1st Engrossment - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to taxation; making technical changes to 1.3 income, franchise, sales, excise, property, healthcare 1.4 provider, and gambling taxes; making technical changes 1.5 to tax administrative provisions; requiring mandate 1.6 explanations be attached to legislative bills before 1.7 committee hearings; amending Minnesota Statutes 1996, 1.8 sections 270.06; 270.069, subdivision 1; 270.70, 1.9 subdivision 15; 278.10; 289A.42, subdivision 2; 1.10 289A.65, subdivisions 7 and 8; 297E.15, subdivisions 8 1.11 and 9; Minnesota Statutes 1997 Supplement, sections 1.12 3.987, subdivision 2; 270.701, subdivision 2; 289A.09, 1.13 subdivision 2; 289A.20, subdivision 2; 289A.38, 1.14 subdivision 7; 290.0673, subdivisions 4, 5, and 7; 1.15 290.92, subdivision 30; 295.53, subdivision 4a; 1.16 297A.01, subdivisions 3 and 11; 297F.22, subdivisions 1.17 6 and 7; and 297G.21, subdivisions 6 and 7. 1.18 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.19 ARTICLE 1 1.20 INCOME AND FRANCHISE TAXES 1.21 Section 1. Minnesota Statutes 1997 Supplement, section 1.22 289A.09, subdivision 2, is amended to read: 1.23 Subd. 2. [WITHHOLDING STATEMENT TO EMPLOYEE OR PAYEE AND 1.24 TO COMMISSIONER.] (a) A person required to deduct and withhold 1.25 from an employee a tax under section 290.92, subdivision 2a or 1.26 3, or 290.923, subdivision 2, or who would have been required to 1.27 deduct and withhold a tax under section 290.92, subdivision 2a 1.28 or 3, or persons required to withhold tax under section 290.923, 1.29 subdivision 2, determined without regard to section 290.92, 1.30 subdivision 19, if the employee or payee had claimed no more 1.31 than one withholding exemption, or who paid wages or made 2.1 payments not subject to withholding under section 290.92, 2.2 subdivision 2a or 3, or 290.923, subdivision 2, to an employee 2.3 or person receiving royalty payments in excess of $600, or who 2.4 has entered into a voluntary withholding agreement with a payee 2.5 under section 290.92, subdivision 20, must give every employee 2.6 or person receiving royalty payments in respect to the 2.7 remuneration paid by the person to the employee or person 2.8 receiving royalty payments during the calendar year, on or 2.9 before January 31 of the succeeding year, or, if employment is 2.10 terminated before the close of the calendar year, within 30 days 2.11 after the date of receipt of a written request from the employee 2.12 if the 30-day period ends before January 31, a written statement 2.13 showing the following: 2.14 (1) name of the person; 2.15 (2) the name of the employee or payee and the employee's or 2.16 payee's social security account number; 2.17 (3) the total amount of wages as that term is defined in 2.18 section 290.92, subdivision 1, paragraph (1); the total amount 2.19 of remuneration subject to withholding under section 290.92, 2.20 subdivision 20; the amount of sick pay as required under section 2.21 6051(f) of the Internal Revenue Code; and the amount of 2.22 royalties subject to withholding under section 290.923, 2.23 subdivision 2; and 2.24 (4) the total amount deducted and withheld as tax under 2.25 section 290.92, subdivision 2a or 3, or 290.923, subdivision 2. 2.26 (b) The statement required to be furnished by this 2.27 paragraph with respect to any remuneration must be furnished at 2.28 those times, must contain the information required, and must be 2.29 in the form the commissioner prescribes. 2.30 (c) The commissioner may prescribe rules providing for 2.31 reasonable extensions of time, not in excess of 30 days, to 2.32 employers or payers required to give the statements to their 2.33 employees or payees under this subdivision. 2.34 (d) A duplicate of any statement made under this 2.35 subdivision and in accordance with rules prescribed by the 2.36 commissioner, along with a reconciliation in the form the 3.1 commissioner prescribes of the statements for the calendar year, 3.2 including a reconciliation of the quarterly returns required to 3.3 be filed under subdivision 1, must be filed with the 3.4 commissioner on or before February 28 of the year after the 3.5 payments were made. 3.6 (e) If an employer cancels the employer's Minnesota 3.7 withholding account number required by section 290.92, 3.8 subdivision 24, the information required by paragraph (d), must 3.9 be filed with the commissioner within 30 days of the end of the 3.10 quarter in which the employer cancels its account number. 3.11 (f) The employer must submit the statements required to be 3.12 sent to the commissioner on magnetic media, if the magnetic 3.13 media was required to satisfy the federal reporting requirements 3.14 of section 6011(e) of the Internal Revenue Code and the 3.15 regulations issued under it. 3.16 (g) A "
provider of payroll servicesthird-party bulk filer" 3.17 as defined in section 289A.20290.92, subdivision 230, 3.18 paragraph (f)(a), clause (2), must submit the returns required 3.19 by this subdivision and subdivision 1, paragraph (a), with the 3.20 commissioner by electronic means. 3.21 Sec. 2. Minnesota Statutes 1997 Supplement, section 3.22 289A.20, subdivision 2, is amended to read: 3.23 Subd. 2. [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 3.24 WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 3.25 WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 3.26 (a) A tax required to be deducted and withheld during the 3.27 quarterly period must be paid on or before the last day of the 3.28 month following the close of the quarterly period, unless an 3.29 earlier time for payment is provided. A tax required to be 3.30 deducted and withheld from compensation of an entertainer and 3.31 from a payment to an out-of-state contractor must be paid on or 3.32 before the date the return for such tax must be filed under 3.33 section 289A.18, subdivision 2. Taxes required to be deducted 3.34 and withheld by partnerships and S corporations must be paid on 3.35 or before the date the return must be filed under section 3.36 289A.18, subdivision 2. 4.1 (b) An employer who, during the previous quarter, withheld 4.2 more than $1,500 of tax under section 290.92, subdivision 2a or 4.3 3, or 290.923, subdivision 2, must deposit tax withheld under 4.4 those sections with the commissioner within the time allowed to 4.5 deposit the employer's federal withheld employment taxes under 4.6 Treasury Regulation, section 31.6302-1, without regard to the 4.7 safe harbor or de minimis rules in subparagraph (f) or the 4.8 one-day rule in subsection (c), clause (3). Taxpayers must 4.9 submit a copy of their federal notice of deposit status to the 4.10 commissioner upon request by the commissioner. 4.11 (c) The commissioner may prescribe by rule other return 4.12 periods or deposit requirements. In prescribing the reporting 4.13 period, the commissioner may classify payors according to the 4.14 amount of their tax liability and may adopt an appropriate 4.15 reporting period for the class that the commissioner judges to 4.16 be consistent with efficient tax collection. In no event will 4.17 the duration of the reporting period be more than one year. 4.18 (d) If less than the correct amount of tax is paid to the 4.19 commissioner, proper adjustments with respect to both the tax 4.20 and the amount to be deducted must be made, without interest, in 4.21 the manner and at the times the commissioner prescribes. If the 4.22 underpayment cannot be adjusted, the amount of the underpayment 4.23 will be assessed and collected in the manner and at the times 4.24 the commissioner prescribes. 