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SF 552

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

KEY: stricken = removed, old language. underscored = added, new language.

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1.1A bill for an act
1.2 relating to financing and operation of state and local government; making
1.3changes to individual income, corporate franchise, property, sales and use, estate,
1.4mineral, tobacco, local, and other taxes and tax-related provisions; modifying the
1.5property tax refund for renters; changing property tax aids and credits; modifying
1.6pension aids; providing pension funding; changing provisions of the Sustainable
1.7Forest Incentive Act; modifying definitions and distributions for property
1.8taxes; providing exemptions; modifying education aids and levies; imposing a
1.9sports memorabilia gross receipts tax; changing tax rates on tobacco; providing
1.10reimbursement for certain property tax abatements; modifying the small business
1.11investment tax credit; making changes to additions and subtractions from federal
1.12taxable income; changing rates for individuals, estates, and trusts; providing
1.13income tax credits; modifying estate tax exclusions for qualifying small business
1.14and farm property; expanding the sales tax base and reducing the sales tax
1.15rate; modifying the definition of sale and purchase; changing the tax rate and
1.16modifying provisions for the rental motor vehicle tax; providing for multiple
1.17points of use certificates; modifying exemptions; authorizing local sales taxes;
1.18authorizing economic development powers; providing authority, organization,
1.19powers, and duties for development of a Destination Medical Center; authorizing
1.20state infrastructure aid; modifying the distribution of taconite production taxes;
1.21authorizing taconite production tax bonds for grants to school districts; modifying
1.22and providing provisions for public finance; providing funding for capitol
1.23renovations; modifying the definition of market value for tax, debt, and other
1.24purposes; making conforming, policy, and technical changes to tax provisions;
1.25requiring studies and reports; appropriating money;amending Minnesota Statutes
1.262012, sections 13.4965, subdivision 3; 16A.46; 16C.03, subdivision 18; 38.18;
1.2740A.15, subdivision 2; 69.011, subdivision 1; 69.021, subdivisions 7, 8, by
1.28adding a subdivision; 88.51, subdivision 3; 103B.102, subdivision 3; 103B.245,
1.29subdivision 3; 103B.251, subdivision 8; 103B.335; 103B.3369, subdivision 5;
1.30103B.635, subdivision 2; 103B.691, subdivision 2; 103C.501, subdivision 4;
1.31103D.905, subdivisions 2, 3, 8; 103F.405, subdivision 1; 116J.8737, subdivisions
1.321, 2, 5, 7, 9, 12, by adding a subdivision; 117.025, subdivision 7; 118A.04,
1.33subdivision 3; 118A.05, subdivision 5; 123A.455, subdivision 1; 124D.11,
1.34subdivision 1; 126C.10, subdivisions 1, 27, by adding subdivisions; 126C.13,
1.35subdivision 4, by adding a subdivision; 126C.17; 126C.48, subdivision 8;
1.36127A.48, subdivision 1; 138.053; 144F.01, subdivision 4; 162.07, subdivisions
1.373, 4; 163.04, subdivision 3; 163.06, subdivision 6; 165.10, subdivision 1;
1.38168.012, subdivision 9, by adding a subdivision; 237.52, subdivision 3, by
1.39adding a subdivision; 270.077; 270.41, subdivision 5; 270B.01, subdivision
2.18; 270B.12, subdivision 4; 270C.03, subdivision 1; 270C.34, subdivision 1;
2.2270C.38, subdivision 1; 270C.42, subdivision 2; 270C.56, subdivision 1; 272.01,
2.3subdivision 2; 272.02, subdivisions 10, 97, by adding subdivisions; 272.025,
2.4subdivision 1; 272.03, subdivision 9, by adding subdivisions; 273.032; 273.11,
2.5subdivision 1; 273.114, subdivision 6; 273.117; 273.124, subdivisions 3a, 13,
2.614, 21; 273.128, by adding a subdivision; 273.13, subdivisions 21b, 23, 25;
2.7273.1315, subdivisions 1, 2; 273.1398, subdivisions 3, 4; 273.19, subdivision 1;
2.8273.372, subdivision 4; 273.39; 275.011, subdivision 1; 275.025, subdivisions 1,
2.92; 275.077, subdivision 2; 275.71, subdivision 4; 276.04, subdivision 2; 276A.01,
2.10subdivisions 10, 12, 13, 15; 276A.06, subdivision 10; 279.06, subdivision 1;
2.11279.37, subdivisions 1a, 2; 281.14; 281.17; 287.05, by adding a subdivision;
2.12287.08; 287.20, by adding a subdivision; 287.23, subdivision 1; 287.385,
2.13subdivision 7; 289A.08, subdivision 3; 289A.10, by adding a subdivision;
2.14289A.12, subdivision 14, by adding a subdivision; 289A.18, by adding a
2.15subdivision; 289A.20, subdivisions 3, 4, by adding a subdivision; 289A.26,
2.16subdivisions 3, 4, 7, 9; 289A.55, subdivision 9; 289A.60, subdivision 4; 290.01,
2.17subdivisions 6b, 19b, 19c, 19d; 290.06, subdivisions 1, 2c, 2d, by adding a
2.18subdivision; 290.0677, subdivisions 1, 1a, 2; 290.068, subdivision 1; 290.0681,
2.19subdivisions 1, 3, 4, 5, 7, 10; 290.091, subdivision 2; 290.0921, subdivisions
2.201, 3; 290.0922, subdivision 1; 290.095, subdivision 2; 290.17, subdivision 4;
2.21290.191, subdivision 5; 290.21, subdivision 4; 290.9705, subdivision 1; 290A.03,
2.22subdivision 3; 290A.04, subdivisions 2a, 4; 290A.25; 290B.04, subdivision 2;
2.23290C.02, subdivision 6; 290C.03; 290C.055; 290C.07; 291.03, subdivisions 8, 9,
2.2410, 11; 296A.01, subdivision 19; 296A.09, subdivision 2; 296A.17, subdivision
2.253; 296A.22, subdivisions 1, 3; 297A.61, subdivisions 3, 4, 10, 17a, 25, 38, 45,
2.26by adding subdivisions; 297A.62, subdivisions 1, 1a; 297A.64, subdivision
2.271; 297A.65; 297A.66, subdivisions 1, 3, by adding a subdivision; 297A.665;
2.28297A.668, by adding a subdivision; 297A.67, subdivision 7, by adding a
2.29subdivision; 297A.68, subdivisions 2, 5, 10, 42, by adding a subdivision;
2.30297A.70, subdivisions 2, 4, 5, 7, 13, 14, by adding subdivisions; 297A.71, by
2.31adding subdivisions; 297A.75, subdivisions 1, 2, 3; 297A.815, subdivision
2.323; 297A.82, subdivision 4, by adding a subdivision; 297A.99, subdivision
2.331; 297B.11; 297E.02, subdivisions 1, 6; 297E.14, subdivision 7; 297F.01,
2.34subdivisions 19, 23, by adding subdivisions; 297F.05, subdivisions 1, 3, 4, by
2.35adding subdivisions; 297F.09, subdivision 9; 297F.18, subdivision 7; 297F.24,
2.36subdivision 1; 297F.25, subdivision 1; 297G.04, subdivision 2; 297G.09,
2.37subdivision 8; 297G.17, subdivision 7; 297I.05, subdivisions 7, 11, 12; 297I.30,
2.38subdivisions 1, 2; 297I.80, subdivision 1; 298.01, subdivisions 3, 3b; 298.018;
2.39298.17; 298.227, as amended; 298.24, subdivision 1; 298.28, subdivisions 4, 6;
2.40325F.781, subdivision 1; 349.166; 353G.08, subdivision 2; 360.531; 360.66;
2.41365.025, subdivision 4; 366.095, subdivision 1; 366.27; 368.01, subdivision
2.4223; 368.47; 370.01; 373.01, subdivision 1; 373.40, subdivisions 1, 2, 4;
2.43375.167, subdivision 1; 375.18, subdivision 3; 375.555; 383A.80, subdivision 4;
2.44383B.152; 383B.245; 383B.73, subdivision 1; 383B.80, subdivision 4; 383D.41,
2.45by adding a subdivision; 383E.20; 383E.23; 385.31; 394.36, subdivision 1;
2.46398A.04, subdivision 8; 401.05, subdivision 3; 403.02, subdivision 21, by
2.47adding subdivisions; 403.06, subdivision 1a; 403.11, subdivision 1, by adding a
2.48subdivision; 410.32; 412.221, subdivision 2; 412.301; 428A.02, subdivision 1;
2.49428A.101; 428A.21; 430.102, subdivision 2; 435.19, subdivision 2, by adding a
2.50subdivision; 447.10; 450.19; 450.25; 458A.10; 458A.31, subdivision 1; 465.04;
2.51469.033, subdivision 6; 469.034, subdivision 2; 469.053, subdivisions 4, 4a, 6;
2.52469.107, subdivision 1; 469.174, subdivision 2, by adding subdivisions; 469.175,
2.53subdivision 3; 469.176, subdivisions 1b, 4b, 4c, 4m, 6, by adding a subdivision;
2.54469.1763, subdivisions 3, 4; 469.177, subdivision 1a; 469.180, subdivision 2;
2.55469.187; 469.190, by adding a subdivision; 469.206; 469.319, subdivision 4;
2.56469.340, subdivision 4; 471.24; 471.571, subdivisions 1, 2; 471.73; 473.325,
2.57subdivision 2; 473.606, subdivision 3; 473.629; 473.661, subdivision 3; 473.667,
2.58subdivision 9; 473.671; 473.711, subdivision 2a; 473F.02, subdivisions 12, 14,
3.115, 23; 473F.08, subdivision 10, by adding a subdivision; 474A.04, subdivision
3.21a; 474A.062; 474A.091, subdivision 3a; 475.521, subdivisions 1, 2, 4;
3.3475.53, subdivisions 1, 3, 4; 475.58, subdivisions 2, 3b; 475.73, subdivision 1;
3.4477A.011, subdivisions 20, 30, 32, 34, 42, by adding subdivisions; 477A.0124,
3.5subdivision 2; 477A.013, subdivisions 1, 8, 9, by adding a subdivision; 477A.03,
3.6subdivisions 2a, 2b, by adding a subdivision; 477A.11, subdivisions 3, 4, by
3.7adding subdivisions; 477A.12, subdivisions 1, 2, 3; 477A.14, subdivision 1, by
3.8adding a subdivision; 641.23; 641.24; 645.44, by adding a subdivision; Laws
3.91971, chapter 773, section 1, subdivision 2, as amended; Laws 1988, chapter 645,
3.10section 3, as amended; Laws 1993, chapter 375, article 9, section 46, subdivisions
3.112, as amended, 5, as amended; Laws 1998, chapter 389, article 8, section 43,
3.12subdivisions 1, 3, as amended, 5, as amended; Laws 1999, chapter 243, article 6,
3.13section 11; Laws 2002, chapter 377, article 3, section 25, as amended; Laws 2005,
3.14First Special Session chapter 3, article 5, section 37, subdivisions 2, 4; Laws 2006,
3.15chapter 259, article 11, section 3, as amended; Laws 2008, chapter 366, article 5,
3.16sections 26; 33; 34, as amended; article 7, section 19, subdivision 3, as amended;
3.17Laws 2010, chapter 216, sections 11; 55; Laws 2010, chapter 389, article 1,
3.18section 12; proposing coding for new law in Minnesota Statutes, chapters 116J;
3.19124D; 136A; 270C; 273; 287; 290; 295; 403; 469; 477A; repealing Minnesota
3.20Statutes 2012, sections 16A.725; 256.9658; 272.69; 273.11, subdivisions 1a,
3.2122; 275.025, subdivision 4; 276A.01, subdivision 11; 289A.60, subdivision 31;
3.22290.01, subdivision 6b; 290.0921, subdivision 7; 290.171; 290.173; 290.174;
3.23297A.61, subdivision 27; 297A.66, subdivision 4; 297A.67, subdivision
3.248; 297A.68, subdivisions 9, 22, 35; 473F.02, subdivision 13; 477A.011,
3.25subdivisions 2a, 19, 21, 29, 31, 32, 33, 36, 39, 40, 41, 42; 477A.013, subdivisions
3.2611, 12; 477A.0133; 477A.0134; Minnesota Rules, part 8130.0500, subpart 2.
3.27BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

3.28ARTICLE 1
3.29AIDS AND CREDITS

3.30    Section 1. Minnesota Statutes 2012, section 69.021, is amended by adding a
3.31subdivision to read:
3.32    Subd. 12. Pension aid accounts. (a) $745,000 is appropriated from the general
3.33fund, in fiscal year 2015 and each year thereafter, to the commissioner of revenue for the
3.34purposes of pension aid. The commissioner shall administer the account and allocate
3.35money in the account as follows:
3.36(1) $130,065 as supplemental state pension funding paid to the executive director of
3.37the Public Employees Retirement Association for deposit in the public employees police
3.38and fire retirement fund established by section 353.65, subdivision 1;
3.39(2) $64,935 to municipalities employing firefighters with retirement coverage by the
3.40public employees police and fire retirement plan, allocated in proportion to the relationship
3.41that the preceding June 30 number of firefighters employed by each municipality who have
3.42public employees police and fire retirement plan coverage bears to the total preceding
3.43June 30 number of municipal firefighters covered by the public employees police and
3.44fire retirement plan; and
4.1(3) $550,000 for municipalities other than the municipalities receiving a
4.2disbursement under clause (2) which qualified to receive fire state aid in that calendar year,
4.3allocated in proportion to the most recent amount of fire state aid paid under subdivision 7
4.4for the municipality bears to the most recent total fire state aid for all municipalities other
4.5than the municipalities receiving a disbursement under clause (2) paid under subdivision
4.67, with the allocated amount for fire departments participating in the voluntary statewide
4.7lump-sum volunteer firefighter retirement plan paid to the executive director of the Public
4.8Employees Retirement Association for deposit in the fund established by section 353G.02,
4.9subdivision 3, and credited to the respective account and with the balance paid to the
4.10treasurer of each municipality for transmittal within 30 days of receipt to the treasurer of
4.11the applicable volunteer firefighter relief association for deposit in its special fund.
4.12(b) $1,550,00 is appropriated from the general fund in fiscal year 2015 to the
4.13commissioner of revenue for the purposes of pension aid. The commissioner shall
4.14administer the account and allocate money in the account as follows:
4.15(1) one-third to be distributed as police state aid as provided under subdivision 7a; and
4.16(2) two-thirds to be apportioned, on the basis of the number of active police officers
4.17certified for police state aid receipt under section 69.011, subdivisions 2 and 2b, between:
4.18(i) the executive director of the Public Employees Retirement Association for
4.19deposit as a supplemental state pension funding aid in the public employees police and fire
4.20retirement fund established by section 353.65, subdivision 1; and
4.21(ii) the executive director of the Minnesota State Retirement System for deposit as a
4.22supplemental state pension funding aid in the state patrol retirement fund.
4.23(c) On or before September 1, annually, the executive director of the Public
4.24Employees Retirement Association shall report to the commissioner the following:
4.25(1) the municipalities which employ firefighters with retirement coverage by the
4.26public employees police and fire retirement plan;
4.27(2) the number of firefighters with public employees police and fire retirement plan
4.28employed by each municipality;
4.29(3) the fire departments covered by the voluntary statewide lump-sum volunteer
4.30firefighter retirement plan; and
4.31(4) any other information requested by the commissioner to administer the surcharge
4.32fire pension aid account.
4.33(d) For this subdivision, (i) the number of firefighters employed by a municipality
4.34who have public employees police and fire retirement plan coverage means the number
4.35of firefighters with public employees police and fire retirement plan coverage that were
4.36employed by the municipality for not less than 30 hours per week for a minimum of six
5.1months prior to December 31 preceding the date of the payment under this section and, if
5.2the person was employed for less than the full year, prorated to the number of full months
5.3employed; and, (ii) the number of active police officers certified for police state aid receipt
5.4under section 69.011, subdivisions 2 and 2b means, for each municipality, the number of
5.5police officers meeting the definition of peace officer in section 69.011, subdivision 1,
5.6counted as provided and limited by section 69.011, subdivisions 2 and 2b.
5.7(e) The payments under this section shall be made on October 1 each year, based on
5.8the amount in the temporary fire pension aid account and the amount in the temporary
5.9police pension aid account on the preceding June 30, with interest at 1 percent for each
5.10month, or portion of a month, that the amount remains unpaid after October 1. The
5.11amounts necessary to make the payments under this subdivision are annually appropriated
5.12to the commissioner from the temporary fire and police pension aid accounts. Any
5.13necessary adjustments shall be made to subsequent payments.
5.14(f) The provisions of this chapter that prevent municipalities and relief associations
5.15from being eligible for, or receiving state aid under this chapter until the applicable
5.16financial reporting requirements have been complied with, apply to the amounts payable
5.17to municipalities and relief associations under this subdivision.
5.18(g) The appropriations in paragraphs (a) and (b) end on (i) December 31, 2020, or
5.19(ii), if earlier, on the December 31 next following the actuarial valuation date on which the
5.20assets of the retirement plan on a market value equals or exceeds 90 percent of the total
5.21actuarial accrued liabilities of the retirement plan as disclosed in an actuarial valuation
5.22prepared under Minnesota Statutes, section 356.215, and the Standards for Actuarial Work
5.23promulgated by the Legislative Commission on Pensions and Retirement, for the State
5.24Patrol retirement plan or the public employees police and fire retirement plan, whichever
5.25occurs last.
5.26(h) The base for fiscal year 2016 and thereafter under paragraph (a) is $7,450,000
5.27and the distribution in clauses (1) to (3) are adjusted accordingly. The base for fiscal year
5.282016 and thereafter, under paragraph (b), is $15,500,000.
5.29EFFECTIVE DATE.This section is effective beginning in the fiscal year beginning
5.30July 1, 2014.

5.31    Sec. 2. Minnesota Statutes 2012, section 477A.011, subdivision 30, is amended to read:
5.32    Subd. 30. Pre-1940 housing percentage. (a) Except as provided in paragraph (b),
5.33"pre-1940 housing percentage" for a city is 100 times the most recent federal census count
5.34by the United States Bureau of the Census of all housing units in the city built before
6.11940, divided by the total number of all housing units in the city. Housing units includes
6.2both occupied and vacant housing units as defined by the federal census.
6.3(b) For the city of East Grand Forks only, "pre-1940 housing percentage" is equal
6.4to 100 times the 1990 federal census count of all housing units in the city built before
6.51940, divided by the most recent counts by the United States Bureau of the Census of all
6.6housing units in the city. Housing units includes both occupied and vacant housing units
6.7as defined by the federal census.
6.8EFFECTIVE DATE.This section is effective for aids payable in calendar year
6.92014 and thereafter.

6.10    Sec. 3. Minnesota Statutes 2012, section 477A.011, is amended by adding a
6.11subdivision to read:
6.12    Subd. 30a. Percent of housing built between 1940 and 1970. "Percent of housing
6.13built between 1940 and 1970" is equal to 100 times the most recent count by the United
6.14States Bureau of the Census of all housing units in the city built after 1939 but before
6.151970, divided by the total number of all housing units in the city. Housing units includes
6.16both occupied and vacant housing units as defined by the federal census.
6.17EFFECTIVE DATE.This section is effective for aids payable in calendar year
6.182014 and thereafter.

6.19    Sec. 4. Minnesota Statutes 2012, section 477A.011, subdivision 34, is amended to read:
6.20    Subd. 34. City revenue need. (a) For a city with a population equal to or greater
6.21than 2,500 10,000, "city revenue need" is the greater of 285 or 1.15 times the sum of (1)
6.225.0734098 4.59 times the pre-1940 housing percentage; plus (2) 19.141678 times the
6.23population decline percentage 0.622 times the percent of housing built between 1940 and
6.241970; plus (3) 2504.06334 times the road accidents factor 169.415 times the jobs per
6.25capita; plus (4) 355.0547; minus (5) the metropolitan area factor; minus (6) 49.10638
6.26times the household size the sparsity adjustment, plus (5) 307.664.
6.27    (b) For a city with a population equal to or greater than 2,500 and less than 10,000,
6.28"city revenue need" is 1.15 times the sum of (1) 572.62; plus (2) 5.026 times the pre-1940
6.29housing percentage; minus (3) 53.768 times household size; plus (4) 14.022 times peak
6.30population decline.
6.31    (b) (c) For a city with a population less than 2,500, "city revenue need" is the sum of
6.32(1) 2.387 times the pre-1940 housing percentage; plus (2) 2.67591 times the commercial
6.33industrial percentage; plus (3) 3.16042 times the population decline percentage; plus (4)
7.11.206 times the transformed population; minus (5) 62.772 410 plus 0.367 times the city's
7.2population over 100. The city revenue need under this paragraph shall not exceed 630.
7.3    (c) (d) For a city with a population of at least 2,500 or more and a population in one
7.4of the most recently available five years that was less than 2,500, "city revenue need"
7.5is the sum of (1) its city revenue need calculated under paragraph (a) multiplied by its
7.6transition factor; plus (2) its city revenue need calculated under the formula in paragraph
7.7(b) multiplied by the difference between one and its transition factor. For purposes of this
7.8paragraph, a city's "transition factor" is equal to 0.2 multiplied by the number of years that
7.9the city's population estimate has been 2,500 or more. This provision only applies for aids
7.10payable in calendar years 2006 to 2008 to cities with a 2002 population of less than 2,500.
7.11It applies to any city for aids payable in 2009 and thereafter but less than 3,000, the "city
7.12revenue need" equals (1) the transition factor times the city's revenue need calculated in
7.13paragraph (b) plus (2) 630 times the difference between one and the transition factor. For
7.14a city with a population of at least 10,000 but less than 10,500, the "city revenue need"
7.15equals (1) the transition factor times the city's revenue need calculated in paragraph (a)
7.16plus (2) the city's revenue need calculated under the formula in paragraph (b) times the
7.17difference between one and the transition factor. For purposes of this paragraph "transition
7.18factor" is 0.2 percent times the amount that the city's population exceeds the minimum
7.19threshold in either of the first two sentences.
7.20    (d) (e) The city revenue need cannot be less than zero.
7.21    (e) (f) For calendar year 2005 2015 and subsequent years, the city revenue need for
7.22a city, as determined in paragraphs (a) to (d) (e), is multiplied by the ratio of the annual
7.23implicit price deflator for government consumption expenditures and gross investment for
7.24state and local governments as prepared by the United States Department of Commerce,
7.25for the most recently available year to the 2003 2013 implicit price deflator for state
7.26and local government purchases.
7.27EFFECTIVE DATE.This section is effective for aids payable in calendar year
7.282014 and thereafter.

7.29    Sec. 5. Minnesota Statutes 2012, section 477A.011, subdivision 42, is amended to read:
7.30    Subd. 42. City jobs base Jobs per capita. (a) "City jobs base" for a city with a
7.31population of 5,000 or more is equal to the product of (1) $25.20, (2) the number of
7.32jobs per capita in the city, and (3) its population. For cities with a population less than
7.335,000, the city jobs base is equal to zero. For a city receiving aid under subdivision 36,
7.34paragraph (k), its city jobs base is reduced by the lesser of 36 percent of the amount of
8.1aid received under that paragraph or $1,000,000. No city's city jobs base may exceed
8.2$4,725,000 under this paragraph.
8.3    (b) For calendar year 2010 and subsequent years, the city jobs base for a city, as
8.4determined in paragraph (a), is multiplied by the ratio of the appropriation under section
8.5477A.03, subdivision 2a, for the year in which the aid is paid to the appropriation under
8.6that section for aids payable in 2009.
8.7    (c) For purposes of this subdivision, "Jobs per capita in the city" means (1) the
8.8average annual number of employees in the city based on the data from the Quarterly
8.9Census of Employment and Wages, as reported by the Department of Employment and
8.10Economic Development, for the most recent calendar year available as of May 1, 2008
8.11 November 1 of every odd-numbered year, divided by (2) the city's population for the
8.12same calendar year as the employment data. The commissioner of the Department of
8.13Employment and Economic Development shall certify to the city the average annual
8.14number of employees for each city by June 1, 2008 January 15, of every even-numbered
8.15year beginning with January 15, 2014.. A city may challenge an estimate under this
8.16paragraph by filing its specific objection, including the names of employers that it feels
8.17may have misreported data, in writing with the commissioner by June 20, 2008 December
8.181 of every odd-numbered year. The commissioner shall make every reasonable effort
8.19to address the specific objection and adjust the data as necessary. The commissioner
8.20shall certify the estimates of the annual employment to the commissioner of revenue by
8.21July 15, 2008 January 15 of all even-numbered years, including any estimates still under
8.22objection. For aids payable in 2014 "jobs per capita" shall be based on the annual number
8.23of employees and population for calendar year 2010 without additional review.
8.24EFFECTIVE DATE.This section is effective for aids payable in calendar year
8.252014 and thereafter.

8.26    Sec. 6. Minnesota Statutes 2012, section 477A.011, is amended by adding a
8.27subdivision to read:
8.28    Subd. 44. Peak population decline. "Peak population decline" is equal to 100
8.29times the difference between one and the ratio of the city's current population, to the
8.30highest city population reported in a federal census from the 1970 census or later. "Peak
8.31population decline" shall not be less than zero.
8.32EFFECTIVE DATE.This section is effective for aids payable in calendar year
8.332014 and thereafter.

9.1    Sec. 7. Minnesota Statutes 2012, section 477A.011, is amended by adding a
9.2subdivision to read:
9.3    Subd. 45. Sparsity adjustment. For a city with a population of 10,000 or more, the
9.4sparsity adjustment is 100 for any city with an average population density less than 150
9.5per square mile. The sparsity adjustment is zero for all other cities.
9.6EFFECTIVE DATE.This section is effective for aids payable in calendar year
9.72014 and thereafter.

9.8    Sec. 8. Minnesota Statutes 2012, section 477A.013, subdivision 1, is amended to read:
9.9    Subdivision 1. Towns. In 2002, no town is eligible for a distribution under this
9.10subdivision. In 2014 and thereafter, each town is eligible for a distribution under this
9.11subdivision equal to the product of (i) its agricultural property factor, (ii) its town area
9.12factor, (iii) its population factor, and (iv) 0.00225. As used in this subdivision, the
9.13following terms have the meanings given them:
9.14(1) "agricultural property factor" means the ratio of the adjusted net tax capacity of
9.15agricultural property located in a town, divided by the adjusted net tax capacity of all other
9.16property located in the town. The agricultural property factor cannot exceed eight;
9.17(2) "agricultural property" means property classified under section 273.13, as
9.18homestead and nonhomestead agricultural property, rural vacant land, and noncommercial
9.19seasonal recreational property;
9.20(3) "town area factor" means the most recent estimate of total acreage, not to exceed
9.2150,000 acres, located in the township available as of July 1 in the aid calculation year,
9.22estimated or established by:
9.23(i) the United States Bureau of the Census;
9.24(ii) the State Land Management Information Center; or
9.25(iii) the secretary of state; and
9.26(4) "population factor" means the square root of the towns population.
9.27If the sum of the aids payable to all towns under this subdivision exceeds the limit
9.28under section 477A.03, subdivision 2c, the distribution to each town must be reduced
9.29proportionately so that the total amount of aids distributed under this section does not
9.30exceed the limit in section 477A.03, subdivision 2c.
9.31EFFECTIVE DATE.This section is effective for aids payable in calendar year
9.322014 and thereafter.

9.33    Sec. 9. Minnesota Statutes 2012, section 477A.013, subdivision 8, is amended to read:
10.1    Subd. 8. City formula aid. (a) For aids payable in 2014 only, the formula aid for a
10.2city is equal to the sum of (1) its 2013 certified aid and (2) the product of (i) the difference
10.3between its unmet need and its 2013 certified aid and (ii) the aid gap percentage.
10.4    (b) For aids payable in 2015 and thereafter, the formula aid for a city is equal to
10.5the sum of (1) its city jobs base, (2) its small city aid base, and (3) the need increase
10.6percentage multiplied by the average of its unmet need for the most recently available two
10.7years formula aid in the previous year and (2) the product of (i) the difference between
10.8its unmet need and its certified aid in the previous year under subdivision 9, and (ii)
10.9the aid gap percentage.
10.10No city may have a formula aid amount less than zero. The need increase aid gap
10.11 percentage must be the same for all cities.
10.12    The applicable need increase aid gap percentage must be calculated by the
10.13Department of Revenue so that the total of the aid under subdivision 9 equals the total
10.14amount available for aid under section 477A.03. Data used in calculating aids to cities
10.15under sections 477A.011 to 477A.013 shall be the most recently available data as of
10.16January 1 in the year in which the aid is calculated except that the data used to compute "net
10.17levy" in subdivision 9 is the data most recently available at the time of the aid computation.
10.18EFFECTIVE DATE.This section is effective for aids payable in calendar year
10.192014 and thereafter.

10.20    Sec. 10. Minnesota Statutes 2012, section 477A.013, subdivision 9, is amended to read:
10.21    Subd. 9. City aid distribution. (a) In calendar year 2013 2014 and thereafter, each
10.22city shall receive an aid distribution equal to the sum of (1) the city formula aid under
10.23subdivision 8, and (2) its city aid base aid adjustment under subdivision 13.
10.24    (b) For aids payable in 2013 and 2014 only, the total aid in the previous year for
10.25any city shall mean the amount of aid it was certified to receive for aids payable in 2012
10.26under this section. For aids payable in 2015 and thereafter, the total aid in the previous
10.27year for any city means the amount of aid it was certified to receive under this section in
10.28the previous payable year.
10.29    (c) For aids payable in 2010 and thereafter, the total aid for any city shall not exceed
10.30the sum of (1) ten percent of the city's net levy for the year prior to the aid distribution
10.31plus (2) its total aid in the previous year. For aids payable in 2009 and thereafter, the total
10.32aid for any city with a population of 2,500 or more may not be less than its total aid under
10.33this section in the previous year minus the lesser of $10 multiplied by its population, or ten
10.34percent of its net levy in the year prior to the aid distribution.
11.1    (d) (b) For aids payable in 2014 only, the total aid for a city may not be less than the
11.2amount it was certified to receive in 2013. For aids payable in 2010 2015 and thereafter,
11.3the total aid for a city with a population less than 2,500 must not be less than the amount
11.4it was certified to receive in the previous year minus the lesser of $10 multiplied by its
11.5population, or five percent of its 2003 certified aid amount. For aids payable in 2009 only,
11.6the total aid for a city with a population less than 2,500 must not be less than what it
11.7received under this section in the previous year unless its total aid in calendar year 2008
11.8was aid under section 477A.011, subdivision 36, paragraph (s), in which case its minimum
11.9aid is zero its net levy in the year prior to the aid distribution.
11.10    (e) A city's aid loss under this section may not exceed $300,000 in any year in
11.11which the total city aid appropriation under section 477A.03, subdivision 2a, is equal or
11.12greater than the appropriation under that subdivision in the previous year, unless the
11.13city has an adjustment in its city net tax capacity under the process described in section
11.14469.174, subdivision 28.
11.15    (f) If a city's net tax capacity used in calculating aid under this section has decreased
11.16in any year by more than 25 percent from its net tax capacity in the previous year due to
11.17property becoming tax-exempt Indian land, the city's maximum allowed aid increase
11.18under paragraph (c) shall be increased by an amount equal to (1) the city's tax rate in the
11.19year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease
11.20resulting from the property becoming tax exempt.
11.21EFFECTIVE DATE.This section is effective for aids payable in calendar year
11.222014 and thereafter.

11.23    Sec. 11. Minnesota Statutes 2012, section 477A.013, is amended by adding a
11.24subdivision to read:
11.25    Subd. 13. Certified aid adjustments. (a) A city that received an aid base increase
11.26under Minnesota Statutes 2012, section 477A.011, subdivision 36, paragraph (e), shall
11.27have its total aid under subdivision 9 increased by an amount equal to $150,000 for aids
11.28payable in 2014 through 2018.
11.29(b) A city that received an aid base increase under section 477A.011, subdivision 36,
11.30paragraph (r), shall have its total aid under subdivision 9 increased by an amount equal to
11.31$160,000 for aids payable in 2014 and thereafter.
11.32(c) A city that received a temporary aid increase under Minnesota Statutes 2012,
11.33section 477A.011, subdivision 36, paragraph (m), (v), or (w), shall have its total aid under
11.34subdivision 9 decreased by the amount of its aid base increase under those paragraphs in
11.35calendar year 2013.

12.1    Sec. 12. Minnesota Statutes 2012, section 477A.03, subdivision 2a, is amended to read:
12.2    Subd. 2a. Cities. For aids payable in 2013 2014 and thereafter, the total aid paid
12.3under section 477A.013, subdivision 9, is $426,438,012 $506,438,012.
12.4EFFECTIVE DATE.This section is effective for aids payable in calendar year
12.52014 and thereafter.

12.6    Sec. 13. Minnesota Statutes 2012, section 477A.03, subdivision 2b, is amended to read:
12.7    Subd. 2b. Counties. (a) For aids payable in 2013 2014 and thereafter, the total aid
12.8payable under section 477A.0124, subdivision 3, is $80,795,000 $100,795,000. Each
12.9calendar year, $500,000 of this appropriation shall be retained by the commissioner
12.10of revenue to make reimbursements to the commissioner of management and budget
12.11for payments made under section 611.27. For calendar year 2004, the amount shall
12.12be in addition to the payments authorized under section 477A.0124, subdivision 1.
12.13For calendar year 2005 and subsequent years, the amount shall be deducted from the
12.14appropriation under this paragraph. The reimbursements shall be to defray the additional
12.15costs associated with court-ordered counsel under section 611.27. Any retained amounts
12.16not used for reimbursement in a year shall be included in the next distribution of county
12.17need aid that is certified to the county auditors for the purpose of property tax reduction
12.18for the next taxes payable year.
12.19    (b) For aids payable in 2013 2014 and thereafter, the total aid under section
12.20477A.0124, subdivision 4 , is $84,909,575 $104,909,575. The commissioner of
12.21management and budget shall bill the commissioner of revenue for the cost of preparation
12.22of local impact notes as required by section 3.987, not to exceed $207,000 in each fiscal
12.23year 2004 and thereafter. The commissioner of education shall bill the commissioner of
12.24revenue for the cost of preparation of local impact notes for school districts as required
12.25by section 3.987, not to exceed $7,000 in each fiscal year 2004 and thereafter. The
12.26commissioner of revenue shall deduct the amounts billed under this paragraph from
12.27the appropriation under this paragraph. The amounts deducted are appropriated to the
12.28commissioner of management and budget and the commissioner of education for the
12.29preparation of local impact notes.
12.30EFFECTIVE DATE.This section is effective for aid payable in 2014 and thereafter.

12.31    Sec. 14. Minnesota Statutes 2012, section 477A.03, is amended by adding a
12.32subdivision to read:
13.1    Subd. 2c. Towns. For aids payable in 2014, the total aids paid under section
13.2477A.013, subdivision 1, is limited to $5,000,000. For aids payable in 2015 and thereafter,
13.3the total aids paid under section 477A.013, subdivision 1, is limited to the amount certified
13.4to be paid in the previous year.
13.5EFFECTIVE DATE.This section is effective for aids payable in calendar year
13.62014 and thereafter.

13.7    Sec. 15. [477A.10] NATURAL RESOURCES LAND PAYMENTS IN LIEU;
13.8PURPOSE.
13.9The purposes of sections 477A.11 to 477A.14 are:
13.10(1) to compensate local units of government for the loss of tax base from state
13.11ownership of land and the need to provide services for state land;
13.12(2) to address the disproportionate impact of state land ownership on local units of
13.13government with a large proportion of state land; and
13.14(3) to address the need to manage state lands held in trust for the local taxing districts.

13.15    Sec. 16. Minnesota Statutes 2012, section 477A.11, subdivision 3, is amended to read:
13.16    Subd. 3. Acquired natural resources land. "Acquired natural resources land"
13.17means:
13.18(1) any land, other than wildlife management land, presently administered by the
13.19commissioner in which the state acquired by purchase, condemnation, or gift, a fee title
13.20interest in lands which were previously privately owned; and
13.21(2) lands acquired by the state under chapter 84A that are designated as state parks,
13.22state recreation areas, scientific and natural areas, or wildlife management areas.
13.23EFFECTIVE DATE.This section is effective for aids payable in calendar year
13.242013 and thereafter.

13.25    Sec. 17. Minnesota Statutes 2012, section 477A.11, subdivision 4, is amended to read:
13.26    Subd. 4. Other natural resources land. "Other natural resources land" means
13.27any other land, other than acquired natural resource land or wildlife management land,
13.28 presently owned in fee title by the state and administered by the commissioner, or
13.29any tax-forfeited land, other than platted lots within a city or those lands described
13.30under subdivision 3, clause (2), which is owned by the state and administered by the
13.31commissioner or by the county in which it is located.
14.1EFFECTIVE DATE.This section is effective for aids payable in calendar year
14.22013 and thereafter.

14.3    Sec. 18. Minnesota Statutes 2012, section 477A.11, is amended by adding a
14.4subdivision to read:
14.5    Subd. 6. Military game refuge. "Military game refuge" means land owned in
14.6fee by another state agency for military purposes and designated as a state game refuge
14.7under section 97A.085.
14.8EFFECTIVE DATE.This section is effective for aids payable in calendar year
14.92013 and thereafter.

14.10    Sec. 19. Minnesota Statutes 2012, section 477A.11, is amended by adding a
14.11subdivision to read:
14.12    Subd. 7. Transportation wetland. "Transportation wetland" means land
14.13administered by the Department of Transportation in which the state acquired, by purchase
14.14from a private owner, a fee title interest in over 500 acres of land within a county to
14.15replace wetland losses from transportation projects.
14.16EFFECTIVE DATE.This section is effective for aids payable in calendar year
14.172013 and thereafter.

14.18    Sec. 20. Minnesota Statutes 2012, section 477A.11, is amended by adding a
14.19subdivision to read:
14.20    Subd. 8. Wildlife management land. "Wildlife management land" means land
14.21administered by the commissioner in which the state acquired, from a private owner by
14.22purchase, condemnation, or gift, a fee interest under the authority granted in chapter 94 or
14.2397A for wildlife management purposes and actually used as a wildlife management area.
14.24EFFECTIVE DATE.This section is effective for aids payable in calendar year
14.252013 and thereafter.

14.26    Sec. 21. Minnesota Statutes 2012, section 477A.12, subdivision 1, is amended to read:
14.27    Subdivision 1. Types of land; payments. (a) As an offset for expenses incurred
14.28by counties and towns in support of natural resources lands, The following amounts are
14.29annually appropriated to the commissioner of natural resources from the general fund for
14.30transfer to the commissioner of revenue. The commissioner of revenue shall pay the
15.1transferred funds to counties as required by sections 477A.11 to 477A.14. The amounts,
15.2based on the acreage as of July 1 of each year prior to the payment year, are:
15.3(1) for acquired natural resources land, $5.133 multiplied by the total number of acres
15.4of acquired natural resources land or, at the county's option three-fourths of one percent of
15.5the appraised value of all acquired natural resources land in the county, whichever is greater;
15.6(2) $5.133, multiplied by the total number of acres of transportation wetland or, at
15.7the county's option, three-fourths of one percent of the appraised value of all acquired
15.8natural resources land in the county, whichever is greater;
15.9(3) three-fourths of one percent of the appraised value of all wildlife management
15.10land in the county;
15.11(4) 50 percent of the dollar amount as determined under clause (1), multiplied by
15.12the number of acres of military refuge land in the county;
15.13$1.283 (5) $1.50, multiplied by the number of acres of county-administered other
15.14natural resources land in the county;
15.15(3) $1.283 (6) $5.133, multiplied by the total number of acres of land utilization
15.16project land in the county; and
15.17(4) 64.2 cents (7) $1.50, multiplied by the number of acres of
15.18commissioner-administered other natural resources land located in each the county as of
15.19July 1 of each year prior to the payment year.; and
15.20    (8) without regard to acreage, $300,000 for local assessments under section 84A.55,
15.21subdivision 9.
15.22(b) The amount determined under paragraph (a), clause (1), is payable for land
15.23that is acquired from a private owner and owned by the Department of Transportation
15.24for the purpose of replacing wetland losses caused by transportation projects, but only
15.25if the county contains more than 500 acres of such land at the time the certification is
15.26made under subdivision 2.
15.27EFFECTIVE DATE.This section is effective for aids payable in calendar year
15.282013 and thereafter.

15.29    Sec. 22. Minnesota Statutes 2012, section 477A.12, subdivision 2, is amended to read:
15.30    Subd. 2. Procedure. Lands for which payments in lieu are made pursuant to
15.31section 97A.061, subdivision 3, and Laws 1973, chapter 567, shall not be eligible for
15.32payments under this section. Each county auditor shall certify to the Department of
15.33Natural Resources during July of each year prior to the payment year the number of acres
15.34of county-administered other natural resources land within the county. The Department of
15.35Natural resources may, in addition to the certification of acreage, require descriptive lists
16.1of land so certified. The commissioner of natural resources shall determine and certify to
16.2the commissioner of revenue by March 1 of the payment year:
16.3(1) the number of acres and most recent appraised value of acquired natural
16.4resources land, wildlife management land, and military refuge land within each county;
16.5(2) the number of acres of commissioner-administered natural resources land within
16.6each county;
16.7(3) the number of acres of county-administered other natural resources land within
16.8each county, based on the reports filed by each county auditor with the commissioner
16.9of natural resources; and
16.10(4) the number of acres of land utilization project land within each county.
16.11The commissioner of transportation shall determine and certify to the commissioner
16.12of revenue by March 1 of the payment year the number of acres of land transportation
16.13wetland and the appraised value of the land described in subdivision 1, paragraph (b), but
16.14only if it exceeds 500 acres in a county.
16.15The commissioner of revenue shall determine the distributions provided for in this
16.16section using the number of acres and appraised values certified by the commissioner of
16.17natural resources and the commissioner of transportation by March 1 of the payment year.
16.18EFFECTIVE DATE.This section is effective for aids payable in calendar year
16.192013 and thereafter.

16.20    Sec. 23. Minnesota Statutes 2012, section 477A.12, subdivision 3, is amended to read:
16.21    Subd. 3. Determination of appraised value. For the purposes of this section, the
16.22appraised value of acquired natural resources land is the purchase price for the first five
16.23years after acquisition until the next six-year appraisal required under this subdivision.
16.24The appraised value of acquired natural resources land received as a donation is the value
16.25determined for the commissioner of natural resources by a licensed appraiser, or the
16.26county assessor's estimated market value if no appraisal is done. The appraised value must
16.27be determined by the county assessor every five six years after the land is acquired. All
16.28reappraisals shall be done in the same year as county assessors are required to assess
16.29exempt land under section 273.18.
16.30EFFECTIVE DATE.This section is effective for aids payable in calendar year
16.312013 and thereafter.

16.32    Sec. 24. Minnesota Statutes 2012, section 477A.14, subdivision 1, is amended to read:
17.1    Subdivision 1. General distribution. Except as provided in subdivision 2 or in
17.2section 97A.061, subdivision 5 subdivisions 2 and 3, 40 percent of the total payment to
17.3the county shall be deposited in the county general revenue fund to be used to provide
17.4property tax levy reduction. The remainder shall be distributed by the county in the
17.5following priority:
17.6(a) 64.2 cents, for each acre of county-administered other natural resources land shall
17.7be deposited in a resource development fund to be created within the county treasury for
17.8use in resource development, forest management, game and fish habitat improvement, and
17.9recreational development and maintenance of county-administered other natural resources
17.10land. Any county receiving less than $5,000 annually for the resource development fund
17.11may elect to deposit that amount in the county general revenue fund;
17.12(b) from the funds remaining, within 30 days of receipt of the payment to the county,
17.13the county treasurer shall pay each organized township 51.3 cents for each acre of acquired
17.14natural resources land and each acre of land described in section 477A.12, subdivision 1,
17.15paragraph (b), and 12.8 cents for each acre of other natural resources land and each acre of
17.16land utilization project land located within its boundaries ten percent of the amount received
17.17under section 477A.12, subdivision 1, clauses (1), (2), and (5) to (7). Payments for natural
17.18resources lands not located in an organized township shall be deposited in the county
17.19general revenue fund. Payments to counties and townships pursuant to this paragraph shall
17.20be used to provide property tax levy reduction, except that of the payments for natural
17.21resources lands not located in an organized township, the county may allocate the amount
17.22determined to be necessary for maintenance of roads in unorganized townships. Provided
17.23that, if the total payment to the county pursuant to section 477A.12 is not sufficient to fully
17.24fund the distribution provided for in this clause, the amount available shall be distributed
17.25to each township and the county general revenue fund on a pro rata basis; and
17.26(c) any remaining funds shall be deposited in the county general revenue fund.
17.27Provided that, if the distribution to the county general revenue fund exceeds $35,000, the
17.28excess shall be used to provide property tax levy reduction.
17.29EFFECTIVE DATE.This section is effective for aids payable in calendar year
17.302013 and thereafter.

17.31    Sec. 25. Minnesota Statutes 2012, section 477A.14, is amended by adding a
17.32subdivision to read:
17.33    Subd. 3. Distribution for wildlife management lands and military refuge lands.
17.34(a) The county treasurer shall allocate the payment for wildlife management land and
17.35military game refuge land among the county, towns, and school districts on the same basis
18.1as if the payments were taxes on the land received in the year. Payment of a town's or a
18.2school district's allocation must be made by the county treasurer to the town or school
18.3district within 30 days of receipt of the payment to the county. The county's share of the
18.4payment shall be deposited in the county general revenue fund.
18.5(b) The county treasurer of a county with a population over 39,000, but less than
18.642,000, in the 1950 federal census shall allocate the payment only among the towns and
18.7school districts on the same basis as if the payments were taxes on the lands received
18.8in the current year.
18.9(c) If a town received a payment in calendar year 2006 or thereafter under this
18.10subdivision, and subsequently incorporated as a city, the city shall continue to receive any
18.11future year's allocations of wildlife land payments that would have been made to the town
18.12had it not incorporated, provided that the payments shall terminate if the governing body
18.13of the city passes an ordinance that prohibits hunting within the boundaries of the city.
18.14EFFECTIVE DATE.This section is effective for aids payable in calendar year
18.152013 and thereafter.

18.16    Sec. 26. Laws 2006, chapter 259, article 11, section 3, as amended by Laws 2008,
18.17chapter 154, article 1, section 4, is amended to read:
18.18    Sec. 3. MAHNOMEN COUNTY; COUNTY, CITY, SCHOOL DISTRICT,
18.19PROPERTY TAX REIMBURSEMENT.
18.20    Subdivision 1. Aid appropriation. $600,000 $1,200,000 is appropriated annually
18.21from the general fund to the commissioner of revenue to be used to make payments to
18.22compensate for the loss of property tax revenue related to the trust conversion application
18.23of the Shooting Star Casino. The commissioner shall pay the county of Mahnomen,
18.24$450,000 $900,000; the city of Mahnomen, $80,000 $160,000; and Independent School
18.25District No. 432, Mahnomen, $70,000 $140,000. The payments shall be made on July 20,
18.26of 2008 2013 and each subsequent year.
18.27EFFECTIVE DATE.This section is effective for aids payable in calendar year
18.282013 and thereafter.

18.29    Sec. 27. REPEALER.
18.30Minnesota Statutes 2012, sections 477A.011, subdivisions 2a, 19, 29, 31, 32, 33, 36,
18.3139, 40, 41, and 42; 477A.013, subdivisions 11 and 12; 477A.0133; and 477A.0134, are
18.32repealed.
19.1EFFECTIVE DATE.This section is effective for aids payable in calendar year
19.22014 and thereafter.

19.3ARTICLE 2
19.4PROPERTY TAX

19.5    Section 1. Minnesota Statutes 2012, section 103B.102, subdivision 3, is amended to
19.6read:
19.7    Subd. 3. Evaluation and report. The Board of Water and Soil Resources shall
19.8evaluate performance, financial, and activity information for each local water management
19.9entity. The board shall evaluate the entities' progress in accomplishing their adopted plans
19.10on a regular basis as determined by the board based on budget and operations of the local
19.11water management entity, but not less than once every five ten years. The board shall
19.12maintain a summary of local water management entity performance on the board's Web site.
19.13Beginning February 1, 2008, and annually thereafter, the board shall provide an analysis
19.14of local water management entity performance to the chairs of the house of representatives
19.15and senate committees having jurisdiction over environment and natural resources policy.

19.16    Sec. 2. Minnesota Statutes 2012, section 103B.335, is amended to read:
19.17103B.335 TAX LEVY AUTHORITY.
19.18    Subdivision 1. Local water planning and management. The governing body of
19.19any county, municipality, or township may levy a tax in an amount required to implement
19.20sections 103B.301 to 103B.355 or a comprehensive watershed management plan as
19.21defined in section 103B.3363.
19.22    Subd. 2. Priority programs; conservation and watershed districts. A county
19.23may levy amounts necessary to pay the reasonable increased costs to soil and water
19.24conservation districts and watershed districts of administering and implementing priority
19.25programs identified in an approved and adopted plan or a comprehensive watershed
19.26management plan as defined in section 103B.3363.

19.27    Sec. 3. Minnesota Statutes 2012, section 103B.3369, subdivision 5, is amended to read:
19.28    Subd. 5. Financial assistance. A base grant may be awarded to a county that
19.29provides a match utilizing a water implementation tax or other local source. A water
19.30implementation tax that a county intends to use as a match to the base grant must be
19.31levied at a rate sufficient to generate a minimum amount determined by the board.
19.32The board may award performance-based grants to local units of government that are
20.1responsible for implementing elements of applicable portions of watershed management
20.2plans, comprehensive plans, local water management plans, or comprehensive watershed
20.3management plans, developed or amended, adopted and approved, according to chapter
20.4103B, 103C, or 103D. Upon request by a local government unit, the board may also
20.5award performance-based grants to local units of government to carry out TMDL
20.6implementation plans as provided in chapter 114D, if the TMDL implementation plan has
20.7been incorporated into the local water management plan according to the procedures for
20.8approving comprehensive plans, watershed management plans, local water management
20.9plans, or comprehensive watershed management plans under chapter 103B, 103C, or
20.10103D, or if the TMDL implementation plan has undergone a public review process.
20.11Notwithstanding section 16A.41, the board may award performance-based grants on an
20.12advanced basis. The fee authorized in section 40A.152 may be used as a local match
20.13or as a supplement to state funding to accomplish implementation of comprehensive
20.14plans, watershed management plans, local water management plans, or comprehensive
20.15watershed management plans under chapter 103B, 103C, or 103D.

20.16    Sec. 4. Minnesota Statutes 2012, section 103C.501, subdivision 4, is amended to read:
20.17    Subd. 4. Cost-sharing funds. (a) The state board shall allocate at least 70 percent
20.18of cost-sharing funds to areas with high priority erosion, sedimentation, or water quality
20.19problems or water quantity problems due to altered hydrology. The areas must be selected
20.20based on the statewide priorities established by the state board.
20.21(b) The allocated funds must be used for conservation practices for high priority
20.22problems identified in the comprehensive and annual work plans of the districts, for
20.23the technical assistance portion of the grant funds to leverage federal or other nonstate
20.24funds, or to address high-priority needs identified in local water management plans or
20.25comprehensive watershed management plans.
20.26(b) The remaining cost-sharing funds may be allocated to districts as follows:
20.27(1) for technical and administrative assistance, not more than 20 percent of the
20.28funds; and
20.29(2) for conservation practices for lower priority erosion, sedimentation, or water
20.30quality problems.

20.31    Sec. 5. Minnesota Statutes 2012, section 103F.405, subdivision 1, is amended to read:
20.32    Subdivision 1. Authority. Each statutory or home rule charter city, town, or
20.33county that has planning and zoning authority under sections 366.10 to 366.19, 394.21
20.34to 394.37, or 462.351 to 462.365 is encouraged to adopt a soil loss ordinance. The soil
21.1loss ordinance must use the soil loss tolerance for each soil series described in the United
21.2States Soil Natural Resources Conservation Service Field Office Technical Guide, or
21.3another method approved by the Board of Water and Soil Resources, to determine the
21.4soil loss limits, but the soil loss limits must be attainable by the best practicable soil
21.5conservation practice. Ordinances adopted by local governments within the metropolitan
21.6area defined in section 473.121 must be consistent with local water management plans
21.7adopted under section 103B.235 a comprehensive plan, local water management plan, or
21.8watershed management plan developed or amended, adopted and approved, according
21.9to chapter 103B, 103C, or 103D.

21.10    Sec. 6. Minnesota Statutes 2012, section 168.012, subdivision 9, is amended to read:
21.11    Subd. 9. Manufactured homes and park trailers. Manufactured homes and park
21.12trailers shall not be taxed as motor vehicles using the public streets and highways and shall
21.13be exempt from the motor vehicle tax provisions of this chapter. Except as provided in
21.14section 273.125, manufactured homes and park trailers shall be taxed as personal property.
21.15The provisions of Minnesota Statutes 1957, section 272.02 or any other act providing for
21.16tax exemption shall be inapplicable to manufactured homes and park trailers, except
21.17such manufactured homes as are held by a licensed dealer or limited dealer, as defined
21.18in section 327B.04, and exempted as inventory under subdivision 9a. Travel trailers not
21.19conspicuously displaying current registration plates on the property tax assessment date
21.20shall be taxed as manufactured homes if occupied as human dwelling places.
21.21EFFECTIVE DATE.This section is effective for taxes payable in 2014 and
21.22thereafter.

21.23    Sec. 7. Minnesota Statutes 2012, section 168.012, is amended by adding a subdivision
21.24to read:
21.25    Subd. 9a. Manufactured home as dealer inventory. Manufactured homes as
21.26defined in section 327.31, subdivision 6, shall be considered as dealer inventory, on the
21.27January 2 assessment date, if the home:
21.28(1) is listed as inventory and held by a licensed or limited dealer;
21.29(2) is unoccupied and not available for rent;
21.30(3) may or may not be permanently connected to utilities when located in a
21.31manufactured park; and
21.32(4) may or may not be temporarily connected to utilities when located at a dealer's
21.33sales center.
22.1The exemption under this subdivision is allowable for up to five assessment years after
22.2the date a home is initially claimed as dealer inventory.
22.3EFFECTIVE DATE.This section is effective for taxes payable in 2014 and
22.4thereafter.

22.5    Sec. 8. [270C.9901] ASSESSOR ACCREDITATION.
22.6Every individual that appraises or physically inspects real property for the purpose of
22.7determining its valuation or classification for property tax purposes must obtain licensure
22.8as an accredited assessor from the Minnesota State Board of Assessors by July 1, 2017, or
22.9by the time the individual is licensed as a certified assessor, whichever is later.
22.10EFFECTIVE DATE.This section is effective beginning January 1, 2014.

22.11    Sec. 9. Minnesota Statutes 2012, section 272.02, subdivision 10, is amended to read:
22.12    Subd. 10. Personal property used for pollution control. Personal property used
22.13primarily for the abatement and control of air, water, or land pollution is exempt to the
22.14extent that it is so used, and real but only if it is not required to be installed by a standard,
22.15rule, criteria, guideline, policy, or order of the Minnesota Pollution Control Agency or if it
22.16is part of a system for the abatement of pollution that was not required to be installed by
22.17a standard, rule, criteria, guideline, policy, or order of the Minnesota Pollution Control
22.18Agency when it was originally installed. Real property is exempt if it is used primarily for
22.19abatement and control of air, water, or land pollution as part of an agricultural operation,
22.20as a part of a centralized treatment and recovery facility operating under a permit
22.21issued by the Minnesota Pollution Control Agency pursuant to chapters 115 and 116
22.22and Minnesota Rules, parts 7001.0500 to 7001.0730, and 7045.0020 to 7045.1260, as a
22.23wastewater treatment facility and for the treatment, recovery, and stabilization of metals,
22.24oils, chemicals, water, sludges, or inorganic materials from hazardous industrial wastes,
22.25or as part of an electric generation system. For purposes of this subdivision, personal
22.26property includes ponderous machinery and equipment used in a business or production
22.27activity that at common law is considered real property.
22.28Any taxpayer requesting exemption of all or a portion of any real property or any
22.29equipment or device, or part thereof, operated primarily for the control or abatement of
22.30air, water, or land pollution shall file an application with the commissioner of revenue.
22.31The Minnesota Pollution Control Agency shall upon request of the commissioner furnish
22.32information and advice to the commissioner.
23.1The information and advice furnished by the Minnesota Pollution Control Agency
23.2must include statements as to whether the equipment, device, or real property meets
23.3a standard, rule, criteria, guideline, policy, or order of the Minnesota Pollution Control
23.4Agency, and whether the equipment, device, or real property is installed or operated
23.5in accordance with it. On determining that property qualifies for exemption, the
23.6commissioner shall issue an order exempting the property from taxation. The equipment,
23.7device, or real property shall continue to be exempt from taxation as long as the order
23.8issued by the commissioner remains in effect.

