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Office of the Revisor of Statutes

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

                            CHAPTER 394-S.F.No. 2655 
                  An act relating to taxation; recodifying insurance tax 
                  laws; providing for civil and criminal penalties; 
                  appropriating money; amending Minnesota Statutes 1998, 
                  sections 43A.316, subdivision 9; 43A.317, subdivision 
                  8; 60A.19, subdivision 8; 60A.198, subdivision 3; 
                  60A.208, subdivision 8; 60A.209, subdivision 3; 
                  60C.17; 60E.04, subdivision 4; 60E.095; 61B.30, 
                  subdivision 1; 62C.01, subdivision 3; 62E.10, 
                  subdivision 1; 62E.13, subdivision 10; 62L.13, 
                  subdivision 3; 62T.10; 64B.24; 71A.04, subdivision 1; 
                  79.252, subdivision 4; 79.34, subdivision 1a; 176A.08; 
                  290.35, subdivisions 2, 3, and 6; 295.58; and 424.165; 
                  Minnesota Statutes 1999 Supplement, sections 43A.23, 
                  subdivision 1; and 60A.19, subdivision 6; proposing 
                  coding for new law as Minnesota Statutes, chapter 
                  297I; repealing Minnesota Statutes 1998, sections 
                  60A.15; 60A.152; 60A.198, subdivision 6; 60A.199, 
                  subdivisions 2, 3, 4, 5, 6, 6a, 7, 8, 9, 10, and 11; 
                  60A.209, subdivisions 4 and 5; 69.54; 69.55; 69.56; 
                  69.57; 69.58; 69.59; 69.60; 69.61; 71A.04, subdivision 
                  2; 299F.21; 299F.22; 299F.23; 299F.24; 299F.25; and 
                  299F.26; Minnesota Rules, part 2765.1500, subpart 6. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                   ARTICLE 1 
                          INSURANCE TAX RECODIFICATION 
           Section 1.  [297I.01] [DEFINITIONS.] 
           Subdivision 1.  [TERMS.] Unless the language or context 
        clearly indicates that a different meaning is intended, for the 
        purposes of this chapter, the following terms have the meanings 
        given them. 
           Subd. 2.  [ASSOCIATION OR ASSOCIATIONS.] "Association" or 
        "associations" has the meaning given in section 60A.02, 
        subdivision 1a. 
           Subd. 3.  [COMMISSIONER.] "Commissioner" means the 
        commissioner of revenue of the state of Minnesota. 
           Subd. 4.  [COMMUNITY INTEGRATED SERVICE NETWORK.] 
        "Community integrated service network" has the meaning given in 
        section 62N.02, subdivision 4a. 
           Subd. 5.  [COMPANY OR INSURANCE COMPANY.] "Company" or 
        "insurance company" has the meaning given in section 60A.02, 
        subdivision 4. 
           Subd. 6.  [DEPARTMENT OF REVENUE.] "Department of revenue" 
        means the Minnesota department of revenue or commissioner of 
        revenue. 
           Subd. 7.  [DOMESTIC.] "Domestic" has the meaning given in 
        section 60A.02, subdivision 5. 
           Subd. 8.  [FOREIGN.] "Foreign" has the meaning given in 
        section 60A.02, subdivision 6. 
           Subd. 9.  [GROSS PREMIUMS.] "Gross premiums" means total 
        premiums paid by policyholders and applicants of policies, 
        whether received in the form of money or other valuable 
        consideration, on property, persons, lives, interests and other 
        risks located, resident, or to be performed in this state, but 
        excluding consideration and premiums for reinsurance assumed 
        from other insurance companies.  The term "gross premiums" 
        includes the total consideration paid to bail bond agents for 
        bail bonds.  For title insurance companies, "gross premiums" 
        means the charge for title insurance made by a title insurance 
        company or its agents according to the company's rate filing 
        approved by the commissioner of commerce without a deduction for 
        commissions paid to or retained by the agent.  Gross premiums of 
        a title insurance company does not include any other charge or 
        fee for abstracting, searching, or examining the title, or 
        escrow, closing, or other related services. 
           Subd. 10.  [HEALTH MAINTENANCE ORGANIZATION.] "Health 
        maintenance organization" has the meaning given in section 
        62D.02, subdivision 4. 
           Subd. 11.  [NONPROFIT HEALTH SERVICE PLAN CORPORATION.] 
        "Nonprofit health service plan corporation" has the meaning 
        given in section 62C.02, subdivision 6. 
           Subd. 12.  [INSURANCE.] "Insurance" means the same as that 
        term is defined in section 60A.02, subdivision 3. 
           Subd. 13.  [INSURANCE AGENT OR INSURANCE 
        AGENCY.] "Insurance agent or insurance agency" has the meaning 
        given in section 60A.02, subdivision 7. 
           Subd. 14.  [RETURN PREMIUMS DEFINED.] "Return premiums" 
        means any dividend or any unused or unabsorbed portion of 
        premium deposit or assessment that is applied toward the payment 
        of any premium, premium deposit, or assessment due from the 
        policyholder or member upon a continuance or renewal of the 
        insurance on account of which the dividend was earned or premium 
        deposit or assessment paid.  Return premiums also includes any 
        portion of premium returned by the company upon cancellation or 
        termination of a policy or membership, except surrender values 
        paid upon the cancellation and surrender of policies or 
        certificates of life insurance. 
           Subd. 15.  [STATE.] "State" has the meaning given in 
        section 60A.02, subdivision 18. 
           Subd. 16.  [TAXPAYER.] "Taxpayer" means any insurance 
        company, association, surplus lines licensee, automobile risk 
        self-insurer, or insured or any other person or entity required 
        to pay any amount due under this chapter. 
           Sec. 2.  [297I.05] [TAX IMPOSED.] 
           Subdivision 1.  [DOMESTIC AND FOREIGN COMPANIES.] Except as 
        otherwise provided in this section, a tax is imposed on every 
        domestic and foreign insurance company.  The rate of tax is 
        equal to two percent of all gross premiums less return premiums 
        on all direct business received by the insurer or agents of the 
        insurer in Minnesota, in cash or otherwise, during the year. 
           Subd. 2.  [TOWN AND FARMERS' MUTUAL INSURANCE.] A tax is 
        imposed on town and farmers' mutual insurance companies.  The 
        rate of tax is equal to one percent of gross premiums less 
        return premiums on all direct business received by the insurer 
        or agents of the insurer in Minnesota, in cash or otherwise, 
        during the year. 
           Subd. 3.  [MUTUAL PROPERTY AND CASUALTY COMPANIES WITH 
        ASSETS OF $5,000,000 OR LESS AT THE END OF THE CALENDAR YEAR.] A 
        tax is imposed on mutual property and casualty companies with 
        assets of $5,000,000 or less at the end of the calendar year.  
        The rate of tax is equal to one percent of gross premiums less 
        return premiums on all direct business received by the insurer 
        or agents of the insurer in Minnesota, in cash or otherwise, 
        during the year. 
           Subd. 4.  [MUTUAL PROPERTY AND CASUALTY COMPANIES WITH 
        TOTAL ASSETS LESS THAN $1,600,000,000 ON DECEMBER 31, 1989.] A 
        tax is imposed on mutual property and casualty companies that 
        had total assets greater than $5,000,000 at the end of the 
        calendar year but that had total assets less than $1,600,000,000 
        on December 31, 1989.  The rate of tax is equal to: 
           (1) two percent of gross premiums less return premiums on 
        all direct business received by the insurer or agents of the 
        insurer in Minnesota for life insurance, in cash or otherwise, 
        during the year; and 
           (2) 1.26 percent of gross premiums less return premiums on 
        all other direct business received by the insurer or agents of 
        the insurer in Minnesota, in cash or otherwise, during the year. 
           Subd. 5.  [HEALTH MAINTENANCE ORGANIZATIONS, NONPROFIT 
        HEALTH SERVICE PLAN CORPORATIONS, AND COMMUNITY INTEGRATED 
        SERVICE NETWORKS.] (a) The commissioner of finance shall 
        determine the balance of the health care access fund on 
        September 1 of each year. 
           (b) If the commissioner of finance determines that there 
        will not be a structural deficit for the next state fiscal year, 
        no tax is imposed under this chapter on health maintenance 
        organizations, nonprofit health service plan corporations, and 
        community integrated service networks for the following calendar 
        year. 
           (c) If the commissioner of finance determines that there 
        will be a structural deficit in the fund for the next state 
        fiscal year, then the commissioner of finance, in consultation 
        with the commissioner of revenue, shall determine the amount 
        needed to eliminate the structural deficit, and a tax is imposed 
        for the next calendar year.  The rate of tax is a percentage of 
        gross premiums less return premiums on all direct business 
        received by the insurer or agents of the insurer in Minnesota, 
        in cash or otherwise, during the year.  The percentage rate is 
        one-quarter of one percent, one-half of one percent, 
        three-quarters of one percent, or one percent of the premiums, 
        whichever is the lowest rate that will produce sufficient 
        revenue to eliminate the projected structural deficit. 
           (d) The commissioner of finance shall publish in the State 
        Register by October 1 of each year the rate of tax to be imposed 
        for the following calendar year.  
           (e) In determining the structural balance of the health 
        care access fund for fiscal year 2001, the commissioner of 
        finance shall disregard the transfer amount from the health care 
        access fund to the general fund for expenditures associated with 
        the services provided to pregnant women and children under the 
        age of two enrolled in the MinnesotaCare program. 
           (f) In approving the premium rates as required in sections 
        62L.08, subdivision 8, and 62A.65, subdivision 3, the 
        commissioners of health and commerce shall ensure that to the 
        extent that the tax imposed under this subdivision is less than 
        one percent of gross premiums less return premiums, the premium 
        rate reflects the difference between the amount of tax imposed 
        and the amount that would have been collected if the rate was 
        one percent. 
           (g) The commissioner shall deposit all revenues, including 
        penalties and interest, collected under this chapter from health 
        maintenance organizations, community integrated service 
        networks, and nonprofit health service plan corporations in the 
        health care access fund.  Refunds of overpayments of tax imposed 
        by this subdivision must be paid from the health care access 
        fund.  There is annually appropriated from the health care 
        access fund to the commissioner the amount necessary to make any 
        refunds of the tax imposed under this subdivision. 