4.25 (e) If the aggregate amount of the tax withheld during a 4.26 fiscal year ending June 30 under section 290.92, subdivision 2a 4.27 or 3, is equal to or exceeds the amounts established for 4.28 remitting federal withheld taxes pursuant to the regulations 4.29 promulgated under section 6302(h) of the Internal Revenue Code, 4.30 the employer must remit each required deposit in the subsequent 4.31 calendar year by means of a funds transfer as defined in section 4.32 336.4A-104, paragraph (a). The funds transfer payment date, as 4.33 defined in section 336.4A-401, must be on or before the date the 4.34 deposit is due. If the date the deposit is due is not a funds 4.35 transfer business day, as defined in section 336.4A-105, 4.36 paragraph (a), clause (4), the payment date must be on or before 5.1 the funds transfer business day next following the date the 5.2 deposit is due. 5.3 (f) Providers of payroll servicesA third-party bulk filer 5.4 as defined in section 290.92, subdivision 30, paragraph (a), 5.5 clause (2), who remitremits withholding deposits must remit all 5.6 deposits by means of a funds transfer as provided in paragraph 5.7 (e), regardless of the aggregate amount of tax withheld during a 5.8 fiscal year for all of the employers. For the purposes of this5.9 paragraph, "providers of payroll services" means persons who5.10 have custody of or control over another employer's funds for the5.11 purpose of paying on behalf of the other employer's Minnesota5.12 withholding taxes.5.13 Sec. 3. Minnesota Statutes 1997 Supplement, section 5.14 289A.38, subdivision 7, is amended to read: 5.15 Subd. 7. [FEDERAL TAX CHANGES.] If the amount of income, 5.16 items of tax preference, deductions, or credits for any year of 5.17 a taxpayer as reported to the Internal Revenue Service is 5.18 changed or corrected by the commissioner of Internal Revenue or 5.19 other officer of the United States or other competent authority, 5.20 or where a renegotiation of a contract or subcontract with the 5.21 United States results in a change in income, items of tax 5.22 preference, deductions, credits, or withholding tax, or, in the 5.23 case of estate tax, where there are adjustments to the taxable 5.24 estate resulting in a change to the credit for state death 5.25 taxes, the taxpayer shall report the change or correction or 5.26 renegotiation results in writing to the commissioner. The 5.27 report must be submitted within 180 days after the final 5.28 determination and must be in the form of either an amended 5.29 Minnesota estate, withholding tax, or income tax return 5.30 conceding the accuracy of the federal determination or a letter 5.31 detailing how the federal determination is incorrect or does not 5.32 change the Minnesota tax. An amended Minnesota income tax 5.33 return must be accompanied by an amended property tax refund 5.34 return, if necessary. A taxpayer filing an amended federal tax 5.35 return must also file a copy of the amended return with the 5.36 commissioner of revenue within 180 days after filing the amended 6.1 return. 6.2 Sec. 4. Minnesota Statutes 1996, section 289A.42, 6.3 subdivision 2, is amended to read: 6.4 Subd. 2. [FEDERAL EXTENSIONS.] When a taxpayer consents to 6.5 an extension of time for the assessment of federal withholding 6.6 or income taxes, the period in which the commissioner may 6.7 recompute the tax is also extended, notwithstanding any period 6.8 of limitations to the contrary, as follows: 6.9 (1) for the periods provided in section 289A.38, 6.10 subdivisions 8 and 9; 6.11 (2) for six months following the expiration of the extended 6.12 federal period of limitations when no change is made by the 6.13 federal authority. If no change is made by the federal 6.14 authority, and, but for this subdivision, the commissioner's 6.15 time period to adjust the tax has expired, and if the 6.16 commissioner has completed a field audit of the taxpayer, no 6.17 additional changes resulting in additional tax due or a refund 6.18 may be made. For purposes of this subdivision, "field audit" 6.19 has the meaning given it in section 289A.38, subdivision 9. 6.20 Sec. 5. Minnesota Statutes 1997 Supplement, section 6.21 290.0673, subdivision 4, is amended to read: 6.22 Subd. 4. [DUTIES OF PROGRAM.] (a) Each program certified 6.23 by the commissioner of children, families, and learning under 6.24 subdivision 2 must comply with the requirements of this 6.25 subdivision. 6.26 (b) Each program must maintain records for each graduate 6.27 for which the program provides a credit certificate to an 6.28 employer. These records must include information sufficient to 6.29 verify the graduate's eligibility under this section, identify 6.30 the employer, describe the job including its compensation rate 6.31 and benefits, and determine the amount of placement and 6.32 retention fees received. 6.33 (c) Each program must report to the commissioner of revenue6.34 children, families, and learning by January 1, 1999, and by 6.35 January 1, 2001, on its use of the credit. Each report must 6.36 include, at least, information on: 7.1 (1) the number of graduates placed; 7.2 (2) demographic information on the graduates; 7.3 (3) the types of position in which each graduate is placed, 7.4 including compensation information; 7.5 (4) the tenure of each graduate at the placed position or 7.6 in other jobs; 7.7 (5) the amount of employer fees paid to the program; 7.8 (6) the amount of money raised by the program from other 7.9 sources; and 7.10 (7) the types and sizes of employers with which graduates 7.11 have been placed and retained. 7.12 (d) The commissioner of children, families, and learning 7.13 shall compile and summarize this information and report to the 7.14 legislature by February 15, 1999, and February 15, 2001. 7.15 Sec. 6. Minnesota Statutes 1997 Supplement, section 7.16 290.0673, subdivision 5, is amended to read: 7.17 Subd. 5. [ISSUANCE OF CREDIT CERTIFICATES.] (a) The total 7.18 amount of credits under this section is limited to $1,200,000 7.19 for taxable years beginning after December 31, 1996, and before 7.20 January 1, 2002. The commissioner of children, families, and 7.21 learning may issue under paragraph (b) no more than the 7.22 specified amount of certificates for taxable years beginning 7.23 during each calendar year: 7.24 1997 $100,000 7.25 1998 $200,000 7.26 1999 $300,000 7.27 2000 $300,000 7.28 2001 $300,000 7.29 Unused certificates for a taxable year carry over and may 7.30 be used for a later taxable year, regardless of when issued by 7.31 the commissioner of children, families, and learning. 7.32 (b) Upon application, the commissioner of children, 7.33 families, and learning shall issue certificates to job training 7.34 programs, certified under subdivision 2, up to the dollar amount 7.35 available for the taxable year. The certificates must be in a 7.36 dollar amount that is no greater than the dollar amount applied 8.1 for, and reflects the commissioner'scommissioner of children, 8.2 families, and learning's estimate of the job training program's 8.3 projected fees for placements and retentions of qualifying 8.4 graduates. The commissioner of children, families, and learning 8.5 shall issue the certificates in the order in which applications 8.6 are received until the available authority has been issued. 8.7 (c) To the extent available, the job training program must 8.8 provide to employers of its qualified graduates certificates 8.9 issued by the commissioner of children, families, and learning 8.10 under this subdivision. 8.11 Sec. 7. Minnesota Statutes 1997 Supplement, section 8.12 290.0673, subdivision 7, is amended to read: 8.13 Subd. 7. [MANNER OF CLAIMING.] The commissioner of revenue 8.14 shall prescribe the manner in which the credit may be claimed. 8.15 This may include allowing the credit only as a separately 8.16 processed claim for a refund. 8.17 Sec. 8. Minnesota Statutes 1997 Supplement, section 8.18 290.92, subdivision 30, is amended to read: 8.19 Subd. 30. [REGISTRATION; THIRD-PARTY BULK FILER.] (a) For 8.20 purposes of this subdivision, the following terms have the 8.21 meanings given: 8.22 (1) Notwithstanding section 290.01, "person" means an 8.23 individual, fiduciary, partnership, corporation, limited 8.24 liability company, association, or other entity organized under 8.25 the laws of this state or any other jurisdiction. 8.26 (2) "Third-party bulk filer" means a person that collects8.27 withholding taxes from more than one employer for the purpose of8.28 filing returns and depositing the withheld taxes with the8.29 commissionerwho has custody or control over another employer's 8.30 funds for the purpose of filing returns and depositing the 8.31 withheld taxes of the other employer with the commissioner. 8.32 (b) A person shall not act as a third-party bulk filer 8.33 unless the person is registered with the commissioner under this 8.34 subdivision. 