an Indian tribal
organization for use on an Indian reservation;

(2) sales to distributors licensed under the laws of
another state or of a province of Canada, as long as all
statutory and regulatory requirements are met in the other state
or province;

(3) sales of promotional tickets as defined in section
349.12; and

(4) pull-tabs and tipboards sold to an organization that
sells pull-tabs and tipboards under the exemption from licensing
in section 349.166, subdivision 2. A distributor shall require
an organization conducting exempt gambling to show proof of its
exempt status before making a tax-exempt sale of pull-tabs or
tipboards to the organization. A distributor shall identify, on
all reports submitted to the commissioner, all sales of
pull-tabs and tipboards that are exempt from tax under this
subdivision.

(c) deleted text begin A distributor having a liability of $120,000 or more
during a fiscal year ending June 30 must remit all liabilities
in the subsequent calendar year by electronic means.
deleted text end

deleted text begin (d) deleted text end Any customer who purchases deals of pull-tabs or
tipboards from a distributor may file an annual claim for a
refund or credit of taxes paid pursuant to this subdivision for
unsold pull-tab and tipboard tickets. The claim must be filed
with the commissioner on a form prescribed by the commissioner
by March 20 of the year following the calendar year for which
the refund is claimed. The refund must be filed as part of the
customer's February monthly return. The refund or credit is
equal to 1.7 percent of the face value of the unsold pull-tab or
tipboard tickets, provided that the refund or credit will be
1.75 percent of the face value of the unsold pull-tab or
tipboard tickets for claims for a refund or credit of taxes
filed on the February 2001 monthly return. The refund claimed
will be applied as a credit against tax owing under this chapter
on the February monthly return. If the refund claimed exceeds
the tax owing on the February monthly return, that amount will
be refunded. The amount refunded will bear interest pursuant to
section 270.76 from 90 days after the claim is filed.

Sec. 5.

Minnesota Statutes 2004, section 473.843,
subdivision 3, is amended to read:

Subd. 3.

Payment of fee.

On or before the 20th day of
each month each operator shall pay the fee due under this
section for the previous month, using a form provided by the
commissioner of revenue.

deleted text begin An operator having a fee of $120,000 or more during a
fiscal year ending June 30 must pay all fees in the subsequent
calendar year by electronic means.
deleted text end

Sec. 6. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2004, sections 289A.26, subdivision 2a;
289A.60, subdivision 21; 295.55, subdivision 4; 295.60,
subdivision 4; 297F.09, subdivision 7; 297G.09, subdivision 6;
and 297I.35, subdivision 2, are repealed.
new text end

Sec. 7. new text begin EFFECTIVE DATE.
new text end

new text begin This article is effective for payments due in calendar year
2006, and in calendar years thereafter, based upon liabilities
incurred in the fiscal year ending June 30, 2005, and in fiscal
years thereafter.
new text end

ARTICLE 6

MISCELLANEOUS

Section 1.

Minnesota Statutes 2004, section 16D.10, is
amended to read:

16D.10 CASE REVIEWER.

new text begin Subdivision 1. new text end

new text begin Duties. new text end

The commissioner shall make a
case reviewer available to debtors. The reviewer must be
available to answer a debtor's questions concerning the
collection process and to review the collection activity taken.
If the reviewer reasonably believes that the particular action
being taken is unreasonable or unfair, the reviewer may make
recommendations to the commissioner in regard to the collection
action.

new text begin Subd. 2. new text end

new text begin Authority to issue debtor assistance order. new text end

new text begin On
application filed by a debtor with the case reviewer, in the
form, manner, and in the time prescribed by the commissioner,
and after thorough investigation, the case reviewer may issue a
debtor assistance order if, in the determination of the case
reviewer, the manner in which the state debt collection laws are
being administered is creating or will create an unjust and
inequitable result for the debtor. Debtor assistance orders are
governed by the provisions relating to taxpayer assistance
orders under section 270.273.
new text end

new text begin Subd. 3. new text end

new text begin Transfer of duties to taxpayer rights advocate.
new text end

new text begin All duties and authority of the case reviewer under subdivisions
1 and 2 are transferred to the taxpayer rights advocate.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2004, section 270.02,
subdivision 3, is amended to read:

Subd. 3.

Powers, organization, assistants.

