SF 3380

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; providing a sales tax rebate; 
  1.3             reducing individual income tax rates; providing an 
  1.4             exclusion for long-term capital gains; expanding 
  1.5             income tax brackets for married taxpayers filing 
  1.6             jointly; repealing the marriage penalty credit; 
  1.7             changing the corporate franchise tax apportionment 
  1.8             formula; reducing property tax class rates on 
  1.9             commercial-industrial property and on certain 
  1.10            apartments; increasing the educational homestead 
  1.11            credit; eliminating June accelerated payments for 
  1.12            sales, liquor, and cigarette and tobacco taxes; 
  1.13            eliminating the sales tax payment and refund 
  1.14            requirements for sales of exempt capital equipment; 
  1.15            providing that certain sales of fruit and fruit 
  1.16            products, vegetables, and milk and milk products are 
  1.17            exempt from sales tax; including machinery used to 
  1.18            produce certain plants and nursery stock in the 
  1.19            definition of farm machinery for purposes of the sales 
  1.20            and use tax; providing for funding of the costs of the 
  1.21            Minnesota comprehensive health association; 
  1.22            appropriating money; amending Minnesota Statutes 1998, 
  1.23            sections 62E.11, by adding a subdivision; 297A.01, 
  1.24            subdivisions 3 and 15; and 297F.09, subdivisions 1 and 
  1.25            2; Minnesota Statutes 1999 Supplement, sections 
  1.26            273.13, subdivisions 24 and 25; 273.1382, subdivision 
  1.27            1a; 289A.18, subdivision 4; 289A.20, subdivision 4; 
  1.28            289A.56, subdivision 4; 290.01, subdivision 19b; 
  1.29            290.06, subdivisions 2c and 2d; 290.091, subdivisions 
  1.30            1, 2, and 6; 290.191, subdivisions 2 and 3; repealing 
  1.31            Minnesota Statutes 1998, sections 289A.60, subdivision 
  1.32            15; 297F.09, subdivision 6; and 297G.09, subdivision 
  1.33            5; Minnesota Statutes 1999 Supplement, sections 
  1.34            290.0675; and 297A.15, subdivision 5. 
  1.35  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.36                             ARTICLE 1
  1.37                          SALES TAX REBATE 
  1.38     Section 1.  [STATEMENT OF PURPOSE.] 
  1.39     (a) The state of Minnesota derives revenues from a variety 
  1.40  of taxes, fees, and other sources, including the state sales tax.
  2.1      (b) It is fair and reasonable to refund the existing state 
  2.2   budget surplus in the form of a rebate of nonbusiness consumer 
  2.3   sales taxes paid by individuals in calendar year 1998. 
  2.4      (c) Information concerning the amount of sales tax paid at 
  2.5   various income levels is contained in the Minnesota tax 
  2.6   incidence report, which is written by the commissioner of 
  2.7   revenue and presented to the legislature according to Minnesota 
  2.8   Statutes, section 270.0682. 
  2.9      (d) It is fair and reasonable to use information contained 
  2.10  in the Minnesota tax incidence report, updated to calendar year 
  2.11  1998, to determine the proportionate share of the sales tax 
  2.12  rebate due each eligible taxpayer since no effective or 
  2.13  practical mechanism exists for determining the amount of actual 
  2.14  sales tax paid by each eligible individual. 
  2.15     Sec. 2.  [SALES TAX REBATE.] 
  2.16     (a) An individual who: 
  2.17     (1) was eligible for a credit under Laws 1998, chapter 389, 
  2.18  article 1, section 1, and who filed for or received that credit 
  2.19  on or before June 15, 2000; or 
  2.20     (2) was a resident of Minnesota for any part of 1998, and 
  2.21  filed a 1998 Minnesota income tax return on or before June 15, 
  2.22  2000, and had a tax liability before refundable credits on that 
  2.23  return of at least $1 but did not file the claim for credit 
  2.24  authorized under Laws 1998, chapter 389, article 1, section 1, 
  2.25  as amended, and who was not allowed to be claimed as a dependent 
  2.26  on a 1998 federal income tax return filed by another person; or 
  2.27     (3) had the property taxes payable on his or her homestead 
  2.28  abated to zero under Laws 1998, chapter 383, section 20, shall 
  2.29  receive a sales tax rebate. 
  2.30     (b) The sales tax rebate for taxpayers who qualify under 
  2.31  paragraph (a) as married filing joint or head of household must 
  2.32  be computed according to the following schedule: 
  2.33       Income                                Sales Tax Rebate
  2.34   less than $2,500                                $140
  2.35   at least $2,500 but less than $5,000            $180
  2.36   at least $5,000 but less than $10,000           $192
  3.1    at least $10,000 but less than $15,000          $211
  3.2    at least $15,000 but less than $20,000          $229
  3.3    at least $20,000 but less than $25,000          $249
  3.4    at least $25,000 but less than $30,000          $260
  3.5    at least $30,000 but less than $35,000          $281
  3.6    at least $35,000 but less than $40,000          $308
  3.7    at least $40,000 but less than $45,000          $330
  3.8    at least $45,000 but less than $50,000          $347
  3.9    at least $50,000 but less than $60,000          $370
  3.10   at least $60,000 but less than $70,000          $396
  3.11   at least $70,000 but less than $80,000          $436
  3.12   at least $80,000 but less than $90,000          $468
  3.13   at least $90,000 but less than $100,000         $517
  3.14   at least $100,000 but less than $120,000        $559
  3.15   at least $120,000 but less than $140,000        $613
  3.16   at least $140,000 but less than $160,000        $662
  3.17   at least $160,000 but less than $180,000        $709
  3.18   at least $180,000 but less than $200,000        $753
  3.19   at least $200,000 but less than $400,000        $964
  3.20   at least $400,000 but less than $600,000      $1,268
  3.21   at least $600,000 but less than $800,000      $1,521
  3.22   at least $800,000 but less than $1,000,000    $1,744
  3.23   $1,000,000 and over                           $2,000
  3.24     (c) The sales tax rebate for individuals who qualify under 
  3.25  paragraph (a) as single or married filing separately must be 
  3.26  computed according to the following schedule: 
  3.27   Income                                    Sales Tax Rebate
  3.28   less than $2,500                                $79
  3.29   at least $2,500 but less than $5,000            $97
  3.30   at least $5,000 but less than $10,000          $114
  3.31   at least $10,000 but less than $15,000         $153
  3.32   at least $15,000 but less than $20,000         $175
  3.33   at least $20,000 but less than $25,000         $190
  3.34   at least $25,000 but less than $30,000         $198
  3.35   at least $30,000 but less than $40,000         $216
  3.36   at least $40,000 but less than $50,000         $242
  4.1    at least $50,000 but less than $70,000         $285
  4.2    at least $70,000 but less than $100,000        $362
  4.3    at least $100,000 but less than $140,000       $436
  4.4    at least $140,000 but less than $200,000       $527
  4.5    at least $200,000 but less than $400,000       $714
  4.6    at least $400,000 but less than $600,000       $940
  4.7    $600,000 and over                            $1,000
  4.8      (d) Individuals who were not residents of Minnesota for any 
  4.9   part of 1998 and who paid more than $10 in Minnesota sales tax 
  4.10  on nonbusiness consumer purchases in that year qualify for a 
  4.11  rebate under this paragraph only.  Qualifying nonresidents must 
  4.12  file a claim for rebate on a form prescribed by the commissioner 
  4.13  before the later of June 15, 2000, or 30 days after the date of 
  4.14  enactment of this act.  The claim must include receipts showing 
  4.15  the Minnesota sales tax paid and the date of the sale.  Taxes 
  4.16  paid on purchases allowed in the computation of federal taxable 
  4.17  income or reimbursed by an employer are not eligible for the 
  4.18  rebate.  The commissioner shall determine the qualifying taxes 
  4.19  paid and rebate the lesser of: 
  4.20     (1) 24.75 percent of that amount; or 
  4.21     (2) the maximum amount for which the claimant would have 
  4.22  been eligible as determined under paragraph (b) if the taxpayer 
  4.23  filed the 1998 federal income tax return as a married taxpayer 
  4.24  filing jointly or head of household, or as determined under 
  4.25  paragraph (c) for other taxpayers. 
  4.26     (e) "Income," for purposes of this section other than 
  4.27  paragraph (d), is taxable income as defined in section 63 of the 
  4.28  Internal Revenue Code of 1986, as amended through December 31, 
  4.29  1997, plus the sum of any additions to federal taxable income 
  4.30  for the taxpayer under Minnesota Statutes, section 290.01, 
  4.31  subdivision 19a, and reported on the original 1998 income tax 
  4.32  return, including subsequent adjustments to that return made 
  4.33  within the time limits specified in paragraph (i).  For an 
  4.34  individual who was a resident of Minnesota for less than the 
  4.35  entire year, the sales tax rebate equals the sales tax rebate 
  4.36  calculated under paragraph (b) or (c) multiplied by the 
  5.1   percentage determined pursuant to Minnesota Statutes, section 
  5.2   290.06, subdivision 2c, paragraph (e), as calculated on the 
  5.3   original 1998 income tax return, including subsequent 
  5.4   adjustments to that return made within the time limits specified 
  5.5   in paragraph (i).  For purposes of paragraph (d), "income" is 
  5.6   taxable income as defined in section 63 of the Internal Revenue 
  5.7   Code of 1986, as amended through December 31, 1997, and reported 
  5.8   on the taxpayer's original federal tax return for the first 
  5.9   taxable year beginning after December 31, 1997. 
  5.10     (f) For a fiscal year taxpayer, the June 15, 2000, dates in 
  5.11  paragraphs (a) through (d) are extended one month for each month 
  5.12  in calendar year 1998 that occurred prior to the start of the 
  5.13  individual's 1998 fiscal tax year. 
  5.14     (g) Before payment, the commissioner of revenue shall 
  5.15  adjust the rebate as follows: 
  5.16     the rebates calculated in paragraphs (b), (c), and (d) must 
  5.17  be proportionately reduced to account for 1998 income tax 
  5.18  returns that are filed on or after January 1, 2000, but before 
  5.19  July 1, 2000, so that the amount of sales tax rebates payable 
  5.20  under paragraphs (b), (c), and (d) does not exceed 
  5.21  $497,000,000.  The adjustment under this paragraph is not a rule 
  5.22  subject to Minnesota Statutes, chapter 14. 
  5.23     (h) The commissioner of revenue may begin making sales tax 
  5.24  rebates by August 1, 2000.  Sales tax rebates not paid by 
  5.25  September 1, 2000, bear interest at the rate specified in 
  5.26  Minnesota Statutes, section 270.75. 
  5.27     (i) A sales tax rebate shall not be adjusted based on 
  5.28  changes to a 1998 income tax return that are made by order of 
  5.29  assessment after June 15, 2000, or made by the taxpayer that are 
  5.30  filed with the commissioner of revenue after June 15, 2000. 
