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Key: (1) language to be deleted (2) new language

                            CHAPTER 300-S.F.No. 2570 
                  An act relating to taxation; making technical changes 
                  to income, franchise, sales, excise, property, 
                  healthcare provider, and gambling taxes; making 
                  technical changes to tax administrative provisions; 
                  requiring mandate explanations be attached to 
                  legislative bills before committee hearings; amending 
                  Minnesota Statutes 1996, sections 270.06; 270.069, 
                  subdivision 1; 270.70, subdivision 15; 278.10; 
                  289A.42, subdivision 2; 289A.65, subdivisions 7 and 8; 
                  297E.15, subdivisions 8 and 9; Minnesota Statutes 1997 
                  Supplement, sections 3.987, subdivision 2; 270.701, 
                  subdivision 2; 289A.09, subdivision 2; 289A.20, 
                  subdivision 2; 289A.38, subdivision 7; 290.0673, 
                  subdivisions 4, 5, and 7; 290.92, subdivision 30; 
                  295.53, subdivision 4a; 297A.01, subdivisions 3 and 
                  11; 297F.22, subdivisions 6 and 7; and 297G.21, 
                  subdivisions 6 and 7.  
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
                                   ARTICLE 1 
                           INCOME AND FRANCHISE TAXES 
           Section 1.  Minnesota Statutes 1997 Supplement, section 
        289A.09, subdivision 2, is amended to read: 
           Subd. 2.  [WITHHOLDING STATEMENT TO EMPLOYEE OR PAYEE AND 
        TO COMMISSIONER.] (a) A person required to deduct and withhold 
        from an employee a tax under section 290.92, subdivision 2a or 
        3, or 290.923, subdivision 2, or who would have been required to 
        deduct and withhold a tax under section 290.92, subdivision 2a 
        or 3, or persons required to withhold tax under section 290.923, 
        subdivision 2, determined without regard to section 290.92, 
        subdivision 19, if the employee or payee had claimed no more 
        than one withholding exemption, or who paid wages or made 
        payments not subject to withholding under section 290.92, 
        subdivision 2a or 3, or 290.923, subdivision 2, to an employee 
        or person receiving royalty payments in excess of $600, or who 
        has entered into a voluntary withholding agreement with a payee 
        under section 290.92, subdivision 20, must give every employee 
        or person receiving royalty payments in respect to the 
        remuneration paid by the person to the employee or person 
        receiving royalty payments during the calendar year, on or 
        before January 31 of the succeeding year, or, if employment is 
        terminated before the close of the calendar year, within 30 days 
        after the date of receipt of a written request from the employee 
        if the 30-day period ends before January 31, a written statement 
        showing the following: 
           (1) name of the person; 
           (2) the name of the employee or payee and the employee's or 
        payee's social security account number; 
           (3) the total amount of wages as that term is defined in 
        section 290.92, subdivision 1, paragraph (1); the total amount 
        of remuneration subject to withholding under section 290.92, 
        subdivision 20; the amount of sick pay as required under section 
        6051(f) of the Internal Revenue Code; and the amount of 
        royalties subject to withholding under section 290.923, 
        subdivision 2; and 
           (4) the total amount deducted and withheld as tax under 
        section 290.92, subdivision 2a or 3, or 290.923, subdivision 2. 
           (b) The statement required to be furnished by this 
        paragraph with respect to any remuneration must be furnished at 
        those times, must contain the information required, and must be 
        in the form the commissioner prescribes. 
           (c) The commissioner may prescribe rules providing for 
        reasonable extensions of time, not in excess of 30 days, to 
        employers or payers required to give the statements to their 
        employees or payees under this subdivision. 
           (d) A duplicate of any statement made under this 
        subdivision and in accordance with rules prescribed by the 
        commissioner, along with a reconciliation in the form the 
        commissioner prescribes of the statements for the calendar year, 
        including a reconciliation of the quarterly returns required to 
        be filed under subdivision 1, must be filed with the 
        commissioner on or before February 28 of the year after the 
        payments were made.  
           (e) If an employer cancels the employer's Minnesota 
        withholding account number required by section 290.92, 
        subdivision 24, the information required by paragraph (d), must 
        be filed with the commissioner within 30 days of the end of the 
        quarter in which the employer cancels its account number. 
           (f) The employer must submit the statements required to be 
        sent to the commissioner on magnetic media, if the magnetic 
        media was required to satisfy the federal reporting requirements 
        of section 6011(e) of the Internal Revenue Code and the 
        regulations issued under it. 
           (g) A "provider of payroll services third-party bulk filer" 
        as defined in section 289A.20 290.92, subdivision 2 30, 
        paragraph (f) (a), clause (2), must submit the returns required 
        by this subdivision and subdivision 1, paragraph (a), with the 
        commissioner by electronic means. 
           Sec. 2.  Minnesota Statutes 1997 Supplement, section 
        289A.20, subdivision 2, is amended to read: 
           Subd. 2.  [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 
        WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 
        WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 
        (a) A tax required to be deducted and withheld during the 
        quarterly period must be paid on or before the last day of the 
        month following the close of the quarterly period, unless an 
        earlier time for payment is provided.  A tax required to be 
        deducted and withheld from compensation of an entertainer and 
        from a payment to an out-of-state contractor must be paid on or 
        before the date the return for such tax must be filed under 
        section 289A.18, subdivision 2.  Taxes required to be deducted 
        and withheld by partnerships and S corporations must be paid on 
        or before the date the return must be filed under section 
        289A.18, subdivision 2. 
           (b) An employer who, during the previous quarter, withheld 
        more than $1,500 of tax under section 290.92, subdivision 2a or 
        3, or 290.923, subdivision 2, must deposit tax withheld under 
        those sections with the commissioner within the time allowed to 
        deposit the employer's federal withheld employment taxes under 
        Treasury Regulation, section 31.6302-1, without regard to the 
        safe harbor or de minimis rules in subparagraph (f) or the 
        one-day rule in subsection (c), clause (3).  Taxpayers must 
        submit a copy of their federal notice of deposit status to the 
        commissioner upon request by the commissioner. 
           (c) The commissioner may prescribe by rule other return 
        periods or deposit requirements.  In prescribing the reporting 
        period, the commissioner may classify payors according to the 
        amount of their tax liability and may adopt an appropriate 
        reporting period for the class that the commissioner judges to 
        be consistent with efficient tax collection.  In no event will 
        the duration of the reporting period be more than one year. 
           (d) If less than the correct amount of tax is paid to the 
        commissioner, proper adjustments with respect to both the tax 
        and the amount to be deducted must be made, without interest, in 
        the manner and at the times the commissioner prescribes.  If the 
        underpayment cannot be adjusted, the amount of the underpayment 
        will be assessed and collected in the manner and at the times 
        the commissioner prescribes. 