Subject to
the provisions of this chapter and other applicable laws the
commissioner shall have power to organize the department with
such divisions and other agencies as the commissioner deems
necessary and to appoint one deputy commissioner, a department
secretary, directors of divisions, and such other officers,
employees, and agents as the commissioner may deem necessary to
discharge the functions of the department, define the duties of
such officers, employees, and agents, and delegate to them any
of the commissioner's powers or duties, subject to the
commissioner's control and under such conditions as the
commissioner may prescribe. Appointments to exercise delegated
power to sign documents which require the signature of the
commissioner or a delegate by law shall be by written order
filed with the secretary of state. new text begin The delegations of authority
granted by the commissioner remain in effect until revoked by
the commissioner or a successor commissioner.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2004, section 270.65, is
amended to read:

270.65 DATE OF ASSESSMENT; DEFINITION.

For purposes of taxes administered by the commissioner, the
term "date of assessment" means the date a liability reported on
a return was entered into the records of the commissioner or the
date a return should have been filed, whichever is later; or, in
the case of taxes determined by the commissioner, "date of
assessment" means the date of the order assessing taxes or date
of the return made by the commissioner; or, in the case of an
amended return filed by the taxpayer, the assessment date is the
date additional liability reported on the return, if any, was
entered into the records of the commissioner; new text begin or, in the case of
a consent agreement signed by the taxpayer under section 270.67,
subdivision 3, the assessment date is the notice date shown on
the agreement; new text end or, in the case of a check from a taxpayer that
is dishonored and results in an erroneous refund being given to
the taxpayer, remittance of the check is deemed to be an
assessment and the "date of assessment" is the date the check
was received by the commissioner.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 4.

Minnesota Statutes 2004, section 270.67,
subdivision 4, is amended to read:

Subd. 4.

Offer-in-compromise and installment payment
program.

(a) In implementing the authority provided in
subdivision 2 or in sections 8.30 and 16D.15 to accept offers of
installment payments or offers-in-compromise of tax liabilities,
the commissioner of revenue shall prescribe guidelines for
employees of the Department of Revenue to determine whether an
offer-in-compromise or an offer to make installment payments is
adequate and should be accepted to resolve a dispute. In
prescribing the guidelines, the commissioner shall develop and
publish schedules of national and local allowances designed to
provide that taxpayers entering into a compromise or payment
agreement have an adequate means to provide for basic living
expenses. The guidelines must provide that the taxpayer's
ownership interest in a motor vehicle, to the extent of the
value allowed in section 550.37, will not be considered as an
asset; in the case of an offer related to a joint tax liability
of spouses, that value of two motor vehicles must be excluded.
The guidelines must provide that employees of the department
shall determine, on the basis of the facts and circumstances of
each taxpayer, whether the use of the schedules is appropriate
and that employees must not use the schedules to the extent the
use would result in the taxpayer not having adequate means to
provide for basic living expenses. The guidelines must provide
that:

(1) an employee of the department shall not reject an
offer-in-compromise or an offer to make installment payments
from a low-income taxpayer solely on the basis of the amount of
the offer; and

(2) in the case of an offer-in-compromise which relates
only to issues of liability of the taxpayer:

(i) the offer must not be rejected solely because the
commissioner is unable to locate the taxpayer's return or return
information for verification of the liability; and

(ii) the taxpayer shall not be required to provide an
audited, reviewed, or compiled financial statement.

(b) The commissioner shall establish procedures:

(1) that require presentation of a counteroffer or a
written rejection of the offer by the commissioner if the amount
offered by the taxpayer in an offer-in-compromise or an offer to
make installment payments is not accepted by the commissioner;

(2) for an administrative review of any written rejection
of a proposed offer-in-compromise or installment agreement made
by a taxpayer under this section before the rejection is
communicated to the taxpayer;

(3) that allow a taxpayer to request reconsideration of any
written rejection of the offer or agreement to the commissioner
of revenue to determine whether the rejection is reasonable and
appropriate under the circumstances; and

(4) that provide for notification to the taxpayer when an
offer-in-compromise has been accepted, and issuance of
certificates of release of any liens imposed under section
270.69 related to the liability which is the subject of the
compromise.

new text begin (c) Each compromise proposal must be accompanied by a
nonrefundable payment of $250. If the compromise proposal is
accepted, the payment must be applied to the accepted compromise
amount. If the compromise is rejected, the payment must be
applied to the outstanding tax debts of the taxpayer pursuant to
section 270.652. In cases of financial hardship, upon
presentation of information establishing an inability to make
the $250 payment, the commissioner may waive this requirement.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for offers in
compromise submitted after August 31, 2005.
new text end

Sec. 5.