23.9    Sec. 10. Minnesota Statutes 2012, section 272.02, is amended by adding a subdivision
23.10to read:
23.11    Subd. 98. Certain property owned by an Indian tribe. (a) Property is exempt that:
23.12(1) was classified as 3a under section 273.13, subdivision 24, for taxes payable
23.13in 2013;
23.14(2) is located in a city of the first class with a population greater than 300,000 as of
23.15the 2010 federal census;
23.16(3) was, on January 2, 2012, and for the current assessment, is owned by a federally
23.17recognized Indian tribe, or its instrumentality, that is located within the state of Minnesota;
23.18and
23.19(4) is used exclusively for tribal purposes or institutions of purely public charity as
23.20defined in subdivision 7.
23.21(b) For purposes of this subdivision, a "tribal purpose" means a public purpose
23.22as defined in subdivision 8 and includes noncommercial tribal government activities.
23.23Property that qualifies for the exemption under this subdivision is limited to no more than
23.24two contiguous parcels and structures that do not exceed in the aggregate 20,000 square
23.25feet. Property acquired for single-family housing, market-rate apartments, agricultural, or
23.26forestry does not qualify for this exemption. The exemption created by this subdivision
23.27expires with taxes payable in 2024.
23.28EFFECTIVE DATE.This section is effective beginning with taxes payable in 2014.

23.29    Sec. 11. Minnesota Statutes 2012, section 272.02, is amended by adding a subdivision
23.30to read:
23.31    Subd. 99. Electric generation facility; personal property. (a) Notwithstanding
23.32subdivision 9, clause (a), and section 453.54, subdivision 20, attached machinery and
23.33other personal property which is part of an electric generation facility that exceeds five
24.1megawatts of installed capacity and meets the requirements of this subdivision is exempt.
24.2At the time of construction, the facility must be:
24.3    (1) designed to utilize natural gas as a primary fuel;
24.4    (2) owned and operated by a municipal power agency as defined in section 453.52,
24.5subdivision 8;
24.6    (3) designed to utilize reciprocating engines paired with generators to produce
24.7electrical power;
24.8    (4) located within the service territory of a municipal power agency's electrical
24.9municipal utility that serves load exclusively in a metropolitan county as defined in
24.10section 473.121, subdivision 4; and
24.11(5) designed to connect directly with a municipality's substation.
24.12    (b) Construction of the facility must be commenced after June 1, 2013, and before
24.13June 1, 2017. Property eligible for this exemption does not include electric transmission
24.14lines and interconnections or gas pipelines and interconnections appurtenant to the
24.15property or the facility.
24.16EFFECTIVE DATE.This section is effective for assessment year 2013, taxes
24.17payable in 2014, and thereafter.

24.18    Sec. 12. Minnesota Statutes 2012, section 272.025, subdivision 1, is amended to read:
24.19    Subdivision 1. Statement of exemption. (a) Except in the case of property owned
24.20by the state of Minnesota or any political subdivision thereof, and property exempt from
24.21taxation under section 272.02, subdivisions 9, 10, 13, 15, 18, 20, and 22 to 25, and at
24.22the times provided in subdivision 3, a taxpayer claiming an exemption from taxation
24.23on property described in section 272.02, subdivisions 1 to 33, must file a statement of
24.24exemption with the assessor of the assessment district in which the property is located.
24.25(b) A taxpayer claiming an exemption from taxation on property described in section
24.26272.02, subdivision 10 , must file a statement of exemption with the commissioner of
24.27revenue, and with the assessor of the assessment district in which the property is located,
24.28 on or before February 15 of each year for which the taxpayer claims an exemption.
24.29(c) In case of sickness, absence or other disability or for good cause, the assessor
24.30or the commissioner may extend the time for filing the statement of exemption for a
24.31period not to exceed 60 days.
24.32(d) The commissioner of revenue shall prescribe the form and contents of the
24.33statement of exemption.

25.1    Sec. 13. Minnesota Statutes 2012, section 273.117, is amended to read:
25.2273.117 CONSERVATION PROPERTY TAX VALUATION.
25.3    The value of real property which is subject to a conservation restriction or easement
25.4may be adjusted shall not be reduced by the assessor if:
25.5    (a) the restriction or easement is for a conservation purpose as defined in section
25.684.64, subdivision 2 , and is recorded on the property; and
25.7    (b) the property is being used in accordance with the terms of the conservation
25.8restriction or easement.
25.9This section does not apply to (1) conservation restrictions or easements covering
25.10riparian buffers along lakes, rivers, and streams that are used for water quantity or quality
25.11control; or (2) parcels of land in excess of 1,920 acres that allow public motorized access.
25.12EFFECTIVE DATE.This section is effective for assessment year 2013 and
25.13thereafter, and for taxes payable in 2014 and thereafter.

25.14    Sec. 14. Minnesota Statutes 2012, section 273.124, subdivision 14, is amended to read:
25.15    Subd. 14. Agricultural homesteads; special provisions. (a) Real estate of less than
25.16ten acres that is the homestead of its owner must be classified as class 2a under section
25.17273.13, subdivision 23 , paragraph (a), if:
25.18    (1) the parcel on which the house is located is contiguous on at least two sides to (i)
25.19agricultural land, (ii) land owned or administered by the United States Fish and Wildlife
25.20Service, or (iii) land administered by the Department of Natural Resources on which in
25.21lieu taxes are paid under sections 477A.11 to 477A.14;
25.22    (2) its owner also owns a noncontiguous parcel of agricultural land that is at least
25.2320 acres;
25.24    (3) the noncontiguous land is located not farther than four townships or cities, or a
25.25combination of townships or cities from the homestead; and
25.26    (4) the agricultural use value of the noncontiguous land and farm buildings is equal
25.27to at least 50 percent of the market value of the house, garage, and one acre of land.
25.28    Homesteads initially classified as class 2a under the provisions of this paragraph shall
25.29remain classified as class 2a, irrespective of subsequent changes in the use of adjoining
25.30properties, as long as the homestead remains under the same ownership, the owner owns a
25.31noncontiguous parcel of agricultural land that is at least 20 acres, and the agricultural use
25.32value qualifies under clause (4). Homestead classification under this paragraph is limited
25.33to property that qualified under this paragraph for the 1998 assessment.
26.1    (b)(i) Agricultural property shall be classified as the owner's homestead, to the same
26.2extent as other agricultural homestead property, if all of the following criteria are met:
26.3    (1) the agricultural property consists of at least 40 acres including undivided
26.4government lots and correctional 40's;
26.5    (2) the owner, the owner's spouse, or a grandchild, child, sibling, or parent of the
26.6owner or of the owner's spouse, is actively farming the agricultural property, either on the
26.7person's own behalf as an individual or on behalf of a partnership operating a family farm,
26.8family farm corporation, joint family farm venture, or limited liability company of which
26.9the person is a partner, shareholder, or member;
26.10    (3) both the owner of the agricultural property and the person who is actively
26.11farming the agricultural property under clause (2), are Minnesota residents;
26.12    (4) neither the owner nor the spouse of the owner claims another agricultural
26.13homestead in Minnesota; and
26.14    (5) neither the owner nor the person actively farming the agricultural property lives
26.15farther than four townships or cities, or a combination of four townships or cities, from the
26.16agricultural property, except that if the owner or the owner's spouse is required to live in
26.17employer-provided housing, the owner or owner's spouse, whichever is actively farming
26.18the agricultural property, may live more than four townships or cities, or combination of
26.19four townships or cities from the agricultural property.
26.20    The relationship under this paragraph may be either by blood or marriage.
26.21    (ii) Agricultural property held by a trustee under a trust is eligible for agricultural
26.22homestead classification under this paragraph if the qualifications in clause (i) are met,
26.23except that "owner" means the grantor of the trust.
26.24    (iii) Property containing the residence of an owner who owns qualified property
26.25under clause (i) shall be classified as part of the owner's agricultural homestead, if that
26.26property is also used for noncommercial storage or drying of agricultural crops.
26.27(iv) As used in this paragraph, "agricultural property" means class 2a property and
26.28any class 2b property that is contiguous to and under the same ownership as the class 2a
26.29property.
26.30    (c) (b) Noncontiguous land shall be included as part of a homestead under section
26.31273.13, subdivision 23 , paragraph (a), only if the homestead is classified as class 2a
26.32and the detached land is located in the same township or city, or not farther than four
26.33townships or cities or combination thereof from the homestead. Any taxpayer of these
26.34noncontiguous lands must notify the county assessor that the noncontiguous land is part of
26.35the taxpayer's homestead, and, if the homestead is located in another county, the taxpayer
26.36must also notify the assessor of the other county.
27.1    (d) (c) Agricultural land used for purposes of a homestead and actively farmed by a
27.2person holding a vested remainder interest in it must be classified as a homestead under
27.3section 273.13, subdivision 23, paragraph (a). If agricultural land is classified class 2a,
27.4any other dwellings on the land used for purposes of a homestead by persons holding
27.5vested remainder interests who are actively engaged in farming the property, and up to
27.6one acre of the land surrounding each homestead and reasonably necessary for the use of
27.7the dwelling as a home, must also be assessed class 2a.
27.8    (e) (d) Agricultural land and buildings that were class 2a homestead property under
27.9section 273.13, subdivision 23, paragraph (a), for the 1997 assessment shall remain
27.10classified as agricultural homesteads for subsequent assessments if:
27.11    (1) the property owner abandoned the homestead dwelling located on the agricultural
27.12homestead as a result of the April 1997 floods;
27.13    (2) the property is located in the county of Polk, Clay, Kittson, Marshall, Norman,
27.14or Wilkin;
27.15    (3) the agricultural land and buildings remain under the same ownership for the
27.16current assessment year as existed for the 1997 assessment year and continue to be used
27.17for agricultural purposes;
27.18    (4) the dwelling occupied by the owner is located in Minnesota and is within 30
27.19miles of one of the parcels of agricultural land that is owned by the taxpayer; and
27.20    (5) the owner notifies the county assessor that the relocation was due to the 1997
27.21floods, and the owner furnishes the assessor any information deemed necessary by the
27.22assessor in verifying the change in dwelling. Further notifications to the assessor are not
27.23required if the property continues to meet all the requirements in this paragraph and any
27.24dwellings on the agricultural land remain uninhabited.
27.25    (f) Agricultural land and buildings that were class 2a homestead property under
27.26section 273.13, subdivision 23, paragraph (a), for the 1998 assessment shall remain
27.27classified agricultural homesteads for subsequent assessments if:
27.28    (1) the property owner abandoned the homestead dwelling located on the agricultural
27.29homestead as a result of damage caused by a March 29, 1998, tornado;
27.30    (2) the property is located in the county of Blue Earth, Brown, Cottonwood,
27.31LeSueur, Nicollet, Nobles, or Rice;
27.32    (3) the agricultural land and buildings remain under the same ownership for the
27.33current assessment year as existed for the 1998 assessment year;
27.34    (4) the dwelling occupied by the owner is located in this state and is within 50 miles
27.35of one of the parcels of agricultural land that is owned by the taxpayer; and
28.1    (5) the owner notifies the county assessor that the relocation was due to a March 29,
28.21998, tornado, and the owner furnishes the assessor any information deemed necessary by
28.3the assessor in verifying the change in homestead dwelling. For taxes payable in 1999, the
28.4owner must notify the assessor by December 1, 1998. Further notifications to the assessor
28.5are not required if the property continues to meet all the requirements in this paragraph
28.6and any dwellings on the agricultural land remain uninhabited.
28.7    (g) Agricultural property of a family farm corporation, joint family farm venture,
28.8family farm limited liability company, or partnership operating a family farm as described
28.9under subdivision 8 shall be classified homestead, to the same extent as other agricultural
28.10homestead property, if all of the following criteria are met:
28.11    (1) the property consists of at least 40 acres including undivided government lots
28.12and correctional 40's;
28.13    (2) a shareholder, member, or partner of that entity is actively farming the
28.14agricultural property;
28.15    (3) that shareholder, member, or partner who is actively farming the agricultural
28.16property is a Minnesota resident;
28.17    (4) neither that shareholder, member, or partner, nor the spouse of that shareholder,
28.18member, or partner claims another agricultural homestead in Minnesota; and
28.19    (5) that shareholder, member, or partner does not live farther than four townships or
28.20cities, or a combination of four townships or cities, from the agricultural property.
28.21    Homestead treatment applies under this paragraph for property leased to a family
28.22farm corporation, joint farm venture, limited liability company, or partnership operating a
28.23family farm if legal title to the property is in the name of an individual who is a member,
28.24shareholder, or partner in the entity.
28.25    (h) (e) To be eligible for the special agricultural homestead under this subdivision,
28.26an initial full application must be submitted to the county assessor where the property is
28.27located. Owners and the persons who are actively farming the property shall be required
28.28to complete only a one-page abbreviated version of the application in each subsequent
28.29year provided that none of the following items have changed since the initial application:
28.30    (1) the day-to-day operation, administration, and financial risks remain the same;
28.31    (2) the owners and the persons actively farming the property continue to live within
28.32the four townships or city criteria and are Minnesota residents;
28.33    (3) the same operator of the agricultural property is listed with the Farm Service
28.34Agency;
28.35    (4) a Schedule F or equivalent income tax form was filed for the most recent year;
28.36    (5) the property's acreage is unchanged; and
29.1    (6) none of the property's acres have been enrolled in a federal or state farm program
29.2since the initial application.
29.3    The owners and any persons who are actively farming the property must include
29.4the appropriate Social Security numbers, and sign and date the application. If any of the
29.5specified information has changed since the full application was filed, the owner must
29.6notify the assessor, and must complete a new application to determine if the property
29.7continues to qualify for the special agricultural homestead. The commissioner of revenue
29.8shall prepare a standard reapplication form for use by the assessors.
29.9    (i) (f) Agricultural land and buildings that were class 2a homestead property under
29.10section 273.13, subdivision 23, paragraph (a), for the 2007 assessment shall remain
29.11classified agricultural homesteads for subsequent assessments if:
29.12    (1) the property owner abandoned the homestead dwelling located on the agricultural
29.13homestead as a result of damage caused by the August 2007 floods;
29.14    (2) the property is located in the county of Dodge, Fillmore, Houston, Olmsted,
29.15Steele, Wabasha, or Winona;
29.16    (3) the agricultural land and buildings remain under the same ownership for the
29.17current assessment year as existed for the 2007 assessment year;
29.18    (4) the dwelling occupied by the owner is located in this state and is within 50 miles
29.19of one of the parcels of agricultural land that is owned by the taxpayer; and
29.20    (5) the owner notifies the county assessor that the relocation was due to the August
29.212007 floods, and the owner furnishes the assessor any information deemed necessary by
29.22the assessor in verifying the change in homestead dwelling. For taxes payable in 2009, the
29.23owner must notify the assessor by December 1, 2008. Further notifications to the assessor
29.24are not required if the property continues to meet all the requirements in this paragraph
29.25and any dwellings on the agricultural land remain uninhabited.
29.26    (j) Agricultural land and buildings that were class 2a homestead property under
29.27section 273.13, subdivision 23, paragraph (a), for the 2008 assessment shall remain
29.28classified as agricultural homesteads for subsequent assessments if:
29.29    (1) the property owner abandoned the homestead dwelling located on the agricultural
29.30homestead as a result of the March 2009 floods;
29.31    (2) the property is located in the county of Marshall;
29.32    (3) the agricultural land and buildings remain under the same ownership for the
29.33current assessment year as existed for the 2008 assessment year and continue to be used
29.34for agricultural purposes;
29.35    (4) the dwelling occupied by the owner is located in Minnesota and is within 50
29.36miles of one of the parcels of agricultural land that is owned by the taxpayer; and
30.1    (5) the owner notifies the county assessor that the relocation was due to the 2009
30.2floods, and the owner furnishes the assessor any information deemed necessary by the
30.3assessor in verifying the change in dwelling. Further notifications to the assessor are not
30.4required if the property continues to meet all the requirements in this paragraph and any
30.5dwellings on the agricultural land remain uninhabited.
30.6EFFECTIVE DATE.This section is effective for taxes payable in 2015 and
30.7thereafter.

30.8    Sec. 15. Minnesota Statutes 2012, section 273.124, subdivision 21, is amended to read:
30.9    Subd. 21. Trust property; homestead. Real or personal property held by a trustee
30.10under a trust is eligible for classification as homestead property if the property satisfies the
30.11requirements of paragraph (a), (b), (c), or (d).
30.12    (a) The grantor or surviving spouse of the grantor of the trust occupies and uses the
30.13property as a homestead.
30.14    (b) A relative or surviving relative of the grantor who meets the requirements
30.15of subdivision 1, paragraph (c), in the case of residential real estate; or subdivision 1,
30.16paragraph (d), in the case of agricultural property, occupies and uses the property as
30.17a homestead.
30.18    (c) A family farm corporation, joint farm venture, limited liability company, or
30.19partnership operating a family farm in which the grantor or the grantor's surviving spouse
30.20is a shareholder, member, or partner rents the property; and, either (1) a shareholder,
30.21member, or partner of the corporation, joint farm venture, limited liability company, or
30.22partnership occupies and uses the property as a homestead; or (2) the property is at least
30.2340 acres, including undivided government lots and correctional 40's, and a shareholder,
30.24member, or partner of the tenant-entity is actively farming the property on behalf of the
30.25corporation, joint farm venture, limited liability company, or partnership.
30.26    (d) A person who has received homestead classification for property taxes payable in
30.272000 on the basis of an unqualified legal right under the terms of the trust agreement to
30.28occupy the property as that person's homestead and who continues to use the property as
30.29a homestead; or, a person who received the homestead classification for taxes payable
30.30in 2005 under paragraph (c) who does not qualify under paragraph (c) for taxes payable
30.31in 2006 or thereafter but who continues to qualify under paragraph (c) as it existed for
30.32taxes payable in 2005.
30.33    For purposes of this subdivision, "grantor" is defined as the person creating or
30.34establishing a testamentary, inter Vivos, revocable or irrevocable trust by written
30.35instrument or through the exercise of a power of appointment.
31.1EFFECTIVE DATE.This section is effective for taxes payable in 2015 and
31.2thereafter.

31.3    Sec. 16. Minnesota Statutes 2012, section 273.128, is amended by adding a subdivision
31.4to read:
31.5    Subd. 1a. Determination of property tax maximum. (a) Property taxes on the
31.6portion of a rental property certified as class 4d may not exceed ten percent of the gross
31.7potential rent for the calendar year in which an application is filed for the units that qualify
31.8for certification under this section. "Gross potential rent" means the maximum annual rent
31.9the owner of a property is authorized to charge for rental housing units subject to a legally
31.10binding rent restriction agreement, assuming that all of the units are occupied at all times.
31.11The Housing Finance Agency will adjust gross potential rent annually to the extent of and
31.12in accordance with changes in the rent restrictions set forth in the rent restriction agreement.
31.13    (b) In order to determine the gross potential rent for a rental property, a separate
31.14application must be filed with the Housing Finance Agency by March 31 of the assessment
31.15year to establish the maximum property taxes for the portion of a property certified under
31.16this section. In addition to the information required in subdivision 2, the application
31.17under this subdivision must include a true and correct copy of any regulatory agreements
31.18or other documents establishing the rent restrictions for the units eligible for class 4d
31.19classification, unless such documentation was provided to the Housing Finance Agency
31.20in a previous year and the owner certifies that the rent restrictions have not changed.
31.21The Housing Finance Agency may charge an application fee approximately equal to the
31.22costs of determining the gross potential rent for the property, any annual adjustments and
31.23processing, and reviewing the application. The applicant must pay the application fee to
31.24the Housing Finance Agency for deposit in the housing development fund. The application
31.25fee under this subdivision is in addition to the application fee under subdivision 2.
31.26    (c) By June 1 of each assessment year, the Housing Finance Agency must certify to
31.27the appropriate county or city assessors, the specific properties that are qualified for the
31.28maximum property tax limitation and the amount of the annual gross potential rent for the
31.29units in the building that qualify for class 4d certification. The auditor shall calculate the
31.30maximum property tax for the units that qualify based on the certification from the Housing
31.31Finance Agency for taxes payable the year following the assessment year certification.
31.32EFFECTIVE DATE.This section is effective beginning with assessment year 2015.

31.33    Sec. 17. Minnesota Statutes 2012, section 273.1398, subdivision 4, is amended to read:
32.1    Subd. 4. Disparity reduction credit. (a) Beginning with taxes payable in 1989,
32.2class 4a and class 3a property qualifies for a disparity reduction credit if: (1) the property
32.3is located in a border city that has an enterprise zone, as defined in section 469.166; (2)
32.4the property is located in a city with a population greater than 2,500 and less than 35,000
32.5according to the 1980 decennial census; (3) the city is adjacent to a city in another state or
32.6immediately adjacent to a city adjacent to a city in another state; and (4) the adjacent city
32.7in the other state has a population of greater than 5,000 and less than 75,000 according to
32.8the 1980 decennial census.
32.9    (b) The credit is an amount sufficient to reduce (i) the taxes levied on class 4a
32.10property to 2.3 1.9 percent of the property's market value and (ii) the tax on class 3a
32.11property to 2.3 1.9 percent of market value.
32.12    (c) The county auditor shall annually certify the costs of the credits to the
32.13Department of Revenue. The department shall reimburse local governments for the
32.14property taxes forgone as the result of the credits in proportion to their total levies.
32.15EFFECTIVE DATE.This section is effective beginning with taxes payable in 2014.

32.16    Sec. 18. Minnesota Statutes 2012, section 275.025, subdivision 1, is amended to read:
32.17    Subdivision 1. Levy amount. The state general levy is levied against
32.18commercial-industrial property and seasonal residential recreational property, as defined
32.19in this section. The state general levy base amount is $592,000,000 for taxes payable in
32.202002. For taxes payable in subsequent years on seasonal residential recreational property,
32.21the levy base amount is increased each year by multiplying the levy base amount for that
32.22class of property for the prior year by the sum of one plus the rate of increase, if any, in the
32.23implicit price deflator for government consumption expenditures and gross investment for
32.24state and local governments prepared by the Bureau of Economic Analysts of the United
32.25States Department of Commerce for the 12-month period ending March 31 of the year
32.26prior to the year the taxes are payable. For taxes payable in 2014 and subsequent years
32.27on commercial-industrial property, the tax is imposed under this subdivision at the rate
32.28of the tax imposed under this subdivision for taxes payable in 2002. The tax under this
32.29section is not treated as a local tax rate under section 469.177 and is not the levy of a
32.30governmental unit under chapters 276A and 473F.
32.31The commissioner shall increase or decrease the preliminary or final rate for a year
32.32as necessary to account for errors and tax base changes that affected a preliminary or final
32.33rate for either of the two preceding years. Adjustments are allowed to the extent that the
32.34necessary information is available to the commissioner at the time the rates for a year must
32.35be certified, and for the following reasons:
33.1(1) an erroneous report of taxable value by a local official;
33.2(2) an erroneous calculation by the commissioner; and
33.3(3) an increase or decrease in taxable value for commercial-industrial or seasonal
33.4residential recreational property reported on the abstracts of tax lists submitted under
33.5section 275.29 that was not reported on the abstracts of assessment submitted under
33.6section 270C.89 for the same year.
33.7The commissioner may, but need not, make adjustments if the total difference in the tax
33.8levied for the year would be less than $100,000.
33.9EFFECTIVE DATE.This section is effective for taxes payable in 2014 and
33.10thereafter.

33.11    Sec. 19. Minnesota Statutes 2012, section 275.025, subdivision 2, is amended to read:
33.12    Subd. 2. Commercial-industrial tax capacity. For the purposes of this section,
33.13"commercial-industrial tax capacity" means the tax capacity of all taxable property
33.14classified as class 3 or class 5(1) under section 273.13, except for electric generation
33.15attached machinery under class 3 and property described in section 473.625. County
33.16commercial-industrial tax capacity amounts are not adjusted for the captured net tax
33.17capacity of a tax increment financing district under section 469.177, subdivision 2, the
33.18net tax capacity of transmission lines deducted from a local government's total net tax
33.19capacity under section 273.425, or fiscal disparities contribution and distribution net
33.20tax capacities under chapter 276A or 473F.
33.21EFFECTIVE DATE.This section is effective for taxes payable in 2014 and
33.22thereafter.

33.23    Sec. 20. Minnesota Statutes 2012, section 279.37, subdivision 1a, is amended to read:
33.24    Subd. 1a. Class 3a property. (a) The delinquent taxes upon a parcel of property
33.25which was classified class 3a, for the previous year's assessment and had a total market
33.26value of $500,000 or less for that same assessment shall be eligible to be composed into a
33.27confession of judgment with the approval of the county auditor. Property qualifying under
33.28this subdivision shall be subject to the same provisions as provided in this section except
33.29as provided in paragraphs (b) to (d) (f).
33.30    (b) Current year taxes and penalty due at the time the confession of judgment
33.31is entered must be paid.
33.32    (c) The down payment must include all special assessments due in the current tax
33.33year, all delinquent special assessments, and 20 percent of the ad valorem tax, penalties,
34.1and interest accrued against the parcel. The balance remaining is payable in four equal
34.2annual installments. A municipality as defined in section 429.011, cities of the first class,
34.3and other special assessment authorities, who have certified special assessments against
34.4any parcel of property, may, through resolution, waive the requirement of payment of all
34.5current and delinquent special assessments at the time the confession is entered. If the
34.6municipality, city, or authority grants the waiver, 100 percent of all current year taxes,
34.7special assessments, and penalties due at the time, along with 20 percent of all delinquent
34.8taxes, special assessments, penalties, interest, and fees must be paid. The balance
34.9remaining shall be subject to and included in the installment plan.
34.10(d) When there are current and delinquent special assessments certified and billed
34.11against a parcel, the assessment authority or municipality as defined in section 429.011
34.12may abate under section 375.192, subdivision 2, all special assessments and the penalty
34.13and interest affiliated with the special assessments, and reassess the special assessments,
34.14penalties, and interest accrued thereon, under section 429.071, subdivision 2. The
34.15municipality shall notify the county auditor of its intent to reassess as a precondition
34.16to the entry of the confession of judgment. Upon the notice to abate and reassess, the
34.17municipality shall, through resolution, notify the county auditor to remove all current
34.18and delinquent special assessments and the accrued penalty and interest on the special
34.19assessments, and the payment of all or a portion of the current and delinquent assessments
34.20shall not be required as part of the down payment due at the time the confession of
34.21judgment is entered in accordance with paragraph (c).
34.22    (d) (e) The amounts entered in judgment bear interest at the rate provided in section
34.23279.03, subdivision 1a , commencing with the date the judgment is entered. The interest
34.24rate is subject to change each year on the unpaid balance in the manner provided in section
34.25279.03, subdivision 1a .
34.26(f) The county auditor may require conditions on properties including, but not
34.27limited to, environmental remediation action plan requirements, restrictions, or covenants,
34.28when considering a request for approval of eligibility for composition into a confession of
34.29judgment for delinquent taxes upon a parcel of property which was classified class 3a, for
34.30the previous year's assessment.

34.31    Sec. 21. Minnesota Statutes 2012, section 279.37, subdivision 2, is amended to read:
34.32    Subd. 2. Installment payments. The owner of any such parcel, or any person to
34.33whom the right to pay taxes has been given by statute, mortgage, or other agreement, may
34.34make and file with the county auditor of the county in which the parcel is located a written
34.35offer to pay the current taxes each year before they become delinquent, or to contest the
35.1taxes under Minnesota Statutes 1941, sections 278.01 to 278.13, and agree to confess
35.2judgment for the amount provided, as determined by the county auditor. By filing the
35.3offer, the owner waives all irregularities in connection with the tax proceedings affecting
35.4the parcel and any defense or objection which the owner may have to the proceedings, and
35.5also waives the requirements of any notice of default in the payment of any installment or
35.6interest to become due pursuant to the composite judgment to be so entered. Unless the
35.7property is subject to subdivision 1a, with the offer, the owner shall (i) tender one-tenth of
35.8the amount of the delinquent taxes, costs, penalty, and interest, and shall (ii) tender all
35.9current year taxes and penalty due at the time the confession of judgment is entered. In the
35.10offer, the owner shall agree to pay the balance in nine equal installments, with interest as
35.11provided in section 279.03, payable annually on installments remaining unpaid from time
35.12to time, on or before December 31 of each year following the year in which judgment
35.13was confessed. The offer must be substantially as follows:
35.14"To the court administrator of the district court of ........... county, I, .....................,
35.15am the owner of the following described parcel of real estate located in ....................
35.16county, Minnesota:
35.17.............................. Upon that real estate there are delinquent taxes for the year ........., and
35.18prior years, as follows: (here insert year of delinquency and the total amount of delinquent
35.19taxes, costs, interest, and penalty). By signing this document I offer to confess judgment in
35.20the sum of $...... and waive all irregularities in the tax proceedings affecting these taxes and
35.21any defense or objection which I may have to them, and direct judgment to be entered for
35.22the amount stated above, minus the sum of $............, to be paid with this document, which
35.23is one-tenth or one-fifth of the amount of the taxes, costs, penalty, and interest stated above.
35.24I agree to pay the balance of the judgment in nine or four equal, annual installments, with
35.25interest as provided in section 279.03, payable annually, on the installments remaining
35.26unpaid. I agree to pay the installments and interest on or before December 31 of each year
35.27following the year in which this judgment is confessed and current taxes each year before
35.28they become delinquent, or within 30 days after the entry of final judgment in proceedings
35.29to contest the taxes under Minnesota Statutes, sections 278.01 to 278.13.
35.30Dated .............., ......."

35.31    Sec. 22. Minnesota Statutes 2012, section 281.14, is amended to read:
35.32281.14 EXPIRATION OF TIME FOR REDEMPTION.
35.33The time for redemption from any tax sale, whether made to the state or to a private
35.34person, shall not expire until notice of expiration of redemption, as provided in section
35.35281.13 281.17, shall have been given.

36.1    Sec. 23. Minnesota Statutes 2012, section 281.17, is amended to read:
36.2281.17 PERIOD FOR REDEMPTION.
36.3Except for properties for which the period of redemption has been limited under
36.4sections 281.173 and 281.174, the following periods for redemption apply.
36.5The period of redemption for all lands sold to the state at a tax judgment sale shall
36.6be three years from the date of sale to the state of Minnesota if the land is within an
36.7incorporated area unless it is: (a) nonagricultural homesteaded land as defined in section
36.8273.13, subdivision 22; (b) homesteaded agricultural land as defined in section 273.13,
36.9subdivision 23
, paragraph (a); or (c) seasonal residential recreational land as defined in
36.10section 273.13, subdivision 22, paragraph (c), or 25, paragraph (d), clause (1), for which
36.11the period of redemption is five years from the date of sale to the state of Minnesota.
36.12The period of redemption for homesteaded lands as defined in section 273.13,
36.13subdivision 22
, located in a targeted neighborhood as defined in Laws 1987, chapter 386,
36.14article 6, section 4, and sold to the state at a tax judgment sale is three years from the date
36.15of sale. The period of redemption for all lands located in a targeted neighborhood as
36.16defined in Laws 1987, chapter 386, article 6, section 4, except (1) homesteaded lands as
36.17defined in section 273.13, subdivision 22, and (2) for periods of redemption beginning
36.18after June 30, 1991, but before July 1, 1996, lands located in the Loring Park targeted
36.19neighborhood on which a notice of lis pendens has been served, and sold to the state at a
36.20tax judgment sale is one year from the date of sale.
36.21The period of redemption for all real property constituting a mixed municipal solid
36.22waste disposal facility that is a qualified facility under section 115B.39, subdivision 1, is
36.23one year from the date of the sale to the state of Minnesota.
36.24The period of redemption for all other lands sold to the state at a tax judgment
36.25sale shall be five years from the date of sale, except that the period of redemption for
36.26nonhomesteaded agricultural land as defined in section 273.13, subdivision 23, paragraph
36.27(b), shall be two years from the date of sale if at that time that property is owned by a
36.28person who owns one or more parcels of property on which taxes are delinquent, and the
36.29delinquent taxes are more than 25 percent of the prior year's school district levy.

36.30    Sec. 24. Minnesota Statutes 2012, section 290A.03, subdivision 3, is amended to read:
36.31    Subd. 3. Income. (1) "Income" means the sum of the following:
36.32(a) federal adjusted gross income as defined in the Internal Revenue Code; and
36.33(b) the sum of the following amounts to the extent not included in clause (a):
36.34(i) all nontaxable income;
37.1(ii) the amount of a passive activity loss that is not disallowed as a result of section
37.2469, paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity
37.3loss carryover allowed under section 469(b) of the Internal Revenue Code;
37.4(iii) an amount equal to the total of any discharge of qualified farm indebtedness
37.5of a solvent individual excluded from gross income under section 108(g) of the Internal
37.6Revenue Code;
37.7(iv) cash public assistance and relief;
37.8(v) any pension or annuity (including railroad retirement benefits, all payments
37.9received under the federal Social Security Act, Supplemental Security Income, and
37.10veterans benefits), which was not exclusively funded by the claimant or spouse, or which
37.11was funded exclusively by the claimant or spouse and which funding payments were
37.12excluded from federal adjusted gross income in the years when the payments were made;
37.13(vi) interest received from the federal or a state government or any instrumentality
37.14or political subdivision thereof;
37.15(vii) workers' compensation;
37.16(viii) nontaxable strike benefits;
37.17(ix) the gross amounts of payments received in the nature of disability income or
37.18sick pay as a result of accident, sickness, or other disability, whether funded through
37.19insurance or otherwise;
37.20(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of
37.211986, as amended through December 31, 1995;
37.22(xi) contributions made by the claimant to an individual retirement account,
37.23including a qualified voluntary employee contribution; simplified employee pension plan;
37.24self-employed retirement plan; cash or deferred arrangement plan under section 401(k)
37.25of the Internal Revenue Code; or deferred compensation plan under section 457 of the
37.26Internal Revenue Code;
37.27(xii) nontaxable scholarship or fellowship grants;
37.28(xiii) the amount of deduction allowed under section 199 of the Internal Revenue
37.29Code;
37.30(xiv) the amount of deduction allowed under section 220 or 223 of the Internal
37.31Revenue Code;
37.32(xv) the amount of tuition expenses required to be added to income under section
37.33290.01, subdivision 19a , clause (12);
37.34(xvi) the amount deducted for certain expenses of elementary and secondary school
37.35teachers under section 62(a)(2)(D) of the Internal Revenue Code; and
37.36(xvii) unemployment compensation.
38.1In the case of an individual who files an income tax return on a fiscal year basis, the
38.2term "federal adjusted gross income" shall mean federal adjusted gross income reflected
38.3in the fiscal year ending in the calendar year. Federal adjusted gross income shall not be
38.4reduced by the amount of a net operating loss carryback or carryforward or a capital loss
38.5carryback or carryforward allowed for the year.
38.6(2) "Income" does not include:
38.7(a) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 102;
38.8(b) amounts of any pension or annuity which was exclusively funded by the claimant
38.9or spouse and which funding payments were not excluded from federal adjusted gross
38.10income in the years when the payments were made;
38.11(c) surplus food or other relief in kind supplied by a governmental agency;
38.12(d) relief granted under this chapter;
38.13(e) child support payments received under a temporary or final decree of dissolution
38.14or legal separation; or
38.15(f) restitution payments received by eligible individuals and excludable interest as
38.16defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of
38.172001, Public Law 107-16.
38.18(3) The sum of the following amounts may be subtracted from income A claimant,
38.19other than one who has rent constituting property taxes, may subtract from income the
38.20sum of the following amounts:
38.21(a) for the claimant's first dependent, the exemption amount multiplied by 1.4;
38.22(b) for the claimant's second dependent, the exemption amount multiplied by 1.3;
38.23(c) for the claimant's third dependent, the exemption amount multiplied by 1.2;
38.24(d) for the claimant's fourth dependent, the exemption amount multiplied by 1.1;
38.25(e) for the claimant's fifth dependent, the exemption amount; and
38.26(f) if the claimant or claimant's spouse who occupies the homestead was disabled
38.27or attained the age of 65 on or before December 31 of the year for which the taxes were
38.28levied or rent paid, the exemption amount.
38.29(4) A claimant who has rent constituting property taxes may subtract from income
38.30the sum of the following amounts:
38.31(a) for the claimant's first dependent, the exemption amount multiplied by 1.5;
38.32(b) for the claimant's second dependent, the exemption amount multiplied by 1.4;
38.33(c) for the claimant's third dependent, the exemption amount multiplied by 1.3;
38.34(d) for the claimant's fourth dependent, the exemption amount multiplied by 1.2;
38.35(e) for the claimant's fifth dependent, the exemption amount multiplied by 1.1;
39.1(f) if the claimant was disabled or attained the age of 65 on or before December 31
39.2of the year for which the rent constituting property taxes was paid, the exemption amount
39.3times 1.5; and
39.4(g) if the claimant's spouse who occupies the homestead was disabled or attained the
39.5age of 65 on or before December 31 of the year for which the rent constituting property
39.6taxes were paid, the exemption amount.
39.7For purposes of this subdivision, the "exemption amount" means the exemption
39.8amount under section 151(d) of the Internal Revenue Code for the taxable year for which
39.9the income is reported.
39.10EFFECTIVE DATE.This section is effective beginning with refunds based on rent
39.11constituting property taxes paid after December 31, 2012.

39.12    Sec. 25. Minnesota Statutes 2012, section 290A.04, subdivision 2a, is amended to read:
39.13    Subd. 2a. Renters. A claimant whose rent constituting property taxes exceeds the
39.14percentage of the household income stated below must pay an amount equal to the percent
39.15of income shown for the appropriate household income level along with the percent to
39.16be paid by the claimant of the remaining amount of rent constituting property taxes. The
39.17state refund equals the amount of rent constituting property taxes that remain, up to the
39.18maximum state refund amount shown below.
39.19
39.20
39.21
Household Income
Percent of Income
Percent Paid by
Claimant
Maximum
State
Refund
39.22
39.23
$0 to 3,589
4,910
1.0 percent
5 percent
$
1,190
1,790
39.24
39.25
3,590 to 4,779
4,911 to 6,530
1.0 percent
10
5 percent
$
1,190
1,790
39.26
39.27
4,780 to 5,969
6,531 to 8,160
1.1 percent
10
5 percent
$
1,190
1,790
39.28
39.29
5,970 to 8,369
8,161 to 11,440
1.2 percent
10
5 percent
$
1,190
1,790
39.30
39.31
8,370 to 10,759
11,441 to 14,710
1.3 percent
15
10 percent
$
1,190
1,790
39.32
39.33
10,760 to 11,949
14,711 to 16,340
1.4 percent
15
10 percent
$
1,190
1,790
39.34
39.35
11,950 to 13,139
16,341 to 17,960
1.4 percent
20
15 percent
$
1,190
1,790
39.36
39.37
13,140 to 15,539
17,961 to 21,240
1.5 percent
20
15 percent
$
1,190
1,790
39.38
39.39
15,540 to 16,729
21,241 to 22,870
1.6 percent
20
15 percent
$
1,190
1,790
40.1
40.2
16,730 to 17,919
22,871 to 24,500
1.7 percent
25
20 percent
$
1,190
1,790
40.3
40.4
17,920 to 20,319
24,501 to 27,780
1.8 percent
25
20 percent
$
1,190
1,790
40.5
40.6
20,320 to 21,509
27,781 to 29,400
1.9 percent
30
25 percent
$
1,190
1,790
40.7
40.8
21,510 to 22,699
29,401 to 31,030
2.0 percent
30
25 percent
$
1,190
1,790
40.9
40.10
22,700 to 23,899
31,031 to 32,670
2.2 percent
30
25 percent
$
1,190
1,790
40.11
40.12
23,900 to 25,089
32,671 to 34,300
2.4 percent
30
25 percent
$
1,190
1,790
40.13
40.14
25,090 to 26,289
34,301 to 35,940
2.6 percent
35
30 percent
$
1,190
1,790
40.15
40.16
26,290 to 27,489
35,941 to 37,580
2.7 percent
35
30 percent
$
1,190
1,790
40.17
40.18
27,490 to 28,679
37,581 to 39,200
2.8 percent
35
30 percent
$
1,190
1,790
40.19
40.20
28,680 to 29,869
39,201 to 40,830
2.9 percent
40
35 percent
$
1,190
1,790
40.21
40.22
29,870 to 31,079
40,831 to 42,490
3.0 percent
40
35 percent
$
1,190
1,790
40.23
40.24
31,080 to 32,269
42,491 to 44,110
3.1 percent
40
35 percent
$
1,190
1,790
40.25
40.26
32,270 to 33,459
44,111 to 45,740
3.2 percent
40
35 percent
$
1,190
1,790
40.27
40.28
33,460 to 34,649
45,741 to 47,370
3.3 percent
45
40 percent
$
1,080
1,630
40.29
40.30
34,650 to 35,849
47,371 to 49,010
3.4 percent
45
40 percent
$
960
1,440
40.31
40.32
35,850 to 37,049
49,011 to 50,650
3.5 percent
45
40 percent
$
830
1,240
40.33
40.34
37,050 to 38,239
50,651 to 52,270
3.5 percent
50
45 percent
$
720
1,080
40.35
40.36
38,240 to 39,439
52,271 to 53,910
3.5 percent
50
45 percent
$
600
900
40.37
40.38
38,440 to 40,629
53,911 to 55,540
3.5 percent
50
45 percent
$
360
540
40.39
40.40
40,630 to 41,819
55,541 to 57,170
3.5 percent
50
45 percent
$
120
180
40.41The payment made to a claimant is the amount of the state refund calculated under
40.42this subdivision. No payment is allowed if the claimant's household income is $41,820 or
40.43 more than $57,170.
40.44EFFECTIVE DATE.This section is effective beginning with refunds based on rent
40.45constituting property taxes paid after December 31, 2012.

41.1    Sec. 26. Minnesota Statutes 2012, section 290A.04, subdivision 4, is amended to read:
41.2    Subd. 4. Inflation adjustment. (a) Beginning for property tax refunds payable in
41.3calendar year 2002, the commissioner shall annually adjust the dollar amounts of the
41.4income thresholds and the maximum refunds under subdivisions 2 and 2a for inflation.
41.5The commissioner shall make the inflation adjustments in accordance with section 1(f) of
41.6the Internal Revenue Code, except that for purposes of this subdivision the percentage
41.7increase shall be determined as provided in this subdivision.
41.8(b) In adjusting the dollar amounts of the income thresholds and the maximum
41.9refunds under subdivision 2 for inflation, the percentage increase shall be determined from
41.10the year ending on June 30, 2011, to the year ending on June 30 of the year preceding that
41.11in which the refund is payable.
41.12(c) In adjusting the dollar amounts of the income thresholds and the maximum
41.13refunds under subdivision 2a for inflation, the percentage increase shall be determined
41.14from the year ending on June 30, 2000 2013, to the year ending on June 30 of the year
41.15preceding that in which the refund is payable.
41.16(d) The commissioner shall use the appropriate percentage increase to annually
41.17adjust the income thresholds and maximum refunds under subdivisions 2 and 2a for
41.18inflation without regard to whether or not the income tax brackets are adjusted for inflation
41.19in that year. The commissioner shall round the thresholds and the maximum amounts,
41.20as adjusted to the nearest $10 amount. If the amount ends in $5, the commissioner shall
41.21round it up to the next $10 amount.
41.22(e) The commissioner shall annually announce the adjusted refund schedule at the
41.23same time provided under section 290.06. The determination of the commissioner under
41.24this subdivision is not a rule under the Administrative Procedure Act.
41.25EFFECTIVE DATE.This section is effective beginning with refunds based on
41.26rent paid after December 31, 2013.

41.27    Sec. 27. Minnesota Statutes 2012, section 290C.02, subdivision 6, is amended to read:
41.28    Subd. 6. Forest land. "Forest land" means land containing a minimum of 20
41.29contiguous acres for which the owner has implemented a forest management plan that was
41.30prepared or updated within the past ten years by an approved plan writer. For purposes of
41.31this subdivision, acres are considered to be contiguous even if they are separated by a road,
41.32waterway, railroad track, or other similar intervening property. At least 50 percent of the
41.33contiguous acreage must meet the definition of forest land in section 88.01, subdivision
41.347
. For the purposes of sections 290C.01 to 290C.11, forest land does not include (i)
41.35land used for residential or agricultural purposes, (ii) land enrolled in the reinvest in
42.1Minnesota program, a state or federal conservation reserve or easement reserve program
42.2under sections 103F.501 to 103F.531, the Minnesota agricultural property tax law under
42.3section 273.111, or land subject to agricultural land preservation controls or restrictions
42.4as defined in section 40A.02 or under the Metropolitan Agricultural Preserves Act under
42.5chapter 473H, or (iii) land exceeding 60,000 acres that is subject to a single conservation
42.6easement funded under section 97A.056 or a comparable permanent easement conveyed
42.7to a governmental nonprofit entity; or (iv) any land that becomes subject to a conservation
42.8easement funded under section 97A.056 or a comparable permanent easement conveyed to
42.9a governmental or nonprofit entity after the effective date of this act; or (v) land improved
42.10with a structure, pavement, sewer, campsite, or any road, other than a township road, used
42.11for purposes not prescribed in the forest management plan.
42.12EFFECTIVE DATE.This section is effective for calculations made in 2013 and
42.13thereafter.

42.14    Sec. 28. Minnesota Statutes 2012, section 290C.03, is amended to read:
42.15290C.03 ELIGIBILITY REQUIREMENTS.
42.16(a) Land may be enrolled in the sustainable forest incentive program under this
42.17chapter if all of the following conditions are met:
42.18(1) the land consists of at least 20 contiguous acres and at least 50 percent of the
42.19land must meet the definition of forest land in section 88.01, subdivision 7, during the
42.20enrollment;
42.21(2) a forest management plan for the land must be prepared by an approved plan
42.22writer and implemented during the period in which the land is enrolled;
42.23(3) timber harvesting and forest management guidelines must be used in conjunction
42.24with any timber harvesting or forest management activities conducted on the land during
42.25the period in which the land is enrolled;
42.26(4) the land must be enrolled for a minimum of eight years;
42.27(5) there are no delinquent property taxes on the land; and
42.28(6) claimants enrolling more than 1,920 acres in the sustainable forest incentive
42.29program must allow year-round, nonmotorized access to fish and wildlife resources and
42.30motorized access on established and maintained roads and trails, unless the road or trail is
42.31temporarily closed for safety, natural resource, or road damage reasons on enrolled land
42.32except within one-fourth mile of a permanent dwelling or during periods of high fire
42.33hazard as determined by the commissioner of natural resources.
43.1(b) Claimants required to allow access under paragraph (a), clause (6), do not by
43.2that action:
43.3(1) extend any assurance that the land is safe for any purpose;
43.4(2) confer upon the person the legal status of an invitee or licensee to whom a duty
43.5of care is owed; or
43.6(3) assume responsibility for or incur liability for any injury to the person or property
43.7caused by an act or omission of the person.
43.8EFFECTIVE DATE.This section is effective for calculations made in 2013 and
43.9thereafter.

43.10    Sec. 29. Minnesota Statutes 2012, section 290C.055, is amended to read:
43.11290C.055 LENGTH OF COVENANT.
43.12(a) The covenant remains in effect for a minimum of eight years. If land is removed
43.13from the program before it has been enrolled for four years, the covenant remains in
43.14effect for eight years from the date recorded.
43.15(b) If land that has been enrolled for four years or more is removed from the program
43.16for any reason, there is a waiting period before the covenant terminates. The covenant
43.17terminates on January 1 of the fifth calendar year that begins after the date that:
43.18(1) the commissioner receives notification from the claimant that the claimant wishes
43.19to remove the land from the program under section 290C.10; or
43.20(2) the date that the land is removed from the program under section 290C.11.
43.21(c) Notwithstanding the other provisions of this section, the covenant is terminated:
43.22(1) at the same time that the land is removed from the program due to acquisition of
43.23title or possession for a public purpose under section 290C.10; or
43.24(2) at the request of the claimant after a reduction in payments due to changes in the
43.25payment formula under section 290C.07.
43.26EFFECTIVE DATE.This section is effective for calculations made in 2013 and
43.27thereafter.

43.28    Sec. 30. Minnesota Statutes 2012, section 290C.07, is amended to read:
43.29290C.07 CALCULATION OF INCENTIVE PAYMENT.
43.30    (a) An approved claimant under the sustainable forest incentive program is eligible
43.31to receive an annual payment. The payment shall equal $7 $7.25 per acre for each acre
43.32enrolled in the sustainable forest incentive program.
44.1(b) The annual payment for each Social Security number or state or federal business
44.2tax identification number must not exceed $100,000.
44.3EFFECTIVE DATE.This section is effective for calculations made in 2013 and
44.4thereafter.

44.5    Sec. 31. Minnesota Statutes 2012, section 428A.101, is amended to read:
44.6428A.101 DEADLINE FOR SPECIAL SERVICE DISTRICT UNDER
44.7GENERAL LAW.
44.8The establishment of a new special service district after June 30, 2013 2018, requires
44.9enactment of a special law authorizing the establishment.
44.10EFFECTIVE DATE.This section is effective the day following final enactment.

44.11    Sec. 32. Minnesota Statutes 2012, section 428A.21, is amended to read:
44.12428A.21 DEADLINE FOR HOUSING IMPROVEMENT DISTRICTS UNDER
44.13GENERAL LAW.
44.14The establishment of a new housing improvement area after June 30, 2013 2018,
44.15requires enactment of a special law authorizing the establishment of the area.
44.16EFFECTIVE DATE.This section is effective the day following final enactment.

44.17    Sec. 33. Minnesota Statutes 2012, section 435.19, subdivision 2, is amended to read:
44.18    Subd. 2. State property. In the case of property owned by the state or any
44.19instrumentality thereof, the governing body of the city or town may must determine
44.20the amount that would have been assessed had the land been privately owned. Such
44.21 The determination shall be made only after the governing body has held a hearing on
44.22the proposed assessment after at least two weeks' notice of the hearing has been given
44.23by registered or certified mail to the head of the instrumentality, department or agency
44.24having jurisdiction over the property. The instrumentality, department, or agency may,
44.25after consultation and agreement by the governing body of the city or town, pay an
44.26amount less than the amount determined. The amount thus determined may be paid by
44.27the instrumentality, department or agency from available funds. If no funds are available
44.28and such instrumentality, department or agency is supported in whole or in part by
44.29appropriations from the general fund, then it shall include in its next budget request the
44.30amount thus determined. No instrumentality, department or agency shall be bound by the
44.31determination of the governing body and may pay from available funds or recommend
45.1payment in such lesser amount as it determines is the measure of the benefit received by
45.2the land from the improvement.
45.3EFFECTIVE DATE.This section is effective for assessment year 2013 and
45.4thereafter, for taxes payable in 2014 and thereafter.

45.5    Sec. 34. Minnesota Statutes 2012, section 435.19, is amended by adding a subdivision
45.6to read:
45.7    Subd. 6. Appropriation. (a) There is annually appropriated from the general
45.8fund and credited to the agency assessment account in the special revenue fund,
45.9$5,000,000 in fiscal year 2014 and each year thereafter. Money in the agency assessment
45.10account is appropriated annually to the commissioner of revenue for grants to reimburse
45.11instrumentalities, departments, or agencies for payment of special assessments, as required
45.12under subdivision 2.
45.13(b) Of the amounts appropriated in paragraph (a), the commissioner shall first
45.14allocate $2,000,000 in fiscal year 2014 only to the city of Moose Lake to reimburse for
45.15payments related to connection of state facilities to the sewer line.
45.16(c) Notwithstanding the allocation under paragraph (b), the commissioner shall
45.17distribute the reimbursements equally between the metropolitan area and greater Minnesota.
45.18EFFECTIVE DATE.This section is effective July 1, 2013.

45.19    Sec. 35. Minnesota Statutes 2012, section 473F.08, is amended by adding a subdivision
45.20to read:
45.21    Subd. 3c. Bloomington computation. Effective for property taxes payable in
45.222014 through taxes payable in 2023, after the Hennepin County auditor has computed
45.23the areawide portion of the levy for the city of Bloomington pursuant to subdivision 3,
45.24clause (a), the auditor shall annually add $4,000,000 to the city of Bloomington's areawide
45.25portion of the levy. The total areawide portion of the levy for the city of Bloomington,
45.26including the additional $4,000,000 certified pursuant to this subdivision shall be certified
45.27by the Hennepin County auditor to the administrative auditor pursuant to subdivision 5.
45.28The Hennepin County auditor shall distribute to the city of Bloomington the additional
45.29areawide portion of the levy computed pursuant to this subdivision at the same time
45.30that payments are made to the other counties pursuant to subdivision 7a. The additional
45.31distribution to the city of Bloomington under this subdivision terminates effective for
45.32taxes payable year 2023.
46.1EFFECTIVE DATE.This section is effective for taxes payable years 2014 through
46.22023.

46.3    Sec. 36. Laws 1988, chapter 645, section 3, as amended by Laws 1999, chapter 243,
46.4article 6, section 9, Laws 2000, chapter 490, article 6, section 15, and Laws 2008, chapter
46.5154, article 2, section 30, is amended to read:
46.6    Sec. 3. TAX; PAYMENT OF EXPENSES.
46.7    (a) The tax levied by the hospital district under Minnesota Statutes, section 447.34,
46.8must not be levied at a rate that exceeds the amount authorized to be levied under that
46.9section. The proceeds of the tax may be used for all purposes of the hospital district,
46.10except as provided in paragraph (b).
46.11    (b) 0.015 percent of taxable market value of the tax in paragraph (a) may be used
46.12solely by the Cook ambulance service and the Orr ambulance service for the purpose of
46.13capital expenditures as it relates to:
46.14(1) ambulance acquisitions for the Cook ambulance service and the Orr ambulance
46.15service and not;
46.16(2) attached and portable equipment for use in and for the ambulances; and
46.17(3) parts and replacement parts for maintenance and repair of the ambulances.
46.18The money may not be used for administrative, operation, or salary expenses.
46.19    (c) The part of the levy referred to in paragraph (b) must be administered by the
46.20Cook Hospital and passed on in equal amounts directly to the Cook area ambulance
46.21service board and the city of Orr to be held in trust until funding for a new ambulance is
46.22needed by either the Cook ambulance service or the Orr ambulance service used for the
46.23purposes in paragraph (b).

46.24    Sec. 37. Laws 1999, chapter 243, article 6, section 11, is amended to read:
46.25    Sec. 11. CEMETERY LEVY FOR SAWYER BY CARLTON COUNTY.
46.26    Subdivision 1. Levy authorized. Notwithstanding other law to the contrary, the
46.27Carlton county board of commissioners may annually levy in and for the unorganized
46.28township of Sawyer an amount up to $1,000 annually for cemetery purposes, beginning
46.29with taxes payable in 2000 and ending with taxes payable in 2009.
46.30    Subd. 2. Effective date. This section is effective June 1, 1999, without local
46.31approval.
46.32EFFECTIVE DATE.This section applies to taxes payable in 2014 and thereafter,
46.33and is effective the day after the Carlton county board of commissioners and its chief
47.1clerical officer timely complete their compliance with Minnesota Statutes, section
47.2645.021, subdivisions 2 and 3.

47.3    Sec. 38. Laws 2008, chapter 366, article 5, section 33, the effective date, is amended to
47.4read:
47.5EFFECTIVE DATE.This section is effective for taxes levied in 2008, payable in
47.62009, and is repealed effective for taxes levied in 2013 2018, payable in 2014 2019,
47.7and thereafter.
47.8EFFECTIVE DATE.This section is effective beginning with taxes payable in 2014.

47.9    Sec. 39. Laws 2010, chapter 389, article 1, section 12, the effective date, is amended to
47.10read:
47.11EFFECTIVE DATE.This section is effective for assessment years 2010 and 2011
47.12 through 2016, for taxes payable in 2011 and 2012 through 2017.
47.13EFFECTIVE DATE.This section is effective for assessment years 2012 through
47.142016.

47.15    Sec. 40. REIMBURSEMENT FOR PROPERTY TAX ABATEMENTS;
47.16APPROPRIATION.
47.17    Subdivision 1. Reimbursement. The commissioner of revenue shall reimburse
47.18taxing jurisdictions for property tax abatements granted in Hennepin County under Laws
47.192011, First Special Session chapter 7, article 5, section 13, notwithstanding the time limits
47.20contained in that section. The reimbursements must be made to each taxing jurisdiction
47.21pursuant to the certification of the Hennepin County auditor.
47.22    Subd. 2. Appropriation. In fiscal year 2014 only, $336,000 is appropriated to the
47.23commissioner of revenue from the general fund to make the payments required in this
47.24section.
47.25EFFECTIVE DATE.This section is effective the day following final enactment.

47.26    Sec. 41. ST. PAUL BALL PARK, PROPERTY TAX EXEMPTION; SPECIAL
47.27ASSESSMENT.
47.28Any real or personal property acquired, owned, leased, controlled, used, or occupied
47.29by the city of St. Paul for the primary purpose of providing a ball park for a minor league
47.30baseball team is declared to be acquired, owned, leased, controlled, used, and occupied for
48.1public, governmental, and municipal purposes, and is exempt from ad valorem taxation
48.2by the state or any political subdivision of the state, provided that the properties are
48.3subject to special assessments levied by a political subdivision for a local improvement in
48.4amounts proportionate to and not exceeding the special benefit received by the properties
48.5from the improvement. In determining the special benefit received by the properties, no
48.6possible use of any of the properties in any manner different from their intended use
48.7for providing a minor league ballpark at the time may be considered. Notwithstanding
48.8Minnesota Statutes, section 272.01, subdivision 2, or 273.19, real or personal property
48.9subject to a lease or use agreement between the city and another person for uses related to
48.10the purposes of the operation of the ballpark and related parking facilities is exempt from
48.11taxation regardless of the length of the lease or use agreement. This section, insofar as it
48.12provides an exemption or special treatment, does not apply to any real property that is
48.13leased for residential, business, or commercial development or other purposes different
48.14from those necessary to the provision and operation of the ball park.
48.15EFFECTIVE DATE.This section is effective the day after compliance by the
48.16governing body of the city of St. Paul with Minnesota Statutes, section 645.021,
48.17subdivisions 2 and 3.