           (e) If the aggregate amount of the tax withheld during a 
        fiscal year ending June 30 under section 290.92, subdivision 2a 
        or 3, is equal to or exceeds the amounts established for 
        remitting federal withheld taxes pursuant to the regulations 
        promulgated under section 6302(h) of the Internal Revenue Code, 
        the employer must remit each required deposit in the subsequent 
        calendar year by means of a funds transfer as defined in section 
        336.4A-104, paragraph (a).  The funds transfer payment date, as 
        defined in section 336.4A-401, must be on or before the date the 
        deposit is due.  If the date the deposit is due is not a funds 
        transfer business day, as defined in section 336.4A-105, 
        paragraph (a), clause (4), the payment date must be on or before 
        the funds transfer business day next following the date the 
        deposit is due. 
           (f) Providers of payroll services A third-party bulk filer 
        as defined in section 290.92, subdivision 30, paragraph (a), 
        clause (2), who remit remits withholding deposits must remit all 
        deposits by means of a funds transfer as provided in paragraph 
        (e), regardless of the aggregate amount of tax withheld during a 
        fiscal year for all of the employers.  For the purposes of this 
        paragraph, "providers of payroll services" means persons who 
        have custody of or control over another employer's funds for the 
        purpose of paying on behalf of the other employer's Minnesota 
        withholding taxes. 
           Sec. 3.  Minnesota Statutes 1997 Supplement, section 
        289A.38, subdivision 7, is amended to read: 
           Subd. 7.  [FEDERAL TAX CHANGES.] If the amount of income, 
        items of tax preference, deductions, or credits for any year of 
        a taxpayer as reported to the Internal Revenue Service is 
        changed or corrected by the commissioner of Internal Revenue or 
        other officer of the United States or other competent authority, 
        or where a renegotiation of a contract or subcontract with the 
        United States results in a change in income, items of tax 
        preference, deductions, credits, or withholding tax, or, in the 
        case of estate tax, where there are adjustments to the taxable 
        estate resulting in a change to the credit for state death 
        taxes, the taxpayer shall report the change or correction or 
        renegotiation results in writing to the commissioner.  The 
        report must be submitted within 180 days after the final 
        determination and must be in the form of either an amended 
        Minnesota estate, withholding tax, or income tax return 
        conceding the accuracy of the federal determination or a letter 
        detailing how the federal determination is incorrect or does not 
        change the Minnesota tax.  An amended Minnesota income tax 
        return must be accompanied by an amended property tax refund 
        return, if necessary.  A taxpayer filing an amended federal tax 
        return must also file a copy of the amended return with the 
        commissioner of revenue within 180 days after filing the amended 
        return. 
           Sec. 4.  Minnesota Statutes 1996, section 289A.42, 
        subdivision 2, is amended to read: 
           Subd. 2.  [FEDERAL EXTENSIONS.] When a taxpayer consents to 
        an extension of time for the assessment of federal withholding 
        or income taxes, the period in which the commissioner may 
        recompute the tax is also extended, notwithstanding any period 
        of limitations to the contrary, as follows:  
           (1) for the periods provided in section 289A.38, 
        subdivisions 8 and 9; 
           (2) for six months following the expiration of the extended 
        federal period of limitations when no change is made by the 
        federal authority.  If no change is made by the federal 
        authority, and, but for this subdivision, the commissioner's 
        time period to adjust the tax has expired, and if the 
        commissioner has completed a field audit of the taxpayer, no 
        additional changes resulting in additional tax due or a refund 
        may be made.  For purposes of this subdivision, "field audit" 
        has the meaning given it in section 289A.38, subdivision 9. 
           Sec. 5.  Minnesota Statutes 1997 Supplement, section 
        290.0673, subdivision 4, is amended to read: 
           Subd. 4.  [DUTIES OF PROGRAM.] (a) Each program certified 
        by the commissioner of children, families, and learning under 
        subdivision 2 must comply with the requirements of this 
        subdivision. 
           (b) Each program must maintain records for each graduate 
        for which the program provides a credit certificate to an 
        employer.  These records must include information sufficient to 
        verify the graduate's eligibility under this section, identify 
        the employer, describe the job including its compensation rate 
        and benefits, and determine the amount of placement and 
        retention fees received. 
           (c) Each program must report to the commissioner of revenue 
        children, families, and learning by January 1, 1999, and by 
        January 1, 2001, on its use of the credit.  Each report must 
        include, at least, information on: 
           (1) the number of graduates placed; 
           (2) demographic information on the graduates; 
           (3) the types of position in which each graduate is placed, 
        including compensation information; 
           (4) the tenure of each graduate at the placed position or 
        in other jobs; 
           (5) the amount of employer fees paid to the program; 
           (6) the amount of money raised by the program from other 
        sources; and 
           (7) the types and sizes of employers with which graduates 
        have been placed and retained. 
           (d) The commissioner of children, families, and learning 
        shall compile and summarize this information and report to the 
        legislature by February 15, 1999, and February 15, 2001.  
           Sec. 6.  Minnesota Statutes 1997 Supplement, section 
        290.0673, subdivision 5, is amended to read: 
           Subd. 5.  [ISSUANCE OF CREDIT CERTIFICATES.] (a) The total 
        amount of credits under this section is limited to $1,200,000 
        for taxable years beginning after December 31, 1996, and before 
        January 1, 2002.  The commissioner of children, families, and 
        learning may issue under paragraph (b) no more than the 
        specified amount of certificates for taxable years beginning 
        during each calendar year: 
               1997            $100,000
               1998            $200,000
               1999            $300,000
               2000            $300,000
               2001            $300,000
           Unused certificates for a taxable year carry over and may 
        be used for a later taxable year, regardless of when issued by 
        the commissioner of children, families, and learning. 
           (b) Upon application, the commissioner of children, 
        families, and learning shall issue certificates to job training 
        programs, certified under subdivision 2, up to the dollar amount 
        available for the taxable year.  The certificates must be in a 
        dollar amount that is no greater than the dollar amount applied 
        for, and reflects the commissioner's commissioner of children, 
        families, and learning's estimate of the job training program's 
        projected fees for placements and retentions of qualifying 
        graduates.  The commissioner of children, families, and learning 
        shall issue the certificates in the order in which applications 
        are received until the available authority has been issued. 
           (c) To the extent available, the job training program must 
        provide to employers of its qualified graduates certificates 
        issued by the commissioner of children, families, and learning 
        under this subdivision. 
           Sec. 7.  Minnesota Statutes 1997 Supplement, section 
        290.0673, subdivision 7, is amended to read: 
           Subd. 7.  [MANNER OF CLAIMING.] The commissioner of revenue 
        shall prescribe the manner in which the credit may be claimed.  
        This may include allowing the credit only as a separately 
        processed claim for a refund. 
           Sec. 8.  Minnesota Statutes 1997 Supplement, section 
        290.92, subdivision 30, is amended to read: 
           Subd. 30.  [REGISTRATION; THIRD-PARTY BULK FILER.] (a) For 
        purposes of this subdivision, the following terms have the 
        meanings given: 
           (1) Notwithstanding section 290.01, "person" means an 
        individual, fiduciary, partnership, corporation, limited 
        liability company, association, or other entity organized under 
        the laws of this state or any other jurisdiction. 