  5.31     (j) Individuals who filed a joint income tax return for 
  5.32  1998 shall receive a joint sales tax rebate.  After the sales 
  5.33  tax rebate has been issued, but before the check has been 
  5.34  cashed, either joint claimant may request a separate check for 
  5.35  one-half of the joint sales tax rebate.  Notwithstanding 
  5.36  anything in this section to the contrary, if prior to payment, 
  6.1   the commissioner has been notified that persons who filed a 
  6.2   joint 1998 income tax return are living at separate addresses, 
  6.3   as indicated on their 1999 income tax return or otherwise, the 
  6.4   commissioner may issue separate checks to each person.  The 
  6.5   amount payable to each person is one-half of the total joint 
  6.6   rebate. 
  6.7      (k) If a rebate is received by the estate of a deceased 
  6.8   individual after the probate estate has been closed, and if the 
  6.9   original rebate check is returned to the commissioner with a 
  6.10  copy of the decree of descent or final account of the estate, 
  6.11  social security numbers, and addresses of the beneficiaries, the 
  6.12  commissioner may issue separate checks in proportion to their 
  6.13  share in the residuary estate in the names of the residuary 
  6.14  beneficiaries of the estate. 
  6.15     (l) The sales tax rebate is a "Minnesota tax law" for 
  6.16  purposes of Minnesota Statutes, section 270B.01, subdivision 8. 
  6.17     (m) The sales tax rebate is "an overpayment of any tax 
  6.18  collected by the commissioner" for purposes of Minnesota 
  6.19  Statutes, section 270.07, subdivision 5.  For purposes of this 
  6.20  paragraph, a joint sales tax rebate is payable to each spouse 
  6.21  equally. 
  6.22     (n) If the commissioner of revenue cannot locate an 
  6.23  individual entitled to a sales tax rebate by July 1, 2002, or if 
  6.24  an individual to whom a sales tax rebate was issued has not 
  6.25  cashed the check by July 1, 2002, the right to the sales tax 
  6.26  rebate lapses and the check must be deposited in the general 
  6.27  fund. 
  6.28     (o) Individuals entitled to a sales tax rebate pursuant to 
  6.29  paragraph (a), but who did not receive one, and individuals who 
  6.30  receive a sales tax rebate that was not correctly computed, must 
  6.31  file a claim with the commissioner before July 1, 2001, in a 
  6.32  form prescribed by the commissioner.  These claims must be 
  6.33  treated as if they are a claim for refund under Minnesota 
  6.34  Statutes, section 289A.50, subdivisions 4 and 7. 
  6.35     (p) The sales tax rebate is a refund subject to revenue 
  6.36  recapture under Minnesota Statutes, chapter 270A.  The 
  7.1   commissioner of revenue shall remit the entire refund to the 
  7.2   claimant agency, which shall, upon the request of the spouse who 
  7.3   does not owe the debt, refund one-half of the joint sales tax 
  7.4   rebate to the spouse who does not owe the debt. 
  7.5      (q) The rebate is a reduction of fiscal year 2000 sales tax 
  7.6   revenues.  The amount necessary to make the sales tax rebates 
  7.7   and interest provided in this section is appropriated from the 
  7.8   general fund to the commissioner of revenue in fiscal year 2000 
  7.9   and is available until June 30, 2002. 
  7.10     (r) If a sales tax rebate check is cashed by someone other 
  7.11  than the payee or payees of the check, and the commissioner of 
  7.12  revenue determines that the check has been forged or improperly 
  7.13  endorsed or the commissioner determines that a rebate was 
  7.14  overstated or erroneously issued, the commissioner may issue an 
  7.15  order of assessment for the amount of the check or the amount 
  7.16  the check is overstated against the person or persons cashing 
  7.17  it.  The assessment must be made within two years after the 
  7.18  check is cashed, but if cashing the check constitutes theft 
  7.19  under Minnesota Statutes, section 609.52, or forgery under 
  7.20  Minnesota Statutes, section 609.631, the assessment can be made 
  7.21  at any time.  The assessment may be appealed administratively 
  7.22  and judicially.  The commissioner may take action to collect the 
  7.23  assessment in the same manner as provided by Minnesota Statutes, 
  7.24  chapter 289A, for any other order of the commissioner assessing 
  7.25  tax. 
  7.26     (s) Notwithstanding Minnesota Statutes, sections 9.031, 
  7.27  16A.40, 16B.49, 16B.50, and any other law to the contrary, the 
  7.28  commissioner of revenue may take whatever actions the 
  7.29  commissioner deems necessary to pay the rebates required by this 
  7.30  section, and may, in consultation with the commissioner of 
  7.31  finance and the state treasurer, contract with a private vendor 
  7.32  or vendors to process, print, and mail the rebate checks or 
  7.33  warrants required under this section and receive and disburse 
  7.34  state funds to pay those checks or warrants. 
  7.35     (t) The commissioner may pay rebates required by this 
  7.36  section by electronic funds transfer to individuals who 
  8.1   requested that their 1999 individual income tax refund be paid 
  8.2   through electronic funds transfer.  The commissioner may make 
  8.3   the electronic funds transfer payments to the same financial 
  8.4   institution and into the same account as the 1999 individual 
  8.5   income tax refund. 
  8.6      Sec. 3.  [APPROPRIATION.] 
  8.7      $....... is appropriated from the general fund to the 
  8.8   commissioner of revenue to administer the sales tax rebate for 
  8.9   fiscal year 2000.  Any unencumbered balance remaining on June 
  8.10  30, 2000, does not cancel but is available for expenditure by 
  8.11  the commissioner of revenue until June 30, 2002.  This is a 
  8.12  one-time appropriation and may not be added to the agency's 
  8.13  budget base. 
  8.14     Sec. 4.  [EFFECTIVE DATE.] 
  8.15     Sections 1 to 3 are effective the day following final 
  8.16  enactment. 
  8.17                             ARTICLE 2 
  8.18                      INDIVIDUAL INCOME TAXES 
  8.19     Section 1.  Minnesota Statutes 1999 Supplement, section 
  8.20  290.01, subdivision 19b, is amended to read: 
  8.21     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
  8.22  individuals, estates, and trusts, there shall be subtracted from 
  8.23  federal taxable income: 
  8.24     (1) interest income on obligations of any authority, 
  8.25  commission, or instrumentality of the United States to the 
  8.26  extent includable in taxable income for federal income tax 
  8.27  purposes but exempt from state income tax under the laws of the 
  8.28  United States; 
  8.29     (2) if included in federal taxable income, the amount of 
  8.30  any overpayment of income tax to Minnesota or to any other 
  8.31  state, for any previous taxable year, whether the amount is 
  8.32  received as a refund or as a credit to another taxable year's 
  8.33  income tax liability; 
  8.34     (3) the amount paid to others, less the credit allowed 
  8.35  under section 290.0674, not to exceed $1,625 for each qualifying 
  8.36  child in grades kindergarten to 6 and $2,500 for each qualifying 
  9.1   child in grades 7 to 12, for tuition, textbooks, and 
  9.2   transportation of each qualifying child in attending an 
  9.3   elementary or secondary school situated in Minnesota, North 
  9.4   Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of 
  9.5   this state may legally fulfill the state's compulsory attendance 
  9.6   laws, which is not operated for profit, and which adheres to the 
  9.7   provisions of the Civil Rights Act of 1964 and chapter 363.  For 
  9.8   the purposes of this clause, "tuition" includes fees or tuition 
  9.9   as defined in section 290.0674, subdivision 1, clause (1).  As 
  9.10  used in this clause, "textbooks" includes books and other 
  9.11  instructional materials and equipment used in elementary and 
  9.12  secondary schools in teaching only those subjects legally and 
  9.13  commonly taught in public elementary and secondary schools in 
  9.14  this state.  Equipment expenses qualifying for deduction 
  9.15  includes expenses as defined and limited in section 290.0674, 
  9.16  subdivision 1, clause (3).  "Textbooks" does not include 
  9.17  instructional books and materials used in the teaching of 
  9.18  religious tenets, doctrines, or worship, the purpose of which is 
  9.19  to instill such tenets, doctrines, or worship, nor does it 
  9.20  include books or materials for, or transportation to, 
  9.21  extracurricular activities including sporting events, musical or 
  9.22  dramatic events, speech activities, driver's education, or 
  9.23  similar programs.  For purposes of the subtraction provided by 
  9.24  this clause, "qualifying child" has the meaning given in section 
  9.25  32(c)(3) of the Internal Revenue Code; 
  9.26     (4) contributions made in taxable years beginning after 
  9.27  December 31, 1981, and before January 1, 1985, to a qualified 
  9.28  governmental pension plan, an individual retirement account, 
  9.29  simplified employee pension, or qualified plan covering a 
  9.30  self-employed person that were included in Minnesota gross 
  9.31  income in the taxable year for which the contributions were made 
  9.32  but were deducted or were not included in the computation of 
  9.33  federal adjusted gross income, less any amount allowed to be 
  9.34  subtracted as a distribution under this subdivision or a 
  9.35  predecessor provision in taxable years that began before January 
  9.36  1, 2000.  This subtraction applies only for taxable years 
 10.1   beginning after December 31, 1999, and before January 1, 2001; 
 10.2      (5) income as provided under section 290.0802; 
 10.3      (6) the amount of unrecovered accelerated cost recovery 
 10.4   system deductions allowed under subdivision 19g; 
 10.5      (7) to the extent included in federal adjusted gross 
 10.6   income, income realized on disposition of property exempt from 
 10.7   tax under section 290.491; 
 10.8      (8) to the extent not deducted in determining federal 
 10.9   taxable income, the amount paid for health insurance of 
 10.10  self-employed individuals as determined under section 162(l) of 
 10.11  the Internal Revenue Code, except that the percent limit does 
 10.12  not apply.  If the taxpayer deducted insurance payments under 
 10.13  section 213 of the Internal Revenue Code of 1986, the 
 10.14  subtraction under this clause must be reduced by the lesser of: 
 10.15     (i) the total itemized deductions allowed under section 
 10.16  63(d) of the Internal Revenue Code, less state, local, and 
 10.17  foreign income taxes deductible under section 164 of the 
 10.18  Internal Revenue Code and the standard deduction under section 
 10.19  63(c) of the Internal Revenue Code; or 
 10.20     (ii) the lesser of (A) the amount of insurance qualifying 
 10.21  as "medical care" under section 213(d) of the Internal Revenue 
 10.22  Code to the extent not deducted under section 162(1) of the 
 10.23  Internal Revenue Code or excluded from income or (B) the total 
 10.24  amount deductible for medical care under section 213(a); 
 10.25     (9) the exemption amount allowed under Laws 1995, chapter 
 10.26  255, article 3, section 2, subdivision 3; 
 10.27     (10) to the extent included in federal taxable income, 
 10.28  postservice benefits for youth community service under section 
 10.29  124D.42 for volunteer service under United States Code, title 
 10.30  42, section 5011(d), as amended; 
 10.31     (11) to the extent not deducted in determining federal 
 10.32  taxable income by an individual who does not itemize deductions 
 10.33  for federal income tax purposes for the taxable year, an amount 
 10.34  equal to 50 percent of the excess of charitable contributions 
 10.35  allowable as a deduction for the taxable year under section 
 10.36  170(a) of the Internal Revenue Code over $500; and 
 11.1      (12) to the extent included in federal taxable income, 
 11.2   holocaust victims' settlement payments for any injury incurred 
 11.3   as a result of the holocaust, if received by an individual who 
 11.4   was persecuted for racial or religious reasons by Nazi Germany 
 11.5   or any other Axis regime or an heir of such a person; and 
 11.6      (13) to the extent included in federal taxable income, 20 
 11.7   percent of adjusted net capital gain, as defined in section 1(h) 
 11.8   of the Internal Revenue Code. 