48.18    Sec. 42. PUBLIC ENTERTAINMENT FACILITY; PROPERTY TAX
48.19EXEMPTION; SPECIAL ASSESSMENT.
48.20Any real or personal property acquired, owned, leased, controlled, used, or occupied
48.21by the city of Minneapolis for the primary purpose of providing an arena for a professional
48.22basketball team is declared to be acquired, owned, leased, controlled, used, and occupied
48.23for public, governmental, and municipal purposes, and is exempt from ad valorem taxation
48.24by the state or any political subdivision of the state, provided that the properties are
48.25subject to special assessments levied by a political subdivision for a local improvement in
48.26amounts proportionate to and not exceeding the special benefit received by the properties
48.27from the improvement. In determining the special benefit received by the properties, no
48.28possible use of any of the properties in any manner different from their intended use for
48.29providing a professional basketball arena at the time may be considered. Notwithstanding
48.30Minnesota Statutes, section 272.01, subdivision 2, or 273.19, real or personal property
48.31subject to a lease or use agreement between the city and another person for uses related to
48.32the purposes of the operation of the arena and related parking facilities is exempt from
48.33taxation regardless of the length of the lease or use agreement. This section, insofar as
48.34it provides an exemption or special treatment, does not apply to any real property that
49.1is leased for residential, business, or commercial development, or for other purposes
49.2different from those necessary to the provision and operation of the arena.
49.3EFFECTIVE DATE.This section is effective the day after compliance by the
49.4governing body of the city of Minneapolis with Minnesota Statutes, section 645.021,
49.5subdivisions 2 and 3.

49.6    Sec. 43. PUBLIC ENTERTAINMENT FACILITY; CONSTRUCTION
49.7MANAGER AT RISK.
49.8(a) For any real or personal property acquired, owned, leased, controlled, used, or
49.9occupied by the city of Minneapolis for the primary purpose of providing an arena for
49.10a professional basketball team, the city of Minneapolis may contract for construction,
49.11materials, supplies, and equipment in accordance with Minnesota Statutes, section
49.12471.345, except that the city may employ or contract with persons, firms, or corporations
49.13to perform one or more or all of the functions of an engineer, architect, construction
49.14manager, or program manager with respect to all or any part of a project to renovate,
49.15refurbish, and remodel the arena under either the traditional design-bid-build or
49.16construction manager at risk, or a combination thereof.
49.17(b) The city may prepare a request for proposals for one or more of the functions
49.18described in paragraph (a). The request must be published in a newspaper of general
49.19circulation. The city may prequalify offerors by issuing a request for qualifications, in
49.20advance of the request for proposals, and select a short list of responsible offerors to
49.21submit proposals.
49.22(c) As provided in the request for proposals, the city may conduct discussions and
49.23negotiations with responsible offerors in order to determine which proposal is most
49.24advantageous to the city and to negotiate the terms of an agreement. In conducting
49.25discussions, there shall be no disclosure of any information derived from proposals
49.26submitted by competing offerors and the content of all proposals is nonpublic data under
49.27Minnesota Statutes, chapter 13, until such time as a notice to award a contract is given
49.28by the city.
49.29(d) Upon agreement on the guaranteed maximum price, the construction manager
49.30or program manager may enter into contracts with subcontractors for labor, materials,
49.31supplies, and equipment for the renovation project through the process of public bidding,
49.32except that the construction manager or program manager may, with the consent of the city:
49.33(1) narrow the listing of eligible bidders to those that the construction manager
49.34or program manager determines to possess sufficient expertise to perform the intended
49.35functions;
50.1(2) award contracts to the subcontractors that the construction manager or program
50.2manager determines provide the best value under a request for proposals, as described
50.3in Minnesota Statutes, section 16C.28, subdivision 1, paragraph (a), clause (2)(c), that
50.4are not required to be the lowest responsible bidder; and
50.5(3) for work the construction manager or program manager determines to be
50.6critical to the completion schedule, perform work with its own forces without soliciting
50.7competitive bids or proposals, if the construction manager or program manager provides
50.8evidence of competitive pricing.
50.9EFFECTIVE DATE.This section is effective the day after compliance by the
50.10governing body of the city of Minneapolis with Minnesota Statutes, section 645.021,
50.11subdivisions 2 and 3.

50.12    Sec. 44. MORATORIUM ON CHANGES IN ASSESSMENT PRACTICE.
50.13(a) An assessor may not deviate from current practices or policies used generally in
50.14assessing or determining the taxable status of property used in the production of biofuels,
50.15wine, beer, distilled beverages, or dairy products.
50.16(b) An assessor may not change the taxable status of any existing property involved
50.17in the industrial processes identified in paragraph (a), unless the change is made as a result
50.18of a change in the use of property, or to correct an error. For currently taxable properties,
50.19the assessor may change the estimated market value of the property.
50.20EFFECTIVE DATE.This section is effective for assessment years 2013 and 2014
50.21only.

50.22    Sec. 45. STUDY AND REPORT ON CERTAIN PROPERTY USED IN
50.23BUSINESS AND PRODUCTION.
50.24In order to provide the legislature with information and recommendations related
50.25to the past, present, and future options for assessment of property used in business
50.26and production activities, the commissioner of revenue with the cooperation of the
50.27commissioners of agriculture and economic development must study the impact of
50.28alternative interpretations and application related to the real and personal property
50.29provisions contained in Minnesota Statutes, section 272.03, subdivisions 1 and 2. The
50.30commissioner must report a summary of findings and recommendations to the chairs and
50.31ranking minority members of the agriculture, energy, and tax committees of the senate and
50.32house of representatives by February 1, 2014. The commissioner shall provide for the
50.33involvement and participation stakeholders from the business and production industry in
51.1the study and recommendations. The study and recommendations shall include, but not
51.2be limited to:
51.3(1) the past and present tax application to process in the production of a product;
51.4(2) exemption from real property for process components of production such as
51.5tanks or containment vessels or other devices wherein a molecular, chemical, or biological
51.6change occurs such that the intended output from the production process is a different
51.7substance from that which was introduced into the tanks, vessels, or other devices
51.8and removal of a tank, device or vessel from the process that would stop or harm the
51.9production of the final intended product;
51.10(3) definitions for process equipment;
51.11(4) the potential economic and competitive impact in relation to other midwestern
51.12states;
51.13(5) the impact on state and local taxes from 2009 to the present and into the future;
51.14(6) the past, present, and future impact on business and production industries;
51.15(7) impact on Minnesota's renewable energy goal attainment; and
51.16(8) other elements considered important for legislative consideration.
51.17EFFECTIVE DATE.This section is effective the day following final enactment.

51.18    Sec. 46. REENROLLMENT; SUSTAINABLE FOREST INCENTIVE
51.19PROGRAM.
51.20A person who elected to terminate participation in the sustainable forest incentive
51.21program, as provided in Laws 2011, First Special Session chapter 7, article 6, section 12,
51.22may reenroll lands for which the claimant terminated participation. A person must apply
51.23for reenrollment under this section within 60 days after the effective date of this section.
51.24EFFECTIVE DATE.This section is effective the day following final enactment.

51.25    Sec. 47. PROPERTY TAX SAVINGS REPORT.
51.26(a) In addition to the certification of its proposed property tax levy under Minnesota
51.27Statutes, section 275.065, each city that has a population over 500 and each county shall
51.28also include the amount of sales and use tax paid, or was estimated to be paid, in 2012.
51.29(b) At the time the notice of the proposed property taxes is mailed as required under
51.30Minnesota Statutes, section 275.065, subdivision 3, the county treasurer shall also include
51.31a separate statement providing a list of sales and use tax certified by the county and cities
51.32within their jurisdiction.
52.1(c) At the public hearing required under Minnesota Statutes, section 275.065,
52.2subdivision 3, the county and city must discuss the estimated savings realized to their
52.3budgets that resulted from the sales tax exemption authorized under Minnesota Statutes,
52.4section 297A.70, subdivision 2, and how those savings will be used for property tax levy
52.5reductions, fee reductions, and other purposes as deemed appropriate.
52.6Reasonable costs of preparing the notice required in this section must be apportioned
52.7between taxing jurisdictions as follows:
52.8(1) one-half is allocated to the county; and
52.9(2) one-half is allocated among the cities.
52.10The amount allocated in clause (2) must be further apportioned among all the cities
52.11in the proportion that the number of parcels in the city bears to the number of parcels in all
52.12the cities that have populations over 500.
52.13EFFECTIVE DATE.This section is effective the day following final enactment,
52.14for taxes levied in 2013 and payable in 2014.

52.15    Sec. 48. METROPOLITAN FISCAL DISPARITIES WORKING GROUP.
52.16(a) The commissioner of revenue shall convene a working group of interested
52.17individuals to examine the issues faced by local governments that are required to pay for
52.18services which are otherwise generally provided throughout the seven-county metropolitan
52.19area by the Metropolitan Council. The commissioner of revenue shall chair the initial
52.20meeting, and the working group shall elect a chair at that initial meeting. The working
52.21group will meet at the call of the chair, but must meet at least three times during the
52.22legislative interim. Members of the working group shall serve without compensation. The
52.23commissioner of revenue must provide administrative support to the working group.
52.24(b) The working group may make its advisory recommendations to the chairs of
52.25house of representatives and senate tax committees on or before February 1, 2014, at
52.26which time the working group shall expire.
52.27EFFECTIVE DATE.This section is effective the day following final enactment.

52.28    Sec. 49. REPEALER.
52.29Minnesota Statutes 2012, section 275.025, subdivision 4, is repealed.
52.30EFFECTIVE DATE.This section is effective for taxes payable in 2014.

53.1ARTICLE 3
53.2EDUCATION AIDS AND LEVIES

53.3    Section 1. Minnesota Statutes 2012, section 124D.11, subdivision 1, is amended to read:
53.4    Subdivision 1. General education revenue. (a) General education revenue must
53.5be paid to a charter school as though it were a district. The general education revenue
53.6for each adjusted marginal cost pupil unit is the state average general education revenue
53.7per pupil unit, plus the referendum equalization aid allowance in the pupil's district of
53.8residence, minus an amount equal to the product of the formula allowance according
53.9to section 126C.10, subdivision 2, times .0485 .0465, calculated without basic skills
53.10revenue, extended time revenue, alternative teacher compensation revenue, equity
53.11revenue, pension adjustment revenue, transition revenue, education advancement revenue,
53.12and transportation sparsity revenue, plus basic skills revenue, extended time revenue,
53.13basic alternative teacher compensation aid according to section 126C.10, subdivision 34,
53.14 equity revenue, pension adjustment revenue, and transition revenue as though the school
53.15were a school district. The general education revenue for each extended time marginal
53.16cost pupil unit equals $4,378 $4,722.
53.17(b) Notwithstanding paragraph (a), for charter schools in the first year of operation,
53.18general education revenue shall be computed using the number of adjusted pupil units
53.19in the current fiscal year.
53.20EFFECTIVE DATE.This section is effective for revenue for fiscal year 2015
53.21and later.

53.22    Sec. 2. [124D.862] ACHIEVEMENT AND INTEGRATION REVENUE.
53.23    Subdivision 1. Eligibility. A school district is eligible for achievement and
53.24integration revenue under this section if the district has a biennial achievement and
53.25integration plan approved by the department under section 124D.861. Priority for funding
53.26must be given to eligible school districts that include methods that have been effective in
53.27reducing disparities in student achievement in the district's biennial plan.
53.28    Subd. 2. Achievement and integration revenue. (a) For fiscal year 2014, initial
53.29achievement and integration revenue for an eligible district equals the lesser of the
53.30district's expenditure for the fiscal year under its budget according to subdivision 1a or the
53.31greater of: (1) 90 percent of the district's integration revenue for fiscal year 2013 under
53.32Minnesota Statutes 2012, section 124D.86, or (2) the sum of: (i) $327 times the district's
53.33adjusted pupil units for the prior fiscal year computed using the pupil unit weights effective
53.34under section 126C.05 for fiscal year 2015 and later, times the district's enrollment of
54.1protected students as a percent of its total enrollment on October 1 of the prior fiscal year,
54.2plus (ii) $100 times the district's adjusted pupil units for the prior fiscal year computed
54.3using the pupil unit weights effective under section 126C.05 for fiscal year 2015 and later
54.4times the district's enrollment of protected students as a percent of its total enrollment on
54.5October 1 of the prior fiscal year times the district's focus rating for the prior fiscal year
54.6under Minnesota's 2012 Elementary and Secondary Education Act flexibility request.
54.7(b) For fiscal year 2015 and later, initial achievement and integration revenue for
54.8an eligible district equals the lesser of the district's expenditure for the fiscal year under
54.9its budget according to subdivision 1a or the greater of: (1) 63 percent of the district's
54.10integration revenue for fiscal year 2013 under Minnesota Statutes 2012, section 124D.86,
54.11or (2) the sum of: (i) $327 times the district's adjusted pupil units for the prior fiscal year
54.12computed using the pupil unit weights effective under section 126C.05 for fiscal year 2015
54.13and later, times the district's enrollment of protected students as a percent of its total
54.14enrollment on October 1 of the prior fiscal year, plus (ii) $100 times the district's adjusted
54.15pupil units for the prior fiscal year computed using the pupil unit weights effective under
54.16section 126C.05 for fiscal year 2015 and later, times the district's enrollment of protected
54.17students as a percent of its total enrollment on October 1 of the prior fiscal year times the
54.18district's focus rating for the prior fiscal year under Minnesota's 2012 Elementary and
54.19Secondary Education Act flexibility request.
54.20(c) In each year, .02 percent of each district's initial achievement and integration
54.21revenue is transferred to the Department of Education for the oversight and accountability
54.22activities required under this section and section 124D.861.
54.23(d) A district that did not meet its achievement goals established in section 124D.861
54.24for the previous biennium must report to the commissioner the reasons why the goals were
54.25not met. The district must submit a two-year improvement plan to achieve the unmet goals
54.26from its achievement and integration plan. A district that does not meet its goals in the
54.27improvement plan must have its initial achievement and integration revenue reduced by
54.2820 percent for the current year.
54.29(e) Any revenue saved by the reductions in paragraph (d) must be proportionately
54.30reallocated on a per adjusted pupil unit basis to all districts that met their achievement
54.31goals in the previous biennium.
54.32    Subd. 3. Achievement and integration aid. A district's achievement and
54.33integration aid for fiscal year 2014 and later equals the difference between the district's
54.34achievement and integration revenue and its achievement and integration levy.
54.35    Subd. 4. Achievement and integration levy. For fiscal year 2014 and later,
54.36a district may levy an amount equal to 30 percent of the district's achievement and
55.1integration revenue as defined in subdivision 2. The Department of Education must adjust
55.2the levy for taxes payable in 2014 by the difference between the levy under this section
55.3and the amount levied by the district under Laws 2011, First Special Session chapter 11,
55.4article 2, section 49, paragraph (f).
55.5    Subd. 5. Revenue reserved. Integration revenue received under this section must
55.6be reserved and used only for the programs authorized in subdivision 6.
55.7    Subd. 6. Revenue uses. At least 80 percent of a district's achievement and
55.8integration revenue received under this section must be used for innovative and integrated
55.9learning environments, family engagement activities, and other approved programs
55.10providing direct services to students. Up to 20 percent of the revenue may be used for
55.11professional development and staff development activities, and not more than ten percent
55.12of this share of the revenue may be used for administrative expenditures.
55.13EFFECTIVE DATE.This section is effective for revenue for fiscal year 2014
55.14and later.

55.15    Sec. 3. Minnesota Statutes 2012, section 126C.10, subdivision 1, is amended to read:
55.16    Subdivision 1. General education revenue. (a) For fiscal years 2013 and 2014, the
55.17general education revenue for each district equals the sum of the district's basic revenue,
55.18extended time revenue, gifted and talented revenue, small schools revenue, basic skills
55.19revenue, training and experience revenue, secondary sparsity revenue, elementary sparsity
55.20revenue, transportation sparsity revenue, total operating capital revenue, equity revenue,
55.21alternative teacher compensation revenue, and transition revenue.
55.22(b) For fiscal year 2015 and later, the general education revenue for each district
55.23equals the sum of the district's basic revenue, extended time revenue, gifted and talented
55.24revenue, declining enrollment revenue, small schools revenue, basic supplemental
55.25revenue, basic skills revenue, secondary sparsity revenue, elementary sparsity revenue,
55.26transportation sparsity revenue, total operating capital revenue, education advancement
55.27revenue, equity revenue, pension adjustment revenue, safe schools revenue, and transition
55.28revenue.

55.29    Sec. 4. Minnesota Statutes 2012, section 126C.10, subdivision 27, is amended to read:
55.30    Subd. 27. District equity index. (a) A district's equity index equals the greater
55.31of zero or the ratio of the sum of the district equity gap amount to the regional equity
55.32gap amount $1,600 minus the district's referendum revenue under section 126C.17,
55.33subdivision 4, per adjusted pupil unit to $1,600.
56.1(b) A charter school's equity index equals the greater of zero or the ratio of $1,600
56.2minus the school's general education revenue attributable to referendum equalization aid
56.3under section 124D.11, subdivision 1, per adjusted pupil unit to $1,600.
56.4EFFECTIVE DATE.This section is effective for revenue for fiscal year 2015
56.5and later.

56.6    Sec. 5. Minnesota Statutes 2012, section 126C.10, is amended by adding a subdivision
56.7to read:
56.8    Subd. 37. Education advancement revenue. The education advancement revenue
56.9for each district equals the advancement allowance times the adjusted pupil units for the
56.10school year. The advancement allowance for fiscal year 2015 and later years is $300.
56.11EFFECTIVE DATE.This section is effective for revenue for fiscal year 2015
56.12and later.

56.13    Sec. 6. Minnesota Statutes 2012, section 126C.10, is amended by adding a subdivision
56.14to read:
56.15    Subd. 39. Education advancement levy. To obtain education advancement
56.16revenue, a district may levy an amount not more than the product of its education
56.17advancement revenue for the fiscal year times the lesser of one or the ratio of its
56.18referendum market value per resident pupil unit to the education advancement revenue
56.19equalizing factor. The education advancement revenue equalizing factor equals $785,000.
56.20If a district adopts a board resolution to levy less than the permitted levy, the district's
56.21education advancement aid shall be reduced proportionately.
56.22EFFECTIVE DATE.This section is effective for revenue for fiscal year 2015
56.23and later.

56.24    Sec. 7. Minnesota Statutes 2012, section 126C.10, is amended by adding a subdivision
56.25to read:
56.26    Subd. 40. Education advancement aid. For fiscal year 2015 and later, a school
56.27district's education advancement aid is the product of: (1) the difference between the
56.28district's education advancement revenue and the education advancement levy; times (2)
56.29the ratio of the actual amount levied to the permitted levy.
56.30EFFECTIVE DATE.This section is effective for revenue for fiscal year 2015
56.31and later.

57.1    Sec. 8. Minnesota Statutes 2012, section 126C.13, is amended by adding a subdivision
57.2to read:
57.3    Subd. 3c. General education levy; districts off the formula. (a) If the amount of
57.4the general education levy for a district exceeds the district's general education revenue,
57.5excluding equity revenue, transition revenue, and education advancement revenue, the
57.6amount of the general education levy must be limited to the district's general education
57.7revenue, excluding equity revenue, transition revenue, and education advancement revenue.
57.8    (b) A levy made according to this subdivision shall also be construed to be the levy
57.9made according to subdivision 3b.

57.10    Sec. 9. Minnesota Statutes 2012, section 126C.13, subdivision 4, is amended to read:
57.11    Subd. 4. General education aid. (a) For fiscal years 2007 2013 and later 2014 only,
57.12a district's general education aid is the sum of the following amounts:
57.13    (1) general education revenue, excluding equity revenue, total operating capital
57.14revenue, alternative teacher compensation revenue, and transition revenue;
57.15    (2) operating capital aid under section 126C.10, subdivision 13b;
57.16    (3) equity aid under section 126C.10, subdivision 30;
57.17    (4) alternative teacher compensation aid under section 126C.10, subdivision 36;
57.18    (5) transition aid under section 126C.10, subdivision 33;
57.19    (6) shared time aid under section 126C.01, subdivision 7;
57.20    (7) referendum aid under section 126C.17, subdivisions 7 and 7a; and
57.21    (8) online learning aid according to section 124D.096.
57.22(b) For fiscal year 2015 and later, a district's general education aid equals:
57.23(1) general education revenue, excluding equity revenue, transition revenue, and
57.24education advancement revenue, minus the general education levy, multiplied times the
57.25ratio of the actual amount of general education levied to the permitted general education
57.26levy; plus
57.27(2) equity aid under section 126C.10, subdivision 30; plus
57.28(3) transition aid under section 126C.10, subdivision 33; plus
57.29(4) education advancement aid under section 126C.10, subdivision 40; plus
57.30(5) shared time aid under section 126C.10, subdivision 7; plus
57.31(6) referendum aid under section 126C.17, subdivisions 7 and 7a; plus
57.32(7) online learning aid under section 124D.096.

57.33    Sec. 10. Minnesota Statutes 2012, section 126C.17, is amended to read:
57.34126C.17 REFERENDUM REVENUE.
58.1    Subdivision 1. Referendum allowance. (a) For fiscal year 2003 and later, a district's
58.2initial referendum revenue allowance equals the sum of the allowance under section
58.3126C.16, subdivision 2, plus any additional allowance per resident marginal cost pupil
58.4unit authorized under subdivision 9 before May 1, 2001, for fiscal year 2002 and later,
58.5plus the referendum conversion allowance approved under subdivision 13, minus $415.
58.6For districts with more than one referendum authority, the reduction must be computed
58.7separately for each authority. The reduction must be applied first to the referendum
58.8conversion allowance and next to the authority with the earliest expiration date. A
58.9district's initial referendum revenue allowance may not be less than zero.
58.10(b) For fiscal year 2003, a district's referendum revenue allowance equals the initial
58.11referendum allowance plus any additional allowance per resident marginal cost pupil unit
58.12authorized under subdivision 9 between April 30, 2001, and December 30, 2001, for
58.13fiscal year 2003 and later.
58.14(c) For fiscal year 2004 and later, a district's referendum revenue allowance equals
58.15the sum of:
58.16(1) the product of (i) the ratio of the resident marginal cost pupil units the district
58.17would have counted for fiscal year 2004 under Minnesota Statutes 2002, section 126C.05,
58.18to the district's resident marginal cost pupil units for fiscal year 2004, times (ii) the initial
58.19referendum allowance plus any additional allowance per resident marginal cost pupil unit
58.20authorized under subdivision 9 between April 30, 2001, and May 30, 2003, for fiscal
58.21year 2003 and later, plus
58.22(2) any additional allowance per resident marginal cost pupil unit authorized under
58.23subdivision 9 after May 30, 2003, for fiscal year 2005 and later.
58.24(a) A district's initial referendum allowance for fiscal year 2015 equals the result of
58.25the following calculations:
58.26(1) multiply the referendum allowance the district would have received for fiscal
58.27year 2015 under section 126C.17, subdivision 1, based on elections held before July 1,
58.282013, by the resident marginal cost pupil units the district would have counted for fiscal
58.29year 2015 under section 126C.05;
58.30(2) add to the result of clause (1) the adjustment the district would have received
58.31under section 127A.47, subdivision 7, paragraphs (a), (b), and (c), based on elections
58.32held before July 1, 2013;
58.33(3) divide the result of clause (2) by the district's adjusted pupil units for fiscal
58.34year 2015, notwithstanding section 126C.05, subdivision 1, paragraph (d), calculated as
58.35though a kindergarten pupil not included in section 126C.05, subdivision 1, paragraph
58.36(c), is counted as 0.55 pupil units, and subtract $300; and
59.1(4) if the result of clause (3) is less than zero, set the allowance to zero.
59.2(b) A district's referendum allowance equals the sum of the district's initial
59.3referendum allowance for fiscal year 2015, plus any additional referendum allowance per
59.4adjusted pupil unit authorized after June 30, 2013, minus any allowances expiring in fiscal
59.5year 2016 or later. For a district with more than one referendum allowance for fiscal year
59.62015 under section 126C.17, the allowance calculated under paragraph (a) must be divided
59.7into components such that the same percentage of the district's allowance expires at the
59.8same time as the old allowances would have expired under section 126C.17.
59.9    Subd. 2. Referendum allowance limit. (a) Notwithstanding subdivision 1, for fiscal
59.10year 2007 2015 and later, a district's referendum allowance must not exceed the greater of:
59.11(1) the sum of: (i) a district's referendum allowance for fiscal year 1994 times 1.177
59.12times the annual inflationary increase as calculated under paragraph (b) plus (ii) its
59.13referendum conversion allowance for fiscal year 2003, minus (iii) $215;
59.14(2) the greater of (i): 26 percent of the formula allowance or (ii) $1,294 times is the
59.15base referendum amount calculated in paragraph (b) minus $300. A district's referendum
59.16allowance under this subdivision must not be less than zero.
59.17(b) The base referendum amount is the annual inflationary increase as calculated
59.18under paragraph (b); or times the greatest of:
59.19(1) $1,845;
59.20(2) the sum of the referendum revenue the district would have received for fiscal year
59.212015 under section 126C.17, subdivision 4, based on elections held before July 1, 2013,
59.22and the adjustment the district would have received under section 127A.47, subdivision
59.237, paragraphs (a), (b), and (c), based on elections held before July 1, 2013, divided by
59.24the district's adjusted pupil units for fiscal year 2015, notwithstanding section 126C.05,
59.25subdivision 1, paragraph (d), calculated as though a kindergarten pupil not included in
59.26section 126C.05, subdivision 1, paragraph (c), is counted as 0.55 pupil units; or
59.27(3) the product of the referendum allowance limit the district would have received
59.28for fiscal year 2015 under section 126C.17, subdivision 2, and the resident marginal cost
59.29pupil units the district would have received for fiscal year 2015 under section 126C.05,
59.30subdivision 6, plus the adjustment the district would have received under section 127A.47,
59.31subdivision 7, paragraphs (a), (b), and (c), based on elections held before July 1, 2013,
59.32divided by the district's adjusted pupil units for fiscal year 2015, notwithstanding section
59.33126C.05, subdivision 1, paragraph (d), calculated as though a kindergarten pupil not
59.34included in section 126C.05, subdivision 1, paragraph (c), is counted as 0.55 pupil units; or
60.1(3) (4) for a newly reorganized district created after July 1, 2006 2013, the referendum
60.2revenue authority for each reorganizing district in the year preceding reorganization divided
60.3by its resident marginal cost adjusted pupil units for the year preceding reorganization.
60.4(b) (c) For purposes of this subdivision, for fiscal year 2005 2016 and later,
60.5"inflationary increase" means one plus the percentage change in the Consumer Price Index
60.6for urban consumers, as prepared by the United States Bureau of Labor Standards, for the
60.7current fiscal year to fiscal year 2004 2015. For fiscal years 2009 year 2016 and later, for
60.8purposes of paragraph (a), clause (1) (3), the inflationary increase equals the inflationary
60.9increase for fiscal year 2008 plus one-fourth of the percentage increase in the formula
60.10allowance for that year compared with the formula allowance for fiscal year 2008 2015.
60.11    Subd. 3. Sparsity exception. A district that qualifies for sparsity revenue under
60.12section 126C.10 is not subject to a referendum allowance limit.
60.13    Subd. 4. Total referendum revenue. The total referendum revenue for each district
60.14equals the district's referendum allowance times the resident marginal cost adjusted pupil
60.15units for the school year.
60.16    Subd. 5. Referendum equalization revenue. (a) For fiscal year 2003 and later,
60.17 A district's referendum equalization revenue equals the sum of the first tier referendum
60.18equalization revenue and the second tier referendum equalization revenue.
60.19(b) A district's first tier referendum equalization revenue equals the district's first
60.20tier referendum equalization allowance times the district's resident marginal cost adjusted
60.21 pupil units for that year.
60.22(c) For fiscal year 2006, a district's first tier referendum equalization allowance
60.23equals the lesser of the district's referendum allowance under subdivision 1 or $500. For
60.24fiscal year 2007, a district's first tier referendum equalization allowance equals the lesser
60.25of the district's referendum allowance under subdivision 1 or $600.
60.26For fiscal year 2008 and later, A district's first tier referendum equalization allowance
60.27equals the lesser of the district's referendum allowance under subdivision 1 or $700 $775.
60.28(d) A district's second tier referendum equalization revenue equals the district's
60.29second tier referendum equalization allowance times the district's resident marginal cost
60.30 adjusted pupil units for that year.
60.31(e) For fiscal year 2006, a district's second tier referendum equalization allowance
60.32equals the lesser of the district's referendum allowance under subdivision 1 or 18.6 percent
60.33of the formula allowance, minus the district's first tier referendum equalization allowance.
60.34For fiscal year 2007 and later, A district's second tier referendum equalization allowance
60.35equals the lesser of the district's referendum allowance under subdivision 1 or 26 25 percent
60.36of the formula allowance, minus the district's first tier referendum equalization allowance.
61.1(f) Notwithstanding paragraph (e), the second tier referendum allowance for a
61.2district qualifying for secondary sparsity revenue under section 126C.10, subdivision 7, or
61.3elementary sparsity revenue under section 126C.10, subdivision 8, equals the district's
61.4referendum allowance under subdivision 1 minus the district's first tier referendum
61.5equalization allowance.
61.6    Subd. 6. Referendum equalization levy. (a) For fiscal year 2003 and later,
61.7a district's referendum equalization levy equals the sum of the first tier referendum
61.8equalization levy and the second tier referendum equalization levy.
61.9(b) A district's first tier referendum equalization levy equals the district's first tier
61.10referendum equalization revenue times the lesser of one or the ratio of the district's
61.11referendum market value per resident marginal cost pupil unit to $476,000 $538,200.
61.12(c) A district's second tier referendum equalization levy equals the district's second
61.13tier referendum equalization revenue times the lesser of one or the ratio of the district's
61.14referendum market value per resident marginal cost pupil unit to $270,000 $259,415.
61.15    Subd. 7. Referendum equalization aid. (a) A district's referendum equalization aid
61.16equals the difference between its referendum equalization revenue and levy.
61.17(b) If a district's actual levy for first or second tier referendum equalization revenue
61.18is less than its maximum levy limit for that tier, aid shall be proportionately reduced.
61.19(c) Notwithstanding paragraph (a), the referendum equalization aid for a district,
61.20where the referendum equalization aid under paragraph (a) exceeds 90 percent of the
61.21referendum revenue, must not exceed 26 25 percent of the formula allowance times the
61.22district's resident marginal cost adjusted pupil units. A district's referendum levy is
61.23increased by the amount of any reduction in referendum aid under this paragraph.
61.24    Subd. 7a. Referendum tax base replacement aid. For each school district that
61.25had a referendum allowance for fiscal year 2002 exceeding $415, for each separately
61.26authorized referendum levy, the commissioner of revenue, in consultation with the
61.27commissioner of education, shall certify the amount of the referendum levy in taxes
61.28payable year 2001 attributable to the portion of the referendum allowance exceeding $415
61.29levied against property classified as class 2, noncommercial 4c(1), or 4c(4), under section
61.30273.13 , excluding the portion of the tax paid by the portion of class 2a property consisting
61.31of the house, garage, and surrounding one acre of land. The resulting amount must be
61.32used to reduce the district's referendum levy amount otherwise determined, and must be
61.33paid to the district each year that the referendum authority remains in effect, is renewed,
61.34or new referendum authority is approved. The aid payable under this subdivision must
61.35be subtracted from the district's referendum equalization aid under subdivision 7. The
61.36referendum equalization aid after the subtraction must not be less than zero.
62.1    Subd. 7b. Referendum aid guarantee. (a) Notwithstanding subdivision 7, a
62.2district's referendum equalization aid for fiscal year 2015 must not be less than the sum of
62.3the referendum equalization aid the district would have received for fiscal year 2015 under
62.4section 126C.17, subdivision 7, and the adjustment the district would have received under
62.5section 127A.47, subdivision 7, paragraphs (a), (b), and (c).
62.6(b) Notwithstanding subdivision 7, referendum equalization aid for fiscal year 2016
62.7and later, for a district qualifying for additional aid under paragraph (a) for fiscal year
62.82015, must not be less than the product of (1) the district's referendum equalization aid
62.9for fiscal year 2015, times (2) the lesser of one or the ratio of the district's referendum
62.10revenue for that school year to the district's referendum revenue for fiscal year 2015, times
62.11(3) the lesser of one or the ratio of the district's referendum market value used for fiscal
62.12year 2015 referendum equalization calculations to the district's referendum market value
62.13used for that year's referendum equalization calculations.
62.14    Subd. 8. Unequalized referendum levy. Each year, a district may levy an amount
62.15equal to the difference between its total referendum revenue according to subdivision 4
62.16and its referendum equalization revenue according to subdivision 5.
62.17    Subd. 9. Referendum revenue. (a) The revenue authorized by section 126C.10,
62.18subdivision 1
, may be increased in the amount approved by the voters of the district
62.19at a referendum called for the purpose. The referendum may be called by the board.
62.20The referendum must be conducted one or two calendar years before the increased levy
62.21authority, if approved, first becomes payable. Only one election to approve an increase
62.22may be held in a calendar year. Unless the referendum is conducted by mail under
62.23subdivision 11, paragraph (a), the referendum must be held on the first Tuesday after the
62.24first Monday in November. The ballot must state the maximum amount of the increased
62.25revenue per resident marginal cost adjusted pupil unit. The ballot may state a schedule,
62.26determined by the board, of increased revenue per resident marginal cost adjusted pupil
62.27unit that differs from year to year over the number of years for which the increased revenue
62.28is authorized or may state that the amount shall increase annually by the rate of inflation.
62.29For this purpose, the rate of inflation shall be the annual inflationary increase calculated
62.30under subdivision 2, paragraph (b). The ballot may state that existing referendum levy
62.31authority is expiring. In this case, the ballot may also compare the proposed levy authority
62.32to the existing expiring levy authority, and express the proposed increase as the amount, if
62.33any, over the expiring referendum levy authority. The ballot must designate the specific
62.34number of years, not to exceed ten, for which the referendum authorization applies. The
62.35ballot, including a ballot on the question to revoke or reduce the increased revenue amount
62.36under paragraph (c), must abbreviate the term "per resident marginal cost adjusted pupil
63.1unit" as "per pupil." The notice required under section 275.60 may be modified to read, in
63.2cases of renewing existing levies at the same amount per pupil as in the previous year:
63.3"BY VOTING "YES" ON THIS BALLOT QUESTION, YOU ARE VOTING
63.4TO EXTEND AN EXISTING PROPERTY TAX REFERENDUM THAT IS
63.5SCHEDULED TO EXPIRE."
63.6    The ballot may contain a textual portion with the information required in this
63.7subdivision and a question stating substantially the following:
63.8    "Shall the increase in the revenue proposed by (petition to) the board of .........,
63.9School District No. .., be approved?"
63.10    If approved, an amount equal to the approved revenue per resident marginal cost
63.11 adjusted pupil unit times the resident marginal cost adjusted pupil units for the school
63.12year beginning in the year after the levy is certified shall be authorized for certification
63.13for the number of years approved, if applicable, or until revoked or reduced by the voters
63.14of the district at a subsequent referendum.
63.15    (b) The board must prepare and deliver by first class mail at least 15 days but no more
63.16than 30 days before the day of the referendum to each taxpayer a notice of the referendum
63.17and the proposed revenue increase. The board need not mail more than one notice to any
63.18taxpayer. For the purpose of giving mailed notice under this subdivision, owners must be
63.19those shown to be owners on the records of the county auditor or, in any county where
63.20tax statements are mailed by the county treasurer, on the records of the county treasurer.
63.21Every property owner whose name does not appear on the records of the county auditor
63.22or the county treasurer is deemed to have waived this mailed notice unless the owner
63.23has requested in writing that the county auditor or county treasurer, as the case may be,
63.24include the name on the records for this purpose. The notice must project the anticipated
63.25amount of tax increase in annual dollars for typical residential homesteads, agricultural
63.26homesteads, apartments, and commercial-industrial property within the school district.
63.27    The notice for a referendum may state that an existing referendum levy is expiring
63.28and project the anticipated amount of increase over the existing referendum levy in
63.29the first year, if any, in annual dollars for typical residential homesteads, agricultural
63.30homesteads, apartments, and commercial-industrial property within the district.
63.31    The notice must include the following statement: "Passage of this referendum will
63.32result in an increase in your property taxes." However, in cases of renewing existing levies,
63.33the notice may include the following statement: "Passage of this referendum extends an
63.34existing operating referendum at the same amount per pupil as in the previous year."
63.35    (c) A referendum on the question of revoking or reducing the increased revenue
63.36amount authorized pursuant to paragraph (a) may be called by the board. A referendum to
64.1revoke or reduce the revenue amount must state the amount per resident marginal cost
64.2pupil unit by which the authority is to be reduced. Revenue authority approved by the
64.3voters of the district pursuant to paragraph (a) must be available to the school district at
64.4least once before it is subject to a referendum on its revocation or reduction for subsequent
64.5years. Only one revocation or reduction referendum may be held to revoke or reduce
64.6referendum revenue for any specific year and for years thereafter.
64.7    (d) The approval of 50 percent plus one of those voting on the question is required to
64.8pass a referendum authorized by this subdivision.
64.9    (e) At least 15 days before the day of the referendum, the district must submit a
64.10copy of the notice required under paragraph (b) to the commissioner and to the county
64.11auditor of each county in which the district is located. Within 15 days after the results
64.12of the referendum have been certified by the board, or in the case of a recount, the
64.13certification of the results of the recount by the canvassing board, the district must notify
64.14the commissioner of the results of the referendum.
64.15    Subd. 10. School referendum levy; market value. A school referendum levy must
64.16be levied against the referendum market value of all taxable property as defined in section
64.17126C.01, subdivision 3 . Any referendum levy amount subject to the requirements of this
64.18subdivision must be certified separately to the county auditor under section 275.07.
64.19    Subd. 11. Referendum date. (a) Except for a referendum held under paragraph (b),
64.20any referendum under this section held on a day other than the first Tuesday after the first
64.21Monday in November must be conducted by mail in accordance with section 204B.46.
64.22Notwithstanding subdivision 9, paragraph (b), to the contrary, in the case of a referendum
64.23conducted by mail under this paragraph, the notice required by subdivision 9, paragraph (b),
64.24must be prepared and delivered by first-class mail at least 20 days before the referendum.
64.25(b) In addition to the referenda allowed in subdivision 9, clause (a), the commissioner
64.26may grant authority to a district to hold a referendum on a different day if the district is in
64.27statutory operating debt and has an approved plan or has received an extension from the
64.28department to file a plan to eliminate the statutory operating debt.
64.29(c) The commissioner must approve, deny, or modify each district's request for a
64.30referendum levy on a different day within 60 days of receiving the request from a district.
64.31    Subd. 13. Referendum conversion allowance. A school district that received
64.32supplemental or transition revenue in fiscal year 2002 may convert its supplemental
64.33revenue conversion allowance and transition revenue conversion allowance to additional
64.34referendum allowance under subdivision 1 for fiscal year 2003 and thereafter. A majority
64.35of the school board must approve the conversion at a public meeting before November 1,
64.362001. For a district with other referendum authority, the referendum conversion allowance
65.1approved by the board continues until the portion of the district's other referendum
65.2authority with the earliest expiration date after June 30, 2006, expires. For a district
65.3with no other referendum authority, the referendum conversion allowance approved by
65.4the board continues until June 30, 2012.
65.5EFFECTIVE DATE.This section is effective for revenue for fiscal year 2015
65.6and later.

65.7    Sec. 11. DIRECTION TO THE COMMISSIONER.
65.8In computing the reduction to a school district's referendum allowance, the
65.9commissioner of education must first reduce a district's referendum allowance with the
65.10earliest expiration date and then, if necessary, reduce additional referendum authority
65.11allowances based on the next earliest expiration date.

65.12    Sec. 12. OPERATING REFERENDUM FREEZE, FISCAL YEAR 2015.
65.13Notwithstanding Minnesota Statutes, section 126C.17, subdivision 9, a school district
65.14may not authorize an increase to its operating referendum in fiscal year 2015. A school
65.15district may reauthorize an operating referendum that is expiring in fiscal year 2015. If a
65.16school district asks the voters to reauthorize operating referendum authority that is expiring
65.17in fiscal year 2015, it may request a reauthorization of that expiring authority minus $300.

65.18    Sec. 13. CURRENT YEAR AID PERCENTAGE; APPROPRIATION
65.19ADJUSTMENTS.
65.20(a) Notwithstanding Minnesota Statutes, section 127A.45, subdivision 2, paragraph
65.21(d), in fiscal year 2014 and later, the commissioner of education shall reduce the current
65.22year aid payment percentage under Minnesota Statutes, section 127A.45, subdivision
65.232, paragraph (d), by 0.2.
65.24(b) For fiscal year 2014 and later, the commissioner of education shall adjust all
65.25appropriations in 2013 Senate File No. 453, if enacted, that are calculated based on a
65.26current year aid payment percentage and a final adjustment payment to reflect the current
65.27year aid payment percentage, under Minnesota Statutes, section 127A.45, subdivision 2,
65.28paragraph (d), as modified by paragraph (a).

65.29    Sec. 14. APPROPRIATIONS.
65.30    Subdivision 1. Department of Education. The sums indicated in this section are
65.31appropriated from the general fund to the Department of Education for the fiscal years
66.1designated and are in addition to any amounts appropriated in any other bill for the same
66.2purpose.
66.3    Subd. 2. General education aid. For general education aid under Minnesota
66.4Statutes, section 126C.13, subdivision 4:
66.5
$
36,460,000
.....
2014
66.6
$
54,765,000
.....
2015
66.7The 2014 appropriation includes $0 for fiscal year 2013 and $36,460,000 for fiscal
66.8year 2014.
66.9The 2015 appropriation includes $12,185,000 for fiscal year 2014 and $42,580,000
66.10for fiscal year 2015.

66.11ARTICLE 4
66.12SPECIAL TAXES

66.13    Section 1. Minnesota Statutes 2012, section 237.52, subdivision 3, is amended to read:
66.14    Subd. 3. Collection. Every provider of services capable of originating a TRS call,
66.15including cellular communications and other nonwire access services, in this state shall,
66.16except as provided in subdivision 3a, collect the charges established by the commission
66.17under subdivision 2 and transfer amounts collected to the commissioner of public
66.18safety in the same manner as provided in section 403.11, subdivision 1, paragraph (d).
66.19The commissioner of public safety must deposit the receipts in the fund established in
66.20subdivision 1.
66.21EFFECTIVE DATE.This section is effective January 1, 2014.

66.22    Sec. 2. Minnesota Statutes 2012, section 237.52, is amended by adding a subdivision
66.23to read:
66.24    Subd. 3a. Fee for prepaid wireless telecommunications service. The fee
66.25established in subdivision 2 does not apply to prepaid wireless telecommunications
66.26services as defined in section 403.02, subdivision 17b, which are instead subject to the
66.27prepaid wireless telecommunications access Minnesota fee established in section 403.161,
66.28subdivision 1, paragraph (b). Collection, remittance, and deposit of prepaid wireless
66.29telecommunications access Minnesota fees are governed by sections 403.161 and 403.162.
66.30EFFECTIVE DATE.This section is effective January 1, 2014.

66.31    Sec. 3. Minnesota Statutes 2012, section 270B.01, subdivision 8, is amended to read:
67.1    Subd. 8. Minnesota tax laws. For purposes of this chapter only, unless expressly
67.2stated otherwise, "Minnesota tax laws" means:
67.3    (1) the taxes, refunds, and fees administered by or paid to the commissioner under
67.4chapters 115B, 289A (except taxes imposed under sections 298.01, 298.015, and 298.24),
67.5290, 290A, 291, 295, 297A, 297B, and 297H, and 403, or any similar Indian tribal tax
67.6administered by the commissioner pursuant to any tax agreement between the state and
67.7the Indian tribal government, and includes any laws for the assessment, collection, and
67.8enforcement of those taxes, refunds, and fees; and
67.9    (2) section 273.1315.
67.10EFFECTIVE DATE.This section is effective January 1, 2014.

67.11    Sec. 4. Minnesota Statutes 2012, section 270B.12, subdivision 4, is amended to read:
67.12    Subd. 4. Department of Public Safety. The commissioner may disclose return
67.13information to the Department of Public Safety for the purpose of and to the extent
67.14necessary to administer section sections 270C.725 and 403.16 to 403.162.
67.15EFFECTIVE DATE.This section is effective January 1, 2014.

67.16    Sec. 5. Minnesota Statutes 2012, section 270C.03, subdivision 1, is amended to read:
67.17    Subdivision 1. Powers and duties. The commissioner shall have and exercise
67.18the following powers and duties:
67.19    (1) administer and enforce the assessment and collection of taxes;
67.20    (2) make determinations, corrections, and assessments with respect to taxes,
67.21including interest, additions to taxes, and assessable penalties;
67.22    (3) use statistical or other sampling techniques consistent with generally accepted
67.23auditing standards in examining returns or records and making assessments;
67.24    (4) investigate the tax laws of other states and countries, and formulate and submit
67.25to the legislature such legislation as the commissioner may deem expedient to prevent
67.26evasions of state revenue laws and to secure just and equal taxation and improvement in
67.27the system of state revenue laws;
67.28    (5) consult and confer with the governor upon the subject of taxation, the
67.29administration of the laws in regard thereto, and the progress of the work of the
67.30department, and furnish the governor, from time to time, such assistance and information
67.31as the governor may require relating to tax matters;
67.32    (6) execute and administer any agreement with the secretary of the treasury or the
67.33Bureau of Alcohol, Tobacco, Firearms and Explosives in the Department of Justice of the
68.1United States or a representative of another state regarding the exchange of information
68.2and administration of the state revenue laws;
68.3    (7) require town, city, county, and other public officers to report information as to the
68.4collection of taxes received from licenses and other sources, and such other information
68.5as may be needful in the work of the commissioner, in such form as the commissioner
68.6may prescribe;
68.7    (8) authorize the use of unmarked motor vehicles to conduct seizures or criminal
68.8investigations pursuant to the commissioner's authority;
68.9    (9) authorize the participation in audits performed by the Multistate Tax Commission.
68.10For the purposes of chapter 270B, the Multistate Tax Commission will be considered to be
68.11a state for the purposes of auditing corporate sales, excise, and income tax returns.
68.12    (10) maintain toll-free telephone access for taxpayer assistance for calls from
68.13locations within the state; and
68.14    (10) (11) exercise other powers and authority and perform other duties required of or
68.15imposed upon the commissioner by law.
68.16EFFECTIVE DATE.This section is effective the day following final enactment.

68.17    Sec. 6. Minnesota Statutes 2012, section 270C.56, subdivision 1, is amended to read:
68.18    Subdivision 1. Liability imposed. A person who, either singly or jointly with
68.19others, has the control of, supervision of, or responsibility for filing returns or reports,
68.20paying taxes, or collecting or withholding and remitting taxes and who fails to do so, or a
68.21person who is liable under any other law, is liable for the payment of taxes arising under
68.22chapters 295, 296A, 297A, 297F, and 297G, or sections 256.9658, 290.92, and 297E.02,
68.23and the applicable penalties and interest on those taxes.
68.24EFFECTIVE DATE.This section is effective July 1, 2013.

68.25    Sec. 7. Minnesota Statutes 2012, section 287.05, is amended by adding a subdivision
68.26to read:
68.27    Subd. 10. Hennepin and Ramsey County. For properties located in Hennepin and
68.28Ramsey County, the county may impose an additional mortgage registry tax as defined in
68.29sections 383A.80 and 383B.80.
68.30EFFECTIVE DATE.This section is effective for all deeds and mortgages
68.31acknowledged on or after July 1, 2013.

68.32    Sec. 8. [287.40] HENNEPIN AND RAMSEY COUNTY.
69.1    For properties located in Hennepin or Ramsey County, the county may impose an
69.2additional deed tax as defined in sections 383A.80 and 383B.80.
69.3EFFECTIVE DATE.This section is effective for all deeds and mortgages
69.4acknowledged on or after July 1, 2013.

69.5    Sec. 9. [295.61] SPORTS MEMORABILIA GROSS RECEIPTS TAX.
69.6    Subdivision 1. Definitions. (a) For purposes of this section, the following terms
69.7have the meanings given, unless the context clearly indicates otherwise.
69.8(b) "Commissioner" means the commissioner of revenue.
69.9(c) "Sale" means a transfer of title or possession of tangible personal property,
69.10whether absolutely or conditionally.
69.11(d) "Sports memorabilia" means items available for sale to the public that are sold
69.12under a license granted by any professional or Collegiate Division I sports league or
69.13association, a team that is a franchise of a professional sports league or association, or
69.14a team that is an affiliate or subsidiary of a professional sports league or association,
69.15including:
69.16(1) one-of-a-kind items related to sports figures, teams, or events;
69.17(2) trading cards;
69.18(3) photographs;
69.19(4) clothing;
69.20(5) sports event licensed items;
69.21(6) sports equipment; and
69.22(7) similar items, but not food or beverage items.
69.23(e) "Wholesale" or "sale at wholesale" means a sale to a retailer, as defined in
69.24section 297A.61, subdivision 9, for the purpose of reselling the property to a third party.
69.25Wholesale does not mean a sale to a wholesaler.
69.26(f) "Wholesaler" means any person making wholesale sales of sports memorabilia
69.27to purchasers in the state.
69.28    Subd. 2. Imposition. A tax is imposed on each sale at wholesale of sports
69.29memorabilia equal to 13 percent of the gross revenues from the sale.
69.30    Subd. 3. Quarterly returns. Each wholesaler must file quarterly returns and make
69.31payments by April 18 for the quarter ending March 31; July 18 for the quarter ending June
69.3230; October 18 for the quarter ending September 30; and January 18 of the following
69.33calendar year for the quarter ending December 31.
69.34    Subd. 4. Compensating use tax. If the tax is not paid under subdivision 2, a
69.35compensating tax is imposed on a retailer or possessor for sale of sports memorabilia in
70.1the state. The rate of tax equals the rate under subdivision 2 and must be paid by the
70.2retailer or possessor for sale of the items.
70.3    Subd. 5. Allocation for youth sports. Five percent of the revenue collected
70.4under subdivision 2 is appropriated to the commissioner for grants to counties for youth
70.5and amateur sports.
70.6    Subd. 6. Administrative provisions. Unless specifically provided otherwise by this
70.7section, the relevant audit, assessment, refund, penalty, interest, enforcement, collection
70.8remedies, appeal, and administrative provisions of chapters 270C and 289A apply to
70.9taxes imposed under this section.
70.10    Subd. 7. Disposition of revenues. The commissioner shall deposit the revenues
70.11from the tax, less the amount allocated in under subdivision 5, in the general fund.
70.12EFFECTIVE DATE.This section is effective for sales and purchases made after
70.13June 30, 2013.

70.14    Sec. 10. Minnesota Statutes 2012, section 296A.09, subdivision 2, is amended to read:
70.15    Subd. 2. Jet fuel and special fuel tax imposed. There is imposed an excise tax
70.16of the same rate 15 cents per gallon as the aviation gasoline on all jet fuel or special
70.17fuel received, sold, stored, or withdrawn from storage in this state, for use as substitutes
70.18for aviation gasoline and not otherwise taxed as gasoline. Jet fuel is defined in section
70.19296A.01, subdivision 8 .
70.20EFFECTIVE DATE.This section is effective July 1, 2014, and applied to sales
70.21and purchases made on or after that date.

70.22    Sec. 11. Minnesota Statutes 2012, section 296A.17, subdivision 3, is amended to read:
70.23    Subd. 3. Refund on graduated basis. Any person who has directly or indirectly
70.24paid the excise tax on aviation gasoline or special fuel for aircraft use provided for by this
70.25chapter under subdivision 2, and the airflight property tax under section 270.72, shall, as
70.26to all such aviation gasoline and special fuel received, stored, or withdrawn from storage
70.27by the person in this state in any calendar year and not sold or otherwise disposed of to
70.28others, or intended for sale or other disposition to others, on which such tax has been so
70.29paid, be entitled to the following graduated reductions in such tax for that calendar year, to
70.30be obtained by means of the following refunds:
70.31(1) on each gallon of such aviation gasoline or special fuel up to 50,000 gallons, all
70.32but five cents per gallon;
71.1(2) on each gallon of such aviation gasoline or special fuel above 50,000 gallons and
71.2not more than 150,000 gallons, all but two cents per gallon;
71.3(3) on each gallon of such aviation gasoline or special fuel above 150,000 gallons
71.4and not more than 200,000 gallons, all but one cent per gallon;
71.5(4) on each gallon of such aviation gasoline or special fuel above 200,000, all but
71.6one-half cent per gallon.
71.7EFFECTIVE DATE.This section is effective July 1, 2014, and applied to sales
71.8and purchases made on or after that date.

71.9    Sec. 12. Minnesota Statutes 2012, section 297A.82, subdivision 4, is amended to read:
71.10    Subd. 4. Exemptions. (a) The following transactions are exempt from the tax
71.11imposed in this chapter to the extent provided.
71.12(b) The purchase or use of aircraft previously registered in Minnesota by a
71.13corporation or partnership is exempt if the transfer constitutes a transfer within the
71.14meaning of section 351 or 721 of the Internal Revenue Code.
71.15(c) The sale to or purchase, storage, use, or consumption by a licensed aircraft dealer
71.16of an aircraft for which a commercial use permit has been issued pursuant to section
71.17360.654 is exempt, if the aircraft is resold while the permit is in effect.
71.18(d) Air flight equipment when sold to, or purchased, stored, used, or consumed by
71.19airline companies, as defined in section 270.071, subdivision 4, is exempt. For purposes
71.20of this subdivision, "air flight equipment" includes airplanes and parts necessary for the
71.21repair and maintenance of such air flight equipment, and flight simulators, but does
71.22not include airplanes with a gross weight of less than 30,000 pounds that are used on
71.23intermittent or irregularly timed flights.
71.24(e) Sales of, and the storage, distribution, use, or consumption of aircraft, as defined
71.25in section 360.511 and approved by the Federal Aviation Administration, and which the
71.26seller delivers to a purchaser outside Minnesota or which, without intermediate use, is
71.27shipped or transported outside Minnesota by the purchaser are exempt, but only if the
71.28purchaser is not a resident of Minnesota and provided that the aircraft is not thereafter
71.29returned to a point within Minnesota, except in the course of interstate commerce or
71.30isolated and occasional use, and will be registered in another state or country upon its
71.31removal from Minnesota. This exemption applies even if the purchaser takes possession of
71.32the aircraft in Minnesota and uses the aircraft in the state exclusively for training purposes
71.33for a period not to exceed ten days prior to removing the aircraft from this state.
71.34(f) The sale or purchase of the following items that relate to aircraft operated under
71.35Federal Aviation Regulations, Parts 91 and 135, and associated installation charges:
72.1equipment and parts necessary for repair and maintenance of aircraft; and equipment
72.2and parts to upgrade and improve aircraft.
72.3EFFECTIVE DATE.This section is effective July 1, 2014, and applied to sales
72.4and purchases made on or after that date.

72.5    Sec. 13. Minnesota Statutes 2012, section 297A.82, is amended by adding a
72.6subdivision to read:
72.7    Subd. 4a. Deposit in state airports fund. Tax revenue collected from the sale or
72.8purchase of an aircraft taxable under this chapter must be deposited in the state airports
72.9fund, established in section 360.017.
72.10EFFECTIVE DATE.This section is effective July 1, 2014, and applied to sales
72.11and purchases made on or after that date.

72.12    Sec. 14. Minnesota Statutes 2012, section 297E.02, subdivision 1, is amended to read:
72.13    Subdivision 1. Imposition. (a) A tax is imposed on all lawful gambling other than
72.14(1) paper or electronic pull-tab deals or games; (2) tipboard deals or games; (3) electronic
72.15linked bingo; and (4) items listed in section 297E.01, subdivision 8, clauses (4) and (5), at
72.16the rate of 8.5 percent on the gross receipts as defined in section 297E.01, subdivision 8,
72.17less prizes actually paid.
72.18(b) A tax is imposed on the conduct of paper pull-tabs, at the rate of 9 percent on
72.19the gross receipts as defined in section 297E.01, subdivision 8, less prizes actually paid.
72.20The tax imposed under this paragraph applies only to an organization that conducts lawful
72.21gambling in a location where at least 50 percent of its annual gross receipts are received
72.22from paper bingo as of January 1, 2013.
72.23(c) The tax imposed by this subdivision is in lieu of the tax imposed by section
72.24297A.62 and all local taxes and license fees except a fee authorized under section 349.16,
72.25subdivision 8
, or a tax authorized under subdivision 5.
72.26(d) The tax imposed under this subdivision is payable by the organization or party
72.27conducting, directly or indirectly, the gambling.
72.28EFFECTIVE DATE.This section is effective July 1, 2013.