           (2) "Third-party bulk filer" means a person that collects 
        withholding taxes from more than one employer for the purpose of 
        filing returns and depositing the withheld taxes with the 
        commissioner who has custody or control over another employer's 
        funds for the purpose of filing returns and depositing the 
        withheld taxes of the other employer with the commissioner.  
           (b) A person shall not act as a third-party bulk filer 
        unless the person is registered with the commissioner under this 
        subdivision. 
           (c) A person may apply to the commissioner, on a form 
        prescribed by the commissioner, for registration as a 
        third-party bulk filer under this subdivision, and the 
        commissioner shall grant the application if the application 
        indicates that the person will comply with this subdivision. 
           (d) A third-party bulk filer must: 
           (1) keep client funds held for payment of federal or state 
        withholding taxes or other client obligations in an account 
        separate from the third-party bulk filer's own funds; 
           (2) permit the commissioner to conduct scheduled or 
        unscheduled audits of the third-party bulk filer's books and 
        records relating to compliance with this subdivision and fully 
        cooperate with the audits or, at the discretion of the 
        commissioner, submit an audit conducted by a certified public 
        accountant; 
           (3) file returns electronically and make deposits 
        electronically with the commissioner in compliance with the 
        commissioner's requirements for electronic filing and 
        depositing; 
           (4) provide to the commissioner at least monthly, in the 
        form requested by the commissioner, an updated client list that 
        includes at least the name, address, tax identification number, 
        and federal deposit frequency of each client.  The address 
        listed for the client must be the client's actual street or post 
        office box address and not the third-party bulk filer's address; 
           (5) disclose in writing to prospective clients that: 
           (i) the third-party bulk filer may invest client funds 
        prior to depositing them with the commissioner and with the 
        Internal Revenue Service and that earnings from those 
        investments will be the property of the third-party bulk filer; 
           (ii) if the third-party bulk filer incurs losses on those 
        investments or uses the client's funds for other purposes, the 
        third-party bulk filer will still be liable to the client for 
        the amounts withheld but will be able to make required tax 
        deposits on behalf of the client only by using the third-party 
        bulk filer's own funds or other assets to replace the funds lost 
        through the investments or used for other purposes; and 
           (iii) no state or federal agency monitors or assumes any 
        responsibility for the financial solvency of third-party bulk 
        filers; 
           (6) timely file all returns and timely make all tax 
        deposits required under its contracts with its clients; 
           (7) upon request, provide to the commissioner, within the 
        time specified in the request, a copy of any contract with a 
        client; and 
           (8) comply with all other requirements of this section or 
        of rules adopted under this section. 
           (e) When the commissioner sends an order of assessment 
        issued under section 289A.37, in either paper or electronic 
        form, to a third-party bulk filer regarding a client, the 
        commissioner shall also send a paper copy of the order of 
        assessment to the client. 
           (f) If the commissioner determines that a required deposit 
        appears not to have been made, the commissioner shall send a 
        written notice of the delinquency, in electronic or paper form, 
        to the third-party bulk filer, and a copy to the client as 
        required under paragraph (e). 
           (g) If the commissioner determines that a required deposit 
        has not been made, and that continued operation of the 
        third-party bulk filer would present a risk of loss to its 
        clients, the commissioner may, upon ten business days' written 
        notice by certified mail to the third-party bulk filer, suspend 
        the registration of the third-party bulk filer for an indefinite 
        period, and notify the third-party bulk filer's clients that the 
        registration has been suspended.  A registration may not be 
        suspended if the failure to make a deposit was caused by the 
        client's failure to deposit funds or provide the information 
        necessary to calculate appropriate tax withholding payments.  
        The commissioner shall, upon request, provide the third-party 
        bulk filer with the opportunity for an administrative appeal 
        under section 289A.65, subdivisions 1, 4, and 10, prior to 
        suspension; the hearing, if any, on the administrative appeal 
        must occur within the ten-day period unless the commissioner, in 
        the commissioner's sole discretion, agrees to delay the 
        suspension to permit a later hearing.  The 60-day period 
        specified in section 289A.65, subdivision 4, does not apply to a 
        proceeding under this paragraph.  Within 30 days after the 
        beginning of a suspension under this paragraph, the commissioner 
        may commence a proceeding to suspend or revoke under paragraph 
        (h); if the commissioner fails to do so, the suspension under 
        this paragraph terminates. 
           (h) If the commissioner determines, in compliance with 
        paragraph (i), that a third-party bulk filer has violated this 
        section without reasonable cause or is no longer eligible for 
        registration under this subdivision, the commissioner may 
        suspend or revoke the third-party bulk filer's registration or 
        may assess a civil penalty upon the third-party bulk filer, not 
        to exceed $5,000 per violation.  A suspension of registration 
        may be for any period of less than six months and may include 
        conditions for reinstatement.  If the commissioner revokes the 
        registration, the third-party bulk filer may not apply for 
        reregistration for six months after the revocation.  If the 
        commissioner suspends or revokes a registration, the 
        commissioner shall notify the former registrant's clients that 
        the registration has been suspended or revoked.  If the 
        commissioner assesses a civil penalty, the commissioner shall 
        not notify the third-party bulk filer's clients of the 
        assessment. 
           (i) Prior to a suspension, revocation, or assessment of a 
        civil penalty under paragraph (h), the commissioner shall first 
        provide 30 days' written notice to the third-party bulk filer, 
        specifying the violations and informing the third-party bulk 
        filer that the commissioner intends, based upon those 
        violations, to take action against the third-party bulk filer as 
        permitted under this paragraph and paragraph (h).  The notice 
        shall advise the third-party bulk filer of the right to contest 
        the suspension, revocation, or assessment of a civil penalty and 
        of the general procedures for a contested case hearing under 
        chapter 14.  The notice may be served personally or by mail in 
        the manner prescribed for service of an order of assessment 
        issued under section 289A.37.  A suspension or revocation of 
        registration under this paragraph is effective when the 
        commissioner serves a notice of suspension or revocation upon 
        the third-party bulk filer after 30 days have passed following 
        the date of the notice of intent to suspend or revoke without 
        the third-party bulk filer requesting a hearing.  If a hearing 
        is timely requested and held, the suspension or revocation is 
        effective upon service by the commissioner of an order of 
        suspension or revocation under section 14.62, subdivision 1. 
           (j) A third-party bulk filer may terminate its registration 
        by written notice to the commissioner, but the termination does 
        not affect the commissioner's authority to begin or continue a 
        proceeding to take action permitted under paragraph (h).  The 
        commissioner shall notify the third-party bulk filer's clients 
        of a termination of registration under this paragraph. 
           (k) The commissioner shall remind employers at least 
        annually, through the department's regular informational 
        publications that it sends to employers, that employers may 
        telephone the department to determine whether a required filing 
        or deposit has been made by a third-party bulk filer. 