8.35 (c) A person may apply to the commissioner, on a form 8.36 prescribed by the commissioner, for registration as a 9.1 third-party bulk filer under this subdivision, and the 9.2 commissioner shall grant the application if the application 9.3 indicates that the person will comply with this subdivision. 9.4 (d) A third-party bulk filer must: 9.5 (1) keep client funds held for payment of federal or state 9.6 withholding taxes or other client obligations in an account 9.7 separate from the third-party bulk filer's own funds; 9.8 (2) permit the commissioner to conduct scheduled or 9.9 unscheduled audits of the third-party bulk filer's books and 9.10 records relating to compliance with this subdivision and fully 9.11 cooperate with the audits or, at the discretion of the 9.12 commissioner, submit an audit conducted by a certified public 9.13 accountant; 9.14 (3) file returns electronically and make deposits 9.15 electronically with the commissioner in compliance with the 9.16 commissioner's requirements for electronic filing and 9.17 depositing; 9.18 (4) provide to the commissioner at least monthly, in the 9.19 form requested by the commissioner, an updated client list that 9.20 includes at least the name, address, tax identification number, 9.21 and federal deposit frequency of each client. The address 9.22 listed for the client must be the client's actual street or post 9.23 office box address and not the third-party bulk filer's address; 9.24 (5) disclose in writing to prospective clients that: 9.25 (i) the third-party bulk filer may invest client funds 9.26 prior to depositing them with the commissioner and with the 9.27 Internal Revenue Service and that earnings from those 9.28 investments will be the property of the third-party bulk filer; 9.29 (ii) if the third-party bulk filer incurs losses on those 9.30 investments or uses the client's funds for other purposes, the 9.31 third-party bulk filer will still be liable to the client for 9.32 the amounts withheld but will be able to make required tax 9.33 deposits on behalf of the client only by using the third-party 9.34 bulk filer's own funds or other assets to replace the funds lost 9.35 through the investments or used for other purposes; and 9.36 (iii) no state or federal agency monitors or assumes any 10.1 responsibility for the financial solvency of third-party bulk 10.2 filers; 10.3 (6) timely file all returns and timely make all tax 10.4 deposits required under its contracts with its clients; 10.5 (7) upon request, provide to the commissioner, within the 10.6 time specified in the request, a copy of any contract with a 10.7 client; and 10.8 (8) comply with all other requirements of this section or 10.9 of rules adopted under this section. 10.10 (e) When the commissioner sends an order of assessment 10.11 issued under section 289A.37, in either paper or electronic 10.12 form, to a third-party bulk filer regarding a client, the 10.13 commissioner shall also send a paper copy of the order of 10.14 assessment to the client. 10.15 (f) If the commissioner determines that a required deposit 10.16 appears not to have been made, the commissioner shall send a 10.17 written notice of the delinquency, in electronic or paper form, 10.18 to the third-party bulk filer, and a copy to the client as 10.19 required under paragraph (e). 10.20 (g) If the commissioner determines that a required deposit 10.21 has not been made, and that continued operation of the 10.22 third-party bulk filer would present a risk of loss to its 10.23 clients, the commissioner may, upon ten business days' written 10.24 notice by certified mail to the third-party bulk filer, suspend 10.25 the registration of the third-party bulk filer for an indefinite 10.26 period, and notify the third-party bulk filer's clients that the 10.27 registration has been suspended. A registration may not be 10.28 suspended if the failure to make a deposit was caused by the 10.29 client's failure to deposit funds or provide the information 10.30 necessary to calculate appropriate tax withholding payments. 10.31 The commissioner shall, upon request, provide the third-party 10.32 bulk filer with the opportunity for an administrative appeal 10.33 under section 289A.65, subdivisions 1, 4, and 10, prior to 10.34 suspension; the hearing, if any, on the administrative appeal 10.35 must occur within the ten-day period unless the commissioner, in 10.36 the commissioner's sole discretion, agrees to delay the 11.1 suspension to permit a later hearing. The 60-day period 11.2 specified in section 289A.65, subdivision 4, does not apply to a 11.3 proceeding under this paragraph. Within 30 days after the 11.4 beginning of a suspension under this paragraph, the commissioner 11.5 may commence a proceeding to suspend or revoke under paragraph 11.6 (h); if the commissioner fails to do so, the suspension under 11.7 this paragraph terminates. 11.8 (h) If the commissioner determines, in compliance with 11.9 paragraph (i), that a third-party bulk filer has violated this 11.10 section without reasonable cause or is no longer eligible for 11.11 registration under this subdivision, the commissioner may 11.12 suspend or revoke the third-party bulk filer's registration or 11.13 may assess a civil penalty upon the third-party bulk filer, not 11.14 to exceed $5,000 per violation. A suspension of registration 11.15 may be for any period of less than six months and may include 11.16 conditions for reinstatement. If the commissioner revokes the 11.17 registration, the third-party bulk filer may not apply for 11.18 reregistration for six months after the revocation. If the 11.19 commissioner suspends or revokes a registration, the 11.20 commissioner shall notify the former registrant's clients that 11.21 the registration has been suspended or revoked. If the 11.22 commissioner assesses a civil penalty, the commissioner shall 11.23 not notify the third-party bulk filer's clients of the 11.24 assessment. 11.25 (i) Prior to a suspension, revocation, or assessment of a 11.26 civil penalty under paragraph (h), the commissioner shall first 11.27 provide 30 days' written notice to the third-party bulk filer, 11.28 specifying the violations and informing the third-party bulk 11.29 filer that the commissioner intends, based upon those 11.30 violations, to take action against the third-party bulk filer as 11.31 permitted under this paragraph and paragraph (h). The notice 11.32 shall advise the third-party bulk filer of the right to contest 11.33 the suspension, revocation, or assessment of a civil penalty and 11.34 of the general procedures for a contested case hearing under 11.35 chapter 14. The notice may be served personally or by mail in 11.36 the manner prescribed for service of an order of assessment 12.1 issued under section 289A.37. A suspension or revocation of 12.2 registration under this paragraph is effective when the 12.3 commissioner serves a notice of suspension or revocation upon 12.4 the third-party bulk filer after 30 days have passed following 12.5 the date of the notice of intent to suspend or revoke without 12.6 the third-party bulk filer requesting a hearing. If a hearing 12.7 is timely requested and held, the suspension or revocation is 12.8 effective upon service by the commissioner of an order of 12.9 suspension or revocation under section 14.62, subdivision 1. 12.10 (j) A third-party bulk filer may terminate its registration 12.11 by written notice to the commissioner, but the termination does 12.12 not affect the commissioner's authority to begin or continue a 12.13 proceeding to take action permitted under paragraph (h). The 12.14 commissioner shall notify the third-party bulk filer's clients 12.15 of a termination of registration under this paragraph. 12.16 (k) The commissioner shall remind employers at least 12.17 annually, through the department's regular informational 12.18 publications that it sends to employers, that employers may 12.19 telephone the department to determine whether a required filing 12.20 or deposit has been made by a third-party bulk filer. 12.21 Sec. 9. [EFFECTIVE DATES.] 12.22 Sections 1, 2, and 8 are effective for withholding on wages 12.23 paid after December 31, 1997. Sections 3 and 4 are effective 12.24 for federal extensions granted and final determinations made 12.25 after the date of final enactment. Sections 5 to 7 are 12.26 effective for certificates issued after December 31, 1996, and 12.27 used in taxable years beginning after July 31, 1997. 