72.29    Sec. 15. Minnesota Statutes 2012, section 297E.02, subdivision 6, is amended to read:
72.30    Subd. 6. Combined net receipts tax. (a) In addition to the taxes imposed under
72.31subdivision 1, a tax is imposed on the combined receipts of the organization. As used in
72.32this section, "combined net receipts" is the sum of the organization's gross receipts from
73.1lawful gambling less gross receipts directly derived from the conduct of paper bingo,
73.2raffles, and paddle wheels, as defined in section 297E.01, subdivision 8, and less the net
73.3prizes actually paid, other than prizes actually paid for paper bingo, raffles, and paddle
73.4wheels, for the fiscal year. The combined net receipts of an organization are subject to a
73.5tax computed according to the following schedule:
73.6
73.7
73.8
If the combined net
receipts for the fiscal year
are:
The tax is:
73.9
Not over $87,500
nine percent
73.10
73.11
Over $87,500, but not over
$122,500
$7,875 plus 18 percent of the amount
over $87,500, but not over $122,500
73.12
73.13
Over $122,500, but not
over $157,500
$14,175 plus 27 percent of the amount
over $122,500, but not over $157,500
73.14
73.15
Over $157,500
$23,625 plus 36 percent of the
amount over $157,500
73.16(b) On or before April 1, 2016, the commissioner shall estimate the total amount of
73.17revenue, including interest and penalties, that will be collected for fiscal year 2016 from
73.18taxes imposed under this chapter. If the amount estimated by the commissioner equals
73.19or exceeds $94,800,000, the commissioner shall certify that effective July 1, 2016, the
73.20rates under this paragraph apply in lieu of the rates under paragraph (a) and shall publish a
73.21notice to that effect in the State Register and notify each taxpayer by June 1, 2016. If the
73.22rates under this section apply, the combined net receipts of an organization are subject to a
73.23tax computed according to the following schedule:
73.24
73.25
73.26
If the combined net
receipts for the fiscal year
are:
The tax is:
73.27
Not over $87,500
8.5 percent
73.28
73.29
Over $87,500, but not over
$122,500
$7,438 plus 17 percent of the amount
over $87,500, but not over $122,500
73.30
73.31
73.32
Over $122,500, but not
over $157,500
$13,388 plus 25.5 percent of the
amount over $122,500, but not over
$157,500
73.33
73.34
Over $157,500
$22,313 plus 34 percent of the
amount over $157,500
73.35(c) Gross receipts derived from sports-themed tipboards are exempt from taxation
73.36under this section. For purposes of this paragraph, a sports-themed tipboard means a
73.37sports-themed tipboard as defined in section 349.12, subdivision 34, under which the
73.38winning numbers are determined by the numerical outcome of a professional sporting event.
73.39(d) If an organization conducts lawful gambling in a location where, as of January 1,
73.402013, at least 50 percent of its annual gross receipts are derived from paper bingo, the
74.1organization is exempt from taxation under this subdivision with respect to its receipts
74.2from paper pull-tabs.
74.3EFFECTIVE DATE.This section is effective July 1, 2013.

74.4    Sec. 16. Minnesota Statutes 2012, section 297F.01, is amended by adding a subdivision
74.5to read:
74.6    Subd. 9b. Little cigar. "Little cigar" means any roll for smoking made in whole or
74.7in part of tobacco if the product is wrapped in a substance containing tobacco other than
74.8natural leaf tobacco, uses an integrated cellulose acetate or other similar filter, and weighs
74.9not more than 4-1/2 pounds per thousand.
74.10EFFECTIVE DATE.This section is effective July 1, 2013.

74.11    Sec. 17. Minnesota Statutes 2012, section 297F.01, is amended by adding a subdivision
74.12to read:
74.13    Subd. 10b. Moist snuff. "Moist snuff" means any finely cut, ground, or powdered
74.14smokeless tobacco that is intended to be placed or dipped in the mouth.
74.15EFFECTIVE DATE.This section is effective July 1, 2013.

74.16    Sec. 18. Minnesota Statutes 2012, section 297F.01, is amended by adding a subdivision
74.17to read:
74.18    Subd. 13a. Premium cigar. "Premium cigar" means any cigar that is
74.19hand-constructed and hand-rolled, has a wrapper that is made entirely from whole tobacco
74.20leaf, has a filler and binder that is made entirely of tobacco, except for adhesives or other
74.21materials used to maintain size, texture, or flavor, and has a wholesale price of no less
74.22than $2.
74.23EFFECTIVE DATE.This section is effective July 1, 2013.

74.24    Sec. 19. Minnesota Statutes 2012, section 297F.01, subdivision 19, is amended to read:
74.25    Subd. 19. Tobacco products. (a) "Tobacco products" means any product
74.26containing, made, or derived from tobacco that is intended for human consumption,
74.27whether chewed, smoked, absorbed, dissolved, inhaled, snorted, sniffed, or ingested by
74.28any other means, or any component, part, or accessory of a tobacco product, including,
74.29but not limited to, cigars; little cigars; cheroots; stogies; periques; granulated, plug cut,
74.30crimp cut, ready rubbed, and other smoking tobacco; snuff; snuff flour; cavendish; plug
75.1and twist tobacco; fine-cut and other chewing tobacco; shorts; refuse scraps, clippings,
75.2cuttings and sweepings of tobacco, and other kinds and forms of tobacco; but does not
75.3include cigarettes as defined in this section. Tobacco products excludes any tobacco
75.4product that has been approved by the United States Food and Drug Administration for
75.5sale as a tobacco cessation product, as a tobacco dependence product, or for other medical
75.6purposes, and is being marketed and sold solely for such an approved purpose.
75.7(b) Except for the imposition of tax under section 297F.05, subdivisions 3 and 4,
75.8tobacco products includes a premium cigar, as defined in subdivision 13a.
75.9EFFECTIVE DATE.This section is effective July 1, 2013.

75.10    Sec. 20. Minnesota Statutes 2012, section 297F.05, subdivision 1, is amended to read:
75.11    Subdivision 1. Rates; cigarettes. A tax is imposed upon the sale of cigarettes in
75.12this state, upon having cigarettes in possession in this state with intent to sell, upon any
75.13person engaged in business as a distributor, and upon the use or storage by consumers, at
75.14the following rates:
75.15(1) on cigarettes weighing not more than three pounds per thousand, 24 108.5 mills,
75.16or 10.85 cents, on each such cigarette; and
75.17(2) on cigarettes weighing more than three pounds per thousand, 48 217 mills, or
75.1821.7 cents, on each such cigarette.
75.19EFFECTIVE DATE.This section is effective July 1, 2013.

75.20    Sec. 21. Minnesota Statutes 2012, section 297F.05, is amended by adding a subdivision
75.21to read:
75.22    Subd. 1a. Annual indexing. (a) Each year the commissioner shall adjust the
75.23tax rates under subdivision 1, including any adjustment made in prior years under this
75.24subdivision, by multiplying the mill rates for the current calendar year by an adjustment
75.25factor. The adjustment factor equals the in-lieu sales tax rate that applies to the following
75.26calendar year divided by the in-lieu sales tax rate for the current calendar year. For
75.27purposes of this subdivision, "in-lieu sales tax rate" means the tax rate established under
75.28section 297F.25, subdivision 1, rounded to 1/100 of one cent per cigarette.
75.29    (b) The commissioner shall publish the resulting rate by November 1 and the rate
75.30applies to sales made on or after January 1 of the following year.
75.31(c) The determination of the commissioner under this subdivision is not a rule and is
75.32not subject to the Administrative Procedure Act in chapter 14.
75.33EFFECTIVE DATE.This section is effective July 1, 2013.

76.1    Sec. 22. Minnesota Statutes 2012, section 297F.05, subdivision 3, is amended to read:
76.2    Subd. 3. Rates; tobacco products. (a) Except as provided in subdivision 3a, a tax is
76.3imposed upon all tobacco products in this state and upon any person engaged in business
76.4as a distributor, at the rate of 35 90 percent of the wholesale sales price of the tobacco
76.5products. The tax is imposed at the time the distributor:
76.6(1) brings, or causes to be brought, into this state from outside the state tobacco
76.7products for sale;
76.8(2) makes, manufactures, or fabricates tobacco products in this state for sale in
76.9this state; or
76.10(3) ships or transports tobacco products to retailers in this state, to be sold by those
76.11retailers.
76.12(b) Notwithstanding paragraph (a), a minimum tax equal to the rate imposed on a pack
76.13of 20 cigarettes weighing not more than three pounds per thousand, as established under
76.14subdivision 1, and adjusted by subdivision 1a, is imposed on each container of moist snuff.
76.15For purposes of this subdivision, a "container" means the smallest consumer-size can,
76.16package, or other container that is marketed or packaged by the manufacturer, distributor,
76.17or retailer for separate sale to a retail purchaser.
76.18(c) Notwithstanding paragraph (a), for little cigars, the tax on each little cigar shall
76.19be equal to the tax imposed per cigarette under subdivision 1, clause (1), and adjusted by
76.20subdivision 1a, and any successor provision taxing cigarettes.
76.21EFFECTIVE DATE.This section is effective July 1, 2013, except the minimum
76.22tax under paragraph (b) is effective January 1, 2014.

76.23    Sec. 23. Minnesota Statutes 2012, section 297F.05, is amended by adding a subdivision
76.24to read:
76.25    Subd. 3a. Rates; tobacco. (a) A tax is imposed upon all premium cigars in this state
76.26and upon any person engaged in business as a tobacco product distributor, at the lesser of:
76.27(1) the rate of 70 percent of the wholesale sales price of the premium cigars; or
76.28(2) $3.50 per premium cigar.
76.29(b) The tax imposed under paragraph (a) is imposed at the time the tobacco products
76.30distributor:
76.31(1) brings, or causes to be brought, into this state from outside the state premium
76.32cigars for sale;
76.33(2) makes, manufactures, or fabricates premium cigars in this state for sale in this
76.34state; or
77.1(3) ships or transports premium cigars to retailers in this state, to be sold by those
77.2retailers.
77.3EFFECTIVE DATE.This section is effective July 1, 2013.

77.4    Sec. 24. Minnesota Statutes 2012, section 297F.05, subdivision 4, is amended to read:
77.5    Subd. 4. Use tax; tobacco products. (a) Except as provided in subdivision 4a, a tax
77.6is imposed upon the use or storage by consumers of tobacco products in this state, and
77.7upon such consumers, at the rate of 35 90 percent of the cost to the consumer of the tobacco
77.8products or the minimum tax under subdivision 3, paragraph (b), whichever is greater.
77.9(b) Notwithstanding paragraph (a), for little cigars, the tax on each little cigar
77.10shall be equal to the tax imposed per cigarette under subdivision 1, clause (1), and any
77.11successor provision taxing cigarettes.
77.12EFFECTIVE DATE.This section is effective July 1, 2013.

77.13    Sec. 25. Minnesota Statutes 2012, section 297F.05, is amended by adding a subdivision
77.14to read:
77.15    Subd. 4a. Use tax; premium cigars. A tax is imposed upon the use or storage by
77.16consumers of all premium cigars in this state, and upon such consumers, at the lesser of:
77.17(1) the rate of 70 percent of the cost to the consumer of the premium cigars; or
77.18(2) $3.50 per premium cigar.
77.19EFFECTIVE DATE.This section is effective July 1, 2013.

77.20    Sec. 26. Minnesota Statutes 2012, section 297F.24, subdivision 1, is amended to read:
77.21    Subdivision 1. Fee imposed. (a) A fee is imposed upon the sale of nonsettlement
77.22cigarettes in this state, upon having nonsettlement cigarettes in possession in this state
77.23with intent to sell, upon any person engaged in business as a distributor, and upon the use
77.24or storage by consumers of nonsettlement cigarettes. The fee equals a rate of 1.75 2.5
77.25cents per cigarette.
77.26(b) The purpose of this fee is to:
77.27(1) ensure that manufacturers of nonsettlement cigarettes pay fees to the state that
77.28are comparable to costs attributable to the use of the cigarettes;
77.29(2) prevent manufacturers of nonsettlement cigarettes from undermining the state's
77.30policy of discouraging underage smoking by offering nonsettlement cigarettes at prices
77.31substantially below the cigarettes of other manufacturers; and
77.32(3) fund such other purposes as the legislature determines appropriate.

78.1    Sec. 27. Minnesota Statutes 2012, section 297F.25, subdivision 1, is amended to read:
78.2    Subdivision 1. Imposition. (a) A tax is imposed on distributors on the sale of
78.3cigarettes by a cigarette distributor to a retailer or cigarette subjobber for resale in this
78.4state. The tax is equal to 6.5 percent of the weighted average retail price and must be
78.5expressed in cents per pack rounded to the nearest one-tenth of a cent. The weighted
78.6average retail price must be determined annually, with new rates published by November
78.71, and effective for sales on or after January 1 of the following year. The weighted average
78.8retail price must be established by surveying cigarette retailers statewide in a manner
78.9and time determined by the commissioner. The commissioner shall make an inflation
78.10adjustment in accordance with the Consumer Price Index for all urban consumers inflation
78.11indicator as published in the most recent state budget forecast. The commissioner shall use
78.12the inflation factor for the calendar year in which the new tax rate takes effect. If the survey
78.13indicates that the average retail price of cigarettes has not increased relative to the average
78.14retail price in the previous year's survey, then the commissioner shall not make an inflation
78.15adjustment. The determination of the commissioner pursuant to this subdivision is not a
78.16"rule" and is not subject to the Administrative Procedure Act contained in chapter 14. For
78.17packs of cigarettes with other than 20 cigarettes, the tax must be adjusted proportionally.
78.18(b) Notwithstanding paragraph (a), and in lieu of a survey of cigarette retailers, the
78.19tax calculation of the weighted average retail price for the sales of cigarettes from August
78.201, 2011, through December 31, 2011, shall be calculated by: (1) increasing the average
78.21retail price per pack of 20 cigarettes from the most recent survey by the percentage change
78.22in a weighted average of the presumed legal prices for cigarettes during the year after
78.23completion of that survey, as reported and published by the Department of Commerce
78.24under section 325D.371; (2) subtracting the sales tax included in the retail price; and (3)
78.25adjusting for expected inflation. The rate must be published by May 1 and is effective for
78.26sales after July 31. If the weighted average of the presumed legal prices indicates that the
78.27average retail price of cigarettes has not increased relative to the average retail price in the
78.28most recent survey, then no inflation adjustment must be made for any period that a rate
78.29change in section 297F.05, subdivision 1, is enacted after the current effective January 1
78.30rate and prior to the following January 1, the commissioner of revenue shall make a
78.31proportionate adjustment to the sales tax rate. For packs of cigarettes with other than 20
78.32cigarettes, the sales tax must be adjusted proportionally.
78.33EFFECTIVE DATE.This section is effective July 1, 2013.

78.34    Sec. 28. Minnesota Statutes 2012, section 325F.781, subdivision 1, is amended to read:
79.1    Subdivision 1. Definitions. (a) For purposes of this section, the following terms
79.2have the meanings given, unless the language or context clearly provides otherwise.
79.3(b) "Consumer" means an individual who purchases, receives, or possesses tobacco
79.4products for personal consumption and not for resale.
79.5(c) "Delivery sale" means:
79.6(1) a sale of tobacco products to a consumer in this state when:
79.7(i) the purchaser submits the order for the sale by means of a telephonic or other
79.8method of voice transmission, the mail or any other delivery service, or the Internet or
79.9other online service; or
79.10(ii) the tobacco products are delivered by use of the mail or other delivery service; or
79.11(2) a sale of tobacco products that satisfies the criteria in clause (1), item (i),
79.12regardless of whether the seller is located inside or outside of the state.
79.13A sale of tobacco products to an individual in this state must be treated as a sale to a
79.14consumer, unless the individual is licensed as a distributor or retailer of tobacco products.
79.15(d) "Delivery service" means a person, including the United States Postal Service,
79.16that is engaged in the commercial delivery of letters, packages, or other containers.
79.17(e) "Distributor" means a person, whether located inside or outside of this state,
79.18other than a retailer, who sells or distributes tobacco products in the state. Distributor does
79.19not include a tobacco products manufacturer, export warehouse proprietor, or importer
79.20with a valid permit under United States Code, title 26, section 5712 (1997), if the person
79.21sells or distributes tobacco products in this state only to distributors who hold valid and
79.22current licenses under the laws of a state, or to an export warehouse proprietor or another
79.23manufacturer. Distributor does not include a common or contract carrier that is transporting
79.24tobacco products under a proper bill of lading or freight bill that states the quantity, source,
79.25and destination of tobacco products, or a person who ships tobacco products through this
79.26state by common or contract carrier under a bill of lading or freight bill.
79.27(f) "Retailer" means a person, whether located inside or outside this state, who sells
79.28or distributes tobacco products to a consumer in this state.
79.29(g) "Tobacco products" means:
79.30(1) cigarettes, as defined in section 297F.01, subdivision 3; and
79.31(2) smokeless tobacco as defined in section 325F.76.; and
79.32(3) premium cigars as defined in section 297F.01, subdivision 13a.
79.33EFFECTIVE DATE.This section is effective July 1, 2013.

80.1    Sec. 29. Minnesota Statutes 2012, section 349.166, is amended to read:
80.2349.166 EXCLUSIONS; EXEMPTIONS.
80.3    Subdivision 1. Exclusions. (a) Bingo, with the exception of linked bingo games, may
80.4be conducted without a license and without complying with sections 349.168, subdivisions
80.51 and 2; 349.17, subdivisions 4 and 5; 349.18, subdivision 1; and 349.19, if it is conducted:
80.6(1) by an organization in connection with a county fair, the state fair, or a civic
80.7celebration and is not conducted for more than 12 consecutive days and is limited to no more
80.8than four separate applications for activities applied for and approved in a calendar year; or
80.9(2) by an organization that conducts bingo on four or fewer days in a calendar year.
80.10An organization that holds a license to conduct lawful gambling under this chapter
80.11may not conduct bingo under this subdivision.
80.12(b) Bingo may be conducted within a nursing home or a senior citizen housing
80.13project or by a senior citizen organization if the prizes for a single bingo game do not
80.14exceed $10, total prizes awarded at a single bingo occasion do not exceed $200, no more
80.15than two bingo occasions are held by the organization or at the facility each week, only
80.16members of the organization or residents of the nursing home or housing project are
80.17allowed to play in a bingo game, no compensation is paid for any persons who conduct the
80.18bingo, and a manager is appointed to supervise the bingo. Bingo conducted under this
80.19paragraph is exempt from sections 349.11 to 349.23, and the board may not require an
80.20organization that conducts bingo under this paragraph, or the manager who supervises the
80.21bingo, to register or file a report with the board. The gross receipts from bingo conducted
80.22under the limitations of this subdivision are exempt from taxation under chapter 297A.
80.23(c) Raffles may be conducted by an organization without registering with the board
80.24if the value of all raffle prizes awarded by the organization in a calendar year does not
80.25exceed $1,500 or, if the organization is a 501(c)(3) organization, if the value of all raffle
80.26prizes awarded by the organization in a calendar year does not exceed $50,000.
80.27(d) Except as provided in paragraph (b), the organization must maintain all required
80.28records of excluded gambling activity for 3-1/2 years.
80.29    Subd. 2. Exemptions. (a) Lawful gambling, with the exception of linked bingo
80.30games, may be conducted by an organization without a license and without complying
80.31with sections 349.168, subdivisions 1 and 2; 349.17, subdivision 4; 349.18, subdivision 1;
80.32and 349.19 if:
80.33(1) the organization conducts lawful gambling on five or fewer days in a calendar year;
80.34(2) the organization does not award more than $50,000 in prizes for lawful gambling
80.35in a calendar year;
81.1(3) (2) the organization submits a board-prescribed application and pays a fee of
81.2$50 to the board for each gambling occasion, and receives an exempt permit number
81.3from the board. If the application is postmarked or received less than 30 days before the
81.4gambling occasion, the fee is $100 for that application. The application must include the
81.5date and location of the occasion, the types of lawful gambling to be conducted, and
81.6the prizes to be awarded;
81.7(4) (3) the organization notifies the local government unit 30 days before the lawful
81.8gambling occasion, or 60 days for an occasion held in a city of the first class;
81.9(5) (4) the organization purchases all gambling equipment and supplies from a
81.10licensed distributor; and
81.11(6) (5) the organization reports to the board, on a single-page form prescribed by
81.12the board, within 30 days of each gambling occasion, the gross receipts, prizes, expenses,
81.13expenditures of net profits from the occasion, and the identification of the licensed
81.14distributor from whom all gambling equipment was purchased.
81.15(b) If the organization fails to file a timely report as required by paragraph (a), clause
81.16(6), the board shall not issue any authorization, license, or permit to the organization to
81.17conduct lawful gambling on an exempt, excluded, or licensed basis until the report has
81.18been filed and the organization may be subject to penalty as determined by the board. The
81.19board may refuse to issue any authorization, license, or permit if a report or application is
81.20determined to be incomplete or knowingly contains false or inaccurate information.
81.21(c) Merchandise prizes must be valued at their fair market value.
81.22(d) Organizations that qualify to conduct exempt raffles under paragraph (a), are
81.23exempt from section 349.173, paragraph (b), clause (2), if the raffle tickets are sold
81.24only in combination with an organization's membership or a ticket for an organization's
81.25membership dinner and are not included with any other raffle conducted under the exempt
81.26permit.
81.27(e) Unused pull-tab and tipboard deals must be returned to the distributor within
81.28seven working days after the end of the lawful gambling occasion. The distributor must
81.29accept and pay a refund for all returns of unopened and undamaged deals returned under
81.30this paragraph.
81.31(f) The organization must maintain all required records of exempt gambling activity
81.32for 3-1/2 years.
81.33EFFECTIVE DATE.This section is effective July 1, 2013.

82.1    Sec. 30. Minnesota Statutes 2012, section 360.531, is amended to read:
82.2360.531 TAXATION.
82.3    Subdivision 1. In lieu tax. All aircraft using the air space overlying the state of
82.4Minnesota or the airports thereof, except as set forth in section 360.55, shall be taxed in
82.5lieu of all other taxes thereon, on the basis and at the rate for the period January 1, 1966, to
82.6June 30, 1967, and for each fiscal year as follows.
82.7    Subd. 2. Rate. The tax shall be at the rate of one percent of value; provided that
82.8the minimum tax on an aircraft subject to the provisions of sections 360.511 to 360.67
82.9 shall not be less than 25 percent of the tax on said aircraft computed on its base price or
82.10$50 whichever is the higher. as follows:
82.11
Base Price
Tax
82.12
Under $499,999
$100
82.13
$500,000 to $999,999
$200
82.14
$1,000,000 to $2,499,999
$2,000
82.15
$2,500,000 to $4,999,999
$4,000
82.16
$5,000,000 to $7,499,999
$7,500
82.17
$7,500,000 to $9,999,999
$10,000
82.18
$10,000,000 to $12,499,999
$12,500
82.19
$12,500,000 to $14,999,999
$15,000
82.20
$15,000,000 to $17,499,999
$17,500
82.21
$17,500,000 to $19,999,999
$20,000
82.22
$20,000,000 to $22,499,999
$22,500
82.23
$22,500,000 to $24,999,999
$25,000
82.24
$25,000,000 to $27,499,999
$27,500
82.25
$27,500,000 to $29,999,999
$30,000
82.26
$30,000,000 to $39,999,999
$50,000
82.27
$40,000,000 and over
$75,000
82.28    Subd. 3. First year of life. "First year of life" means the year the aircraft was
82.29manufactured.
82.30    Subd. 4. Base price for taxation. For the purpose of fixing a base price for taxation
82.31from which depreciation in value at a fixed percent per annum can be counted, such , the
82.32base price is defined as follows:
82.33(a) The base price for taxation of an aircraft shall be the manufacturer's list price.
82.34(b) The commissioner shall have authority to fix the base value for taxation purposes
82.35of any aircraft of which no such similar or corresponding model has been manufactured,
82.36and of any rebuilt or foreign aircraft, any aircraft on which a record of the list price is not
82.37available, or any military aircraft converted for civilian use, using as a basis for such
83.1valuation the list price of aircraft with comparable performance characteristics, and taking
83.2into consideration the age and condition of the aircraft.
83.3    Subd. 5. Similarity of corresponding model. Models shall be deemed similar if
83.4substantially alike and of the same make. Models shall be deemed to be corresponding
83.5models for the purpose of taxation under sections 360.54 to 360.67 if of the same make
83.6and having approximately the same weight and type of frame and the same style and
83.7size of motor.
83.8    Subd. 6. Depreciation. After the first year of aircraft life the base value for taxation
83.9purposes shall be reduced as follows: ten percent the second year, and 15 percent the third
83.10and each succeeding year thereafter, but in no event shall such tax be reduced below
83.11the minimum.
83.12    Subd. 7. Prorating tax. When an aircraft first becomes subject to taxation during the
83.13period for which the tax is to be paid, the tax on it shall be for the remainder of that period,
83.14prorated on a monthly basis of 1/12 of the annual tax for each calendar month counting the
83.15month during which it becomes subject to the tax as the first month of such period.
83.16    Subd. 8. Tax, fiscal year. Every aircraft subject to the provisions of sections
83.17360.511 to 360.67 which has at any time since April 19, 1945, used the air space overlying
83.18the state of Minnesota or the airports thereof shall be taxed for the period from January 1,
83.191966, through June 30, 1967, and for each fiscal year thereafter in which it is so used. Any
83.20aircraft which does not use the air space overlying the state of Minnesota or the airports
83.21thereof at any time during the period of January 1, 1966, to and including June 30, 1967,
83.22or at any time during any fiscal year thereafter shall not be subject to the tax provided by
83.23sections 360.511 to 360.67 for such period. Rebuilt aircraft shall be subject to the tax
83.24provided by sections 360.511 to 360.67 for that portion of the aforesaid periods remaining
83.25after the aircraft has been rebuilt, prorated on a monthly basis.
83.26    Subd. 9. Assessed as personal property in certain cases. Aircraft subject to
83.27taxation under the provisions of sections 360.54 to 360.67 shall not be assessed as personal
83.28property and shall be subject to no tax except as provided for by these sections. Aircraft
83.29not subject to taxation as provided in these sections, but subject to taxation as personal
83.30property within the state of Minnesota shall be assessed and valued at 33-1/3 percent of
83.31the market value thereof and taxed at the rate and in the manner provided by law for the
83.32taxation of ordinary personal property. If the person against whom any tax has been levied
83.33on the ad valorem basis because of any aircraft shall, during the calendar year for which
83.34such ad valorem tax is levied, be also taxed under provisions of these sections, then and in
83.35that event, upon proper showing, the commissioner of revenue shall grant to the person
83.36against whom said ad valorem tax was levied, such reduction or abatement of net tax
84.1capacity or taxes as was occasioned by the so-called ad valorem tax imposed. If the ad
84.2valorem tax upon any aircraft has been assessed against a dealer in new and used aircraft,
84.3and the tax imposed by these sections for the required period is thereafter paid by the
84.4owner, then and in that event, upon proper showing, the commissioner of revenue, upon
84.5the application of said dealer, shall grant to such dealer against whom said ad valorem tax
84.6was levied such reduction or abatement of net tax capacity or taxes as was occasioned
84.7by the so-called ad valorem tax imposed.
84.8EFFECTIVE DATE.This section is effective July 1, 2014, and applies to aircraft
84.9tax due on or after that date.

84.10    Sec. 31. Minnesota Statutes 2012, section 360.66, is amended to read:
84.11360.66 STATE AIRPORTS FUND.
84.12    Subdivision 1. Tax credited to fund. The proceeds of the tax imposed on aircraft
84.13under sections 360.54 360.531 to 360.67 and all fees and penalties provided for therein
84.14shall be collected by the commissioner and paid into the state treasury and credited to the
84.15state airports fund created by other statutes of this state.
84.16    Subd. 2. Reimbursement for expenses. There shall be transferred by the
84.17commissioner of management and budget each year from the state airports fund to the
84.18general fund in the state treasury the amount expended from the latter fund for expenses of
84.19administering the provisions of sections 360.54 360.531 to 360.67.
84.20EFFECTIVE DATE.This section is effective July 1, 2014, and applies to aircraft
84.21tax due on or after that date.

84.22    Sec. 32. Minnesota Statutes 2012, section 383A.80, subdivision 4, is amended to read:
84.23    Subd. 4. Expiration. The authority to impose the tax under this section expires
84.24January 1, 2013 2023.
84.25EFFECTIVE DATE.This section is effective for all deeds and mortgages
84.26acknowledged on or after July 1, 2013.

84.27    Sec. 33. Minnesota Statutes 2012, section 383B.80, subdivision 4, is amended to read:
84.28    Subd. 4. Expiration. The authority to impose the tax under this section expires
84.29January 1, 2013 2023.
84.30EFFECTIVE DATE.This section is effective for all deeds and mortgages
84.31acknowledged on or after July 1, 2013.

85.1    Sec. 34. Minnesota Statutes 2012, section 403.02, is amended by adding a subdivision
85.2to read:
85.3    Subd. 17b. Prepaid wireless telecommunications service. "Prepaid wireless
85.4telecommunications service" means a wireless telecommunications service that allows the
85.5caller to dial 911 to access the 911 system, which service must be paid for in advance and is:
85.6(1) sold in predetermined units or dollars of which the number declines with use in a
85.7known amount; or
85.8(2) provides unlimited use for a predetermined time period.
85.9The inclusion of nontelecommunications services, including the download of digital
85.10products delivered electronically, content, and ancillary services, with a prepaid wireless
85.11telephone service does not preclude that service from being considered a prepaid wireless
85.12telephone service under this chapter.
85.13EFFECTIVE DATE.This section is effective January 1, 2014.

85.14    Sec. 35. Minnesota Statutes 2012, section 403.02, is amended by adding a subdivision
85.15to read:
85.16    Subd. 20a. Wireless telecommunications service. "Wireless telecommunications
85.17service" means a commercial mobile radio service, as that term is defined in United
85.18States Code, title 47, section 332, subsection (d), including all broadband personal
85.19communication services, wireless radio telephone services, and geographic area
85.20specialized mobile radio licensees, that offer real-time, two-way voice service
85.21interconnected with the public switched telephone network.
85.22EFFECTIVE DATE.This section is effective January 1, 2014.

85.23    Sec. 36. Minnesota Statutes 2012, section 403.02, subdivision 21, is amended to read:
85.24    Subd. 21. Wireless telecommunications service provider. "Wireless
85.25telecommunications service provider" means a provider of commercial mobile radio
85.26services, as that term is defined in United States Code, title 47, section 332, subsection
85.27(d), including all broadband personal communications services, wireless radio telephone
85.28services, geographic area specialized and enhanced specialized mobile radio services, and
85.29incumbent wide area specialized mobile radio licensees, that offers real-time, two-way
85.30voice service interconnected with the public switched telephone network and that is doing
85.31business in the state of Minnesota wireless telecommunications service.
85.32EFFECTIVE DATE.This section is effective January 1, 2014.

86.1    Sec. 37. Minnesota Statutes 2012, section 403.06, subdivision 1a, is amended to read:
86.2    Subd. 1a. Biennial budget; annual financial report. The commissioner shall
86.3prepare a biennial budget for maintaining the 911 system. By December 15 of each year,
86.4the commissioner shall submit a report to the legislature detailing the expenditures for
86.5maintaining the 911 system, the 911 fees collected, the balance of the 911 fund, and the
86.6911-related administrative expenses of the commissioner, and of a separate accounting
86.7of E911 fees from prepaid wireless customers. The commissioner is authorized to
86.8expend money that has been appropriated to pay for the maintenance, enhancements,
86.9and expansion of the 911 system.
86.10EFFECTIVE DATE.This section is effective January 1, 2014.

86.11    Sec. 38. Minnesota Statutes 2012, section 403.11, subdivision 1, is amended to read:
86.12    Subdivision 1. Emergency telecommunications service fee; account. (a) Each
86.13customer of a wireless or wire-line switched or packet-based telecommunications service
86.14provider connected to the public switched telephone network that furnishes service capable
86.15of originating a 911 emergency telephone call is assessed a fee based upon the number
86.16of wired or wireless telephone lines, or their equivalent, to cover the costs of ongoing
86.17maintenance and related improvements for trunking and central office switching equipment
86.18for 911 emergency telecommunications service, to offset administrative and staffing costs
86.19of the commissioner related to managing the 911 emergency telecommunications service
86.20program, to make distributions provided for in section 403.113, and to offset the costs,
86.21including administrative and staffing costs, incurred by the State Patrol Division of the
86.22Department of Public Safety in handling 911 emergency calls made from wireless phones.
86.23    (b) Money remaining in the 911 emergency telecommunications service account
86.24after all other obligations are paid must not cancel and is carried forward to subsequent
86.25years and may be appropriated from time to time to the commissioner to provide financial
86.26assistance to counties for the improvement of local emergency telecommunications
86.27services. The improvements may include providing access to 911 service for
86.28telecommunications service subscribers currently without access and upgrading existing
86.29911 service to include automatic number identification, local location identification,
86.30automatic location identification, and other improvements specified in revised county
86.31911 plans approved by the commissioner.
86.32    (c) The fee may not be less than eight cents nor more than 65 cents a month until
86.33June 30, 2008, not less than eight cents nor more than 75 cents a month until June 30,
86.342009, not less than eight cents nor more than 85 cents a month until June 30, 2010, and
86.35not less than eight cents nor more than 95 cents a month on or after July 1, 2010, for
87.1each customer access line or other basic access service, including trunk equivalents as
87.2designated by the Public Utilities Commission for access charge purposes and including
87.3wireless telecommunications services. With the approval of the commissioner of
87.4management and budget, the commissioner of public safety shall establish the amount of
87.5the fee within the limits specified and inform the companies and carriers of the amount to
87.6be collected. When the revenue bonds authorized under section 403.27, subdivision 1,
87.7have been fully paid or defeased, the commissioner shall reduce the fee to reflect that debt
87.8service on the bonds is no longer needed. The commissioner shall provide companies and
87.9carriers a minimum of 45 days' notice of each fee change. The fee must be the same for all
87.10customers, except that the fee imposed under this subdivision does not apply to prepaid
87.11wireless telecommunications service, which is instead subject to the fee imposed under
87.12section 403.161, subdivision 1, paragraph (a).
87.13    (d) The fee must be collected by each wireless or wire-line telecommunications
87.14service provider subject to the fee. Fees are payable to and must be submitted to the
87.15commissioner monthly before the 25th of each month following the month of collection,
87.16except that fees may be submitted quarterly if less than $250 a month is due, or annually if
87.17less than $25 a month is due. Receipts must be deposited in the state treasury and credited
87.18to a 911 emergency telecommunications service account in the special revenue fund. The
87.19money in the account may only be used for 911 telecommunications services.
87.20    (e) This subdivision does not apply to customers of interexchange carriers.
87.21    (f) The installation and recurring charges for integrating wireless 911 calls into
87.22enhanced 911 systems are eligible for payment by the commissioner if the 911 service
87.23provider is included in the statewide design plan and the charges are made pursuant to
87.24contract.
87.25    (g) Competitive local exchanges carriers holding certificates of authority from the
87.26Public Utilities Commission are eligible to receive payment for recurring 911 services.
87.27EFFECTIVE DATE.This section is effective January 1, 2014.

87.28    Sec. 39. Minnesota Statutes 2012, section 403.11, is amended by adding a subdivision
87.29to read:
87.30    Subd. 6. Report. (a) Beginning September 1, 2013, and continuing semiannually
87.31thereafter, each wireless telecommunications service provider shall report to the
87.32commissioner, based on the mobile telephone number, both the total number of prepaid
87.33wireless telecommunications subscribers sourced to Minnesota and the total number of
87.34wireless telecommunications subscribers sourced to Minnesota. The report must be filed
87.35on the same schedule as Federal Communications Commission Form 477.
88.1(b) The commissioner shall make a standard form available to all wireless
88.2telecommunications service providers for submitting information required to compile
88.3the report required under this subdivision.
88.4(c) The information provided to the commissioner under this subdivision is
88.5considered trade secret data under section 13.37 and may only be used for purposes of
88.6administering this chapter.
88.7EFFECTIVE DATE.This section is effective the day following final enactment.

88.8    Sec. 40. [403.16] DEFINITIONS.
88.9    Subdivision 1. Scope. For the purposes of sections 403.16 to 403.164, the terms
88.10defined in this section have the meanings given them.
88.11    Subd. 2. Consumer. "Consumer" means a person who purchases prepaid wireless
88.12telecommunications service in a retail transaction.
88.13    Subd. 3. Department. "Department" means the Department of Revenue.
88.14    Subd. 4. Prepaid wireless E911 fee. "Prepaid wireless E911 fee" means the fee that
88.15is required to be collected by a seller from a consumer as established in section 403.161,
88.16subdivision 1, paragraph (a).
88.17    Subd. 5. Prepaid wireless telecommunications access Minnesota fee. "Prepaid
88.18wireless telecommunications access Minnesota fee" means the fee that is required to be
88.19collected by a seller from a consumer as established in section 403.161, subdivision 1,
88.20paragraph (b).
88.21    Subd. 6. Provider. "Provider" means a person that provides prepaid wireless
88.22telecommunications service under a license issued by the Federal Communications
88.23Commission.
88.24    Subd. 7. Retail transaction. "Retail transaction" means the purchase of prepaid
88.25wireless telecommunications service from a seller for any purpose other than resale.
88.26    Subd. 8. Seller. "Seller" means a person who sells prepaid wireless
88.27telecommunications service to another person.
88.28EFFECTIVE DATE.This section is effective the day following final enactment.

88.29    Sec. 41. [403.161] PREPAID WIRELESS FEES IMPOSED; COLLECTION;
88.30REMITTANCE.
88.31    Subdivision 1. Fees imposed. (a) A prepaid wireless E911 fee of 80 cents per retail
88.32transaction is imposed on prepaid wireless telecommunications service until the fee is
88.33adjusted as an amount per retail transaction under subdivision 6.
89.1(b) A prepaid wireless telecommunications access Minnesota fee, in the amount of
89.2the monthly charge provided for in section 237.52, subdivision 2, is imposed on each
89.3retail transaction for prepaid wireless telecommunications service until the fee is adjusted
89.4as an amount per retail transaction under subdivision 6.
89.5    Subd. 2. Exemption. The fees established under subdivision 1 are not imposed on a
89.6minimal amount of prepaid wireless telecommunications service that is sold with a prepaid
89.7wireless device and is charged a single nonitemized price, and a seller may not apply the
89.8fees to such a transaction. For purposes of this subdivision, a minimal amount of service
89.9means an amount of service denominated as either ten minutes or less or $5 or less.
89.10    Subd. 3. Fee collected. The prepaid wireless E911 and telecommunications
89.11access Minnesota fees must be collected by the seller from the consumer for each retail
89.12transaction occurring in this state. The amount of each fee must be combined into one
89.13amount, which must be separately stated on an invoice, receipt, or other similar document
89.14that is provided to the consumer by the seller, or otherwise disclosed to the consumer.
89.15    Subd. 4. Sales and use tax treatment. For purposes of this section, a retail
89.16transaction conducted in person by a consumer at a business location of the seller must
89.17be treated as occurring in this state if that business location is in this state, and any other
89.18retail transaction must be treated as occurring in this state if the retail transaction is treated
89.19as occurring in this state for purposes of the sales and use tax as specified in section
89.20297A.669, subdivision 3, paragraph (c).
89.21    Subd. 5. Remittance. The prepaid wireless E911 and telecommunications access
89.22Minnesota fees are the liability of the consumer and not of the seller or of any provider,
89.23except that the seller is liable to remit all fees that the seller collects from consumers as
89.24provided in section 403.162, including all fees that the seller is deemed to collect in which
89.25the amount of the fee has not been separately stated on an invoice, receipt, or other similar
89.26document provided to the consumer by the seller.
89.27    Subd. 6. Exclusion for calculating other charges. The combined amount of the
89.28prepaid wireless E911 and telecommunications access Minnesota fees collected by a seller
89.29from a consumer must not be included in the base for measuring any tax, fee, surcharge,
89.30or other charge that is imposed by this state, any political subdivision of this state, or
89.31any intergovernmental agency.
89.32    Subd. 7. Fee changes. (a) The prepaid wireless E911 and telecommunications
89.33access Minnesota fee must be proportionately increased or reduced upon any change to
89.34the fee imposed under section 403.11, subdivision 1, paragraph (c), after July 1, 2013, or
89.35the fee imposed under section 237.52, subdivision 2, as applicable.
90.1(b) The department shall post notice of any fee changes on its Web site at least 30
90.2days in advance of the effective date of the fee changes. It is the responsibility of sellers to
90.3monitor the department's Web site for notice of fee changes.
90.4(c) Fee changes are effective 60 days after the first day of the first calendar month
90.5after the commissioner of public safety or the Public Utilities Commission, as applicable,
90.6changes the fee.
90.7EFFECTIVE DATE.This section is effective January 1, 2014.

90.8    Sec. 42. [403.162] ADMINISTRATION OF PREPAID WIRELESS E911 FEES.
90.9    Subdivision 1. Remittance. Prepaid wireless E911 and telecommunications access
90.10Minnesota fees collected by sellers must be remitted to the commissioner of revenue
90.11at the times and in the manner provided by chapter 297A with respect to the general
90.12sales and use tax. The commissioner of revenue shall establish registration and payment
90.13procedures that substantially coincide with the registration and payment procedures that
90.14apply in chapter 297A.
90.15    Subd. 2. Seller's fee retention. A seller may deduct and retain three percent of
90.16prepaid wireless E911 and telecommunications access Minnesota fees collected by the
90.17seller from consumers.
90.18    Subd. 3. Audit; appeal. The audit and appeal procedures applicable under chapter
90.19297A apply to any fee imposed under section 403.161.
90.20    Subd. 4. Procedures for resale transactions. The commissioner of revenue shall
90.21establish procedures by which a seller of prepaid wireless telecommunications service
90.22may document that a sale is not a retail transaction. These procedures must substantially
90.23coincide with the procedures for documenting sale for resale transactions as provided in
90.24chapter 297A.
90.25    Subd. 5. Fees deposited. (a) The commissioner of revenue shall, based on
90.26the relative proportion of the prepaid wireless E911 fee and the prepaid wireless
90.27telecommunications access Minnesota fee imposed per retail transaction, divide the fees
90.28collected in corresponding proportions. Within 30 days of receipt of the collected fees,
90.29the commissioner shall:
90.30(1) deposit the proportion of the collected fees attributable to the prepaid wireless
90.31E911 fee in the 911 emergency telecommunications service account in the special revenue
90.32fund; and
90.33(2) deposit the proportion of collected fees attributable to the prepaid wireless
90.34telecommunications access Minnesota fee in the telecommunications access fund
90.35established in section 237.52, subdivision 1.
91.1(b) The department may deduct and retain an amount, not to exceed two percent of
91.2collected fees, to reimburse its direct costs of administering the collection and remittance
91.3of prepaid wireless E911 fees and prepaid wireless telecommunications access Minnesota
91.4fees.
91.5EFFECTIVE DATE.This section is effective January 1, 2014.

91.6    Sec. 43. [403.163] LIABILITY PROTECTION FOR SELLERS AND
91.7PROVIDERS.
91.8(a) A provider or seller of prepaid wireless telecommunications service is not liable
91.9for damages to any person resulting from or incurred in connection with providing any
91.10lawful assistance in good faith to any investigative or law enforcement officer of the
91.11United States, this or any other state, or any political subdivision of this or any other state.
91.12(b) In addition to the protection from liability provided by paragraphs (a) and (b),
91.13section 403.08, subdivision 11, applies to sellers and providers.
91.14EFFECTIVE DATE.This section is effective January 1, 2014.

91.15    Sec. 44. [403.164] EXCLUSIVITY OF PREPAID WIRELESS E911 FEE.
91.16The prepaid wireless E911 fee imposed by section 403.161 is the only E911 funding
91.17obligation imposed with respect to prepaid wireless telecommunications service in this
91.18state, and no tax, fee, surcharge, or other charge may be imposed by this state, any political
91.19subdivision of this state, or any intergovernmental agency, for E911 funding purposes,
91.20upon any provider, seller, or consumer with respect to the sale, purchase, use, or provision
91.21of prepaid wireless telecommunications service.
91.22EFFECTIVE DATE.This section is effective January 1, 2014.

91.23    Sec. 45. FLOOR STOCKS TAX.
91.24(a) A floor stocks cigarette tax is imposed on every person engaged in the business
91.25in this state as a distributor, retailer, subjobber, vendor, manufacturer, or manufacturer's
91.26representative of cigarettes, on the stamped cigarettes and unaffixed stamps in the person's
91.27possession or under the person's control at 12:01 a.m. on July 1, 2013. The tax is imposed
91.28at the following rates:
91.29(1) on cigarettes weighing not more than three pounds per thousand, 47 mills on
91.30each cigarette; and
91.31(2) on cigarettes weighing more than three pounds per thousand, 94 mills on each
91.32cigarette.
92.1(b) Each distributor, on or before July 10, 2013, shall file a return with the
92.2commissioner of revenue, in the form the commissioner prescribes, showing the stamped
92.3cigarettes and unaffixed stamps on hand at 12:01 a.m. on July 1, 2013, and the amount of
92.4tax due on the cigarettes and unaffixed stamps.
92.5(c) Each retailer, subjobber, vendor, manufacturer, or manufacturer's representative,
92.6on or before July 10, 2013, shall file a return with the commissioner of revenue, in the
92.7form the commissioner prescribes, showing the cigarettes on hand at 12:01 a.m. on July 1,
92.82013, and the amount of tax due on the cigarettes.
92.9(d) The tax imposed by this section is due and payable on or before September 4,
92.102013, and after that date bears interest at the rate of one percent per month.
92.11EFFECTIVE DATE.This section is effective July 1, 2013.

92.12    Sec. 46. TAXES AND FEES PAID BY INDIANS AND INDIAN TRIBES.
92.13    Subdivision 1. Health impact fees imposed from 2005 through 2009. (a) The
92.14commissioner of revenue shall recompute all cigarette and tobacco products excise tax
92.15refunds and payments for periods after July 31, 2005, but before January 1, 2010, that
92.16were made to Indian tribes under agreements entered into under Minnesota Statutes,
92.17section 270C.19.
92.18(b) In making the recomputation for each year, the commissioner must (1) use a per
92.19capita amount, as that phrase is used in the agreements, equal to the sum of (i) the average
92.20statewide per capita cigarette and tobacco products excise tax paid during the applicable
92.21state fiscal year plus (ii) the statewide average per capita health impact fee paid on cigarette
92.22and tobacco products during the applicable state fiscal year, and (2) add the health impact
92.23fees collected on cigarettes and tobacco products delivered onto the reservation to the total
92.24cigarette and tobacco products excise tax collected on cigarettes and tobacco products
92.25delivered onto the reservation to determine the tax base to share under the agreements.
92.26(c) The additional payments to each tribe payable under this section are equal to the
92.27amount determined under the recomputation for the tribe minus the amount previously
92.28paid as a cigarette and tobacco products excise tax or health impact fee refund or payment
92.29to the tribe under any agreement entered into under Minnesota Statutes, section 270C.19.
92.30(d) The commissioner shall compute the additional payments required under this
92.31section based on information available to the commissioner. The tribe does not need to
92.32file a claim for payment.
92.33(e) The additional payments under this subdivision must only be paid to a tribe that
92.34has entered into an agreement under Minnesota Statutes, section 270C.19, subdivision 5,
93.1that covers health impact fees imposed on cigarettes and tobacco products delivered onto
93.2the reservation after December 31, 2009.
93.3    Subd. 2. Limited authority to enter into health impact fee agreements. (a)
93.4Notwithstanding Minnesota Statutes, section 270C.19, or any other law, the commissioner
93.5must not enter into any agreement covering health impact fees imposed on cigarettes and
93.6tobacco products sold, purchased, or delivered onto a reservation before January 1, 2010.
93.7(b) Notwithstanding Minnesota Statutes, section 270C.19, or any other law, the
93.8commissioner is not authorized to enter into any agreement covering the health impact
93.9fee imposed on cigarettes and tobacco products sold, purchased, or delivered onto a
93.10reservation after December 31, 2009.
93.11    Subd. 3. Payments to tribes under existing agreements. (a) The commissioner
93.12must not make refunds and payments of health impact fees required under any agreement
93.13entered into under Minnesota Statutes, section 270C.19, subdivision 5, for any period after
93.14the health impact fee has been repealed.
93.15(b) The commissioner must adjust all annual cigarette and tobacco products excise
93.16tax per capita amounts under existing tax agreements entered into under Minnesota
93.17Statutes, section 270C.19, subdivisions 1 and 2, to $95, effective for refunds due for the
93.18quarter ending September 30, 2013. This amount may be changed upon mutual agreement
93.19of the parties to the agreement to more accurately reflect taxes paid on the reservation
93.20by tribal members.
93.21    Subd. 4. Appropriation. An amount necessary to make refunds and payments
93.22under this section is appropriated to the commissioner from the general fund.
93.23EFFECTIVE DATE.This section is effective the day following final enactment,
93.24except that subdivision 2, paragraph (b), is effective January 2, 2014.

93.25    Sec. 47. REPORT.
93.26On or before June 30, 2016, and every four years thereafter, the commissioner of
93.27transportation, in consultation with the commissioner of revenue, shall prepare and submit
93.28to the chairs and ranking minority members of the senate and house of representatives
93.29committees with jurisdiction over transportation policy and budget, a report that identifies
93.30the amount and sources of annual revenues attributable to each type of aviation tax, along
93.31with annual expenditures from the state airports fund, and any other transfers out of the
93.32fund, during the previous four years. The report must include draft legislation for any
93.33recommended statutory changes to ensure the future adequacy of the state airports fund.
94.1EFFECTIVE DATE.This section is effective July 1, 2014, and applies to aircraft
94.2tax due on or after that date.

94.3    Sec. 48. ARMER GRANTS.
94.4$1,500,000 in fiscal year 2014 and $1,500,000 in fiscal year 2015 is appropriated
94.5from the 911 account of the state government special revenue fund to the commissioner of
94.6public safety for grants to counties to reimburse for the sales tax costs associated with
94.7upgrading public safety radio systems prior to January 1, 2013. The commissioner of
94.8public safety shall give preference to counties that did not receive state or federal grants to
94.9upgrade their public safety radio systems. This is a onetime appropriation.
94.10EFFECTIVE DATE.This section is effective January 1, 2014.

94.11    Sec. 49. TOBACCO TAX COLLECTION REPORT.
94.12    Subdivision 1. Report to legislature. (a) The commissioner of revenue shall report
94.13to the 2014 legislature on the tobacco tax collection system, including recommendations
94.14to improve compliance under the excise tax for both cigarettes and other tobacco products.
94.15The purpose of the report is to provide information and guidance to the legislature on
94.16improvements to the tobacco tax collection system to:
94.17(1) provide a unified system of collecting both the cigarette and other tobacco
94.18taxes, regardless of category, size, or shape, that ensures the highest reasonable rates of
94.19tax collection;
94.20(2) discourage tax evasion; and
94.21(3) help to prevent illegal sale of tobacco products, which may make these products
94.22more accessible to youth.
94.23(b) In the report, the commissioner shall:
94.24(1) provide a detailed review of the present excise tax collection and compliance
94.25system as it applies to both cigarettes and other tobacco products. This must include
94.26an assessment of the levels of compliance for each category of products and the effect
94.27of the stamping requirement on compliance for each category of products and the effect
94.28of the stamping requirement on compliance rates for cigarettes relative to other tobacco
94.29products. It also must identify any weaknesses in the system;
94.30(2) survey the methods of collection and enforcement used by other states or nations,
94.31including identifying and discussing emerging best practices that ensure tracking of both
94.32cigarettes and other tobacco products and result in the highest rates of tax collection and
94.33compliance. These best practices must consider high-technology alternatives, such as use
95.1of bar codes, radio-frequency identification tags, or similar mechanisms for tracking
95.2compliance;
95.3(3) evaluate the adequacy and effectiveness of the existing penalties and other
95.4sanctions for noncompliance;
95.5(4) evaluate the adequacy of the resources allocated by the state to enforce the
95.6tobacco tax and prevention laws; and
95.7(5) make recommendations on implementation of a comprehensive tobacco tax
95.8collection system for Minnesota that can be implemented by January 1, 2014, including:
95.9(i) recommendations on the specific steps needed to institute and implement the new
95.10system, including estimates of the state's costs of doing so and any additional personnel
95.11requirements;
95.12(ii) recommendations on methods to recover the cost of implementing the system
95.13from the industry;
95.14(iii) evaluation of the extent to which the proposed system is sufficiently flexible
95.15and adaptable to adjust to modifications in the construction, packaging, formatting, and
95.16marketing of tobacco products by the industry; and
95.17(iv) recommendations to modify existing penalties or to impose new penalties or
95.18other sanctions to ensure compliance with the system.
95.19    Subd. 2. Due date. The report required by subdivision 1 is due January 1, 2014.
95.20    Subd. 3. Procedure. The report required under this section must be made in the
95.21manner provided under Minnesota Statutes, section 3.195. In addition, copies must be
95.22provided to the chairs and ranking minority members of the legislative committees and
95.23divisions with jurisdiction over taxation.
95.24    Subd. 4. Appropriation. (a) $100,000 is appropriated from the general fund to the
95.25commissioner of revenue for fiscal year 2014 for the cost of preparing the report under
95.26subdivision 1.
95.27(b) The appropriation under this subdivision is a onetime appropriation and is not
95.28included in the base budget.
95.29EFFECTIVE DATE.This section is effective the day following final enactment.

95.30    Sec. 50. REPEALER.
95.31Minnesota Statutes 2012, sections 16A.725; 256.9658; 290.171; 290.173; and
95.32290.174, are repealed.
95.33EFFECTIVE DATE.This section is effective July 1, 2013.