           Subd. 6.  [FIRE MARSHAL TAX.] A tax is imposed on every 
        licensed company, including reciprocals or interinsurance 
        exchanges, doing business in this state, except farmers' mutual 
        fire insurance companies and township fire insurance companies.  
        The rate of tax is equal to one-half of one percent of the gross 
        fire premiums and assessments, less return premiums, on all 
        direct business received by the company in this state, or by its 
        agents for it, in cash or otherwise, during the year.  "Gross 
        fire premiums and assessments" includes premiums on policies 
        covering fire risks only on automobiles, whether written under 
        floater form or otherwise. 
           Subd. 7.  [SURPLUS LINES TAX.] (a) A tax is imposed on 
        surplus lines licensees.  The rate of tax is equal to three 
        percent of the gross premiums less return premiums received by 
        the licensee minus any licensee association operating 
        assessments paid under section 60A.208. 
           (b) If surplus lines insurance placed by a surplus lines 
        licensee and taxed under this subdivision covers a subject of 
        insurance residing, located, or to be performed outside this 
        state, a proper pro rata portion of the entire premium payable 
        for all of that insurance must be allocated according to the 
        subjects of insurance residing, located, or to be performed in 
        this state. 
           Subd. 8.  [INSURANCE PREMIUM TAX EQUIVALENT PAYMENT BY 
        AUTOMOBILE RISK SELF-INSURERS.] (a) The following terms, for the 
        purposes of this subdivision, have the meanings given them. 
           (1) "Automobile risks" means the risk of providing no-fault 
        insurance under sections 65B.41 to 65B.71. 
           (2) "Motor vehicle" has the meaning given in section 
        65B.43, subdivision 2. 
           (3) "Person" means an owner, as defined in section 65B.43, 
        subdivision 4, but does not include the state or a political 
        subdivision as defined in section 65B.43, subdivision 20. 
           (4) "Self-insurance" means the condition of qualifying as a 
        self-insurer by complying with section 65B.48, subdivisions 3 
        and 3a. 
           (5) "Self-insurer" means a person who has arranged 
        self-insurance for the automobile risks associated with the 
        person's motor vehicle. 
           (b) Every self-insurer who owns, leases, or operates a 
        motor vehicle required to be registered or licensed in this 
        state or principally garaged in this state for at least two 
        months in the calendar year shall pay an annual amount for each 
        vehicle of: 
           (1) $15 for a private passenger vehicle as defined in 
        section 65B.001, subdivision 3, or a utility vehicle as defined 
        in section 65B.001, subdivision 4, not including a taxi; or 
           (2) $25 for a taxi or any other self-insured vehicle not 
        covered by clause (1). 
           (c) A self-insurer who is more than six months delinquent 
        in paying the amount due under this subdivision must be referred 
        by the commissioner to the commissioner of commerce for action.  
        That action may include revocation of the self-insured's 
        self-insurer status. 
           (d) The amount paid under this subdivision must be 
        deposited into the general fund to the credit of the account 
        from which the police state aid provided for in sections 69.011 
        to 69.051 is payable. 
           Subd. 9.  [TAX ON PERSONS, FIRMS, OR CORPORATIONS LICENSED 
        TO PROCURE INSURANCE FROM UNLICENSED FOREIGN COMPANIES.] (a) A 
        tax is imposed on any person, firm, or corporation licensed 
        under section 60A.19, subdivision 8.  The rate of tax is equal 
        to two percent of gross premiums paid in the year less return 
        premiums received in the year. 
           (b)(1) Money collected under this subdivision must be paid 
        to a municipality or a fire department relief association if: 
           (i) the money is attributable to fire, lightning, or 
        sprinkler insurance premiums paid by an owner to insure 
        property; and 
           (ii) the property is in a municipality that has an 
        organized fire department, a partly paid fire department, or a 
        volunteer fire department. 
        The money must be paid to the municipality where the insured 
        property is located, or to the municipality's fire department 
        relief association.  The money to be paid includes penalties and 
        interest collected because a property owner failed to pay on 
        time the taxes due under this subdivision.  
           (2) This paragraph does not apply to taxes paid under this 
        subdivision that are attributable to premiums paid on property 
        if:  
           (i) the property is owned and occupied exclusively as a 
        homestead, and the owner carries insurance on the property; or 
           (ii) the property is exempt under section 550.37 and the 
        owner carries insurance on the property. 
           Subd. 10.  [TAX ON PERSONS, FIRMS, OR CORPORATIONS 
        PROCURING INSURANCE FROM AN INELIGIBLE COMPANY.] (a) A tax is 
        imposed on each insured in this state who procures, causes to be 
        procured, or continues or renews insurance with an ineligible 
        surplus lines insurer or any self-insurer in this state who 
        procures or continues excess of loss, catastrophe, or other 
        insurance upon a subject of insurance resident, located, or to 
        be performed within this state, other than insurance procured 
        pursuant to section 60A.201 or 60A.209, subdivision 1, equal to 
        two percent of gross premiums less return premiums paid for such 
        insurance. 
           (b) If the insurance described in paragraph (a) also covers 
        a subject of insurance residing, located, or to be performed 
        outside this state, for the purposes of this subdivision, a 
        proper pro rata portion of the entire premium payable for all of 
        that insurance must be allocated according to the subjects of 
        insurance residing, located, or to be performed in this state. 
           (c) For the purposes of this subdivision, insurance placed 
        with an ineligible surplus lines insurer is considered to be 
        procured, continued, or renewed in this state if: 
           (1) it was procured through negotiations occurring in whole 
        or in part within or from outside this state; 
           (2) it was procured by an application made in whole or in 
        part within or from outside this state; or 
           (3) premiums for it are paid from within this state 
        directly or indirectly, in whole or in part. 
           Subd. 11.  [RETALIATORY PROVISIONS.] (a) If any other state 
        or country imposes any taxes, fines, deposits, penalties, 
        licenses, or fees upon any insurance companies of this state and 
        their agents doing business in another state or country that are 
        in addition to or in excess of those imposed by the laws of this 
        state upon foreign insurance companies and their agents doing 
        business in this state, the same taxes, fines, deposits, 
        penalties, licenses, and fees are imposed upon every similar 
        insurance company of that state or country and their agents 
        doing or applying to do business in this state. 
           (b) If any conditions precedent to the right to do business 
        in any other state or country are imposed by the laws of that 
        state or country, beyond those imposed upon foreign companies by 
        the laws of this state, the same conditions precedent are 
        imposed upon every similar insurance company of that state or 
        country and their agents doing or applying to do business in 
        that state. 
           (c) For purposes of this subdivision, "taxes, fines, 
        deposits, penalties, licenses, or fees" means an amount of money 
        that is deposited in the general revenue fund of the state or 
        other similar fund in another state or country and is not 
        dedicated to a special purpose or use or money deposited in the 
        general revenue fund of the state or other similar fund in 
        another state or country and appropriated to the commissioner of 
        commerce or insurance for the operation of the department of 
        commerce or other similar agency with jurisdiction over 
        insurance.  Taxes, fines, deposits, penalties, licenses, or fees 
        do not include: 
           (1) special purpose obligations or assessments imposed in 
        connection with particular kinds of insurance, including but not 
        limited to assessments imposed in connection with residual 
        market mechanisms; or 
           (2) assessments made by the insurance guaranty association, 
        life and health guarantee association, or similar association. 
           (d) This subdivision applies to taxes imposed under 
        subdivisions 1, 3, 4, 6, and 12, paragraph (a), clauses (1) and 
        (3). 
           (e) This subdivision does not apply to insurance companies 
        organized or domiciled in a state or country, the laws of which 
        do not impose retaliatory taxes, fines, deposits, penalties, 
        licenses, or fees or which grant, on a reciprocal basis, 
        exemptions from retaliatory taxes, fines, deposits, penalties, 
        licenses, or fees to insurance companies domiciled in this state.
           Subd. 12.  [OTHER ENTITIES.] (a) A tax is imposed equal to 
        two percent of: 
           (1) gross premiums less return premiums written for risks 
        resident or located in Minnesota by a risk retention group; 
           (2) gross premiums less return premiums received by an 
        attorney in fact acting in accordance with chapter 71A; 
           (3) gross premiums less return premiums received pursuant 
        to assigned risk policies and contracts of coverage under 
        chapter 79; 
           (4) the direct funded premium received by the reinsurance 
        association under section 79.34 from self-insurers approved 
        under section 176.181 and political subdivisions that 
        self-insure; 
           (5) gross premiums less return premiums received by a 
        nonprofit health service plan corporation authorized under 
        chapter 62C; and 
           (6) gross premiums less return premiums paid to an insurer 
        other than a licensed insurance company or a surplus lines 
        licensee for coverage of risks resident or located in Minnesota 
        by a purchasing group or any members of the purchasing group to 
        a broker or agent for the purchasing group. 
           (b) A tax is imposed on the state fund mutual insurance 
        company established under chapter 176A.  The tax must be 
        computed in the same manner as mutual insurance companies under 
        subdivisions 1, 3, and 4. 
           (c) A tax is imposed on a joint self-insurance plan 
        operating under chapter 60F.  The rate of tax is equal to two 
        percent of the total amount of claims paid during the fund year, 
        with no deduction for claims wholly or partially reimbursed 
        through stop-loss insurance. 
           (d) A tax is imposed on a joint self-insurance plan 
        operating under chapter 62H.  The rate of tax is equal to two 
        percent of the total amount of claims paid during the fund's 
        fiscal year, with no deduction for claims wholly or partially 
        reimbursed through stop-loss insurance. 
           (e) A tax is imposed equal to the tax imposed under section 
        297I.05, subdivision 5, on the gross premiums less return 
        premiums on all coverages received by an accountable provider 
        network or agents of an accountable provider network in 
        Minnesota, in cash or otherwise, during the year. 
           Subd. 13.  [FUNDS DEPOSITED INTO GENERAL FUND.] Unless 
        otherwise specified in this chapter, all amounts collected by 
        the commissioner under this chapter must be deposited in the 
        general fund. 
           Sec. 3.  [297I.10] [SURCHARGE ON PREMIUMS TO RESTORE 
        DEFICIENCY IN SPECIAL FUND.] 