           Sec. 9.  [EFFECTIVE DATES.] 
           Sections 1, 2, and 8 are effective for withholding on wages 
        paid after December 31, 1997.  Sections 3 and 4 are effective 
        for federal extensions granted and final determinations made 
        after the date of final enactment.  Sections 5 to 7 are 
        effective for certificates issued after December 31, 1996, and 
        used in taxable years beginning after July 31, 1997.  
                                   ARTICLE 2
                                  SALES TAXES 
           Section 1.  Minnesota Statutes 1996, section 270.069, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [COSTS DEDUCTED; APPROPRIATION.] If the 
        commissioner of revenue agrees to collect a locally imposed tax, 
        the local unit of government must agree that all the direct and 
        indirect costs of the department of revenue for collecting the 
        tax and any other statewide indirect costs will be deducted from 
        the amounts collected and paid to the local unit of government.  
        The amounts deducted must be deposited in the state treasury and 
        credited to the general fund. 
           Sec. 2.  Minnesota Statutes 1997 Supplement, section 
        297A.01, subdivision 3, is amended to read: 
           Subd. 3.  A "sale" and a "purchase" includes, but is not 
        limited to, each of the following transactions: 
           (a) Any transfer of title or possession, or both, of 
        tangible personal property, whether absolutely or conditionally, 
        and the leasing of or the granting of a license to use or 
        consume tangible personal property other than manufactured homes 
        used for residential purposes for a continuous period of 30 days 
        or more, for a consideration in money or by exchange or barter; 
           (b) The production, fabrication, printing, or processing of 
        tangible personal property for a consideration for consumers who 
        furnish either directly or indirectly the materials used in the 
        production, fabrication, printing, or processing; 
           (c) The furnishing, preparing, or serving for a 
        consideration of food, meals, or drinks.  "Sale" or "purchase" 
        does not include: 
           (1) meals or drinks served to patients, inmates, or persons 
        residing at hospitals, sanitariums, nursing homes, senior 
        citizens homes, and correctional, detention, and detoxification 
        facilities; 
           (2) meals or drinks purchased for and served exclusively to 
        individuals who are 60 years of age or over and their spouses or 
        to the handicapped and their spouses by governmental agencies, 
        nonprofit organizations, agencies, or churches or pursuant to 
        any program funded in whole or part through 42 USCA sections 
        3001 through 3045, wherever delivered, prepared or served; or 
           (3) meals and lunches served at public and private schools, 
        universities, or colleges. 
        Notwithstanding section 297A.25, subdivision 2, taxable food or 
        meals include, but are not limited to, the following:  
           (i) food or drinks prepared sold by the retailer for 
        immediate consumption either on or off the retailer's premises.  
        For purposes of this subdivision, "food or drinks prepared for 
        immediate consumption" includes any food product upon which an 
        act of preparation including, but not limited to, cooking, 
        mixing, sandwich making, blending, heating, or pouring has been 
        performed by the retailer so the food product may be immediately 
        consumed by the purchaser.  For purposes of this subdivision, 
        "premises" means the total space and facilities, including 
        buildings, grounds, and parking lots that are made available or 
        that are available for use by the retailer or customer for the 
        purpose of sale or consumption of prepared food and drinks.  
        Food and drinks sold within a building or grounds which require 
        an admission charge for entrance are presumed to be sold for 
        consumption on the premises.  The premises of a caterer is the 
        place where the catered food or drinks are served; 
           (ii) food or drinks prepared by the retailer for immediate 
        consumption either on or off the retailer's premises.  For 
        purposes of this subdivision, "food or drinks prepared for 
        immediate consumption" includes any food product upon which an 
        act of preparation including, but not limited to, cooking, 
        mixing, sandwich making, blending, heating, or pouring has been 
        performed by the retailer so the food product may be immediately 
        consumed by the purchaser; 
           (iii) ice cream, ice milk, or frozen yogurt products, or 
        frozen novelties sold in single or individual servings including 
        novelties, cones, sundaes, and snow cones, sold in single or 
        individual servings.  For purposes of this subdivision, "single 
        or individual servings" does not include products prepackaged 
        and when sold in bulk containers or bulk packaging; 
           (iii) (iv) soft drinks and other beverages including all 
        carbonated and noncarbonated beverages or drinks sold in liquid 
        form except beverages or drinks which contain milk or milk 
        products, beverages or drinks containing 15 or more percent 
        fruit juice, or and noncarbonated and noneffervescent bottled 
        water sold in individual containers of one-half gallon or more 
        in size; 
           (iv) (v) gum, candy, and candy products, except when sold 
        for fundraising purposes by a nonprofit organization that 
        provides educational and social activities primarily for young 
        people 18 years of age and under; 
           (v) (vi) ice; 
           (vi) (vii) all food sold from vending machines, pushcarts, 
        lunch carts, motor vehicles, or any other form of vehicle except 
        home delivery vehicles; 
           (viii) all food for immediate consumption sold from 
        concession stands and vehicles; 
           (vii) (ix) party trays; 
           (viii) (x) all meals and single servings of packaged snack 
        food sold in restaurants and bars; and 
           (ix) (xi) bakery products: 
           (A) prepared by the retailer for consumption on the 
        retailer's premises; 
           (B) sold at a place that charges admission; 
           (C) sold from vending machines; or 
           (D) sold in single or individual servings from concession 
        stands, vehicles, bars, and restaurants.  For purposes of this 
        subdivision, "single or individual servings" does not include 
        products when sold in bulk containers or bulk packaging.  
           For purposes of this subdivision, "premises" means the 
        total space and facilities, including buildings, grounds, and 
        parking lots that are made available or that are available for 
        use by the retailer or customer for the purpose of sale or 
        consumption of prepared food and drinks.  The premises of a 
        caterer is the place where the catered food or drinks are 
        served; 
           (d) The granting of the privilege of admission to places of 
        amusement, recreational areas, or athletic events, except a 
        world championship football game sponsored by the national 
        football league, and the privilege of having access to and the 
        use of amusement devices, tanning facilities, reducing salons, 
        steam baths, turkish baths, health clubs, and spas or athletic 
        facilities; 
           (e) The furnishing for a consideration of lodging and 
        related services by a hotel, rooming house, tourist court, motel 
        or trailer camp and of the granting of any similar license to 
        use real property other than the renting or leasing thereof for 
        a continuous period of 30 days or more; 
           (f) The furnishing for a consideration of electricity, gas, 
        water, or steam for use or consumption within this state, or 
        local exchange telephone service, intrastate toll service, and 
        interstate toll service, if that service originates from and is 
        charged to a telephone located in this state.  Telephone service 
        does not include services purchased with prepaid telephone 
        calling cards.  Telephone service includes paging services and 
        private communication service, as defined in United States Code, 
        title 26, section 4252(d), as amended through December 31, 1991, 
        except for private communication service purchased by an agent 
        acting on behalf of the state lottery.  The furnishing for a 
        consideration of access to telephone services by a hotel to its 
        guests is a sale under this clause.  Sales by municipal 
        corporations in a proprietary capacity are included in the 
        provisions of this clause.  The furnishing of water and sewer 
        services for residential use shall not be considered a sale.  