96.1ARTICLE 5
96.2INDIVIDUAL INCOME AND CORPORATE FRANCHISE TAXES

96.3    Section 1. [116J.3738] QUALIFIED EXPANSIONS OF GREATER MINNESOTA
96.4BUSINESSES.
96.5    Subdivision 1. Definitions. (a) For purposes of this section, the following terms
96.6have the meanings given unless the context clearly indicates otherwise.
96.7(b) "Agricultural processing facility" means one or more facilities or operations
96.8that transform, package, sort, or grade livestock or livestock products, agricultural
96.9commodities, or plants or plant products into goods that are used for intermediate or final
96.10consumption including goods for nonfood use, and surrounding property.
96.11(c) "Business" means an individual, corporation, partnership, limited liability
96.12company, association, or any other entity engaged in operating a trade or business located
96.13in greater Minnesota.
96.14(d) "City" means a statutory or home rule charter city.
96.15(e) "Greater Minnesota" means the area of the state that excludes the metropolitan
96.16area, as defined in section 473.121, subdivision 2.
96.17(f) "Qualified business" means a business that satisfies the requirements of subdivision
96.182, has been certified under subdivision 3, and has not been terminated under subdivision 5.
96.19    Subd. 2. Qualified business. (a) A business is a qualified business if it satisfies the
96.20requirement of this paragraph and is not disqualified under the provisions of paragraph
96.21(b). To qualify, the business must:
96.22(1) have operated its trade or business in a city or cities in greater Minnesota for at
96.23least one year before applying under subdivision 3;
96.24(2) pay or agree to pay in the future each employee compensation, including benefits
96.25not mandated by law, that on an annualized basis equal at least 120 percent of the federal
96.26poverty level for a family of four;
96.27(3) plan and agree to expand its employment in one or more cities in greater Minnesota
96.28by the minimum number of employees required under subdivision 3, paragraph (c); and
96.29(4) received certification from the commissioner under subdivision 3 that it is a
96.30qualified business.
96.31(b) A business is not a qualified business if it is either:
96.32(1) primarily engaged in making retail sales to purchasers who are physically present
96.33at the business's location or locations in greater Minnesota; or
96.34(2) a public utility, as defined in section 336B.01.
97.1(c) The requirements in paragraph (a) that the business' operations and expansion be
97.2located in a city do not apply to an agricultural processing facility.
97.3    Subd. 3. Certification of qualified business. (a) A business may apply to
97.4the commissioner for certification as a qualified business under this section. The
97.5commissioner shall specify the form of the application, the manner and times for applying,
97.6and the information required to be included in the application. The commissioner may
97.7impose an application fee in an amount sufficient to defray the commissioner's cost of
97.8processing certifications. A business must file a copy of its application with the chief
97.9clerical officer of the city at the same it applies to the commissioner. For an agricultural
97.10processing facility located outside the boundaries of a city, the business must file a copy
97.11of the application with the county auditor.
97.12(b) The commissioner shall certify each business as a qualified business that:
97.13(1) satisfies the requirements of subdivision 2;
97.14(2) the commissioner determines would not expand its operations in greater
97.15Minnesota without the tax incentives available under subdivision 4; and
97.16(3) enters a business subsidy agreement with the commissioner that pledges to
97.17satisfy the minimum expansion requirements of paragraph (c) within three years or less
97.18following execution of the agreement.
97.19The commissioner must act on an application within 60 days after its filing. Failure
97.20by the commissioner to take action within the 60-day period is deemed approval of the
97.21application.
97.22(c) The following minimum expansion requirements apply, based on the number of
97.23employees of the business at locations in greater Minnesota:
97.24(1) a business that employees 50 or fewer full-time equivalent employees in greater
97.25Minnesota when the agreement is executed must increase its employment by five or more
97.26full-time equivalent employees;
97.27(2) a business that employees more than 50 but fewer than 200 full-time equivalent
97.28employees in greater Minnesota when the agreement is executed must increase the number
97.29of its full-time equivalent employees in greater Minnesota by at least ten percent; or
97.30(3) a business that employees 200 or more full-time equivalent employees in greater
97.31Minnesota when the agreement is executed must increase its employment by at least 21
97.32full-time equivalent employees.
97.33(d) The city, or a county for an agricultural processing facility located outside the
97.34boundaries of a city, in which the business proposes to expand its operations may file
97.35comments supporting or opposing the application with the commissioner. The comments
97.36must be filed within 30 days after receipt by the city of the application and may include a
98.1notice of any contribution the city or county intends to make to encourage or support the
98.2business expansion, such as the use of tax increment financing, property tax abatement,
98.3additional city or county services, or other financial assistance.
98.4(e) Certification of a qualified business is effective for the 12-year period beginning
98.5on the first day of the calendar month immediately following execution of the business
98.6subsidy agreement.
98.7    Subd. 4. Available tax incentives. A qualified business is entitled to one or more
98.8of the following tax incentives as provided under its business subsidy agreement with
98.9the commissioner:
98.10(1) a sales tax exemption, as provided in section 297A.68, subdivision 44, for
98.11purchases made during the period the business was certified as a qualified business under
98.12this section; and
98.13(2) the jobs credit, as provided in section 290.0682, effective for taxable years
98.14beginning during a calendar year in which certification of the business as a qualified
98.15business applies under this section.
98.16    Subd. 5. Termination of status as a qualified business. (a) The commissioner shall
98.17put in place a system for monitoring and ensuring that each certified business meets within
98.18three years or less the minimum expansion requirement in its business subsidy agreement
98.19and continues to satisfy those requirements for the rest of the duration of the certification
98.20under subdivision 3. This system must include regular reporting by the business to the
98.21commissioner of its baseline and current employment levels and any other information
98.22the commissioner determines may be useful to ensure compliance and for legislative
98.23evaluation of the effectiveness of the tax incentives.
98.24(b) A business ceases to be a qualified business and to qualify for the sales tax
98.25exemption under section 297A.68, subdivision 49, under this subdivision upon the earlier
98.26of the following dates:
98.27(1) the end of the duration of its designation under subdivision 3, paragraph (e),
98.28effective as provided under this subdivision or other provision of law for the tax incentive;
98.29or
98.30(2) the date the commissioner finds that the business has breached its business
98.31subsidy agreement and failed to satisfy the minimum expansion required by subdivision 3
98.32and its agreement.
98.33(c) A business may contest the commissioner's finding that it breached its business
98.34subsidy agreement under paragraph (b), clause (2), under the contested case procedures in
98.35the Administrative Procedure Act, chapter 14.
99.1(d) The commissioner, after consulting with the commissioner of revenue, may
99.2waive a breach of the business subsidy agreement and permit continued receipt of tax
99.3incentives, if the commissioner determines that termination of the tax incentives is not in
99.4the best interest of the state or the local government units and the business' breach of the
99.5agreement is a result of circumstances beyond its control including, but not limited to:
99.6(1) a natural disaster;
99.7(2) unforeseen industry trends;
99.8(3) a decline in economic activity in the overall or greater Minnesota economy; or
99.9(4) loss of a major supplier or customer of the business.
99.10EFFECTIVE DATE.This section is effective the day following final enactment.

99.11    Sec. 2. Minnesota Statutes 2012, section 116J.8737, subdivision 1, is amended to read:
99.12    Subdivision 1. Definitions. (a) For the purposes of this section, the following terms
99.13have the meanings given.
99.14(b) "Qualified small business" means a business that has been certified by the
99.15commissioner under subdivision 2.
99.16(c) "Qualified investor" means an investor who has been certified by the
99.17commissioner under subdivision 3.
99.18(d) "Qualified fund" means a pooled angel investment network fund that has been
99.19certified by the commissioner under subdivision 4.
99.20(e) "Qualified investment" means a cash investment in a qualified small business
99.21of a minimum of:
99.22(1) $10,000 in a calendar year by a qualified investor; or
99.23(2) $30,000 in a calendar year by a qualified fund.
99.24A qualified investment must be made in exchange for common stock, a partnership
99.25or membership interest, preferred stock, debt with mandatory conversion to equity, or an
99.26equivalent ownership interest as determined by the commissioner.
99.27(f) "Family" means a family member within the meaning of the Internal Revenue
99.28Code, section 267(c)(4).
99.29(g) "Pass-through entity" means a corporation that for the applicable taxable year is
99.30treated as an S corporation or a general partnership, limited partnership, limited liability
99.31partnership, trust, or limited liability company and which for the applicable taxable year is
99.32not taxed as a corporation under chapter 290.
99.33(h) "Intern" means a student of an accredited institution of higher education, or a
99.34former student who has graduated in the past six months from an accredited institution
99.35of higher education, who is employed by a qualified small business in a nonpermanent
100.1position for a duration of nine months or less that provides training and experience in the
100.2primary business activity of the business.
100.3(i) "Qualified greater Minnesota business" means a qualified small business that
100.4is also certified by the commissioner as a qualified greater Minnesota business under
100.5subdivision 2, paragraph (h).
100.6(j) "Liquidation event" means a conversion of qualified investment for cash, cash
100.7and other consideration, or any other form of equity or debt interest.
100.8EFFECTIVE DATE.This section is effective the day following final enactment.

100.9    Sec. 3. Minnesota Statutes 2012, section 116J.8737, subdivision 2, is amended to read:
100.10    Subd. 2. Certification of qualified small businesses. (a) Businesses may apply
100.11to the commissioner for certification as a qualified small business for a calendar year.
100.12In addition, the business' application may request certification as a qualified greater
100.13Minnesota business under paragraph (h). The application must be in the form and
100.14be made under the procedures specified by the commissioner, accompanied by an
100.15application fee of $150. Application fees are deposited in the small business investment
100.16tax credit administration account in the special revenue fund. The application for
100.17certification for 2010 must be made available on the department's Web site by August 1,
100.182010. Applications for subsequent years' certification must be made available on the
100.19department's Web site by November 1 of the preceding year.
100.20(b) Within 30 days of receiving an application for certification under this
100.21subdivision, the commissioner must either certify the business as satisfying the conditions
100.22required of a qualified small business or a qualified greater Minnesota business, request
100.23additional information from the business, or reject the application for certification. If
100.24the commissioner requests additional information from the business, the commissioner
100.25must either certify the business or reject the application within 30 days of receiving the
100.26additional information. If the commissioner neither certifies the business nor rejects
100.27the application within 30 days of receiving the original application or within 30 days of
100.28receiving the additional information requested, whichever is later, then the application is
100.29deemed rejected, and the commissioner must refund the $150 application fee. A business
100.30that applies for certification and is rejected may reapply.
100.31(c) To receive certification as a qualified small business, a business must satisfy
100.32all of the following conditions:
100.33(1) the business has its headquarters in Minnesota;
100.34(2) at least 51 percent of the business's employees are employed in Minnesota, and
100.3551 percent of the business's total payroll is paid or incurred in the state;
101.1(3) the business is engaged in, or is committed to engage in, innovation in Minnesota
101.2in one of the following as its primary business activity:
101.3(i) using proprietary technology to add value to a product, process, or service in a
101.4qualified high-technology field;
101.5(ii) researching or developing a proprietary product, process, or service in a qualified
101.6high-technology field; or
101.7(iii) researching, developing, or producing a new proprietary technology for use in
101.8the fields of agriculture, tourism, forestry, mining, manufacturing, or transportation;
101.9(4) other than the activities specifically listed in clause (3), the business is not
101.10engaged in real estate development, insurance, banking, lending, lobbying, political
101.11consulting, information technology consulting, wholesale or retail trade, leisure,
101.12hospitality, transportation, construction, ethanol production from corn, or professional
101.13services provided by attorneys, accountants, business consultants, physicians, or health
101.14care consultants;
101.15(5) the business has fewer than 25 employees;
101.16(6) the business must pay its employees annual wages of at least 175 percent of the
101.17federal poverty guideline for the year for a family of four and must pay its interns annual
101.18wages of at least 175 percent of the federal minimum wage used for federally covered
101.19employers, except that this requirement must be reduced proportionately for employees
101.20and interns who work less than full-time, and does not apply to an executive, officer, or
101.21member of the board of the business, or to any employee who owns, controls, or holds
101.22power to vote more than 20 percent of the outstanding securities of the business;
101.23(7) the business has not been in operation for more than ten years;
101.24(8) the business has not previously received private equity investments of more
101.25than $4,000,000; and
101.26    (9) the business is not an entity disqualified under section 80A.50, paragraph (b),
101.27clause (3); and
101.28    (10) the business has not issued securities that are traded on a public exchange.
101.29(d) In applying the limit under paragraph (c), clause (5), the employees in all members
101.30of the unitary business, as defined in section 290.17, subdivision 4, must be included.
101.31(e) In order for a qualified investment in a business to be eligible for tax credits, the
101.32business:
101.33(1) the business must have applied for and received certification for the calendar
101.34year in which the investment was made prior to the date on which the qualified investment
101.35was made;
101.36(2) must not have issued securities that are traded on a public exchange;
102.1(3) must not issue securities that are traded on a public exchange within 180 days
102.2after the date on which the qualified investment was made; and
102.3(4) must not have a liquidation event within 180 days after the date on which a
102.4qualified investment was made.
102.5(f) The commissioner must maintain a list of qualified small businesses and qualified
102.6greater Minnesota businesses certified under this subdivision for the calendar year and
102.7make the list accessible to the public on the department's Web site.
102.8(g) For purposes of this subdivision, the following terms have the meanings given:
102.9(1) "qualified high-technology field" includes aerospace, agricultural processing,
102.10renewable energy, energy efficiency and conservation, environmental engineering, food
102.11technology, cellulosic ethanol, information technology, materials science technology,
102.12nanotechnology, telecommunications, biotechnology, medical device products,
102.13pharmaceuticals, diagnostics, biologicals, chemistry, veterinary science, and similar
102.14fields; and
102.15(2) "proprietary technology" means the technical innovations that are unique and
102.16legally owned or licensed by a business and includes, without limitation, those innovations
102.17that are patented, patent pending, a subject of trade secrets, or copyrighted.; and
102.18(3) "greater Minnesota" means the area of Minnesota located outside of the
102.19metropolitan area as defined in section 473.121, subdivision 2.
102.20(h) To receive certification as a qualified greater Minnesota business, a business must
102.21satisfy all of the requirements of paragraph (c) and must satisfy the following conditions:
102.22(1) the business has its headquarters in greater Minnesota; and
102.23(2) at least 51 percent of the business's employees are employed in greater Minnesota,
102.24and 51 percent of the business's total payroll is paid or incurred in greater Minnesota.
102.25EFFECTIVE DATE.This section is effective the day following final enactment.

102.26    Sec. 4. Minnesota Statutes 2012, section 116J.8737, subdivision 5, is amended to read:
102.27    Subd. 5. Credit allowed. (a) A qualified investor or qualified fund is eligible for a
102.28credit equal to 25 percent of the qualified investment in a qualified small business.
102.29 Investments made by a pass-through entity qualify for a credit only if the entity is a
102.30qualified fund. The commissioner must not allocate more than $11,000,000 in credits to
102.31qualified investors or qualified funds for taxable years beginning after December 31, 2009,
102.32and before January 1, 2011, and must not allocate more than $12,000,000 in credits per
102.33year for taxable years beginning after December 31, 2010, and before January 1, 2015
102.34 2013, or more than $17,000,000 in credits per year for taxable years beginning after
103.1December 31, 2012, and before January 1, 2016. Any portion of a taxable year's credits
103.2that is not allocated by the commissioner does not cancel and may be carried forward to
103.3subsequent taxable years until all credits have been allocated.
103.4(b) The commissioner may not allocate more than a total maximum amount in credits
103.5for a taxable year to a qualified investor for the investor's cumulative qualified investments
103.6as an individual qualified investor and as an investor in a qualified fund; for married
103.7couples filing joint returns the maximum is $250,000, and for all other filers the maximum
103.8is $125,000. The commissioner may not allocate more than a total of $1,000,000 in credits
103.9over all taxable years for qualified investments in any one qualified small business.
103.10(c) The commissioner may not allocate a credit to a qualified investor either as an
103.11individual qualified investor or as an investor in a qualified fund if the investor receives
103.12more than 50 percent of the investor's gross annual income from the qualified small
103.13business in which the qualified investment is proposed. A member of the family of an
103.14individual disqualified by this paragraph is not eligible for a credit under this section. For
103.15a married couple filing a joint return, the limitations in this paragraph apply collectively
103.16to the investor and spouse. For purposes of determining the ownership interest of an
103.17investor under this paragraph, the rules under section 267(c) and 267(e) of the Internal
103.18Revenue Code apply.
103.19(d) Applications for tax credits for 2010 must be made available on the department's
103.20Web site by September 1, 2010, and the department must begin accepting applications
103.21by September 1, 2010. Applications for subsequent years must be made available by
103.22November 1 of the preceding year.
103.23(e) Qualified investors and qualified funds must apply to the commissioner for tax
103.24credits. Tax credits must be allocated to qualified investors or qualified funds in the order
103.25that the tax credit request applications are filed with the department. The commissioner
103.26must approve or reject tax credit request applications within 15 days of receiving the
103.27application. The investment specified in the application must be made within 60 days of
103.28the allocation of the credits. If the investment is not made within 60 days, the credit
103.29allocation is canceled and available for reallocation. A qualified investor or qualified fund
103.30that fails to invest as specified in the application, within 60 days of allocation of the
103.31credits, must notify the commissioner of the failure to invest within five business days of
103.32the expiration of the 60-day investment period.
103.33(f) All tax credit request applications filed with the department on the same day must
103.34be treated as having been filed contemporaneously. If two or more qualified investors or
103.35qualified funds file tax credit request applications on the same day, and the aggregate
103.36amount of credit allocation claims exceeds the aggregate limit of credits under this section
104.1or the lesser amount of credits that remain unallocated on that day, then the credits must
104.2be allocated among the qualified investors or qualified funds who filed on that day on a
104.3pro rata basis with respect to the amounts claimed. The pro rata allocation for any one
104.4qualified investor or qualified fund is the product obtained by multiplying a fraction,
104.5the numerator of which is the amount of the credit allocation claim filed on behalf of
104.6a qualified investor and the denominator of which is the total of all credit allocation
104.7claims filed on behalf of all applicants on that day, by the amount of credits that remain
104.8unallocated on that day for the taxable year.
104.9(g) A qualified investor or qualified fund, or a qualified small business acting on their
104.10behalf, must notify the commissioner when an investment for which credits were allocated
104.11has been made, and the taxable year in which the investment was made. A qualified fund
104.12must also provide the commissioner with a statement indicating the amount invested by
104.13each investor in the qualified fund based on each investor's share of the assets of the
104.14qualified fund at the time of the qualified investment. After receiving notification that the
104.15investment was made, the commissioner must issue credit certificates for the taxable year
104.16in which the investment was made to the qualified investor or, for an investment made by
104.17a qualified fund, to each qualified investor who is an investor in the fund. The certificate
104.18must state that the credit is subject to revocation if the qualified investor or qualified
104.19fund does not hold the investment in the qualified small business for at least three years,
104.20consisting of the calendar year in which the investment was made and the two following
104.21years. The three-year holding period does not apply if:
104.22(1) the investment by the qualified investor or qualified fund becomes worthless
104.23before the end of the three-year period;
104.24(2) 80 percent or more of the assets of the qualified small business is sold before
104.25the end of the three-year period;
104.26(3) the qualified small business is sold before the end of the three-year period; or
104.27(4) the qualified small business's common stock begins trading on a public exchange
104.28before the end of the three-year period.
104.29(h) The commissioner must notify the commissioner of revenue of credit certificates
104.30issued under this section.
104.31EFFECTIVE DATE.This section is effective the day following final enactment for
104.32taxable years beginning after December 31, 2012.

104.33    Sec. 5. Minnesota Statutes 2012, section 116J.8737, is amended by adding a
104.34subdivision to read:
105.1    Subd. 5a. Promotion of credit in greater Minnesota. (a) By July 1, 2013, the
105.2commissioner shall develop a plan to increase awareness of and use of the credit for
105.3investments in greater Minnesota businesses with a target goal that a minimum of 30
105.4percent of the credit will be awarded for those investments during the second half
105.5of calendar year 2013 and for each full calendar year thereafter. Beginning with the
105.6legislative report due on March 15, 2014, under subdivision 9, the commissioner shall
105.7report on its plan under this subdivision and the results achieved.
105.8(b) If the target goal of 30 percent under paragraph (a) is not achieved for the
105.9six-month period ending on December 31, 2013, the credit percentage under subdivision
105.105, paragraph (a), is increased to 40 percent for a qualified investment made after December
105.1131, 2013, in a greater Minnesota business. This paragraph does not apply and the credit
105.12percentage for all qualified investments is the rate provided under subdivision 5 for any
105.13calendar year beginning after a calendar year for which the commissioner determines the
105.1430 percent target has been satisfied. The commissioner shall timely post notification of
105.15changes in the credit rate under this paragraph on the department's Web site.
105.16EFFECTIVE DATE.This section is effective the day following final enactment.

105.17    Sec. 6. Minnesota Statutes 2012, section 116J.8737, subdivision 7, is amended to read:
105.18    Subd. 7. Revocation of credits. (a) If the commissioner determines that a
105.19qualified investor or qualified fund did not meet the three-year holding period required in
105.20subdivision 5, paragraph (g), any credit allocated and certified to the investor or fund is
105.21revoked and must be repaid by the investor.
105.22(b) If the commissioner determines that a business did not meet the employment
105.23and payroll requirements in subdivision 2, paragraph (c), clause (2), or paragraph (h), as
105.24applicable, in any of the five calendar years following the year in which an investment in the
105.25business that qualified for a tax credit under this section was made, the business must repay
105.26the following percentage of the credits allowed for qualified investments in the business:
105.27
Year following the year in which
Percentage of credit required
105.28
the investment was made:
to be repaid:
105.29
First
100%
105.30
Second
80%
105.31
Third
60%
105.32
Fourth
40%
105.33
Fifth
20%
105.34
Sixth and later
0
105.35(c) The commissioner must notify the commissioner of revenue of every credit
105.36revoked and subject to full or partial repayment under this section.
106.1(d) For the repayment of credits allowed under this section and section 290.0692,
106.2a qualified small business, qualified investor, or investor in a qualified fund must file an
106.3amended return with the commissioner of revenue and pay any amounts required to be
106.4repaid within 30 days after becoming subject to repayment under this section.
106.5EFFECTIVE DATE.This section is effective the day following final enactment.

106.6    Sec. 7. Minnesota Statutes 2012, section 116J.8737, subdivision 9, is amended to read:
106.7    Subd. 9. Report to legislature. Beginning in 2011, the commissioner must
106.8annually report by March 15 to the chairs and ranking minority members of the legislative
106.9committees having jurisdiction over taxes and economic development in the senate and
106.10the house of representatives, in compliance with sections 3.195 and 3.197, on the tax
106.11credits issued under this section. The report must include:
106.12(1) the number and amount of the credits issued;
106.13(2) the recipients of the credits;
106.14(3) for each qualified small business, its location, line of business, and if it received
106.15an investment resulting in certification of tax credits;
106.16(4) the total amount of investment in each qualified small business resulting in
106.17certification of tax credits;
106.18(5) for each qualified small business that received investments resulting in tax
106.19credits, the total amount of additional investment that did not qualify for the tax credit;
106.20(6) the number and amount of credits revoked under subdivision 7;
106.21(7) the number and amount of credits that are no longer subject to the three-year
106.22holding period because of the exceptions under subdivision 5, paragraph (g), clauses
106.23(1) to (4); and
106.24(8) the number of qualified small businesses that are women or minority-owned; and
106.25(9) any other information relevant to evaluating the effect of these credits.
106.26EFFECTIVE DATE.This section is effective the day following final enactment.

106.27    Sec. 8. Minnesota Statutes 2012, section 116J.8737, subdivision 12, is amended to read:
106.28    Subd. 12. Sunset. This section expires for taxable years beginning after December
106.2931, 2014 2015, except that reporting requirements under subdivision 6 and revocation
106.30of credits under subdivision 7 remain in effect through 2016 2017 for qualified
106.31investors and qualified funds, and through 2018 2019 for qualified small businesses,
106.32reporting requirements under subdivision 9 remain in effect through 2019 2020, and the
106.33appropriation in subdivision 11 remains in effect through 2018 2019.
107.1EFFECTIVE DATE.This section is effective the day following final enactment.

107.2    Sec. 9. [136A.129] GREATER MINNESOTA INTERNSHIP PROGRAM.
107.3    Subdivision 1. Definitions. (a) For the purposes of this section, the terms defined in
107.4this subdivision have the meanings given to them.
107.5(b) "Eligible employer" means a taxpayer under section 290.01 with employees
107.6located in greater Minnesota.
107.7(c) "Eligible institution" means a Minnesota public postsecondary institution or a
107.8Minnesota private, nonprofit, baccalaureate degree-granting college or university.
107.9(d) "Eligible student" means a student enrolled in an eligible institution who has
107.10completed one-half of the credits necessary for the respective degree or certification.
107.11(e) "Greater Minnesota" means the area of the state outside of the counties of Anoka,
107.12Carver, Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, Sherburne, Washington, and
107.13Wright.
107.14    Subd. 2. Program established. The Office of Higher Education shall administer
107.15a greater Minnesota internship program through eligible institutions to provide credit at
107.16the eligible institution for internships and tax credits for eligible employers who hire
107.17interns for employment in greater Minnesota. The purpose of the program is to encourage
107.18Minnesota businesses to:
107.19(1) employ and provide valuable experience to Minnesota students; and
107.20(2) foster long-term relationships between the students and greater Minnesota
107.21employers.
107.22    Subd. 3. Program components. (a) An intern must be an eligible student who has
107.23been admitted to a major program that is related to the intern experience as determined
107.24by the eligible institution.
107.25(b) To participate in the program, an eligible institution must:
107.26(1) enter into written agreements with eligible employers to provide internships that
107.27are at least 12 weeks long and located in greater Minnesota;
107.28(2) determine that the work experience of the internship is related to the eligible
107.29student's course of study; and
107.30(3) provide academic credit for the successful completion of the internship or ensure
107.31that it fulfills requirements necessary to complete a vocational technical education program.
107.32(c) To participate in the program, an eligible employer must enter into a written
107.33agreement with an eligible institution specifying that the intern:
107.34(1) would not have been hired without the tax credit described in subdivision 4;
108.1(2) did not work for the employer in the same or a similar job prior to entering
108.2the agreement;
108.3(3) does not replace an existing employee;
108.4(4) has not previously participated in the program;
108.5(5) will be employed at a location in greater Minnesota;
108.6(6) will be paid at least minimum wage for a minimum of 16 hours per week for a
108.7period of at least 12 weeks; and
108.8(7) will be supervised and evaluated by the employer.
108.9(d) Participating eligible institutions and eligible employers must report annually to
108.10the office. The report must include at least the following:
108.11(1) the number of interns hired;
108.12(2) the number of hours and weeks worked by interns; and
108.13(3) the compensation paid to interns.
108.14(e) An internship required to complete an academic program does not qualify for the
108.15greater Minnesota internship program under this section.
108.16    Subd. 4. Tax credit allowed. An employer is entitled to a tax credit as provided
108.17in section 290.06, subdivision 3b. The office shall allocate tax credits authorized in
108.18subdivision 4 to eligible institutions. The office shall determine relevant criteria to
108.19allocate the tax credits including the geographic distribution of credits to work locations
108.20outside the metropolitan area. Any credits allocated to an institution but not used may be
108.21reallocated to eligible institutions. The office shall allocate a portion of the administrative
108.22fee under section 290.06, subdivision 36, to participating eligible institutions for their
108.23administrative costs.
108.24    Subd. 5. Reports to the legislature. (a) By February 1, 2015, the office and the
108.25Department of Revenue shall report to the legislature on the greater Minnesota internship
108.26program. The report must include at least the following:
108.27(1) the number and dollar amount of credits allowed;
108.28(2) the number of interns employed under the program; and
108.29(3) the cost of administering the program.
108.30(b) By February 1, 2016, the office and the Department of Revenue shall report to the
108.31legislature with an analysis of the effectiveness of the program in stimulating businesses
108.32to hire interns and in assisting participating interns in finding permanent career positions.
108.33This report must include the number of students who participated in the program who
108.34were subsequently employed full-time by the employer.
108.35EFFECTIVE DATE.This section is effective for taxable years beginning after
108.36December 31, 2013.

109.1    Sec. 10. Minnesota Statutes 2012, section 289A.08, subdivision 3, is amended to read:
109.2    Subd. 3. Corporations. (a) A corporation that is subject to the state's jurisdiction to
109.3tax under section 290.014, subdivision 5, must file a return, except that a foreign operating
109.4corporation as defined in section 290.01, subdivision 6b, is not required to file a return.
109.5(b) Members of a unitary business that are required to file a combined report on one
109.6return must designate a member of the unitary business to be responsible for tax matters,
109.7including the filing of returns, the payment of taxes, additions to tax, penalties, interest,
109.8or any other payment, and for the receipt of refunds of taxes or interest paid in excess of
109.9taxes lawfully due. The designated member must be a member of the unitary business that
109.10is filing the single combined report and either:
109.11(1) a corporation that is subject to the taxes imposed by chapter 290; or
109.12(2) a corporation that is not subject to the taxes imposed by chapter 290:
109.13(i) Such corporation consents by filing the return as a designated member under this
109.14clause to remit taxes, penalties, interest, or additions to tax due from the members of the
109.15unitary business subject to tax, and receive refunds or other payments on behalf of other
109.16members of the unitary business. The member designated under this clause is a "taxpayer"
109.17for the purposes of this chapter and chapter 270C, and is liable for any liability imposed
109.18on the unitary business under this chapter and chapter 290.
109.19(ii) If the state does not otherwise have the jurisdiction to tax the member designated
109.20under this clause, consenting to be the designated member does not create the jurisdiction
109.21to impose tax on the designated member, other than as described in item (i).
109.22(iii) The member designated under this clause must apply for a business tax account
109.23identification number.
109.24(c) The commissioner shall adopt rules for the filing of one return on behalf of the
109.25members of an affiliated group of corporations that are required to file a combined report.
109.26All members of an affiliated group that are required to file a combined report must file one
109.27return on behalf of the members of the group under rules adopted by the commissioner.
109.28(d) If a corporation claims on a return that it has paid tax in excess of the amount of
109.29taxes lawfully due, that corporation must include on that return information necessary for
109.30payment of the tax in excess of the amount lawfully due by electronic means.
109.31EFFECTIVE DATE.This section is effective for taxable years beginning after
109.32December 31, 2012.

109.33    Sec. 11. Minnesota Statutes 2012, section 290.01, subdivision 19b, is amended to read:
109.34    Subd. 19b. Subtractions from federal taxable income. For individuals, estates,
109.35and trusts, there shall be subtracted from federal taxable income:
110.1    (1) net interest income on obligations of any authority, commission, or
110.2instrumentality of the United States to the extent includable in taxable income for federal
110.3income tax purposes but exempt from state income tax under the laws of the United States;
110.4    (2) if included in federal taxable income, the amount of any overpayment of income
110.5tax to Minnesota or to any other state, for any previous taxable year, whether the amount
110.6is received as a refund or as a credit to another taxable year's income tax liability;
110.7    (3) the amount paid to others, less the amount used to claim the credit allowed under
110.8section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten
110.9to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
110.10transportation of each qualifying child in attending an elementary or secondary school
110.11situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
110.12resident of this state may legally fulfill the state's compulsory attendance laws, which
110.13is not operated for profit, and which adheres to the provisions of the Civil Rights Act
110.14of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
110.15tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause,
110.16"textbooks" includes books and other instructional materials and equipment purchased
110.17or leased for use in elementary and secondary schools in teaching only those subjects
110.18legally and commonly taught in public elementary and secondary schools in this state.
110.19Equipment expenses qualifying for deduction includes expenses as defined and limited in
110.20section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional
110.21books and materials used in the teaching of religious tenets, doctrines, or worship, the
110.22purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
110.23or materials for, or transportation to, extracurricular activities including sporting events,
110.24musical or dramatic events, speech activities, driver's education, or similar programs. No
110.25deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or
110.26the qualifying child's vehicle to provide such transportation for a qualifying child. For
110.27purposes of the subtraction provided by this clause, "qualifying child" has the meaning
110.28given in section 32(c)(3) of the Internal Revenue Code;
110.29    (4) income as provided under section 290.0802;
110.30    (5) to the extent included in federal adjusted gross income, income realized on
110.31disposition of property exempt from tax under section 290.491;
110.32    (6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E)
110.33of the Internal Revenue Code in determining federal taxable income by an individual
110.34who does not itemize deductions for federal income tax purposes for the taxable year, an
110.35amount equal to 50 percent of the excess of charitable contributions over $500 allowable
111.1as a deduction for the taxable year under section 170(a) of the Internal Revenue Code,
111.2under the provisions of Public Law 109-1 and Public Law 111-126;
111.3    (7) for individuals who are allowed a federal foreign tax credit for taxes that do not
111.4qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover
111.5of subnational foreign taxes for the taxable year, but not to exceed the total subnational
111.6foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
111.7"federal foreign tax credit" means the credit allowed under section 27 of the Internal
111.8Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
111.9under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
111.10the extent they exceed the federal foreign tax credit;
111.11    (8) in each of the five tax years immediately following the tax year in which an
111.12addition is required under subdivision 19a, clause (7), or 19c, clause (15) (14), in the case
111.13of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
111.14delayed depreciation. For purposes of this clause, "delayed depreciation" means the amount
111.15of the addition made by the taxpayer under subdivision 19a, clause (7), or subdivision 19c,
111.16clause (15) (14), in the case of a shareholder of an S corporation, minus the positive value
111.17of any net operating loss under section 172 of the Internal Revenue Code generated for the
111.18tax year of the addition. The resulting delayed depreciation cannot be less than zero;
111.19    (9) job opportunity building zone income as provided under section 469.316;
111.20    (10) to the extent included in federal taxable income, the amount of compensation
111.21paid to members of the Minnesota National Guard or other reserve components of the
111.22United States military for active service, excluding compensation for services performed
111.23under the Active Guard Reserve (AGR) program. For purposes of this clause, "active
111.24service" means (i) state active service as defined in section 190.05, subdivision 5a, clause
111.25(1); or (ii) federally funded state active service as defined in section 190.05, subdivision
111.265b
, but "active service" excludes service performed in accordance with section 190.08,
111.27subdivision 3
;
111.28    (11) to the extent included in federal taxable income, the amount of compensation
111.29paid to Minnesota residents who are members of the armed forces of the United States
111.30or United Nations for active duty performed under United States Code, title 10; or the
111.31authority of the United Nations;
111.32    (12) an amount, not to exceed $10,000, equal to qualified expenses related to a
111.33qualified donor's donation, while living, of one or more of the qualified donor's organs
111.34to another person for human organ transplantation. For purposes of this clause, "organ"
111.35means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
111.36"human organ transplantation" means the medical procedure by which transfer of a human
112.1organ is made from the body of one person to the body of another person; "qualified
112.2expenses" means unreimbursed expenses for both the individual and the qualified donor
112.3for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
112.4may be subtracted under this clause only once; and "qualified donor" means the individual
112.5or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
112.6individual may claim the subtraction in this clause for each instance of organ donation for
112.7transplantation during the taxable year in which the qualified expenses occur;
112.8    (13) in each of the five tax years immediately following the tax year in which an
112.9addition is required under subdivision 19a, clause (8), or 19c, clause (16) (15), in the case
112.10of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth of
112.11the addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16)
112.12 (15), in the case of a shareholder of a corporation that is an S corporation, minus the
112.13positive value of any net operating loss under section 172 of the Internal Revenue Code
112.14generated for the tax year of the addition. If the net operating loss exceeds the addition for
112.15the tax year, a subtraction is not allowed under this clause;
112.16    (14) to the extent included in the federal taxable income of a nonresident of
112.17Minnesota, compensation paid to a service member as defined in United States Code, title
112.1810, section 101(a)(5), for military service as defined in the Servicemembers Civil Relief
112.19Act, Public Law 108-189, section 101(2);
112.20    (15) to the extent included in federal taxable income, the amount of national service
112.21educational awards received from the National Service Trust under United States Code,
112.22title 42, sections 12601 to 12604, for service in an approved Americorps National Service
112.23program;
112.24(16) to the extent included in federal taxable income, discharge of indebtedness
112.25income resulting from reacquisition of business indebtedness included in federal taxable
112.26income under section 108(i) of the Internal Revenue Code. This subtraction applies only
112.27to the extent that the income was included in net income in a prior year as a result of the
112.28addition under section 290.01, subdivision 19a, clause (16); and
112.29(17) the amount of the net operating loss allowed under section 290.095, subdivision
112.3011
, paragraph (c); and
112.31(18) in the year that the expenditures are made for railroad track maintenance, as
112.32defined in section 45G(d) of the Internal Revenue Code, in the case of a shareholder of a
112.33corporation that is an S corporation or a partner in a partnership, an amount equal to the
112.34credit awarded pursuant to section 45G(a) of the Internal Revenue Code. The subtraction
112.35shall be reduced to an amount equal to the percentage of the shareholder's or partner's
112.36share of the net income of the S corporation or partnership.
113.1EFFECTIVE DATE.This section is effective for taxable years beginning after
113.2December 31, 2012.

113.3    Sec. 12. Minnesota Statutes 2012, section 290.01, subdivision 19c, is amended to read:
113.4    Subd. 19c. Corporations; additions to federal taxable income. For corporations,
113.5there shall be added to federal taxable income:
113.6    (1) the amount of any deduction taken for federal income tax purposes for income,
113.7excise, or franchise taxes based on net income or related minimum taxes, including but not
113.8limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
113.9another state, a political subdivision of another state, the District of Columbia, or any
113.10foreign country or possession of the United States;
113.11    (2) interest not subject to federal tax upon obligations of: the United States, its
113.12possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
113.13state, any of its political or governmental subdivisions, any of its municipalities, or any
113.14of its governmental agencies or instrumentalities; the District of Columbia; or Indian
113.15tribal governments;
113.16    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
113.17Revenue Code;
113.18    (4) the amount of any net operating loss deduction taken for federal income tax
113.19purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
113.20deduction under section 810 of the Internal Revenue Code;
113.21    (5) the amount of any special deductions taken for federal income tax purposes
113.22under sections 241 to 247 and 965 of the Internal Revenue Code;
113.23    (6) losses from the business of mining, as defined in section 290.05, subdivision 1,
113.24clause (a), that are not subject to Minnesota income tax;
113.25    (7) the amount of any capital losses deducted for federal income tax purposes under
113.26sections 1211 and 1212 of the Internal Revenue Code;
113.27    (8) the exempt foreign trade income of a foreign sales corporation under sections
113.28921(a) and 291 of the Internal Revenue Code;
113.29    (9) the amount of percentage depletion deducted under sections 611 through 614 and
113.30291 of the Internal Revenue Code;
113.31    (10) for certified pollution control facilities placed in service in a taxable year
113.32beginning before December 31, 1986, and for which amortization deductions were elected
113.33under section 169 of the Internal Revenue Code of 1954, as amended through December
113.3431, 1985, the amount of the amortization deduction allowed in computing federal taxable
113.35income for those facilities;
114.1    (11) the amount of any deemed dividend from a foreign operating corporation
114.2determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend
114.3shall be reduced by the amount of the addition to income required by clauses (20), (21),
114.4(22), and (23);
114.5    (12) (11) the amount of a partner's pro rata share of net income which does not flow
114.6through to the partner because the partnership elected to pay the tax on the income under
114.7section 6242(a)(2) of the Internal Revenue Code;
114.8    (13) (12) the amount of net income excluded under section 114 of the Internal
114.9Revenue Code;
114.10    (14) (13) any increase in subpart F income, as defined in section 952(a) of the
114.11Internal Revenue Code, for the taxable year when subpart F income is calculated without
114.12regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
114.13    (15) (14) 80 percent of the depreciation deduction allowed under section
114.14168(k)(1)(A) and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if
114.15the taxpayer has an activity that in the taxable year generates a deduction for depreciation
114.16under section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable
114.17year that the taxpayer is not allowed to claim for the taxable year, "the depreciation
114.18allowed under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess
114.19of the depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A)
114.20over the amount of the loss from the activity that is not allowed in the taxable year. In
114.21succeeding taxable years when the losses not allowed in the taxable year are allowed, the
114.22depreciation under section 168(k)(1)(A) and (k)(4)(A) is allowed;
114.23    (16) (15) 80 percent of the amount by which the deduction allowed by section 179 of
114.24the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
114.25Revenue Code of 1986, as amended through December 31, 2003;
114.26    (17) (16) to the extent deducted in computing federal taxable income, the amount of
114.27the deduction allowable under section 199 of the Internal Revenue Code;
114.28    (18) (17) for taxable years beginning before January 1, 2013, the exclusion allowed
114.29under section 139A of the Internal Revenue Code for federal subsidies for prescription
114.30drug plans;
114.31    (19) (18) the amount of expenses disallowed under section 290.10, subdivision 2;
114.32    (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
114.33accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
114.34of a corporation that is a member of the taxpayer's unitary business group that qualifies
114.35as a foreign operating corporation. For purposes of this clause, intangible expenses and
114.36costs include:
115.1    (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
115.2use, maintenance or management, ownership, sale, exchange, or any other disposition of
115.3intangible property;
115.4    (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
115.5transactions;
115.6    (iii) royalty, patent, technical, and copyright fees;
115.7    (iv) licensing fees; and
115.8    (v) other similar expenses and costs.
115.9For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
115.10applications, trade names, trademarks, service marks, copyrights, mask works, trade
115.11secrets, and similar types of intangible assets.
115.12This clause does not apply to any item of interest or intangible expenses or costs paid,
115.13accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
115.14to such item of income to the extent that the income to the foreign operating corporation
115.15is income from sources without the United States as defined in subtitle A, chapter 1,
115.16subchapter N, part 1, of the Internal Revenue Code;
115.17    (21) except as already included in the taxpayer's taxable income pursuant to clause
115.18(20), any interest income and income generated from intangible property received or
115.19accrued by a foreign operating corporation that is a member of the taxpayer's unitary
115.20group. For purposes of this clause, income generated from intangible property includes:
115.21    (i) income related to the direct or indirect acquisition, use, maintenance or
115.22management, ownership, sale, exchange, or any other disposition of intangible property;
115.23    (ii) income from factoring transactions or discounting transactions;
115.24    (iii) royalty, patent, technical, and copyright fees;
115.25    (iv) licensing fees; and
115.26    (v) other similar income.
115.27For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
115.28applications, trade names, trademarks, service marks, copyrights, mask works, trade
115.29secrets, and similar types of intangible assets.
115.30This clause does not apply to any item of interest or intangible income received or accrued
115.31by a foreign operating corporation with respect to such item of income to the extent that
115.32the income is income from sources without the United States as defined in subtitle A,
115.33chapter 1, subchapter N, part 1, of the Internal Revenue Code;
115.34    (22) the dividends attributable to the income of a foreign operating corporation that
115.35is a member of the taxpayer's unitary group in an amount that is equal to the dividends
116.1paid deduction of a real estate investment trust under section 561(a) of the Internal
116.2Revenue Code for amounts paid or accrued by the real estate investment trust to the
116.3foreign operating corporation;
116.4    (23) the income of a foreign operating corporation that is a member of the taxpayer's
116.5unitary group in an amount that is equal to gains derived from the sale of real or personal
116.6property located in the United States;
116.7    (24) (19) for taxable years beginning before January 1, 2010, the additional amount
116.8allowed as a deduction for donation of computer technology and equipment under section
116.9170(e)(6) of the Internal Revenue Code, to the extent deducted from taxable income; and
116.10(25) (20) discharge of indebtedness income resulting from reacquisition of business
116.11indebtedness and deferred under section 108(i) of the Internal Revenue Code.
116.12EFFECTIVE DATE.This section is effective for taxable years beginning after
116.13December 31, 2012.

116.14    Sec. 13. Minnesota Statutes 2012, section 290.01, subdivision 19d, is amended to read:
116.15    Subd. 19d. Corporations; modifications decreasing federal taxable income. For
116.16corporations, there shall be subtracted from federal taxable income after the increases
116.17provided in subdivision 19c:
116.18    (1) the amount of foreign dividend gross-up added to gross income for federal
116.19income tax purposes under section 78 of the Internal Revenue Code;
116.20    (2) the amount of salary expense not allowed for federal income tax purposes due to
116.21claiming the work opportunity credit under section 51 of the Internal Revenue Code;
116.22    (3) any dividend (not including any distribution in liquidation) paid within the
116.23taxable year by a national or state bank to the United States, or to any instrumentality of
116.24the United States exempt from federal income taxes, on the preferred stock of the bank
116.25owned by the United States or the instrumentality;
116.26    (4) amounts disallowed for intangible drilling costs due to differences between
116.27this chapter and the Internal Revenue Code in taxable years beginning before January
116.281, 1987, as follows:
116.29    (i) to the extent the disallowed costs are represented by physical property, an amount
116.30equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09,
116.31subdivision 7
, subject to the modifications contained in subdivision 19e; and
116.32    (ii) to the extent the disallowed costs are not represented by physical property, an
116.33amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
116.34290.09, subdivision 8 ;
117.1    (5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
117.2Internal Revenue Code, except that:
117.3    (i) for capital losses incurred in taxable years beginning after December 31, 1986,
117.4capital loss carrybacks shall not be allowed;
117.5    (ii) for capital losses incurred in taxable years beginning after December 31, 1986,
117.6a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
117.7allowed;
117.8    (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
117.9capital loss carryback to each of the three taxable years preceding the loss year, subject to
117.10the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
117.11    (iv) for capital losses incurred in taxable years beginning before January 1, 1987,
117.12a capital loss carryover to each of the five taxable years succeeding the loss year to the
117.13extent such loss was not used in a prior taxable year and subject to the provisions of
117.14Minnesota Statutes 1986, section 290.16, shall be allowed;
117.15    (6) an amount for interest and expenses relating to income not taxable for federal
117.16income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
117.17expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
117.18291 of the Internal Revenue Code in computing federal taxable income;
117.19    (7) in the case of mines, oil and gas wells, other natural deposits, and timber for
117.20which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a
117.21reasonable allowance for depletion based on actual cost. In the case of leases the deduction
117.22must be apportioned between the lessor and lessee in accordance with rules prescribed
117.23by the commissioner. In the case of property held in trust, the allowable deduction must
117.24be apportioned between the income beneficiaries and the trustee in accordance with the
117.25pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
117.26of the trust's income allocable to each;
117.27    (8) for certified pollution control facilities placed in service in a taxable year
117.28beginning before December 31, 1986, and for which amortization deductions were elected
117.29under section 169 of the Internal Revenue Code of 1954, as amended through December
117.3031, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
117.311986, section 290.09, subdivision 7;
117.32    (9) amounts included in federal taxable income that are due to refunds of income,
117.33excise, or franchise taxes based on net income or related minimum taxes paid by the
117.34corporation to Minnesota, another state, a political subdivision of another state, the
117.35District of Columbia, or a foreign country or possession of the United States to the extent
118.1that the taxes were added to federal taxable income under section 290.01, subdivision 19c,
118.2clause (1), in a prior taxable year;
118.3    (10) 80 percent of royalties, fees, or other like income accrued or received from a
118.4foreign operating corporation or a foreign corporation which is part of the same unitary
118.5business as the receiving corporation, unless the income resulting from such payments or
118.6accruals is income from sources within the United States as defined in subtitle A, chapter
118.71, subchapter N, part 1, of the Internal Revenue Code;
118.8    (11) (10) income or gains from the business of mining as defined in section 290.05,
118.9subdivision 1
, clause (a), that are not subject to Minnesota franchise tax;
118.10    (12) (11) the amount of disability access expenditures in the taxable year which are not
118.11allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
118.12    (13) (12) the amount of qualified research expenses not allowed for federal income
118.13tax purposes under section 280C(c) of the Internal Revenue Code, but only to the extent
118.14that the amount exceeds the amount of the credit allowed under section 290.068;
118.15    (14) (13) the amount of salary expenses not allowed for federal income tax purposes
118.16due to claiming the Indian employment credit under section 45A(a) of the Internal
118.17Revenue Code;
118.18    (15) (14) for a corporation whose foreign sales corporation, as defined in section
118.19922 of the Internal Revenue Code, constituted a foreign operating corporation during any
118.20taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
118.21claiming the deduction under section 290.21, subdivision 4, for income received from
118.22the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of
118.23income excluded under section 114 of the Internal Revenue Code, provided the income is
118.24not income of a foreign operating company;
118.25    (16) (15) any decrease in subpart F income, as defined in section 952(a) of the
118.26Internal Revenue Code, for the taxable year when subpart F income is calculated without
118.27regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
118.28    (17) (16) in each of the five tax years immediately following the tax year in which an
118.29addition is required under subdivision 19c, clause (15) (14), an amount equal to one-fifth
118.30of the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
118.31amount of the addition made by the taxpayer under subdivision 19c, clause (15) (14). The
118.32resulting delayed depreciation cannot be less than zero;
118.33    (18) (17) in each of the five tax years immediately following the tax year in which an
118.34addition is required under subdivision 19c, clause (16) (15), an amount equal to one-fifth
118.35of the amount of the addition; and
119.1(19) (18) to the extent included in federal taxable income, discharge of indebtedness
119.2income resulting from reacquisition of business indebtedness included in federal taxable
119.3income under section 108(i) of the Internal Revenue Code. This subtraction applies only
119.4to the extent that the income was included in net income in a prior year as a result of the
119.5addition under section 290.01, subdivision 19c, clause (25) (20); and
119.6(19) in the year that the expenditures are made for railroad track maintenance, as
119.7defined in section 45G(d) of the Internal Revenue Code, an amount equal to the credit
119.8awarded pursuant to section 45G(a) of the Internal Revenue Code.
119.9EFFECTIVE DATE.This section is effective for taxable years beginning after
119.10December 31, 2012.

119.11    Sec. 14. Minnesota Statutes 2012, section 290.06, subdivision 1, is amended to read:
119.12    Subdivision 1. Computation, corporations. The franchise tax imposed upon
119.13corporations shall be computed by applying to their taxable income the rate of 9.8 9.0
119.14percent.
119.15EFFECTIVE DATE.This section is effective for taxable years beginning after
119.16December 31, 2012.

119.17    Sec. 15. Minnesota Statutes 2012, section 290.06, subdivision 2c, is amended to read:
119.18    Subd. 2c. Schedules of rates for individuals, estates, and trusts. (a) The income
119.19taxes imposed by this chapter upon married individuals filing joint returns and surviving
119.20spouses as defined in section 2(a) of the Internal Revenue Code must be computed by
119.21applying to their taxable net income the following schedule of rates:
119.22    (1) On the first $25,680 $35,480, 5.35 percent;
119.23    (2) On all over $25,680 $35,480, but not over $102,030 $140,960, 7.05 percent;
119.24    (3) On all over $102,030 $140,960, 7.85 9.4 percent.
119.25    Married individuals filing separate returns, estates, and trusts must compute their
119.26income tax by applying the above rates to their taxable income, except that the income
119.27brackets will be one-half of the above amounts.
119.28    (b) The income taxes imposed by this chapter upon unmarried individuals must be
119.29computed by applying to taxable net income the following schedule of rates:
119.30    (1) On the first $17,570 $24,270, 5.35 percent;
119.31    (2) On all over $17,570 $24,270, but not over $57,710 $79,730, 7.05 percent;
119.32    (3) On all over $57,710 $79,730, 7.85 9.4 percent.
120.1    (c) The income taxes imposed by this chapter upon unmarried individuals qualifying
120.2as a head of household as defined in section 2(b) of the Internal Revenue Code must be
120.3computed by applying to taxable net income the following schedule of rates:
120.4    (1) On the first $21,630 $29,880, 5.35 percent;
120.5    (2) On all over $21,630 $29,880, but not over $86,910 $120,070, 7.05 percent;
120.6    (3) On all over $86,910 $120,070, 7.85 9.4 percent.
120.7    (d) In lieu of a tax computed according to the rates set forth in this subdivision, the
120.8tax of any individual taxpayer whose taxable net income for the taxable year is less than
120.9an amount determined by the commissioner must be computed in accordance with tables
120.10prepared and issued by the commissioner of revenue based on income brackets of not
120.11more than $100. The amount of tax for each bracket shall be computed at the rates set
120.12forth in this subdivision, provided that the commissioner may disregard a fractional part of
120.13a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.
120.14    (e) An individual who is not a Minnesota resident for the entire year must compute
120.15the individual's Minnesota income tax as provided in this subdivision. After the
120.16application of the nonrefundable credits provided in this chapter, the tax liability must
120.17then be multiplied by a fraction in which:
120.18    (1) the numerator is the individual's Minnesota source federal adjusted gross income
120.19as defined in section 62 of the Internal Revenue Code and increased by the additions
120.20required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12),
120.21(13), and (16) to (18), and reduced by the Minnesota assignable portion of the subtraction
120.22for United States government interest under section 290.01, subdivision 19b, clause
120.23(1), and the subtractions under section 290.01, subdivision 19b, clauses (8), (9), (13),
120.24(14), (16), and (17), after applying the allocation and assignability provisions of section
120.25290.081 , clause (a), or 290.17; and
120.26    (2) the denominator is the individual's federal adjusted gross income as defined in
120.27section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in
120.28section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), (13), and (16) to
120.29(18), and reduced by the amounts specified in section 290.01, subdivision 19b, clauses (1),
120.30(8), (9), (13), (14), (16), and (17).
120.31EFFECTIVE DATE.This section is effective for taxable years beginning after
120.32December 31, 2012.

120.33    Sec. 16. Minnesota Statutes 2012, section 290.06, subdivision 2d, is amended to read:
120.34    Subd. 2d. Inflation adjustment of brackets. (a) For taxable years beginning after
120.35December 31, 2000 2013, the minimum and maximum dollar amounts for each rate
121.1bracket for which a tax is imposed in subdivision 2c shall be adjusted for inflation by the
121.2percentage determined under paragraph (b). For the purpose of making the adjustment as
121.3provided in this subdivision all of the rate brackets provided in subdivision 2c shall be the
121.4rate brackets as they existed for taxable years beginning after December 31, 1999 2012,
121.5and before January 1, 2001 2014. The rate applicable to any rate bracket must not be
121.6changed. The dollar amounts setting forth the tax shall be adjusted to reflect the changes
121.7in the rate brackets. The rate brackets as adjusted must be rounded to the nearest $10
121.8amount. If the rate bracket ends in $5, it must be rounded up to the nearest $10 amount.
121.9(b) The commissioner shall adjust the rate brackets and by the percentage determined
121.10pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in
121.11section 1(f)(3)(B) the word "1999" "2012" shall be substituted for the word "1992." For
121.122001 2014, the commissioner shall then determine the percent change from the 12 months
121.13ending on August 31, 1999 2012, to the 12 months ending on August 31, 2000 2013, and
121.14in each subsequent year, from the 12 months ending on August 31, 1999 2012, to the 12
121.15months ending on August 31 of the year preceding the taxable year. The determination of
121.16the commissioner pursuant to this subdivision shall not be considered a "rule" and shall
121.17not be subject to the Administrative Procedure Act contained in chapter 14.
121.18No later than December 15 of each year, the commissioner shall announce the
121.19specific percentage that will be used to adjust the tax rate brackets.
121.20EFFECTIVE DATE.This section is effective for taxable years beginning after
121.21December 31, 2012.

121.22    Sec. 17. Minnesota Statutes 2012, section 290.06, is amended by adding a subdivision
121.23to read:
121.24    Subd. 36. Greater Minnesota internship credit. (a) A taxpayer may take a credit
121.25against the tax due under this chapter equal to the lesser of:
121.26(1) 40 percent of the compensation paid to an intern qualifying under the program
121.27established under section 136A.129, but not to exceed $2,000 per intern; or
121.28(2) the amount certified by the Office of Higher Education under section 136A.129
121.29to the taxpayer.
121.30(b) Credits allowed to a partnership, a limited liability company taxed as a
121.31partnership, an S corporation, or multiple owners of property are passed through to the
121.32partners, members, shareholders, or owners, respectively, pro rata to each partner, member,
121.33shareholder, or owner based on their share of the entity's income for the taxable year.
122.1(c) If the amount of credit which the taxpayer is eligible to receive under this
122.2subdivision exceeds the taxpayer's tax liability under this chapter, the commissioner of
122.3revenue shall refund the excess to the taxpayer.
122.4(d) The amount necessary to:
122.5(1) pay claims for the refund provided in this subdivision; and
122.6(2) an amount equal to one percent of the total amount of the credits authorized
122.7under this subdivision for an administrative fee for the Office of Higher Education
122.8and participating eligible institutions is appropriated from the general fund to the
122.9commissioner of revenue, not to exceed $2,020,000.
122.10The commissioner of revenue shall transfer the amount of the administrative fee to
122.11the Office of Higher Education.
122.12EFFECTIVE DATE.This section is effective for taxable years beginning after
122.13December 31, 2013.

122.14    Sec. 18. Minnesota Statutes 2012, section 290.0677, subdivision 1, is amended to read:
122.15    Subdivision 1. Credit allowed; current military service. (a) An individual is
122.16allowed a credit against the tax due under this chapter equal to $59 for each month or
122.17portion thereof that the individual was in active military service in a designated area after
122.18September 11, 2001, and before January 1, 2009, while a Minnesota domiciliary.
122.19    (b) An individual is allowed a credit against the tax due under this chapter equal
122.20to $120 $200 for each month or portion thereof that the individual was in active military
122.21service in a designated area after December 31, 2008, while a Minnesota domiciliary.
122.22    (c) For active service performed after September 11, 2001, and before December 31,
122.232006, the individual may claim the credit in the taxable year beginning after December 31,
122.242005, and before January 1, 2007.
122.25    (d) For active service performed after December 31, 2006, the individual may claim
122.26the credit for the taxable year in which the active service was performed.
122.27    (e) If an individual entitled to the credit died prior to January 1, 2006, the individual's
122.28estate or heirs at law, if the individual's probate estate has closed or the estate was not
122.29probated, may claim the credit.
122.30EFFECTIVE DATE.This section is effective for taxable years beginning after
122.31December 31, 2012.

122.32    Sec. 19. Minnesota Statutes 2012, section 290.0677, subdivision 1a, is amended to read:
123.1    Subd. 1a. Credit allowed; past military service. (a) A qualified individual is
123.2allowed a credit against the tax imposed under this chapter for past military service. The
123.3credit equals $750 $1,500. The credit allowed under this subdivision is reduced by ten
123.4percent of adjusted gross income in excess of $30,000, but in no case is the credit less
123.5than zero.
123.6    (b) For a nonresident or a part-year resident, the credit under this subdivision
123.7must be allocated based on the percentage calculated under section 290.06, subdivision
123.82c
, paragraph (e).
123.9EFFECTIVE DATE.This section is effective for taxable years beginning after
123.10December 31, 2012.

123.11    Sec. 20. Minnesota Statutes 2012, section 290.0677, subdivision 2, is amended to read:
123.12    Subd. 2. Definitions. (a) For purposes of this section, the following terms have
123.13the meanings given.
123.14    (b) "Designated area" means a:
123.15    (1) combat zone designated by Executive Order from the President of the United
123.16States;
123.17    (2) qualified hazardous duty area, designated in Public Law; or
123.18    (3) location certified by the U. S. Department of Defense as eligible for combat zone
123.19tax benefits due to the location's direct support of military operations.
123.20    (c) "Active military service" means active duty service in any of the United States
123.21armed forces, the National Guard, or reserves.
123.22    (d) "Qualified individual" means an individual who has:
123.23    (1) either (i) met one of the following criteria:
123.24    (i) has served at least 20 years in the military or;
123.25    (ii) has a service-connected disability rating of 100 percent for a total and permanent
123.26disability; or
123.27    (iii) has been determined by the military to be eligible for compensation from a
123.28pension or other retirement pay from the federal government for service in the military,
123.29as computed under United States Code, title 10, sections 1401 to 1414, 1447 to 1455,
123.30or 12733; and
123.31    (2) separated from military service before the end of the taxable year.
123.32    (e) "Adjusted gross income" has the meaning given in section 61 of the Internal
123.33Revenue Code.
124.1EFFECTIVE DATE.This section is effective for taxable years beginning after
124.2December 31, 2012.

