1st Engrossment - 79th Legislature (1995 - 1996) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to taxation; making technical and 1.3 administrative changes, corrections, and 1.4 clarifications; amending Minnesota Statutes 1994, 1.5 sections 10A.31, subdivision 3a; 239.761, subdivision 1.6 5; 270.067, subdivision 2; 270.07, subdivision 1; 1.7 270.271; 273.02, subdivision 3; 275.07, subdivision 4; 1.8 275.61; 278.01, by adding a subdivision; 278.08; 1.9 287.06; 290.01, subdivision 4a; 290.06, subdivision 1.10 22; 290.0922, subdivision 1; 290.17, subdivision 2; 1.11 296.01, subdivisions 2 and 13; 296.02, by adding a 1.12 subdivision; 296.025, subdivision 6; 296.141, 1.13 subdivision 5; 296.15, by adding a subdivision; 1.14 296.17, subdivision 7; and 477A.011, subdivision 3; 1.15 Minnesota Statutes 1995 Supplement, sections 41A.09, 1.16 subdivision 2a; 273.124, subdivision 1; 275.08, 1.17 subdivision 1b; 290A.04, subdivision 2h; 296.02, 1.18 subdivision 1; 296.025, subdivision 1; 296.12, 1.19 subdivision 3; and 297A.02, subdivision 4; Laws 1994, 1.20 chapter 587, article 3, section 21; proposing coding 1.21 for new law in Minnesota Statutes, chapter 290A; 1.22 repealing Minnesota Statutes 1994, section 296.25, 1.23 subdivision 1a. 1.24 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.25 ARTICLE 1 1.26 INCOME AND FRANCHISE TAXES 1.27 Section 1. Minnesota Statutes 1994, section 10A.31, 1.28 subdivision 3a, is amended to read: 1.29 Subd. 3a. [QUALIFICATION OF POLITICAL PARTIES.] A major 1.30 political party as defined in section 10A.01, subdivision 12, 1.31 qualifies for inclusion on the income tax form and property tax 1.32 refund return as provided in subdivision 3, provided that it 1.33 qualifies as a major political party by July 1 of the taxable 1.34 year. 2.1 A minor political party as defined in section 10A.01, 2.2 subdivision 13 qualifies for inclusion on the income tax form 2.3 and property tax refund return as provided in subdivision 3, 2.4 provided that 2.5 (1) (a) if a petition is filed, it is filed by June 1 of 2.6 the taxable year; or 2.7 (b) if the party ran a candidate for statewide office, that 2.8 office must have been the office of governor and lieutenant 2.9 governor, secretary of state, state auditor, state treasurer, or 2.10 attorney general; and 2.11 (2) the secretary of state certifies to the commissioner of 2.12 revenue by July 1, 1984, and by July 1 of every odd-numbered 2.13 year thereafter the parties which qualify as minor political 2.14 parties under this subdivision. 2.15 A minor party shall be certified only if the secretary of 2.16 state determines that the party satisfies the following 2.17 conditions: 2.18 (a) the party meets the requirements of section 10A.01, 2.19 subdivision 13, and in the last applicable election ran a 2.20 candidate for the statewide offices listed in clause (1)(b) of 2.21 this subdivision; 2.22 (b) it is a political party, not a principal campaign 2.23 committee; 2.24 (c) it has held a state convention in the last two years, 2.25 adopted a state constitution, and elected state officers; and 2.26 (d) an officer of the party has filed with the secretary of 2.27 state a certification that the party held a state convention in 2.28 the last two years, adopted a state constitution, and elected 2.29 state officers. 2.30 Sec. 2. Minnesota Statutes 1994, section 270.067, 2.31 subdivision 2, is amended to read: 2.32 Subd. 2. [PREPARATION; SUBMISSION.] The commissioner of 2.33 revenue shall prepare a tax expenditure budget for the state. 2.34 The tax expenditure budget report shall be submitted to the 2.35 legislature
as a supplement to the governor's budget and at the2.36 same time as provided for submission of the budget pursuant to3.1 section 16A.11, subdivision 1by February 1 of each 3.2 even-numbered year. 3.3 Sec. 3. Minnesota Statutes 1994, section 290.01, 3.4 subdivision 4a, is amended to read: 3.5 Subd. 4a. [FINANCIAL INSTITUTION.] (a) "Financial 3.6 institution" means: 3.7 (1) a holding company; 3.8 (2) any regulated financial corporation; or 3.9 (3) any other corporation organized under the laws of the 3.10 United States or organized under the laws of this state or any 3.11 other state or country that is carrying on the business of a 3.12 financial institution. 3.13 (b) "Holding company" means any corporation registered 3.14 under the Federal Bank Holding Company Act of 1956, as amended, 3.15 or registered as a savings and loan holding company under the 3.16 Federal National Housing Act, as amended. 3.17 (c) "Regulated financial corporation" means an institution, 3.18 the deposits or accounts of which are insured under the Federal 3.19 Deposit Insurance Act or by the Federal Savings and Loan 3.20 Insurance Corporation, any institution which is a member of a 3.21 Federal Home Loan Bank, any other bank or thrift institution 3.22 incorporated or organized under the laws of any state or any 3.23 foreign country which is engaged in the business of receiving 3.24 deposits, any corporation organized under the provisions of 3.25 United States Code, title 12, sections 611 to 631 (Edge Act 3.26 Corporations), and any agency of a foreign depository as defined 3.27 in United States Code, title 12, section 3101. 3.28 (d) "Business of a financial institution" means: 3.29 (1) the business that a regulated financial corporation may3.30 be authorized to do under state or federal law or the business3.31 that its subsidiary is authorized to do by the proper regulatory3.32 authorities;3.33 (2)the business that any corporation organized under the 3.34 authority of the United States or organized under the laws of 3.35 this state or any other state or country does or has authority 3.36 to do which is substantially similar to the business which a 4.1 corporation may be created to do under chapters 46 to 55 or any 4.2 business which a corporation or its subsidiaryis authorized to 4.3 do by those laws; or 4.4 (3)(2) the business that any corporation organized under 4.5 the authority of the United States or organized under the laws 4.6 of this state or any other state or country does or has 4.7 authority to do if the corporation derives more than 50 percent 4.8 of its gross income from lending activities (including 4.9 discounting obligations) in substantial competition with the 4.10 businesses described in clausesclause (1) and (2). For 4.11 purposes of this clause, the computation of the gross income of 4.12 a corporation does not include income from nonrecurring, 4.13 extraordinary items. 4.14 Sec. 4. Minnesota Statutes 1994, section 290.06, 4.15 subdivision 22, is amended to read: 4.16 Subd. 22. [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 4.17 taxpayer who is liable for taxes on or measured by net income to 4.18 another state or province or territory of Canada, as provided in 4.19 paragraphs (b) through (f), upon income allocated or apportioned 4.20 to Minnesota, is entitled to a credit for the tax paid to 4.21 another state or province or territory of Canada if the tax is 4.22 actually paid in the taxable year or a subsequent taxable year. 4.23 A taxpayer who is a resident of this state pursuant to section 4.24 290.01, subdivision 7, clause (2), and who is subject to income 4.25 tax as a resident in the state of the individual's domicile is 4.26 not allowed this credit unless the state of domicile does not 4.27 allow a similar credit. 