12.28 ARTICLE 2 12.29 SALES TAXES 12.30 Section 1. Minnesota Statutes 1996, section 270.069, 12.31 subdivision 1, is amended to read: 12.32 Subdivision 1. [COSTS DEDUCTED; APPROPRIATION.] If the 12.33 commissioner of revenue agrees to collect a locally imposed tax, 12.34 the local unit of government must agree that all the direct and 12.35 indirect costs of the department of revenue for collecting the 12.36 tax and any other statewide indirect costs will be deducted from 13.1 the amounts collected and paid to the local unit of government. 13.2 The amounts deducted must be deposited in the state treasury and13.3 credited to the general fund.13.4 Sec. 2. Minnesota Statutes 1997 Supplement, section 13.5 297A.01, subdivision 3, is amended to read: 13.6 Subd. 3. A "sale" and a "purchase" includes, but is not 13.7 limited to, each of the following transactions: 13.8 (a) Any transfer of title or possession, or both, of 13.9 tangible personal property, whether absolutely or conditionally, 13.10 and the leasing of or the granting of a license to use or 13.11 consume tangible personal property other than manufactured homes 13.12 used for residential purposes for a continuous period of 30 days 13.13 or more, for a consideration in money or by exchange or barter; 13.14 (b) The production, fabrication, printing, or processing of 13.15 tangible personal property for a consideration for consumers who 13.16 furnish either directly or indirectly the materials used in the 13.17 production, fabrication, printing, or processing; 13.18 (c) The furnishing, preparing, or serving for a 13.19 consideration of food, meals, or drinks. "Sale" or "purchase" 13.20 does not include: 13.21 (1) meals or drinks served to patients, inmates, or persons 13.22 residing at hospitals, sanitariums, nursing homes, senior 13.23 citizens homes, and correctional, detention, and detoxification 13.24 facilities; 13.25 (2) meals or drinks purchased for and served exclusively to 13.26 individuals who are 60 years of age or over and their spouses or 13.27 to the handicapped and their spouses by governmental agencies, 13.28 nonprofit organizations, agencies, or churches or pursuant to 13.29 any program funded in whole or part through 42 USCA sections 13.30 3001 through 3045, wherever delivered, prepared or served; or 13.31 (3) meals and lunches served at public and private schools, 13.32 universities, or colleges. 13.33 Notwithstanding section 297A.25, subdivision 2, taxable food or 13.34 meals include, but are not limited to, the following: 13.35 (i) food or drinks preparedsold by the retailer for 13.36 immediate consumption eitheron or offthe retailer's premises. 14.1 For purposes of this subdivision, "food or drinks prepared for14.2 immediate consumption" includes any food product upon which an14.3 act of preparation including, but not limited to, cooking,14.4 mixing, sandwich making, blending, heating, or pouring has been14.5 performed by the retailer so the food product may be immediately14.6 consumed by the purchaser. For purposes of this subdivision,14.7 "premises" means the total space and facilities, including14.8 buildings, grounds, and parking lots that are made available or14.9 that are available for use by the retailer or customer for the14.10 purpose of sale or consumption of prepared food and drinks.14.11 Food and drinks sold within a building or grounds which require 14.12 an admission charge for entrance are presumed to be sold for 14.13 consumption on the premises . The premises of a caterer is the14.14 place where the catered food or drinks are served; 14.15 (ii) food or drinks prepared by the retailer for immediate 14.16 consumption either on or off the retailer's premises. For 14.17 purposes of this subdivision, "food or drinks prepared for 14.18 immediate consumption" includes any food product upon which an 14.19 act of preparation including, but not limited to, cooking, 14.20 mixing, sandwich making, blending, heating, or pouring has been 14.21 performed by the retailer so the food product may be immediately 14.22 consumed by the purchaser; 14.23 (iii) ice cream, ice milk, orfrozen yogurt products, or 14.24 frozen novelties sold in single or individual servings including 14.25 novelties,cones, sundaes, and snow cones , sold in single or14.26 individual servings. For purposes of this subdivision, "single 14.27 or individual servings" does not include products prepackaged14.28 andwhen sold in bulk containers or bulk packaging; 14.29 (iii)(iv) soft drinks and other beverages including all 14.30 carbonated and noncarbonated beverages or drinks sold in liquid 14.31 form except beverages or drinks which contain milk or milk 14.32 products, beverages or drinks containing 15 or more percent 14.33 fruit juice, orand noncarbonated and noneffervescent bottled 14.34 water sold in individual containers of one-half gallon or more 14.35 in size; 14.36 (iv)(v) gum, candy, and candy products, except when sold 15.1 for fundraising purposes by a nonprofit organization that 15.2 provides educational and social activities primarily for young 15.3 people 18 years of age and under; 15.4 (v)(vi) ice; 15.5 (vi)(vii) all food sold from vending machines , pushcarts,15.6 lunch carts, motor vehicles, or any other form of vehicle except15.7 home delivery vehicles; 15.8 (viii) all food for immediate consumption sold from 15.9 concession stands and vehicles; 15.10 (vii)(ix) party trays; 15.11 (viii)(x) all meals and single servings of packaged snack 15.12 food sold in restaurants and bars; and 15.13 (ix)(xi) bakery products: 15.14 (A) prepared by the retailer for consumption on the 15.15 retailer's premises; 15.16 (B) sold at a place that charges admission; 15.17 (C) sold from vending machines; or 15.18 (D) sold in single or individual servings from concession 15.19 stands, vehicles, bars, and restaurants. For purposes of this 15.20 subdivision, "single or individual servings" does not include 15.21 products when sold in bulk containers or bulk packaging. 15.22 For purposes of this subdivision, "premises" means the 15.23 total space and facilities, including buildings, grounds, and 15.24 parking lots that are made available or that are available for 15.25 use by the retailer or customer for the purpose of sale or 15.26 consumption of prepared food and drinks. The premises of a 15.27 caterer is the place where the catered food or drinks are 15.28 served; 15.29 (d) The granting of the privilege of admission to places of 15.30 amusement, recreational areas, or athletic events, except a 15.31 world championship football game sponsored by the national 15.32 football league, and the privilege of having access to and the 15.33 use of amusement devices, tanning facilities, reducing salons, 15.34 steam baths, turkish baths, health clubs, and spas or athletic 15.35 facilities; 15.36 (e) The furnishing for a consideration of lodging and 16.1 related services by a hotel, rooming house, tourist court, motel 16.2 or trailer camp and of the granting of any similar license to 16.3 use real property other than the renting or leasing thereof for 16.4 a continuous period of 30 days or more; 16.5 (f) The furnishing for a consideration of electricity, gas, 16.6 water, or steam for use or consumption within this state, or 16.7 local exchange telephone service, intrastate toll service, and 16.8 interstate toll service, if that service originates from and is 16.9 charged to a telephone located in this state. Telephone service 16.10 does not include services purchased with prepaid telephone 16.11 calling cards. Telephone service includes paging services and 16.12 private communication service, as defined in United States Code, 16.13 title 26, section 4252(d), as amended through December 31, 1991, 16.14 except for private communication service purchased by an agent 16.15 acting on behalf of the state lottery. The furnishing for a 16.16 consideration of access to telephone services by a hotel to its 16.17 guests is a sale under this clause. Sales by municipal 16.18 corporations in a proprietary capacity are included in the 16.19 provisions of this clause. The furnishing of water and sewer 16.20 services for residential use shall not be considered a sale. 16.21 The sale of natural gas to be used