        The sale of natural gas to be used as a fuel in vehicles 
        propelled by natural gas shall not be considered a sale for the 
        purposes of this section; 
           (g) The furnishing for a consideration of cable television 
        services, including charges for basic service, charges for 
        premium service, and any other charges for any other 
        pay-per-view, monthly, or similar television services; 
           (h) The furnishing for a consideration of parking services, 
        whether on a contractual, hourly, or other periodic basis, 
        except for parking at a meter; 
           (i) The furnishing for a consideration of services listed 
        in this paragraph: 
           (i) laundry and dry cleaning services including cleaning, 
        pressing, repairing, altering, and storing clothes, linen 
        services and supply, cleaning and blocking hats, and carpet, 
        drapery, upholstery, and industrial cleaning.  Laundry and dry 
        cleaning services do not include services provided by coin 
        operated facilities operated by the customer; 
           (ii) motor vehicle washing, waxing, and cleaning services, 
        including services provided by coin-operated facilities operated 
        by the customer, and rustproofing, undercoating, and towing of 
        motor vehicles; 
           (iii) building and residential cleaning, maintenance, and 
        disinfecting and exterminating services; 
           (iv) detective services, security services, burglar, fire 
        alarm, and armored car services; but not including services 
        performed within the jurisdiction they serve by off-duty 
        licensed peace officers as defined in section 626.84, 
        subdivision 1, or services provided by a nonprofit organization 
        for monitoring and electronic surveillance of persons placed on 
        in-home detention pursuant to court order or under the direction 
        of the Minnesota department of corrections; 
           (v) pet grooming services; 
           (vi) lawn care, fertilizing, mowing, spraying and sprigging 
        services; garden planting and maintenance; tree, bush, and shrub 
        pruning, bracing, spraying, and surgery; indoor plant care; 
        tree, bush, shrub and stump removal; and tree trimming for 
        public utility lines.  Services performed under a construction 
        contract for the installation of shrubbery, plants, sod, trees, 
        bushes, and similar items are not taxable; 
           (vii) massages, except when provided by a licensed health 
        care facility or professional or upon written referral from a 
        licensed health care facility or professional for treatment of 
        illness, injury, or disease; and 
           (viii) the furnishing for consideration of lodging, board 
        and care services for animals in kennels and other similar 
        arrangements, but excluding veterinary and horse boarding 
        services. 
        The services listed in this paragraph are taxable under section 
        297A.02 if the service is performed wholly within Minnesota or 
        if the service is performed partly within and partly without 
        Minnesota and the greater proportion of the service is performed 
        in Minnesota, based on the cost of performance.  In applying the 
        provisions of this chapter, the terms "tangible personal 
        property" and "sales at retail" include taxable services and the 
        provision of taxable services, unless specifically provided 
        otherwise.  Services performed by an employee for an employer 
        are not taxable under this paragraph.  Services performed by a 
        partnership or association for another partnership or 
        association are not taxable under this paragraph if one of the 
        entities owns or controls more than 80 percent of the voting 
        power of the equity interest in the other entity.  Services 
        performed between members of an affiliated group of corporations 
        are not taxable.  For purposes of this section, "affiliated 
        group of corporations" includes those entities that would be 
        classified as a member of an affiliated group under United 
        States Code, title 26, section 1504, as amended through December 
        31, 1987, and who are eligible to file a consolidated tax return 
        for federal income tax purposes; 
           (j) A "sale" and a "purchase" includes the transfer of 
        computer software, meaning information and directions that 
        dictate the function performed by data processing equipment.  A 
        "sale" and a "purchase" does not include the design, 
        development, writing, translation, fabrication, lease, or 
        transfer for a consideration of title or possession of a custom 
        computer program; and 
           (k) The granting of membership in a club, association, or 
        other organization if: 
           (1) the club, association, or other organization makes 
        available for the use of its members sports and athletic 
        facilities (without regard to whether a separate charge is 
        assessed for use of the facilities); and 
           (2) use of the sports and athletic facilities is not made 
        available to the general public on the same basis as it is made 
        available to members.  
        Granting of membership includes both one-time initiation fees 
        and periodic membership dues.  Sports and athletic facilities 
        include golf courses, tennis, racquetball, handball and squash 
        courts, basketball and volleyball facilities, running tracks, 
        exercise equipment, swimming pools, and other similar athletic 
        or sports facilities.  The provisions of this paragraph do not 
        apply to camps or other recreation facilities owned and operated 
        by an exempt organization under section 501(c)(3) of the 
        Internal Revenue Code of 1986, as amended through December 31, 
        1992, for educational and social activities for young people 
        primarily age 18 and under.  
           Sec. 3.  Minnesota Statutes 1997 Supplement, section 
        297A.01, subdivision 11, is amended to read: 
           Subd. 11.  "Tangible personal property" means corporeal 
        personal property of any kind whatsoever, including property 
        which is to become real property as a result of incorporation, 
        attachment, or installation following its acquisition. 
           Personal property does not include: 
           (a) large ponderous machinery and equipment used in a 
        business or production activity which at common law would be 
        considered to be real property; 
           (b) property which is subject to an ad valorem property 
        tax; 
           (c) property described in section 272.02, subdivision 1, 
        clause (8), paragraphs (a) to (d); 
           (d) property described in section 272.03, subdivision 2, 
        clauses (3) and (5). 
           Tangible personal property includes computer software, 
        whether contained on tape, discs, cards, or other devices.  
        Tangible personal property also includes prepaid telephone 
        calling cards.  For purposes of this chapter, "prepaid telephone 
        calling card" means any card or other similar arrangement, 
        including prepaid authorization numbers, which permit its holder 
        to obtain telephone services and pay for such services in 
        advance.  
           Sec. 4.  [EFFECTIVE DATE.] 
           Sections 1 and 2 are effective the day following final 
        enactment. 
           Section 3 is effective for sales or purchases made on or 
        after July 1, 1997. 
                                   ARTICLE 3
                                 MISCELLANEOUS
           Section 1.  Minnesota Statutes 1997 Supplement, section 
        3.987, subdivision 2, is amended to read: 
           Subd. 2.  [MANDATE EXPLANATIONS.] Any bill introduced in 
        the legislature after June 30, 1997, Before a committee hearing 
        on a bill that seeks to impose program or financial mandates on 
        political subdivisions must include an attachment from, the 
        author must provide the committee with a note that gives 
        appropriate responses to the following guidelines.  It The note 
        must state and list: 
           (1) the policy goals that are sought to be attained, the 
        performance standards that are to be imposed, and an explanation 
        why the goals and standards will best be served by requiring 
        compliance by political subdivisions; 
           (2) performance standards that will allow political 
        subdivisions flexibility and innovation of method in achieving 
        those goals; 
           (3) the reasons for each prescribed standard and the 
        process by which each standard governs input such as staffing 
        and other administrative aspects of the program; 
           (4) the sources of additional revenue, in addition to 
        existing funding for similar programs, that are directly linked 
        to imposition of the mandates that will provide adequate and 
        stable funding for their requirements; 
           (5) what input has been obtained to ensure that the 
        implementing agencies have the capacity to carry out the 
        delegated responsibilities; and 
           (6) the reasons why less intrusive measures such as 
        financial incentives or voluntary compliance would not yield the 
        equity, efficiency, or desired level of statewide uniformity in 
        the proposed program. 