4.28 (b) For an individual, estate, or trust, the credit is 4.29 determined by multiplying the tax payable under this chapter by 4.30 the ratio derived by dividing the income subject to tax in the 4.31 other state or province or territory of Canada that is also 4.32 subject to tax in Minnesota while a resident of Minnesota by the 4.33 taxpayer's federal adjusted gross income, as defined in section 4.34 62 of the Internal Revenue Code, modified by the addition 4.35 required by section 290.01, subdivision 19a, clause (1), and the 4.36 subtraction allowed by section 290.01, subdivision 19b, clause 5.1 (1), to the extent the income is allocated or assigned to 5.2 Minnesota under sections 290.081 and 290.17. 5.3 (c) If the taxpayer is an athletic team that apportions all 5.4 of its income under section 290.17, subdivision 5, paragraph 5.5 (c), the credit is determined by multiplying the tax payable 5.6 under this chapter by the ratio derived from dividing the total 5.7 net income subject to tax in the other state or province or 5.8 territory of Canada by the taxpayer's Minnesota taxable income. 5.9 (d) The credit determined under paragraph (b) or (c) shall 5.10 not exceed the amount of tax so paid to the other state or 5.11 province or territory of Canada on the gross income earned 5.12 within the other state or province or territory of Canada 5.13 subject to tax under this chapter, nor shall the allowance of 5.14 the credit reduce the taxes paid under this chapter to an amount 5.15 less than what would be assessed if such income amount was 5.16 excluded from taxable net income. 5.17 (e) In the case of the tax assessed on a lump sum 5.18 distribution under section 290.032, the credit allowed under 5.19 paragraph (a) is the tax assessed by the other state or province 5.20 or territory of Canada on the lump sum distribution that is also 5.21 subject to tax under section 290.032, and shall not exceed the 5.22 tax assessed under section 290.032. To the extent the total 5.23 lump sum distribution defined in section 290.032, subdivision 1, 5.24 includes lump sum distributions received in prior years or is 5.25 all or in part an annuity contract, the reduction to the tax on 5.26 the lump sum distribution allowed under section 290.032, 5.27 subdivision 2, includes tax paid to another state that is 5.28 properly apportioned to that distribution. 5.29 (f) If a Minnesota resident reported an item of income to 5.30 Minnesota and is assessed tax in such other state or province or 5.31 territory of Canada on that same income after the Minnesota 5.32 statute of limitations has expired, the taxpayer shall receive a 5.33 credit for that year under paragraph (a), notwithstanding any 5.34 statute of limitations to the contrary. The claim for the 5.35 credit must be submitted within one year from the date the taxes 5.36 were paid to the other state or province or territory of 6.1 Canada. The taxpayer must submit sufficient proof to show 6.2 entitlement to a credit. 6.3 (g) For the purposes of this subdivision, a resident 6.4 shareholder of a corporation having a valid election in effect 6.5 under section 1362 of the Internal Revenue Code must be 6.6 considered to have paid a tax imposed on the shareholder in an 6.7 amount equal to the shareholder's pro rata share of any net 6.8 income tax paid by the S corporation to aanother state that6.9 does not measure the income of the shareholder of the S6.10 corporation by reference to the income of the S corporation. 6.11 For the purposes of the preceding sentence, the term "net income 6.12 tax" means any tax imposed on or measured by a corporation's net 6.13 income. 6.14 (h) For the purposes of this subdivision, a resident member 6.15 of a limited liability company taxed as a partnership under the 6.16 Internal Revenue Code must be considered to have paid a tax 6.17 imposed on the member in an amount equal to the member's pro 6.18 rata share of any net income tax paid by the limited liability 6.19 company to a state that does not measure the income of the 6.20 member of the limited liability company by reference to the 6.21 income of the limited liability company. For purposes of the 6.22 preceding sentence, the term "net income" tax means any tax 6.23 imposed on or measured by a limited liability company's net 6.24 income. 6.25 Sec. 5. Minnesota Statutes 1994, section 290.0922, 6.26 subdivision 1, is amended to read: 6.27 Subdivision 1. [IMPOSITION.] (a) In addition to the tax 6.28 imposed by this chapter without regard to this section, the 6.29 franchise tax imposed on a corporation required to file under 6.30 section 289A.08, subdivision 3, other than a corporation having 6.31 a valid election in effect under section 1362 of the Internal 6.32 Revenue Code for the taxable year includes a tax equal to the 6.33 following amounts: 6.34 If the sum of the corporation's 6.35 Minnesota property, payrolls, and sales 6.36 or receipts is: the tax equals: 7.1 less than $500,000 $0 7.2 $ 500,000 to $ 999,999 $100 7.3 $ 1,000,000 to $ 4,999,999 $300 7.4 $ 5,000,000 to $ 9,999,999 $1,000 7.5 $10,000,000 to $19,999,999 $2,000 7.6 $20,000,000 or more $5,000 7.7 (b) A tax is imposed annually beginning in 1990for each 7.8 taxable year on a corporation required to file a return under 7.9 section 289A.12, subdivision 3, that has a valid election in 7.10 effect for the taxable year under section 1362 of the Internal 7.11 Revenue Code and on a partnership required to file a return 7.12 under section 289A.12, subdivision 3, other than a partnership 7.13 that derives over 80 percent of its income from farming. The 7.14 tax imposed under this paragraph is due on or before the due 7.15 date of the return for the taxpayer due under section 289A.18, 7.16 subdivision 1. The commissioner shall prescribe the return to 7.17 be used for payment of this tax. The tax under this paragraph is 7.18 equal to the following amounts: 7.19 If the sum of the S corporation's or partnership's 7.20 Minnesota property, payrolls, and sales 7.21 or receipts is: the tax equals: 7.22 less than $500,000 $0 7.23 $ 500,000 to $ 999,999 $100 7.24 $ 1,000,000 to $ 4,999,999 $300 7.25 $ 5,000,000 to $ 9,999,999 $1,000 7.26 $10,000,000 to $19,999,999 $2,000 7.27 $20,000,000 or more $5,000 7.28 Sec. 6. Minnesota Statutes 1994, section 290.17, 7.29 subdivision 2, is amended to read: 7.30 Subd. 2. [INCOME NOT DERIVED FROM CONDUCT OF A TRADE OR 7.31 BUSINESS.] The income of a taxpayer subject to the allocation 7.32 rules that is not derived from the conduct of a trade or 7.33 business must be assigned in accordance with paragraphs (a) to 7.34 (f): 7.35 (a)(1) Subject to paragraphs (a)(2) and (a)(3), income from 7.36 labor or personal or professional services is assigned to this 8.1 state if, and to the extent that, the labor or services are 8.2 performed within it; all other income from such sources is 8.3 treated as income from sources without this state. 8.4 Severance pay shall be considered income from labor or 8.5 personal or professional services. 8.6 (2) In the case of an individual who is a nonresident of 8.7 Minnesota and who is an athlete or entertainer, income from 8.8 compensation for labor or personal services performed within 8.9 this state shall be determined in the following manner: 8.10 (i) The amount of income to be assigned to Minnesota for an 8.11 individual who is a nonresident salaried athletic team employee 8.12 shall be determined by using a fraction in which the denominator 8.13 contains the total number of days in which the individual is 8.14 under a duty to perform for the employer, and the numerator is 8.15 the total number of those days spent in Minnesota; and 8.16 (ii) The amount of income to be assigned to Minnesota for 8.17 an individual who is a nonresident, and who is an athlete or 8.18 entertainer not listed in clause (i), for that person's athletic 8.19 or entertainment performance in Minnesota shall be determined by 8.20 assigning to this state all income from performances or athletic 8.21 contests in this state. 