           Subdivision 1.  [CITIES OF THE FIRST CLASS.] (a) The 
        commissioner shall order and direct a surcharge to be collected 
        of two percent of the fire, lightning, and sprinkler leakage 
        gross premiums, less return premiums, on all direct business 
        received by any licensed foreign or domestic fire insurance 
        company on property in a city of the first class, or by its 
        agents for it, in cash or otherwise. 
           (b) By July 31 and December 31 of each year the 
        commissioner of finance shall pay to the relief association in 
        each city a warrant for an amount equal to the total amount of 
        the surcharge on the premiums collected within the city since 
        the previous payment. 
           (c) The treasurer of the relief association shall place the 
        money received under this subdivision in the special fund of the 
        relief association. 
           Subd. 2.  [CITY OF THE SECOND CLASS.] (a) Upon receiving 
        certification from a city of the second class pursuant to 
        section 424.165, the commissioner shall direct a surcharge to be 
        collected of two percent of the fire, lightning, and sprinkler 
        leakage gross premiums, less return premiums, on all direct 
        business received by any foreign or domestic fire insurance 
        company on property in such city of the second class, or by its 
        agents for it, in cash or otherwise. 
           (b) The board of trustees of a firefighter's relief 
        association of the city of the second class that has sent 
        certification to the commissioner under paragraph (a) must 
        notify the commissioner as soon as the balance in their special 
        fund equals $50,000.  Upon receiving notice from the 
        association, the commissioner shall notify the insurers subject 
        to the surcharge that the surcharge is discontinued effective 15 
        days after the balance reached $50,000. 
           (c) By September 1 and March 1 of each year, the 
        commissioner of finance shall pay to the firefighter's relief 
        association of each city of the second class a warrant for an 
        amount equal to the total amount of the surcharge on the 
        premiums collected within the city since the previous payment. 
           (d) The treasurer of the firefighter's relief association 
        shall place the money received under this subdivision in the 
        special fund of the relief association. 
           Subd. 3.  [APPROPRIATION.] The amount necessary to make the 
        payments required under this section is appropriated to the 
        commissioner of finance from the general fund. 
           Sec. 4.  [297I.15] [EXEMPTIONS FROM TAX] 
           Subdivision 1.  [GOVERNMENT PAYMENTS.] Premiums under 
        medical assistance, general assistance medical care, the 
        MinnesotaCare program, and the Minnesota comprehensive health 
        insurance plan and all payments, revenues, and reimbursements 
        received from the federal government for medicare-related 
        coverage as defined in section 62A.31, subdivision 3, are not 
        subject to tax under this chapter. 
           Subd. 2.  [MINNESOTA EMPLOYEES INSURANCE PROGRAM.] To the 
        extent that the Minnesota employees insurance program under 
        section 43A.317 operates as a self-insured group, the premiums 
        paid to the program are exempt from the taxes imposed under this 
        chapter, but are subject to a Minnesota comprehensive health 
        association assessment under section 62E.11. 
           Subd. 3.  [PUBLIC EMPLOYEES INSURANCE PROGRAM.] Premiums 
        paid to the public employees insurance program under section 
        43A.316 are exempt from the taxes imposed under this chapter. 
           Subd. 4.  [PREMIUMS PAID TO HEALTH CARRIERS BY STATE.] A 
        health carrier as defined in section 62A.011 is exempt from the 
        taxes imposed under this chapter on premiums paid to it by the 
        state. 
           Subd. 5.  [MINNESOTA INSURANCE GUARANTY ASSOCIATION.] The 
        Minnesota insurance guaranty association under chapter 60C is 
        exempt from the taxes imposed under this chapter. 
           Subd. 6.  [MINNESOTA LIFE AND HEALTH GUARANTY ASSOCIATION.] 
        The Minnesota life and health guaranty association under chapter 
        61B is exempt from the taxes imposed under this chapter. 
           Subd. 7.  [MINNESOTA COMPREHENSIVE HEALTH ASSOCIATION.] The 
        Minnesota comprehensive health association under chapter 62E is 
        exempt from the taxes imposed under this chapter. 
           Subd. 8.  [WRITING CARRIER FOR THE COMPREHENSIVE HEALTH 
        INSURANCE PLAN.] Premiums received by the writing carrier for 
        the comprehensive health insurance plan established under 
        section 62E.10 in connection with that plan are exempt from the 
        taxes imposed under this chapter. 
           Subd. 9.  [HEALTH COVERAGE REINSURANCE ASSOCIATION.] The 
        health coverage reinsurance association under chapter 62L is 
        exempt from the taxes imposed under this chapter. 
           Subd. 10.  [PREMIUMS PAID TO FRATERNAL BENEFIT SOCIETIES.] 
        Premiums paid to fraternal benefit societies pursuant to chapter 
        64B are exempt from the taxes imposed under this chapter. 
           Sec. 5.  [297I.20] [GUARANTY ASSOCIATION ASSESSMENT 
        OFFSET.] 
           (a) An insurance company may offset against its premium tax 
        liability to this state any amount paid for assessments made for 
        insolvencies which occur after July 31, 1994, under sections 
        60C.01 to 60C.22; and any amount paid for assessments made after 
        July 31, 1994, under Minnesota Statutes 1992, sections 61B.01 to 
        61B.16, or under sections 61B.18 to 61B.32 as follows: 
           (1) Each such assessment shall give rise to an amount of 
        offset equal to 20 percent of the amount of the assessment for 
        each of the five calendar years following the year in which the 
        assessment was paid. 
           (2) The amount of offset initially determined for each 
        taxable year is the sum of the amounts determined under clause 
        (1) for that taxable year. 
           (b)(1) Each year the commissioner shall compare total 
        guaranty association assessments levied over the preceding five 
        calendar years to the sum of all premium tax and corporate 
        franchise tax revenues collected from insurance companies, 
        without reduction for any guaranty association assessment offset 
        in the preceding calendar year, referred to in this subdivision 
        as "preceding year insurance tax revenues." 
           (2) If total guaranty association assessments levied over 
        the preceding five years exceed the preceding year insurance tax 
        revenues, insurance companies must be allowed only a 
        proportionate part of the premium tax offset calculated under 
        paragraph (a) for the current calendar year. 
           (3) The proportionate part of the premium tax offset 
        allowed in the current calendar year is determined by 
        multiplying the amount calculated under paragraph (a) by a 
        fraction.  The numerator of the fraction equals the preceding 
        year insurance tax revenues, and its denominator equals total 
        guaranty association assessments levied over the preceding 
        five-year period. 
           (4) The proportionate part of the premium tax offset that 
        is not allowed must be carried forward to subsequent tax years 
        and added to the amount of premium tax offset calculated under 
        paragraph (a) prior to application of the limitation imposed by 
        this paragraph. 
           (5) Any amount carried forward from prior years must be 
        allowed before allowance of the offset for the current year 
        calculated under paragraph (a). 
           (6) The premium tax offset limitation must be calculated 
        separately for (i) insurance companies subject to assessment 
        under sections 60C.01 to 60C.22, and (ii) insurance companies 
        subject to assessment under Minnesota Statutes 1992, sections 
        61B.01 to 61B.16, or 61B.18 to 61B.32. 
           (7) When the premium tax offset is limited by this 
        provision, the commissioner shall notify affected insurance 
        companies on a timely basis for purposes of completing premium 
        and corporate franchise tax returns.  
           (8) The guaranty associations created under sections 60C.01 
        to 60C.22, Minnesota Statutes 1992, sections 61B.01 to 61B.16, 
        and 61B.18 to 61B.32, shall provide the commissioner with the 
        necessary information on guaranty association assessments. 
           (c)(1) If the offset determined by the application of 
        paragraphs (a) and (b) exceeds the greater of the insurance 
        company's premium tax liability under this section or its 
        corporate franchise tax liability under chapter 290 prior to 
        allowance of the credit for premium taxes, then the insurance 
        company may carry forward the excess, referred to in this 
        subdivision as the "carryforward credit" to subsequent taxable 
        years. 
           (2) The carryforward credit is allowed as an offset against 
        premium tax liability for the first succeeding year to the 
        extent that the premium tax liability for that year exceeds the 
        amount of the allowable offset for the year determined under 
        paragraphs (a) and (b). 
           (3) The carryforward credit must be reduced, but not below 
        zero, by the greater of the amount of the carryforward credit 
        allowed as an offset against the premium tax under this 
        paragraph or the amount of the carryforward credit allowed as an 
        offset against the insurance company's corporate franchise tax 
        liability under section 290.35, subdivision 6, paragraph (d).  
        The remainder, if any, of the carryforward credit must be 
        carried forward to succeeding taxable years until the entire 
        carryforward credit has been credited against the insurance 
        company's liability for premium tax under this chapter and 
        corporate franchise tax under chapter 290 if applicable for that 
        taxable year. 
           (d) When an insurer has offset against taxes its payment of 
        an assessment of the Minnesota life and health guaranty 
        association, and the association pays the insurer a refund with 
        respect to the assessment under Minnesota Statutes 1992, section 
        61B.07, subdivision 6, or 61B.24, subdivision 6, then the refund 
        reduces the insurer's carryforward credit under paragraph (c).  
        If the refund exceeds the amount of the carryforward credit, the 
        excess amount must be repaid to the state by the insurers to the 
        extent of the offset in the manner the commissioner requires. 
           Sec. 6.  [297I.25] [INFORMATION RETURNS.] 
           Subdivision 1.  [LICENSED BROKERS OR AGENTS OF RISK 
        RETENTION GROUPS.] To the extent licensed agents or brokers are 
        utilized in accordance with section 60E.12, they shall report to 
        the commissioner the premiums received for direct business for 
        risks resident or located within this state which the licensees 
        have placed with or on behalf of a risk retention group not 
        chartered in this state. 
           Subd. 2.  [FIRETOWN AND POLICE PREMIUM REPORTS.] To the 
        extent required by section 69.021, each insurer shall file with 
        the commissioner a Minnesota firetown premium report and 
        Minnesota aid to police premium report. 
           Sec. 7.  [297I.30] [DUE DATES FOR FILING RETURNS.] 