           Sec. 2.  Minnesota Statutes 1996, section 270.06, is 
        amended to read: 
           270.06 [POWERS AND DUTIES.] 
           The commissioner of revenue shall: 
           (1) have and exercise general supervision over the 
        administration of the assessment and taxation laws of the state, 
        over assessors, town, county, and city boards of review and 
        equalization, and all other assessing officers in the 
        performance of their duties, to the end that all assessments of 
        property be made relatively just and equal in compliance with 
        the laws of the state; 
           (2) confer with, advise, and give the necessary 
        instructions and directions to local assessors and local boards 
        of review throughout the state as to their duties under the laws 
        of the state; 
           (3) direct proceedings, actions, and prosecutions to be 
        instituted to enforce the laws relating to the liability and 
        punishment of public officers and officers and agents of 
        corporations for failure or negligence to comply with the 
        provisions of the laws of this state governing returns of 
        assessment and taxation of property, and cause complaints to be 
        made against local assessors, members of boards of equalization, 
        members of boards of review, or any other assessing or taxing 
        officer, to the proper authority, for their removal from office 
        for misconduct or negligence of duty; 
           (4) require county attorneys to assist in the commencement 
        of prosecutions in actions or proceedings for removal, 
        forfeiture and punishment for violation of the laws of this 
        state in respect to the assessment and taxation of property in 
        their respective districts or counties; 
           (5) require town, city, county, and other public officers 
        to report information as to the assessment of property, 
        collection of taxes received from licenses and other sources, 
        and such other information as may be needful in the work of the 
        department of revenue, in such form and upon such blanks as the 
        commissioner may prescribe; 
           (6) require individuals, copartnerships, companies, 
        associations, and corporations to furnish information concerning 
        their capital, funded or other debt, current assets and 
        liabilities, earnings, operating expenses, taxes, as well as all 
        other statements now required by law for taxation purposes; 
           (7) subpoena witnesses, at a time and place reasonable 
        under the circumstances, to appear and give testimony, and to 
        produce books, records, papers and documents for inspection and 
        copying relating to any matter which the commissioner may have 
        authority to investigate or determine; 
           (8) issue a subpoena which does not identify the person or 
        persons with respect to whose liability the subpoena is issued, 
        but only if (a) the subpoena relates to the investigation of a 
        particular person or ascertainable group or class of persons, 
        (b) there is a reasonable basis for believing that such person 
        or group or class of persons may fail or may have failed to 
        comply with any law administered by the commissioner, (c) the 
        information sought to be obtained from the examination of the 
        records (and the identity of the person or persons with respect 
        to whose liability the subpoena is issued) is not readily 
        available from other sources, (d) the subpoena is clear and 
        specific as to the information sought to be obtained, and (e) 
        the information sought to be obtained is limited solely to the 
        scope of the investigation.  Provided further that the party 
        served with a subpoena which does not identify the person or 
        persons with respect to whose tax liability the subpoena is 
        issued shall have the right, within 20 days after service of the 
        subpoena, to petition the district court for the judicial 
        district in which lies the county in which that party is located 
        for a determination as to whether the commissioner of revenue 
        has complied with all the requirements in (a) to (e), and thus, 
        whether the subpoena is enforceable.  If no such petition is 
        made by the party served within the time prescribed, the 
        subpoena shall have the force and effect of a court order; 
           (9) cause the deposition of witnesses residing within or 
        without the state, or absent therefrom, to be taken, upon notice 
        to the interested party, if any, in like manner that depositions 
        of witnesses are taken in civil actions in the district court, 
        in any matter which the commissioner may have authority to 
        investigate or determine; 
           (10) investigate the tax laws of other states and countries 
        and to formulate and submit to the legislature such legislation 
        as the commissioner may deem expedient to prevent evasions of 
        assessment and taxing laws, and secure just and equal taxation 
        and improvement in the system of assessment and taxation in this 
        state; 
           (11) consult and confer with the governor upon the subject 
        of taxation, the administration of the laws in regard thereto, 
        and the progress of the work of the department of revenue, and 
        furnish the governor, from time to time, such assistance and 
        information as the governor may require relating to tax matters; 
           (12) transmit to the governor, on or before the third 
        Monday in December of each even-numbered year, and to each 
        member of the legislature, on or before November 15 of each 
        even-numbered year, the report of the department of revenue for 
        the preceding years, showing all the taxable property in the 
        state and the value of the same, in tabulated form; 
           (13) inquire into the methods of assessment and taxation 
        and ascertain whether the assessors faithfully discharge their 
        duties, particularly as to their compliance with the laws 
        requiring the assessment of all property not exempt from 
        taxation; 
           (14) administer and enforce the assessment and collection 
        of state taxes and fees, including the use of any remedy 
        available to nongovernmental creditors, and, from time to time, 
        make, publish, and distribute rules for the administration and 
        enforcement of assessments and fees administered by the 
        commissioner and state tax laws.  The rules have the force of 
        law; 
           (15) prepare blank forms for the returns required by state 
        tax law and distribute them throughout the state, furnishing 
        them subject to charge on application; 
           (16) prescribe rules governing the qualification and 
        practice of agents, attorneys, or other persons representing 
        taxpayers before the commissioner.  The rules may require that 
        those persons, agents, and attorneys show that they are of good 
        character and in good repute, have the necessary qualifications 
        to give taxpayers valuable services, and are otherwise competent 
        to advise and assist taxpayers in the presentation of their case 
        before being recognized as representatives of taxpayers.  After 
        due notice and opportunity for hearing, the commissioner may 
        suspend and disbar from further practice before the commissioner 
        any person, agent, or attorney who is shown to be incompetent or 
        disreputable, who refuses to comply with the rules, or who with 
        intent to defraud, willfully or knowingly deceives, misleads, or 
        threatens a taxpayer or prospective taxpayer, by words, 
        circular, letter, or by advertisement.  This clause does not 
        curtail the rights of individuals to appear in their own behalf 
        or partners or corporations' officers to appear in behalf of 
        their respective partnerships or corporations; 
           (17) appoint agents as the commissioner considers necessary 
        to make examinations and determinations.  The agents have the 
        rights and powers conferred on the commissioner to subpoena, 
        examine, and copy books, records, papers, or memoranda, subpoena 
        witnesses, administer oaths and affirmations, and take 
        testimony.  In addition to administrative subpoenas of the 
        commissioner and the agents, upon demand of the commissioner or 
        an agent, the court administrator of any district court shall 
        issue a subpoena for the attendance of a witness or the 
        production of books, papers, records, or memoranda before the 
        agent for inspection and copying.  Disobedience of a court 
        administrator's subpoena shall be punished by the district court 
        of the district in which the subpoena is issued, or in the case 
        of a subpoena issued by the commissioner or an agent, by the 
        district court of the district in which the party served with 
        the subpoena is located, in the same manner as contempt of the 
        district court; 
           (18) appoint and employ additional help, purchase supplies 
        or materials, or incur other expenditures in the enforcement of 
        state tax laws as considered necessary.  The salaries of all 
        agents and employees provided for in this chapter shall be fixed 
        by the appointing authority, subject to the approval of the 
        commissioner of administration; 
           (19) execute and administer any agreement with the 
        secretary of the treasury of the United States or a 
        representative of another state regarding the exchange of 
        information and administration of the tax laws; 
           (20) administer and enforce the provisions of sections 
        325D.30 to 325D.42, the Minnesota unfair cigarette sales act; 
           (21) authorize the use of unmarked motor vehicles to 
        conduct seizures or criminal investigations pursuant to the 
        commissioner's authority; and 
           (22) exercise other powers and perform other duties 
        required of or imposed upon the commissioner of revenue by law.  