Minnesota Statutes 2004, section 270.69,
subdivision 4, is amended to read:

Subd. 4.

Period of limitations.

The lien imposed by this
section shall, notwithstanding any other provision of law to the
contrary, be enforceable from the time the lien arises and for
ten years from the date of filing the notice of lien, which must
be filed by the commissioner within five years after the date of
assessment of the tax or final administrative or judicial
determination of the assessment. A notice of lien filed in one
county may be transcribed to new text begin the secretary of state or to new text end any
other county within ten years after the date of its filing, but
the transcription shall not extend the period during which the
lien is enforceable. A notice of lien may be renewed by the
commissioner before the expiration of the ten-year period for an
additional ten years. The taxpayer must receive written notice
of the renewal.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 6.

Minnesota Statutes 2004, section 270B.01,
subdivision 5, is amended to read:

Subd. 5.

Taxpayer identity.

"Taxpayer identity" means
the name of a person with respect to whom a return is filed, or
the person's mailing address, or the person's taxpayer
identifying number. new text begin "Taxpayer identity" does not include the
state taxpayer identifying number of a business entity, which is
classified as public data.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 7.

Minnesota Statutes 2004, section 270B.03,
subdivision 1, is amended to read:

Subdivision 1.

Who may inspect.

Returns and return
information must, on request, be made open to inspection by or
disclosure to the data subject. The request must be made in
writing or in accordance with written procedures of the chief
disclosure officer of the department that have been approved by
the commissioner to establish the identification of the person
making the request as the data subject. For purposes of this
chapter, the following are the data subject:

(1) in the case of an individual return, that individual;

(2) in the case of an income tax return filed jointly,
either of the individuals with respect to whom the return is
filed;

(3) deleted text begin in the case of a partnership return, any person who was
a member of the partnership during any part of the period
covered by the return;
deleted text end

deleted text begin (4) in the case of the return of a corporation or its
subsidiary:
deleted text end

deleted text begin (i) any person designated by resolution of the board of
directors or other similar governing body;
deleted text end

deleted text begin (ii) any officer or employee of the corporation upon
written request signed by any officer and attested to by the
secretary or another officer;
deleted text end

deleted text begin (iii) any bona fide shareholder of record owning one
percent or more of the outstanding stock of the corporation;
deleted text end

deleted text begin (iv) if the corporation is a corporation that has made an
election under section 1362 of the Internal Revenue Code of
1986, as amended through December 31, 1988, any person who was a
shareholder during any part of the period covered by the return
during which an election was in effect; or
deleted text end

deleted text begin (v) if the corporation has been dissolved, any person
authorized by state law to act for the corporation or any person
who would have been authorized if the corporation had not been
dissolved deleted text end new text begin in the case of a return filed by a business entity, an
officer of a corporation, a shareholder owning more than one
percent of the stock, or any shareholder of an S corporation; a
general partner in a partnership; the owner of a sole
proprietorship; a member or manager of a limited liability
company; a participant in a joint venture; the individual who
signed the return on behalf of the business entity; or an
employee who is responsible for handling the tax matters of the
business entity, such as the tax manager, bookkeeper, or
managing agent new text end ;

deleted text begin (5) deleted text end new text begin (4) new text end in the case of an estate return:

(i) the personal representative or trustee of the estate;
and

(ii) any beneficiary of the estate as shown on the federal
estate tax return;

deleted text begin (6) deleted text end new text begin (5) new text end in the case of a trust return:

(i) the trustee or trustees, jointly or separately; and

(ii) any beneficiary of the trust as shown in the trust
instrument;

deleted text begin (7) deleted text end new text begin (6) new text end if liability has been assessed to a transferee
under section 289A.31, subdivision 3, the transferee is the data
subject with regard to the returns and return information
relating to the assessed liability;

deleted text begin (8) deleted text end new text begin (7) new text end in the case of an Indian tribal government or an
Indian tribal government-owned entity,

(i) the chair of the tribal government, or

(ii) any person authorized by the tribal government; and

deleted text begin (9) deleted text end new text begin (8) new text end in the case of a successor as defined in section
270.102, subdivision 1, paragraph (b), the successor is the data
subject and information may be disclosed as provided by section
270.102, subdivision 4.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 8.

Minnesota Statutes 2004, section 289A.19,
subdivision 4, is amended to read:

Subd. 4.