           Subdivision 1.  [GENERAL RULE.] On or before March 1, every 
        insurer subject to taxation under section 297I.05, subdivisions 
        1 to 6, and 12, paragraphs (a), clauses (1) to (5), (b), and 
        (e), shall file an annual return for the preceding calendar year 
        setting forth such information as the commissioner may 
        reasonably require on forms prescribed by the commissioner. 
           Subd. 2.  [SURPLUS LINES LICENSEES AND PURCHASING 
        GROUPS.] On or before February 15 and August 15 of each year, 
        every surplus lines licensee subject to taxation under section 
        297I.05, subdivision 7, and every purchasing group or member of 
        a purchasing group subject to tax under section 297I.05, 
        subdivision 12, paragraph (a), clause (6), shall file a return 
        with the commissioner for the preceding six-month period ending 
        December 31, or June 30, setting forth any information the 
        commissioner reasonably prescribes on forms prescribed by the 
        commissioner. 
           Subd. 3.  [AUTOMOBILE RISK SELF-INSURERS.] On or before 
        July 1 of each year, every self-insurer subject to taxation 
        under section 297I.05, subdivision 8, shall file a return with 
        the commissioner for the preceding calendar year setting forth 
        any information the commissioner reasonably requires on forms 
        prescribed by the commissioner. 
           Subd. 4.  [PERSONS, FIRMS, OR CORPORATIONS LICENSED TO 
        PROCURE INSURANCE FROM UNLICENSED FOREIGN COMPANIES.] On or 
        before 30 days following the expiration date of a license issued 
        under section 297I.05, subdivision 9, a person, firm, or 
        corporation licensed to obtain insurance from a company not 
        authorized to do business in Minnesota shall file a return with 
        the commissioner for the preceding 12-month period setting forth 
        any information the commissioner reasonably requires on forms 
        prescribed by the commissioner. 
           Subd. 5.  [JOINT SELF-INSURANCE PLANS.] On or before 60 
        days following the conclusion of their fiscal year, a plan 
        subject to tax under 297I.05, subdivision 12, paragraph (c) or 
        (d), shall file a return with the commissioner for the preceding 
        fiscal year setting forth any information the commissioner 
        reasonably requires on forms prescribed by the commissioner. 
           Subd. 6.  [PERSONS, FIRMS, OR CORPORATIONS PROCURING 
        INSURANCE FROM AN UNLICENSED FOREIGN COMPANY.] Within 30 days 
        after the date the insurance was procured, continued, or 
        renewed, a taxpayer required to pay the tax under section 
        297I.05, subdivision 10, shall file a return setting forth any 
        information the commissioner reasonably requires on forms 
        prescribed by the commissioner. 
           Subd. 7.  [SURCHARGE.] (a)(1) By April 30 of each year, 
        every company required to pay the surcharge under section 
        297I.10, subdivision 1, shall file a return for the five-month 
        period ending March 31 setting forth any information the 
        commissioner reasonably requires on forms prescribed by the 
        commissioner. 
           (2) By June 30 of each year, every company required to pay 
        the surcharge under section 297I.10, subdivision 1, shall file a 
        return for the two-month period ending May 31 setting forth any 
        information the commissioner reasonably requires on forms 
        prescribed by the commissioner. 
           (3) By November 30 of each year, every company required to 
        pay the surcharge under section 297I.10, subdivision 1, shall 
        file a return for the five-month period ending October 31 
        setting forth any information the commissioner reasonably 
        requires on forms prescribed by the commissioner. 
           (b) By February 15 and August 15 of each year, every 
        company required to pay a surcharge under section 297I.10, 
        subdivision 2, must file a return for the preceding six-month 
        period ending December 31 and June 30. 
           Sec. 8.  [297I.35] [PAYMENT OF TAX.] 
           Subdivision 1.  [GENERAL RULE.] All taxes and surcharges 
        imposed under this chapter must be paid to the commissioner by 
        the date that the return must be filed under section 297I.30. 
           Subd. 2.  [ELECTRONIC FUNDS TRANSFER.] If the aggregate 
        amount of tax and surcharges due under this chapter during a 
        calendar year is equal to or exceeds $120,000, or if the 
        taxpayer is required to make payment of any other tax to the 
        commissioner by means of electronic funds transfer as defined in 
        section 336.4A-104, paragraph (a), then all tax and surcharge 
        payments in the subsequent calendar year must be paid 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-104, must be on or before the date the payment is due.  
        If the date the payment 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 payment is due. 
           Sec. 9.  [297I.40] [ESTIMATED TAX.] 
           Subdivision 1.  [REQUIREMENT TO PAY.] On or before April 1, 
        June 1, and December 1 of each year, every taxpayer subject to 
        tax under section 297I.05, subdivisions 1 to 6, and 12, 
        paragraphs (a), clauses (1) to (5), (b), and (e), must pay to 
        the commissioner an installment equal to one-third of the 
        insurer's total estimated tax for the current year. 
           Subd. 2.  [AMOUNT OF REQUIRED INSTALLMENT.] The amount of 
        any required installment is one-third of the lesser of 
           (1) 80 percent of the tax imposed for the current year, or 
           (2) 100 percent of the tax paid for the previous year. 
           Subd. 3.  [NO ADDITION TO TAX WHERE THE TAX IS SMALL.] No 
        addition to tax is imposed if the total tax for the current tax 
        year is $500 or less. 
           Subd. 4.  [ADDITION TO TAX.] (a) In case of any 
        underpayment of installments by an insurer, there is added to, 
        and collected as part of, the tax for the taxable year an amount 
        determined at the rate specified in section 270.75 upon the 
        amount of underpayment. 
           (b) The amount of the underpayment is the excess of:  (1) 
        the amount of the installment; over (2) the amount, if any, of 
        the installment paid on or before the last date prescribed for 
        payment.  
           (c) The period of the underpayment runs from the date the 
        installment was required to be paid to the earlier of:  
           (1) March 1 of the year following the close of the taxable 
        year; or 
           (2) with respect to any portion of the underpayment, the 
        date on which that portion is paid.  For purposes of this 
        clause, a payment of estimated tax on any installment date is 
        considered a payment of any previous underpayment only to the 
        extent the payment exceeds the amount of the installment 
        required to be made on that date. 
           Subd. 5.  [DEFINITION OF TAX.] The term "tax" as used in 
        this section means the tax imposed by section 297I.05, 
        subdivisions 1 to 6, and 12, paragraphs (a), clauses (1) to (5), 
        (b), and (e), without regard to the retaliatory provisions of 
        section 297I.05, subdivision 11, and the offset in section 
        297I.20. 
           Subd. 6.  [FAILURE TO PAY ESTIMATED TAX.] When an insurer 
        does not make any payments, the period of the underpayment runs 
        from the three installment dates set forth in subdivision 1 to 
        whichever of the periods in subdivision 4, paragraph (c), is the 
        earlier. 
           Subd. 7.  [APRIL ESTIMATED PAYMENT.] A taxpayer who claims 
        a refund of an overpayment on an original return may elect to 
        have all or any portion of the overpayment applied as a credit 
        to the April 1 estimated tax payment for the year following the 
        year of the return.  The credit is considered applied on April 
        1.  Notwithstanding section 297I.80, the amount credited does 
        not bear interest. 
           Sec. 10.  [297I.45] [ASSESSMENTS.] 
           The commissioner shall make determinations, corrections, 
        and assessments with respect to taxes and surcharges, including 
        interest, additions to tax, and penalties.  To determine the 
        accuracy of a return, or in fixing liability for a tax or 
        surcharge, the commissioner may make reasonable examinations or 
        investigations of the taxpayer's records and accounts.  If a 
        taxpayer fails to file a required return, the commissioner, from 
        information in the commissioner's possession or obtainable by 
        the commissioner, may make a return for the taxpayer. 
           Sec. 11.  [297I.50] [ORDER OF ASSESSMENT.] 
           Subdivision 1.  [ORDER OF ASSESSMENT; NOTICE AND DEMAND TO 
        TAXPAYER.] (a) When a return has been filed and the commissioner 
        determines that the tax or surcharge disclosed by the return is 
        different than the tax or surcharge determined by the 
        examination, the commissioner shall send an order of assessment 
        to the taxpayer.  When no return has been filed, the 
        commissioner may make a return for the taxpayer under section 
        297I.45 or may send an order of assessment under this 
        subdivision.  The order must explain the basis for the 
        assessment and must explain the taxpayer's appeal rights.  An 
        order of assessment is final when made but may be reconsidered 
        by the commissioner under section 297I.95. 
           (b) If a tax payment meets the requirements of this 
        paragraph, the penalty under section 297I.85, subdivision 2, is 
        not imposed, and the commissioner may not take any collection 
        action, including the filing of liens under section 270.69.  
           To meet the requirements, the taxpayer must first file a 
        return for the tax or surcharge type on which the order is based 
        and then pay the amount shown on the order within the following 
        time limits: 
           (1) If the taxpayer files an administrative appeal under 
        section 297I.95 or a tax court appeal under chapter 271, and if 
        the appeal is based on a constitutional challenge to the tax, 
        the payment must be made within 60 days after final 
        determination of the appeal. 
           (2) If the appeal is not based on a constitutional 
        challenge, the payment must be made when the decision of the tax 
        court is made. 
           (3) If the taxpayer does not file an appeal, the payment 
        must be made within 60 days after the date the order is mailed 
        to the taxpayer by the commissioner. 
           Subd. 2.  [ERRONEOUS REFUNDS.] An erroneous refund is 
        considered an underpayment of tax or surcharge on the date 
        made.  An assessment of a deficiency arising out of an erroneous 
        refund may be made at any time within two years from the making 
        of the refund.  If part of the refund was induced by fraud or 
        misrepresentation of a material fact, the assessment may be made 
        at any time. 
           Subd. 3.  [ASSESSMENT PRESUMED VALID.] A return or 
        assessment of tax or surcharge made by the commissioner is prima 
        facie correct and valid.  The taxpayer has the burden of 
        establishing its incorrectness or invalidity in any related 
        action or proceeding.  
           Subd. 4.  [AGGREGATE REFUND OR ASSESSMENT.] The 
        commissioner, on examining returns of a taxpayer for more than 
        one year or period, may issue one order covering the period 
        under examination that reflects the aggregate refund or 
        additional tax or surcharge due. 