8.22 (3) For purposes of this section, amounts received by a 8.23 nonresident from the United States, its agencies or 8.24 instrumentalities, the Federal Reserve Bank, the state of 8.25 Minnesota or any of its political or governmental subdivisions, 8.26 or a Minnesota volunteer firefighters' relief association, by 8.27 way of payment as a pension, public employee retirement benefit, 8.28 or any combination of these, or as a retirement or survivor's 8.29 benefit made from a plan qualifying under section 401, 403, 408, 8.30 or 409, or as defined in section 403(b) or 457 of the Internal 8.31 Revenue Code, are not considered income derived from carrying on 8.32 a trade or business or from performing personal or professional 8.33 services in Minnesota, and are not taxable under this chapter. 8.34 (b) Income or gains from tangible property located in this 8.35 state that is not employed in the business of the recipient of 8.36 the income or gains must be assigned to this state. 9.1 (c) Income or gains from intangible personal property not 9.2 employed in the business of the recipient of the income or gains 9.3 must be assigned to this state if the recipient of the income or 9.4 gains is a resident of this state or is a resident trust or 9.5 estate. 9.6 Gain on the sale of a partnership interest is allocable to 9.7 this state in the ratio of the original cost of partnership 9.8 tangible property in this state to the original cost of 9.9 partnership tangible property everywhere, determined at the time 9.10 of the sale. If more than 50 percent of the value of the 9.11 partnership's assets consists of intangibles, gain or loss from 9.12 the sale of the partnership interest is allocated to this state 9.13 in accordance with the sales factor of the partnership for its 9.14 first full tax period immediately preceding the tax period of 9.15 the partnership during which the partnership interest was sold. 9.16 Gain on the sale of goodwill or income from a covenant not 9.17 to compete that is connected with a business operating all or 9.18 partially in Minnesota is allocated to this state to the extent 9.19 that the income from the business in the year preceding the year 9.20 of sale was assignable to Minnesota under subdivision 3. 9.21 When an employer pays an employee for a covenant not to 9.22 compete, the income allocated to this state is in the ratio of 9.23 the employee's service in Minnesota in the calendar year 9.24 preceding leaving the employment of the employer over the total 9.25 services performed by the employee for the employer in that year. 9.26 (d) Income from the operation of a farm shall be assigned 9.27 to this state if the farm is located within this state and to 9.28 other states only if the farm is not located in this state. 9.29 (e) Income from winnings on Minnesota pari-mutuel betting 9.30 tickets, the Minnesota state lottery, and lawful gambling as 9.31 defined in section 349.12, subdivision 24, conducted within the 9.32 boundaries of the state of Minnesota shall be assigned to this 9.33 state. 9.34 (f) All items of gross income not covered in paragraphs (a) 9.35 to (e) and not part of the taxpayer's income from a trade or 9.36 business shall be assigned to the taxpayer's domicile. 10.1 Sec. 7. [EFFECTIVE DATE.] 10.2 Sections 1 and 3 to 6 are effective for tax years beginning 10.3 after December 31, 1995. 10.4 ARTICLE 2 10.5 PROPERTY TAX 10.6 Section 1. Minnesota Statutes 1994, section 270.07, 10.7 subdivision 1, is amended to read: 10.8 Subdivision 1. [POWERS OF COMMISSIONER; APPLICATION FOR 10.9 ABATEMENT; ORDERS.] (a) The commissioner of revenue shall 10.10 prescribe the form of all blanks and books required under this 10.11 chapter and shall hear and determine all matters of grievance 10.12 relating to taxation. Except for matters delegated to the 10.13 various boards of county commissioners under section 375.192, 10.14 and except as otherwise provided by law, the commissioner shall 10.15 have power to grant such reduction or abatement of net tax 10.16 capacities or taxes and of any costs, penalties or interest 10.17 thereon as the commissioner may deem just and equitable, and to 10.18 order the refundment, in whole or in part, of any taxes, costs, 10.19 penalties or interest thereon which have been erroneously or 10.20 unjustly paid. Application therefor shall be submitted with a 10.21 statement of facts in the case and the favorable recommendation 10.22 of the county board or of the board of abatement of any city 10.23 where any such board exists, and the county auditor of the 10.24 county wherein such tax was levied or paid. In the case of taxes 10.25 other than gross earnings taxes, the order may be made only on 10.26 application and approval as provided in this paragraph. No 10.27 reduction, abatement, or refundment of any special assessments 10.28 made or levied by any municipality for local improvements shall 10.29 be made unless it is also approved by the board of review or 10.30 similar taxing authority of such municipality. 10.31 (b) The commissioner has the power to grant reductions or 10.32 abatements of gross earnings tax. An application for reduction 10.33 of gross earnings taxes may be made directly to the commissioner 10.34 without the favorable action of the county board and county 10.35 auditor. The commissioner shall direct that any gross earnings 10.36 taxes that may have been erroneously or unjustly paid be applied 11.1 against unpaid taxes due from the applicant. 11.2 (c) The commissioner shall forward to the county auditor a 11.3 copy of the order made by the commissioner in all cases in which 11.4 the approval of the county board is required. 11.5 (d) The commissioner may refer any question that may arise 11.6 in reference to the true construction of this chapter to the 11.7 attorney general, and the decision thereon shall be in force and 11.8 effect until annulled by the judgment of a court of competent 11.9 jurisdiction. 11.10 (e) The commissioner may by written order abate, reduce, or 11.11 refund any penalty or interest imposed by any law relating to 11.12 taxation, if in the commissioner's opinion the failure to timely 11.13 pay the tax or failure to timely file the return is due to 11.14 reasonable cause. The order shall be made on application of the 11.15 taxpayer to the commissioner. 11.16 (f) If an order issued under this subdivision is for an 11.17 abatement, reduction, or refund of over $5,000, it shall be 11.18 valid only if approved in writing by the attorney general. 11.19 (g) An appeal may not be taken to the tax court from any 11.20 order of the commissioner of revenue made in the exercise of the 11.21 discretionary authority granted in paragraph (a) with respect to 11.22 the reduction or abatement of real or personal property taxes in 11.23 response to a taxpayer's application for an abatement, 11.24 reduction, or refund of taxes, net tax capacities, costs, 11.25 penalties, or interest. 11.26 Sec. 2. Minnesota Statutes 1994, section 270.271, is 11.27 amended to read: 11.28 270.271 [TIMELY MAILING TREATED AS TIMELY FILING AND 11.29 PAYING.] 