 11.9      Sec. 2.  Minnesota Statutes 1999 Supplement, section 
 11.10  290.06, subdivision 2c, is amended to read: 
 11.11     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
 11.12  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
 11.13  married individuals filing joint returns and surviving spouses 
 11.14  as defined in section 2(a) of the Internal Revenue Code must be 
 11.15  computed by applying to their taxable net income the following 
 11.16  schedule of rates: 
 11.17     (1) On the first $25,220 $35,140, 5.5 5.22 percent; 
 11.18     (2) On all over $25,220 $35,140, but not over 
 11.19  $100,200 $115,420, 7.25 6.88 percent; 
 11.20     (3) On all over $100,200 $115,420, 8 7.6 percent. 
 11.21     Married individuals filing separate returns, estates, and 
 11.22  trusts must compute their income tax by applying the above rates 
 11.23  to their taxable income, except that the income brackets will be 
 11.24  one-half of the above amounts.  
 11.25     (b) The income taxes imposed by this chapter upon unmarried 
 11.26  individuals must be computed by applying to taxable net income 
 11.27  the following schedule of rates: 
 11.28     (1) On the first $17,250 $17,570, 5.5 5.22 percent; 
 11.29     (2) On all over $17,250 $17,570, but not over 
 11.30  $56,680 $57,710, 7.25 6.88 percent; 
 11.31     (3) On all over $56,680 $57,710, 8 7.6 percent. 
 11.32     (c) The income taxes imposed by this chapter upon unmarried 
 11.33  individuals qualifying as a head of household as defined in 
 11.34  section 2(b) of the Internal Revenue Code must be computed by 
 11.35  applying to taxable net income the following schedule of rates: 
 11.36     (1) On the first $21,240 $26,355, 5.5 5.22 percent; 
 12.1      (2) On all over $21,240 $26,355, but not 
 12.2   over $85,350 $86,910, 7.25 6.88 percent; 
 12.3      (3) On all over $85,350 $86,910, 8 7.6 percent. 
 12.4      (d) In lieu of a tax computed according to the rates set 
 12.5   forth in this subdivision, the tax of any individual taxpayer 
 12.6   whose taxable net income for the taxable year is less than an 
 12.7   amount determined by the commissioner must be computed in 
 12.8   accordance with tables prepared and issued by the commissioner 
 12.9   of revenue based on income brackets of not more than $100.  The 
 12.10  amount of tax for each bracket shall be computed at the rates 
 12.11  set forth in this subdivision, provided that the commissioner 
 12.12  may disregard a fractional part of a dollar unless it amounts to 
 12.13  50 cents or more, in which case it may be increased to $1. 
 12.14     (e) An individual who is not a Minnesota resident for the 
 12.15  entire year must compute the individual's Minnesota income tax 
 12.16  as provided in this subdivision.  After the application of the 
 12.17  nonrefundable credits provided in this chapter, the tax 
 12.18  liability must then be multiplied by a fraction in which:  
 12.19     (1) the numerator is the individual's Minnesota source 
 12.20  federal adjusted gross income as defined in section 62 of the 
 12.21  Internal Revenue Code and increased by the additions required 
 12.22  under section 290.01, subdivision 19a, clauses (1) and (6), 
 12.23  after applying the allocation and assignability provisions of 
 12.24  section 290.081, clause (a), or 290.17; and 
 12.25     (2) the denominator is the individual's federal adjusted 
 12.26  gross income as defined in section 62 of the Internal Revenue 
 12.27  Code of 1986, increased by the amounts specified in section 
 12.28  290.01, subdivision 19a, clauses (1) and (6), and reduced by the 
 12.29  amounts specified in section 290.01, subdivision 19b, clause (1).
 12.30     Sec. 3.  Minnesota Statutes 1999 Supplement, section 
 12.31  290.06, subdivision 2d, is amended to read: 
 12.32     Subd. 2d.  [INFLATION ADJUSTMENT OF BRACKETS.] (a) For 
 12.33  taxable years beginning after December 31, 1999 2000, the 
 12.34  minimum and maximum dollar amounts for each rate bracket for 
 12.35  which a tax is imposed in subdivision 2c shall be adjusted for 
 12.36  inflation by the percentage determined under paragraph (b).  For 
 13.1   the purpose of making the adjustment as provided in this 
 13.2   subdivision all of the rate brackets provided in subdivision 2c 
 13.3   shall be the rate brackets as they existed for taxable years 
 13.4   beginning after December 31, 1998 1999, and before January 
 13.5   1, 2000 2001.  The rate applicable to any rate bracket must not 
 13.6   be changed.  The dollar amounts setting forth the tax shall be 
 13.7   adjusted to reflect the changes in the rate brackets.  The rate 
 13.8   brackets as adjusted must be rounded to the nearest $10 amount.  
 13.9   If the rate bracket ends in $5, it must be rounded up to the 
 13.10  nearest $10 amount.  
 13.11     (b) The commissioner shall adjust the rate brackets and by 
 13.12  the percentage determined pursuant to the provisions of section 
 13.13  1(f) of the Internal Revenue Code, except that in section 
 13.14  1(f)(3)(B) the word "1998" shall be substituted for the word 
 13.15  "1992."  For 2000 2001, the commissioner shall then determine 
 13.16  the percent change from the 12 months ending on August 31, 1998 
 13.17  1999, to the 12 months ending on August 31, 1999 2000, and in 
 13.18  each subsequent year, from the 12 months ending on August 
 13.19  31, 1998 1999, to the 12 months ending on August 31 of the year 
 13.20  preceding the taxable year.  The determination of the 
 13.21  commissioner pursuant to this subdivision shall not be 
 13.22  considered a "rule" and shall not be subject to the 
 13.23  Administrative Procedure Act contained in chapter 14.  
 13.24     No later than December 15 of each year, the commissioner 
 13.25  shall announce the specific percentage that will be used to 
 13.26  adjust the tax rate brackets. 
 13.27     Sec. 4.  Minnesota Statutes 1999 Supplement, section 
 13.28  290.091, subdivision 1, is amended to read: 
 13.29     Subdivision 1.  [IMPOSITION OF TAX.] In addition to all 
 13.30  other taxes imposed by this chapter a tax is imposed on 
 13.31  individuals, estates, and trusts equal to the excess (if any) of 
 13.32     (a) an amount equal to 6.5 6.17 percent of alternative 
 13.33  minimum taxable income after subtracting the exemption amount, 
 13.34  over 
 13.35     (b) the regular tax for the taxable year. 
 13.36     Sec. 5.  Minnesota Statutes 1999 Supplement, section 
 14.1   290.091, subdivision 2, is amended to read: 
 14.2      Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
 14.3   this section, the following terms have the meanings given: 
 14.4      (a) "Alternative minimum taxable income" means the sum of 
 14.5   the following for the taxable year: 
 14.6      (1) the taxpayer's federal alternative minimum taxable 
 14.7   income as defined in section 55(b)(2) of the Internal Revenue 
 14.8   Code; 
 14.9      (2) the taxpayer's itemized deductions allowed in computing 
 14.10  federal alternative minimum taxable income, but excluding: 
 14.11     (i) the Minnesota charitable contribution deduction; 
 14.12     (ii) the medical expense deduction; 
 14.13     (iii) the casualty, theft, and disaster loss deduction; 
 14.14     (iv) the impairment-related work expenses of a disabled 
 14.15  person; and 
 14.16     (v) holocaust victims' settlement payments to the extent 
 14.17  allowed under section 290.01, subdivision 19b; 
 14.18     (3) for depletion allowances computed under section 613A(c) 
 14.19  of the Internal Revenue Code, with respect to each property (as 
 14.20  defined in section 614 of the Internal Revenue Code), to the 
 14.21  extent not included in federal alternative minimum taxable 
 14.22  income, the excess of the deduction for depletion allowable 
 14.23  under section 611 of the Internal Revenue Code for the taxable 
 14.24  year over the adjusted basis of the property at the end of the 
 14.25  taxable year (determined without regard to the depletion 
 14.26  deduction for the taxable year); 
 14.27     (4) to the extent not included in federal alternative 
 14.28  minimum taxable income, the amount of the tax preference for 
 14.29  intangible drilling cost under section 57(a)(2) of the Internal 
 14.30  Revenue Code determined without regard to subparagraph (E); and 
 14.31     (5) to the extent not included in federal alternative 
 14.32  minimum taxable income, the amount of interest income as 
 14.33  provided by section 290.01, subdivision 19a, clause (1); 
 14.34     less the sum of the amounts determined under the following: 
 14.35     (1) interest income as defined in section 290.01, 
 14.36  subdivision 19b, clause (1); 
 15.1      (2) an overpayment of state income tax as provided by 
 15.2   section 290.01, subdivision 19b, clause (2), to the extent 
 15.3   included in federal alternative minimum taxable income; and 
 15.4      (3) the amount of investment interest paid or accrued 
 15.5   within the taxable year on indebtedness to the extent that the 
 15.6   amount does not exceed net investment income, as defined in 
 15.7   section 163(d)(4) of the Internal Revenue Code.  Interest does 
 15.8   not include amounts deducted in computing federal adjusted gross 
 15.9   income. 
 15.10     In the case of an estate or trust, alternative minimum 
 15.11  taxable income must be computed as provided in section 59(c) of 
 15.12  the Internal Revenue Code. 
 15.13     (b) "Investment interest" means investment interest as 
 15.14  defined in section 163(d)(3) of the Internal Revenue Code. 
 15.15     (c) "Tentative minimum tax" equals 6.5 6.17 percent of 
 15.16  alternative minimum taxable income after subtracting the 
 15.17  exemption amount determined under subdivision 3. 
 15.18     (d) "Regular tax" means the tax that would be imposed under 
 15.19  this chapter (without regard to this section and section 
 15.20  290.032), reduced by the sum of the nonrefundable credits 
 15.21  allowed under this chapter.  
 15.22     (e) "Net minimum tax" means the minimum tax imposed by this 
 15.23  section. 
 15.24     (f) "Minnesota charitable contribution deduction" means a 
 15.25  charitable contribution deduction under section 170 of the 
 15.26  Internal Revenue Code to or for the use of an entity described 
 15.27  in section 290.21, subdivision 3, clauses (a) to (e).  When the 
 15.28  federal deduction for charitable contributions is limited under 
 15.29  section 170(b) of the Internal Revenue Code, the allowable 
 15.30  contributions in the year of contribution are deemed to be first 
 15.31  contributions to entities described in section 290.21, 
 15.32  subdivision 3, clauses (a) to (e). 