           Subd. 5.  [SUFFICIENCY OF NOTICE.] An order of assessment, 
        sent postage prepaid by United States mail to the taxpayer at 
        the taxpayer's last known address, is sufficient even if a 
        corporation has terminated its existence, unless the department 
        has been provided with a new address by a party authorized to 
        received notices of assessment. 
           Sec. 12.  [297I.55] [EXAMINATIONS; AUDITS AND COLLECTIONS.] 
           Subdivision 1.  [EXAMINATION OF TAXPAYER.] To determine the 
        accuracy of a return or report, or in fixing liability under 
        this chapter, or for the purpose of collection, the commissioner 
        may make reasonable examinations or investigations of a 
        taxpayer's place of business; tangible personal property; 
        equipment, computer systems and facilities; and pertinent books, 
        records, papers, vouchers, computer printouts, accounts, and 
        documents. 
           Subd. 2.  [ACCESS TO RECORDS OF OTHER PERSONS IN CONNECTION 
        WITH EXAMINATION OF TAXPAYER.] When conducting an investigation 
        or an audit of a taxpayer, or for the purpose of collection, the 
        commissioner may, except where privileged by law, examine the 
        relevant records and files of any state agency as well as any 
        person, business, institution, financial institution, agency of 
        the United States government, or agency of any other state where 
        permitted by statute, agreement, or reciprocity.  The 
        commissioner may compel production of these records by subpoena. 
        A subpoena may be served directly by the commissioner. 
           Subd. 3.  [POWER TO COMPEL TESTIMONY.] In the 
        administration of this chapter, the commissioner may: 
           (1) administer oaths or affirmations and compel by subpoena 
        the attendance of witnesses, testimony, and the production of a 
        person's pertinent books, records, papers, or other data for 
        inspection and copying; and 
           (2) examine under oath or affirmation any person regarding 
        the business of any taxpayer concerning any relevant matter 
        incident to the administration of this chapter.  The fees of 
        witnesses required by the commissioner to attend a hearing are 
        equal to those allowed to witnesses appearing before courts of 
        this state.  The fees must be paid in the manner provided for 
        the payment of other expenses incident to the administration of 
        state tax law. 
           Subd. 4.  [THIRD-PARTY SUBPOENA WHERE TAXPAYER'S IDENTITY 
        IS KNOWN.] An investigation may extend to a person that the 
        commissioner determines has access to information that may be 
        relevant to the examination or investigation.  When a subpoena 
        requiring the production of records as described in subdivision 
        2 is served on a third-party recordkeeper, written notice of the 
        subpoena must be mailed to the taxpayer and to any other person 
        who is identified in the subpoena.  The notices must be given 
        within three days of the day on which the subpoena is served.  
        Notice to the taxpayer required by this section is sufficient if 
        it is mailed to the last address on record with the commissioner.
           The provisions of this subdivision relating to notice to 
        the taxpayer or other parties identified in the subpoena do not 
        apply if there is reasonable cause to believe that the giving of 
        notice may lead to attempts to conceal, destroy, or alter 
        records or assets relevant to the examination, to prevent the 
        communication of information from other persons through 
        intimidation, bribery, or collusion, or to flee to avoid 
        prosecution, testifying, or production of records. 
           Subd. 5.  [THIRD-PARTY SUBPOENA WHERE TAXPAYER'S IDENTITY 
        IS NOT KNOWN.] A subpoena that does not identify the person or 
        persons whose tax or surcharge liability is being investigated 
        may be served only if: 
           (1) the subpoena relates to the investigation of a 
        particular person or ascertainable group or class of persons; 
           (2) there is a reasonable basis for believing that the 
        person or group or class of persons may fail or may have failed 
        to comply with laws administered by the commissioner; 
           (3) 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; 
           (4) the subpoena is clear and specific concerning the 
        information sought to be obtained; and 
           (5) the information sought to be obtained is limited solely 
        to the scope of the investigation. 
           When a subpoena does not identify the person or persons 
        with respect to whose tax or surcharge liability the subpoena is 
        issued, the party served with the subpoena may petition for a 
        determination concerning whether the commissioner has complied 
        with clauses (1) to (5) and thus whether the subpoena is 
        enforceable.  The petitions must be to the district court in 
        which the party is located.  The petition must be filed within 
        20 days after service of the subpoena.  If the party served does 
        not petition within the time prescribed, the subpoena has the 
        effect of a court order. 
           Subd. 6.  [REQUEST BY TAXPAYER FOR SUBPOENA.] When the 
        commissioner has the power to issue a subpoena for investigative 
        or auditing purposes, the commissioner shall honor a reasonable 
        request by the taxpayer to issue a subpoena on the taxpayer's 
        behalf, if in connection with the investigation or audit. 
           Subd. 7.  [APPLICATION TO COURT FOR ENFORCEMENT OF 
        SUBPOENA.] Disobedience of subpoenas issued under this section 
        is punishable 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. 
           Subd. 8.  [COST OF PRODUCTION OF RECORDS.] The cost of 
        producing records of a third party required by a subpoena must 
        be paid by the taxpayer, if the taxpayer requests the subpoena 
        to be issued, or if the taxpayer has the records available but 
        has refused to provide them to the commissioner.  In other cases 
        where the taxpayer cannot produce records and the commissioner 
        then initiates a subpoena for third-party records, the 
        commissioner shall pay the reasonable cost of producing the 
        records.  The commissioner may later assess the reasonable costs 
        against the taxpayer if the records contribute to the 
        determination of an assessment of tax or surcharge against the 
        taxpayer. 
           Sec. 13.  [297I.60] [CLAIMS FOR REFUND.] 
           Subdivision 1.  [GENERAL RIGHT TO REFUND.] (a) Subject to 
        the requirements of this section and section 297I.70, if a 
        taxpayer has paid a tax or surcharge in excess of the amount due 
        and files a written claim for refund, the commissioner shall 
        refund or credit the overpayment determined by the commissioner 
        to be erroneously paid. 
           (b) The claim must specify the name of the taxpayer, the 
        date when and the period for which the tax or surcharge was 
        paid, the kind of tax or surcharge paid, the amount that the 
        taxpayer claims was erroneously paid, the grounds on which a 
        refund is claimed, and other information relative to the payment.
        The claim must be in the form required by the commissioner.  A 
        return or amended return claiming an overpayment constitutes a 
        claim for refund. 
           (c) The commissioner shall determine the amount of refund, 
        if any, that is due, and notify the taxpayer of the 
        determination as soon as practicable after a claim has been 
        filed.  Notice must be mailed to the taxpayer at the address 
        stated upon the return or claim for refund. 
           (d) If the amount of tax or surcharge paid by the taxpayer 
        exceeds the amount of tax or surcharge imposed on the taxpayer, 
        the amount of excess is considered an overpayment even if in 
        fact there was no liability with respect to which the amount was 
        paid. 
           (e) When in the course of an examination and within the 
        time for requesting a refund, the commissioner determines that 
        there has been an overpayment of tax or surcharge, the 
        commissioner shall refund or credit the amount of the 
        overpayment to the taxpayer and no return is necessary. 
           (f) Notwithstanding any law to the contrary, the 
        commissioner is not required to refund or credit any overpayment 
        of less than one dollar. 
           (g) There is appropriated to the commissioner the amounts 
        necessary to make refunds required by this section.  The funds 
        are appropriated from the same fund to which the tax or 
        surcharge being refunded was originally deposited. 
           Subd. 2.  [REMEDIES.] (a) If the taxpayer is notified that 
        the refund claim is denied in whole or in part, the taxpayer may 
        contest the denial by: 
           (1) filing an administrative appeal with the commissioner 
        under section 297I.95; 
           (2) filing an appeal in tax court within 60 days of the 
        date of the notice of denial; or 
           (3) filing an action in the district court to recover the 
        refund. 
           (b) An action in the district court must be brought within 18 
        months following the date of the notice of denial.  An action 
        for refund of tax or surcharge must be brought in the district 
        court of the district in which lies the taxpayer's principal 
        place of business or in the district court for Ramsey county.  
        If a taxpayer files a claim for refund and the commissioner has 
        not issued a denial of the claim, the taxpayer may bring an 
        action in the district court or the tax court at any time after 
        the expiration of six months of the time the claim was filed. 
           Sec. 14.  [297I.65] [LIMITATIONS OF TIME FOR ASSESSMENT OF 
        TAX.] 
           Subdivision 1.  [GENERAL RULE.] Except as otherwise 
        provided, the amount of taxes or surcharges assessable must be 
        assessed within three and one-half years after the date the 
        return is filed. 
           Subd. 2.  [FILING DATE.] For purposes of this section, a 
        return filed before the last day prescribed by law for filing 
        the return is considered to be filed on the last day. 
           Subd. 3.  [FALSE OR FRAUDULENT RETURN.] Notwithstanding the 
        limitation under subdivision 1, the tax or surcharge may be 
        assessed at any time if a false or fraudulent return is filed or 
        when a taxpayer fails to file a return. 
           Sec. 15.  [297I.70] [LIMITATION ON CLAIMS FOR REFUND.] 
           Except as provided in section 297I.75, a claim for refund 
        of an overpayment must be filed within 3-1/2 years from the date 
        prescribed for filing the return, or one year from the date of 
        an order assessing tax or surcharge, or one year from the date 
        of a return filed by the commissioner, upon payment in full of 
        the tax, surcharge, penalties, and interest shown on the order 
        or return made by the commissioner, whichever period expires 
        later.  Claims for refund filed after the 3-1/2-year period but 
        within the one-year period are limited to the amount of tax, 
        surcharge, penalties, and interest on the order or return made 
        by the commissioner and to issues determined by the order or 
        return made by the commissioner. 
           Sec. 16.  [297I.75] [CONSENT TO EXTEND TIME.] 
           If before the expiration of the time prescribed in sections 
        297I.65 and 297I.70 for the assessment of tax or surcharge or 
        the filing of a claim for refund, the commissioner and the 
        taxpayer have consented in writing to the assessment or filing 
        of a claim for refund after that time, the tax or surcharge may 
        be assessed at any time before the expiration of the agreed-upon 
        period and a claim for refund may be paid at any time before the 
        expiration of the agreed-upon period plus six months.  The 
        period may be extended by later agreements in writing before the 
        expiration of the period previously agreed upon. 