11.30 Subdivision 1. [DATE OF DELIVERY.] When a document, 11.31 including a return, claim, or statement, is required to be 11.32 filed, or a payment is required to be made to the commissioner, 11.33 or to a county for the payment of real or personal property 11.34 taxes, within a prescribed period, or on or before a prescribed 11.35 date, and if the document or payment is delivered by United 11.36 States mail after the period or the date to the place prescribed 12.1 for filing or payment, then the date of the United States 12.2 postmark stamped on the cover in which the document or payment 12.3 is mailed shall be considered the date of delivery or of 12.4 payment, as the case may be. 12.5 Subd. 2. [MAILING REQUIREMENTS.] Subdivision 1 applies 12.6 only if: 12.7 (1) the postmark date falls within the prescribed period or 12.8 on or before the prescribed date, 12.9 (i) for filing (including any extension granted for the 12.10 filing) of the document, or 12.11 (ii) for making the payment (including any extension 12.12 granted for making the payment); and 12.13 (2) the document or payment was within the time prescribed 12.14 in clause (1), deposited in the mail in the United States in an 12.15 envelope or other appropriate wrapper, postage prepaid, properly 12.16 addressed to the office of the department of revenue, or the 12.17 county for the payment of real or personal property taxes, with 12.18 which the document is required to be filed or to which payment 12.19 is required to be made. 12.20 Subd. 3. [UNITED STATES POSTAL SERVICE POSTMARK.] Only the 12.21 postmark of the United States Postal Service, rather than those 12.22 of private postage meters, qualifies as proof of timely mailing 12.23 under this section. If the document or payment is sent by 12.24 United States registered mail, the date of registration shall be 12.25 treated as the postmark date. If the document or payment is 12.26 sent by United States certified mail and the sender's receipt is 12.27 postmarked by the postal employee to whom the envelope 12.28 containing such document or payment is presented, the date of 12.29 the United States postmark on the receipt shall be treated as 12.30 the postmark date of the document or payment. 12.31 Subd. 4. [RECEIPT DATE OTHERWISE GOVERNS.] In any case in 12.32 which the document or payment is not treated as timely filed or 12.33 paid under this section, the date of receipt by the 12.34 commissioner, or the county for the payment of real or personal 12.35 property taxes, and not the postmark date, shall govern for 12.36 purposes of determining the amount of any penalties for late 13.1 filing or payment. 13.2 Sec. 3. Minnesota Statutes 1994, section 273.02, 13.3 subdivision 3, is amended to read: 13.4 Subd. 3. [WHAT RIGHTS NOT AFFECTED.] Nothing in 13.5 subdivisions 1 to 3 shall affect any rights in undervalued or 13.6 erroneously classified property, acquired for value in good 13.7 faith prior to the correction of the net tax capacity thereof by 13.8 the county auditor as provided in this section. Any person 13.9 whose rights are adversely affected by any action of the county 13.10 auditor as provided in this subdivision may apply for a 13.11 reduction of the net tax capacity under the provisions of 13.12 section 270.07, relating to the powers of the commissioner of13.13 revenue375.192. 13.14 Sec. 4. Minnesota Statutes 1995 Supplement, section 13.15 273.124, subdivision 1, is amended to read: 13.16 Subdivision 1. [GENERAL RULE.] (a) Residential real estate 13.17 that is occupied and used for the purposes of a homestead by its 13.18 owner, who must be a Minnesota resident, is a residential 13.19 homestead. 13.20 Agricultural land, as defined in section 273.13, 13.21 subdivision 23, that is occupied and used as a homestead by its 13.22 owner, who must be a Minnesota resident, is an agricultural 13.23 homestead. 13.24 Dates for establishment of a homestead and homestead 13.25 treatment provided to particular types of property are as 13.26 provided in this section. 13.27 Property of a trustee, beneficiary, or grantor of a trust 13.28 is not disqualified from receiving homestead benefits if the 13.29 homestead requirements under this chapter are satisfied. 13.30 The assessor shall require proof, as provided in 13.31 subdivision 13, of the facts upon which classification as a 13.32 homestead may be determined. Notwithstanding any other law, the 13.33 assessor may at any time require a homestead application to be 13.34 filed in order to verify that any property classified as a 13.35 homestead continues to be eligible for homestead status. 13.36 Notwithstanding any other law to the contrary, the department of 14.1 revenue may, upon request from an assessor, verify whether an 14.2 individual who is requesting or receiving homestead 14.3 classification has filed a Minnesota income tax return as a 14.4 resident for the most recent taxable year for which the 14.5 information is available. 14.6 When there is a name change or a transfer of homestead 14.7 property, the assessor may reclassify the property in the next 14.8 assessment unless a homestead application is filed to verify 14.9 that the property continues to qualify for homestead 14.10 classification. 14.11 (b) For purposes of this section, homestead property shall 14.12 include property which is used for purposes of the homestead but 14.13 is separated from the homestead by a road, street, lot, 14.14 waterway, or other similar intervening property. The term "used 14.15 for purposes of the homestead" shall include but not be limited 14.16 to uses for gardens, garages, or other outbuildings commonly 14.17 associated with a homestead, but shall not include vacant land 14.18 held primarily for future development. In order to receive 14.19 homestead treatment for the noncontiguous property, the owner 14.20 shall apply for it to the assessor by July 1 of the year when 14.21 the treatment is initially sought. After initial qualification 14.22 for the homestead treatment, additional applications for 14.23 subsequent years are not required. 14.24 (c) Residential real estate that is occupied and used for 14.25 purposes of a homestead by a relative of the owner is a 14.26 homestead but only to the extent of the homestead treatment that 14.27 would be provided if the related owner occupied the property. 14.28 For purposes of this paragraph and paragraph (f), "relative" 14.29 means a parent, stepparent, child, stepchild, grandparent, 14.30 grandchild, brother, sister, uncle, or aunt. This relationship 14.31 may be by blood or marriage. Property that has been classified 14.32 as seasonal recreational residential property at any time during 14.33 which it has been owned by the current owner or spouse of the 14.34 current owner will not be reclassified as a homestead unless it 14.35 is occupied as a homestead by the owner; this prohibition also 14.36 applies to property that, in the absence of this paragraph, 15.1 would have been classified as seasonal recreational residential 15.2 property at the time when the residence was constructed. 15.3 Neither the related occupant nor the owner of the property may 15.4 claim a property tax refund under chapter 290A for a homestead 15.5 occupied by a relative. In the case of a residence located on 15.6 agricultural land, only the house, garage, and immediately 15.7 surrounding one acre of land shall be classified as a homestead 15.8 under this paragraph, except as provided in paragraph (d). 15.9 (d) Agricultural property that is occupied and used for 15.10 purposes of a homestead by a relative of the owner, is a 15.11 homestead, only to the extent of the homestead treatment that 15.12 would be provided if the related owner occupied the property, 15.13 and only if all of the following criteria are met: 15.14 (1) the relative who is occupying the agricultural property 15.15 is a son, daughter, father, or mother of the owner of the 15.16 agricultural property or a son or daughter of the spouse of the 15.17 owner of the agricultural property, 15.18 (2) the owner of the agricultural property must be a 15.19 Minnesota resident, 15.20 (3) the owner of the agricultural property must not receive 15.21 homestead treatment on any other agricultural property in 15.22 Minnesota, and 15.23 (4) the owner of the agricultural property is limited to 15.24 only one agricultural homestead per family under this paragraph. 