Estate tax returns.

deleted text begin When in the commissioner's
judgment good cause exists, the commissioner may extend the time
for filing an estate tax return for not more than six months.
deleted text end When an extension to file the federal estate tax return has been
granted under section 6081 of the Internal Revenue Code, the
time for filing the estate tax return is extended for that
period. new text begin If the estate requests an extension to file an estate
tax return within the time provided in section 289A.18,
subdivision 3, the commissioner shall extend the time for filing
the estate tax return for six months.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for estates of
decedents dying after December 31, 2004.
new text end

Sec. 9.

Minnesota Statutes 2004, section 289A.31,
subdivision 2, is amended to read:

Subd. 2.

Joint income tax returns.

(a) If a joint income
tax return is made by a husband and wife, the liability for the
tax is joint and several. A spouse who qualifies for relief
from a liability attributable to an underpayment under section
6015(b) of the Internal Revenue Code is relieved of the state
income tax liability on the underpayment.

(b) In the case of individuals who were a husband and wife
prior to the dissolution of their marriage or their legal
separation, or prior to the death of one of the individuals, for
tax liabilities reported on a joint or combined return, the
liability of each person is limited to the proportion of the tax
due on the return that equals that person's proportion of the
total tax due if the husband and wife filed separate returns for
the taxable year. This provision is effective only when the
commissioner receives written notice of the marriage
dissolution, legal separation, or death of a spouse from the
husband or wife. No refund may be claimed by an ex-spouse,
legally separated or widowed spouse for any taxes paid more than
60 days before receipt by the commissioner of the written notice.

new text begin (c) A request for calculation of separate liability
pursuant to paragraph (b) for taxes reported on a return must be
made within six years after the due date of the return. For
calculation of separate liability for taxes assessed by the
commissioner under section 289A.35 or 289A.37, the request must
be made within six years after the date of assessment. The
commissioner is not required to calculate separate liability if
the remaining unpaid liability for which recalculation is
requested is $100 or less.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for requests
for relief made on or after the day following final enactment.
new text end

Sec. 10.

Minnesota Statutes 2004, section 289A.37,
subdivision 5, is amended to read:

Subd. 5.

Sufficiency of notice.

An order of assessment,
sent postage prepaid by United States mail to the taxpayer at
the taxpayer's last known address, new text begin or sent by electronic mail to
the taxpayer's last known electronic mailing address as provided
for in section 325L.08, new text end is sufficient even if the taxpayer is
deceased or is under a legal disability, or, in the case of a
corporation, has terminated its existence, unless the department
has been provided with a new address by a party authorized to
receive notices of assessment.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 11.

Minnesota Statutes 2004, section 289A.60,
subdivision 2a, is amended to read:

Subd. 2a.

Penalties for extended delinquency.

(a) If an
individual income tax is not paid within 180 days after the date
of filing of a return or, in the case of taxes assessed by the
commissioner, within 180 days after the assessment date or, if
appealed, within 180 days after final resolution of the appeal,
an extended delinquency penalty of five percent of the tax
remaining unpaid is added to the amount due.

(b) If a deleted text begin corporate franchise, fiduciary income, mining
company, estate, partnership, S corporation, or nonresident
entertainer deleted text end tax return is not filed within 30 days after written
demand for the filing of a delinquent return, an extended
delinquency penalty of five percent of the tax not paid prior to
the demand deleted text begin is added to the tax, deleted text end or deleted text begin in the case of an individual
income tax return, a minimum penalty of deleted text end $100 deleted text begin or the five percent
penalty deleted text end is imposed, whichever amount is greater.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for returns
originally due on or after August 1, 2005.
new text end

Sec. 12.

Minnesota Statutes 2004, section 289A.60,
subdivision 6, is amended to read:

Subd. 6.

Penalty for new text begin failure to file, new text end false or fraudulent
return, evasion.

If a person new text begin , with intent to evade or defeat a
tax or payment of tax, fails to file a return, new text end files a false or
fraudulent return, or attempts in any new text begin other new text end manner to evade or
defeat a tax or payment of tax, there is imposed on the person a
penalty equal to 50 percent of the tax, less amounts paid by the
person on the basis of the false or fraudulent return, new text begin if any,
new text end due for the period to which the return related.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 13.

Minnesota Statutes 2004, section 289A.60,
subdivision 11, is amended to read:

Subd. 11.

Penalties relating to information reports,
withholding.