           Sec. 17.  [297I.80] [INTEREST.] 
           Subdivision 1.  [PAYABLE TO THE COMMISSIONER.] (a) When 
        interest is required under this section, interest is computed at 
        the rate specified in section 270.75. 
           (b) If a tax or surcharge is not paid within the time named 
        by law for payment, the unpaid tax or surcharge bears interest 
        from the date the tax or surcharge should have been paid until 
        the date the tax or surcharge is paid. 
           (c) Whenever a taxpayer is liable for additional tax or 
        surcharge because of a redetermination by the commissioner or 
        other reason, the additional tax or surcharge bears interest 
        from the time the tax or surcharge should have been paid until 
        the date the tax or surcharge is paid. 
           (d) A penalty bears interest from the date the return or 
        payment was required to be filed or paid to the date of payment 
        of the penalty. 
           Subd. 2.  [ON OVERPAYMENTS.] (a) When interest is required 
        under this section, interest is computed at the rate specified 
        in section 270.76. 
           (b) Interest on an overpayment is computed from the date of 
        the payment of the tax or surcharge until the date the refund is 
        made.  For purposes of this subdivision, any payment made before 
        the last day prescribed by law to make the payment, including 
        any estimated tax payments, is considered paid on the last day 
        prescribed by law for the payment.  A return filed before the 
        due date is considered as filed on the due date. 
           Sec. 18.  [297I.85] [CIVIL PENALTIES.] 
           Subdivision 1.  [LATE FILING PENALTY.] If a taxpayer fails 
        to file a return within the time prescribed, a penalty of five 
        percent of the amount of tax or surcharge not timely paid is 
        added to the tax or surcharge. 
           Subd. 2.  [LATE PAYMENT PENALTY.] If a taxpayer fails to 
        pay a tax or surcharge within the time specified for payment a 
        penalty must be added to the amount required to be shown as tax 
        or surcharge.  The penalty is five percent of the tax or 
        surcharge not paid on or before the date specified for payment 
        of the tax or surcharge if the failure is for not more than 30 
        days, with an additional penalty of five percent of the amount 
        of tax or surcharge remaining unpaid during each additional 30 
        days or fraction of 30 days during which the failure continues, 
        not exceeding 15 percent in the aggregate. 
           Subd. 3.  [INTENT TO EVADE.] If a taxpayer, with intent to 
        evade the tax or surcharge imposed by this chapter fails to file 
        any return required by this chapter, or with such intent files a 
        false or fraudulent return, a penalty is imposed on the 
        taxpayer.  The penalty is equal to 50 percent of the tax or 
        surcharge, less amounts paid by the taxpayer on the basis of the 
        false or fraudulent return and is due for the period to which 
        the return related. 
           Subd. 4.  [NEGLIGENCE OR INTENTIONAL DISREGARD; 
        PENALTY.] If any part of an additional assessment is due to 
        negligence or intentional disregard of the statute or a rule but 
        without intent to defraud, there is added to the tax or 
        surcharge a penalty equal to ten percent of the additional 
        assessment. 
           Subd. 5.  [PAYMENT OF PENALTIES.] The penalties imposed by 
        this section must be collected and paid in the same manner as 
        taxes. 
           Subd. 6.  [PENALTIES ARE ADDITIONAL.] The civil penalties 
        imposed by this section are in addition to the criminal 
        penalties imposed by this chapter. 
           Subd. 7.  [PENALTY FOR FAILURE TO MAKE PAYMENT BY 
        ELECTRONIC FUNDS TRANSFER.] In addition to other applicable 
        penalties imposed by this section, if the commissioner notifies 
        the taxpayer that payments are required to be made by means of 
        electronic funds transfer, and the payments are made by some 
        other means, a penalty is imposed.  The amount of the penalty is 
        equal to five percent of each payment that should have been paid 
        electronically.  The penalty may be abated under the abatement 
        procedures prescribed in section 270.07, subdivision 6, if the 
        failure to pay electronically is due to reasonable cause. 
           Sec. 19.  [297I.90] [CRIMINAL PENALTIES.] 
           Subdivision 1.  [PENALTIES FOR KNOWING FAILURE TO FILE OR 
        PAY; WILLFUL EVASION.] (a) If a person is required to file with 
        the commissioner a return, report, or other document, and that 
        person fails to file it when required and does so knowingly, 
        rather than accidentally, inadvertently, or negligently, that 
        person is guilty of a gross misdemeanor.  
           (b) If a person is required to file with the commissioner a 
        return, report, or other document, and that person willfully 
        attempts in any manner to evade or defeat a tax or surcharge by 
        failing to file it when required, that person is guilty of a 
        felony.  
           (c) If a person is required to pay or to collect and remit 
        a tax or surcharge, and that person knowingly, rather than 
        accidentally, inadvertently, or negligently fails to do so when 
        required, that person is guilty of a gross misdemeanor.  
           (d) If a person is required to pay or to collect and remit 
        a tax or surcharge, and that person willfully attempts to evade 
        or defeat a tax or surcharge by failing to do so when required, 
        that person is guilty of a felony. 
           Subd. 2.  [FALSE OR FRAUDULENT RETURNS; PENALTIES.] (a) A 
        person who files with the commissioner a return, report, or 
        other document known by the person to be fraudulent or false 
        concerning a material matter is guilty of a felony. 
           (b) A person who knowingly aids or assists in, or advises 
        in the preparation or presentation of a return, report, or other 
        document that is fraudulent or false concerning a material 
        matter, whether or not the falsity or fraud committed is with 
        the knowledge or consent of the person authorized or required to 
        present the return, report, or other document, is guilty of a 
        felony. 
           Sec. 20.  [297I.95] [ADMINISTRATIVE APPEALS.] 
           Subdivision 1.  [TAXPAYER RIGHT TO RECONSIDERATION.] A 
        taxpayer may obtain the commissioner's reconsideration of an 
        order assessing tax or surcharge, a denial of a request for 
        abatement of penalty or interest, or a denial of a claim for 
        refund by filing an administrative appeal under subdivision 4.  
        No reconsideration is allowed under this section if the action 
        taken by the commissioner is the outcome of an administrative 
        appeal. 
           Subd. 2.  [APPEAL BY TAXPAYER.] A taxpayer who wishes to 
        seek administrative review must follow the procedures in 
        subdivision 4.  
           Subd. 3.  [NOTICE DATE.] For purposes of this section, the 
        term "notice date" means the date of the order adjusting the tax 
        or surcharge or order denying a request for abatement, or, in 
        the case of a denied refund, the date of the notice of denial.  
           Subd. 4.  [TIME AND CONTENT FOR ADMINISTRATIVE 
        APPEAL.] Within 60 days after the notice date, the taxpayer must 
        file a written appeal with the commissioner.  The appeal need 
        not be in any particular form but must contain the following 
        information:  
           (1) name and address of the taxpayer; 
           (2) if a corporation, the state of incorporation of the 
        taxpayer, and the principal place of business of the 
        corporation; 
           (3) the Minnesota identification number or social security 
        number of the taxpayer; 
           (4) the type of tax or surcharge involved; 
           (5) the date; 
           (6) the tax years or periods involved and the amount of tax 
        or surcharge involved for each year or period; 
           (7) the findings in the notice that the taxpayer disputes; 
           (8) a summary statement that the taxpayer relies on for 
        each exception; and 
           (9) the taxpayer's signature or signature of the taxpayer's 
        duly authorized agent.  
           Subd. 5.  [EXTENSIONS.] When requested in writing and 
        within the time allowed for filing an administrative appeal, the 
        commissioner may extend the time for filing an appeal for a 
        period not more than 30 days after the expiration of the 60 days 
        after the notice date. 
           Subd. 6.  [DETERMINATION OF APPEAL.] Based on applicable 
        law and available information, the commissioner shall determine 
        whether the appeal is valid.  The commissioner shall find the 
        appeal valid in whole, valid in part, or invalid, and shall 
        notify the taxpayer of the decision.  This notice must be in 
        writing and must state the reasons for the determination. 
           Subd. 7.  [AGREEMENT DETERMINING TAX LIABILITY.] When it 
        appears to be in the best interests of the state, the 
        commissioner may settle any taxes, surcharges, 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 by 
        the taxpayer's representative authorized by the taxpayer to 
        enter into an agreement.  The agreement is final and, except 
        upon a showing of fraud, malfeasance, or misrepresentation of a 
        material fact, the case must not be reopened as to the matters 
        agreed upon. 
           Subd. 8.  [APPEAL OF AN ADMINISTRATIVE DETERMINATION.] 
        After deciding an appeal, the commissioner shall issue an order 
        reflecting that decision.  The order must be issued 
        notwithstanding any statute of limitations for making 
        assessments or other determinations.  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.  The order is appealable to the 
        Minnesota tax court under section 271.06. 
           Subd. 9.  [APPEAL WHERE NO DETERMINATION.] If the 
        commissioner does not make a determination within six months 
        after the filing of an administrative appeal, the taxpayer may 
        appeal to tax court.  
           Subd. 10.  [EXEMPTION FROM ADMINISTRATIVE PROCEDURE 
        ACT.] This section is not subject to the contested case 
        procedures of chapter 14. 
           Sec. 21.  [PURPOSE.] 
           It is the intent of the legislature to simplify Minnesota's 
        insurance tax laws by consolidating and recodifying tax 
        administration and compliance provisions now contained 
        throughout Minnesota Statutes, chapter 60A, and elsewhere.  Due 
        to the complexity of the recodification, prior provisions are 
        repealed on the effective date of the new provisions.  The 
        repealed provisions, however, remain in effect until superseded 
        by the analogous provision in the new law. 
           Sec. 22.  [EFFECTIVE DATES.] 
           Sections 1 and 16 are effective January 1, 2001. 
           Sections 2 to 9 and 18 are effective for returns, taxes, 
        surcharges, and estimated payments required to be filed or paid 
        for tax years beginning on or after January 1, 2001. 
           Sections 10 to 12 are effective for assessments made and 
        examinations and audits commenced on or after January 1, 2001. 