 15.33     Sec. 6.  Minnesota Statutes 1999 Supplement, section 
 15.34  290.091, subdivision 6, is amended to read: 
 15.35     Subd. 6.  [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) A credit 
 15.36  is allowed against the tax imposed by this chapter on 
 16.1   individuals, trusts, and estates equal to the minimum tax credit 
 16.2   for the taxable year.  The minimum tax credit equals the 
 16.3   adjusted net minimum tax for taxable years beginning after 
 16.4   December 31, 1988, reduced by the minimum tax credits allowed in 
 16.5   a prior taxable year.  The credit may not exceed the excess (if 
 16.6   any) for the taxable year of 
 16.7      (1) the regular tax, over 
 16.8      (2) the greater of (i) the tentative alternative minimum 
 16.9   tax, or (ii) zero. 
 16.10     (b) The adjusted net minimum tax for a taxable year equals 
 16.11  the lesser of the net minimum tax or the excess (if any) of 
 16.12     (1) the tentative minimum tax, over 
 16.13     (2) 6.5 6.17 percent of the sum of 
 16.14     (i) adjusted gross income as defined in section 62 of the 
 16.15  Internal Revenue Code, 
 16.16     (ii) interest income as defined in section 290.01, 
 16.17  subdivision 19a, clause (1), 
 16.18     (iii) interest on specified private activity bonds, as 
 16.19  defined in section 57(a)(5) of the Internal Revenue Code, to the 
 16.20  extent not included under clause (ii), 
 16.21     (iv) depletion as defined in section 57(a)(1), determined 
 16.22  without regard to the last sentence of paragraph (1), of the 
 16.23  Internal Revenue Code, less 
 16.24     (v) the deductions allowed in computing alternative minimum 
 16.25  taxable income provided in subdivision 2, paragraph (a), clause 
 16.26  (2) of the first series of clauses and clauses (1), (2), and (3) 
 16.27  of the second series of clauses, and 
 16.28     (vi) the exemption amount determined under subdivision 3. 
 16.29     In the case of an individual who is not a Minnesota 
 16.30  resident for the entire year, adjusted net minimum tax must be 
 16.31  multiplied by the fraction defined in section 290.06, 
 16.32  subdivision 2c, paragraph (e).  In the case of a trust or 
 16.33  estate, adjusted net minimum tax must be multiplied by the 
 16.34  fraction defined under subdivision 4, paragraph (b). 
 16.35     Sec. 7.  [REPEALER.] 
 16.36     Minnesota Statutes 1999 Supplement, section 290.0675, is 
 17.1   repealed. 
 17.2      Sec. 8.  [EFFECTIVE DATE.] 
 17.3      Section 1 is effective for sales and exchanges occurring 
 17.4   after the date of final enactment of this act for taxable years 
 17.5   beginning after December 31, 1999.  
 17.6      Sections 2 and 4 to 7 are effective for taxable years 
 17.7   beginning after December 31, 1999. 
 17.8      Section 3 is effective for taxable years beginning after 
 17.9   December 31, 2000. 
 17.10                             ARTICLE 3 
 17.11                      CORPORATE FRANCHISE TAX 
 17.12     Section 1.  Minnesota Statutes 1999 Supplement, section 
 17.13  290.191, subdivision 2, is amended to read: 
 17.14     Subd. 2.  [APPORTIONMENT FORMULA OF GENERAL APPLICATION.] 
 17.15  Except for those trades or businesses required to use a 
 17.16  different formula under subdivision 3 or section 290.35 or 
 17.17  290.36, and for those trades or businesses that receive 
 17.18  permission to use some other method under section 290.20 or 
 17.19  under subdivision 4, a trade or business required to apportion 
 17.20  its net income must apportion its income to this state on the 
 17.21  basis of the percentage obtained by taking the sum of:  
 17.22     (1) 75 percent of the percentage which the sales made 
 17.23  within this state in connection with the trade or business 
 17.24  during the tax period are of the total sales wherever made in 
 17.25  connection with the trade or business during the tax period;. 
 17.26     (2) 12.5 percent of the percentage which the total tangible 
 17.27  property used by the taxpayer in this state in connection with 
 17.28  the trade or business during the tax period is of the total 
 17.29  tangible property, wherever located, used by the taxpayer in 
 17.30  connection with the trade or business during the tax period; and 
 17.31     (3) 12.5 percent of the percentage which the taxpayer's 
 17.32  total payrolls paid or incurred in this state or paid in respect 
 17.33  to labor performed in this state in connection with the trade or 
 17.34  business during the tax period are of the taxpayer's total 
 17.35  payrolls paid or incurred in connection with the trade or 
 17.36  business during the tax period.  
 18.1      Sec. 2.  Minnesota Statutes 1999 Supplement, section 
 18.2   290.191, subdivision 3, is amended to read: 
 18.3      Subd. 3.  [APPORTIONMENT FORMULA FOR FINANCIAL 
 18.4   INSTITUTIONS.] Except for an investment company required to 
 18.5   apportion its income under section 290.36, a financial 
 18.6   institution that is required to apportion its net income must 
 18.7   apportion its net income to this state on the basis of the 
 18.8   percentage obtained by taking the sum of:  
 18.9      (1) 75 percent of the percentage which the receipts from 
 18.10  within this state in connection with the trade or business 
 18.11  during the tax period are of the total receipts in connection 
 18.12  with the trade or business during the tax period, from wherever 
 18.13  derived;. 
 18.14     (2) 12.5 percent of the percentage which the sum of the 
 18.15  total tangible property used by the taxpayer in this state and 
 18.16  the intangible property owned by the taxpayer and attributed to 
 18.17  this state in connection with the trade or business during the 
 18.18  tax period is of the sum of the total tangible property, 
 18.19  wherever located, used by the taxpayer and the intangible 
 18.20  property owned by the taxpayer and attributed to all states in 
 18.21  connection with the trade or business during the tax period; and 
 18.22     (3) 12.5 percent of the percentage which the taxpayer's 
 18.23  total payrolls paid or incurred in this state or paid in respect 
 18.24  to labor performed in this state in connection with the trade or 
 18.25  business during the tax period are of the taxpayer's total 
 18.26  payrolls paid or incurred in connection with the trade or 
 18.27  business during the tax period. 
 18.28     Sec. 3.  [EFFECTIVE DATE.] 
 18.29     Sections 1 and 2 are effective for taxable years beginning 
 18.30  after December 31, 2000. 
 18.31                             ARTICLE 4 
 18.32                        SALES AND USE TAXES 
 18.33     Section 1.  Minnesota Statutes 1999 Supplement, section 
 18.34  289A.18, subdivision 4, is amended to read: 
 18.35     Subd. 4.  [SALES AND USE TAX RETURNS.] (a) Sales and use 
 18.36  tax returns must be filed on or before the 20th day of the month 
 19.1   following the close of the preceding reporting period, except 
 19.2   that annual use tax returns provided for under section 289A.11, 
 19.3   subdivision 1, must be filed by April 15 following the close of 
 19.4   the calendar year, in the case of individuals.  Annual use tax 
 19.5   returns of businesses, including sole proprietorships, and 
 19.6   annual sales tax returns must be filed by February 5 following 
 19.7   the close of the calendar year.  
 19.8      (b) Except for the return for the June reporting period, 
 19.9   which is due on the following August 25, Returns filed by 
 19.10  retailers required to remit liabilities by means of funds 
 19.11  transfer under section 289A.20, subdivision 4, 
 19.12  paragraph (d) (b), are due on or before the 25th day of the 
 19.13  month following the close of the preceding reporting period.  
 19.14     (c) If a retailer has an average sales and use tax 
 19.15  liability, including local sales and use taxes administered by 
 19.16  the commissioner, equal to or less than $500 per month in any 
 19.17  quarter of a calendar year, and has substantially complied with 
 19.18  the tax laws during the preceding four calendar quarters, the 
 19.19  retailer may request authorization to file and pay the taxes 
 19.20  quarterly in subsequent calendar quarters.  The authorization 
 19.21  remains in effect during the period in which the retailer's 
 19.22  quarterly returns reflect sales and use tax liabilities of less 
 19.23  than $1,500 and there is continued compliance with state tax 
 19.24  laws. 
 19.25     (d) If a retailer has an average sales and use tax 
 19.26  liability, including local sales and use taxes administered by 
 19.27  the commissioner, equal to or less than $100 per month during a 
 19.28  calendar year, and has substantially complied with the tax laws 
 19.29  during that period, the retailer may request authorization to 
 19.30  file and pay the taxes annually in subsequent years.  The 
 19.31  authorization remains in effect during the period in which the 
 19.32  retailer's annual returns reflect sales and use tax liabilities 
 19.33  of less than $1,200 and there is continued compliance with state 
 19.34  tax laws. 
 19.35     (e) The commissioner may also grant quarterly or annual 
 19.36  filing and payment authorizations to retailers if the 
 20.1   commissioner concludes that the retailers' future tax 
 20.2   liabilities will be less than the monthly totals identified in 
 20.3   paragraphs (c) and (d).  An authorization granted under this 
 20.4   paragraph is subject to the same conditions as an authorization 
 20.5   granted under paragraphs (c) and (d). 
 20.6      (f) A taxpayer who is a materials supplier may report gross 
 20.7   receipts either on: 
 20.8      (1) the cash basis as the consideration is received; or 
 20.9      (2) the accrual basis as sales are made.  
 20.10  As used in this paragraph, "materials supplier" means a person 
 20.11  who provides materials for the improvement of real property; who 
 20.12  is primarily engaged in the sale of lumber and building 
 20.13  materials-related products to owners, contractors, 
 20.14  subcontractors, repairers, or consumers; who is authorized to 
 20.15  file a mechanics lien upon real property and improvements under 
 20.16  chapter 514; and who files with the commissioner an election to 
 20.17  file sales and use tax returns on the basis of this paragraph. 
 20.18     Sec. 2.  Minnesota Statutes 1999 Supplement, section 
 20.19  289A.20, subdivision 4, is amended to read: 
 20.20     Subd. 4.  [SALES AND USE TAX.] (a) The taxes imposed by 
 20.21  chapter 297A are due and payable to the commissioner monthly on 
 20.22  or before the 20th day of the month following the month in which 
 20.23  the taxable event occurred, or following another reporting 
 20.24  period as the commissioner prescribes or as allowed under 
 20.25  section 289A.18, subdivision 4, paragraph (f), except that use 
 20.26  taxes due on an annual use tax return as provided under section 
 20.27  289A.11, subdivision 1, are payable by April 15 following the 
 20.28  close of the calendar year. 
 20.29     (b) A vendor having a liability of $120,000 or more during 
 20.30  a fiscal year ending June 30 must remit the June liability for 
 20.31  the next year in the following manner: 
 20.32     (1) Two business days before June 30 of the year, the 
 20.33  vendor must remit 75 percent of the estimated June liability to 
 20.34  the commissioner.  