15.25 Neither the related occupant nor the owner of the property 15.26 may claim a property tax refund under chapter 290A for a 15.27 homestead occupied by a relative qualifying under this 15.28 paragraph. For purposes of this paragraph, "agricultural 15.29 property" means the house, garage, other farm buildings and 15.30 structures, and agricultural land. 15.31 Application must be made to the assessor by the owner of 15.32 the agricultural property to receive homestead benefits under 15.33 this paragraph. The assessor may require the necessary proof 15.34 that the requirements under this paragraph have been met. 15.35 (e) In the case of property owned by a property owner who 15.36 is married, the assessor must not deny homestead treatment in 16.1 whole or in part if only one of the spouses occupies the 16.2 property and the other spouse is absent due to: (1) marriage 16.3 dissolution proceedings, (2) legal separation, (3) employment or 16.4 self-employment in another location, (4) residence in a nursing 16.5 home or boarding care facility, or (5) other personal 16.6 circumstances causing the spouses to live separately, not 16.7 including an intent to obtain two homestead classifications for 16.8 property tax purposes. To qualify under clause (3), the 16.9 spouse's place of employment or self-employment must be at least 16.10 50 miles distant from the other spouse's place of employment, 16.11 and the homesteads must be at least 50 miles distant from each 16.12 other. Homestead treatment, in whole or in part, shall not be 16.13 denied to the spouse of an owner if he or she previously 16.14 occupied the residence with the owner and the absence of the 16.15 owner is due to one of the exceptions provided in this paragraph. 16.16 (f) If an individual is purchasing property with the intent 16.17 of claiming it as a homestead and is required by the terms of 16.18 the financing agreement to have a relative shown on the deed as 16.19 a coowner, the assessor shall allow a full homestead 16.20 classification. This provision only applies to first-time 16.21 purchasers, whether married or single, or to a person who had 16.22 previously been married and is purchasing as a single individual 16.23 for the first time. The application for homestead benefits must 16.24 be on a form prescribed by the commissioner and must contain the 16.25 data necessary for the assessor to determine if full homestead 16.26 benefits are warranted. 16.27 Sec. 5. Minnesota Statutes 1994, section 275.07, 16.28 subdivision 4, is amended to read: 16.29 Subd. 4. [REPORT TO COMMISSIONER.] On or before September16.30 30 for taxes payable in 1994, and thereafterOctober 8 of each 16.31 year, the county auditor shall report to the commissioner of 16.32 revenue the proposed levy certified by local units of government 16.33 under section 275.065, subdivision 1. On or before January 15 ,16.34 for taxes levied in 1989 and thereafterof each year, the county 16.35 auditor shall report to the commissioner of revenue the final 16.36 levy certified by local units of government under subdivision 17.1 1. The levies must be reported in the manner prescribed by the 17.2 commissioner. The reports must show a total levy and the amount 17.3 of each special levy. 17.4 Sec. 6. Minnesota Statutes 1995 Supplement, section 17.5 275.08, subdivision 1b, is amended to read: 17.6 Subd. 1b. The amounts certified to be levied against net 17.7 tax capacity under section 275.07 by an individual local 17.8 government unit , except for any amounts certified under sections17.9 124A.03, subdivision 2a, and 275.61,shall be divided by the 17.10 total net tax capacity of all taxable properties within the 17.11 local government unit's taxing jurisdiction. The resulting 17.12 ratio, the local government's local tax rate, multiplied by each 17.13 property's net tax capacity shall be each property's net tax 17.14 capacity tax for that local government unit before reduction by 17.15 any credits. 17.16 Any amount certified to the county auditor under section17.17 124A.03, subdivision 2a, or 275.61, after the dates given in17.18 those sections,to be levied against market value shall be 17.19 divided by the total estimatedreferendum market value of all 17.20 taxable properties within the taxing district. The resulting 17.21 ratio, the taxing district's new referendum tax rate, multiplied 17.22 by each property's estimatedreferendum market value shall be 17.23 each property's new referendum tax before reduction by any 17.24 credits. For the purposes of this subdivision, "referendum 17.25 market value" means the market value as defined in section 17.26 124A.02, subdivision 3b. 17.27 Sec. 7. Minnesota Statutes 1994, section 275.61, is 17.28 amended to read: 17.29 275.61 [REFERENDUM LEVY; MARKET VALUE.] 17.30 For local governmental subdivisions other than school 17.31 districts, any levy, including the issuance of debt obligations 17.32 payable in whole or in part from property taxes, required to be 17.33 approved and approved by the voters at a general or special 17.34 election for taxes payable in 1993 and thereafter, shall be 17.35 levied against the referendum market value of all taxable 17.36 property within the governmental subdivision, as defined in 18.1 section 124A.02, subdivision 3b. Any levy amount subject to the 18.2 requirements of this section shall be certified separately to 18.3 the county auditor under section 275.07. 18.4 The ballot shall state the maximum amount of the increased 18.5 levy as a percentage of market value and the amount that will be 18.6 raised by the new referendum tax rate in the first year it is to 18.7 be levied. 18.8 Sec. 8. Minnesota Statutes 1994, section 278.01, is 18.9 amended by adding a subdivision to read: 18.10 Subd. 4. [FILING OF APPEAL DEADLINE; 18.11 EXCEPTION.] Notwithstanding the March 31 date in subdivision 1, 18.12 whenever the exempt status, valuation, or classification of real 18.13 or personal property is changed other than by an abatement or a 18.14 court decision, and the owner responsible for payment of the tax 18.15 is not given notice of the change until after January 31 of the 18.16 year the tax is payable or after July 1 in the case of property 18.17 subject to section 273.125, subdivision 4, an eligible 18.18 petitioner, as defined and limited in subdivision 1, has 60 days 18.19 from the date of mailing of the notice to initiate an appeal of 18.20 the property's exempt status, classification, or valuation 18.21 change under this chapter. 18.22 Sec. 9. Minnesota Statutes 1994, section 278.08, is 18.23 amended to read: 18.24 278.08 [INTEREST.] 18.25 Subdivision 1. [INTEREST; PENALTY.] In the case of real or 18.26 personal property, the judgment must include the following 18.27 interest: 18.28 (1) if the tax is sustained in full, interest on the unpaid 18.29 part of the tax computed under section 279.03, subdivision 1, at 18.30 the rate provided in section 549.09; 18.31 (2) if the tax is increased, interest on the unpaid part of 18.32 the tax as originally assessed computed under section 279.03, 18.33 subdivision 1, at the rate provided in section 549.09; 18.34 (3) if the tax is reduced, interest on the difference 18.35 between the tax as recomputed and the amount previously paid 18.36 computed under section 279.03, subdivision 1, at the rate 19.1 provided in section 549.09. 19.2 If the tax is sustained or increased, penalty on the unpaid 19.3 part of the tax as originally assessed computed under section 19.4 279.01 must be included in the judgment. 