as a fuel in vehicles 16.22 propelled by natural gas shall not be considered a sale for the 16.23 purposes of this section; 16.24 (g) The furnishing for a consideration of cable television 16.25 services, including charges for basic service, charges for 16.26 premium service, and any other charges for any other 16.27 pay-per-view, monthly, or similar television services; 16.28 (h) The furnishing for a consideration of parking services, 16.29 whether on a contractual, hourly, or other periodic basis, 16.30 except for parking at a meter; 16.31 (i) The furnishing for a consideration of services listed 16.32 in this paragraph: 16.33 (i) laundry and dry cleaning services including cleaning, 16.34 pressing, repairing, altering, and storing clothes, linen 16.35 services and supply, cleaning and blocking hats, and carpet, 16.36 drapery, upholstery, and industrial cleaning. Laundry and dry 17.1 cleaning services do not include services provided by coin 17.2 operated facilities operated by the customer; 17.3 (ii) motor vehicle washing, waxing, and cleaning services, 17.4 including services provided by coin-operated facilities operated 17.5 by the customer, and rustproofing, undercoating, and towing of 17.6 motor vehicles; 17.7 (iii) building and residential cleaning, maintenance, and 17.8 disinfecting and exterminating services; 17.9 (iv) detective services, security services, burglar, fire 17.10 alarm, and armored car services; but not including services 17.11 performed within the jurisdiction they serve by off-duty 17.12 licensed peace officers as defined in section 626.84, 17.13 subdivision 1, or services provided by a nonprofit organization 17.14 for monitoring and electronic surveillance of persons placed on 17.15 in-home detention pursuant to court order or under the direction 17.16 of the Minnesota department of corrections; 17.17 (v) pet grooming services; 17.18 (vi) lawn care, fertilizing, mowing, spraying and sprigging 17.19 services; garden planting and maintenance; tree, bush, and shrub 17.20 pruning, bracing, spraying, and surgery; indoor plant care; 17.21 tree, bush, shrub and stump removal; and tree trimming for 17.22 public utility lines. Services performed under a construction 17.23 contract for the installation of shrubbery, plants, sod, trees, 17.24 bushes, and similar items are not taxable; 17.25 (vii) massages, except when provided by a licensed health 17.26 care facility or professional or upon written referral from a 17.27 licensed health care facility or professional for treatment of 17.28 illness, injury, or disease; and 17.29 (viii) the furnishing for consideration of lodging, board 17.30 and care services for animals in kennels and other similar 17.31 arrangements, but excluding veterinary and horse boarding 17.32 services. 17.33 The services listed in this paragraph are taxable under section 17.34 297A.02 if the service is performed wholly within Minnesota or 17.35 if the service is performed partly within and partly without 17.36 Minnesota and the greater proportion of the service is performed 18.1 in Minnesota, based on the cost of performance. In applying the 18.2 provisions of this chapter, the terms "tangible personal 18.3 property" and "sales at retail" include taxable services and the 18.4 provision of taxable services, unless specifically provided 18.5 otherwise. Services performed by an employee for an employer 18.6 are not taxable under this paragraph. Services performed by a 18.7 partnership or association for another partnership or 18.8 association are not taxable under this paragraph if one of the 18.9 entities owns or controls more than 80 percent of the voting 18.10 power of the equity interest in the other entity. Services 18.11 performed between members of an affiliated group of corporations 18.12 are not taxable. For purposes of this section, "affiliated 18.13 group of corporations" includes those entities that would be 18.14 classified as a member of an affiliated group under United 18.15 States Code, title 26, section 1504, as amended through December 18.16 31, 1987, and who are eligible to file a consolidated tax return 18.17 for federal income tax purposes; 18.18 (j) A "sale" and a "purchase" includes the transfer of 18.19 computer software, meaning information and directions that 18.20 dictate the function performed by data processing equipment. A 18.21 "sale" and a "purchase" does not include the design, 18.22 development, writing, translation, fabrication, lease, or 18.23 transfer for a consideration of title or possession of a custom 18.24 computer program; and 18.25 (k) The granting of membership in a club, association, or 18.26 other organization if: 18.27 (1) the club, association, or other organization makes 18.28 available for the use of its members sports and athletic 18.29 facilities (without regard to whether a separate charge is 18.30 assessed for use of the facilities); and 18.31 (2) use of the sports and athletic facilities is not made 18.32 available to the general public on the same basis as it is made 18.33 available to members. 18.34 Granting of membership includes both one-time initiation fees 18.35 and periodic membership dues. Sports and athletic facilities 18.36 include golf courses, tennis, racquetball, handball and squash 19.1 courts, basketball and volleyball facilities, running tracks, 19.2 exercise equipment, swimming pools, and other similar athletic 19.3 or sports facilities. The provisions of this paragraph do not 19.4 apply to camps or other recreation facilities owned and operated 19.5 by an exempt organization under section 501(c)(3) of the 19.6 Internal Revenue Code of 1986, as amended through December 31, 19.7 1992, for educational and social activities for young people 19.8 primarily age 18 and under. 19.9 Sec. 3. Minnesota Statutes 1997 Supplement, section 19.10 297A.01, subdivision 11, is amended to read: 19.11 Subd. 11. "Tangible personal property" means corporeal 19.12 personal property of any kind whatsoever, including property 19.13 which is to become real property as a result of incorporation, 19.14 attachment, or installation following its acquisition. 19.15 Personal property does not include: 19.16 (a) large ponderous machinery and equipment used in a 19.17 business or production activity which at common law would be 19.18 considered to be real property; 19.19 (b) property which is subject to an ad valorem property 19.20 tax; 19.21 (c) property described in section 272.02, subdivision 1, 19.22 clause (8), paragraphs (a) to (d); 19.23 (d) property described in section 272.03, subdivision 2, 19.24 clauses (3) and (5). 19.25 Tangible personal property includes computer software, 19.26 whether contained on tape, discs, cards, or other devices. 19.27 Tangible personal property also includes prepaid telephone 19.28 calling cards. For purposes of this chapter, "prepaid telephone 19.29 calling card" means any card or other similar arrangement, 19.30 including prepaid authorization numbers, which permit its holder 19.31 to obtain telephone services and pay for such services in 19.32 advance. 19.33 Sec. 4. [EFFECTIVE DATE.] 19.34 Sections 1 and 2 are effective the day following final 19.35 enactment. 19.36 Section 3 is effective for sales or purchases made on or 20.1 after July 1, 1997. 20.2 ARTICLE 3 20.3 MISCELLANEOUS 20.4 Section 1. Minnesota Statutes 1997 Supplement, section 20.5 3.987, subdivision 2, is amended to read: 20.6 Subd. 2. [MANDATE EXPLANATIONS.] Any bill introduced in20.7 the legislature after June 30, 1997,Before a committee hearing 20.8 on a bill that seeks to impose program or financial mandates on 20.9 political subdivisions must include an attachment from, the 20.10 author must provide the committee with a note that gives 20.11 appropriate responses to the following guidelines. ItThe note 20.12 must state and list: 20.13 (1) the policy goals that are sought to be attained, the 20.14 performance standards that are to be imposed, and an explanation 20.15 why the goals and standards will best be served by requiring 20.16 compliance by political subdivisions; 20.17 (2) performance standards that will allow political 20.18 subdivisions flexibility and innovation of method in achieving 20.19 those goals; 20.20 (3) the reasons for each prescribed standard and the 20.21 process by which each standard governs input such as staffing 20.22 and other administrative aspects of the program; 20.23 (4) the sources of additional revenue, in addition to 20.24 existing funding for similar programs, that are directly linked 20.25 to imposition of the mandates that will provide adequate and 20.26 stable funding for their requirements; 20.27 (5) what input has been obtained to ensure that the 20.28 implementing agencies have the capacity to carry out the 20.29 delegated responsibilities; and 20.30 (6) the reasons why less intrusive measures such as 20.31 financial incentives or voluntary compliance would not yield the 20.32 equity, efficiency, or desired level of statewide uniformity in 20.33 the proposed program. 