(a) When a person required under section 289A.09,
subdivision 2, to give a statement to an employee or payee and a
duplicate statement to the commissioner, or to give a
reconciliation of the statements and quarterly returns to the
commissioner, gives a false or fraudulent statement to an
employee or payee or a false or fraudulent duplicate statement
or reconciliation of statements and quarterly returns to the
commissioner, or fails to give a statement or the reconciliation
in the manner, when due, and showing the information required by
section 289A.09, subdivision 2, or rules prescribed by the
commissioner under that section, that person is liable for a
penalty of $50 for an act or failure to act. The total amount
imposed on the delinquent person for failures during a calendar
year must not exceed $25,000.

(b) In addition to any other penalty provided by law, an
employee who gives a withholding exemption certificate or a
residency affidavit to an employer that deleted text begin the employee has reason
to know contains a materially incorrect statement deleted text end new text begin decreases the
amount withheld under section 290.92 and as of the time the
certificate or affidavit was given to the employer there was no
reasonable basis for the statements in the certificate or
affidavit new text end is liable to the commissioner of revenue for a penalty
of $500 for each instance.

(c) In addition to any other penalty provided by law, an
employer who fails to submit a copy of a withholding exemption
certificate or a residency affidavit required by section 290.92,
subdivision 5a, clause (1)(a), (1)(b), or (2) is liable to the
commissioner of revenue for a penalty of $50 for each instance.

(d) An employer or payor who fails to file an application
for a withholding account number, as required by section 290.92,
subdivision 24, is liable to the commissioner for a penalty of
$100.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for
certificates and affidavits given to employers after December
31, 2005.
new text end

Sec. 14.

Minnesota Statutes 2004, section 290.92,
subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(1) [WAGES.] For purposes
of this section, the term "wages" means the same as that term is
defined in section 3401(a) and (f) of the Internal Revenue Code.

(2) [PAYROLL PERIOD.] For purposes of this section the
term "payroll period" means a period for which a payment of
wages is ordinarily made to the employee by the employee's
employer, and the term "miscellaneous payroll period" means a
payroll period other than a daily, weekly, biweekly,
semimonthly, monthly, quarterly, semiannual, or annual payroll
period.

(3) [EMPLOYEE.] For purposes of this section the term
"employee" means any resident individual performing services for
an employer, either within or without, or both within and
without the state of Minnesota, and every nonresident individual
performing services within the state of Minnesota, the
performance of which services constitute, establish, and
determine the relationship between the parties as that of
employer and employee. As used in the preceding sentence, the
term "employee" includes an officer of a corporation, and an
officer, employee, or elected official of the United States, a
state, or any political subdivision thereof, or the District of
Columbia, or any agency or instrumentality of any one or more of
the foregoing.

(4) [EMPLOYER.] For purposes of this section the term
"employer" means any person, including individuals, fiduciaries,
estates, trusts, partnerships, limited liability companies, and
corporations transacting business in or deriving any income from
sources within the state of Minnesota for whom an individual
performs or performed any service, of whatever nature, as the
employee of such person, except that if the person for whom the
individual performs or performed the services does not have
deleted text begin legal deleted text end control of the payment of the wages for such services, the
term "employer," except for purposes of paragraph (1), means the
person having deleted text begin legal deleted text end control of the payment of such wages. As
used in the preceding sentence, the term "employer" includes any
corporation, individual, estate, trust, or organization which is
exempt from taxation under section 290.05 and further includes,
but is not limited to, officers of corporations who have deleted text begin legal
deleted text end control, either individually or jointly with another or others,
of the payment of the wages.

(5) [NUMBER OF WITHHOLDING EXEMPTIONS CLAIMED.] For
purposes of this section, the term "number of withholding
exemptions claimed" means the number of withholding exemptions
claimed in a withholding exemption certificate in effect under
subdivision 5, except that if no such certificate is in effect,
the number of withholding exemptions claimed shall be considered
to be zero.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 15.

Minnesota Statutes 2004, section 290C.05, is
amended to read:

290C.05 ANNUAL CERTIFICATION.

On or before July 1 of each year, beginning with the year
after the claimant has received an approved application, the
commissioner shall send each claimant enrolled under the
sustainable forest incentive program a certification form. The
claimant must sign the certification, attesting that the
requirements and conditions for continued enrollment in the
program are currently being met, and must return the signed
certification form to the commissioner by August 15 of that same
year. deleted text begin Failure to deleted text end new text begin If the claimant does not new text end return an annual
certification form by the due date deleted text begin shall result in removal of
the lands from the provisions of the sustainable forest
incentive program, and the imposition of any applicable removal
penalty deleted text end new text begin , the provisions in section 290C.11 apply new text end . deleted text begin The claimant
may appeal the removal and any associated penalty according to
the procedures and within the time allowed under this chapter.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 16.

new text begin [290C.055] LENGTH OF COVENANT.
new text end

new text begin 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.
new text end

new text begin 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:
new text end

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

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

new text begin Notwithstanding the other provisions of this section, the
covenant is terminated 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.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 17.