124.3    Sec. 21. Minnesota Statutes 2012, section 290.068, subdivision 1, is amended to read:
124.4    Subdivision 1. Credit allowed. A corporation, partners in a partnership, or
124.5shareholders in a corporation treated as an "S" corporation under section 290.9725 are
124.6allowed a credit against the tax computed under this chapter for the taxable year equal to:
124.7    (a) ten percent of the first $2,000,000 of the excess (if any) of
124.8    (1) the qualified research expenses for the taxable year, over
124.9    (2) the base amount; and
124.10    (b) 2.5 4.5 percent on all of such excess expenses over $2,000,000.
124.11EFFECTIVE DATE.This section is effective for taxable years beginning after
124.12December 31, 2012.

124.13    Sec. 22. Minnesota Statutes 2012, section 290.0681, subdivision 1, is amended to read:
124.14    Subdivision 1. Definitions. (a) For purposes of this section, the following terms
124.15have the meanings given.
124.16(b) "Account" means the historic credit administration account in the special
124.17revenue fund.
124.18(c) "Office" means the State Historic Preservation Office of the Minnesota Historical
124.19Society.
124.20(d) "Project" means rehabilitation of a certified historic structure, as defined in
124.21section 47(c)(3)(A) of the Internal Revenue Code, that is located in Minnesota and is
124.22allowed a federal credit under section 47(a)(2) of the Internal Revenue Code.
124.23(e) "Society" means the Minnesota Historical Society.
124.24(f) "Federal credit" means the credit allowed under section 47(a)(2) of the Internal
124.25Revenue Code.
124.26(g) "Placed in service" has the meaning used in section 47 of the Internal Revenue
124.27Code.
124.28(h) "Qualified rehabilitation expenditures" has the meaning given in section 47 of
124.29the Internal Revenue Code.
124.30EFFECTIVE DATE.This section is effective the day following final enactment.

124.31    Sec. 23. Minnesota Statutes 2012, section 290.0681, subdivision 3, is amended to read:
125.1    Subd. 3. Applications; allocations. (a) To qualify for a credit or grant under this
125.2section, the developer of a project must apply to the office before the rehabilitation begins.
125.3The application must contain the information and be in the form prescribed by the office.
125.4The office may collect a fee for application of up to $5,000 0.5 percent of qualified
125.5rehabilitation expenditures, up to $45,000, based on estimated qualified rehabilitation
125.6expenses expenditures, to offset costs associated with personnel and administrative
125.7expenses related to administering the credit and preparing the economic impact report
125.8in subdivision 9. Application fees are deposited in the account. The application must
125.9indicate if the application is for a credit or a grant in lieu of the credit or a combination of
125.10the two and designate the taxpayer qualifying for the credit or the recipient of the grant.
125.11    (b) Upon approving an application for credit, the office shall issue allocation
125.12certificates that:
125.13    (1) verify eligibility for the credit or grant;
125.14    (2) state the amount of credit or grant anticipated with the project, with the credit
125.15amount equal to 100 percent and the grant amount equal to 90 percent of the federal
125.16credit anticipated in the application;
125.17    (3) state that the credit or grant allowed may increase or decrease if the federal
125.18credit the project receives at the time it is placed in service is different than the amount
125.19anticipated at the time the allocation certificate is issued; and
125.20    (4) state the fiscal year in which the credit or grant is allocated, and that the taxpayer
125.21or grant recipient is entitled to receive the credit or grant at the time the project is placed
125.22in service, provided that date is within three calendar years following the issuance of
125.23the allocation certificate.
125.24    (c) The office, in consultation with the commissioner of revenue, shall determine
125.25if the project is eligible for a credit or a grant under this section and must notify the
125.26developer in writing of its determination. Eligibility for the credit is subject to review
125.27and audit by the commissioner of revenue.
125.28    (d) The federal credit recapture and repayment requirements under section 50 of the
125.29Internal Revenue Code do not apply to the credit allowed under this section.
125.30(e) Any decision of the office under paragraph (c) may be challenged as a contested
125.31case under chapter 14. The contested case proceeding must be initiated within 45 days of
125.32the date of written notification by the office.
125.33EFFECTIVE DATE.This section is effective the day following final enactment.

125.34    Sec. 24. Minnesota Statutes 2012, section 290.0681, subdivision 4, is amended to read:
126.1    Subd. 4. Credit certificates; grants. (a)(1) The developer of a project for which
126.2the office has issued an allocation certificate must notify the office when the project is
126.3placed in service. Upon verifying that the project has been placed in service, and was
126.4allowed a federal credit, the office must issue a credit certificate to the taxpayer designated
126.5in the application or must issue a grant to the recipient designated in the application.
126.6Credit certificates will be issued on a first come, first served basis according to the date
126.7and time of verification required under this clause. The credit certificate must state the
126.8amount of the credit.
126.9    (2) The credit amount equals the federal credit allowed for the project.
126.10    (3) The grant amount equals 90 percent of the federal credit allowed for the project.
126.11    (b) The recipient of a credit certificate may assign the certificate to another taxpayer,
126.12which is then allowed the credit under this section or section 297I.20, subdivision 3. An
126.13assignment is not valid unless the assignee notifies the commissioner within 30 days of the
126.14date that the assignment is made. The commissioner shall prescribe the forms necessary
126.15for notifying the commissioner of the assignment of a credit certificate and for claiming
126.16a credit by assignment.
126.17    (c) Credits passed through to partners, members, shareholders, or owners pursuant to
126.18subdivision 5 are not an assignment of a credit certificate under this subdivision.
126.19    (d) A grant agreement between the office and the recipient of a grant may allow the
126.20grant to be issued to another individual or entity.
126.21EFFECTIVE DATE.Paragraph (a) is effective beginning fiscal year 2016.
126.22Paragraph (b) is effective the day following final enactment.

126.23    Sec. 25. Minnesota Statutes 2012, section 290.0681, subdivision 5, is amended to read:
126.24    Subd. 5. Partnerships; multiple owners. Credits granted to a partnership, a limited
126.25liability company taxed as a partnership, S corporation, or multiple owners of property
126.26are passed through to the partners, members, shareholders, or owners, respectively, pro
126.27rata to each partner, member, shareholder, or owner based on their share of the entity's
126.28assets or as specially allocated in their organizational documents or any other executed
126.29agreement, as of the last day of the taxable year.
126.30EFFECTIVE DATE.This section is effective the day following final enactment.

126.31    Sec. 26. Minnesota Statutes 2012, section 290.0681, subdivision 7, is amended to read:
127.1    Subd. 7. Appropriations. (a) An amount sufficient to pay the refunds authorized
127.2under this section is appropriated to the commissioner from the general fund, not to
127.3exceed $15,000,000 per fiscal year.
127.4(b) Subject to the limitation in paragraph (a), an amount sufficient to pay the grants
127.5authorized under this section is appropriated to the society from the general fund.
127.6(c) Amounts in the account are appropriated to the society for costs associated with
127.7personnel and administrative expenses related to administering the credit for historic
127.8structure rehabilitation in this section, for refunding application fees under subdivision
127.93, and for costs associated with preparing the determination of economic impact report
127.10required in subdivision 9.
127.11EFFECTIVE DATE.This section is effective beginning fiscal year 2016.

127.12    Sec. 27. Minnesota Statutes 2012, section 290.0681, subdivision 10, is amended to read:
127.13    Subd. 10. Sunset. This section expires after fiscal year 2015 2021, except that
127.14the office's authority to issue credit certificates under subdivision 4 based on allocation
127.15certificates that were issued before fiscal year 2016 2022 remains in effect through 2018
127.16 2024, and the reporting requirements in subdivision 9 remain in effect through the year
127.17following the year in which all allocation certificates have either been canceled or resulted
127.18in issuance of credit certificates, or 2019 2025, whichever is earlier.
127.19EFFECTIVE DATE.This section is effective the day following final enactment.

127.20    Sec. 28. [290.0682] JOBS CREDIT; GREATER MINNESOTA BUSINESS
127.21EXPANSIONS.
127.22    Subdivision 1. Credit allowed. If authorized by its business subsidy agreement, a
127.23qualified business is allowed a credit against the taxes imposed under chapter 290. The
127.24credit equals seven percent of the:
127.25(1) lesser of:
127.26(i) the greater Minnesota payroll for the taxable year, less the greater Minnesota
127.27payroll for the base year; or
127.28(ii) the total Minnesota payroll for the taxable year, less the total Minnesota payroll
127.29for the base year; minus
127.30(2)(i) $35,000 multiplied by (ii) the number of full-time equivalent employees that
127.31the qualified business employs in greater Minnesota for the taxable year, minus the
127.32number of full-time equivalent employees the business employed in greater Minnesota in
127.33the base year, but not less than zero.
128.1    Subd. 2. Definitions. (a) For purposes of this section, the following terms have
128.2the meanings given.
128.3(b) "Base year" means the taxable year beginning during the calendar year prior to
128.4the calendar year in which the qualified business was certified under section 116J.3738.
128.5(c) "Full-time equivalent employees" means the equivalent of annualized expected
128.6hours of work equal to 2,080 hours.
128.7(d) "Greater Minnesota" has the meaning given in section 116J.3738.
128.8(e) "Greater Minnesota payroll" is that portion of the payroll factor under section
128.9290.191 that represents:
128.10(1) wages or salaries paid to an individual for services performed in greater
128.11Minnesota; plus
128.12(2) wages or salaries paid to individuals working from offices within greater
128.13Minnesota if their employment requires them to work outside of greater Minnesota and the
128.14work is incidental to the work performed by the individual within greater Minnesota; less
128.15(3) the amount of compensation attributable to any employee whose wages or salary
128.16are included in clause (1) or (2) that exceeds $125,000.
128.17(f) "Minnesota payroll" means the wages or salaries attributed to Minnesota under
128.18section 290.191, subdivision 12, for the qualified business or the unitary business of which
128.19the qualified business is a part, whichever is greater.
128.20(g) "Qualified business" means a qualified business certified under section
128.21116J.3738, subdivision 3.
128.22    Subd. 3. Inflation adjustment. For taxable years beginning after December 31,
128.232014, the dollar amounts in subdivision 1, clause (2), and subdivision 2, paragraph (e), are
128.24annually adjusted for inflation. The commissioner of revenue shall adjust the amounts by
128.25the percentage determined under section 290.06, subdivision 2d, for the taxable year.
128.26    Subd. 4. Refundable. If the amount of the credit exceeds the liability for tax under
128.27this chapter, the commissioner of revenue shall refund the excess to the qualified business.
128.28    Subd. 5. Appropriation. An amount sufficient to pay the refunds authorized by
128.29this section is appropriated to the commissioner of revenue from the general fund, not to
128.30exceed $5,000,000 in a taxable year.
128.31EFFECTIVE DATE.This section is effective for taxable years beginning after
128.32December 31, 2013.

128.33    Sec. 29. [290.0683] CLOTHING SALES TAX CREDIT.
128.34    Subdivision 1. Definitions. (a) For purposes of this section, the following terms
128.35have the meanings given.
129.1(b) "Income" has the meaning given in section 290.067, subdivision 2a.
129.2(c) "Dependent" has the meaning given in section 152 of the Internal Revenue Code.
129.3    Subd. 2. Credit allowed. A taxpayer is allowed a refundable credit against the tax
129.4imposed under this chapter. The credit is equal to $60 for a married couple filing a joint
129.5return, and $30 for all other filers, plus $30 for the first dependent claimed on the return,
129.6$15 for each of the second and third dependents claimed on the return, $10 for the fourth
129.7dependent claimed on the return, and $5 for each subsequent dependent.
129.8    Subd. 3. Limitations. The credit allowed in this section is reduced by $10 for every
129.9$1,000 of income in excess of 200 percent of the federal poverty guidelines.
129.10    Subd. 4. Appropriation. An amount sufficient to pay the refunds required by this
129.11section is appropriated to the commissioner from the general fund.
129.12EFFECTIVE DATE.This section is effective for taxable years beginning after
129.13December 31, 2012.

129.14    Sec. 30. Minnesota Statutes 2012, section 290.091, subdivision 2, is amended to read:
129.15    Subd. 2. Definitions. For purposes of the tax imposed by this section, the following
129.16terms have the meanings given:
129.17    (a) "Alternative minimum taxable income" means the sum of the following for
129.18the taxable year:
129.19    (1) the taxpayer's federal alternative minimum taxable income as defined in section
129.2055(b)(2) of the Internal Revenue Code;
129.21    (2) the taxpayer's itemized deductions allowed in computing federal alternative
129.22minimum taxable income, but excluding:
129.23    (i) the charitable contribution deduction under section 170 of the Internal Revenue
129.24Code;
129.25    (ii) the medical expense deduction;
129.26    (iii) the casualty, theft, and disaster loss deduction; and
129.27    (iv) the impairment-related work expenses of a disabled person;
129.28    (3) for depletion allowances computed under section 613A(c) of the Internal
129.29Revenue Code, with respect to each property (as defined in section 614 of the Internal
129.30Revenue Code), to the extent not included in federal alternative minimum taxable income,
129.31the excess of the deduction for depletion allowable under section 611 of the Internal
129.32Revenue Code for the taxable year over the adjusted basis of the property at the end of the
129.33taxable year (determined without regard to the depletion deduction for the taxable year);
130.1    (4) to the extent not included in federal alternative minimum taxable income, the
130.2amount of the tax preference for intangible drilling cost under section 57(a)(2) of the
130.3Internal Revenue Code determined without regard to subparagraph (E);
130.4    (5) to the extent not included in federal alternative minimum taxable income, the
130.5amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and
130.6    (6) the amount of addition required by section 290.01, subdivision 19a, clauses (7)
130.7to (9), (12), (13), and (16) to (18);
130.8    less the sum of the amounts determined under the following:
130.9    (1) interest income as defined in section 290.01, subdivision 19b, clause (1);
130.10    (2) an overpayment of state income tax as provided by section 290.01, subdivision
130.1119b
, clause (2), to the extent included in federal alternative minimum taxable income;
130.12    (3) the amount of investment interest paid or accrued within the taxable year on
130.13indebtedness to the extent that the amount does not exceed net investment income, as
130.14defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include
130.15amounts deducted in computing federal adjusted gross income;
130.16    (4) amounts subtracted from federal taxable income as provided by section 290.01,
130.17subdivision 19b
, clauses (6), (8) to (14), and (16), and (18); and
130.18(5) the amount of the net operating loss allowed under section 290.095, subdivision
130.1911
, paragraph (c).
130.20    In the case of an estate or trust, alternative minimum taxable income must be
130.21computed as provided in section 59(c) of the Internal Revenue Code.
130.22    (b) "Investment interest" means investment interest as defined in section 163(d)(3)
130.23of the Internal Revenue Code.
130.24    (c) "Net minimum tax" means the minimum tax imposed by this section.
130.25    (d) "Regular tax" means the tax that would be imposed under this chapter (without
130.26regard to this section and section 290.032), reduced by the sum of the nonrefundable
130.27credits allowed under this chapter.
130.28    (e) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable
130.29income after subtracting the exemption amount determined under subdivision 3.
130.30EFFECTIVE DATE.This section is effective for taxable years beginning after
130.31December 31, 2012.

130.32    Sec. 31. Minnesota Statutes 2012, section 290.0921, subdivision 1, is amended to read:
130.33    Subdivision 1. Tax imposed. In addition to the taxes computed under this chapter
130.34without regard to this section, the franchise tax imposed on corporations includes a tax
130.35equal to the excess, if any, for the taxable year of:
131.1(1) 5.8 5.3 percent of Minnesota alternative minimum taxable income; over
131.2(2) the tax imposed under section 290.06, subdivision 1, without regard to this section.
131.3EFFECTIVE DATE.This section is effective for taxable years beginning after
131.4December 31, 2012.

131.5    Sec. 32. Minnesota Statutes 2012, section 290.0921, subdivision 3, is amended to read:
131.6    Subd. 3. Alternative minimum taxable income. "Alternative minimum taxable
131.7income" is Minnesota net income as defined in section 290.01, subdivision 19, and
131.8includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e),
131.9(f), and (h) of the Internal Revenue Code. If a corporation files a separate company
131.10Minnesota tax return, the minimum tax must be computed on a separate company basis.
131.11If a corporation is part of a tax group filing a unitary return, the minimum tax must be
131.12computed on a unitary basis. The following adjustments must be made.
131.13(1) For purposes of the depreciation adjustments under section 56(a)(1) and
131.1456(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in
131.15service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal
131.16income tax purposes, including any modification made in a taxable year under section
131.17290.01, subdivision 19e , or Minnesota Statutes 1986, section 290.09, subdivision 7,
131.18paragraph (c).
131.19For taxable years beginning after December 31, 2000, the amount of any remaining
131.20modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986,
131.21section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation
131.22allowance in the first taxable year after December 31, 2000.
131.23(2) The portion of the depreciation deduction allowed for federal income tax
131.24purposes under section 168(k) of the Internal Revenue Code that is required as an addition
131.25under section 290.01, subdivision 19c, clause (15) (14), is disallowed in determining
131.26alternative minimum taxable income.
131.27(3) The subtraction for depreciation allowed under section 290.01, subdivision
131.2819d
, clause (17) (16), is allowed as a depreciation deduction in determining alternative
131.29minimum taxable income.
131.30(4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d)
131.31of the Internal Revenue Code does not apply.
131.32(5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal
131.33Revenue Code does not apply.
131.34(6) The special rule for dividends from section 936 companies under section
131.3556(g)(4)(C)(iii) does not apply.
132.1(7) The tax preference for depletion under section 57(a)(1) of the Internal Revenue
132.2Code does not apply.
132.3(8) The tax preference for intangible drilling costs under section 57(a)(2) of the
132.4Internal Revenue Code must be calculated without regard to subparagraph (E) and the
132.5subtraction under section 290.01, subdivision 19d, clause (4).
132.6(9) The tax preference for tax exempt interest under section 57(a)(5) of the Internal
132.7Revenue Code does not apply.
132.8(10) The tax preference for charitable contributions of appreciated property under
132.9section 57(a)(6) of the Internal Revenue Code does not apply.
132.10(11) For purposes of calculating the tax preference for accelerated depreciation or
132.11amortization on certain property placed in service before January 1, 1987, under section
132.1257(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the
132.13deduction allowed under section 290.01, subdivision 19e.
132.14For taxable years beginning after December 31, 2000, the amount of any remaining
132.15modification made under section 290.01, subdivision 19e, not previously deducted is a
132.16depreciation or amortization allowance in the first taxable year after December 31, 2004.
132.17(12) For purposes of calculating the adjustment for adjusted current earnings in
132.18section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable
132.19income" as it is used in section 56(g) of the Internal Revenue Code, means alternative
132.20minimum taxable income as defined in this subdivision, determined without regard to the
132.21adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code.
132.22(13) For purposes of determining the amount of adjusted current earnings under
132.23section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section
132.2456(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign dividend
132.25gross-up subtracted as provided in section 290.01, subdivision 19d, clause (1), (ii) the
132.26amount of refunds of income, excise, or franchise taxes subtracted as provided in section
132.27290.01, subdivision 19d , clause (9), or (iii) the amount of royalties, fees or other like
132.28income subtracted as provided in section 290.01, subdivision 19d, clause (10).
132.29(14) Alternative minimum taxable income excludes the income from operating in a
132.30job opportunity building zone as provided under section 469.317.
132.31(15) Alternative minimum taxable income excludes the income from operating in a
132.32biotechnology and health sciences industry zone as provided under section 469.337.
132.33Items of tax preference must not be reduced below zero as a result of the
132.34modifications in this subdivision.
132.35EFFECTIVE DATE.This section is effective for taxable years beginning after
132.36December 31, 2012.

133.1    Sec. 33. Minnesota Statutes 2012, section 290.0922, subdivision 1, is amended to read:
133.2    Subdivision 1. Imposition. (a) In addition to the tax imposed by this chapter without
133.3regard to this section, the franchise tax imposed on a corporation required to file under
133.4section 289A.08, subdivision 3, other than a corporation treated as an "S" corporation
133.5under section 290.9725 for the taxable year includes a tax equal to the following amounts:
133.6
133.7
If the sum of the corporation's Minnesota
property, payrolls, and sales or receipts is:
the tax equals:
133.8
133.9
less than
$
500,000
930,000
$
0
133.10
133.11
$
500,000
930,000
to
$
999,999
1,869,999
$
100
190
133.12
133.13
$
1,000,000
1,870,000
to
$
4,999,999
9,339,999
$
300
560
133.14
133.15
$
5,000,000
9,340,000
to
$
9,999,999
18,679,999
$
1,000
1,870
133.16
133.17
$
10,000,000
18,680,000
to
$
19,999,999
37,359,999
$
2,000
3,740
133.18
133.19
$
20,000,000
37,360,000
or
more
$
5,000
9,340
133.20(b) A tax is imposed for each taxable year on a corporation required to file a return
133.21under section 289A.12, subdivision 3, that is treated as an "S" corporation under section
133.22290.9725 and on a partnership required to file a return under section 289A.12, subdivision
133.233
, other than a partnership that derives over 80 percent of its income from farming. The
133.24tax imposed under this paragraph is due on or before the due date of the return for the
133.25taxpayer due under section 289A.18, subdivision 1. The commissioner shall prescribe
133.26the return to be used for payment of this tax. The tax under this paragraph is equal to
133.27the following amounts:
133.28
133.29
133.30
133.31
If the sum of the S corporation's
or partnership's Minnesota
property, payrolls, and sales or
receipts is:
the tax equals:
133.32
133.33
less than
$
500,000
930,000
$
0
133.34
133.35
$
500,000
930,000
to
$
999,999
1,869,999
$
100
190
133.36
133.37
$
1,000,000
1,870,000
to
$
4,999,999
9,339,999
$
300
560
133.38
133.39
$
5,000,000
9,340,000
to
$
9,999,999
18,679,999
$
1,000
1,870
133.40
133.41
$
10,000,000
18,680,000
to
$
19,999,999
37,359,999
$
2,000
3,740
133.42
133.43
$
20,000,000
37,360,000
or
more
$
5,000
9,340
134.1(c) The commissioner shall adjust the dollar amounts of both the tax and the property,
134.2payrolls, and sales or receipts thresholds in paragraphs (a) and (b) by the percentage
134.3determined pursuant to the provisions of section 1(f) of the Internal Revenue Code, except
134.4that in section 1(f)(3)(B) the year 2012 must be substituted for the year 1992. For 2014,
134.5the commissioner shall determine the percentage change from the 12 months ending on
134.6August 31, 2012, to the 12 months ending on August 31, 2013, and in each subsequent
134.7year, from the 12 months ending on August 31, 2012, to the 12 months ending on August
134.831 of the year preceding the taxable year. The determination of the commissioner pursuant
134.9to this subdivision is not a rule subject to the Administrative Procedure Act contained in
134.10chapter 14. The tax amounts as adjusted must be rounded to the nearest $10 amount and
134.11the threshold amounts must be adjusted to the nearest $10,000 amount. For tax amounts
134.12that end in $5, the amount is rounded up to the nearest $10 amount and for threshold
134.13amounts that end in $5,000, the amount is rounded up to the nearest $10,000.
134.14EFFECTIVE DATE.This section is effective for taxable years beginning after
134.15December 31, 2012.

134.16    Sec. 34. Minnesota Statutes 2012, section 290.095, subdivision 2, is amended to read:
134.17    Subd. 2. Defined and limited. (a) The term "net operating loss" as used in this
134.18section shall mean a net operating loss as defined in section 172(c) of the Internal Revenue
134.19Code, with the modifications specified in subdivision 4. The deductions provided in
134.20section 290.21 and the modification provided in section 290.01, subdivision 19d, clause
134.21(10), cannot be used in the determination of a net operating loss.
134.22(b) The term "net operating loss deduction" as used in this section means the
134.23aggregate of the net operating loss carryovers to the taxable year, computed in accordance
134.24with subdivision 3. The provisions of section 172(b) of the Internal Revenue Code relating
134.25to the carryback of net operating losses, do not apply.
134.26EFFECTIVE DATE.This section is effective for taxable years beginning after
134.27December 31, 2012.

134.28    Sec. 35. Minnesota Statutes 2012, section 290.17, subdivision 4, is amended to read:
134.29    Subd. 4. Unitary business principle. (a) If a trade or business conducted wholly
134.30within this state or partly within and partly without this state is part of a unitary business,
134.31the entire income of the unitary business is subject to apportionment pursuant to section
134.32290.191 . Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary
134.33business is considered to be derived from any particular source and none may be allocated
135.1to a particular place except as provided by the applicable apportionment formula. The
135.2provisions of this subdivision do not apply to business income subject to subdivision 5,
135.3income of an insurance company, or income of an investment company determined under
135.4section 290.36.
135.5(b) The term "unitary business" means business activities or operations which
135.6result in a flow of value between them. The term may be applied within a single legal
135.7entity or between multiple entities and without regard to whether each entity is a sole
135.8proprietorship, a corporation, a partnership or a trust.
135.9(c) Unity is presumed whenever there is unity of ownership, operation, and use,
135.10evidenced by centralized management or executive force, centralized purchasing,
135.11advertising, accounting, or other controlled interaction, but the absence of these
135.12centralized activities will not necessarily evidence a nonunitary business. Unity is also
135.13presumed when business activities or operations are of mutual benefit, dependent upon or
135.14contributory to one another, either individually or as a group.
135.15(d) Where a business operation conducted in Minnesota is owned by a business
135.16entity that carries on business activity outside the state different in kind from that
135.17conducted within this state, and the other business is conducted entirely outside the state, it
135.18is presumed that the two business operations are unitary in nature, interrelated, connected,
135.19and interdependent unless it can be shown to the contrary.
135.20(e) Unity of ownership is not deemed to exist when a corporation is involved unless
135.21that corporation is a member of a group of two or more business entities and more than 50
135.22percent of the voting stock of each member of the group is directly or indirectly owned
135.23by a common owner or by common owners, either corporate or noncorporate, or by one
135.24or more of the member corporations of the group. For this purpose, the term "voting
135.25stock" shall include membership interests of mutual insurance holding companies formed
135.26under section 66A.40.
135.27(f) The net income and apportionment factors under section 290.191 or 290.20 of
135.28foreign corporations and other foreign entities which are part of a unitary business shall not
135.29be included in the net income or the apportionment factors of the unitary business; except
135.30that the income and apportionment factors of a foreign corporation, foreign partnership, or
135.31other foreign entity, that are included in the federal taxable income, as defined in section
135.3263 of the Internal Revenue Code as amended through the date named in section 290.01,
135.33subdivision 19, of a domestic corporation, domestic entity, or individual must be included
135.34in determining net income and the factors to be used in the apportionment of net income
135.35pursuant to section 290.191 or 290.20. A foreign corporation or other foreign entity which
135.36is not part of a unitary business and which is required to file a return under this chapter shall
136.1file on a separate return basis. The net income and apportionment factors under section
136.2290.191 or 290.20 of foreign operating corporations shall not be included in the net income
136.3or the apportionment factors of the unitary business except as provided in paragraph (g).
136.4(g) The adjusted net income of a foreign operating corporation shall be deemed to
136.5be paid as a dividend on the last day of its taxable year to each shareholder thereof, in
136.6proportion to each shareholder's ownership, with which such corporation is engaged in
136.7a unitary business. Such deemed dividend shall be treated as a dividend under section
136.8290.21, subdivision 4.
136.9Dividends actually paid by a foreign operating corporation to a corporate shareholder
136.10which is a member of the same unitary business as the foreign operating corporation shall
136.11be eliminated from the net income of the unitary business in preparing a combined report
136.12for the unitary business. The adjusted net income of a foreign operating corporation
136.13shall be its net income adjusted as follows:
136.14(1) any taxes paid or accrued to a foreign country, the commonwealth of Puerto
136.15Rico, or a United States possession or political subdivision of any of the foregoing shall
136.16be a deduction; and
136.17(2) the subtraction from federal taxable income for payments received from foreign
136.18corporations or foreign operating corporations under section 290.01, subdivision 19d,
136.19clause (10), shall not be allowed.
136.20If a foreign operating corporation incurs a net loss, neither income nor deduction from
136.21that corporation shall be included in determining the net income of the unitary business.
136.22(h) (g) For purposes of determining the net income of a unitary business and the
136.23factors to be used in the apportionment of net income pursuant to section 290.191 or
136.24290.20 , there must be included only the income and apportionment factors of domestic
136.25corporations or other domestic entities other than foreign operating corporations that are
136.26determined to be part of the unitary business pursuant to this subdivision, notwithstanding
136.27that foreign corporations or other foreign entities might be included in the unitary
136.28business; except that the income and apportionment factors of a foreign corporation,
136.29foreign partnership, or other foreign entity, that is included in the federal taxable income,
136.30as defined in section 63 of the Internal Revenue Code as amended through the date
136.31named in section 290.01, subdivision 19, of a domestic corporation, domestic entity, or
136.32individual must be included in determining net income and the factors to be used in the
136.33apportionment of net income pursuant to section 290.191 or 290.20.
136.34(i) Deductions for expenses, interest, or taxes otherwise allowable under this chapter
136.35that are connected with or allocable against dividends, deemed dividends described
137.1in paragraph (g), or royalties, fees, or other like income described in section 290.01,
137.2subdivision 19d
, clause (10), shall not be disallowed.
137.3(j) (h) Each corporation or other entity, except a sole proprietorship, that is part of
137.4a unitary business must file combined reports as the commissioner determines. On the
137.5reports, all intercompany transactions between entities included pursuant to paragraph (h)
137.6 (g) must be eliminated and the entire net income of the unitary business determined in
137.7accordance with this subdivision is apportioned among the entities by using each entity's
137.8Minnesota factors for apportionment purposes in the numerators of the apportionment
137.9formula and the total factors for apportionment purposes of all entities included pursuant to
137.10paragraph (h) (g) in the denominators of the apportionment formula. All sales of the unitary
137.11business made within this state pursuant to section 290.191 or 290.20 must be included
137.12on the combined report of a corporation or other entity that is a member of the unitary
137.13business and is subject to the jurisdiction of this state to impose tax under this chapter.
137.14(k) (i) If a corporation has been divested from a unitary business and is included in a
137.15combined report for a fractional part of the common accounting period of the combined
137.16report:
137.17(1) its income includable in the combined report is its income incurred for that part
137.18of the year determined by proration or separate accounting; and
137.19(2) its sales, property, and payroll included in the apportionment formula must
137.20be prorated or accounted for separately.
137.21EFFECTIVE DATE.This section is effective for taxable years beginning after
137.22December 31, 2012.

137.23    Sec. 36. Minnesota Statutes 2012, section 290.191, subdivision 5, is amended to read:
137.24    Subd. 5. Determination of sales factor. For purposes of this section, the following
137.25rules apply in determining the sales factor.
137.26    (a) The sales factor includes all sales, gross earnings, or receipts received in the
137.27ordinary course of the business, except that the following types of income are not included
137.28in the sales factor:
137.29    (1) interest;
137.30    (2) dividends;
137.31    (3) sales of capital assets as defined in section 1221 of the Internal Revenue Code;
137.32    (4) sales of property used in the trade or business, except sales of leased property of
137.33a type which is regularly sold as well as leased; and
137.34    (5) sales of debt instruments as defined in section 1275(a)(1) of the Internal Revenue
137.35Code or sales of stock; and.
138.1    (6) royalties, fees, or other like income of a type which qualify for a subtraction from
138.2federal taxable income under section 290.01, subdivision 19d, clause (10).
138.3    (b) Sales of tangible personal property are made within this state if the property is
138.4received by a purchaser at a point within this state, and the taxpayer is taxable in this state,
138.5regardless of the f.o.b. point, other conditions of the sale, or the ultimate destination
138.6of the property.
138.7    (c) Tangible personal property delivered to a common or contract carrier or foreign
138.8vessel for delivery to a purchaser in another state or nation is a sale in that state or nation,
138.9regardless of f.o.b. point or other conditions of the sale.
138.10    (d) Notwithstanding paragraphs (b) and (c), when intoxicating liquor, wine,
138.11fermented malt beverages, cigarettes, or tobacco products are sold to a purchaser who is
138.12licensed by a state or political subdivision to resell this property only within the state of
138.13ultimate destination, the sale is made in that state.
138.14    (e) Sales made by or through a corporation that is qualified as a domestic
138.15international sales corporation under section 992 of the Internal Revenue Code are not
138.16considered to have been made within this state.
138.17    (f) Sales, rents, royalties, and other income in connection with real property is
138.18attributed to the state in which the property is located.
138.19    (g) Receipts from the lease or rental of tangible personal property, including finance
138.20leases and true leases, must be attributed to this state if the property is located in this
138.21state and to other states if the property is not located in this state. Receipts from the
138.22lease or rental of moving property including, but not limited to, motor vehicles, rolling
138.23stock, aircraft, vessels, or mobile equipment are included in the numerator of the receipts
138.24factor to the extent that the property is used in this state. The extent of the use of moving
138.25property is determined as follows:
138.26    (1) A motor vehicle is used wholly in the state in which it is registered.
138.27    (2) The extent that rolling stock is used in this state is determined by multiplying
138.28the receipts from the lease or rental of the rolling stock by a fraction, the numerator of
138.29which is the miles traveled within this state by the leased or rented rolling stock and the
138.30denominator of which is the total miles traveled by the leased or rented rolling stock.
138.31    (3) The extent that an aircraft is used in this state is determined by multiplying the
138.32receipts from the lease or rental of the aircraft by a fraction, the numerator of which is
138.33the number of landings of the aircraft in this state and the denominator of which is the
138.34total number of landings of the aircraft.
138.35    (4) The extent that a vessel, mobile equipment, or other mobile property is used in
138.36the state is determined by multiplying the receipts from the lease or rental of the property
139.1by a fraction, the numerator of which is the number of days during the taxable year the
139.2property was in this state and the denominator of which is the total days in the taxable year.
139.3    (h) Royalties and other income not described in paragraph (a), clause (6), received
139.4for the use of or for the privilege of using intangible property, including patents,
139.5know-how, formulas, designs, processes, patterns, copyrights, trade names, service names,
139.6franchises, licenses, contracts, customer lists, or similar items, must be attributed to the
139.7state in which the property is used by the purchaser. If the property is used in more
139.8than one state, the royalties or other income must be apportioned to this state pro rata
139.9according to the portion of use in this state. If the portion of use in this state cannot be
139.10determined, the royalties or other income must be excluded from both the numerator
139.11and the denominator. Intangible property is used in this state if the purchaser uses the
139.12intangible property or the rights therein in the regular course of its business operations in
139.13this state, regardless of the location of the purchaser's customers.
139.14    (i) Sales of intangible property are made within the state in which the property is
139.15used by the purchaser. If the property is used in more than one state, the sales must be
139.16apportioned to this state pro rata according to the portion of use in this state. If the
139.17portion of use in this state cannot be determined, the sale must be excluded from both the
139.18numerator and the denominator of the sales factor. Intangible property is used in this
139.19state if the purchaser used the intangible property in the regular course of its business
139.20operations in this state.
139.21    (j) Receipts from the performance of services must be attributed to the state where
139.22the services are received. For the purposes of this section, receipts from the performance
139.23of services provided to a corporation, partnership, or trust may only be attributed to a state
139.24where it has a fixed place of doing business. If the state where the services are received is
139.25not readily determinable or is a state where the corporation, partnership, or trust receiving
139.26the service does not have a fixed place of doing business, the services shall be deemed
139.27to be received at the location of the office of the customer from which the services were
139.28ordered in the regular course of the customer's trade or business. If the ordering office
139.29cannot be determined, the services shall be deemed to be received at the office of the
139.30customer to which the services are billed.
139.31    (k) For the purposes of this subdivision and subdivision 6, paragraph (l), receipts
139.32from management, distribution, or administrative services performed by a corporation
139.33or trust for a fund of a corporation or trust regulated under United States Code, title 15,
139.34sections 80a-1 through 80a-64, must be attributed to the state where the shareholder of
139.35the fund resides. Under this paragraph, receipts for services attributed to shareholders are
139.36determined on the basis of the ratio of: (1) the average of the outstanding shares in the
140.1fund owned by shareholders residing within Minnesota at the beginning and end of each
140.2year; and (2) the average of the total number of outstanding shares in the fund at the
140.3beginning and end of each year. Residence of the shareholder, in the case of an individual,
140.4is determined by the mailing address furnished by the shareholder to the fund. Residence
140.5of the shareholder, when the shares are held by an insurance company as a depositor for
140.6the insurance company policyholders, is the mailing address of the policyholders. In
140.7the case of an insurance company holding the shares as a depositor for the insurance
140.8company policyholders, if the mailing address of the policyholders cannot be determined
140.9by the taxpayer, the receipts must be excluded from both the numerator and denominator.
140.10Residence of other shareholders is the mailing address of the shareholder.
140.11EFFECTIVE DATE.This section is effective for taxable years beginning after
140.12December 31, 2012.

140.13    Sec. 37. Minnesota Statutes 2012, section 290.21, subdivision 4, is amended to read:
140.14    Subd. 4. Dividends received from another corporation. (a)(1) Eighty percent
140.15of dividends received by a corporation during the taxable year from another corporation,
140.16in which the recipient owns 20 percent or more of the stock, by vote and value, not
140.17including stock described in section 1504(a)(4) of the Internal Revenue Code when the
140.18corporate stock with respect to which dividends are paid does not constitute the stock in
140.19trade of the taxpayer or would not be included in the inventory of the taxpayer, or does not
140.20constitute property held by the taxpayer primarily for sale to customers in the ordinary
140.21course of the taxpayer's trade or business, or when the trade or business of the taxpayer
140.22does not consist principally of the holding of the stocks and the collection of the income
140.23and gains therefrom; and
140.24    (2)(i) the remaining 20 percent of dividends if the dividends received are the stock in
140.25an affiliated company transferred in an overall plan of reorganization and the dividend
140.26is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as
140.27amended through December 31, 1989;
140.28    (ii) the remaining 20 percent of dividends if the dividends are received from a
140.29corporation which is subject to tax under section 290.36 and which is a member of an
140.30affiliated group of corporations as defined by the Internal Revenue Code and the dividend
140.31is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as
140.32amended through December 31, 1989, or is deducted under an election under section
140.33243(b) of the Internal Revenue Code; or
140.34    (iii) the remaining 20 percent of the dividends if the dividends are received from a
140.35property and casualty insurer as defined under section 60A.60, subdivision 8, which is a
141.1member of an affiliated group of corporations as defined by the Internal Revenue Code
141.2and either: (A) the dividend is eliminated in consolidation under Treasury Regulation
141.31.1502-14(a), as amended through December 31, 1989; or (B) the dividend is deducted
141.4under an election under section 243(b) of the Internal Revenue Code.
141.5    (b) Seventy percent of dividends received by a corporation during the taxable year
141.6from another corporation in which the recipient owns less than 20 percent of the stock,
141.7by vote or value, not including stock described in section 1504(a)(4) of the Internal
141.8Revenue Code when the corporate stock with respect to which dividends are paid does not
141.9constitute the stock in trade of the taxpayer, or does not constitute property held by the
141.10taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or
141.11business, or when the trade or business of the taxpayer does not consist principally of the
141.12holding of the stocks and the collection of income and gain therefrom.
141.13    (c) The dividend deduction provided in this subdivision shall be allowed only with
141.14respect to dividends that are included in a corporation's Minnesota taxable net income
141.15for the taxable year.
141.16    The dividend deduction provided in this subdivision does not apply to a dividend
141.17from a corporation which, for the taxable year of the corporation in which the distribution
141.18is made or for the next preceding taxable year of the corporation, is a corporation exempt
141.19from tax under section 501 of the Internal Revenue Code.
141.20The dividend deduction provided in this subdivision does not apply to a dividend
141.21received from a real estate investment trust as defined in section 856 of the Internal
141.22Revenue Code.
141.23    The dividend deduction provided in this subdivision applies to the amount of
141.24regulated investment company dividends only to the extent determined under section
141.25854(b) of the Internal Revenue Code.
141.26    The dividend deduction provided in this subdivision shall not be allowed with
141.27respect to any dividend for which a deduction is not allowed under the provisions of
141.28section 246(c) of the Internal Revenue Code.
141.29    (d) If dividends received by a corporation that does not have nexus with Minnesota
141.30under the provisions of Public Law 86-272 are included as income on the return of
141.31an affiliated corporation permitted or required to file a combined report under section
141.32290.17, subdivision 4 , or 290.34, subdivision 2, then for purposes of this subdivision the
141.33determination as to whether the trade or business of the corporation consists principally
141.34of the holding of stocks and the collection of income and gains therefrom shall be made
141.35with reference to the trade or business of the affiliated corporation having a nexus with
141.36Minnesota.
142.1    (e) The deduction provided by this subdivision does not apply if the dividends are
142.2paid by a FSC as defined in section 922 of the Internal Revenue Code.
142.3    (f) If one or more of the members of the unitary group whose income is included on
142.4the combined report received a dividend, the deduction under this subdivision for each
142.5member of the unitary business required to file a return under this chapter is the product
142.6of: (1) 100 percent of the dividends received by members of the group; (2) the percentage
142.7allowed pursuant to paragraph (a) or (b); and (3) the percentage of the taxpayer's business
142.8income apportionable to this state for the taxable year under section 290.191 or 290.20.
142.9EFFECTIVE DATE.This section is effective for taxable years beginning after
142.10December 31, 2012.

142.11    Sec. 38. Minnesota Statutes 2012, section 297G.04, subdivision 2, is amended to read:
142.12    Subd. 2. Tax credit. A qualified brewer producing fermented malt beverages
142.13is entitled to a tax credit of $4.60 per barrel on 25,000 barrels sold in any fiscal year
142.14beginning July 1, regardless of the alcohol content of the product. Qualified brewers may
142.15take the credit on the 18th day of each month, but the total credit allowed may not exceed
142.16in any fiscal year the lesser of:
142.17    (1) the liability for tax; or
142.18    (2) $115,000.
142.19    For purposes of this subdivision, a "qualified brewer" means a brewer, whether or
142.20not located in this state, manufacturing less than 100,000 250,000 barrels of fermented
142.21malt beverages in the calendar year immediately preceding the calendar year for which
142.22the credit under this subdivision is claimed. In determining the number of barrels, all
142.23brands or labels of a brewer must be combined. All facilities for the manufacture of
142.24fermented malt beverages owned or controlled by the same person, corporation, or other
142.25entity must be treated as a single brewer.
142.26EFFECTIVE DATE.This section is effective for determinations based on calendar
142.27year 2012 production and thereafter.

142.28    Sec. 39. Minnesota Statutes 2012, section 298.01, subdivision 3b, is amended to read:
142.29    Subd. 3b. Deductions. (a) For purposes of determining taxable income under
142.30subdivision 3, the deductions from gross income include only those expenses necessary
142.31to convert raw ores to marketable quality. Such expenses include costs associated with
142.32refinement but do not include expenses such as transportation, stockpiling, marketing, or
142.33marine insurance that are incurred after marketable ores are produced, unless the expenses
143.1are included in gross income. The allowable deductions from a mine or plant that mines
143.2and produces more than one mineral, metal, or energy resource must be determined
143.3separately for the purposes of computing the deduction in section 290.01, subdivision 19c,
143.4clause (9). These deductions may be combined on one occupation tax return to arrive at
143.5the deduction from gross income for all production.
143.6(b) The provisions of section 290.01, subdivisions 19c, clauses (6) and (9), and 19d,
143.7clauses (7) and (11) (10), are not used to determine taxable income.
143.8EFFECTIVE DATE.This section is effective for taxable years beginning after
143.9December 31, 2012.

143.10    Sec. 40. Laws 2010, chapter 216, section 11, the effective date, is amended to read:
143.11EFFECTIVE DATE.This section is effective for taxable years beginning
143.12after December 31, 2009, for certified historic structures for which qualified costs of
143.13rehabilitation are first paid under construction contracts entered into after May 1, 2010
143.14 rehabilitation expenditures are first paid by the developer or taxpayer after May 1, 2010,
143.15for rehabilitation that occurs after May 1, 2010, provided that the application under
143.16subdivision 3 is submitted before the project is placed in service.
143.17EFFECTIVE DATE.This section is effective the day following final enactment
143.18and applies retroactively for taxable years beginning after December 31, 2009, and for
143.19certified historic structures placed in service after May 1, 2010, but the office may not
143.20issue certificates allowed under the change to this section until July 1, 2013.

143.21    Sec. 41. CLOTHING SALES TAX CREDIT; TAX YEAR 2013.
143.22For tax year 2013 only, the credit calculated under Minnesota Statutes, section
143.23290.0683, is the credit under Minnesota Statutes, section 290.0683, subdivision 2, after
143.24limitations imposed under Minnesota Statutes, section 290.0683, subdivision 3, multiplied
143.25by one-half.
143.26EFFECTIVE DATE.This section is effective for taxable years beginning after
143.27December 31, 2012.

143.28    Sec. 42. REPEALER.
143.29Minnesota Statutes 2012, sections 290.01, subdivision 6b; and 290.0921, subdivision
143.307, are repealed.
144.1EFFECTIVE DATE.This section is effective for taxable years beginning after
144.2December 31, 2012.

144.3ARTICLE 6
144.4ESTATE TAXES

144.5    Section 1. Minnesota Statutes 2012, section 291.03, subdivision 8, is amended to read:
144.6    Subd. 8. Definitions. (a) For purposes of this section, the following terms have the
144.7meanings given in this subdivision.
144.8(b) "Family member" means a family member as defined in section 2032A(e)(2) of
144.9the Internal Revenue Code, or a trust whose present beneficiaries are all family members
144.10as defined in section 2032A(e)(2) of the Internal Revenue Code.
144.11(c) "Qualified heir" means a family member who acquired qualified property from
144.12 upon the death of the decedent and satisfies the requirement under subdivision 9, clause
144.13(6) (7), or subdivision 10, clause (4) (5), for the property.
144.14(d) "Qualified property" means qualified small business property under subdivision
144.159 and qualified farm property under subdivision 10.
144.16EFFECTIVE DATE.This section is effective retroactively for estates of decedents
144.17dying after June 30, 2011.

144.18    Sec. 2. Minnesota Statutes 2012, section 291.03, subdivision 9, is amended to read:
144.19    Subd. 9. Qualified small business property. Property satisfying all of the following
144.20requirements is qualified small business property:
144.21(1) The value of the property was included in the federal adjusted taxable estate.
144.22(2) The property consists of the assets of a trade or business or shares of stock or
144.23other ownership interests in a corporation or other entity engaged in a trade or business.
144.24The decedent or the decedent's spouse must have materially participated in the trade or
144.25business within the meaning of section 469 of the Internal Revenue Code during the
144.26taxable year that ended before the date of the decedent's death. Shares of stock in a
144.27corporation or an ownership interest in another type of entity do not qualify under this
144.28subdivision if the shares or ownership interests are traded on a public stock exchange at
144.29any time during the three-year period ending on the decedent's date of death. For purposes
144.30of this subdivision, an ownership interest includes the interest the decedent is deemed to
144.31own under sections 2036, 2037, and 2038 of the Internal Revenue Code.
144.32(3) During the taxable year that ended before the decedent's death, the trade or
144.33business must not have been a passive activity within the meaning of section 469(c) of the
145.1Internal Revenue Code, and the decedent or the decedent's spouse must have materially
145.2participated in the trade or business within the meaning of section 469(h) of the Internal
145.3Revenue Code, excluding section 469(h)(3) of the Internal Revenue Code and any other
145.4provision provided by United States Treasury Department regulation that substitutes
145.5material participation in prior taxable years for material participation in the taxable year
145.6that ended before the decedent's death.
145.7(4) The gross annual sales of the trade or business were $10,000,000 or less for the
145.8last taxable year that ended before the date of the death of the decedent.
145.9(4) (5) The property does not consist of cash or, cash equivalents, publicly traded
145.10securities, or assets not used in the operation of the trade or business. For property
145.11consisting of shares of stock or other ownership interests in an entity, the amount value of
145.12cash or, cash equivalents, publicly traded securities, or assets not used in the operation of
145.13the trade or business held by the corporation or other entity must be deducted from the
145.14value of the property qualifying under this subdivision in proportion to the decedent's
145.15share of ownership of the entity on the date of death.
145.16(5) (6) The decedent continuously owned the property, including property the
145.17decedent is deemed to own under sections 2036, 2037, and 2038 of the Internal Revenue
145.18Code, for the three-year period ending on the date of death of the decedent. In the case of
145.19a sole proprietor, if the property replaced similar property within the three-year period,
145.20the replacement property will be treated as having been owned for the three-year period
145.21ending on the date of death of the decedent.
145.22(6) A family member continuously uses the property in the operation of the trade or
145.23business for three years following the date of death of the decedent.
145.24(7) For three years following the date of death of the decedent, the trade or business
145.25is not a passive activity within the meaning of section 469(c) of the Internal Revenue Code,
145.26and a family member materially participates in the operation of the trade or business within
145.27the meaning of section 469(h) of the Internal Revenue Code, excluding section 469(h)(3)
145.28of the Internal Revenue Code and any other provision provided by United States Treasury
145.29Department regulation that substitutes material participation in prior taxable years for
145.30material participation in the three years following the date of death of the decedent.
145.31(8) The estate and the qualified heir elect to treat the property as qualified small
145.32business property and agree, in the form prescribed by the commissioner, to pay the
145.33recapture tax under subdivision 11, if applicable.
145.34EFFECTIVE DATE.This section is effective retroactively for estates of decedents
145.35dying after June 30, 2011.

146.1    Sec. 3. Minnesota Statutes 2012, section 291.03, subdivision 10, is amended to read:
146.2    Subd. 10. Qualified farm property. Property satisfying all of the following
146.3requirements is qualified farm property:
146.4(1) The value of the property was included in the federal adjusted taxable estate.
146.5(2) The property consists of a farm meeting the requirements of agricultural land as
146.6defined in section 500.24, subdivision 2, paragraph (g), and is owned by a person or entity
146.7that is either not subject to or is in compliance with section 500.24, and was classified for
146.8property tax purposes as the homestead of the decedent or the decedent's spouse or both
146.9under section 273.124, and as class 2a property under section 273.13, subdivision 23.
146.10(3) For property taxes payable in the taxable year of the decedent's death, the
146.11decedent's interest in the property was classified as the homestead of the decedent, the
146.12decedent's spouse, or both under section 273.124 and as class 2a property under section
146.13273.13, subdivision 23.
146.14(4) The decedent continuously owned the property, including property the decedent
146.15is deemed to own under sections 2036, 2037, and 2038 of the Internal Revenue Code, for
146.16the three-year period ending on the date of death of the decedent either by ownership of
146.17the agricultural land or pursuant to holding an interest in an entity that is not subject to
146.18or is in compliance with section 500.24.
146.19(4) A family member continuously uses the property in the operation of the trade or
146.20business (5) The property is classified for property tax purposes as class 2a property under
146.21section 273.13, subdivision 23, for three years following the date of death of the decedent.
146.22(5) (6) The estate and the qualified heir elect to treat the property as qualified farm
146.23property and agree, in a form prescribed by the commissioner, to pay the recapture tax
146.24under subdivision 11, if applicable.
146.25EFFECTIVE DATE.This section is effective retroactively for estates of decedents
146.26dying after June 30, 2011.

146.27    Sec. 4. Minnesota Statutes 2012, section 291.03, subdivision 11, is amended to read:
146.28    Subd. 11. Recapture tax. (a) If, within three years after the decedent's death and
146.29before the death of the qualified heir, the qualified heir disposes of any interest in the
146.30qualified property, other than by a disposition to a family member, or a family member
146.31ceases to use the qualified property which was acquired or passed from the decedent
146.32 satisfy the requirement under subdivision 9, clause (7); or 10, clause (5), an additional
146.33estate tax is imposed on the property. In the case of a sole proprietor, if the qualified heir
146.34replaces qualified small business property excluded under subdivision 9 with similar
147.1property, then the qualified heir will not be treated as having disposed of an interest in the
147.2qualified property.
147.3(b) The amount of the additional tax equals the amount of the exclusion claimed by
147.4the estate under subdivision 8, paragraph (d), multiplied by 16 percent.
147.5(c) The additional tax under this subdivision is due on the day which is six months
147.6after the date of the disposition or cessation in paragraph (a).
147.7EFFECTIVE DATE.This section is effective retroactively for estates of decedents
147.8dying after June 30, 2011.

147.9ARTICLE 7
147.10SALES AND USE TAXES; LOCAL SALES TAXES

147.11    Section 1. Minnesota Statutes 2012, section 16C.03, subdivision 18, is amended to read:
147.12    Subd. 18. Contracts with foreign vendors. (a) The commissioner and other
147.13agencies to which this section applies and the legislative branch of government shall,
147.14subject to paragraph (d), cancel a contract for goods or services from a vendor or an
147.15affiliate of a vendor or suspend or debar a vendor or an affiliate of a vendor from future
147.16contracts upon notification from the commissioner of revenue that the vendor or an
147.17affiliate of the vendor has not registered to collect the sales and use tax imposed under
147.18chapter 297A on its sales in Minnesota or to a destination in Minnesota. This subdivision
147.19shall not apply to state colleges and universities, the courts, and any agency in the judicial
147.20branch of government. For purposes of this subdivision, the term "affiliate" means any
147.21person or entity that is controlled by, or is under common control of, a vendor through
147.22stock ownership or other affiliation.
147.23    (b) Beginning January 1, 2006, Each vendor or affiliate of a vendor selling goods or
147.24services, subject to tax under chapter 297A, to an agency or the legislature must register
147.25with the commissioner of revenue as provided in section 297A.83, and comply with all legal
147.26requirements imposed on a person maintaining a place of business in this state, including
147.27the requirement to collect and remit sales and use tax on all taxable sales to customers in
147.28the state, and provide its Minnesota sales and use tax business identification number, upon
147.29request, to show that the vendor is registered to collect Minnesota sales or use tax.
147.30    (c) The commissioner of revenue shall periodically provide to the commissioner
147.31and the legislative branch a list of vendors who have not registered to collect Minnesota
147.32sales and use tax and who are subject to being suspended or debarred as vendors or having
147.33their contracts canceled.
148.1    (d) The provisions of this subdivision may be waived by the commissioner or the
148.2legislative branch when the vendor is the single source of such goods or services, in the
148.3event of an emergency, or when it is in the best interests of the state as determined by the
148.4commissioner in consultation with the commissioner of revenue. Such consultation is not
148.5a disclosure violation under chapter 270B.
148.6EFFECTIVE DATE.This section is effective for sales and purchases made after
148.7June 30, 2013.