20.34 Sec. 2. Minnesota Statutes 1996, section 270.06, is 20.35 amended to read: 20.36 270.06 [POWERS AND DUTIES.] 21.1 The commissioner of revenue shall: 21.2 (1) have and exercise general supervision over the 21.3 administration of the assessment and taxation laws of the state, 21.4 over assessors, town, county, and city boards of review and 21.5 equalization, and all other assessing officers in the 21.6 performance of their duties, to the end that all assessments of 21.7 property be made relatively just and equal in compliance with 21.8 the laws of the state; 21.9 (2) confer with, advise, and give the necessary 21.10 instructions and directions to local assessors and local boards 21.11 of review throughout the state as to their duties under the laws 21.12 of the state; 21.13 (3) direct proceedings, actions, and prosecutions to be 21.14 instituted to enforce the laws relating to the liability and 21.15 punishment of public officers and officers and agents of 21.16 corporations for failure or negligence to comply with the 21.17 provisions of the laws of this state governing returns of 21.18 assessment and taxation of property, and cause complaints to be 21.19 made against local assessors, members of boards of equalization, 21.20 members of boards of review, or any other assessing or taxing 21.21 officer, to the proper authority, for their removal from office 21.22 for misconduct or negligence of duty; 21.23 (4) require county attorneys to assist in the commencement 21.24 of prosecutions in actions or proceedings for removal, 21.25 forfeiture and punishment for violation of the laws of this 21.26 state in respect to the assessment and taxation of property in 21.27 their respective districts or counties; 21.28 (5) require town, city, county, and other public officers 21.29 to report information as to the assessment of property, 21.30 collection of taxes received from licenses and other sources, 21.31 and such other information as may be needful in the work of the 21.32 department of revenue, in such form and upon such blanks as the 21.33 commissioner may prescribe; 21.34 (6) require individuals, copartnerships, companies, 21.35 associations, and corporations to furnish information concerning 21.36 their capital, funded or other debt, current assets and 22.1 liabilities, earnings, operating expenses, taxes, as well as all 22.2 other statements now required by law for taxation purposes; 22.3 (7) subpoena witnesses, at a time and place reasonable 22.4 under the circumstances, to appear and give testimony, and to 22.5 produce books, records, papers and documents for inspection and 22.6 copying relating to any matter which the commissioner may have 22.7 authority to investigate or determine; 22.8 (8) issue a subpoena which does not identify the person or 22.9 persons with respect to whose liability the subpoena is issued, 22.10 but only if (a) the subpoena relates to the investigation of a 22.11 particular person or ascertainable group or class of persons, 22.12 (b) there is a reasonable basis for believing that such person 22.13 or group or class of persons may fail or may have failed to 22.14 comply with any law administered by the commissioner, (c) the 22.15 information sought to be obtained from the examination of the 22.16 records (and the identity of the person or persons with respect 22.17 to whose liability the subpoena is issued) is not readily 22.18 available from other sources, (d) the subpoena is clear and 22.19 specific as to the information sought to be obtained, and (e) 22.20 the information sought to be obtained is limited solely to the 22.21 scope of the investigation. Provided further that the party 22.22 served with a subpoena which does not identify the person or 22.23 persons with respect to whose tax liability the subpoena is 22.24 issued shall have the right, within 20 days after service of the 22.25 subpoena, to petition the district court for the judicial 22.26 district in which lies the county in which that party is located 22.27 for a determination as to whether the commissioner of revenue 22.28 has complied with all the requirements in (a) to (e), and thus, 22.29 whether the subpoena is enforceable. If no such petition is 22.30 made by the party served within the time prescribed, the 22.31 subpoena shall have the force and effect of a court order; 22.32 (9) cause the deposition of witnesses residing within or 22.33 without the state, or absent therefrom, to be taken, upon notice 22.34 to the interested party, if any, in like manner that depositions 22.35 of witnesses are taken in civil actions in the district court, 22.36 in any matter which the commissioner may have authority to 23.1 investigate or determine; 23.2 (10) investigate the tax laws of other states and countries 23.3 and to formulate and submit to the legislature such legislation 23.4 as the commissioner may deem expedient to prevent evasions of 23.5 assessment and taxing laws, and secure just and equal taxation 23.6 and improvement in the system of assessment and taxation in this 23.7 state; 23.8 (11) consult and confer with the governor upon the subject 23.9 of taxation, the administration of the laws in regard thereto, 23.10 and the progress of the work of the department of revenue, and 23.11 furnish the governor, from time to time, such assistance and 23.12 information as the governor may require relating to tax matters; 23.13 (12) transmit to the governor, on or before the third 23.14 Monday in December of each even-numbered year, and to each 23.15 member of the legislature, on or before November 15 of each 23.16 even-numbered year, the report of the department of revenue for 23.17 the preceding years, showing all the taxable property in the 23.18 state and the value of the same, in tabulated form; 23.19 (13) inquire into the methods of assessment and taxation 23.20 and ascertain whether the assessors faithfully discharge their 23.21 duties, particularly as to their compliance with the laws 23.22 requiring the assessment of all property not exempt from 23.23 taxation; 23.24 (14) administer and enforce the assessment and collection 23.25 of state taxes and fees, including the use of any remedy 23.26 available to nongovernmental creditors, and, from time to time, 23.27 make, publish, and distribute rules for the administration and 23.28 enforcement of assessments and fees administered by the 23.29 commissioner and state tax laws. The rules have the force of 23.30 law; 23.31 (15) prepare blank forms for the returns required by state 23.32 tax law and distribute them throughout the state, furnishing 23.33 them subject to charge on application; 23.34 (16) prescribe rules governing the qualification and 23.35 practice of agents, attorneys, or other persons representing 23.36 taxpayers before the commissioner. The rules may require that 24.1 those persons, agents, and attorneys show that they are of good 24.2 character and in good repute, have the necessary qualifications 24.3 to give taxpayers valuable services, and are otherwise competent 24.4 to advise and assist taxpayers in the presentation of their case 24.5 before being recognized as representatives of taxpayers. After 24.6 due notice and opportunity for hearing, the commissioner may 24.7 suspend and disbar from further practice before the commissioner 24.8 any person, agent, or attorney who is shown to be incompetent or 24.9 disreputable, who refuses to comply with the rules, or who with 24.10 intent to defraud, willfully or knowingly deceives, misleads, or 24.11 threatens a taxpayer or prospective taxpayer, by words, 24.12 circular, letter, or