           Section 13 is effective for claims for refunds filed on or 
        after January 1, 2001. 
           Section 14 is effective for assessments that have not been 
        made as of the day following final enactment.  The time period 
        for making such assessments is the time period prescribed in the 
        enacted section or one year after the day following final 
        enactment, whichever is greater. 
           Section 15 is effective for claims for refund which have 
        not been filed as of the day following final enactment and in 
        which the time period for filing the claim has not expired under 
        the provisions in effect prior to the day following final 
        enactment.  The time period for filing such claims is the time 
        period prescribed in the enacted sections, or one year after the 
        day following final enactment, whichever is greater. 
           Section 17 is effective for all amounts due on or after 
        January 1, 2001. 
           Section 19 is effective for crimes committed on or after 
        January 1, 2001. 
           Section 20 is effective for assessments made or refund 
        claims or abatements denied on or after January 1, 2001. 

                                   ARTICLE 2 
                               TECHNICAL CHANGES 
           Section 1.  Minnesota Statutes 1999 Supplement, section 
        43A.23, subdivision 1, is amended to read: 
           Subdivision 1.  [GENERAL.] The commissioner is authorized 
        to request bids from carriers or to negotiate with carriers and 
        to enter into contracts with carriers which in the judgment of 
        the commissioner are best qualified to underwrite and service 
        the benefit plans.  Contracts entered into with carriers are not 
        subject to the requirements of sections 16C.16 to 16C.19.  The 
        commissioner may negotiate premium rates and coverage provisions 
        with all carriers licensed under chapters 62A, 62C, and 62D.  
        The commissioner may also negotiate reasonable restrictions to 
        be applied to all carriers under chapters 62A, 62C, and 62D.  
        Contracts to underwrite the benefit plans must be bid or 
        negotiated separately from contracts to service the benefit 
        plans, which may be awarded only on the basis of competitive 
        bids.  The commissioner shall consider the cost of the plans, 
        conversion options relating to the contracts, service 
        capabilities, character, financial position, and reputation of 
        the carriers, and any other factors which the commissioner deems 
        appropriate.  Each benefit contract must be for a uniform term 
        of at least one year, but may be made automatically renewable 
        from term to term in the absence of notice of termination by 
        either party.  The commissioner shall, to the extent feasible, 
        make hospital and medical benefits available from at least one 
        carrier licensed to do business pursuant to each of chapters 
        62A, 62C, and 62D.  The commissioner need not provide health 
        maintenance organization services to an employee who resides in 
        an area which is not served by a licensed health maintenance 
        organization.  The commissioner may refuse to allow a health 
        maintenance organization to continue as a carrier.  The 
        commissioner may elect not to offer all three types of carriers 
        if there are no bids or no acceptable bids by that type of 
        carrier or if the offering of additional carriers would result 
        in substantial additional administrative costs.  A carrier 
        licensed under chapter 62A is exempt from the tax taxes imposed 
        by section 60A.15 chapter 297I on premiums paid to it by the 
        state. 
           All self-insured hospital and medical service products must 
        comply with coverage mandates, data reporting, and consumer 
        protection requirements applicable to the licensed carrier 
        administering the product, had the product been insured, 
        including chapters 62J, 62M, and 62Q.  Any self-insured products 
        that limit coverage to a network of providers or provide 
        different levels of coverage between network and nonnetwork 
        providers shall comply with section 62D.123 and geographic 
        access standards for health maintenance organizations adopted by 
        the commissioner of health in rule under chapter 62D. 
           Sec. 2.  Minnesota Statutes 1998, section 43A.316, 
        subdivision 9, is amended to read: 
           Subd. 9.  [INSURANCE TRUST FUND.] The insurance trust fund 
        in the state treasury consists of deposits of the premiums 
        received from employers participating in the program and 
        transfers before July 1, 1994, from the excess contributions 
        holding account established by section 353.65, subdivision 7.  
        All money in the fund is appropriated to the commissioner to pay 
        insurance premiums, approved claims, refunds, administrative 
        costs, and other related service costs.  Premiums paid by 
        employers to the fund are exempt from the tax taxes imposed by 
        sections 60A.15 and 60A.198 chapter 297I.  The commissioner 
        shall reserve an amount of money to cover the estimated costs of 
        claims incurred but unpaid.  The state board of investment shall 
        invest the money according to section 11A.24.  Investment income 
        and losses attributable to the fund must be credited to the fund.
           Sec. 3.  Minnesota Statutes 1998, section 43A.317, 
        subdivision 8, is amended to read: 
           Subd. 8.  [PREMIUMS.] (a) [PAYMENTS.] Employers enrolled in 
        the program shall pay premiums according to terms established by 
        the commissioner.  If an employer fails to make the required 
        payments, the commissioner may cancel coverage and pursue other 
        civil remedies. 
           (b) [RATING METHOD.] The commissioner shall determine the 
        premium rates and rating method for the program.  The rating 
        method for eligible small employers must meet or exceed the 
        requirements of chapter 62L.  The rating methods must recover in 
        premiums all of the ongoing costs for state administration and 
        for maintenance of a premium stability and claim fluctuation 
        reserve.  On June 30, 1999, after paying all necessary and 
        reasonable expenses, the commissioner must apply up to 
        $2,075,000 of any remaining balance in the Minnesota employees' 
        insurance trust fund to repayment of any amounts drawn or 
        expended for this program from the health care access fund. 
           (c) [TAXES AND ASSESSMENTS.] To the extent that the program 
        operates as a self-insured group, the premiums paid to the 
        program are not subject to the premium taxes imposed by sections 
        60A.15 and 60A.198 chapter 297I, but the program is subject to a 
        Minnesota comprehensive health association assessment under 
        section 62E.11. 
           Sec. 4.  Minnesota Statutes 1999 Supplement, section 
        60A.19, subdivision 6, is amended to read: 
           Subd. 6.  [RETALIATORY PROVISIONS.] (1) When by the laws of 
        any other state or country any taxes, fines, deposits, 
        penalties, licenses, or fees, in addition to or in excess of 
        those imposed by the laws of this state upon foreign insurance 
        companies and their agents doing business in this state, are 
        imposed on insurance companies of this state and their agents 
        doing business in that state or country, or when any conditions 
        precedent to the right to do business in that state are imposed 
        by the laws thereof, beyond those imposed upon these foreign 
        companies by the laws of this state, the same taxes, fines, 
        deposits, penalties, licenses, fees, and conditions precedent 
        shall be imposed upon every similar insurance company of that 
        state or country and their agents doing or applying to do 
        business in this state so long as these foreign laws remain in 
        force.  Special purpose obligations or assessments, including 
        assessments by an insurance guaranty association, joint 
        underwriting association or similar organization, or assessments 
        imposed in connection with particular kinds of insurance, are 
        not taxes, licenses, or fees as these terms are used in this 
        section. 
           (2) In the event that a domestic insurance company, after 
        complying with all reasonable laws and rulings of any other 
        state or country, is refused permission by that state or country 
        to transact business therein after the commissioner of commerce 
        of Minnesota has determined that that company is solvent and 
        properly managed and after the commissioner has so certified to 
        the proper authority of that other state or country, then, and 
        in every such case, the commissioner may forthwith suspend or 
        cancel the certificate of authority of every insurance company 
        organized under the laws of that other state or country to the 
        extent that it insures, or seeks to insure, in this state 
        against any of the risks or hazards which that domestic company 
        seeks to insure against in that other state or country.  Without 
        limiting the application of the foregoing provision, it is 
        hereby determined that any law or ruling of any other state or 
        country which prescribes to a Minnesota domestic insurance 
        company the premium rate or rates for life insurance issued or 
        to be issued outside that other state or country shall not be 
        reasonable. 
           (3) (2) This section does not apply to insurance companies 
        organized or domiciled in a state or country, the laws of which 
        do not impose retaliatory taxes, fines, deposits, penalties, 
        licenses, or fees or which grant, on a reciprocal basis, 
        exemptions from retaliatory taxes, fines, deposits, penalties, 
        licenses, or fees to insurance companies domiciled in this state.
           Sec. 5.  Minnesota Statutes 1998, section 60A.19, 
        subdivision 8, is amended to read: 
           Subd. 8.  [INSURANCE FROM UNLICENSED FOREIGN COMPANIES.] 
        Any person, firm, or corporation desiring to obtain insurance 
        upon any property, interests, or risks of any nature other than 
        life insurance in this state in companies not authorized to do 
        business therein shall give bond to the commissioner of commerce 
        in such sum as the commissioner shall deem reasonable, with 
        satisfactory resident sureties, conditioned that the obligors, 
        on the expiration of a license to obtain such insurance, shall 
        pay to the commissioner of revenue, for the use of the state, a 
        tax of two percent upon the gross premiums paid by the 
        licensee in the state must agree to file with the commissioner 
        of revenue all returns required under chapter 297I and pay to 
        the commissioner of revenue any amounts required to be paid 
        under chapter 297I.  Thereupon Upon that agreement, the 
        commissioner of commerce shall issue such a license, good for 
        one year, and all.  Insurance procured thereunder shall be 
        lawful and under the license is valid and the provisions of all 
        the policies thereof shall be deemed are considered to be in 
        accordance, and construed as if identical in effect, with the 
        standard policy prescribed by the laws of this state and.  The 
        insurers may enter the state to perform any act necessary or 
        proper in the conduct of the business.  This bond may be 
        enforced by the commissioner of commerce in the commissioner's 
        name in any district court.  The licensee shall file with the 
        commissioner of commerce on June 30 and December 31 annually a 
        verified statement of the aggregate premiums paid and returned 
        premiums received on account of such insurance. 
           The commissioner of revenue, or duly authorized agents, may 
        conduct investigations, inquiries, and hearings to enforce the 
        tax imposed by this subdivision and, in connection with those 
        investigations, inquiries, and hearings, the commissioner and 
        duly authorized agents have all the powers conferred by section 
        270.06. 