 20.35     (2) On or before August 14 of the year, the vendor must pay 
 20.36  any additional amount of tax not remitted in June. 
 21.1      (c) A vendor having a liability of $120,000 or more during 
 21.2   a fiscal year ending June 30 must remit all liabilities in the 
 21.3   subsequent calendar year by means of a funds transfer as defined 
 21.4   in section 336.4A-104, paragraph (a).  The funds transfer 
 21.5   payment date, as defined in section 336.4A-401, must be on or 
 21.6   before the 14th day of the month following the month in which 
 21.7   the taxable event occurred, or on or before the 14th day of the 
 21.8   month following the month in which the sale is reported under 
 21.9   section 289A.18, subdivision 4, except for 75 percent of the 
 21.10  estimated June liability, which is due two business days before 
 21.11  June 30.  The remaining amount of the June liability is due on 
 21.12  August 14.  If the date the tax is due is not a funds transfer 
 21.13  business day, as defined in section 336.4A-105, paragraph (a), 
 21.14  clause (4), the payment date must be on or before the funds 
 21.15  transfer business day next following the date the tax is due. 
 21.16     (d) (c) If the vendor required to remit by electronic funds 
 21.17  transfer as provided in paragraph (c) (b) is unable due to 
 21.18  reasonable cause to determine the actual sales and use tax due 
 21.19  on or before the due date for payment, the vendor may remit an 
 21.20  estimate of the tax owed using one of the following options: 
 21.21     (1) 100 percent of the tax reported on the previous month's 
 21.22  sales and use tax return; 
 21.23     (2) 100 percent of the tax reported on the sales and use 
 21.24  tax return for the same month in the previous calendar year; or 
 21.25     (3) 95 percent of the actual tax due. 
 21.26     Any additional amount of tax that is not remitted on or 
 21.27  before the due date for payment, must be remitted with the 
 21.28  return.  If a vendor fails to remit the actual liability or does 
 21.29  not remit using one of the estimate options by the due date for 
 21.30  payment, the vendor must remit actual liability as provided in 
 21.31  paragraph (c) (b) in all subsequent periods.  This paragraph 
 21.32  does not apply to the June sales and use tax liability. 
 21.33     Sec. 3.  Minnesota Statutes 1999 Supplement, section 
 21.34  289A.56, subdivision 4, is amended to read: 
 21.35     Subd. 4.  [CAPITAL EQUIPMENT REFUNDS; REFUNDS TO 
 21.36  PURCHASERS.] Notwithstanding subdivision 3, for refunds payable 
 22.1   under section 297A.15, subdivision 5, interest is computed from 
 22.2   the date the refund claim is filed with the commissioner.  For 
 22.3   refunds payable under section 289A.50, subdivision 2a, interest 
 22.4   is computed from the 20th day of the month following the month 
 22.5   of the invoice date for the purchase which is the subject of the 
 22.6   refund, if the refund claim includes a detailed schedule of 
 22.7   purchases made during each of the periods in the claim.  If the 
 22.8   refund claim submitted does not contain a schedule reflecting 
 22.9   purchases made in each period, interest is computed from the 
 22.10  date the claim was filed. 
 22.11     Sec. 4.  Minnesota Statutes 1998, section 297A.01, 
 22.12  subdivision 3, is amended to read: 
 22.13     Subd. 3.  A "sale" and a "purchase" includes, but is not 
 22.14  limited to, each of the following transactions: 
 22.15     (a) Any transfer of title or possession, or both, of 
 22.16  tangible personal property, whether absolutely or conditionally, 
 22.17  and the leasing of or the granting of a license to use or 
 22.18  consume tangible personal property other than manufactured homes 
 22.19  used for residential purposes for a continuous period of 30 days 
 22.20  or more, for a consideration in money or by exchange or barter; 
 22.21     (b) The production, fabrication, printing, or processing of 
 22.22  tangible personal property for a consideration for consumers who 
 22.23  furnish either directly or indirectly the materials used in the 
 22.24  production, fabrication, printing, or processing; 
 22.25     (c) The furnishing, preparing, or serving for a 
 22.26  consideration of food, meals, or drinks.  "Sale" or "purchase" 
 22.27  does not include: 
 22.28     (1) meals or drinks served to patients, inmates, or persons 
 22.29  residing at hospitals, sanitariums, nursing homes, senior 
 22.30  citizens homes, and correctional, detention, and detoxification 
 22.31  facilities; 
 22.32     (2) meals or drinks purchased for and served exclusively to 
 22.33  individuals who are 60 years of age or over and their spouses or 
 22.34  to the handicapped and their spouses by governmental agencies, 
 22.35  nonprofit organizations, agencies, or churches or pursuant to 
 22.36  any program funded in whole or part through 42 USCA sections 
 23.1   3001 through 3045, wherever delivered, prepared or served; or 
 23.2      (3) meals and lunches served at public and private schools, 
 23.3   universities, or colleges. 
 23.4   Notwithstanding section 297A.25, subdivision 2, taxable food or 
 23.5   meals include, but are not limited to, the following:  
 23.6      (i) food or drinks sold by the retailer for immediate 
 23.7   consumption on the retailer's premises.  Food and drinks sold 
 23.8   within a building or grounds which require an admission charge 
 23.9   for entrance are presumed to be sold for consumption on the 
 23.10  premises; 
 23.11     (ii) food or drinks prepared by the retailer for immediate 
 23.12  consumption either on or off the retailer's premises.  For 
 23.13  purposes of this subdivision, "food or drinks prepared for 
 23.14  immediate consumption" includes any food product upon which an 
 23.15  act of preparation including, but not limited to, cooking, 
 23.16  mixing, sandwich making, blending, heating, or pouring has been 
 23.17  performed by the retailer so the food product may be immediately 
 23.18  consumed by the purchaser; 
 23.19     (iii) ice cream, ice milk, frozen yogurt products, or 
 23.20  frozen novelties sold in single or individual servings including 
 23.21  cones, sundaes, and snow cones.  For purposes of this 
 23.22  subdivision, "single or individual servings" does not include 
 23.23  products when sold in bulk containers or bulk packaging; 
 23.24     (iv) soft drinks and other beverages including all 
 23.25  carbonated and noncarbonated beverages or drinks sold in liquid 
 23.26  form except beverages or drinks which contain milk or milk 
 23.27  products, beverages or drinks containing 15 or more percent 
 23.28  fruit juice, and noncarbonated and noneffervescent bottled water 
 23.29  sold in individual containers of one-half gallon or more in 
 23.30  size; 
 23.31     (v) gum, candy, and candy products, except when sold for 
 23.32  fundraising purposes by a nonprofit organization that provides 
 23.33  educational and social activities primarily for young people 18 
 23.34  years of age and under; 
 23.35     (vi) ice; 
 23.36     (vii) all food sold from vending machines, except: 
 24.1      (A) beverages or drinks which contain milk or milk 
 24.2   products; 
 24.3      (B) beverages or drinks containing 15 or more percent fruit 
 24.4   juice; 
 24.5      (C) fresh fruit and canned fruit; 
 24.6      (D) vegetables; 
 24.7      (E) granola bars and fruit-filled breakfast bars; 
 24.8      (F) yogurt and pudding; and 
 24.9      (G) cheese and cottage cheese; 
 24.10     (viii) all food for immediate consumption sold from 
 24.11  concession stands and vehicles; 
 24.12     (ix) party trays; 
 24.13     (x) all meals and single servings of packaged snack food 
 24.14  sold in restaurants and bars; and 
 24.15     (xi) bakery products: 
 24.16     (A) prepared by the retailer for consumption on the 
 24.17  retailer's premises; 
 24.18     (B) sold at a place that charges admission; 
 24.19     (C) sold from vending machines; or 
 24.20     (D) sold in single or individual servings from concession 
 24.21  stands, vehicles, bars, and restaurants.  For purposes of this 
 24.22  subdivision, "single or individual servings" does not include 
 24.23  products when sold in bulk containers or bulk packaging.  
 24.24     For purposes of this subdivision, "premises" means the 
 24.25  total space and facilities, including buildings, grounds, and 
 24.26  parking lots that are made available or that are available for 
 24.27  use by the retailer or customer for the purpose of sale or 
 24.28  consumption of prepared food and drinks.  The premises of a 
 24.29  caterer is the place where the catered food or drinks are 
 24.30  served; 
 24.31     (d) The granting of the privilege of admission to places of 
 24.32  amusement, recreational areas, or athletic events, except a 
 24.33  world championship football game sponsored by the national 
 24.34  football league, and the privilege of having access to and the 
 24.35  use of amusement devices, tanning facilities, reducing salons, 
 24.36  steam baths, turkish baths, health clubs, and spas or athletic 
 25.1   facilities; 
 25.2      (e) The furnishing for a consideration of lodging and 
 25.3   related services by a hotel, rooming house, tourist court, motel 
 25.4   or trailer camp and of the granting of any similar license to 
 25.5   use real property other than the renting or leasing thereof for 
 25.6   a continuous period of 30 days or more; 
 25.7      (f) The furnishing for a consideration of electricity, gas, 
 25.8   water, or steam for use or consumption within this state, or 
 25.9   local exchange telephone service, intrastate toll service, and 
 25.10  interstate toll service, if that service originates from and is 
 25.11  charged to a telephone located in this state.  Telephone service 
 25.12  does not include services purchased with prepaid telephone 
 25.13  calling cards.  Telephone service includes paging services and 
 25.14  private communication service, as defined in United States Code, 
 25.15  title 26, section 4252(d), as amended through December 31, 1991, 
 25.16  except for private communication service purchased by an agent 
 25.17  acting on behalf of the state lottery.  The furnishing for a 
 25.18  consideration of access to telephone services by a hotel to its 
 25.19  guests is a sale under this clause.  Sales by municipal 
 25.20  corporations in a proprietary capacity are included in the 
 25.21  provisions of this clause.  The furnishing of water and sewer 
 25.22  services for residential use shall not be considered a sale.  