           Sec. 3.  Minnesota Statutes 1996, section 270.70, 
        subdivision 15, is amended to read: 
           Subd. 15.  [EFFECT OF HONORING LEVY.] Any person in 
        possession of (or obligated with respect to) property or rights 
        to property subject to levy upon which a levy has been made who, 
        upon demand by the commissioner, surrenders the property or 
        rights to property (or who pays a liability under section 
        270.7002, subdivision 8 1) shall be discharged from any 
        obligation or liability to the person liable for the payment or 
        collection of the delinquent tax with respect to the property or 
        rights to property so surrendered or paid.  
           Sec. 4.  Minnesota Statutes 1997 Supplement, section 
        270.701, subdivision 2, is amended to read: 
           Subd. 2.  [NOTICE OF SALE.] The commissioner shall as soon 
        as practicable after the seizure of the property give notice of 
        sale of the property to the owner, in the manner of service 
        prescribed in subdivision 1.  In the case of personal property, 
        the notice shall be served at least 10 days prior to the sale.  
        In the case of real property, the notice shall be served at 
        least four weeks prior to the sale.  The commissioner shall also 
        cause public notice of each sale to be made.  In the case of 
        personal property, notice shall be posted at least 10 days prior 
        to the sale at the county courthouse for the county where the 
        seizure is made, and in not less than two other public places. 
        In the case of real property, six weeks' published notice shall 
        be given prior to the sale, in a newspaper published or 
        generally circulated in the county.  The notice of sale provided 
        in this subdivision shall specify the property to be sold, and 
        the time, place, manner and conditions of the sale.  Whenever 
        levy is made without regard to the ten-day 30-day period 
        provided in section 270.70, subdivision 2, public notice of sale 
        of the property seized shall not be made within the 
        ten-day 30-day period unless section 270.702 (relating to sale 
        of perishable goods) is applicable.  
           Sec. 5.  Minnesota Statutes 1996, section 278.10, is 
        amended to read: 
           278.10 [TO BE ENTERED IN JUDGMENT BOOK.] 
           Upon entry of the judgment referred to in section 278.07, 
        the county auditor shall bill the taxpayer for the unpaid 
        portion of the judgment, if any, plus the allowable costs, 
        interest, and penalties that have accrued to the date of entry, 
        as provided in section 278.08.  If such the judgment has not 
        then been referred to in section 278.07 is not paid within 30 
        days of the billing, the county auditor shall enter the same in 
        the certified copy of the real estate tax judgment book received 
        by the auditor pursuant to section 279.23 for the year for which 
        such taxes were levied, with the same effect as if judgment had 
        been entered in the proceedings, adding thereto any under 
        chapter 279, except that interest or penalties that have accrued 
        to the date of such entry, and in shall not accrue during, nor 
        apply to, the 30-day payment period.  In the event such the 
        judgment under section 278.07 shall be entered subsequent to the 
        publication of the notice of real estate tax judgment sale of 
        under section 280.01 for the taxes on such the applicable 
        delinquent list, and if such judgment shall remain unpaid for 30 
        days thereafter after billing, then interest shall again begin 
        to accrue, and the parcel of land, against which such judgment 
        was entered, shall be immediately advertised and sold bid-in for 
        the state, and all subsequent events, deadlines, and periods 
        related to the enforcement of the judgment against the affected 
        real estate shall be measured from the bid-in date under this 
        section.  
           Sec. 6.  Minnesota Statutes 1996, section 289A.65, 
        subdivision 7, is amended to read: 
           Subd. 7.  [AGREEMENT DETERMINING TAX LIABILITY.] When it 
        appears to be in the best interests of the state, the 
        commissioner may settle any taxes, penalties, or interest that 
        the commissioner has under consideration by virtue of an appeal 
        filed under this section.  An agreement must be in writing and 
        signed by the commissioner and the taxpayer, or the taxpayer's 
        representative authorized by the taxpayer to enter into an 
        agreement.  The agreement must be filed in the office of the 
        commissioner.  The agreement shall be final and conclusive and, 
        except upon a showing of fraud or malfeasance, or 
        misrepresentation of a material fact, the case shall not be 
        reopened as to the matters agreed upon.  
           Sec. 7.  Minnesota Statutes 1996, section 289A.65, 
        subdivision 8, is amended to read: 
           Subd. 8.  [APPEAL OF AN ADMINISTRATIVE DETERMINATION.] 
        Following the determination or settlement of an appeal and 
        notwithstanding any period of limitations for making assessments 
        or other determinations to the contrary, the commissioner must 
        issue an order reflecting that disposition.  If the statute of 
        limitations for making assessments or other determinations would 
        have expired before the issuance of this order, except for this 
        section, the order is limited to issues or matters contained in 
        the appealed determination.  Except in the case of an agreement 
        determining tax under this section, The order is appealable to 
        the Minnesota tax court under section 271.06. 
           Sec. 8.  Minnesota Statutes 1997 Supplement, section 
        295.53, subdivision 4a, is amended to read: 
           Subd. 4a.  [CREDIT FOR RESEARCH.] (a) In addition to the 
        exemptions allowed under subdivision 1, a hospital or health 
        care provider may claim an annual credit against the total 
        amount of tax, if any, the hospital or health care provider owes 
        for that calendar year under sections 295.50 to 295.57.  The 
        credit shall equal 2.5 percent of revenues for patient services 
        used to fund expenditures for qualifying research conducted by 
        an allowable research program.  The amount of the credit shall 
        not exceed the tax liability of the hospital or health care 
        provider under sections 295.50 to 295.57. 