19.5 Subd. 2. [REFUND.] In the case of real or personal 19.6 property, if the petitioner has overpaid the tax determined or 19.7 stipulated to be due, the county auditor shall compute interest 19.8 on the overpayment from the date of the filing of the petition 19.9 for review or from the date of payment of the tax, whichever is 19.10 later, until the date of issuance of the refund warrant. 19.11 Interest shall be calculated on the overpayment under section 19.12 279.03, subdivision 1, at the rate provided in section 279.0319.13 549.09 for delinquent property taxes originally due and payable19.14 inthe sameyear asthe tax which wasbecame or remained 19.15 overpaid. For the purposes of computing interest due under this 19.16 subdivision, an overpayment occurs on the date when the 19.17 cumulative total of the payments made by the taxpayer for the 19.18 payable year exceed the final total tax amount determined for 19.19 that payable year. In determining whether an overpayment has 19.20 occurred, taxpayer payments are allocated first to any penalty 19.21 imposed due to late payment of installments, then to the tax due. 19.22 Sec. 10. Minnesota Statutes 1994, section 287.06, is 19.23 amended to read: 19.24 287.06 [EXEMPTION FROM OTHER TAXES.] 19.25 All mortgages upon which such tax has been paid, with the19.26 debts or obligations secured thereby and the papers evidencing19.27 the same, shall be exempt from all other taxes; but nothing19.28 herein shall exempt such property from the operation of the laws19.29 relating to the taxation of gifts and inheritances, or those19.30 governing the taxation of banks, savings banks, or trust19.31 companies; provided, thatSections 287.01 to 287.12 shall not 19.32 apply to mortgages taken in good faith by persons or 19.33 corporations whose personalproperty is expressly exempted from 19.34 taxation by lawsection 272.02, subdivision 1, clauses (1) to 19.35 (7), or is taxed upon the basis of gross earnings or other19.36 methods of computation in lieu of all other taxesmortgagees 20.1 that are fraternal benefit societies subject to section 64B.24. 20.2 Sec. 11. Minnesota Statutes 1995 Supplement, section 20.3 290A.04, subdivision 2h, is amended to read: 20.4 Subd. 2h. (a) If the gross property taxes payable on a 20.5 homestead increase more than 12 percent over the net property 20.6 taxes payable in the prior year on the same property that is 20.7 owned and occupied by the same owner on January 2 of both years, 20.8 and the amount of that increase is $100 or more for taxes 20.9 payable in 1995 and1996 and 1997, a claimant who is a homeowner 20.10 shall be allowed an additional refund equal to 60 percent of the 20.11 amount of the increase over the greater of 12 percent of the 20.12 prior year's net property taxes payable or $100 for taxes 20.13 payable in 1995 and1996 and 1997. This subdivision shall not 20.14 apply to any increase in the gross property taxes payable 20.15 attributable to improvements made to the homestead after the 20.16 assessment date for the prior year's taxes. This subdivision 20.17 shall not apply to any increase in the gross property taxes 20.18 payable attributable to the termination of valuation exclusions 20.19 under section 273.11, subdivision 16. 20.20 The maximum refund allowed under this subdivision is $1,000. 20.21 (b) For purposes of this subdivision, the following terms 20.22 have the meanings given: 20.23 (1) "Net property taxes payable" means property taxes 20.24 payable minus refund amounts for which the claimant qualifies 20.25 pursuant to subdivision 2 and this subdivision. 20.26 (2) "Gross property taxes" means net property taxes payable 20.27 determined without regard to the refund allowed under this 20.28 subdivision. 20.29 (c) In addition to the other proofs required by this 20.30 chapter, each claimant under this subdivision shall file with 20.31 the property tax refund return a copy of the property tax 20.32 statement for taxes payable in the preceding year or other 20.33 documents required by the commissioner. 20.34 (d) On or before December 1, 1995, the commissioner shall 20.35 estimate the cost of making the payments provided by this 20.36 subdivision for taxes payable in 1996. Notwithstanding the open 21.1 appropriation provision of section 290A.23, if the estimated 21.2 total refund claims for taxes payable in 1996 exceed $5,500,000, 21.3 the commissioner shall first reduce the 60 percent refund rate 21.4 enough, but to no lower a rate than 50 percent, so that the 21.5 estimated total refund claims do not exceed $5,500,000. If the 21.6 commissioner estimates that total claims will exceed $5,500,000 21.7 at a 50 percent refund rate, the commissioner shall also reduce 21.8 the $1,000 maximum refund amount by enough so that total 21.9 estimated refund claims do not exceed $5,500,000. 21.10 The determinations of the revised thresholds by the 21.11 commissioner are not rules subject to chapter 14. 21.12 (e) Upon request, the appropriate county official shall 21.13 make available the names and addresses of the property taxpayers 21.14 who may be eligible for the additional property tax refund under 21.15 this section. The information shall be provided on a magnetic 21.16 computer disk. The county may recover its costs by charging the 21.17 person requesting the information the reasonable cost for 21.18 preparing the data. The information may not be used for any 21.19 purpose other than for notifying the homeowner of potential 21.20 eligibility and assisting the homeowner, without charge, in 21.21 preparing a refund claim. 21.22 Sec. 12. [290A.27] [ROUNDING.] 21.23 In computing the dollar amount of items on the property tax 21.24 refund claim form and accompanying schedules, items may be 21.25 rounded off to the nearest whole dollar amount, disregarding 21.26 amounts of less than 50 cents and increasing amounts of 50 cents 21.27 to 99 cents to the next highest dollar. 21.28 Sec. 13. Minnesota Statutes 1995 Supplement, section 21.29 297A.02, subdivision 4, is amended to read: 21.30 Subd. 4. [MANUFACTURED HOUSING AND PARK TRAILERS.] 21.31 Notwithstanding the provisions of subdivision 1, for sales at 21.32 retail of newmanufactured homes used for residential purposes 21.33 and new or used park trailers, as defined in section 168.011, 21.34 subdivision 8, paragraph (b), the excise tax is imposed upon 65 21.35 percent of the sales price of the home or park trailer. 21.36 Sec. 14. Minnesota Statutes 1994, section 477A.011, 22.1 subdivision 3, is amended to read: 22.2 Subd. 3. [POPULATION.] "Population" means the population 22.3 established as of July 1 in an aid calculation year by the most 22.4 recent federal census, by a special census conducted under 22.5 contract with the United States Bureau of the Census, by a 22.6 population estimate made by the metropolitan council, or by a 22.7 population estimate of the state demographer made pursuant to 22.8 section 4A.02, whichever is the most recent as to the stated 22.9 date of the count or estimate for the preceding calendar year. 22.10 The term "per capita" refers to population as defined by this 22.11 subdivision. 22.12 Sec. 15. Laws 1994, chapter 587, article 3, section 21, is 22.13 amended to read: 22.14 Sec. 21. [REPEALER.] 22.15 (a) Minnesota Statutes 1992, sections 3.862 and 477A.012, 22.16 subdivision 6 are repealed. 22.17 (b) Minnesota Statutes 1992, sections 16A.711, 273.1381, 22.18 273.1398, subdivision 7 , and 477A.0132, as amended by Laws 1994,22.19 chapter 416, article 1, section 60; and Minnesota Statutes 1993 22.20 Supplement, sections 16A.712, 256E.06, subdivision 12, 273.166, 22.21 subdivision 4, 290A.23, subdivision 2, 477A.03, subdivision 1, 22.22 and Laws 1973, chapter 650, article 24, section 6, as amended by 22.23 Laws 1974, chapter 257, section 4 are repealed. 22.24 Sec. 16. [SECTION REMAINS IN EFFECT.] 