 25.23  The sale of natural gas to be used as a fuel in vehicles 
 25.24  propelled by natural gas shall not be considered a sale for the 
 25.25  purposes of this section; 
 25.26     (g) The furnishing for a consideration of cable television 
 25.27  services, including charges for basic service, charges for 
 25.28  premium service, and any other charges for any other 
 25.29  pay-per-view, monthly, or similar television services; 
 25.30     (h) The furnishing for a consideration of parking services, 
 25.31  whether on a contractual, hourly, or other periodic basis, 
 25.32  except for parking at a meter; 
 25.33     (i) The furnishing for a consideration of services listed 
 25.34  in this paragraph: 
 25.35     (i) (1) laundry and dry cleaning services including 
 25.36  cleaning, pressing, repairing, altering, and storing clothes, 
 26.1   linen services and supply, cleaning and blocking hats, and 
 26.2   carpet, drapery, upholstery, and industrial cleaning.  Laundry 
 26.3   and dry cleaning services do not include services provided by 
 26.4   coin operated facilities operated by the customer; 
 26.5      (ii) (2) motor vehicle washing, waxing, and cleaning 
 26.6   services, including services provided by coin-operated 
 26.7   facilities operated by the customer, and rustproofing, 
 26.8   undercoating, and towing of motor vehicles; 
 26.9      (iii) (3) building and residential cleaning, maintenance, 
 26.10  and disinfecting and exterminating services; 
 26.11     (iv) (4) detective services, security services, burglar, 
 26.12  fire alarm, and armored car services; but not including services 
 26.13  performed within the jurisdiction they serve by off-duty 
 26.14  licensed peace officers as defined in section 626.84, 
 26.15  subdivision 1, or services provided by a nonprofit organization 
 26.16  for monitoring and electronic surveillance of persons placed on 
 26.17  in-home detention pursuant to court order or under the direction 
 26.18  of the Minnesota department of corrections; 
 26.19     (v) (5) pet grooming services; 
 26.20     (vi) (6) lawn care, fertilizing, mowing, spraying and 
 26.21  sprigging services; garden planting and maintenance; tree, bush, 
 26.22  and shrub pruning, bracing, spraying, and surgery; indoor plant 
 26.23  care; tree, bush, shrub and stump removal; and tree trimming for 
 26.24  public utility lines.  Services performed under a construction 
 26.25  contract for the installation of shrubbery, plants, sod, trees, 
 26.26  bushes, and similar items are not taxable; 
 26.27     (vii) (7) massages, except when provided by a licensed 
 26.28  health care facility or professional or upon written referral 
 26.29  from a licensed health care facility or professional for 
 26.30  treatment of illness, injury, or disease; and 
 26.31     (viii) (8) the furnishing for consideration of lodging, 
 26.32  board and care services for animals in kennels and other similar 
 26.33  arrangements, but excluding veterinary and horse boarding 
 26.34  services. 
 26.35  The services listed in this paragraph are taxable under section 
 26.36  297A.02 if the service is performed wholly within Minnesota or 
 27.1   if the service is performed partly within and partly without 
 27.2   Minnesota and the greater proportion of the service is performed 
 27.3   in Minnesota, based on the cost of performance.  In applying the 
 27.4   provisions of this chapter, the terms "tangible personal 
 27.5   property" and "sales at retail" include taxable services and the 
 27.6   provision of taxable services, unless specifically provided 
 27.7   otherwise.  Services performed by an employee for an employer 
 27.8   are not taxable under this paragraph.  Services performed by a 
 27.9   partnership or association for another partnership or 
 27.10  association are not taxable under this paragraph if one of the 
 27.11  entities owns or controls more than 80 percent of the voting 
 27.12  power of the equity interest in the other entity.  Services 
 27.13  performed between members of an affiliated group of corporations 
 27.14  are not taxable.  For purposes of this section, "affiliated 
 27.15  group of corporations" includes those entities that would be 
 27.16  classified as a member of an affiliated group under United 
 27.17  States Code, title 26, section 1504, as amended through December 
 27.18  31, 1987, and who are eligible to file a consolidated tax return 
 27.19  for federal income tax purposes; 
 27.20     (j) A "sale" and a "purchase" includes the transfer of 
 27.21  computer software, meaning information and directions that 
 27.22  dictate the function performed by data processing equipment.  A 
 27.23  "sale" and a "purchase" does not include the design, 
 27.24  development, writing, translation, fabrication, lease, or 
 27.25  transfer for a consideration of title or possession of a custom 
 27.26  computer program; and 
 27.27     (k) The granting of membership in a club, association, or 
 27.28  other organization if: 
 27.29     (1) the club, association, or other organization makes 
 27.30  available for the use of its members sports and athletic 
 27.31  facilities (without regard to whether a separate charge is 
 27.32  assessed for use of the facilities); and 
 27.33     (2) use of the sports and athletic facilities is not made 
 27.34  available to the general public on the same basis as it is made 
 27.35  available to members.  
 27.36  Granting of membership includes both one-time initiation fees 
 28.1   and periodic membership dues.  Sports and athletic facilities 
 28.2   include golf courses, tennis, racquetball, handball and squash 
 28.3   courts, basketball and volleyball facilities, running tracks, 
 28.4   exercise equipment, swimming pools, and other similar athletic 
 28.5   or sports facilities.  The provisions of this paragraph do not 
 28.6   apply to camps or other recreation facilities owned and operated 
 28.7   by an exempt organization under section 501(c)(3) of the 
 28.8   Internal Revenue Code of 1986, as amended through December 31, 
 28.9   1992, for educational and social activities for young people 
 28.10  primarily age 18 and under.  
 28.11     Sec. 5.  Minnesota Statutes 1998, section 297A.01, 
 28.12  subdivision 15, is amended to read: 
 28.13     Subd. 15.  "Farm machinery" means new or used machinery, 
 28.14  equipment, implements, accessories, and contrivances used 
 28.15  directly and principally in the production for sale, but not 
 28.16  including the processing, of livestock, dairy animals, dairy 
 28.17  products, poultry and poultry products, fruits, vegetables, 
 28.18  flowering or ornamental plants including nursery stock, forage, 
 28.19  grains, and bees and apiary products.  "Farm machinery" includes:
 28.20     (1) machinery for the preparation, seeding or cultivation 
 28.21  of soil for growing agricultural crops and sod, harvesting and 
 28.22  threshing of agricultural products, harvesting or mowing of sod, 
 28.23  and certain machinery for dairy, livestock and poultry farms; 
 28.24     (2) barn cleaners, milking systems, grain dryers, automatic 
 28.25  feeding systems and similar installations, whether or not the 
 28.26  equipment is installed by the seller and becomes part of the 
 28.27  real property; 
 28.28     (3) irrigation equipment sold for exclusively agricultural 
 28.29  use, including pumps, pipe fittings, valves, sprinklers and 
 28.30  other equipment necessary to the operation of an irrigation 
 28.31  system when sold as part of an irrigation system, whether or not 
 28.32  the equipment is installed by the seller and becomes part of the 
 28.33  real property; 
 28.34     (4) logging equipment, including chain saws used for 
 28.35  commercial logging; 
 28.36     (5) fencing used for the containment of farmed cervidae, as 
 29.1   defined in section 17.451, subdivision 2; 
 29.2      (6) primary and backup generator units used to generate 
 29.3   electricity for the purpose of operating farm machinery, as 
 29.4   defined in this subdivision, or providing light or space heating 
 29.5   necessary for the production of livestock, dairy animals, dairy 
 29.6   products, or poultry and poultry products; and 
 29.7      (7) aquaculture production equipment as defined in 
 29.8   subdivision 19.  
 29.9      Repair or replacement parts for farm machinery shall not be 
 29.10  included in the definition of farm machinery.  
 29.11     Tools, shop equipment, grain bins, feed bunks, fencing 
 29.12  material except fencing material covered by clause (5), 
 29.13  communication equipment and other farm supplies shall not be 
 29.14  considered to be farm machinery.  "Farm machinery" does not 
 29.15  include motor vehicles taxed under chapter 297B, snowmobiles, 
 29.16  snow blowers, lawn mowers except those used in the production of 
 29.17  sod for sale, garden-type tractors or garden tillers and the 
 29.18  repair and replacement parts for those vehicles and machines. 
 29.19     Sec. 6.  Minnesota Statutes 1998, section 297F.09, 
 29.20  subdivision 1, is amended to read: 
 29.21     Subdivision 1.  [MONTHLY RETURN; CIGARETTE DISTRIBUTOR.] On 
 29.22  or before the 18th day of each calendar month, a distributor 
 29.23  with a place of business in this state shall file a return with 
 29.24  the commissioner showing the quantity of cigarettes manufactured 
 29.25  or brought in from outside the state or purchased during the 
 29.26  preceding calendar month and the quantity of cigarettes sold or 
 29.27  otherwise disposed of in this state and outside this state 
 29.28  during that month.  A licensed distributor outside this state 
 29.29  shall in like manner file a return showing the quantity of 
 29.30  cigarettes shipped or transported into this state during the 
 29.31  preceding calendar month.  Returns must be made in the form and 
 29.32  manner prescribed by the commissioner and must contain any other 
 29.33  information required by the commissioner.  The return must be 
 29.34  accompanied by a remittance for the full unpaid tax liability 
 29.35  shown by it.  The return for the May liability and 75 percent of 
 29.36  the estimated June liability is due on the date payment of the 
 30.1   tax is due. 
 30.2      Sec. 7.  Minnesota Statutes 1998, section 297F.09, 
 30.3   subdivision 2, is amended to read: 
 30.4      Subd. 2.  [MONTHLY RETURN; TOBACCO PRODUCTS DISTRIBUTOR.] 
 30.5   On or before the 18th day of each calendar month, a distributor 
 30.6   with a place of business in this state shall file a return with 
 30.7   the commissioner showing the quantity and wholesale sales price 
 30.8   of each tobacco product: 
 30.9      (1) brought, or caused to be brought, into this state for 
 30.10  sale; and 
 30.11     (2) made, manufactured, or fabricated in this state for 
 30.12  sale in this state, during the preceding calendar month.  
 30.13  Every licensed distributor outside this state shall in like 
 30.14  manner file a return showing the quantity and wholesale sales 
 30.15  price of each tobacco product shipped or transported to 
 30.16  retailers in this state to be sold by those retailers, during 
 30.17  the preceding calendar month.  Returns must be made in the form 
 30.18  and manner prescribed by the commissioner and must contain any 
 30.19  other information required by the commissioner.  The return must 
 30.20  be accompanied by a remittance for the full tax liability shown, 
 30.21  less 1.5 percent of the liability as compensation to reimburse 
 30.22  the distributor for expenses incurred in the administration of 
 30.23  this chapter.  The return for the May liability and 75 percent 
 30.24  of the estimated June liability is due on the date payment of 
 30.25  the tax is due. 
 30.26     Sec. 8.  [REPEALER.] 
 30.27     (a) Minnesota Statutes 1999 Supplement, section 297A.15, 
 30.28  subdivision 5, is repealed. 
 30.29     (b) Minnesota Statutes 1998, sections 289A.60, subdivision 
 30.30  15; 297F.09, subdivision 6; and 297G.09, subdivision 5, are 
 30.31  repealed. 
 30.32     Sec. 9.  [EFFECTIVE DATE.] 
 30.33     Sections 1, 2, 6, 7, and 8, paragraph (b), are effective 
 30.34  for returns filed after January 1, 2001.  Sections 3 to 5 and 8, 
 30.35  paragraph (a), are effective for sales and purchases occurring 
 30.36  after June 30, 2000. 
 31.1                              ARTICLE 5 
 31.2                            PROPERTY TAXES 
 31.3      Section 1.  Minnesota Statutes 1999 Supplement, section 
 31.4   273.13, subdivision 24, is amended to read: 
 31.5      Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
 31.6   property and utility real and personal property is class 3a.  