           (b) For purposes of this subdivision, the following 
        requirements apply: 
           (1) expenditures must be for program costs of qualifying 
        research conducted by an allowable research program; 
           (2) an allowable research program must be a formal program 
        of medical and health care research conducted by an entity which 
        is exempt under section 501(c)(3) of the Internal Revenue Code 
        of 1986 or is owned and operated under authority of a 
        governmental unit; 
           (3) qualifying research must:  
           (A) be approved in writing by the governing body of the 
        hospital or health care provider which is taking the deduction 
        under this subdivision; 
           (B) have as its purpose the development of new knowledge in 
        basic or applied science relating to the diagnosis and treatment 
        of conditions affecting the human body; 
           (C) be subject to review by individuals with expertise in 
        the subject matter of the proposed study but who have no 
        financial interest in the proposed study and are not involved in 
        the conduct of the proposed study; and 
           (D) be subject to review and supervision by an 
        institutional review board operating in conformity with federal 
        regulations if the research involves human subjects or an 
        institutional animal care and use committee operating in 
        conformity with federal regulations if the research involves 
        animal subjects.  Research expenses are not exempt if the study 
        is a routine evaluation of health care methods or products used 
        in a particular setting conducted for the purpose of making a 
        management decision.  Costs of clinical research activities paid 
        directly for the benefit of an individual patient are excluded 
        from this exemption.  Basic research in fields including 
        biochemistry, molecular biology, and physiology are also 
        included if such programs are subject to a peer review process. 
           (c) No credit shall be allowed under this subdivision for 
        any revenue received by the hospital or health care provider in 
        the form of a grant, gift, or otherwise, whether from a 
        government or nongovernment source, on which the tax liability 
        under section 295.52 is not imposed. 
           (d) The taxpayer shall apply for the credit under this 
        section on the annual return under section 295.55, subdivision 5.
           (e) Beginning September 1, 2000 2001, if the actual or 
        estimated amount paid under this section for the calendar year 
        exceeds $2,500,000, the commissioner of finance shall determine 
        the rate of the research credit for the following calendar year 
        to the nearest one-half percent so that refunds paid under this 
        section will most closely equal $2,500,000.  The commissioner of 
        finance shall publish in the State Register by October 1 of each 
        year the rate of the credit for the following calendar year.  A 
        determination under this section is not subject to the 
        rulemaking provisions of chapter 14. 
           Sec. 9.  Minnesota Statutes 1996, section 297E.15, 
        subdivision 8, is amended to read: 
           Subd. 8.  [AGREEMENT DETERMINING TAX LIABILITY.] If it 
        appears to be in the best interests of the state, the 
        commissioner may settle taxes, penalties, or interest that the 
        commissioner has under consideration by virtue of an appeal 
        filed under this section.  An agreement must be in writing and 
        signed by the commissioner and the taxpayer or the taxpayer's 
        representative authorized by the taxpayer to enter into an 
        agreement.  An agreement must be filed in the office of the 
        commissioner.  The agreement shall be final and conclusive and, 
        except upon a showing of fraud or malfeasance, or 
        misrepresentation of a material fact, the case shall not be 
        reopened as to the matters agreed upon.  
           Sec. 10.  Minnesota Statutes 1996, section 297E.15, 
        subdivision 9, is amended to read: 
           Subd. 9.  [APPEAL OF AN ADMINISTRATIVE APPEAL 
        DETERMINATION.] Following the determination or settlement of an 
        appeal, the commissioner must issue an order reflecting that 
        disposition.  Except in the case of an agreement determining tax 
        under this section, The order is appealable to the Minnesota tax 
        court under section 271.06.  
           Sec. 11.  Minnesota Statutes 1997 Supplement, section 
        297F.22, subdivision 6, is amended to read: 
           Subd. 6.  [AGREEMENT DETERMINING TAX LIABILITY.] When it 
        appears to be in the best interests of the state, the 
        commissioner may settle any taxes, penalties, or interest that 
        the commissioner has under consideration by virtue of an appeal 
        filed under this section.  An agreement must be in writing and 
        signed by the commissioner and the taxpayer, or the taxpayer's 
        representative authorized by the taxpayer to enter into an 
        agreement.  The agreement must be filed in the office of the 
        commissioner.  The agreement shall be final and conclusive and, 
        except upon a showing of fraud or malfeasance, or 
        misrepresentation of a material fact, the case shall not be 
        reopened as to the matters agreed upon.  
           Sec. 12.  Minnesota Statutes 1997 Supplement, section 
        297F.22, subdivision 7, is amended to read: 
           Subd. 7.  [APPEAL OF AN ADMINISTRATIVE DETERMINATION.] 
        Following the determination or settlement of an appeal and 
        notwithstanding any period of limitations for making assessments 
        or other determinations to the contrary, the commissioner must 
        issue an order reflecting that disposition.  If the statute of 
        limitations for making assessments or other determinations would 
        have expired before the issuance of this order, except for this 
        section, the order is limited to issues or matters contained in 
        the appealed determination.  Except in the case of an agreement 
        determining tax under this section, The order is appealable to 
        the Minnesota tax court under section 271.06. 
           Sec. 13.  Minnesota Statutes 1997 Supplement, section 
        297G.21, subdivision 6, is amended to read: 
           Subd. 6.  [AGREEMENT DETERMINING TAX LIABILITY.] When it 
        appears to be in the best interests of the state, the 
        commissioner may settle any taxes, penalties, or interest that 
        the commissioner has under consideration by virtue of an appeal 
        filed under this section.  An agreement must be in writing and 
        signed by the commissioner and the taxpayer, or the taxpayer's 
        representative authorized by the taxpayer to enter into an 
        agreement.  The agreement must be filed in the office of the 
        commissioner.  The agreement shall be final and conclusive and, 
        except upon a showing of fraud or malfeasance, or 
        misrepresentation of a material fact, the case shall not be 
        reopened as to the matters agreed upon.  
           Sec. 14.  Minnesota Statutes 1997 Supplement, section 
        297G.21, subdivision 7, is amended to read: 
           Subd. 7.  [APPEAL OF AN ADMINISTRATIVE DETERMINATION.] 
        Following the determination or settlement of an appeal and 
        notwithstanding any period of limitations for making assessments 
        or other determinations to the contrary, the commissioner shall 
        issue an order reflecting that disposition.  If the statute of 
        limitations for making assessments or other determinations would 
        have expired before the issuance of this order, except for this 
        section, the order is limited to issues or matters contained in 
        the appealed determination.  Except in the case of an agreement 
        determining tax under this section, The order is appealable to 
        the Minnesota tax court under section 271.06. 
           Sec. 15.  [EFFECTIVE DATES.] 
           Sections 1 to 4 and 6 to 14 are effective the day following 
        final enactment. 
           Section 5 is effective for petitions filed on or after July 
        1, 1998. 
           Presented to the governor March 17, 1998 
           Signed by the governor March 18, 1998, 4:40 p.m.