148.8    Sec. 2. Minnesota Statutes 2012, section 297A.61, subdivision 3, is amended to read:
148.9    Subd. 3. Sale and purchase. (a) "Sale" and "purchase" include, but are not
148.10limited to, each of the transactions listed in this subdivision. In applying the provisions
148.11of this chapter, the terms "tangible personal property" and "retail sale" include taxable
148.12services listed in clause (6), items (i) to (vi) and (viii), and the provision of these taxable
148.13services, unless specifically provided otherwise. Services performed by an employee
148.14for an employer are not taxable. Services performed by a partnership or association for
148.15another partnership or association are not taxable if one of the entities owns or controls
148.16more than 80 percent of the voting power of the equity interest in the other entity. Services
148.17performed between members of an affiliated group of corporations are not taxable. For
148.18purposes of the preceding sentence, "affiliated group of corporations" means those entities
148.19that would be classified as members of an affiliated group as defined under United States
148.20Code, title 26, section 1504, disregarding the exclusions in section 1504(b).
148.21    (b) Sale and purchase include:
148.22    (1) any transfer of title or possession, or both, of tangible personal property, whether
148.23absolutely or conditionally, for a consideration in money or by exchange or barter; and
148.24    (2) the leasing of or the granting of a license to use or consume, for a consideration
148.25in money or by exchange or barter, tangible personal property, other than a manufactured
148.26home used for residential purposes for a continuous period of 30 days or more.
148.27    (c) Sale and purchase include the production, fabrication, printing, or processing of
148.28tangible personal property for a consideration for consumers who furnish either directly or
148.29indirectly the materials used in the production, fabrication, printing, or processing.
148.30    (d) Sale and purchase include the preparing for a consideration of food.
148.31Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited
148.32to, the following:
148.33    (1) prepared food sold by the retailer;
148.34    (2) soft drinks;
148.35    (3) candy;
149.1    (4) dietary supplements; and
149.2    (5) all food sold through vending machines.
149.3    (e) A sale and a purchase includes the furnishing for a consideration of electricity,
149.4gas, water, or steam for use or consumption within this state.
149.5    (f) A sale and a purchase includes:
149.6    (1) the transfer for a consideration of prewritten computer software whether
149.7delivered electronically, by load and leave, or otherwise.; and
149.8    (2) the receipt of custom computer software whether delivered electronically, by
149.9load and leave, or otherwise.
149.10    (g) A sale and a purchase includes the furnishing for a consideration of the following
149.11services:
149.12    (1) the privilege of admission to places of amusement, exhibitions, recreational
149.13areas, or professional athletic events, including the rental of box seats and suites at
149.14professional athletic events, and the making available of amusement devices, tanning
149.15facilities, reducing salons, steam baths, Turkish baths, health clubs, and spas or athletic
149.16facilities. "Exhibitions" means trade shows, boat shows, home shows, garden shows,
149.17and other similar events;
149.18    (2) lodging and related services by a hotel, rooming house, resort, campground,
149.19motel, or trailer camp, including furnishing the guest of the facility with access to
149.20telecommunication services, and the granting of any similar license to use real property in
149.21a specific facility, other than the renting or leasing of it for a continuous period of 30 days
149.22or more under an enforceable written agreement that may not be terminated without prior
149.23notice and including accommodations intermediary services provided in connection with
149.24other services provided under this clause;
149.25    (3) nonresidential parking services, whether on a contractual, hourly, or other
149.26periodic basis, except for parking at a meter;
149.27    (4) the granting of membership in a club, association, or other organization if:
149.28    (i) the club, association, or other organization makes available for the use of its
149.29members sports and athletic facilities, without regard to whether a separate charge is
149.30assessed for use of the facilities; and
149.31    (ii) use of the sports and athletic facility is not made available to the general public
149.32on the same basis as it is made available to members.
149.33Granting of membership means both onetime initiation fees and periodic membership
149.34dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and
149.35squash courts; basketball and volleyball facilities; running tracks; exercise equipment;
149.36swimming pools; and other similar athletic or sports facilities;
150.1    (5) delivery of aggregate materials by a third party, excluding delivery of aggregate
150.2material used in road construction; and delivery of concrete block by a third party if the
150.3delivery would be subject to the sales tax if provided by the seller of the concrete block.
150.4For purposes of this clause, "road construction" means construction of:
150.5    (i) public roads;
150.6    (ii) cartways; and
150.7    (iii) private roads in townships located outside of the seven-county metropolitan area
150.8up to the point of the emergency response location sign; and
150.9    (6) services as provided in this clause:
150.10    (i) laundry and dry cleaning services including cleaning, pressing, repairing, altering,
150.11and storing clothes, linen services and supply, cleaning and blocking hats, and carpet,
150.12drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not
150.13include services provided by coin operated facilities operated by the customer;
150.14    (ii) motor vehicle washing, waxing, and cleaning services, including services
150.15provided by coin operated facilities operated by the customer, and rustproofing,
150.16undercoating, and towing of motor vehicles;
150.17    (iii) building and residential cleaning, maintenance, and disinfecting services and
150.18pest control and exterminating services;
150.19    (iv) detective, security, burglar, fire alarm, and armored car services; but not
150.20including services performed within the jurisdiction they serve by off-duty licensed peace
150.21officers as defined in section 626.84, subdivision 1, or services provided by a nonprofit
150.22organization or any organization at the direction of a county for monitoring and electronic
150.23surveillance of persons placed on in-home detention pursuant to court order or under the
150.24direction of the Minnesota Department of Corrections;
150.25    (v) pet grooming services;
150.26    (vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting
150.27and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor
150.28plant care; tree, bush, shrub, and stump removal, except when performed as part of a land
150.29clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for
150.30public utility lines. Services performed under a construction contract for the installation of
150.31shrubbery, plants, sod, trees, bushes, and similar items are not taxable;
150.32    (vii) massages, except when provided by a licensed health care facility or
150.33professional or upon written referral from a licensed health care facility or professional for
150.34treatment of illness, injury, or disease; and
150.35    (viii) the furnishing of lodging, board, and care services for animals in kennels and
150.36other similar arrangements, but excluding veterinary and horse boarding services.
151.1    In applying the provisions of this chapter, the terms "tangible personal property"
151.2and "retail sale" include taxable services listed in clause (6), items (i) to (vi) and (viii),
151.3and the provision of these taxable services, unless specifically provided otherwise.
151.4Services performed by an employee for an employer are not taxable. Services performed
151.5by a partnership or association for another partnership or association are not taxable if
151.6one of the entities owns or controls more than 80 percent of the voting power of the
151.7equity interest in the other entity. Services performed between members of an affiliated
151.8group of corporations are not taxable. For purposes of the preceding sentence, "affiliated
151.9group of corporations" means those entities that would be classified as members of an
151.10affiliated group as defined under United States Code, title 26, section 1504, disregarding
151.11the exclusions in section 1504(b).
151.12    For purposes of clause (5), "road construction" means construction of (1) public
151.13roads, (2) cartways, and (3) private roads in townships located outside of the seven-county
151.14metropolitan area up to the point of the emergency response location sign.
151.15    (h) A sale and a purchase includes the furnishing for a consideration of tangible
151.16personal property or taxable services by the United States or any of its agencies or
151.17instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political
151.18subdivisions.
151.19    (i) A sale and a purchase includes the furnishing for a consideration of
151.20telecommunications services, ancillary services associated with telecommunication
151.21services, cable and pay television services, and direct satellite services. Telecommunication
151.22services include, but are not limited to, the following services, as defined in section
151.23297A.669 : air-to-ground radiotelephone service, mobile telecommunication service,
151.24postpaid calling service, prepaid calling service, prepaid wireless calling service, and
151.25private communication services. The services in this paragraph are taxed to the extent
151.26allowed under federal law.
151.27    (j) A sale and a purchase includes the furnishing for a consideration of installation if
151.28the installation charges would be subject to the sales tax if the installation were provided
151.29by the seller of the item being installed.
151.30    (k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer
151.31to a customer when (1) the vehicle is rented by the customer for a consideration, or (2)
151.32the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section
151.3359B.02, subdivision 11.
151.34    (l) A sale and a purchase includes the furnishing for a consideration of specified
151.35digital products or other digital products and granting the right for a consideration to use
151.36specified digital products or other digital products on a temporary or permanent basis and
152.1regardless of whether the purchaser is required to make continued payments for such
152.2right. Wherever the term "tangible personal property" is used in this chapter, other than in
152.3subdivisions 10 and 38, the provisions also apply to specified digital products, or other
152.4digital products, unless specifically provided otherwise or the context indicates otherwise.
152.5(m) A sale and purchase includes:
152.6(1) any service performed for the care, cleansing, beautification, or alteration of the
152.7appearance of the body, skin, nails, or hair, or in the enhancement of personal relaxation,
152.8appearance, or health, but excluding mortuary services;
152.9(2) repair labor for:
152.10(i) farm machinery as defined under section 297A.61, subdivision 12;
152.11(ii) motor vehicles as defined under section 297B.01, subdivision 11, except for
152.12motor vehicles sold at wholesale auction at an auto auction facility; and
152.13(iii) any other tangible personal property;
152.14(3) warehousing or storage services for tangible personal property excluding storage
152.15of farm products, refrigerated food, and electronic data; and
152.16(4) the furnishing for consideration of documents prepared in connection with any
152.17legal proceeding, including a trial hearing, deposition, arbitration, or mediation, except
152.18for such documents prepared for a public defender or a public defender corporation
152.19under chapter 611.
152.20(n) A sale and purchase also is the personal services of event planning, dating
152.21services, personal shopping, personal concierge services, or personal or household
152.22organizing services.
152.23(o) In applying the provisions of this chapter, the terms "tangible personal property"
152.24and "retail sale" include taxable services listed in paragraph (g), clause (6), items (i) to (vi)
152.25and (viii), and paragraphs (m) and (n), and the provision of these taxable services, unless
152.26specifically provided otherwise.
152.27EFFECTIVE DATE.This section is effective for sales and purchases made after
152.28June 30, 2013.

152.29    Sec. 3. Minnesota Statutes 2012, section 297A.61, subdivision 4, is amended to read:
152.30    Subd. 4. Retail sale. (a) A "retail sale" means:
152.31    (1) any sale, lease, or rental of tangible personal property for any purpose, other than
152.32resale, sublease, or subrent of items by the purchaser in the normal course of business
152.33as defined in subdivision 21; and
152.34    (2) any sale of a service enumerated in subdivision 3, for any purpose other than
152.35resale by the purchaser in the normal course of business as defined in subdivision 21.
153.1    (b) A sale of property used by the owner only by leasing it to others or by holding it
153.2in an effort to lease it, and put to no use by the owner other than resale after the lease or
153.3effort to lease, is a sale of property for resale.
153.4    (c) A sale of master computer software that is purchased and used to make copies for
153.5sale or lease is a sale of property for resale.
153.6    (d) A sale of building materials, supplies, and equipment to owners, contractors,
153.7subcontractors, or builders for the erection of buildings or the alteration, repair, or
153.8improvement of real property is a retail sale in whatever quantity sold, whether the sale is
153.9for purposes of resale in the form of real property or otherwise.
153.10    (e) A sale of carpeting, linoleum, or similar floor covering to a person who provides
153.11for installation of the floor covering is a retail sale and not a sale for resale since a sale of
153.12floor covering which includes installation is a contract for the improvement of real property.
153.13    (f) A sale of shrubbery, plants, sod, trees, and similar items to a person who provides
153.14for installation of the items is a retail sale and not a sale for resale since a sale of
153.15shrubbery, plants, sod, trees, and similar items that includes installation is a contract for
153.16the improvement of real property.
153.17    (g) A sale of tangible personal property that is awarded as prizes is a retail sale and
153.18is not considered a sale of property for resale.
153.19    (h) A sale of tangible personal property utilized or employed in the furnishing or
153.20providing of services under subdivision 3, paragraph (g), clause (1), including, but not
153.21limited to, property given as promotional items, is a retail sale and is not considered a
153.22sale of property for resale.
153.23    (i) A sale of tangible personal property used in conducting lawful gambling under
153.24chapter 349 or the State Lottery under chapter 349A, including, but not limited to, property
153.25given as promotional items, is a retail sale and is not considered a sale of property for resale.
153.26    (j) A sale of machines, equipment, or devices that are used to furnish, provide, or
153.27dispense goods or services, including, but not limited to, coin-operated devices, is a retail
153.28sale and is not considered a sale of property for resale.
153.29    (k) In the case of a lease, a retail sale occurs (1) when an obligation to make a lease
153.30payment becomes due under the terms of the agreement or the trade practices of the
153.31lessor or (2) in the case of a lease of a motor vehicle, as defined in section 297B.01,
153.32subdivision 11
, but excluding vehicles with a manufacturer's gross vehicle weight rating
153.33greater than 10,000 pounds and rentals of vehicles for not more than 28 days, at the time
153.34the lease is executed.
153.35    (l) In the case of a conditional sales contract, a retail sale occurs upon the transfer of
153.36title or possession of the tangible personal property.
154.1    (m) A sale of a bundled transaction in which one or more of the products included
154.2in the bundle is a taxable product is a retail sale, except that if one of the products
154.3is a telecommunication service, ancillary service, Internet access, or audio or video
154.4programming service, and the seller has maintained books and records identifying through
154.5reasonable and verifiable standards the portions of the price that are attributable to the
154.6distinct and separately identifiable products, then the products are not considered part of a
154.7bundled transaction. For purposes of this paragraph:
154.8    (1) the books and records maintained by the seller must be maintained in the regular
154.9course of business, and do not include books and records created and maintained by the
154.10seller primarily for tax purposes;
154.11    (2) books and records maintained in the regular course of business include, but are
154.12not limited to, financial statements, general ledgers, invoicing and billing systems and
154.13reports, and reports for regulatory tariffs and other regulatory matters; and
154.14    (3) books and records are maintained primarily for tax purposes when the books
154.15and records identify taxable and nontaxable portions of the price, but the seller maintains
154.16other books and records that identify different prices attributable to the distinct products
154.17included in the same bundled transaction.
154.18(n) A sale of motor vehicle repair paint and materials by a motor vehicle repair or
154.19body shop business is a retail sale and the sales tax is imposed on the gross receipts from the
154.20retail sale of the paint and materials. The motor vehicle repair or body shop that purchases
154.21motor vehicle repair paint and motor vehicle repair materials for resale must either:
154.22(1) separately state each item of paint and each item of materials, and the sales price
154.23of each, on the invoice to the purchaser; or
154.24(2) in order to calculate the sales price of the paint and materials, use a method
154.25which estimates the amount and monetary value of the paint and materials used in
154.26the repair of the motor vehicle by multiplying the number of labor hours by a rate of
154.27consideration for the paint and materials used in the repair of the motor vehicle following
154.28industry standard practices that fairly calculate the gross receipts from the retail sale of
154.29the motor vehicle repair paint and motor vehicle repair materials. An industry standard
154.30practice fairly calculates the gross receipts if the sales price of the paint and materials used
154.31or consumed in the repair of a motor vehicle equals or exceeds the purchase price paid
154.32by the motor vehicle repair or body shop business. Under clause (1), the invoice must
154.33either separately state the "paint and materials" as a single taxable item, or separately state
154.34"paint" as a taxable item and "materials" as a taxable item. This clause does not apply to
154.35wholesale transactions at an auto auction facility.
155.1    (o) A sale of specified digital products or other digital products to an end user with
155.2or without rights of permanent use and regardless of whether rights of use are conditioned
155.3upon continued payment by the purchaser is a retail sale. When a digital code has been
155.4purchased that relates to specified digital products or other digital products, the subsequent
155.5receipt of or access to the related specified digital products or other digital products
155.6is not a retail sale.
155.7    (p) A payment made to an electric cooperative or public utility for contribution in
155.8aid of construction is a contract for improvement to real property and is not a retail sale.
155.9EFFECTIVE DATE.This section is effective for sales and purchases made after
155.10June 30, 2013.

155.11    Sec. 4. Minnesota Statutes 2012, section 297A.61, subdivision 10, is amended to read:
155.12    Subd. 10. Tangible personal property. (a) "Tangible personal property" means
155.13personal property that can be seen, weighed, measured, felt, or touched, or that is in any
155.14other manner perceptible to the senses. "Tangible personal property" includes, but is not
155.15limited to, electricity, water, gas, steam, and prewritten computer software.
155.16    (b) Tangible personal property does not include:
155.17    (1) large ponderous machinery and equipment used in a business or production
155.18activity which at common law would be considered to be real property;
155.19    (2) property which is subject to an ad valorem property tax;
155.20    (3) property described in section 272.02, subdivision 9, clauses (a) to (d); and
155.21    (4) property described in section 272.03, subdivision 2, clauses (3) and (5).; and
155.22(5) specified digital products, or other digital products, transferred electronically,
155.23except that prewritten computer software delivered electronically is tangible personal
155.24property.
155.25EFFECTIVE DATE.This section is effective for sales and purchases made after
155.26June 30, 2013.

155.27    Sec. 5. Minnesota Statutes 2012, section 297A.61, subdivision 17a, is amended to read:
155.28    Subd. 17a. Delivered electronically. "Delivered electronically" means delivered
155.29to the purchaser by means other than tangible storage media and, unless the context
155.30indicates otherwise, applies to the delivery of computer software. Computer software is
155.31not considered delivered electronically to a purchaser simply because the purchaser has
155.32access to the product.
156.1EFFECTIVE DATE.This section is effective for sales and purchases the day
156.2following final enactment.

156.3    Sec. 6. Minnesota Statutes 2012, section 297A.61, subdivision 25, is amended to read:
156.4    Subd. 25. Cable Pay television service. "Cable Pay television service" means
156.5the transmission of video, audio, or other programming service to purchasers, and the
156.6subscriber interaction, if any, required for the selection or use of the programming service,
156.7regardless of whether the programming is transmitted over facilities owned or operated
156.8by the cable service provider or over facilities owned or operated by one or more dealers
156.9of communications services. The term includes point-to-multipoint distribution direct to
156.10home satellite services by which programming is transmitted or broadcast by microwave
156.11or other equipment directly to the subscriber's premises, or any similar or comparable
156.12method of service. The term includes basic, extended, premium, all programming services,
156.13including subscriptions, digital video recorders, pay-per-view, digital, and music services.
156.14EFFECTIVE DATE.This section is effective for sales and purchases made after
156.15June 30, 2013.

156.16    Sec. 7. Minnesota Statutes 2012, section 297A.61, subdivision 38, is amended to read:
156.17    Subd. 38. Bundled transaction. (a) "Bundled transaction" means the retail sale
156.18of two or more products when the products are otherwise distinct and identifiable, and
156.19the products are sold for one nonitemized price. As used in this subdivision, "product"
156.20includes tangible personal property, services, intangibles, and digital goods, including
156.21specified digital products or other digital products, but does not include real property or
156.22services to real property. A bundled transaction does not include the sale of any products
156.23in which the sales price varies, or is negotiable, based on the selection by the purchaser of
156.24the products included in the transaction.
156.25    (b) For purposes of this subdivision, "distinct and identifiable" products does not
156.26include:
156.27    (1) packaging and other materials, such as containers, boxes, sacks, bags, and
156.28bottles, wrapping, labels, tags, and instruction guides, that accompany the retail sale of the
156.29products and are incidental or immaterial to the retail sale. Examples of packaging that are
156.30incidental or immaterial include grocery sacks, shoe boxes, dry cleaning garment bags,
156.31and express delivery envelopes and boxes;
156.32    (2) a promotional product provided free of charge with the required purchase of
156.33another product. A promotional product is provided free of charge if the sales price of
157.1another product, which is required to be purchased in order to receive the promotional
157.2product, does not vary depending on the inclusion of the promotional product; and
157.3    (3) items included in the definition of sales price.
157.4    (c) For purposes of this subdivision, the term "one nonitemized price" does not
157.5include a price that is separately identified by product on binding sales or other supporting
157.6sales-related documentation made available to the customer in paper or electronic form
157.7including but not limited to an invoice, bill of sale, receipt, contract, service agreement,
157.8lease agreement, periodic notice of rates and services, rate card, or price list.
157.9    (d) A transaction that otherwise meets the definition of a bundled transaction is
157.10not a bundled transaction if it is:
157.11    (1) the retail sale of tangible personal property and a service and the tangible
157.12personal property is essential to the use of the service, and is provided exclusively in
157.13connection with the service, and the true object of the transaction is the service;
157.14    (2) the retail sale of services if one service is provided that is essential to the use or
157.15receipt of a second service and the first service is provided exclusively in connection with
157.16the second service and the true object of the transaction is the second service;
157.17    (3) a transaction that includes taxable products and nontaxable products and the
157.18purchase price or sales price of the taxable products is de minimis; or
157.19    (4) the retail sale of exempt tangible personal property and taxable tangible personal
157.20property if:
157.21    (i) the transaction includes food and food ingredients, drugs, durable medical
157.22equipment, mobility enhancing equipment, over-the-counter drugs, prosthetic devices,
157.23or medical supplies; and
157.24    (ii) the seller's purchase price or sales price of the taxable tangible personal property is
157.2550 percent or less of the total purchase price or sales price of the bundled tangible personal
157.26property. Sellers must not use a combination of the purchase price and sales price of the
157.27tangible personal property when making the 50 percent determination for a transaction.
157.28    (e) For purposes of this subdivision, "purchase price" means the measure subject to
157.29use tax on purchases made by the seller, and "de minimis" means that the seller's purchase
157.30price or sales price of the taxable products is ten percent or less of the total purchase
157.31price or sales price of the bundled products. Sellers shall use either the purchase price
157.32or the sales price of the products to determine if the taxable products are de minimis.
157.33Sellers must not use a combination of the purchase price and sales price of the products
157.34to determine if the taxable products are de minimis. Sellers shall use the full term of a
157.35service contract to determine if the taxable products are de minimis.
158.1EFFECTIVE DATE.This section is effective for sales and purchases made after
158.2June 30, 2013.

158.3    Sec. 8. Minnesota Statutes 2012, section 297A.61, subdivision 45, is amended to read:
158.4    Subd. 45. Ring tone. "Ring tone" means a digitized sound file that is downloaded
158.5onto a device and that may be used to alert the customer of a telecommunication service
158.6 with respect to a communication. A ring tone does not include ring back tones or other
158.7digital audio files that are not stored on the purchaser's communication device.
158.8EFFECTIVE DATE.This section is effective for sales and purchases made after
158.9June 30, 2013.

158.10    Sec. 9. Minnesota Statutes 2012, section 297A.61, is amended by adding a subdivision
158.11to read:
158.12    Subd. 49. Motor vehicle repair paint and motor vehicle repair materials.
158.13"Motor vehicle repair paint" means a substance composed of solid matter suspended in a
158.14liquid medium and applied as a protective or decorative coating to the surface of a motor
158.15vehicle in order to restore the motor vehicle to its original condition, and includes primer,
158.16body paint, clear coat, and paint thinner used to paint motor vehicles, as defined in section
158.17297B.01. "Motor vehicle repair materials" means items, other than motor vehicle repair
158.18paint or motor vehicle parts, that become a part of a repaired motor vehicle or are consumed
158.19in repairing the motor vehicle at retail, and include abrasives, battery water, body filler or
158.20putty, bolts and nuts, brake fluid, buffing pads, chamois, cleaning compounds, degreasing
158.21compounds, glaze, grease, grinding discs, hydraulic jack oil, lubricants, masking tape,
158.22oxygen and acetylene, polishes, rags, razor blades, sandpaper, sanding discs, scuff pads,
158.23sealer, solder, solvents, striping tape, tack cloth, thinner, waxes, and welding rods. Motor
158.24vehicle repair materials do not include items that are not used directly on the motor vehicle,
158.25such as floor dry that is used to clean the shop, or cleaning compounds and rags that are
158.26used to clean tools, equipment, or the shop and are not used to clean the motor vehicle.
158.27EFFECTIVE DATE.This section is effective for sales and purchases made after
158.28June 30, 2013.

158.29    Sec. 10. Minnesota Statutes 2012, section 297A.61, is amended by adding a
158.30subdivision to read:
158.31    Subd. 50. Digital audio works. "Digital audio works" means works that result from
158.32a fixation of a series of musical, spoken, or other sounds, that are transferred electronically.
159.1Digital audio works includes such items as the following which may either be prerecorded
159.2or live: songs, music, readings of books or other written materials, speeches, ring tones, or
159.3other sound recordings. Digital audio works does not include audio greeting cards sent by
159.4electronic mail. Unless the context provides otherwise, in this chapter digital audio works
159.5includes the digital code, or a subscription to or access to a digital code, for receiving,
159.6accessing, or otherwise obtaining digital audio works.
159.7EFFECTIVE DATE.This section is effective for sales and purchases made after
159.8June 30, 2013.

159.9    Sec. 11. Minnesota Statutes 2012, section 297A.61, is amended by adding a
159.10subdivision to read:
159.11    Subd. 51. Digital audiovisual works. "Digital audiovisual works" means a series
159.12of related images which, when shown in succession, impart an impression of motion,
159.13together with accompanying sounds, if any, that are transferred electronically. Digital
159.14audiovisual works includes such items as motion pictures, movies, musical videos, news
159.15and entertainment, and live events. Digital audiovisual works does not include video
159.16greeting cards sent by electronic mail. Unless the context provides otherwise, in this
159.17chapter digital audiovisual works includes the digital code, or a subscription to or access to
159.18a digital code, for receiving, accessing, or otherwise obtaining digital audiovisual works.
159.19EFFECTIVE DATE.This section is effective for sales and purchases made after
159.20June 30, 2013.

159.21    Sec. 12. Minnesota Statutes 2012, section 297A.61, is amended by adding a
159.22subdivision to read:
159.23    Subd. 52. Digital books. "Digital books" means any literary works, other than
159.24digital audiovisual works or digital audio works, expressed in words, numbers, or other
159.25verbal or numerical symbols or indicia so long as the product is generally recognized in
159.26the ordinary and usual sense as a "book." It includes works of fiction and nonfiction and
159.27short stories. It does not include periodicals, magazines, newspapers, or other news or
159.28information products, chat rooms, or weblogs. Unless the context provides otherwise, in
159.29this chapter digital books includes the digital code, or a subscription to or access to a
159.30digital code, for receiving, accessing, or otherwise obtaining digital books.
159.31EFFECTIVE DATE.This section is effective for sales and purchases made after
159.32June 30, 2013.

160.1    Sec. 13. Minnesota Statutes 2012, section 297A.61, is amended by adding a
160.2subdivision to read:
160.3    Subd. 53. Digital code. "Digital code" means a code which provides a purchaser
160.4with a right to obtain one or more specified digital products or other digital products.
160.5A digital code may be transferred electronically, such as through electronic mail, or it
160.6may be transferred on a tangible medium, such as on a plastic card, a piece of paper or
160.7invoice, or imprinted on another product. A digital code is not a code that represents a
160.8stored monetary value that is deducted from a total as it is used by the purchaser, and it
160.9is not a code that represents a redeemable card, gift card, or gift certificate that entitles
160.10the holder to select a digital product of an indicated cash value. The end user of a digital
160.11code is any purchaser except one who receives the contractual right to redistribute a digital
160.12product which is the subject of the transaction.
160.13EFFECTIVE DATE.This section is effective for sales and purchases made after
160.14June 30, 2013.

160.15    Sec. 14. Minnesota Statutes 2012, section 297A.61, is amended by adding a
160.16subdivision to read:
160.17    Subd. 54. Other digital products. "Other digital products" means the following
160.18items when transferred electronically:
160.19(1) greeting cards;
160.20(2) finished artwork available for reproduction, display, or similar purposes;
160.21(3) video or electronic games;
160.22(4) periodicals;
160.23(5) magazines; and
160.24(6) other news or information products, excluding newspapers.
160.25EFFECTIVE DATE.This section is effective for sales and purchases made after
160.26June 30, 2013.

160.27    Sec. 15. Minnesota Statutes 2012, section 297A.61, is amended by adding a
160.28subdivision to read:
160.29    Subd. 55. Specified digital products. "Specified digital products" means digital
160.30audio works, digital audiovisual works, and digital books that are transferred electronically
160.31to a customer.
160.32EFFECTIVE DATE.This section is effective for sales and purchases made after
160.33June 30, 2013.

161.1    Sec. 16. Minnesota Statutes 2012, section 297A.61, is amended by adding a
161.2subdivision to read:
161.3    Subd. 56. Transferred electronically. "Transferred electronically" means obtained
161.4by the purchaser by means other than tangible storage media. For purposes of this
161.5subdivision, it is not necessary that a copy of the product be physically transferred to
161.6the purchaser. A product will be considered to have been transferred electronically to a
161.7purchaser if the purchaser has access to the product.
161.8EFFECTIVE DATE.This section is effective for sales and purchases made after
161.9June 30, 2013.

161.10    Sec. 17. Minnesota Statutes 2012, section 297A.62, subdivision 1, is amended to read:
161.11    Subdivision 1. Generally. Except as otherwise provided in subdivision 3 or in this
161.12chapter, a sales tax of 6.5 5.675 percent is imposed on the gross receipts from retail sales
161.13as defined in section 297A.61, subdivision 4, made in this state or to a destination in this
161.14state by a person who is required to have or voluntarily obtains a permit under section
161.15297A.83, subdivision 1 .
161.16EFFECTIVE DATE.This section is effective for sales and purchases made after
161.17June 30, 2013.

161.18    Sec. 18. Minnesota Statutes 2012, section 297A.62, subdivision 1a, is amended to read:
161.19    Subd. 1a. Constitutionally required sales tax increase. Except as otherwise
161.20provided in subdivision 3 or in this chapter, an additional sales tax of 0.375 0.325 percent,
161.21as required under the Minnesota Constitution, article XI, section 15, is imposed on the gross
161.22receipts from retail sales as defined in section 297A.61, subdivision 4, made in this state or
161.23to a destination in this state by a person who is required to have or voluntarily obtains a
161.24permit under section 297A.83, subdivision 1. This additional tax expires July 1, 2034.
161.25EFFECTIVE DATE.This section is effective for sales and purchases made after
161.26June 30, 2013.

161.27    Sec. 19. Minnesota Statutes 2012, section 297A.64, subdivision 1, is amended to read:
161.28    Subdivision 1. Tax imposed. A tax is imposed on the lease or rental in this state
161.29for not more than 28 days of a passenger automobile as defined in section 168.002,
161.30subdivision 24
, a van as defined in section 168.002, subdivision 40, or a pickup truck as
161.31defined in section 168.002, subdivision 26. The rate of tax is 6.2 9.05 percent of the sales
161.32price. The tax applies whether or not the vehicle is licensed in the state.
162.1EFFECTIVE DATE.This section is effective for sales and purchases made after
162.2June 30, 2013.

162.3    Sec. 20. Minnesota Statutes 2012, section 297A.65, is amended to read:
162.4297A.65 LOTTERY TICKETS; IN LIEU TAX.
162.5Sales of state lottery tickets are exempt from the tax imposed under section
162.6297A.62 . The State Lottery must on or before the 20th day of each month transmit to
162.7the commissioner of revenue an amount equal to the gross receipts from the sale of
162.8lottery tickets for the previous month multiplied by the a tax rate under section 297A.62,
162.9subdivision 1
of 6.5 percent. The resulting payment is in lieu of the sales tax that otherwise
162.10would be imposed by this chapter. The commissioner shall deposit the money transmitted
162.11as provided by section 297A.94 and the money must be treated as other proceeds of the
162.12sales tax. For purposes of this section, "gross receipts" means the proceeds of the sale
162.13of tickets before deduction of a commission or other compensation paid to the vendor or
162.14retailer for selling tickets.
162.15EFFECTIVE DATE.This section is effective for sales and purchases made after
162.16June 30, 2013.

162.17    Sec. 21. Minnesota Statutes 2012, section 297A.66, subdivision 1, is amended to read:
162.18    Subdivision 1. Definitions. (a) To the extent allowed by the United States
162.19Constitution and the laws of the United States, A"retailer maintaining a place of business
162.20in this state," or a similar term, means a retailer:
162.21    (1) having or maintaining within this state, directly or by a subsidiary or an affiliate,
162.22 an office, place of distribution, sales or sample room or place, warehouse, or other place
162.23of business; or
162.24    (2) having utilizing a representative, including, but not limited to, an affiliate, agent,
162.25salesperson, canvasser, or solicitor operating in this state under the authority of the retailer
162.26or its subsidiary, for any purpose, including the repairing, selling, delivering, installing, or
162.27soliciting of orders for the retailer's goods or services, or the leasing of tangible personal
162.28property located in this state, whether the place of business or agent, representative, affiliate,
162.29 salesperson, canvasser, or solicitor is located in the state permanently or temporarily, or
162.30whether or not the retailer, subsidiary, or affiliate is authorized to do business in this state.
162.31    (b) "Destination of a sale" means the location to which the retailer makes delivery of
162.32the property sold, or causes the property to be delivered, to the purchaser of the property,
163.1or to the agent or designee of the purchaser. The delivery may be made by any means,
163.2including the United States Postal Service or a for-hire carrier.
163.3    (c) A retailer shall be presumed to be "maintaining a place of business in this state" if:
163.4    (1) any person, other than a person acting in the person's capacity as a common
163.5carrier, that has substantial nexus with this state:
163.6    (i) sells a similar line of products as the retailer and does so under the same or
163.7a similar business name;
163.8    (ii) maintains an office, distribution facility, warehouse or storage place, or similar
163.9place of business in the state to facilitate the delivery of property or services sold by the
163.10retailer to the retailer's customers;
163.11    (iii) uses trademarks, service marks, or trade names in the state that are substantially
163.12the same or substantially similar to those used by the retailer;
163.13    (iv) delivers, installs, assembles, or performs maintenance services for the retailer's
163.14customers within the state;
163.15    (v) facilitates the retailer's delivery of property to customers in the state by allowing
163.16the retailer's customers to pick up property sold by the retailer at an office, distribution
163.17facility, warehouse, storage space, or similar place of business maintained by the person in
163.18the state;
163.19    (vi) conducts any other activities in the state that are significantly associated with the
163.20retailer's ability to establish and maintain a market in the state for the retailer's sales; or
163.21    (2) any affiliated person has substantial nexus with the state.
163.22    (d) The presumptions in paragraph (c) may be rebutted by demonstrating that the
163.23activities of the person or affiliated person in the state are not significantly associated with
163.24the retailer's ability to establish or maintain a market in this state for the retailer's sales.
163.25    (e) "Affiliated person" means any person that is a member of the same controlled
163.26group of corporations, as defined in section 1563(a) of the Internal Revenue Code as
163.27the retailer, or any other entity that, notwithstanding its form of organization, bears the
163.28same ownership relationship to the retailer as a corporation that is a member of the same
163.29controlled group of corporations as defined in section 1563(a) of the Internal Revenue Code.
163.30    (f) "Solicitor" means a person, whether an independent contractor or other
163.31representative, who directly or indirectly solicits business for the retailer.
163.32     (1) A retailer is presumed to have a solicitor in this state if it enters into an agreement
163.33with one or more persons under which the person, for a commission or other consideration,
163.34while within this state directly or indirectly refers potential customers, whether by a link
163.35on an Internet Web site, by telemarketing, by an in-person oral presentation, or otherwise,
163.36to the retailer, if the cumulative gross receipts from the sales by the retailer to customers in
164.1the state who are referred to the retailer by all persons within this state with this type of an
164.2agreement with the retailer is in excess of $10,000 during the preceding 12 months.
164.3    (2) The presumption in clause (1) may be rebutted by submitting proof that the
164.4persons with whom the retailer has an agreement did not engage in any activity within the
164.5state that was significantly associated with the retailer's ability to establish or maintain
164.6the retailer's market in the state during the preceding 12 months. Such proof may consist
164.7of sworn written statements from all of the persons within this state with whom the
164.8retailer has an agreement stating that they did not engage in any solicitation in this state
164.9on behalf of the retailer during the preceding year, provided that such statements were
164.10provided and obtained in good faith.
164.11    (3) Nothing in this section shall be construed to narrow the scope of the terms
164.12"agent," "salesperson," "canvasser," or "other representative" for purposes of subdivision
164.131, paragraph (a).
164.14EFFECTIVE DATE.This section is effective for sales and purchases made after
164.15June 30, 2013.

164.16    Sec. 22. Minnesota Statutes 2012, section 297A.66, subdivision 3, is amended to read:
164.17    Subd. 3. Retailer not maintaining place of business in this state. (a) To the
164.18extent allowed by the United States Constitution and the laws of the United States, a
164.19retailer making retail sales from outside this state to a destination within this state and
164.20not maintaining a place of business in this state shall collect sales and use taxes and remit
164.21them to the commissioner under section 297A.77, if the retailer engages in the regular or
164.22systematic soliciting of sales from potential customers in this state by:
164.23    (1) distribution, by mail or otherwise, of catalogs, periodicals, advertising flyers, or
164.24other written solicitations of business to customers in this state;
164.25    (2) display of advertisements on billboards or other outdoor advertising in this state;
164.26    (3) advertisements in newspapers published in this state;
164.27    (4) advertisements in trade journals or other periodicals the circulation of which is
164.28primarily within this state;
164.29    (5) advertisements in a Minnesota edition of a national or regional publication or
164.30a limited regional edition in which this state is included as part of a broader regional or
164.31national publication which are not placed in other geographically defined editions of the
164.32same issue of the same publication;
164.33    (6) advertisements in regional or national publications in an edition which is not
164.34by its contents geographically targeted to Minnesota but which is sold over the counter
164.35in Minnesota or by subscription to Minnesota residents;
165.1    (7) advertisements broadcast on a radio or television station located in Minnesota; or
165.2    (8) any other solicitation by telegraphy, telephone, computer database, cable, optic,
165.3microwave, or other communication system.
165.4    This paragraph (a) must be construed without regard to the state from which
165.5distribution of the materials originated or in which they were prepared.
165.6    (b) The location within or without this state of independent vendors that provide
165.7products or services to the retailer in connection with its solicitation of customers within this
165.8state, including such products and services as creation of copy, printing, distribution, and
165.9recording, is not considered in determining whether the retailer is required to collect tax.
165.10    (c) A retailer not maintaining a place of business in this state is presumed, subject to
165.11rebuttal, to be engaged in regular solicitation within this state if it engages in any of the
165.12activities in paragraph (a) and:
165.13    (1) makes 100 or more retail sales from outside this state to destinations in this state
165.14during a period of 12 consecutive months; or
165.15    (2) makes ten or more retail sales totaling more than $100,000 from outside this state
165.16to destinations in this state during a period of 12 consecutive months.
165.17EFFECTIVE DATE.This section is effective for sales and purchases made after
165.18June 30, 2013.

165.19    Sec. 23. Minnesota Statutes 2012, section 297A.66, is amended by adding a
165.20subdivision to read:
165.21    Subd. 7. Severability. The legislature intends that the provisions of this section
165.22are severable. If any provision contained in this bill is held invalid or unconstitutional, or
165.23its application is held invalid or unconstitutional, that finding shall not affect the other
165.24provisions or applications that can be given effect without the invalid or unconstitutional
165.25provision or application.
165.26EFFECTIVE DATE.This section is effective July 1, 2013.

165.27    Sec. 24. Minnesota Statutes 2012, section 297A.665, is amended to read:
165.28297A.665 PRESUMPTION OF TAX; BURDEN OF PROOF.
165.29    (a) For the purpose of the proper administration of this chapter and to prevent
165.30evasion of the tax, until the contrary is established, it is presumed that:
165.31    (1) all gross receipts are subject to the tax; and
165.32    (2) all retail sales for delivery in Minnesota are for storage, use, or other consumption
165.33in Minnesota.
166.1    (b) The burden of proving that a sale is not a taxable retail sale is on the seller.
166.2However, a seller is relieved of liability if:
166.3    (1) the seller obtains a fully completed exemption certificate or all the relevant
166.4information required by section 297A.72, subdivision 2, at the time of the sale or within
166.590 days after the date of the sale; or
166.6    (2) if the seller has not obtained a fully completed exemption certificate or all the
166.7relevant information required by section 297A.72, subdivision 2, within the time provided
166.8in clause (1), within 120 days after a request for substantiation by the commissioner,
166.9the seller either:
166.10    (i) obtains in good faith a fully completed exemption certificate or all the relevant
166.11information required by section 297A.72, subdivision 2, from the purchaser; or
166.12    (ii) proves by other means that the transaction was not subject to tax;
166.13    (3) in the case of drop shipment sales, a seller engaged in drop shipping may claim a
166.14resale exemption based on an exemption certificate provided by its customer or reseller,
166.15or any other acceptable information available to the seller engaged in drop shipping
166.16evidencing qualification for a resale exemption, regardless of whether the customer or
166.17e-seller is registered to collect and remit sales and use tax in the state.
166.18    (c) Notwithstanding paragraph (b), relief from liability does not apply to a seller who:
166.19    (1) fraudulently fails to collect the tax; or
166.20    (2) solicits purchasers to participate in the unlawful claim of an exemption.
166.21    (d) A certified service provider, as defined in section 297A.995, subdivision 2, is
166.22relieved of liability under this section to the extent a seller who is its client is relieved of
166.23liability.
166.24    (e) A purchaser of tangible personal property or any items listed in section 297A.63
166.25that are shipped or brought to Minnesota by the purchaser has the burden of proving that the
166.26property was not purchased from a retailer for storage, use, or consumption in Minnesota.
166.27    (f) If a seller claims that certain sales are exempt and does not provide the certificate,
166.28information, or proof required by paragraph (b), clause (2), within 120 days after the date
166.29of the commissioner's request for substantiation, then the exemptions claimed by the seller
166.30that required substantiation are disallowed.
166.31EFFECTIVE DATE.This section is effective for sales and purchases made after
166.32June 30, 2013.

166.33    Sec. 25. Minnesota Statutes 2012, section 297A.668, is amended by adding a
166.34subdivision to read:
167.1    Subd. 6a. Multiple points of use. (a) Notwithstanding the provisions of
167.2subdivisions 2 and 3, a business purchaser that is not a holder of a direct pay permit that
167.3purchases electronically delivered goods or services that will be concurrently available for
167.4use in more than one taxing jurisdiction may deliver to the seller in conjunction with its
167.5purchase a multiple points of use certificate disclosing this fact.
167.6(b) Upon receipt of the multiple points of use certificate, the seller is relieved of the
167.7obligation to collect, pay, or remit the applicable tax and the purchaser is obligated to
167.8collect, pay, or remit the applicable tax on a direct pay basis.
167.9(c) The purchaser delivering the multiple points of use certificate has sole discretion
167.10to use any reasonable but consistent and uniform method of apportionment that is supported
167.11by the purchaser's business records as they exist at the time of the consummation of the sale.
167.12(d) The multiple points of use certificate remains in effect for all future sales by the
167.13seller to the purchaser until it is revoked by the purchaser in writing.
167.14(e) A holder of a direct pay permit is not required to deliver a multiple points of use
167.15certificate to the seller. A direct pay permit holder shall follow the provisions of paragraph
167.16(c) in apportioning the tax due on electronically delivered goods or services that will be
167.17concurrently available for use in more than one taxing jurisdiction.
167.18(f) A seller is relieved of liability if:
167.19(1) the seller obtains a fully completed multiple points of use certificate or all the
167.20relevant information required by section 297A.72, subdivision 2, at the time of the sale or
167.21within 90 days after the date of the sale; or
167.22(2) within 120 days after a request for substantiation by the commissioner, the
167.23seller either:
167.24(i) obtains in good faith a fully completed multiple points of use certificate or all the
167.25relevant information required by section 297A.72, subdivision 2, from the purchaser; or
167.26(ii) proves by other means that the transaction was not subject to tax.
167.27EFFECTIVE DATE.This section is effective for sales and purchases made after
167.28June 30, 2013.

167.29    Sec. 26. Minnesota Statutes 2012, section 297A.67, subdivision 7, is amended to read:
167.30    Subd. 7. Drugs; medical devices. (a) Sales of the following drugs and medical
167.31devices for human use are exempt:
167.32    (1) prescription drugs, including over-the-counter drugs;
167.33    (2) single-use finger-pricking devices for the extraction of blood and other single-use
167.34devices and single-use diagnostic agents used in diagnosing, monitoring, or treating
167.35diabetes;
168.1    (3) insulin and medical oxygen for human use, regardless of whether prescribed
168.2or sold over the counter;
168.3    (4) prosthetic devices;
168.4    (5) durable medical equipment for home use only;
168.5    (6) mobility enhancing equipment;
168.6    (7) prescription corrective eyeglasses; and
168.7    (8) kidney dialysis equipment, including repair and replacement parts.
168.8(b) Items purchased in transactions covered by:
168.9(1) Medicare as defined under title XVIII of the Social Security Act, United States
168.10Code, title 42, section 1395, et seq.; or
168.11(2) Medicaid as defined under title XIX of the Social Security Act, United States
168.12Code, title 42, section 1396, et. seq.
168.13    (b) (c) For purposes of this subdivision:
168.14    (1) "Drug" means a compound, substance, or preparation, and any component of
168.15a compound, substance, or preparation, other than food and food ingredients, dietary
168.16supplements, or alcoholic beverages that is:
168.17    (i) recognized in the official United States Pharmacopoeia, official Homeopathic
168.18Pharmacopoeia of the United States, or official National Formulary, and supplement
168.19to any of them;
168.20    (ii) intended for use in the diagnosis, cure, mitigation, treatment, or prevention
168.21of disease; or
168.22    (iii) intended to affect the structure or any function of the body.
168.23    (2) "Durable medical equipment" means equipment, including repair and
168.24replacement parts, including single-patient use items, but not including mobility enhancing
168.25equipment, that:
168.26    (i) can withstand repeated use;
168.27    (ii) is primarily and customarily used to serve a medical purpose;
168.28    (iii) generally is not useful to a person in the absence of illness or injury; and
168.29    (iv) is not worn in or on the body.
168.30    For purposes of this clause, "repair and replacement parts" includes all components
168.31or attachments used in conjunction with the durable medical equipment, but does not
168.32include including repair and replacement parts which are for single patient use only.
168.33    (3) "Mobility enhancing equipment" means equipment, including repair and
168.34replacement parts, but not including durable medical equipment, that:
168.35    (i) is primarily and customarily used to provide or increase the ability to move from
168.36one place to another and that is appropriate for use either in a home or a motor vehicle;
169.1    (ii) is not generally used by persons with normal mobility; and
169.2    (iii) does not include any motor vehicle or equipment on a motor vehicle normally
169.3provided by a motor vehicle manufacturer.
169.4    (4) "Over-the-counter drug" means a drug that contains a label that identifies the
169.5product as a drug as required by Code of Federal Regulations, title 21, section 201.66. The
169.6label must include a "drug facts" panel or a statement of the active ingredients with a list of
169.7those ingredients contained in the compound, substance, or preparation. Over-the-counter
169.8drugs do not include grooming and hygiene products, regardless of whether they otherwise
169.9meet the definition. "Grooming and hygiene products" are soaps, cleaning solutions,
169.10shampoo, toothpaste, mouthwash, antiperspirants, and suntan lotions and sunscreens.
169.11    (5) (4) "Prescribed" and "prescription" means a direction in the form of an order,
169.12formula, or recipe issued in any form of oral, written, electronic, or other means of
169.13transmission by a duly licensed health care professional.
169.14    (6) (5) "Prosthetic device" means a replacement, corrective, or supportive device,
169.15including repair and replacement parts, worn on or in the body to:
169.16    (i) artificially replace a missing portion of the body;
169.17    (ii) prevent or correct physical deformity or malfunction; or
169.18    (iii) support a weak or deformed portion of the body.
169.19Prosthetic device does not include corrective eyeglasses.
169.20    (7) (6) "Kidney dialysis equipment" means equipment that:
169.21    (i) is used to remove waste products that build up in the blood when the kidneys are
169.22not able to do so on their own; and
169.23    (ii) can withstand repeated use, including multiple use by a single patient,
169.24notwithstanding the provisions of clause (2).
169.25(7) A transaction is covered by Medicare or Medicaid if any portion of the cost of
169.26the item purchased in the transaction is paid for or reimbursed by the federal government
169.27or the state of Minnesota pursuant to the Medicare or Medicaid program, by a private
169.28insurance company administering the Medicare or Medicaid program on behalf of the
169.29federal government or the state of Minnesota, or by a managed care organization for the
169.30benefit of a patient enrolled in a prepaid program that furnishes medical services in lieu
169.31of conventional Medicare or Medicaid coverage pursuant to agreement with the federal
169.32government or the state of Minnesota.
169.33EFFECTIVE DATE.Changes to paragraph (a), clause (1), and paragraph (c),
169.34clause (4), are effective for sales and purchases made after June 30, 2013. Changes to
169.35paragraph (b) and paragraph (c), clauses (2) and (7), are effective retroactively for sales
170.1and purchases made after April 1, 2009. Purchasers may apply for a refund of tax paid on
170.2qualifying purchases under paragraph (b) and paragraph (c), clauses (2) and (7), made
170.3after April 1, 2009, and before July 1, 2013, in the manner provided in section 297A.75.
170.4Notwithstanding limitations on claims for refunds under section 289A.40, claims may be
170.5filed with the commissioner until June 30, 2014.

170.6    Sec. 27. Minnesota Statutes 2012, section 297A.67, is amended by adding a
170.7subdivision to read:
170.8    Subd. 7a. Accessories and supplies. Accessories and supplies required for the
170.9effective use of durable medical equipment for home use only or purchased in a transaction
170.10covered by medicare or Medicaid, that are not already exempt under section 297A.67,
170.11subdivision 7, are exempt. Accessories and supplies for the effective use of a prosthetic
170.12device that are not already exempt under section 297A.67, subdivision 7, are exempt.
170.13For purposes of this subdivision "durable medical equipment," "prosthetic device,"
170.14"Medicare," and "Medicaid" have the definitions given in section 297A.67, subdivision 7.
170.15EFFECTIVE DATE.This section is effective retroactively for sales and purchases
170.16made after April 1, 2009. Purchasers may apply for a refund of tax paid on qualifying
170.17purchases under this section made after April 1, 2009, and before July 1, 2013, in the
170.18manner provided in section 297A.75. Notwithstanding limitations on claims for refunds
170.19under section 289A.40, claims may be filed with the commissioner until June 30, 2014.

170.20    Sec. 28. Minnesota Statutes 2012, section 297A.68, subdivision 2, is amended to read:
170.21    Subd. 2. Materials consumed in industrial production. (a) Materials stored, used,
170.22or consumed in industrial production of tangible personal property intended to be sold
170.23ultimately at retail, are exempt, whether or not the item so used becomes an ingredient
170.24or constituent part of the property produced. Materials that qualify for this exemption
170.25include, but are not limited to, the following:
170.26(1) chemicals, including chemicals used for cleaning food processing machinery
170.27and equipment;
170.28(2) materials, including chemicals, fuels, and electricity purchased by persons
170.29engaged in industrial production to treat waste generated as a result of the production
170.30process;
170.31(3) fuels, electricity, gas, and steam used or consumed in the production process,
170.32except that electricity, gas, or steam used for space heating, cooling, or lighting is exempt
170.33if (i) it is in excess of the average climate control or lighting for the production area, and
170.34(ii) it is necessary to produce that particular product;
171.1(4) petroleum products and lubricants;
171.2(5) packaging materials, including returnable containers used in packaging food
171.3and beverage products;
171.4(6) accessory tools, equipment, and other items that are separate detachable units
171.5with an ordinary useful life of less than 12 months used in producing a direct effect upon
171.6the product; and
171.7(7) the following materials, tools, and equipment used in metal-casting: crucibles,
171.8thermocouple protection sheaths and tubes, stalk tubes, refractory materials, molten metal
171.9filters and filter boxes, degassing lances, and base blocks.
171.10(b) This exemption does not include:
171.11(1) machinery, equipment, implements, tools, accessories, appliances, contrivances
171.12and furniture and fixtures, except those listed in paragraph (a), clause (6); and
171.13(2) petroleum and special fuels used in producing or generating power for propelling
171.14ready-mixed concrete trucks on the public highways of this state.
171.15(c) Industrial production includes, but is not limited to, research, development,
171.16design or production of any tangible personal property, manufacturing, processing (other
171.17than by restaurants and consumers) of agricultural products (whether vegetable or animal),
171.18commercial fishing, refining, smelting, reducing, brewing, distilling, printing, mining,
171.19quarrying, lumbering, generating electricity, the production of road building materials,
171.20and the research, development, design, or production of computer software. Industrial
171.21production does not include painting, cleaning, repairing or similar processing of property
171.22except as part of the original manufacturing process.
171.23(d) Industrial production does not include:
171.24(1) the furnishing of services listed in section 297A.61, subdivision 3, paragraph (g),
171.25clause (6), items (i) to (vi) and (viii), or paragraph (m) or (n); or
171.26(2) the transportation, transmission, or distribution of petroleum, liquefied gas,
171.27natural gas, water, or steam, in, by, or through pipes, lines, tanks, mains, or other means of
171.28transporting those products. For purposes of this paragraph, "transportation, transmission,
171.29or distribution" does not include blending of petroleum or biodiesel fuel as defined
171.30in section 239.77.
171.31EFFECTIVE DATE.This section is effective for sales and purchases made after
171.32June 30, 2013.

171.33    Sec. 29. Minnesota Statutes 2012, section 297A.68, subdivision 5, is amended to read:
171.34    Subd. 5. Capital equipment. (a) Capital equipment is exempt. Except as provided
171.35in paragraphs (e) and (f), the tax must be imposed and collected as if the rate under section
172.1297A.62, subdivision 1 , applied, and then refunded in the manner provided in section
172.2297A.75 .
172.3"Capital equipment" means machinery and equipment purchased or leased, and used
172.4in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining,
172.5or refining tangible personal property to be sold ultimately at retail if the machinery and
172.6equipment are essential to the integrated production process of manufacturing, fabricating,
172.7mining, or refining. Capital equipment also includes machinery and equipment
172.8used primarily to electronically transmit results retrieved by a customer of an online
172.9computerized data retrieval system.
172.10(b) Capital equipment includes, but is not limited to:
172.11(1) machinery and equipment used to operate, control, or regulate the production
172.12equipment;
172.13(2) machinery and equipment used for research and development, design, quality
172.14control, and testing activities;
172.15(3) environmental control devices that are used to maintain conditions such as
172.16temperature, humidity, light, or air pressure when those conditions are essential to and are
172.17part of the production process;
172.18(4) materials and supplies used to construct and install machinery or equipment;
172.19(5) repair and replacement parts, including accessories, whether purchased as spare
172.20parts, repair parts, or as upgrades or modifications to machinery or equipment;
172.21(6) materials used for foundations that support machinery or equipment;
172.22(7) materials used to construct and install special purpose buildings used in the
172.23production process;
172.24(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed
172.25as part of the delivery process regardless if mounted on a chassis, repair parts for
172.26ready-mixed concrete trucks, and leases of ready-mixed concrete trucks; and
172.27(9) machinery or equipment used for research, development, design, or production
172.28of computer software.
172.29(c) Capital equipment does not include the following:
172.30(1) motor vehicles taxed under chapter 297B;
172.31(2) machinery or equipment used to receive or store raw materials;
172.32(3) building materials, except for materials included in paragraph (b), clauses (6)
172.33and (7);
172.34(4) machinery or equipment used for nonproduction purposes, including, but not
172.35limited to, the following: plant security, fire prevention, first aid, and hospital stations;
173.1support operations or administration; pollution control; and plant cleaning, disposal of
173.2scrap and waste, plant communications, space heating, cooling, lighting, or safety;
173.3(5) farm machinery and aquaculture production equipment as defined by section
173.4297A.61 , subdivisions 12 and 13;
173.5(6) machinery or equipment purchased and installed by a contractor as part of an
173.6improvement to real property;
173.7(7) machinery and equipment used by restaurants in the furnishing, preparing, or
173.8serving of prepared foods as defined in section 297A.61, subdivision 31;
173.9(8) machinery and equipment used to furnish the services listed in section 297A.61,
173.10subdivision 3
, paragraph (g), clause (6), items (i) to (vi) and (viii);
173.11(9) machinery or equipment used in the transportation, transmission, or distribution
173.12of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines,
173.13tanks, mains, or other means of transporting those products. This clause does not apply to
173.14machinery or equipment used to blend petroleum or biodiesel fuel as defined in section
173.15239.77 ; or
173.16(10) any other item that is not essential to the integrated process of manufacturing,
173.17fabricating, mining, or refining.
173.18(d) For purposes of this subdivision:
173.19(1) "Equipment" means independent devices or tools separate from machinery but
173.20essential to an integrated production process, including computers and computer software,
173.21used in operating, controlling, or regulating machinery and equipment; and any subunit or
173.22assembly comprising a component of any machinery or accessory or attachment parts of
173.23machinery, such as tools, dies, jigs, patterns, and molds.
173.24(2) "Fabricating" means to make, build, create, produce, or assemble components or
173.25property to work in a new or different manner.
173.26(3) "Integrated production process" means a process or series of operations through
173.27which tangible personal property is manufactured, fabricated, mined, or refined. For
173.28purposes of this clause, (i) manufacturing begins with the removal of raw materials
173.29from inventory and ends when the last process prior to loading for shipment has been
173.30completed; (ii) fabricating begins with the removal from storage or inventory of the
173.31property to be assembled, processed, altered, or modified and ends with the creation
173.32or production of the new or changed product; (iii) mining begins with the removal of
173.33overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and
173.34ends when the last process before stockpiling is completed; and (iv) refining begins with
173.35the removal from inventory or storage of a natural resource and ends with the conversion
173.36of the item to its completed form.
174.1(4) "Machinery" means mechanical, electronic, or electrical devices, including
174.2computers and computer software, that are purchased or constructed to be used for the
174.3activities set forth in paragraph (a), beginning with the removal of raw materials from
174.4inventory through completion of the product, including packaging of the product.
174.5(5) "Machinery and equipment used for pollution control" means machinery and
174.6equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity
174.7described in paragraph (a).
174.8(6) "Manufacturing" means an operation or series of operations where raw materials
174.9are changed in form, composition, or condition by machinery and equipment and which
174.10results in the production of a new article of tangible personal property. For purposes of
174.11this subdivision, "manufacturing" includes the generation of electricity or steam to be
174.12sold at retail.
174.13(7) "Mining" means the extraction of minerals, ores, stone, or peat.
174.14(8) "Online data retrieval system" means a system whose cumulation of information
174.15is equally available and accessible to all its customers.
174.16(9) "Primarily" means machinery and equipment used 50 percent or more of the time
174.17in an activity described in paragraph (a).
174.18(10) "Refining" means the process of converting a natural resource to an intermediate
174.19or finished product, including the treatment of water to be sold at retail.
174.20(11) This subdivision does not apply to telecommunications equipment as
174.21provided in subdivision 35, and does not apply to wire, cable, fiber, poles, or conduit
174.22for telecommunications services.
174.23(e) Materials exempt under this section may be purchased without imposing and
174.24collecting the tax and without applying for a refund under section 297A.75, provided that:
174.25(1) the purchaser employed not more than 80 full-time equivalent employees at
174.26any time during calendar year 2013; and
174.27(2) if another business owns at least 20 percent of the purchaser, then the sum of the
174.28number of full-time equivalent employees employed by the purchaser and the number
174.29of full-time equivalent employees employed by any other business that owns at least 20
174.30percent of the purchaser's business is not more than 80 full-time equivalent employees
174.31during calendar year 2013. This clause must be applied for each business that owns at
174.32least 20 percent of the purchaser.
174.33(f) For the state's fiscal year 2016 and thereafter, all purchases exempt under this
174.34section may be purchased without imposing and collecting the tax and without applying
174.35for a refund under section 297A.75.
175.1EFFECTIVE DATE.Paragraph (e) is effective for sales and purchases made
175.2after June 30, 2014, and through June 30, 2015. Paragraph (f) is effective for sales and
175.3purchases made after June 30, 2015.