22.25 As required by Minnesota Statutes, section 645.36, it is 22.26 specifically provided that Minnesota Statutes 1994, section 22.27 477A.0132, as amended by Laws 1995, chapter 264, article 8, 22.28 section 15, is revived. 22.29 Sec. 17. [REVISOR INSTRUCTION.] 22.30 In the next edition of Minnesota Statutes, the revisor 22.31 shall renumber section 383.06, subdivision 2, as section 373.01, 22.32 subdivision 4. 22.33 Sec. 18. [EFFECTIVE DATE.] 22.34 Sections 1 to 4, and 9 are effective the day following 22.35 final enactment. Section 5 is effective for petitions filed 22.36 after the day of final enactment. Section 10 is effective for 23.1 mortgages recorded or registered after the day of final 23.2 enactment. Section 11 is effective for refunds for taxes 23.3 payable in 1997 only. Section 12 is effective for timely filed 23.4 property tax refund claims based on rent paid in 1996 and 23.5 property taxes payable in 1997, and thereafter. Section 13 is 23.6 effective for sales made after December 31, 1996. Section 14 is 23.7 effective for calculations in 1996 and thereafter, for aids 23.8 payable in 1997 and thereafter. 23.9 ARTICLE 3 23.10 MOTOR FUELS TAX 23.11 Section 1. Minnesota Statutes 1995 Supplement, section 23.12 41A.09, subdivision 2a, is amended to read: 23.13 Subd. 2a. [DEFINITIONS.] For the purposes of this section, 23.14 the terms defined in this subdivision have the meanings given 23.15 them. 23.16 (a) "Ethanol" means fermentation ethyl alcohol derived from 23.17 agricultural products, including potatoes, cereal, grains, 23.18 cheese whey, and sugar beets; forest products; or other 23.19 renewable resources, including residue and waste generated from 23.20 the production, processing, and marketing of agricultural 23.21 products, forest products, and other renewable resources, that: 23.22 (1) meets all of the specifications in ASTM specification D 23.23 4806-88; and 23.24 (2) is denatured with unleaded gasoline or rubber23.25 hydrocarbon solventas definedspecified in Code of Federal 23.26 Regulations, title 27, parts 21120 and 212, as adopted by the23.27 Bureau of Alcohol, Tobacco and Firearms of the United States23.28 Treasury Department21. 23.29 (b) "Wet alcohol" means agriculturally derived fermentation 23.30 ethyl alcohol having a purity of at least 50 percent but less 23.31 than 99 percent. 23.32 (c) "Anhydrous alcohol" means fermentation ethyl alcohol 23.33 derived from agricultural products as described in paragraph 23.34 (a), but that does not meet ASTM specifications or is not 23.35 denatured and is shipped in bond for further processing. 23.36 (d) "Ethanol plant" means a plant at which ethanol, 24.1 anhydrous alcohol, or wet alcohol is produced. 24.2 Sec. 2. Minnesota Statutes 1994, section 239.761, 24.3 subdivision 5, is amended to read: 24.4 Subd. 5. [DENATURED ETHANOL.] Denatured ethanol that is to 24.5 be blended with gasoline must be agriculturally derived and must 24.6 comply with ASTM specification D 4806-88. This includes the 24.7 requirement that ethanol may be denatured only with specified24.8 concentrations of unleaded gasoline or rubber hydrocarbon24.9 solventas definedspecified in Code of Federal Regulations, 24.10 title 27, parts 21120 and 212, as adopted by the Bureau of24.11 Alcohol, Tobacco and Firearms of the United States Treasury24.12 Department21. 24.13 Sec. 3. Minnesota Statutes 1994, section 296.01, 24.14 subdivision 2, is amended to read: 24.15 Subd. 2. [AGRICULTURAL ALCOHOL GASOLINE.] "Agricultural 24.16 alcohol gasoline" means a gasoline-ethanol blend of up to ten 24.17 percent agriculturally derived fermentation ethanol derived from 24.18 agricultural products, such as potatoes, cereal, grains, cheese 24.19 whey, sugar beets, or forest products or other renewable 24.20 resources, that: 24.21 (1) meets the specifications in ASTM specification D 24.22 4806-88; and 24.23 (2) is denatured with unleaded gasoline or rubber24.24 hydrocarbon solventas definedspecified in Code of Federal 24.25 Regulations, title 27, parts 21120 and 212, as adopted by the24.26 Bureau of Alcohol, Tobacco and Firearms of the United States24.27 Treasury Department21. 24.28 Sec. 4. Minnesota Statutes 1994, section 296.01, 24.29 subdivision 13, is amended to read: 24.30 Subd. 13. [DENATURED ETHANOL.] "Denatured ethanol" means 24.31 ethanol that is to be blended with gasoline, has been 24.32 agriculturally derived, and complies with ASTM specification D 24.33 4806-88. This includes the requirement that ethanol may be 24.34 denatured only with specified concentrations of unleaded24.35 gasoline or rubber hydrocarbon solventas definedspecified in 24.36 Code of Federal Regulations, title 27, parts 21120 and 212, as25.1 adopted by the Bureau of Alcohol, Tobacco and Firearms of the25.2 United States Treasury Department21. 25.3 Sec. 5. Minnesota Statutes 1995 Supplement, section 25.4 296.02, subdivision 1, is amended to read: 25.5 Subdivision 1. [TAX IMPOSED ; EXCEPTION FOR QUALIFIED25.6 SERVICE STATION.] There is imposed an excise tax on gasoline, 25.7 gasoline blended with ethanol, and agricultural alcohol 25.8 gasoline, used in producing and generating power for propelling 25.9 motor vehicles used on the public highways of this state. The 25.10 tax is imposed on the first distributor who received the product 25.11 in Minnesota. For purposes of this section, gasoline is defined 25.12 in section 296.01, subdivisions 10, 15b, 18, 19, 20, and 24a. 25.13 This tax is payable at the times, in the manner, and by persons 25.14 specified in this chapter. The tax is payable at the rate 25.15 specified in subdivision 1b, subject to the exceptions and 25.16 reductions specified in this section. 25.17 (a) Notwithstanding any other provision of law to the25.18 contrary, the tax imposed on special fuel sold by a qualified25.19 service station may not exceed, or the tax on gasoline delivered25.20 to a qualified service station must be reduced to, a rate not25.21 more than three cents per gallon above the state tax rate25.22 imposed on such products sold by a service station in a25.23 contiguous state located within the distance indicated in clause25.24 (b).25.25 (b) A "qualifying service station" means a service station25.26 located within 7.5 miles, measured by the shortest route by25.27 public road, from a service station selling like product in the25.28 contiguous state.25.29 (c) A qualified service station shall be allowed a credit25.30 by the supplier or distributor, or both, for the amount of25.31 reduction computed in accordance with clause (a).25.32 A qualified service station, before receiving the credit,25.33 shall be registered with the commissioner of revenue.25.34 Sec. 6. Minnesota Statutes 1994, section 296.02, is 25.35 amended by adding a subdivision to read: 25.36 Subd. 1c. [QUALIFYING SERVICE STATIONS.] Notwithstanding 26.1 any other provision of law to the contrary, the tax imposed on 26.2 gasoline or undyed diesel fuel delivered to a qualified service 26.3 station may not exceed, or must be reduced to, a rate not more 26.4 than three cents per gallon above the state tax rate imposed on 26.5 such products sold by a service station in a contiguous state 26.6 located within the distance indicated in this subdivision. 26.7 A distributor shall be allowed a credit or refund for the 26.8 amount of reduction computed in accordance with this subdivision. 26.9 For purposes of this subdivision, a "qualifying service 26.10 station" means a service station located within 7.5 miles, 26.11 measured by the shortest route by public road, from a service 26.12 station selling like product in the contiguous state. 