by advertisement. This clause does not 24.13 curtail the rights of individuals to appear in their own behalf 24.14 or partners or corporations' officers to appear in behalf of 24.15 their respective partnerships or corporations; 24.16 (17) appoint agents as the commissioner considers necessary 24.17 to make examinations and determinations. The agents have the 24.18 rights and powers conferred on the commissioner to subpoena, 24.19 examine, and copy books, records, papers, or memoranda, subpoena 24.20 witnesses, administer oaths and affirmations, and take 24.21 testimony. In addition to administrative subpoenas of the 24.22 commissioner and the agents, upon demand of the commissioner or 24.23 an agent, the court administrator of any district court shall 24.24 issue a subpoena for the attendance of a witness or the 24.25 production of books, papers, records, or memoranda before the 24.26 agent for inspection and copying. Disobedience of a court 24.27 administrator's subpoena shall be punished by the district court 24.28 of the district in which the subpoena is issued, or in the case 24.29 of a subpoena issued by the commissioner or an agent, by the 24.30 district court of the district in which the party served with 24.31 the subpoena is located, in the same manner as contempt of the 24.32 district court; 24.33 (18) appoint and employ additional help, purchase supplies 24.34 or materials, or incur other expenditures in the enforcement of 24.35 state tax laws as considered necessary. The salaries of all 24.36 agents and employees provided for in this chapter shall be fixed 25.1 by the appointing authority, subject to the approval of the 25.2 commissioner of administration; 25.3 (19) execute and administer any agreement with the 25.4 secretary of the treasury of the United States or a 25.5 representative of another state regarding the exchange of 25.6 information and administration of the tax laws; 25.7 (20) administer and enforce the provisions of sections 25.8 325D.30 to 325D.42, the Minnesota unfair cigarette sales act; 25.9 (21) authorize the use of unmarked motor vehicles to 25.10 conduct seizures or criminal investigations pursuant to the 25.11 commissioner's authority; and 25.12 (22) exercise other powers and perform other duties 25.13 required of or imposed upon the commissioner of revenue by law. 25.14 Sec. 3. Minnesota Statutes 1996, section 270.70, 25.15 subdivision 15, is amended to read: 25.16 Subd. 15. [EFFECT OF HONORING LEVY.] Any person in 25.17 possession of (or obligated with respect to) property or rights 25.18 to property subject to levy upon which a levy has been made who, 25.19 upon demand by the commissioner, surrenders the property or 25.20 rights to property (or who pays a liability under section 25.21 270.7002, subdivision 81) shall be discharged from any 25.22 obligation or liability to the person liable for the payment or 25.23 collection of the delinquent tax with respect to the property or 25.24 rights to property so surrendered or paid. 25.25 Sec. 4. Minnesota Statutes 1997 Supplement, section 25.26 270.701, subdivision 2, is amended to read: 25.27 Subd. 2. [NOTICE OF SALE.] The commissioner shall as soon 25.28 as practicable after the seizure of the property give notice of 25.29 sale of the property to the owner, in the manner of service 25.30 prescribed in subdivision 1. In the case of personal property, 25.31 the notice shall be served at least 10 days prior to the sale. 25.32 In the case of real property, the notice shall be served at 25.33 least four weeks prior to the sale. The commissioner shall also 25.34 cause public notice of each sale to be made. In the case of 25.35 personal property, notice shall be posted at least 10 days prior 25.36 to the sale at the county courthouse for the county where the 26.1 seizure is made, and in not less than two other public places. 26.2 In the case of real property, six weeks' published notice shall 26.3 be given prior to the sale, in a newspaper published or 26.4 generally circulated in the county. The notice of sale provided 26.5 in this subdivision shall specify the property to be sold, and 26.6 the time, place, manner and conditions of the sale. Whenever 26.7 levy is made without regard to the ten-day30-day period 26.8 provided in section 270.70, subdivision 2, public notice of sale 26.9 of the property seized shall not be made within the 26.10 ten-day30-day period unless section 270.702 (relating to sale 26.11 of perishable goods) is applicable. 26.12 Sec. 5. Minnesota Statutes 1996, section 278.10, is 26.13 amended to read: 26.14 278.10 [TO BE ENTERED IN JUDGMENT BOOK.] 26.15 Upon entry of the judgment referred to in section 278.07, 26.16 the county auditor shall bill the taxpayer for the unpaid 26.17 portion of the judgment, if any, plus the allowable costs, 26.18 interest, and penalties that have accrued to the date of entry, 26.19 as provided in section 278.08. If suchthe judgment has not26.20 then beenreferred to in section 278.07 is not paid within 30 26.21 days of the billing, the county auditor shall enter the same in 26.22 the certified copy of the real estate tax judgment book received 26.23 by the auditor pursuant to section 279.23 for the year for which 26.24 such taxes were levied, with the same effect as if judgment had 26.25 been entered in the proceedings, adding thereto anyunder 26.26 chapter 279, except that interest or penalties that have accrued26.27 to the date of such entry, and inshall not accrue during, nor 26.28 apply to, the 30-day payment period. In the event suchthe 26.29 judgment under section 278.07 shall be entered subsequent to the 26.30 publication of the notice ofreal estate tax judgment sale of26.31 under section 280.01 for the taxes on suchthe applicable 26.32 delinquent list, and if such judgment shall remain unpaid for 30 26.33 days thereafterafter billing, then interest shall again begin 26.34 to accrue, and the parcel of land, against which such judgment 26.35 was entered, shall be immediately advertised and soldbid-in for 26.36 the state, and all subsequent events, deadlines, and periods 27.1 related to the enforcement of the judgment against the affected 27.2 real estate shall be measured from the bid-in date under this 27.3 section. 27.4 Sec. 6. Minnesota Statutes 1996, section 289A.65, 27.5 subdivision 7, is amended to read: 27.6 Subd. 7. [AGREEMENT DETERMINING TAX LIABILITY.] When it 27.7 appears to be in the best interests of the state, the 27.8 commissioner may settle any taxes, penalties, or interest that 27.9 the commissioner has under consideration by virtue of an appeal 27.10 filed under this section. An agreement must be in writing and 27.11 signed by the commissioner and the taxpayer, or the taxpayer's 27.12 representative authorized by the taxpayer to enter into an 27.13 agreement. The agreement must be filed in the office of the27.14 commissioner.The agreement shall be final and conclusive and, 27.15 except upon a showing of fraud or malfeasance, or 27.16 misrepresentation of a material fact, the case shall not be 27.17 reopened as to the matters agreed upon. 27.18 Sec. 7. Minnesota Statutes 1996, section 289A.65, 27.19 subdivision 8, is amended to read: 27.20 Subd. 8. [APPEAL OF AN ADMINISTRATIVE DETERMINATION.] 27.21 Following the determination or settlementof an appeal and 27.22 notwithstanding any period of limitations for making assessments 27.23 or other determinations to the contrary, the commissioner must 27.24 issue an order reflecting that disposition. If the statute of 27.25 limitations for making assessments or other determinations would 27.26 have expired before the issuance of this order, except for this 27.27 section, the order is limited to issues or matters contained in 27.28 the appealed determination. Except in the case of an agreement27.29 determining tax under this section,The order is appealable to 27.30 the Minnesota tax court under section 271.06. 27.31 Sec. 8. Minnesota Statutes 1997 Supplement, section 27.32 295.53, subdivision 4a, is amended to read: 27.33 Subd. 4a. [CREDIT FOR RESEARCH.] (a) In addition to the 27.34 exemptions allowed under subdivision 1, a hospital or health 27.35 care provider may claim an annual credit against the total 27.36 amount of tax, if any, the hospital or health care provider owes 28.1 for that calendar year under sections 295.50 to 295.57. The 28.2 credit shall equal 2.5 percent of revenues for patient services 28.3 used to fund expenditures for qualifying research conducted by 28.4 an allowable research program. The amount of the credit shall 28.5 not exceed the tax liability of the hospital or health care 28.6 provider under sections 295.50 to 295.57. 