 31.7   Each parcel of real property has a class rate of 2.4 2.0 percent 
 31.8   of the first tier of market value, and 3.4 3.0 percent of the 
 31.9   remaining market value, except that in the case of contiguous 
 31.10  parcels of property owned by the same person or entity, only the 
 31.11  value equal to the first-tier value of the contiguous parcels 
 31.12  qualifies for the reduced class rate.  For the purposes of this 
 31.13  subdivision, the first tier means the first $150,000 of market 
 31.14  value.  Real property owned in fee by a utility for transmission 
 31.15  line right-of-way shall be classified at the class rate for the 
 31.16  higher tier.  All personal property shall be classified at the 
 31.17  class rate for the higher tier.  For purposes of this 
 31.18  subdivision "personal property" means tools, implements, and 
 31.19  machinery of an electric generating, transmission, or 
 31.20  distribution system, or a pipeline system transporting or 
 31.21  distributing water, gas, crude oil, or petroleum products or 
 31.22  mains and pipes used in the distribution of steam or hot or 
 31.23  chilled water for heating or cooling buildings, which are 
 31.24  fixtures. 
 31.25     For purposes of this paragraph, parcels are considered to 
 31.26  be contiguous even if they are separated from each other by a 
 31.27  road, street, vacant lot, waterway, or other similar intervening 
 31.28  type of property. 
 31.29     (b) Employment property defined in section 469.166, during 
 31.30  the period provided in section 469.170, shall constitute class 
 31.31  3b.  The class rates for class 3b property are determined under 
 31.32  paragraph (a). 
 31.33     (c)(1) Subject to the limitations of clause (2), structures 
 31.34  which are (i) located on property classified as class 3a, (ii) 
 31.35  constructed under an initial building permit issued after 
 31.36  January 2, 1996, (iii) located in a transit zone as defined 
 32.1   under section 473.3915, subdivision 3, (iv) located within the 
 32.2   boundaries of a school district, and (v) not primarily used for 
 32.3   retail or transient lodging purposes, shall have a class rate 
 32.4   equal to the lesser of 2.975 percent or the class rate of the 
 32.5   second tier of the commercial property rate under paragraph (a) 
 32.6   on any portion of the market value that does not qualify for the 
 32.7   first tier class rate under paragraph (a).  As used in item (v), 
 32.8   a structure is primarily used for retail or transient lodging 
 32.9   purposes if over 50 percent of its square footage is used for 
 32.10  those purposes.  A class rate equal to the lesser of 2.975 
 32.11  percent or the class rate of the second tier of the commercial 
 32.12  property class rate under paragraph (a) shall also apply to 
 32.13  improvements to existing structures that meet the requirements 
 32.14  of items (i) to (v) if the improvements are constructed under an 
 32.15  initial building permit issued after January 2, 1996, even if 
 32.16  the remainder of the structure was constructed prior to January 
 32.17  2, 1996.  For the purposes of this paragraph, a structure shall 
 32.18  be considered to be located in a transit zone if any portion of 
 32.19  the structure lies within the zone.  If any property once 
 32.20  eligible for treatment under this paragraph ceases to remain 
 32.21  eligible due to revisions in transit zone boundaries, the 
 32.22  property shall continue to receive treatment under this 
 32.23  paragraph for a period of three years. 
 32.24     (2) This clause applies to any structure qualifying for the 
 32.25  transit zone reduced class rate under clause (1) on January 2, 
 32.26  1999, or any structure meeting any of the qualification criteria 
 32.27  in item (i) and otherwise qualifying for the transit zone 
 32.28  reduced class rate under clause (1).  Such a structure continues 
 32.29  to receive the transit zone reduced class rate until the 
 32.30  occurrence of one of the events in item (ii).  Property 
 32.31  qualifying under item (i)(D), that is located outside of a city 
 32.32  of the first class, qualifies for the transit zone reduced class 
 32.33  rate as provided in that item.  Property qualifying under item 
 32.34  (i)(E) qualifies for the transit zone reduced class rate as 
 32.35  provided in that item. 
 32.36     (i) A structure qualifies for the rate in this clause if it 
 33.1   is: 
 33.2      (A) property for which a building permit was issued before 
 33.3   December 31, 1998; or 
 33.4      (B) property for which a building permit was issued before 
 33.5   June 30, 2001, if: 
 33.6      (I) at least 50 percent of the land on which the structure 
 33.7   is to be built has been acquired or is the subject of signed 
 33.8   purchase agreements or signed options as of March 15, 1998, by 
 33.9   the entity that proposes construction of the project or an 
 33.10  affiliate of the entity; 
 33.11     (II) signed agreements have been entered into with one 
 33.12  entity or with affiliated entities to lease for the account of 
 33.13  the entity or affiliated entities at least 50 percent of the 
 33.14  square footage of the structure or the owner of the structure 
 33.15  will occupy at least 50 percent of the square footage of the 
 33.16  structure; and 
 33.17     (III) one of the following requirements is met: 
 33.18     the project proposer has submitted the completed data 
 33.19  portions of an environmental assessment worksheet by December 
 33.20  31, 1998; or 
 33.21     a notice of determination of adequacy of an environmental 
 33.22  impact statement has been published by April 1, 1999; or 
 33.23     an alternative urban areawide review has been completed by 
 33.24  April 1, 1999; or 
 33.25     (C) property for which a building permit is issued before 
 33.26  July 30, 1999, if: 
 33.27     (I) at least 50 percent of the land on which the structure 
 33.28  is to be built has been acquired or is the subject of signed 
 33.29  purchase agreements as of March 31, 1998, by the entity that 
 33.30  proposes construction of the project or an affiliate of the 
 33.31  entity; 
 33.32     (II) a signed agreement has been entered into between the 
 33.33  building developer and a tenant to lease for its own account at 
 33.34  least 200,000 square feet of space in the building; 
 33.35     (III) a signed letter of intent is entered into by July 1, 
 33.36  1998, between the building developer and the tenant to lease the 
 34.1   space for its own account; and 
 34.2      (IV) the environmental review process required by state law 
 34.3   was commenced by December 31, 1998; 
 34.4      (D) property for which an irrevocable letter of credit with 
 34.5   a housing and redevelopment authority was signed before December 
 34.6   31, 1998.  The structure shall receive the transit zone reduced 
 34.7   class rate during construction and for the duration of time that 
 34.8   the original tenants remain in the building.  Any unoccupied net 
 34.9   leasable square footage that is not leased within 36 months 
 34.10  after the certificate of occupancy has been issued for the 
 34.11  building shall not be eligible to receive the reduced class 
 34.12  rate.  This reduced class rate applies only if the entity that 
 34.13  constructed the structure continues to own the property; 
 34.14     (E) property, located in a city of the first class, and for 
 34.15  which the building permits for the excavation, the parking ramp, 
 34.16  and the office tower were issued prior to April 1, 1999, shall 
 34.17  receive the reduced class rate during construction and for the 
 34.18  first five assessment years immediately following its initial 
 34.19  occupancy provided that, when completed, at least 25 percent of 
 34.20  the net leasable square footage must be occupied by the entity 
 34.21  or the parent entity constructing the structure each year during 
 34.22  this time period.  In order to receive the reduced class rate on 
 34.23  the structure in any subsequent assessment years, at least 50 
 34.24  percent of the rentable square footage must be occupied by the 
 34.25  entity or the parent entity that constructed the structure.  
 34.26  This reduced class rate applies only if the entity or the parent 
 34.27  entity that constructed the structure continues to own the 
 34.28  property. 
 34.29     (ii) A structure specified by this clause, other than a 
 34.30  structure qualifying under clause (i)(D) or (E), shall continue 
 34.31  to receive the transit zone reduced class rate until the 
 34.32  occurrence of one of the following events: 
 34.33     (A) if the structure upon initial occupancy will be owner 
 34.34  occupied by the entity initially constructing the structure or 
 34.35  an affiliated entity, the structure receives the reduced class 
 34.36  rate until the structure ceases to be at least 50 percent 
 35.1   occupied by the entity or an affiliated entity, provided, if the 
 35.2   portion of the structure occupied by that entity or an affiliate 
 35.3   of the entity is less than 85 percent, the transit zone class 
 35.4   rate reduction for the portion of structure not so occupied 
 35.5   terminates upon the leasing of such space to any nonaffiliated 
 35.6   entity; or 
 35.7      (B) if the structure is leased by a single entity or 
 35.8   affiliated entity at the time of initial occupancy, the 
 35.9   structure shall receive the reduced class rate until the 
 35.10  structure ceases to be at least 50 percent occupied by the 
 35.11  entity or an affiliated entity, provided, if the portion of the 
 35.12  structure occupied by that entity or an affiliate of the entity 
 35.13  is less than 85 percent, the transit zone class rate reduction 
 35.14  for the portion of structure not so occupied shall terminate 
 35.15  upon the leasing of such space to any nonaffiliated entity; or 
 35.16     (C) if the structure meets the criteria in item (i)(C), the 
 35.17  structure shall receive the reduced class rate until the 
 35.18  expiration of the initial lease term of the applicable tenants. 
 35.19     Percentages occupied or leased shall be determined based 
 35.20  upon net leasable square footage in the structure.  The assessor 
 35.21  shall allocate the value of the structure in the same fashion as 
 35.22  provided in the general law for portions of any structure 
 35.23  receiving and not receiving the transit tax class reduction as a 
 35.24  result of this clause. 
 35.25     Sec. 2.  Minnesota Statutes 1999 Supplement, section 
 35.26  273.13, subdivision 25, is amended to read: 
 35.27     Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
 35.28  estate containing four or more units and used or held for use by 
 35.29  the owner or by the tenants or lessees of the owner as a 
 35.30  residence for rental periods of 30 days or more.  Class 4a also 
 35.31  includes hospitals licensed under sections 144.50 to 144.56, 
 35.32  other than hospitals exempt under section 272.02, and contiguous 
 35.33  property used for hospital purposes, without regard to whether 
 35.34  the property has been platted or subdivided.  Class 4a property 
 35.35  in a city with a population of 5,000 or less, that is (1) 
 35.36  located outside of the metropolitan area, as defined in section 
 36.1   473.121, subdivision 2, or outside any county contiguous to the 
 36.2   metropolitan area, and (2) whose city boundary is at least 15 
 36.3   miles from the boundary of any city with a population greater 
 36.4   than 5,000 has a class rate of 2.15 percent of market value.  
 36.5   All other Class 4a property has a class rate of 2.4 2.0 percent 
 36.6   of market value.  For purposes of this paragraph, population has 
 36.7   the same meaning given in section 477A.011, subdivision 3. 
 36.8      (b) Class 4b includes: 
 36.9      (1) residential real estate containing less than four units 
 36.10  that does not qualify as class 4bb, other than seasonal 
 36.11  residential, and recreational; 
 36.12     (2) manufactured homes not classified under any other 
 36.13  provision; 
 36.14     (3) a dwelling, garage, and surrounding one acre of 
 36.15  property on a nonhomestead farm classified under subdivision 23, 
 36.16  paragraph (b) containing two or three units; 
 36.17     (4) unimproved property that is classified residential as 
 36.18  determined under subdivision 33.  