Minnesota Statutes 2004, section 290C.10, is
amended to read:

290C.10 WITHDRAWAL PROCEDURES.

An approved claimant under the sustainable forest incentive
program for a minimum of four years may notify the commissioner
of the intent to terminate enrollment. Within 90 days of
receipt of notice to terminate enrollment, the commissioner
shall inform the claimant in writing, acknowledging receipt of
this notice and indicating the effective date of termination
from the sustainable forest incentive program. Termination of
enrollment in the sustainable forest incentive program occurs on
January 1 of the fifth calendar year that begins after receipt
by the commissioner of the termination notice. After the
commissioner issues an effective date of termination, a claimant
wishing to continue the land's enrollment in the sustainable
forest incentive program beyond the termination date must apply
for enrollment as prescribed in section 290C.04. A claimant who
withdraws a parcel of land from this program may not reenroll
the parcel for a period of three years. Within 90 days after
the termination date, the commissioner shall execute and
acknowledge a document releasing the land from the covenant
required under this chapter. The document must be mailed to the
claimant and is entitled to be recorded. The commissioner may
allow early withdrawal from the Sustainable Forest Incentive Act
without penalty deleted text begin in cases of condemnation deleted text end new text begin when the state of
Minnesota, any local government unit, or any other entity which
has the right of eminent domain acquires title or possession to
the land new text end for a public purpose notwithstanding the provisions of
this section. new text begin In the case of such acquisition, the commissioner
shall execute and acknowledge a document releasing the land
acquired by the state, local government unit, or other entity
from the covenant. All other enrolled land must remain in the
program.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 18.

Minnesota Statutes 2004, section 325D.33,
subdivision 6, is amended to read:

Subd. 6.

Violations.

If the commissioner determines that
a distributor is violating any provision of this chapter, the
commissioner must give the distributor a written warning
explaining the violation and an explanation of what must be done
to comply with this chapter. Within ten days of issuance of the
warning, the distributor must notify the commissioner that the
distributor has complied with the commissioner's recommendation
or request that the commissioner set the issue for a hearing
pursuant to chapter 14. If a hearing is requested, the hearing
shall be scheduled within 20 days of the request and the
recommendation of the administrative law judge shall be issued
within five working days of the close of the hearing. The
commissioner's final determination shall be issued within five
working days of the receipt of the administrative law judge's
recommendation. If the commissioner's final determination is
adverse to the distributor and the distributor does not comply
within ten days of receipt of the commissioner's final
determination, the commissioner may order the distributor to
immediately cease the stamping of cigarettes. As soon as
practicable after the order, the commissioner must remove the
meter and any unapplied cigarette stamps from the premises of
the distributor.

If within ten days of issuance of the written warning the
distributor has not complied with the commissioner's
recommendation or requested a hearing, the commissioner may
order the distributor to immediately cease the stamping of
cigarettes and remove the meter and unapplied stamps from the
distributor's premises.

deleted text begin If, within any 12-month period, the commissioner has issued
three written warnings to any distributor, even if the
distributor has complied within ten days, the commissioner shall
notify the distributor of the commissioner's intent to revoke
the distributor's license for a continuing course of conduct
contrary to this chapter. For purposes of this paragraph, a
written warning that was ultimately resolved by removal of the
warning by the commissioner is not deemed to be a warning. The
commissioner must notify the distributor of the date and time of
a hearing pursuant to chapter 14 at least 20 days before the
hearing is held. The hearing must provide an opportunity for
the distributor to show cause why the license should not be
revoked. If the commissioner revokes a distributor's license,
the commissioner shall not issue a new license to that
distributor for 180 days.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 19.

Minnesota Statutes 2004, section 473.843,
subdivision 5, is amended to read:

Subd. 5.

Penalties; enforcement.

The audit, penalty, and
enforcement provisions applicable to new text begin corporate franchise new text end taxes
imposed under chapter 290 apply to the fees imposed under this
section. The commissioner of revenue shall administer the
provisions.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end