28.7 (b) For purposes of this subdivision, the following 28.8 requirements apply: 28.9 (1) expenditures must be for program costs of qualifying 28.10 research conducted by an allowable research program; 28.11 (2) an allowable research program must be a formal program 28.12 of medical and health care research conducted by an entity which 28.13 is exempt under section 501(c)(3) of the Internal Revenue Code 28.14 of 1986 or is owned and operated under authority of a 28.15 governmental unit; 28.16 (3) qualifying research must: 28.17 (A) be approved in writing by the governing body of the 28.18 hospital or health care provider which is taking the deduction 28.19 under this subdivision; 28.20 (B) have as its purpose the development of new knowledge in 28.21 basic or applied science relating to the diagnosis and treatment 28.22 of conditions affecting the human body; 28.23 (C) be subject to review by individuals with expertise in 28.24 the subject matter of the proposed study but who have no 28.25 financial interest in the proposed study and are not involved in 28.26 the conduct of the proposed study; and 28.27 (D) be subject to review and supervision by an 28.28 institutional review board operating in conformity with federal 28.29 regulations if the research involves human subjects or an 28.30 institutional animal care and use committee operating in 28.31 conformity with federal regulations if the research involves 28.32 animal subjects. Research expenses are not exempt if the study 28.33 is a routine evaluation of health care methods or products used 28.34 in a particular setting conducted for the purpose of making a 28.35 management decision. Costs of clinical research activities paid 28.36 directly for the benefit of an individual patient are excluded 29.1 from this exemption. Basic research in fields including 29.2 biochemistry, molecular biology, and physiology are also 29.3 included if such programs are subject to a peer review process. 29.4 (c) No credit shall be allowed under this subdivision for 29.5 any revenue received by the hospital or health care provider in 29.6 the form of a grant, gift, or otherwise, whether from a 29.7 government or nongovernment source, on which the tax liability 29.8 under section 295.52 is not imposed. 29.9 (d) The taxpayer shall apply for the credit under this 29.10 section on the annual return under section 295.55, subdivision 5. 29.11 (e) Beginning September 1, 20002001, if the actual or 29.12 estimated amount paid under this section for the calendar year 29.13 exceeds $2,500,000, the commissioner of finance shall determine 29.14 the rate of the research credit for the following calendar year 29.15 to the nearest one-half percent so that refunds paid under this 29.16 section will most closely equal $2,500,000. The commissioner of 29.17 finance shall publish in the State Register by October 1 of each 29.18 year the rate of the credit for the following calendar year. A 29.19 determination under this section is not subject to the 29.20 rulemaking provisions of chapter 14. 29.21 Sec. 9. Minnesota Statutes 1996, section 297E.15, 29.22 subdivision 8, is amended to read: 29.23 Subd. 8. [AGREEMENT DETERMINING TAX LIABILITY.] If it 29.24 appears to be in the best interests of the state, the 29.25 commissioner may settle taxes, penalties, or interest that the 29.26 commissioner has under consideration by virtue of an appeal 29.27 filed under this section. An agreement must be in writing and 29.28 signed by the commissioner and the taxpayer or the taxpayer's 29.29 representative authorized by the taxpayer to enter into an 29.30 agreement. An agreement must be filed in the office of the29.31 commissioner.The agreement shall be final and conclusive and, 29.32 except upon a showing of fraud or malfeasance, or 29.33 misrepresentation of a material fact, the case shall not be 29.34 reopened as to the matters agreed upon. 29.35 Sec. 10. Minnesota Statutes 1996, section 297E.15, 29.36 subdivision 9, is amended to read: 30.1 Subd. 9. [APPEAL OF AN ADMINISTRATIVE APPEAL30.2 DETERMINATION.] Following the determination or settlementof an 30.3 appeal, the commissioner must issue an order reflecting that 30.4 disposition. Except in the case of an agreement determining tax30.5 under this section,The order is appealable to the Minnesota tax 30.6 court under section 271.06. 30.7 Sec. 11. Minnesota Statutes 1997 Supplement, section 30.8 297F.22, subdivision 6, is amended to read: 30.9 Subd. 6. [AGREEMENT DETERMINING TAX LIABILITY.] When it 30.10 appears to be in the best interests of the state, the 30.11 commissioner may settle any taxes, penalties, or interest that 30.12 the commissioner has under consideration by virtue of an appeal 30.13 filed under this section. An agreement must be in writing and 30.14 signed by the commissioner and the taxpayer, or the taxpayer's 30.15 representative authorized by the taxpayer to enter into an 30.16 agreement. The agreement must be filed in the office of the30.17 commissioner.The agreement shall be final and conclusive and, 30.18 except upon a showing of fraud or malfeasance, or 30.19 misrepresentation of a material fact, the case shall not be 30.20 reopened as to the matters agreed upon. 30.21 Sec. 12. Minnesota Statutes 1997 Supplement, section 30.22 297F.22, subdivision 7, is amended to read: 30.23 Subd. 7. [APPEAL OF AN ADMINISTRATIVE DETERMINATION.] 30.24 Following the determination or settlementof an appeal and 30.25 notwithstanding any period of limitations for making assessments 30.26 or other determinations to the contrary, the commissioner must 30.27 issue an order reflecting that disposition. If the statute of 30.28 limitations for making assessments or other determinations would 30.29 have expired before the issuance of this order, except for this 30.30 section, the order is limited to issues or matters contained in 30.31 the appealed determination. Except in the case of an agreement30.32 determining tax under this section,The order is appealable to 30.33 the Minnesota tax court under section 271.06. 30.34 Sec. 13. Minnesota Statutes 1997 Supplement, section 30.35 297G.21, subdivision 6, is amended to read: 30.36 Subd. 6. [AGREEMENT DETERMINING TAX LIABILITY.] When it 31.1 appears to be in the best interests of the state, the 31.2 commissioner may settle any taxes, penalties, or interest that 31.3 the commissioner has under consideration by virtue of an appeal 31.4 filed under this section. An agreement must be in writing and 31.5 signed by the commissioner and the taxpayer, or the taxpayer's 31.6 representative authorized by the taxpayer to enter into an 31.7 agreement. The agreement must be filed in the office of the31.8 commissioner.The agreement shall be final and conclusive and, 31.9 except upon a showing of fraud or malfeasance, or 31.10 misrepresentation of a material fact, the case shall not be 31.11 reopened as to the matters agreed upon. 31.12 Sec. 14. Minnesota Statutes 1997 Supplement, section 31.13 297G.21, subdivision 7, is amended to read: 31.14 Subd. 7. [APPEAL OF AN ADMINISTRATIVE DETERMINATION.] 31.15 Following the determination or settlementof an appeal and 31.16 notwithstanding any period of limitations for making assessments 31.17 or other determinations to the contrary, the commissioner shall 31.18 issue an order reflecting that disposition. If the statute of 31.19 limitations for making assessments or other determinations would 31.20 have expired before the issuance of this order, except for this 31.21 section, the order is limited to issues or matters contained in 31.22 the appealed determination. Except in the case of an agreement31.23 determining tax under this section,The order is appealable to 31.24 the Minnesota tax court under section 271.06. 31.25 Sec. 15. [EFFECTIVE DATES.] 31.26 Sections 1 to 4 and 6 to 14 are effective the day following 31.27 final enactment. 31.28 Section 5 is effective for petitions filed on or after July 31.29 1, 1998.