 36.19     Class 4b property has a class rate of 1.65 percent of 
 36.20  market value.  
 36.21     (c) Class 4bb includes: 
 36.22     (1) nonhomestead residential real estate containing one 
 36.23  unit, other than seasonal residential, and recreational; and 
 36.24     (2) a single family dwelling, garage, and surrounding one 
 36.25  acre of property on a nonhomestead farm classified under 
 36.26  subdivision 23, paragraph (b). 
 36.27     Class 4bb has a class rate of 1.2 percent on the first 
 36.28  $76,000 of market value and a class rate of 1.65 percent of its 
 36.29  market value that exceeds $76,000. 
 36.30     Property that has been classified as seasonal recreational 
 36.31  residential property at any time during which it has been owned 
 36.32  by the current owner or spouse of the current owner does not 
 36.33  qualify for class 4bb. 
 36.34     (d) Class 4c property includes: 
 36.35     (1) except as provided in subdivision 22, paragraph (c), 
 36.36  real property devoted to temporary and seasonal residential 
 37.1   occupancy for recreation purposes, including real property 
 37.2   devoted to temporary and seasonal residential occupancy for 
 37.3   recreation purposes and not devoted to commercial purposes for 
 37.4   more than 250 days in the year preceding the year of 
 37.5   assessment.  For purposes of this clause, property is devoted to 
 37.6   a commercial purpose on a specific day if any portion of the 
 37.7   property is used for residential occupancy, and a fee is charged 
 37.8   for residential occupancy.  In order for a property to be 
 37.9   classified as class 4c, seasonal recreational residential for 
 37.10  commercial purposes, at least 40 percent of the annual gross 
 37.11  lodging receipts related to the property must be from business 
 37.12  conducted during 90 consecutive days and either (i) at least 60 
 37.13  percent of all paid bookings by lodging guests during the year 
 37.14  must be for periods of at least two consecutive nights; or (ii) 
 37.15  at least 20 percent of the annual gross receipts must be from 
 37.16  charges for rental of fish houses, boats and motors, 
 37.17  snowmobiles, downhill or cross-country ski equipment, or charges 
 37.18  for marina services, launch services, and guide services, or the 
 37.19  sale of bait and fishing tackle.  For purposes of this 
 37.20  determination, a paid booking of five or more nights shall be 
 37.21  counted as two bookings.  Class 4c also includes commercial use 
 37.22  real property used exclusively for recreational purposes in 
 37.23  conjunction with class 4c property devoted to temporary and 
 37.24  seasonal residential occupancy for recreational purposes, up to 
 37.25  a total of two acres, provided the property is not devoted to 
 37.26  commercial recreational use for more than 250 days in the year 
 37.27  preceding the year of assessment and is located within two miles 
 37.28  of the class 4c property with which it is used.  Class 4c 
 37.29  property classified in this clause also includes the remainder 
 37.30  of class 1c resorts provided that the entire property including 
 37.31  that portion of the property classified as class 1c also meets 
 37.32  the requirements for class 4c under this clause; otherwise the 
 37.33  entire property is classified as class 3.  Owners of real 
 37.34  property devoted to temporary and seasonal residential occupancy 
 37.35  for recreation purposes and all or a portion of which was 
 37.36  devoted to commercial purposes for not more than 250 days in the 
 38.1   year preceding the year of assessment desiring classification as 
 38.2   class 1c or 4c, must submit a declaration to the assessor 
 38.3   designating the cabins or units occupied for 250 days or less in 
 38.4   the year preceding the year of assessment by January 15 of the 
 38.5   assessment year.  Those cabins or units and a proportionate 
 38.6   share of the land on which they are located will be designated 
 38.7   class 1c or 4c as otherwise provided.  The remainder of the 
 38.8   cabins or units and a proportionate share of the land on which 
 38.9   they are located will be designated as class 3a.  The owner of 
 38.10  property desiring designation as class 1c or 4c property must 
 38.11  provide guest registers or other records demonstrating that the 
 38.12  units for which class 1c or 4c designation is sought were not 
 38.13  occupied for more than 250 days in the year preceding the 
 38.14  assessment if so requested.  The portion of a property operated 
 38.15  as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 
 38.16  nonresidential facility operated on a commercial basis not 
 38.17  directly related to temporary and seasonal residential occupancy 
 38.18  for recreation purposes shall not qualify for class 1c or 4c; 
 38.19     (2) qualified property used as a golf course if: 
 38.20     (i) it is open to the public on a daily fee basis.  It may 
 38.21  charge membership fees or dues, but a membership fee may not be 
 38.22  required in order to use the property for golfing, and its green 
 38.23  fees for golfing must be comparable to green fees typically 
 38.24  charged by municipal courses; and 
 38.25     (ii) it meets the requirements of section 273.112, 
 38.26  subdivision 3, paragraph (d). 
 38.27     A structure used as a clubhouse, restaurant, or place of 
 38.28  refreshment in conjunction with the golf course is classified as 
 38.29  class 3a property; 
 38.30     (3) real property up to a maximum of one acre of land owned 
 38.31  by a nonprofit community service oriented organization; provided 
 38.32  that the property is not used for a revenue-producing activity 
 38.33  for more than six days in the calendar year preceding the year 
 38.34  of assessment and the property is not used for residential 
 38.35  purposes on either a temporary or permanent basis.  For purposes 
 38.36  of this clause, a "nonprofit community service oriented 
 39.1   organization" means any corporation, society, association, 
 39.2   foundation, or institution organized and operated exclusively 
 39.3   for charitable, religious, fraternal, civic, or educational 
 39.4   purposes, and which is exempt from federal income taxation 
 39.5   pursuant to section 501(c)(3), (10), or (19) of the Internal 
 39.6   Revenue Code of 1986, as amended through December 31, 1990.  For 
 39.7   purposes of this clause, "revenue-producing activities" shall 
 39.8   include but not be limited to property or that portion of the 
 39.9   property that is used as an on-sale intoxicating liquor or 3.2 
 39.10  percent malt liquor establishment licensed under chapter 340A, a 
 39.11  restaurant open to the public, bowling alley, a retail store, 
 39.12  gambling conducted by organizations licensed under chapter 349, 
 39.13  an insurance business, or office or other space leased or rented 
 39.14  to a lessee who conducts a for-profit enterprise on the 
 39.15  premises.  Any portion of the property which is used for 
 39.16  revenue-producing activities for more than six days in the 
 39.17  calendar year preceding the year of assessment shall be assessed 
 39.18  as class 3a.  The use of the property for social events open 
 39.19  exclusively to members and their guests for periods of less than 
 39.20  24 hours, when an admission is not charged nor any revenues are 
 39.21  received by the organization shall not be considered a 
 39.22  revenue-producing activity; 
 39.23     (4) post-secondary student housing of not more than one 
 39.24  acre of land that is owned by a nonprofit corporation organized 
 39.25  under chapter 317A and is used exclusively by a student 
 39.26  cooperative, sorority, or fraternity for on-campus housing or 
 39.27  housing located within two miles of the border of a college 
 39.28  campus; 
 39.29     (5) manufactured home parks as defined in section 327.14, 
 39.30  subdivision 3; and 
 39.31     (6) real property that is actively and exclusively devoted 
 39.32  to indoor fitness, health, social, recreational, and related 
 39.33  uses, is owned and operated by a not-for-profit corporation, and 
 39.34  is located within the metropolitan area as defined in section 
 39.35  473.121, subdivision 2. 
 39.36     Class 4c property has a class rate of 1.65 percent of 
 40.1   market value, except that (i) each parcel of seasonal 
 40.2   residential recreational property not used for commercial 
 40.3   purposes has the same class rates as class 4bb property, (ii) 
 40.4   manufactured home parks assessed under clause (5) have the same 
 40.5   class rate as class 4b property, and (iii) property described in 
 40.6   paragraph (d), clause (4), has the same class rate as the rate 
 40.7   applicable to the first tier of class 4bb nonhomestead 
 40.8   residential real estate under paragraph (c).  
 40.9      (e) Class 4d property is qualifying low-income rental 
 40.10  housing certified to the assessor by the housing finance agency 
 40.11  under sections 273.126 and 462A.071.  Class 4d includes land in 
 40.12  proportion to the total market value of the building that is 
 40.13  qualifying low-income rental housing.  For all properties 
 40.14  qualifying as class 4d, the market value determined by the 
 40.15  assessor must be based on the normal approach to value using 
 40.16  normal unrestricted rents. 
 40.17     Class 4d property has a class rate of one percent of market 
 40.18  value.  
 40.19     Sec. 3.  Minnesota Statutes 1999 Supplement, section 
 40.20  273.1382, subdivision 1a, is amended to read: 
 40.21     Subd. 1a.  [EDUCATION HOMESTEAD CREDIT.] Each county 
 40.22  auditor shall determine a general education homestead credit for 
 40.23  each homestead within the county equal to 66.2 percent for taxes 
 40.24  payable in 1999 and 83 .. percent for taxes payable in 2000 and 
 40.25  thereafter of the education credit tax rate times the net tax 
 40.26  capacity of the homestead for the taxes payable year.  The 
 40.27  amount of general education homestead credit for a homestead may 
 40.28  not exceed $320 for taxes payable in 1999 and $390 $....... for 
 40.29  taxes payable in 2000 and thereafter.  In the case of an 
 40.30  agricultural homestead, only the net tax capacity of the house, 
 40.31  garage, and surrounding one acre of land shall be used in 
 40.32  determining the property's education homestead credit. 
 40.33     Sec. 4.  [EFFECTIVE DATE.] 
 40.34     Sections 1 to 3 are effective for taxes levied in 2000, 
 40.35  payable in 2001, and thereafter. 
 40.36                             ARTICLE 6 
 41.1              MINNESOTA COMPREHENSIVE HEALTH ASSOCIATION 
 41.2      Section 1.  Minnesota Statutes 1998, section 62E.11, is 
 41.3   amended by adding a subdivision to read: 
 41.4      Subd. 13.  [FUNDING.] There is annually appropriated from 
 41.5   the general fund to the commissioner of commerce a sum 
 41.6   sufficient to pay 75 percent of the claims expenses and 
 41.7   operating and administrative expenses of the association 
 41.8   incurred on or after January 1, 2001, to the extent they exceed 
 41.9   premiums received.  Any expenses not paid by this annual 
 41.10  appropriation must be paid as otherwise provided in this 
 41.11  section.  All contributing members shall adjust their premium 
 41.12  rates to fully reflect funding provided under this subdivision.  
 41.13  The commissioner of commerce or the commissioner of health, as 
 41.14  appropriate, shall require contributing members to prove 
 41.15  compliance with this rate adjustment requirement. 
 41.16     The commissioner of commerce shall transfer to the 
 41.17  association each July 1 and January 1, one-half of the annual 
 41.18  appropriation provided by this subdivision.