175.4    Sec. 30. Minnesota Statutes 2012, section 297A.68, subdivision 10, is amended to read:
175.5    Subd. 10. Publications; publication materials. Tangible personal property that
175.6is used or consumed in producing any publication regularly issued at average intervals
175.7not exceeding three months is exempt, and any such publication is exempt. "Publication"
175.8includes, but is not limited to, a qualified newspaper as defined by section 331A.02,
175.9together with any supplements or enclosures. "Publication" does not include magazines
175.10and periodicals, whether sold over the counter or by subscription. Tangible personal
175.11property that is used or consumed in producing a publication does not include machinery,
175.12equipment, implements, tools, accessories, appliances, contrivances, furniture, and fixtures
175.13used in the publication, or fuel, electricity, gas, or steam used for space heating or lighting.
175.14Advertising contained in a publication is a nontaxable service and is exempt.
175.15Persons who publish or sell newspapers are engaging in a nontaxable service with
175.16respect to gross receipts realized from such news-gathering or news-publishing activities,
175.17including the sale of advertising.
175.18EFFECTIVE DATE.This section is effective for sales and purchases made after
175.19June 30, 2013.

175.20    Sec. 31. Minnesota Statutes 2012, section 297A.68, subdivision 42, is amended to read:
175.21    Subd. 42. Qualified data centers. (a) Purchases of enterprise information
175.22technology equipment and computer software for use in a qualified data center are exempt.
175.23The tax on purchases exempt under this paragraph must be imposed and collected as if the
175.24rate under section 297A.62, subdivision 1, applied, and then refunded after June 30, 2013,
175.25in the manner provided in section 297A.75. This exemption includes enterprise information
175.26technology equipment and computer software purchased to replace or upgrade enterprise
175.27information technology equipment and computer software in a qualified data center.
175.28(b) Electricity used or consumed in the operation of a qualified data center is exempt.
175.29(c) For purposes of this subdivision, "qualified data center" means a facility in
175.30Minnesota:
175.31(1) that is comprised of one or more buildings that consist in the aggregate of at least
175.3230,000 25,000 square feet, and that are located on a single parcel or on contiguous parcels,
175.33where the total cost of construction or refurbishment, investment in enterprise information
176.1technology equipment, and computer software is at least $50,000,000 $20,000,000 within
176.2a 24-month period;
176.3(2) that is constructed or substantially refurbished after June 30, 2012, where
176.4"substantially refurbished" means that at least 30,000 25,000 square feet have been rebuilt
176.5or modified; and, including:
176.6(i) installation of enterprise information technology equipment, environmental
176.7control, and energy efficiency improvements; and
176.8(ii) building improvements; and
176.9(3) that is used to house enterprise information technology equipment, where the
176.10facility has the following characteristics:
176.11(i) uninterruptible power supplies, generator backup power, or both;
176.12(ii) sophisticated fire suppression and prevention systems; and
176.13(iii) enhanced security. A facility will be considered to have enhanced security if it
176.14has restricted access to the facility to selected personnel; permanent security guards; video
176.15camera surveillance; an electronic system requiring pass codes, keycards, or biometric
176.16scans, such as hand scans and retinal or fingerprint recognition; or similar security features.
176.17In determining whether the facility has the required square footage, the square
176.18footage of the following spaces shall be included if the spaces support the operation
176.19of enterprise information technology equipment: office space, meeting space, and
176.20mechanical and other support facilities. For purposes of this subdivision, "computer
176.21software" includes, but is not limited to, software utilized or loaded at the qualified data
176.22center, including maintenance, licensing, and software customization.
176.23(d) For purposes of this subdivision, "enterprise information technology equipment"
176.24means computers and equipment supporting computing, networking, or data storage,
176.25including servers and routers. It includes, but is not limited to: cooling systems,
176.26cooling towers, and other temperature control infrastructure; power infrastructure for
176.27transformation, distribution, or management of electricity used for the maintenance
176.28and operation of a qualified data center, including but not limited to exterior dedicated
176.29business-owned substations, backup power generation systems, battery systems, and
176.30related infrastructure; and racking systems, cabling, and trays, which are necessary for
176.31the maintenance and operation of the qualified data center.
176.32(e) A qualified data center may claim the exemptions in this subdivision for
176.33purchases made either within 20 years of the date of its first purchase qualifying for the
176.34exemption under paragraph (a), or by June 30, 2042, whichever is earlier.
176.35(f) The purpose of this exemption is to create jobs in the construction and data
176.36center industries.
177.1(g) This subdivision is effective for sales and purchases made after June 30, 2012,
177.2and before July 1, 2042.
177.3EFFECTIVE DATE.This section is effective for sales and purchases made after
177.4June 30, 2013.

177.5    Sec. 32. Minnesota Statutes 2012, section 297A.68, is amended by adding a
177.6subdivision to read:
177.7    Subd. 49. Greater Minnesota business expansions. (a) Purchases and use of
177.8tangible personal property or taxable services by a qualified business, as defined in section
177.9116J.3738, are exempt if:
177.10(1) the business subsidy agreement provides that the exemption under this
177.11subdivision applies;
177.12(2) the property or services are primarily used or consumed in greater Minnesota; and
177.13(3) the purchase was made and delivery received during the duration of the
177.14certification of the business as a qualified business under section 116J.3738.
177.15(b) Purchase and use of construction materials and supplies used or consumed in,
177.16and equipment incorporated into, the construction of improvements to real property in
177.17greater Minnesota are exempt if the improvements after completion of construction are
177.18to be used in the conduct of the trade or business of the qualified business, as defined in
177.19section 116J.3738. This exemption applies regardless of whether the purchases are made
177.20by the business or a contractor.
177.21(c) The exemptions under this subdivision apply to a local sales and use tax.
177.22(d) A qualifying business may claim an exemption under this subdivision in an
177.23amount up to $15,000.
177.24(e) The tax on purchases imposed under this subdivision must be imposed and
177.25collected as if the rate under section 297A.62, subdivision 1, applied, and then refunded in
177.26the manner provided in section 297A.75. No more than $1,000,000 may be refunded in a
177.27fiscal year for all purchases under this subdivision. Any portion of the balance of funds
177.28allocated for refunds under this paragraph does not cancel and shall be carried forward to
177.29and available for refunds in subsequent fiscal years.
177.30EFFECTIVE DATE.This section is effective for sales and purchases made after
177.31June 30, 2013.

177.32    Sec. 33. Minnesota Statutes 2012, section 297A.70, subdivision 2, is amended to read:
178.1    Subd. 2. Sales to government. (a) All sales, except those listed in paragraph (b),
178.2to the following governments and political subdivisions, or to the listed agencies or
178.3instrumentalities of governments and political subdivisions, are exempt:
178.4(1) the United States and its agencies and instrumentalities;
178.5(2) school districts, local governments, the University of Minnesota, state universities,
178.6community colleges, technical colleges, state academies, the Perpich Minnesota Center for
178.7Arts Education, and an instrumentality of a political subdivision that is accredited as an
178.8optional/special function school by the North Central Association of Colleges and Schools;
178.9(3) hospitals and nursing homes owned and operated by political subdivisions of
178.10the state of tangible personal property and taxable services used at or by hospitals and
178.11nursing homes;
178.12(4) the Metropolitan Council, for its purchases of vehicles and repair parts to equip
178.13operations provided for in section 473.4051;
178.14(5) other states or political subdivisions of other states, if the sale would be exempt
178.15from taxation if it occurred in that state; and
178.16(6) public libraries, public library systems, multicounty, multitype library systems as
178.17defined in section 134.001, county law libraries under chapter 134A, state agency libraries,
178.18the state library under section 480.09, and the Legislative Reference Library; and.
178.19(7) towns.
178.20(b) This exemption does not apply to the sales of the following products and services:
178.21(1) building, construction, or reconstruction materials purchased by a contractor
178.22or a subcontractor as a part of a lump-sum contract or similar type of contract with a
178.23guaranteed maximum price covering both labor and materials for use in the construction,
178.24alteration, or repair of a building or facility;
178.25(2) construction materials purchased by tax exempt entities or their contractors to
178.26be used in constructing buildings or facilities which will not be used principally by the
178.27tax exempt entities;
178.28(3) the leasing of a motor vehicle as defined in section 297B.01, subdivision 11,
178.29except for leases entered into by the United States or its agencies or instrumentalities;
178.30(4) lodging as defined under section 297A.61, subdivision 3, paragraph (g), clause
178.31(2), and prepared food, candy, soft drinks, and alcoholic beverages as defined in section
178.32297A.67, subdivision 2 , except for lodging, prepared food, candy, soft drinks, and alcoholic
178.33beverages purchased directly by the United States or its agencies or instrumentalities; or
178.34(5) goods or services purchased by a town local government as inputs to goods and
178.35services that are generally provided by a private business and the purchases would be
178.36taxable if made by a private business engaged in the same activity.
179.1(c) As used in this subdivision, "school districts" means public school entities and
179.2districts of every kind and nature organized under the laws of the state of Minnesota, and
179.3any instrumentality of a school district, as defined in section 471.59.
179.4(d) As used in this subdivision, "local governments" means cities, counties, and
179.5townships.
179.6(d) (e) As used in this subdivision, "goods or services generally provided by a private
179.7business" include, but are not limited to, goods or services provided by liquor stores, gas
179.8and electric utilities, golf courses, marinas, health and fitness centers, campgrounds, cafes,
179.9and laundromats. "Goods or services generally provided by a private business" do not
179.10include housing services, sewer and water services, wastewater treatment, ambulance and
179.11other public safety services, correctional services, chore or homemaking services provided
179.12to elderly or disabled individuals, or road and street maintenance or lighting.
179.13EFFECTIVE DATE.This section is effective for sales and purchases made after
179.14June 30, 2013.

179.15    Sec. 34. Minnesota Statutes 2012, section 297A.70, subdivision 4, is amended to read:
179.16    Subd. 4. Sales to nonprofit groups. (a) All sales, except those listed in paragraph
179.17(b), to the following "nonprofit organizations" are exempt:
179.18(1) a corporation, society, association, foundation, or institution organized and
179.19operated exclusively for charitable, religious, or educational purposes if the item
179.20purchased is used in the performance of charitable, religious, or educational functions; and
179.21(2) any senior citizen group or association of groups that:
179.22(i) in general limits membership to persons who are either age 55 or older, or
179.23physically disabled;
179.24(ii) is organized and operated exclusively for pleasure, recreation, and other
179.25nonprofit purposes, not including housing, no part of the net earnings of which inures to
179.26the benefit of any private shareholders; and
179.27(iii) is an exempt organization under section 501(c) of the Internal Revenue Code.
179.28For purposes of this subdivision, charitable purpose includes the maintenance of a
179.29cemetery owned by a religious organization.
179.30(b) This exemption does not apply to the following sales:
179.31(1) building, construction, or reconstruction materials purchased by a contractor
179.32or a subcontractor as a part of a lump-sum contract or similar type of contract with a
179.33guaranteed maximum price covering both labor and materials for use in the construction,
179.34alteration, or repair of a building or facility;
180.1(2) construction materials purchased by tax-exempt entities or their contractors to
180.2be used in constructing buildings or facilities that will not be used principally by the
180.3tax-exempt entities; and
180.4(3) lodging as defined under section 297A.61, subdivision 3, paragraph (g), clause
180.5(2), and prepared food, candy, soft drinks, and alcoholic beverages as defined in section
180.6297A.67, subdivision 2 , except wine purchased by an established religious organization
180.7for sacramental purposes or as allowed under subdivision 9a; and
180.8(4) leasing of a motor vehicle as defined in section 297B.01, subdivision 11, except
180.9as provided in paragraph (c).
180.10(c) This exemption applies to the leasing of a motor vehicle as defined in section
180.11297B.01, subdivision 11 , only if the vehicle is:
180.12(1) a truck, as defined in section 168.002, a bus, as defined in section 168.002, or a
180.13passenger automobile, as defined in section 168.002, if the automobile is designed and
180.14used for carrying more than nine persons including the driver; and
180.15(2) intended to be used primarily to transport tangible personal property or
180.16individuals, other than employees, to whom the organization provides service in
180.17performing its charitable, religious, or educational purpose.
180.18(d) A limited liability company also qualifies for exemption under this subdivision if
180.19(1) it consists of a sole member that would qualify for the exemption, and (2) the items
180.20purchased qualify for the exemption.
180.21EFFECTIVE DATE.This section is effective retroactively for sales and purchases
180.22made after June 30, 2012.

180.23    Sec. 35. Minnesota Statutes 2012, section 297A.70, subdivision 5, is amended to read:
180.24    Subd. 5. Veterans groups. Sales to an organization of military service veterans or
180.25an auxiliary unit of an organization of military service veterans are exempt if:
180.26(1) the organization or auxiliary unit is organized within the state of Minnesota
180.27and is exempt from federal taxation under section 501(c), clause (19), of the Internal
180.28Revenue Code; and
180.29(2) the tangible personal property is or services are for charitable, civic, educational,
180.30or nonprofit uses and not for social, recreational, pleasure, or profit uses.
180.31EFFECTIVE DATE.This section is effective for sales and purchases made after
180.32June 30, 2013.

180.33    Sec. 36. Minnesota Statutes 2012, section 297A.70, subdivision 7, is amended to read:
181.1    Subd. 7. Hospitals and, outpatient surgical centers, and critical access dental
181.2providers. (a) Sales, except for those listed in paragraph (c) (d), to a hospital are exempt,
181.3if the items purchased are used in providing hospital services. For purposes of this
181.4subdivision, "hospital" means a hospital organized and operated for charitable purposes
181.5within the meaning of section 501(c)(3) of the Internal Revenue Code, and licensed under
181.6chapter 144 or by any other jurisdiction, and "hospital services" are services authorized or
181.7required to be performed by a "hospital" under chapter 144.
181.8    (b) Sales, except for those listed in paragraph (c) (d), to an outpatient surgical center
181.9are exempt, if the items purchased are used in providing outpatient surgical services. For
181.10purposes of this subdivision, "outpatient surgical center" means an outpatient surgical
181.11center organized and operated for charitable purposes within the meaning of section
181.12501(c)(3) of the Internal Revenue Code, and licensed under chapter 144 or by any other
181.13jurisdiction. For the purposes of this subdivision, "outpatient surgical services" means:
181.14(1) services authorized or required to be performed by an outpatient surgical center under
181.15chapter 144; and (2) urgent care. For purposes of this subdivision, "urgent care" means
181.16health services furnished to a person whose medical condition is sufficiently acute to
181.17require treatment unavailable through, or inappropriate to be provided by, a clinic or
181.18physician's office, but not so acute as to require treatment in a hospital emergency room.
181.19    (c) Sales, except for those listed in paragraph (d), to a critical access dental provider
181.20are exempt, if the items purchased are used in providing critical access dental care
181.21services. For the purposes of this subdivision, "critical access dental provider" means
181.22a dentist or dental clinic designated as a critical access dental provider under section
181.23256B.76, subdivision 4, that serve only recipients of Minnesota health care programs.
181.24    (d) This exemption does not apply to the following products and services:
181.25    (1) purchases made by a clinic, physician's office, or any other medical facility not
181.26operating as a hospital or, outpatient surgical center, or critical access dental provider,
181.27even though the clinic, office, or facility may be owned and operated by a hospital or,
181.28 outpatient surgical center, or critical access dental provider;
181.29    (2) sales under section 297A.61, subdivision 3, paragraph (g), clause (2), and
181.30prepared food, candy, and soft drinks;
181.31    (3) building and construction materials used in constructing buildings or facilities
181.32that will not be used principally by the hospital or, outpatient surgical center, or critical
181.33access dental provider;
181.34    (4) building, construction, or reconstruction materials purchased by a contractor or a
181.35subcontractor as a part of a lump-sum contract or similar type of contract with a guaranteed
182.1maximum price covering both labor and materials for use in the construction, alteration, or
182.2repair of a hospital or, outpatient surgical center, or critical access dental provider; or
182.3    (5) the leasing of a motor vehicle as defined in section 297B.01, subdivision 11.
182.4    (d) (e) A limited liability company also qualifies for exemption under this
182.5subdivision if (1) it consists of a sole member that would qualify for the exemption, and
182.6(2) the items purchased qualify for the exemption.
182.7    (e) (f) An entity that contains both a hospital and a nonprofit unit may claim this
182.8exemption on purchases made for both the hospital and nonprofit unit provided that:
182.9    (1) the nonprofit unit would have qualified for exemption under subdivision 4; and
182.10    (2) the items purchased would have qualified for the exemption.
182.11EFFECTIVE DATE.This section is effective retroactively for sales and purchases
182.12made after June 30, 2007. Purchasers may apply for a refund of tax paid for qualifying
182.13purchases under this subdivision made after June 30, 2007, and before July 1, 2013, in the
182.14manner provided in Minnesota Statutes, section 297A.75.

182.15    Sec. 37. Minnesota Statutes 2012, section 297A.70, is amended by adding a
182.16subdivision to read:
182.17    Subd. 9a. Established religious orders. Sales of lodging, prepared food, candy,
182.18soft drinks, and alcoholic beverages at noncatered events between an established religious
182.19order and an affiliated institution of higher education are exempt. For purposes of this
182.20subdivision, an institution of higher education is "affiliated" with an established religious
182.21order if members of the religious order are represented on the governing board of the
182.22institution of higher education and the two organizations share campus space and common
182.23facilities.
182.24EFFECTIVE DATE.This section is effective retroactively for sales and purchases
182.25made after June 30, 2012.

182.26    Sec. 38. Minnesota Statutes 2012, section 297A.70, subdivision 13, is amended to read:
182.27    Subd. 13. Fund-raising sales by or for nonprofit groups. (a) The following
182.28sales by the specified organizations for fund-raising purposes are exempt, subject to the
182.29limitations listed in paragraph (b):
182.30(1) all sales made by a nonprofit organization that exists solely for the purpose of
182.31providing educational or social activities for young people primarily age 18 and under;
182.32(2) all sales made by an organization that is a senior citizen group or association of
182.33groups if (i) in general it limits membership to persons age 55 or older; (ii) it is organized
183.1and operated exclusively for pleasure, recreation, and other nonprofit purposes; and (iii)
183.2no part of its net earnings inures to the benefit of any private shareholders;
183.3(3) the sale or use of tickets or admissions to a golf tournament held in Minnesota if
183.4the beneficiary of the tournament's net proceeds qualifies as a tax-exempt organization
183.5under section 501(c)(3) of the Internal Revenue Code; and
183.6(4) sales of candy sold for fund-raising purposes by a nonprofit organization that
183.7provides educational and social activities primarily for young people age 18 and under.
183.8(b) The exemptions listed in paragraph (a) are limited in the following manner:
183.9(1) the exemption under paragraph (a), clauses (1) and (2), applies only if the gross
183.10annual receipts of the organization from fund-raising do not exceed $10,000; and
183.11(2) the exemption under paragraph (a), clause (1), does not apply if the sales are
183.12derived from admission charges or from activities for which the money must be deposited
183.13with the school district treasurer under section 123B.49, subdivision 2, or be recorded in
183.14the same manner as other revenues or expenditures of the school district under section
183.15123B.49, subdivision 4 .
183.16(c) Sales of tangible personal property and services are exempt if the entire proceeds,
183.17less the necessary expenses for obtaining the property or services, will be contributed to
183.18a registered combined charitable organization described in section 43A.50, to be used
183.19exclusively for charitable, religious, or educational purposes, and the registered combined
183.20charitable organization has given its written permission for the sale. Sales that occur over
183.21a period of more than 24 days per year are not exempt under this paragraph.
183.22(d) For purposes of this subdivision, a club, association, or other organization of
183.23elementary or secondary school students organized for the purpose of carrying on sports,
183.24educational, or other extracurricular activities is a separate organization from the school
183.25district or school for purposes of applying the $10,000 limit.
183.26EFFECTIVE DATE.This section is effective for sales and purchases made after
183.27June 30, 2013.

183.28    Sec. 39. Minnesota Statutes 2012, section 297A.70, subdivision 14, is amended to read:
183.29    Subd. 14. Fund-raising events sponsored by nonprofit groups. (a) Sales of
183.30tangible personal property or services at, and admission charges for fund-raising events
183.31sponsored by, a nonprofit organization are exempt if:
183.32(1) all gross receipts are recorded as such, in accordance with generally accepted
183.33accounting practices, on the books of the nonprofit organization; and
184.1(2) the entire proceeds, less the necessary expenses for the event, will be used solely
184.2and exclusively for charitable, religious, or educational purposes. Exempt sales include
184.3the sale of prepared food, candy, and soft drinks at the fund-raising event.
184.4(b) This exemption is limited in the following manner:
184.5(1) it does not apply to admission charges for events involving bingo or other
184.6gambling activities or to charges for use of amusement devices involving bingo or other
184.7gambling activities;
184.8(2) all gross receipts are taxable if the profits are not used solely and exclusively for
184.9charitable, religious, or educational purposes;
184.10(3) it does not apply unless the organization keeps a separate accounting record,
184.11including receipts and disbursements from each fund-raising event that documents all
184.12deductions from gross receipts with receipts and other records;
184.13(4) it does not apply to any sale made by or in the name of a nonprofit corporation as
184.14the active or passive agent of a person that is not a nonprofit corporation;
184.15(5) all gross receipts are taxable if fund-raising events exceed 24 days per year;
184.16(6) it does not apply to fund-raising events conducted on premises leased for more
184.17than five days but less than 30 days; and
184.18(7) it does not apply if the risk of the event is not borne by the nonprofit organization
184.19and the benefit to the nonprofit organization is less than the total amount of the state and
184.20local tax revenues forgone by this exemption.
184.21(c) For purposes of this subdivision, a "nonprofit organization" means any unit of
184.22government, corporation, society, association, foundation, or institution organized and
184.23operated for charitable, religious, educational, civic, fraternal, and senior citizens' or
184.24veterans' purposes, no part of the net earnings of which inures to the benefit of a private
184.25individual.
184.26EFFECTIVE DATE.This section is effective for sales and purchases made after
184.27June 30, 2013.

184.28    Sec. 40. Minnesota Statutes 2012, section 297A.70, is amended by adding a
184.29subdivision to read:
184.30    Subd. 18. Nursing homes and boarding care homes. (a) All sales, except those
184.31listed in paragraph (b), to a nursing home licensed under section 144A.02 or a boarding
184.32care home certified as a nursing facility under title 19 of the Social Security Act are
184.33exempt if the facility:
184.34(1) is exempt from federal income taxation pursuant to section 501(c)(3) of the
184.35Internal Revenue Code; and
185.1(2) is certified to participate in the medical assistance program under title 19 of the
185.2Social Security Act, or certifies to the commissioner that it does not discharge residents
185.3due to the inability to pay.
185.4(b) This exemption does not apply to the following sales:
185.5(1) building, construction, or reconstruction materials purchased by a contractor
185.6or a subcontractor as a part of a lump-sum contract or similar type of contract with a
185.7guaranteed maximum price covering both labor and materials for use in the construction,
185.8alteration, or repair of a building or facility;
185.9(2) construction materials purchased by tax-exempt entities or their contractors to
185.10be used in constructing buildings or facilities that will not be used principally by the
185.11tax-exempt entities;
185.12(3) lodging as defined under section 297A.61, subdivision 3, paragraph (g), clause
185.13(2), and prepared food, candy, soft drinks, and alcoholic beverages as defined in section
185.14297A.67, subdivision 2; and
185.15(4) leasing of a motor vehicle as defined in section 297B.01, subdivision 11, except
185.16as provided in paragraph (c).
185.17(c) This exemption applies to the leasing of a motor vehicle as defined in section
185.18297B.01, subdivision 11, only if the vehicle is:
185.19(1) a truck, as defined in section 168.002; a bus, as defined in section 168.002; or a
185.20passenger automobile, as defined in section 168.002, if the automobile is designed and
185.21used for carrying more than nine persons including the driver; and
185.22(2) intended to be used primarily to transport tangible personal property or residents
185.23of the nursing home or boarding care home.
185.24EFFECTIVE DATE.This section is effective for sales and purchases made after
185.25June 30, 2013.

185.26    Sec. 41. Minnesota Statutes 2012, section 297A.71, is amended by adding a
185.27subdivision to read:
185.28    Subd. 45. Biopharmaceutical manufacturing facility. (a) Materials and
185.29supplies used or consumed in, capital equipment incorporated into, and privately
185.30owned infrastructure in support of the construction, improvement, or expansion of a
185.31biopharmaceutical manufacturing facility in the state are exempt if the following criteria
185.32are met:
185.33(1) the facility is used for the manufacturing of biologics;
185.34(2) the total capital investment made at the facility exceeds $50,000,000; and
186.1(3) the facility creates and maintains at least 190 full-time equivalent positions at the
186.2facility. These positions must be new jobs in Minnesota and not the result of relocating
186.3jobs that currently exist in Minnesota.
186.4(b) The tax must be imposed and collected as if the rate under section 297A.62,
186.5subdivision 1, applied, and refunded in the manner provided in section 297A.75.
186.6(c) To be eligible for a refund, the owner of the biopharmaceutical manufacturing
186.7facility must:
186.8(1) initially apply to the Department of Employment and Economic Development
186.9for certification no later than one year from the final completion date of construction,
186.10improvement, or expansion of the facility; and
186.11(2) for each year that the owner of the biopharmaceutical manufacturing facility
186.12applies for a refund, the owner must have received written certification from the
186.13Department of Employment and Economic Development that the facility has met the
186.14criteria of paragraph (a).
186.15(d) The refund is to be paid annually at a rate of 25 percent of the total allowable
186.16refund payable to date, with the commissioner making annual payments of the remaining
186.17refund until all of the refund has been paid.
186.18(e) For purposes of this subdivision, "biopharmaceutical" and "biologics" are
186.19interchangeable and mean medical drugs or medicinal preparations produced using
186.20technology that uses biological systems, living organisms or derivatives of living
186.21organisms, to make or modify products or processes for specific use. The medical drugs or
186.22medicinal preparations include but are not limited to proteins, antibodies, nucleic acids,
186.23and vaccines.
186.24EFFECTIVE DATE.This section is effective retroactively to capital investments
186.25made and jobs created after December 31, 2012, and effective retroactively for sales and
186.26purchases made after December 31, 2012, and before July 1, 2019.

186.27    Sec. 42. Minnesota Statutes 2012, section 297A.71, is amended by adding a
186.28subdivision to read:
186.29    Subd. 46. Research and development facilities. Materials and supplies used
186.30or consumed in, and equipment incorporated into, the construction or improvement of
186.31a research and development facility that has laboratory space of at least 400,000 square
186.32feet and utilizes both high-intensity and low-intensity laboratories, provided that the
186.33project has a total construction cost of at least $140,000,000 within a 24-month period.
186.34The tax on purchases imposed under this subdivision must be imposed and collected as if
187.1the rate under section 297A.62, subdivision 1, applied and then refunded in the manner
187.2provided in section 297A.75.
187.3EFFECTIVE DATE.This section is effective for sales and purchases made after
187.4June 30, 2013, and before September 1, 2015.

187.5    Sec. 43. Minnesota Statutes 2012, section 297A.71, is amended by adding a
187.6subdivision to read:
187.7    Subd. 47. Industrial measurement manufacturing and controls facility. (a)
187.8Materials and supplies used or consumed in, capital equipment incorporated into,
187.9fixtures installed in, and privately owned infrastructure in support of the construction,
187.10improvement, or expansion of an industrial measurement manufacturing and controls
187.11facility are exempt if:
187.12(1) the total capital investment made at the facility is at least $60,000,000;
187.13(2) the facility employs at least 250 full-time equivalent employees that are not
187.14employees currently employed by the company in the state; and
187.15(3) the Department of Employment and Economic Development determines that
187.16the expansion, remodeling, or improvement of the facility has a significant impact on
187.17the state economy.
187.18(b) The tax must be imposed and collected as if the rate under section 297A.62,
187.19subdivisions 1 and 1a, applied and refunded in the manner provided in section 297A.75,
187.20only after the following criteria are met:
187.21(1) a refund may not be issued until the owner of the facility has received
187.22certification from the Department of Employment and Economic Development that the
187.23company meets the requirements in paragraph (a); and
187.24(2) to receive the refund, the owner of the industrial measurement manufacturing
187.25and controls facility must initially apply to the Department of Employment and Economic
187.26Development for certification no later than one year from the final completion date of
187.27construction, improvement, or expansion of the industrial measurement manufacturing
187.28and controls facility.
187.29EFFECTIVE DATE.This section is effective for sales and purchases made after
187.30June 30, 2013, and before December 31, 2015.

187.31    Sec. 44. Minnesota Statutes 2012, section 297A.71, is amended by adding a
187.32subdivision to read:
188.1    Subd. 48. Retail, hotel, amusement, and office construction project. Materials
188.2and supplies used or consumed in, and equipment incorporated into the construction or
188.3improvement of buildings and infrastructure for retail, hotel, amusement, and office use
188.4within a two square mile area with a capital investment of at least $250,000,000, are
188.5exempt. The tax on purchases exempt under this provision must be imposed and collected
188.6as if the rate under section 297A.62, subdivision 1, applied and then refunded in the
188.7manner provided in section 297A.75. This subdivision expires June 30, 2023.
188.8EFFECTIVE DATE.This section is effective for sales and purchases made after
188.9June 30, 2014, and before July 1, 2024.

188.10    Sec. 45. Minnesota Statutes 2012, section 297A.75, subdivision 1, is amended to read:
188.11    Subdivision 1. Tax collected. The tax on the gross receipts from the sale of the
188.12following exempt items must be imposed and collected as if the sale were taxable and the
188.13rate under section 297A.62, subdivision 1, applied. The exempt items include:
188.14    (1) capital equipment exempt under section 297A.68, subdivision 5;
188.15    (2) (1) building materials for an agricultural processing facility exempt under section
188.16297A.71, subdivision 13 ;
188.17    (3) (2) building materials for mineral production facilities exempt under section
188.18297A.71, subdivision 14 ;
188.19    (4) (3) building materials for correctional facilities under section 297A.71,
188.20subdivision 3
;
188.21    (5) (4) building materials used in a residence for disabled veterans exempt under
188.22section 297A.71, subdivision 11;
188.23    (6) (5) elevators and building materials exempt under section 297A.71, subdivision
188.2412
;
188.25    (7) (6) building materials for the Long Lake Conservation Center exempt under
188.26section 297A.71, subdivision 17;
188.27    (8) (7) materials and supplies for qualified low-income housing under section
188.28297A.71, subdivision 23 ;
188.29    (9) (8) materials, supplies, and equipment for municipal electric utility facilities
188.30under section 297A.71, subdivision 35;
188.31    (10) (9) equipment and materials used for the generation, transmission, and
188.32distribution of electrical energy and an aerial camera package exempt under section
188.33297A.68 , subdivision 37;
188.34    (11) (10) commuter rail vehicle and repair parts under section 297A.70, subdivision
188.353, paragraph (a), clause (10);
189.1    (12) (11) materials, supplies, and equipment for construction or improvement of
189.2projects and facilities under section 297A.71, subdivision 40;
189.3(13) (12) materials, supplies, and equipment for construction or improvement of a
189.4meat processing facility exempt under section 297A.71, subdivision 41;
189.5(14) (13) materials, supplies, and equipment for construction, improvement, or
189.6expansion of:
189.7(i) an aerospace defense manufacturing facility exempt under section 297A.71,
189.8subdivision 42;
189.9(ii) a biopharmaceutical manufacturing facility exempt under section 297A.71,
189.10subdivision 45;
189.11(iii) a research and development facility exempt under section 297A.71, subdivision
189.124b;
189.13(iv) an industrial measurement manufacturing and controls facility exempt under
189.14section 297A.71, subdivision 47; and
189.15(v) buildings and infrastructure for retail, hotel, amusement, and office facilities
189.16exempt under section 297A.71, subdivision 48;
189.17(15) (14) enterprise information technology equipment and computer software for
189.18use in a qualified data center exempt under section 297A.68, subdivision 42; and
189.19(16) (15) materials, supplies, and equipment for qualifying capital projects under
189.20section 297A.71, subdivision 44;
189.21(16) items purchased for use in providing critical access dental services exempt
189.22under section 297A.70, subdivision 7, paragraph (c);
189.23(17) items purchased in transactions covered under Medicare or Medicaid exempt
189.24under section 297A.67, subdivision 7, paragraphs (b) and (c), and accessories and supplies
189.25exempt under section 297A.67, subdivision 7a; and
189.26(18) items and services purchased under a business subsidy agreement for use or
189.27consumption primarily in greater Minnesota exempt under section 297A.68, subdivision 49.
189.28EFFECTIVE DATE.The change to clause (1) is effective for sales and purchases
189.29made after June 30, 2015. The changes in clauses (13), (16), and (17), are effective the
189.30day following final enactment.

189.31    Sec. 46. Minnesota Statutes 2012, section 297A.75, subdivision 2, is amended to read:
189.32    Subd. 2. Refund; eligible persons. Upon application on forms prescribed by the
189.33commissioner, a refund equal to the tax paid on the gross receipts of the exempt items
189.34must be paid to the applicant. Only the following persons may apply for the refund:
190.1    (1) for subdivision 1, clauses (1) to (3) (2), (16), and (17), the applicant must be
190.2the purchaser;
190.3    (2) for subdivision 1, clauses (4) (3) and (7) (6), the applicant must be the
190.4governmental subdivision;
190.5    (3) for subdivision 1, clause (5) (4), the applicant must be the recipient of the
190.6benefits provided in United States Code, title 38, chapter 21;
190.7    (4) for subdivision 1, clause (6) (5), the applicant must be the owner of the
190.8homestead property;
190.9    (5) for subdivision 1, clause (8) (7), the owner of the qualified low-income housing
190.10project;
190.11    (6) for subdivision 1, clause (9) (8), the applicant must be a municipal electric utility
190.12or a joint venture of municipal electric utilities;
190.13    (7) for subdivision 1, clauses (10), (9), (12), (13), (14), and (15) and (18), the owner
190.14of the qualifying business; and
190.15    (8) for subdivision 1, clauses (10), (11), (12), and (16) (15), the applicant must be
190.16the governmental entity that owns or contracts for the project or facility.
190.17EFFECTIVE DATE.This section is effective the day following final enactment.

190.18    Sec. 47. Minnesota Statutes 2012, section 297A.75, subdivision 3, is amended to read:
190.19    Subd. 3. Application. (a) The application must include sufficient information
190.20to permit the commissioner to verify the tax paid. If the tax was paid by a contractor,
190.21subcontractor, or builder, under subdivision 1, clause (3), (4), (5), (6), (7), (8), (9), (10),
190.22(11), (12), (13), (14), (15), or (16) (18), the contractor, subcontractor, or builder must
190.23furnish to the refund applicant a statement including the cost of the exempt items and the
190.24taxes paid on the items unless otherwise specifically provided by this subdivision. The
190.25provisions of sections 289A.40 and 289A.50 apply to refunds under this section.
190.26    (b) An applicant may not file more than two applications per calendar year for
190.27refunds for taxes paid on capital equipment exempt under section 297A.68, subdivision 5.
190.28    (c) Total refunds for purchases of items in section 297A.71, subdivision 40, must not
190.29exceed $5,000,000 in fiscal years 2010 and 2011. Applications for refunds for purchases
190.30of items in sections 297A.70, subdivision 3, paragraph (a), clause (11), and 297A.71,
190.31subdivision 40, must not be filed until after June 30, 2009.
190.32EFFECTIVE DATE.This section is effective for sales and purchases made after
190.33June 30, 2015.

191.1    Sec. 48. Minnesota Statutes 2012, section 297A.815, subdivision 3, is amended to read:
191.2    Subd. 3. Motor vehicle lease sales tax revenue. (a) For purposes of this
191.3subdivision, "net revenue" means an amount equal to:
191.4    (1) the revenues, including interest and penalties, that would have been collected
191.5under this section, during the fiscal year if the rate had been 6.875 percent; less
191.6    (2) in fiscal year 2011, $30,100,000; in fiscal year 2012, $31,100,000; and in fiscal
191.7year 2013 and following fiscal years, $32,000,000.
191.8    (b) On or before June 30 of each fiscal year, the commissioner of revenue shall
191.9estimate the amount of the revenues and subtraction under paragraph (a) for the current
191.10fiscal year.
191.11    (c) On or after July 1 of the subsequent fiscal year, the commissioner of management
191.12and budget shall transfer the net revenue as estimated in paragraph (b) from the general
191.13fund, as follows:
191.14    (1) 50 percent to the greater Minnesota transit account; and
191.15    (2) 50 percent to the county state-aid highway fund. Notwithstanding any other law
191.16to the contrary, the commissioner of transportation shall allocate the funds transferred
191.17under this clause to the counties in the metropolitan area, as defined in section 473.121,
191.18subdivision 4, excluding the counties of Hennepin and Ramsey, so that each county shall
191.19receive of such amount the percentage that its population, as defined in section 477A.011,
191.20subdivision 3, estimated or established by July 15 of the year prior to the current calendar
191.21year, bears to the total population of the counties receiving funds under this clause.
191.22    (d) For fiscal years 2010 and 2011, the amount under paragraph (a), clause (1), must
191.23be calculated using the following percentages of the total revenues:
191.24    (1) for fiscal year 2010, 83.75 percent; and
191.25    (2) for fiscal year 2011, 93.75 percent.
191.26EFFECTIVE DATE.This section is effective for sales and purchases made after
191.27June 30, 2013.

191.28    Sec. 49. Minnesota Statutes 2012, section 297A.99, subdivision 1, is amended to read:
191.29    Subdivision 1. Authorization; scope. (a) A political subdivision of this state may
191.30impose a general sales tax (1) under section 297A.992, (2) under section 297A.993, (3) if
191.31permitted by special law, or (4) if the political subdivision enacted and imposed the tax
191.32before January 1, 1982, and its predecessor provision.
191.33    (b) This section governs the imposition of a general sales tax by the political
191.34subdivision. The provisions of this section preempt the provisions of any special law:
191.35    (1) enacted before June 2, 1997, or
192.1    (2) enacted on or after June 2, 1997, that does not explicitly exempt the special law
192.2provision from this section's rules by reference.
192.3    (c) This section does not apply to or preempt a sales tax on motor vehicles or a
192.4special excise tax on motor vehicles.
192.5(d) A political subdivision may not advertise or expend funds for the promotion of a
192.6referendum to support imposing a local option sales tax.
192.7(e) Notwithstanding paragraph (d), a political subdivision may only expend funds to:
192.8(1) conduct the referendum.;
192.9(2) disseminate information included in the resolution adopted under subdivision 2;
192.10(3) provide notice of, and conduct public forums at which proponents and opponents
192.11on the merits of the referendum are given equal time to express their opinions on the
192.12merits of the referendum;
192.13(4) provide facts and data on the impact of the proposed sales tax on consumer
192.14purchases; and
192.15(5) provide facts and data related to the programs and projects to be funded with
192.16the sales tax.
192.17EFFECTIVE DATE.This section is effective the day following final enactment.

192.18    Sec. 50. Minnesota Statutes 2012, section 469.190, is amended by adding a subdivision
192.19to read:
192.20    Subd. 1a. Tax base; locally collected taxes. A tax imposed on the gross receipts
192.21from lodging under this section or under a special law applies to the same base as taxes
192.22collected by the commissioner of revenue under subdivision 7 and section 270C.171.
192.23EFFECTIVE DATE.This section is effective the day following final enactment.
192.24In enacting this section, the legislature confirms its original intent in enacting Minnesota
192.25Statutes, section 469.190, its predecessor provisions, and any special laws authorizing
192.26political subdivisions to impose lodging taxes, and that those taxes were and are intended
192.27to apply to the entire consideration paid to obtain access to transient lodging, including
192.28ancillary or related services, such as services provided by accommodation intermediaries
192.29as defined in Minnesota Statutes, section 297A.61, and similar services. The provisions of
192.30this section must not be interpreted to imply a narrower construction of the tax base under
192.31lodging tax provisions of Minnesota law prior to the enactment of this section.

192.32    Sec. 51. Laws 1993, chapter 375, article 9, section 46, subdivision 2, as amended by
192.33Laws 1997, chapter 231, article 7, section 40, Laws 1998, chapter 389, article 8, section
193.130, Laws 2003, First Special Session chapter 21, article 8, section 13, Laws 2005, First
193.2Special Session chapter 3, article 5, section 26, and Laws 2009, chapter 88, article 4,
193.3section 15, is amended to read:
193.4    Subd. 2. Use of revenues. Revenues received from the tax authorized by subdivision
193.51 may only be used by the city to pay the cost of collecting the tax, and, except as provided in
193.6paragraph (e), to pay for the following projects or to secure or pay any principal, premium,
193.7or interest on bonds issued in accordance with subdivision 3 for the following projects.
193.8    (a) To pay all or a portion of the capital expenses of construction, equipment and
193.9acquisition costs for the expansion and remodeling of the St. Paul Civic Center complex,
193.10including the demolition of the existing arena and the construction and equipping of a
193.11new arena.
193.12    (b) Except as provided in paragraphs (e) and (f), the remainder of the funds must be
193.13spent for:
193.14    (1) capital projects to further residential, cultural, commercial, and economic
193.15development in both downtown St. Paul and St. Paul neighborhoods; and
193.16    (2) capital and operating expenses of cultural organizations in the city, provided
193.17that the amount spent under this clause must equal ten percent of the total amount spent
193.18under this paragraph in any year.
193.19    (c) The amount apportioned under paragraph (b) shall be no less than 60 percent
193.20of the revenues derived from the tax each year, except to the extent that a portion of that
193.21amount is required to pay debt service on (1) bonds issued for the purposes of paragraph (a)
193.22prior to March 1, 1998; or (2) bonds issued for the purposes of paragraph (a) after March 1,
193.231998, but only if the city council determines that 40 percent of the revenues derived from
193.24the tax together with other revenues pledged to the payment of the bonds, including the
193.25proceeds of definitive bonds, is expected to exceed the annual debt service on the bonds.
193.26    (d) If in any year more than 40 percent of the revenue derived from the tax authorized
193.27by subdivision 1 is used to pay debt service on the bonds issued for the purposes of
193.28paragraph (a) and to fund a reserve for the bonds, the amount of the debt service payment
193.29that exceeds 40 percent of the revenue must be determined for that year. In any year when
193.3040 percent of the revenue produced by the sales tax exceeds the amount required to pay
193.31debt service on the bonds and to fund a reserve for the bonds under paragraph (a), the
193.32amount of the excess must be made available for capital projects to further residential,
193.33cultural, commercial, and economic development in the neighborhoods and downtown
193.34until the cumulative amounts determined for all years under the preceding sentence have
193.35been made available under this sentence. The amount made available as reimbursement in
193.36the preceding sentence is not included in the 60 percent determined under paragraph (c).
194.1    (e) In each of calendar years 2006 to 2014, revenue not to exceed $3,500,000 may be
194.2used to pay the principal of bonds issued for capital projects of the city. After December
194.331, 2014, revenue from the tax imposed under subdivision 1 may not be used for this
194.4purpose. If the amount necessary to meet obligations under paragraphs (a) and (d) are less
194.5than 40 percent of the revenue from the tax in any year, the city may place the difference
194.6between 40 percent of the revenue and the amounts allocated under paragraphs (a) and (d)
194.7in an economic development fund to be used for any economic development purposes.
194.8    (f) By January 15 of each year, the mayor and the city council must report to the
194.9legislature on the use of sales tax revenues during the preceding one-year period.
194.10EFFECTIVE DATE.This section is effective the day after compliance by the
194.11governing body of the city of St. Paul with Minnesota Statutes, section 645.021,
194.12subdivisions 2 and 3.

194.13    Sec. 52. Laws 1993, chapter 375, article 9, section 46, subdivision 5, as amended by
194.14Laws 1998, chapter 389, article 8, section 32, is amended to read:
194.15    Subd. 5. Expiration of taxing authority. The authority granted by subdivision 1 to
194.16the city to impose a sales tax shall expire on December 31, 2030 2040, or at an earlier
194.17time as the city shall, by ordinance, determine. Any funds remaining after completion of
194.18projects approved under subdivision 2, paragraph (a) and retirement or redemption of any
194.19bonds or other obligations may be placed in the general fund of the city.
194.20EFFECTIVE DATE.This section is effective the day after compliance by the
194.21governing body of the city of St. Paul with Minnesota Statutes, section 645.021,
194.22subdivisions 2 and 3.

194.23    Sec. 53. Laws 2005, First Special Session chapter 3, article 5, section 37, subdivision
194.242, is amended to read:
194.25    Subd. 2. Use of revenues. (a) Revenues received from the tax authorized by
194.26subdivision 1 by the city of St. Cloud must be used for the cost of collecting and
194.27administering the tax and to pay all or part of the capital or administrative costs of the
194.28development, acquisition, construction, improvement, and securing and paying debt
194.29service on bonds or other obligations issued to finance the following regional projects as
194.30approved by the voters and specifically detailed in the referendum authorizing the tax or
194.31extending the tax:
194.32    (1) St. Cloud Regional Airport;
194.33    (2) regional transportation improvements;
195.1    (3) regional community and aquatics centers;
195.2    (4) regional public libraries; and
195.3    (5) acquisition and improvement of regional park land and open space.
195.4    (b) Revenues received from the tax authorized by subdivision 1 by the cities of St.
195.5Joseph, Waite Park, Sartell, Sauk Rapids, and St. Augusta must be used for the cost of
195.6collecting and administering the tax and to pay all or part of the capital or administrative
195.7costs of the development, acquisition, construction, improvement, and securing and paying
195.8debt service on bonds or other obligations issued to fund the projects specifically approved
195.9by the voters at the referendum authorizing the tax or extending the tax. The portion of
195.10revenues from the city going to fund the regional airport or regional library located in the
195.11city of St. Cloud will be as required under the applicable joint powers agreement.
195.12    (c) The use of revenues received from the taxes authorized in subdivision 1 for
195.13projects allowed under paragraphs (a) and (b) are limited to the amount authorized for
195.14each project under the enabling referendum.
195.15EFFECTIVE DATE.This section is effective for the city that approves them the
195.16day after compliance by the governing body of each city with Minnesota Statutes, section
195.17645.021, subdivision 3.

195.18    Sec. 54. Laws 2005, First Special Session chapter 3, article 5, section 37, subdivision
195.194, is amended to read:
195.20    Subd. 4. Termination of tax. The tax imposed in the cities of St. Joseph, St. Cloud,
195.21St. Augusta, Sartell, Sauk Rapids, and Waite Park under subdivision 1 expires when the
195.22city council determines that sufficient funds have been collected from the tax to retire or
195.23redeem the bonds and obligations authorized under subdivision 2, paragraph (a), but no
195.24later than December 31, 2018. Notwithstanding Minnesota Statutes, section 297A.99,
195.25subdivision 3, paragraphs (a), (c), and (d), a city may extend the tax imposed under
195.26subdivision 1 through December 31, 2038, if approved under the referendum authorizing
195.27the tax under subdivision 1 or if approved by voters of the city at a general election held
195.28no later than November 6, 2017.
195.29EFFECTIVE DATE.This section is effective for the city that approves them the
195.30day after compliance by the governing body of each city with Minnesota Statutes, section
195.31645.021, subdivision 3.

195.32    Sec. 55. Laws 2008, chapter 366, article 7, section 19, subdivision 3, as amended by
195.33Laws 2011, First Special Session chapter 7, article 4, section 8, is amended to read:
196.1    Subd. 3. Use of revenues. Notwithstanding Minnesota Statutes, section 297A.99,
196.2subdivision 3
, paragraph (b), the proceeds of the tax imposed under this section shall be
196.3used to pay for the costs of improvements to the Sportsman Park/Ballfields, Riverside
196.4Park, Lions Park/Pavilion, Cedar South Park also known as Eldorado Park, and Spring
196.5Street Park; improvements to and extension of the River County Bike Trail; acquisition,
196.6 and construction, improvement, and development of regional parks, bicycle trails, park
196.7land, open space, and of a pedestrian walkways, as described in the city improvement
196.8plan adopted by the city council by resolution on December 12, 2006, and walkway
196.9over Interstate 94 and State Highway 24; and the acquisition of land and construction of
196.10buildings for a community and recreation center. The total amount of revenues from the
196.11taxes in subdivisions 1 and 2 that may be used to fund these projects is $12,000,000
196.12plus any associated bond costs.
196.13EFFECTIVE DATE.This section is effective the day after compliance by the
196.14governing body of the city of Clearwater with Minnesota Statutes, section 645.021,
196.15subdivisions 2 and 3.

196.16    Sec. 56. DULUTH LOCAL SALES TAX; RATE REDUCTION.
196.17Notwithstanding Minnesota Statutes, section 297A.99 or 645.021, or any ordinance,
196.18city charter, or other provision of law, the city of Duluth shall reduce its rate of tax
196.19authorized under Laws 1973, chapter 461, section 1, as amended by Laws 1977, chapter
196.20438, to 0.87 percent.
196.21EFFECTIVE DATE.This section is effective for sales and purchases made after
196.22June 30, 2013.

196.23    Sec. 57. REVISOR'S INSTRUCTION.
196.24In Minnesota Rules, part 8130.9700, the revisor of statutes shall remove the last
196.25sentence in subpart 3, item B, that reads "Use of equipment on a time-sharing basis,
196.26where access to the equipment is only by means of remote access facilities, is not taxable
196.27leasing of such equipment."
196.28EFFECTIVE DATE.This section is effective for sales and purchases made after
196.29June 30, 2013.

196.30    Sec. 58. REPEALER.
196.31(a) Minnesota Statutes 2012, sections 297A.61, subdivision 27; 297A.66, subdivision
196.324; 297A.67, subdivision 8; and 297A.68, subdivisions 9, 22, and 35, are repealed.
197.1(b) Minnesota Rules, part 8130.0500, subpart 2, is repealed.
197.2EFFECTIVE DATE.This section is effective for sales and purchases made after
197.3June 30, 2013.

197.4ARTICLE 8
197.5LOCAL DEVELOPMENT

197.6    Section 1. Minnesota Statutes 2012, section 469.174, subdivision 2, is amended to read:
197.7    Subd. 2. Authority. "Authority" means a rural development financing authority
197.8created pursuant to sections 469.142 to 469.151; a housing and redevelopment authority
197.9created pursuant to sections 469.001 to 469.047; a port authority created pursuant to
197.10sections 469.048 to 469.068; an economic development authority created pursuant to
197.11sections 469.090 to 469.108; a redevelopment agency as defined in sections 469.152 to
197.12469.165 ; a municipality that is administering a development district created pursuant to
197.13sections 469.124 to 469.134 or any special law; a municipality that undertakes a project
197.14pursuant to sections 469.152 to 469.165, except a town located outside the metropolitan
197.15area or with a population of 5,000 persons or less; a municipality that undertakes a project
197.16located in an area designated under subdivision 30; or a municipality that exercises the
197.17powers of a port authority pursuant to any general or special law.
197.18EFFECTIVE DATE.This section is effective the day following final enactment.

197.19    Sec. 2. Minnesota Statutes 2012, section 469.174, is amended by adding a subdivision
197.20to read:
197.21    Subd. 19a. Soil deficiency district. "Soil deficiency district" means a type of tax
197.22increment financing district consisting of a project, or portions of a project, within which
197.23the authority finds by resolution that the following conditions exist:
197.24(1) parcels consisting of 70 percent of the area of the district contain unusual terrain
197.25or soil deficiencies which require substantial filling, grading, or other physical preparation
197.26for use and a parcel is eligible for inclusion if at least 50 percent of the area of the parcel
197.27requires substantial filling, grading, or other physical preparation for use; and
197.28(2) the estimated cost of the physical preparation under clause (1), but excluding
197.29costs directly related to roads as defined in section 160.01, and local improvements as
197.30described in sections 429.021, subdivision 1, clauses (1) to (7), (11), and (12), and 430.01,
197.31exceeds the fair market value of the land before completion of the preparation.
198.1EFFECTIVE DATE.This section is effective for districts for which the request for
198.2certification is made after April 30, 2013.

198.3    Sec. 3. Minnesota Statutes 2012, section 469.174, is amended by adding a subdivision
198.4to read:
198.5    Subd. 30. Mining reclamation project area. (a) An authority may designate an
198.6area within its jurisdiction as a mining reclamation project area by finding by resolution,
198.7that parcels consisting of at least 70 percent of the acreage, excluding street and railroad
198.8rights-of-way, are characterized by one or more of the following conditions:
198.9(1) peat or other soils with geotechnical deficiencies that impair development of
198.10buildings or infrastructure;
198.11(2) soils or terrain that requires substantial filling in order to permit the development
198.12of buildings or infrastructure;
198.13(3) landfills, dumps, or similar deposits of municipal or private waste;
198.14(4) quarries or similar resource extraction sites;
198.15(5) floodway; and
198.16(6) substandard buildings, within the meaning of section 469.174, subdivision 10.
198.17(b) For the purposes of paragraph (a), clauses (1) to (5), a parcel is characterized by
198.18the relevant condition if at least 50 percent of the area of the parcel contains the relevant
198.19condition. For the purposes of paragraph (a), clause (6), a parcel is characterized by
198.20substandard buildings if substandard buildings occupy at least 30 percent of the area
198.21of the parcel.
198.22EFFECTIVE DATE.This section is effective for districts for which the request for
198.23certification is made after April 30, 2013.

198.24    Sec. 4. Minnesota Statutes 2012, section 469.175, subdivision 3, is amended to read:
198.25    Subd. 3. Municipality approval. (a) A county auditor shall not certify the original
198.26net tax capacity of a tax increment financing district until the tax increment financing plan
198.27proposed for that district has been approved by the municipality in which the district
198.28is located. If an authority that proposes to establish a tax increment financing district
198.29and the municipality are not the same, the authority shall apply to the municipality in
198.30which the district is proposed to be located and shall obtain the approval of its tax
198.31increment financing plan by the municipality before the authority may use tax increment
198.32financing. The municipality shall approve the tax increment financing plan only after a
198.33public hearing thereon after published notice in a newspaper of general circulation in the
198.34municipality at least once not less than ten days nor more than 30 days prior to the date
199.1of the hearing. The published notice must include a map of the area of the district from
199.2which increments may be collected and, if the project area includes additional area, a map
199.3of the project area in which the increments may be expended. The hearing may be held
199.4before or after the approval or creation of the project or it may be held in conjunction with
199.5a hearing to approve the project.
199.6    (b) Before or at the time of approval of the tax increment financing plan, the
199.7municipality shall make the following findings, and shall set forth in writing the reasons
199.8and supporting facts for each determination:
199.9    (1) that the proposed tax increment financing district is a redevelopment district, a
199.10renewal or renovation district, a housing district, a soils condition district, soil deficiency
199.11district, or an economic development district; if the proposed district is a redevelopment
199.12district or a renewal or renovation district, the reasons and supporting facts for the
199.13determination that the district meets the criteria of section 469.174, subdivision 10,
199.14paragraph (a), clauses (1) and (2), or subdivision 10a, must be documented in writing
199.15and retained and made available to the public by the authority until the district has been
199.16terminated;
199.17    (2) that, in the opinion of the municipality:
199.18    (i) the proposed development or redevelopment would not reasonably be expected to
199.19occur solely through private investment within the reasonably foreseeable future; and
199.20    (ii) the increased market value of the site that could reasonably be expected to occur
199.21without the use of tax increment financing would be less than the increase in the market
199.22value estimated to result from the proposed development after subtracting the present
199.23value of the projected tax increments for the maximum duration of the district permitted
199.24by the plan. The requirements of this item do not apply if the district is a housing district;
199.25    (3) that the tax increment financing plan conforms to the general plan for the
199.26development or redevelopment of the municipality as a whole;
199.27    (4) that the tax increment financing plan will afford maximum opportunity,
199.28consistent with the sound needs of the municipality as a whole, for the development or
199.29redevelopment of the project by private enterprise;
199.30    (5) that the municipality elects the method of tax increment computation set forth in
199.31section 469.177, subdivision 3, paragraph (b), if applicable; and
199.32(6) that for a redevelopment district, renewal and renovation district, soils condition
199.33district, or soil deficiency district established by the authority in a mining reclamation
199.34project area, the reasons and supporting facts for the determination that the mining
199.35reclamation project area meets the requirements under section 469.174, subdivision 30,
199.36must be documented in writing and retained and made available to the public by the
200.1authority until two years after the district is decertified. These findings must have been
200.2made and documented no more than ten years before approval of the tax increment
200.3financing plan for the district.
200.4    (c) When the municipality and the authority are not the same, the municipality shall
200.5approve or disapprove the tax increment financing plan within 60 days of submission by the
200.6authority. When the municipality and the authority are not the same, the municipality may
200.7not amend or modify a tax increment financing plan except as proposed by the authority
200.8pursuant to subdivision 4. Once approved, the determination of the authority to undertake
200.9the project through the use of tax increment financing and the resolution of the governing
200.10body shall be conclusive of the findings therein and of the public need for the financing.
200.11    (d) For a district that is subject to the requirements of paragraph (b), clause (2),
200.12item (ii), the municipality's statement of reasons and supporting facts must include all of
200.13the following:
200.14    (1) an estimate of the amount by which the market value of the site will increase
200.15without the use of tax increment financing;
200.16    (2) an estimate of the increase in the market value that will result from the
200.17development or redevelopment to be assisted with tax increment financing; and
200.18    (3) the present value of the projected tax increments for the maximum duration of
200.19the district permitted by the tax increment financing plan.
200.20