26.13 Sec. 7. Minnesota Statutes 1995 Supplement, section 26.14 296.025, subdivision 1, is amended to read: 26.15 Subdivision 1. [TAX IMPOSED.] There is hereby imposed an 26.16 excise tax on all special fuel at the rates specified in 26.17 subdivision 1b. For undyed diesel fuel, the tax is imposed on 26.18 the first distributor who received the product in Minnesota. 26.19 For dyed fuel being used illegally in a licensed motor vehicle, 26.20 the tax is imposed on the owner or operator of the motor 26.21 vehicle , or in some instances, on the dealer who supplied the26.22 fuel. For dyed fuel used in a motor vehicle but subject to a 26.23 federal exemption, although no federal tax may be imposed, the 26.24 fuel is subject toowner or operator of the vehicle is liable 26.25 for the state tax. For other fuels, including jet fuel, 26.26 propane, and compressed natural gas, the tax is imposed on the 26.27 distributor, special fuel dealer, or bulk purchaser. This tax 26.28 is payable at the time and in the manner specified in this 26.29 chapter. For purposes of this section, "owner or operator" 26.30 means the operation of licensed motor vehicles, whether loaded 26.31 or empty, whether for compensation or not for compensation, and 26.32 whether owned by or leased to the motor carrier who operates 26.33 them or causes them to be operated. 26.34 Sec. 8. Minnesota Statutes 1994, section 296.025, 26.35 subdivision 6, is amended to read: 26.36 Subd. 6. [WHEN FUEL DEEMED SPECIAL FUEL; TAX.] All sales 27.1 of combustible gases and liquid petroleum products (except 27.2 gasoline) shall be deemed to be sales of special fuel if the 27.3 sales tickets, invoices, and records evidencing such sales fail 27.4 to show the true and correct names and addresses of the 27.5 purchasers. In such cases, there is hereby imposed an excise27.6 tax of the same rate per gallon as the gasoline excise tax on27.7 all such combustible gases and liquid petroleum products, and27.8 the vendor shall be liable for such tax to the extent not 27.9 previously paid. 27.10 Sec. 9. Minnesota Statutes 1995 Supplement, section 27.11 296.12, subdivision 3, is amended to read: 27.12 Subd. 3. [TAX COLLECTION, REPORTING AND PAYMENT.] (a) For 27.13 undyed diesel fuel, the tax is imposed on the distributor who 27.14 receives the fuel. 27.15 (b) For all other special fuels, the tax is imposed on the 27.16 distributor, bulk purchaser, or special fuel dealer. The tax 27.17 may be paid upon receipt or sale as follows: 27.18 (1) Distributors and special fuel dealers may, subject to 27.19 the approval of the commissioner, elect to pay to the 27.20 commissioner the special fuel excise tax on all special fuel 27.21 delivered or sold into the supply tank of an aircraft or a 27.22 licensed motor vehicle. Under this option an invoice must be 27.23 issued at the time of each delivery showing the name and address 27.24 of the purchaser, date of sale, number of gallons, price per 27.25 gallon and total amount of sale. A separate sales ticket book 27.26 shall be maintained for special fuel sales; and 27.27 (2) Bulk purchasers shall report and pay the excise tax on 27.28 all special fuel purchased by them for storage, to the 27.29 commissioner in the form and manner prescribed by the 27.30 commissioner. 27.31 (c) Any person delivering special fuel on which the excise 27.32 tax has not previously been paid, into the supply tank of an 27.33 aircraft or a licensed motor vehicle shall report such delivery 27.34 and shall pay, or collect and pay the excise tax on the special 27.35 fuel so delivered, to the commissioner. 27.36 Sec. 10. Minnesota Statutes 1994, section 296.141, 28.1 subdivision 5, is amended to read: 28.2 Subd. 5. [REFUND TO DEALER; DESTRUCTION BY ACCIDENT.] 28.3 Notwithstanding the provisions of subdivision 4, the 28.4 commissioner shall allow a dealer a refund of the tax paid on28.5 gasoline or special fuel destroyed by accident while in the28.6 possession of the dealer: 28.7 (1) the tax paid by the distributor on gasoline or undyed 28.8 diesel fuel destroyed by accident while in the possession of the 28.9 dealer; or 28.10 (2) the tax paid by a distributor or special fuels dealer 28.11 on other special fuels destroyed by accident while in the 28.12 possession of the dealer. 28.13 Sec. 11. Minnesota Statutes 1994, section 296.15, is 28.14 amended by adding a subdivision to read: 28.15 Subd. 2a. [IMPOSITION OF CIVIL PENALTY; DYED FUEL.] (a) If 28.16 any dyed fuel is sold or held for sale by a person for any use 28.17 which the person knows or has reason to know is not a nontaxable 28.18 use of the fuel; or if any dyed fuel is held for use or used in 28.19 a licensed motor vehicle or for any other use by a person for a 28.20 use other than a nontaxable use and the person knew, or had 28.21 reason to know, that the fuel was so dyed; or if a person 28.22 willfully alters, or attempts to alter, the strength or 28.23 composition of any dye or marking in any dyed fuel, then the 28.24 person shall pay a penalty in addition to the tax, if any. 28.25 (b) Except as provided in paragraph (c), the amount of 28.26 penalty under paragraph (a) for each act is the greater of 28.27 $1,000, or $10 for each gallon of dyed fuel involved. 28.28 (c) With regard to a multiple violation under paragraph 28.29 (a), the penalty shall be applied by increasing the amount in 28.30 paragraph (b) by the product of (1) such amount, and (2) the 28.31 number of prior penalties, if any, imposed by this section on 28.32 the person, or a related person, or any predecessor of the 28.33 person or related person. 28.34 (d) If a penalty is imposed under this section on a 28.35 business entity, each officer, employee, or agent of the entity 28.36 who willfully participated in any act giving rise to the penalty 29.1 is jointly and severally liable with the entity for the penalty. 29.2 Sec. 12. Minnesota Statutes 1994, section 296.17, 29.3 subdivision 7, is amended to read: 29.4 Subd. 7. [DEFINITIONS.] As used in subdivisions 7 to 22: 29.5 (a) "motor fuel" means a liquid, regardless of its 29.6 composition or properties, used to propel a motor vehicle; 29.7 (b) "commercial motor vehicle" means a passenger vehicle29.8 that has seats for more than 20 passengers in addition to the29.9 driver, or a power unit that (1) has a gross weight in excess of29.10 26,000 pounds, or (2) has three or more axles regardless of29.11 weight, or (3) when used in combination, the weight of the29.12 combination exceeds 26,000 pounds gross vehicle weight;motor 29.13 vehicle used, designed, or maintained for transportation of 29.14 persons or property that: 29.15 (1) has two axles and a gross vehicle weight or registered 29.16 gross vehicle weight exceeding 26,000 pounds; or 29.17 (2) has three or more axles regardless of weight; or 29.18 (3) is used in combination, when the weight of such 29.19 combination exceeds 26,000 pounds gross vehicle or registered 29.20 gross vehicle weight. "Commercial motor vehicle" does not 29.21 include recreational vehicles; 29.22 (c) "motor carrier" means a person who operates or causes 29.23 to be operated a commercial motor vehicle on a highway in this 29.24 state; 29.25 (d) "operation" means operation of commercial motor 29.26 vehicles whether loaded or empty, whether for compensation or 29.27 not for compensation, and whether owned by or leased to the 29.28 motor carrier who operates them or causes them to be operated; 29.29 and 29.30 (e) "highway" means the entire width between the boundary 29.31 lines of every way publicly maintained when part of the highway 29.32 is open for the public to travel on. 29.33 Sec. 13. [REPEALER.] 29.34 Minnesota Statutes 1994, section 296.25, subdivision 1a, is 29.35 repealed. 29.36 Sec. 14. [EFFECTIVE DATE.] 30.1 Sections 1 to 13 are effective the day following final 30.2 enactment.