           Sec. 6.  Minnesota Statutes 1998, section 60A.198, 
        subdivision 3, is amended to read: 
           Subd. 3.  [PROCEDURE FOR OBTAINING LICENSE.] A person 
        licensed as an agent in this state pursuant to other law may 
        obtain a surplus lines license by doing the following:  
           (a) filing an application in the form and with the 
        information the commissioner may reasonably require to determine 
        the ability of the applicant to act in accordance with sections 
        60A.195 to 60A.209; 
           (b) maintaining an agent's license in this state; 
           (c) delivering to the commissioner a financial guarantee 
        bond from a surety acceptable to the commissioner for the 
        greater of the following:  
           (1) $5,000; or 
           (2) the largest semiannual surplus lines premium tax 
        liability incurred by the applicant in the immediately preceding 
        five years; 
           (d) agreeing to file with the commissioner of revenue no 
        later than February 15 and August 15 annually, a sworn statement 
        of the charges for insurance procured or placed and the amounts 
        returned on the insurance canceled under the license for the 
        preceding six-month period ending December 31 and June 30 
        respectively, and at the time of the filing of this statement, 
        paying the commissioner a tax on premiums equal to three percent 
        of the total written premiums less cancellations; all returns 
        required by chapter 297I and paying to the commissioner of 
        revenue all amounts required under chapter 297I; and 
           (e) (d) paying a fee as prescribed by section 60K.06, 
        subdivision 2, paragraph (a), clause (4); and. 
           (f) paying penalties imposed under section 289A.60, 
        subdivision 1, as it relates to withholding and sales or use 
        taxes, if the tax due under clause (d) is not timely paid. 
           Sec. 7.  Minnesota Statutes 1998, section 60A.208, 
        subdivision 8, is amended to read: 
           Subd. 8.  [OPERATING ASSESSMENT.] (a) Upon request from the 
        association, the commissioner may approve the levy of an 
        assessment of not more than one-half of one percent of premiums 
        charged pursuant to sections 60A.195 to 60A.209 for operation of 
        the association to the extent that the operation relieves the 
        commissioner of duties otherwise required of the commissioner 
        pursuant to sections 60A.195 to 60A.209.  Any assessment so 
        approved may be subtracted from the premium tax owed by the 
        licensee under chapter 297I.  
           (b) The association may revoke the membership and the 
        commissioner may revoke the license in this state, of any 
        licensee who fails to pay an assessment when due, if the 
        assessment has been approved by the commissioner.  
           Sec. 8.  Minnesota Statutes 1998, section 60A.209, 
        subdivision 3, is amended to read: 
           Subd. 3.  [DUTY TO REPORT.] Each insured in this state who 
        procures, causes to be procured, or continues or renews 
        insurance with an ineligible surplus lines insurer or any 
        self-insurer in this state who procures or continues excess of 
        loss, catastrophe, or other insurance upon a subject of 
        insurance resident, located, or to be performed within this 
        state, other than insurance procured pursuant to section 60A.201 
        or subdivision 1 shall file a written report regarding the 
        insurance with the commissioner of revenue on forms prescribed 
        by the commissioner of revenue and furnished to the insured upon 
        request.  The report shall be filed within 30 days after the 
        date the insurance was procured, continued, or renewed and shall 
        be accompanied by the tax on the premiums of two percent.  The 
        report shall show all of the following:  
           (a) The name and address of the insured; 
           (b) The name and address of the insurer; 
           (c) The subject of the insurance; 
           (d) A general description of the coverage; 
           (e) The amount of premium currently charged for the 
        insurance; and 
           (f) Any additional pertinent information reasonably 
        requested by the commissioner of revenue must file with the 
        commissioner of revenue all returns and pay to the commissioner 
        of revenue all amounts required under chapter 297I. 
           Sec. 9.  Minnesota Statutes 1998, section 60C.17, is 
        amended to read: 
           60C.17 [TAX EXEMPTION.] 
           The association is exempt from payment of all taxes imposed 
        under chapter 297I and all fees and all other taxes levied by 
        this state or any of its subdivisions except taxes levied on 
        real or personal property.  
           Sec. 10.  Minnesota Statutes 1998, section 60E.04, 
        subdivision 4, is amended to read: 
           Subd. 4.  [TAXATION.] (a) Each risk retention group is 
        liable for the payment of premium taxes and taxes on premiums of 
        direct business for risks resident or located within this state, 
        and shall report to the commissioner of revenue the net premiums 
        written for risks resident or located within this state.  The 
        risk retention group shall be subject to taxation, and any 
        applicable taxation-related fines and penalties, on the same 
        basis as a foreign admitted insurer must file with the 
        commissioner of revenue all returns and pay to the commissioner 
        of revenue all amounts required under chapter 297I. 
           (b) To the extent licensed agents or brokers are utilized 
        pursuant to in accordance with section 60E.12, they shall report 
        to the commissioner of revenue the premiums for direct business 
        for risks resident or located within this state which the 
        licensees have placed with or on behalf of a risk retention 
        group not chartered in this state. 
           (c) To the extent that insurance agents or brokers are 
        utilized pursuant to in accordance with section 60E.12, each 
        agent or broker shall keep a complete and separate record of all 
        policies procured from each risk retention group, which shall 
        must be open to examination by the commissioner, as provided in 
        section 60A.031 and by the commissioner of revenue.  These 
        records shall must, for each policy and each kind of insurance 
        provided, include the following: 
           (1) the limit of liability; 
           (2) the time period covered; 
           (3) the effective date; 
           (4) the name of the risk retention group which issued the 
        policy; 
           (5) the gross premium charged; and 
           (6) the amount of return premiums, if any. 
           Sec. 11.  Minnesota Statutes 1998, section 60E.095, is 
        amended to read: 
           60E.095 [PURCHASING GROUP TAXATION.] 
           Premium taxes and taxes on premiums paid for coverage of 
        risks resident or located in this state by a purchasing group or 
        any members of the purchasing groups shall be: 
           (1) imposed at the same rate and subject to the same 
        interest, fines, and penalties as that applicable to premium 
        taxes and taxes on premiums paid for similar coverage from a 
        similar insurance source by other insureds; and 
           (2) paid first by the insurance source, and if not by the 
        source by the agent or broker for the purchasing group, and if 
        not by the agent or broker then by the purchasing group, and if 
        not by the purchasing group then by each of its members group 
        must be paid to the commissioner of revenue as provided in 
        chapter 297I. 
           Sec. 12.  Minnesota Statutes 1998, section 61B.30, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [STATE FEES AND TAXES.] The association is 
        exempt from payment of all taxes imposed under chapter 297I and 
        all fees and all other taxes levied by this state or its 
        subdivisions, except taxes levied on real property. 
           Sec. 13.  Minnesota Statutes 1998, section 62C.01, 
        subdivision 3, is amended to read: 
           Subd. 3.  [SCOPE.] Every foreign or domestic nonprofit 
        corporation organized for the purpose of establishing or 
        operating a health service plan in Minnesota whereby health 
        services are provided to subscribers to the plan under a 
        contract with the corporation shall be subject to and governed 
        by Laws 1971, chapter 568, and shall not be subject to the laws 
        of this state relating to insurance, except section 60A.15 the 
        gross premiums tax provisions contained in chapter 297I and as 
        otherwise specifically provided.  Laws 1971, chapter 568 shall 
        apply to all health service plan corporations incorporated after 
        August 1, 1971, and to all existing health service plan 
        corporations, except as otherwise provided.  Nothing in sections 
        62C.01 to 62C.23 shall apply to prepaid group practice plans.  A 
        prepaid group practice plan is any plan or arrangement other 
        than a service plan, whereby health services are rendered to 
        certain patients by providers who devote their professional 
        effort primarily to members or patients of the plan, and whereby 
        the recipients of health services pay for the services on a 
        regular, periodic basis, not on a fee for service basis.  
           Sec. 14.  Minnesota Statutes 1998, section 62E.10, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CREATION; TAX EXEMPTION.] There is 
        established a comprehensive health association to promote the 
        public health and welfare of the state of Minnesota with 
        membership consisting of all insurers; self-insurers; 
        fraternals; joint self-insurance plans regulated under chapter 
        62H; the Minnesota employees insurance program established in 
        section 43A.317, effective July 1, 1993; health maintenance 
        organizations; and community integrated service networks 
        licensed or authorized to do business in this state.  The 
        comprehensive health association shall be is exempt from 
        taxation the taxes imposed under the chapter 297I and any other 
        laws of this state and all property owned by the 
        association shall be is exempt from taxation. 
           Sec. 15.  Minnesota Statutes 1998, section 62E.13, 
        subdivision 10, is amended to read: 
           Subd. 10.  [PREMIUMS NOT SUBJECT TO TAX.] Premiums received 
        by the writing carrier for the comprehensive health insurance 
        plan are exempt from the provisions of section 60A.15 taxes 
        imposed under chapter 297I. 
           Sec. 16.  Minnesota Statutes 1998, section 62L.13, 
        subdivision 3, is amended to read: 
           Subd. 3.  [EXEMPTIONS.] The association, its transactions, 
        and all property owned by it are exempt from taxation under the 
        laws of this state or any of its subdivisions, including, but 
        not limited to, premiums taxes imposed under chapter 297I, 
        income tax, sales tax, use tax, and property tax. The 
        association may seek exemption from payment of all fees and 
        taxes levied by the federal government.  Except as otherwise 
        provided in this chapter, the association is not subject to the 
        provisions of chapters 13, 60A, 62A to 62H, and section 
        471.705.  The association is not a public employer and is not 
        subject to the provisions of chapters 179A and 353.  The board 
        of directors and health carriers who are members of the 
        association are exempt from sections 325D.49 to 325D.66 in the 
        performance of their duties as directors and members of the 
        association. 
           Sec. 17.  Minnesota Statutes 1998, section 62T.10, is 
        amended to read: 
           62T.10 [MINNESOTACARE TAX.] 
           An accountable provider network is subject to the premium 
        tax established in section 60A.15 and must pay installments as 
        described in section 60A.15, subdivision 1, paragraph (d) shall 
        file with the commissioner of revenue all returns and pay to the 
        commissioner of revenue all amounts required under chapter 297I. 
           Sec. 18.  Minnesota Statutes 1998, section 64B.24, is 
        amended to read: 
           64B.24 [TAXATION.] 
           Fraternal benefit societies are declared to be charitable 
        institutions, and the property held and used for lodge purposes, 
        and the funds of these societies shall be exempt from taxation 
        under the general tax or revenue laws of this state, except that 
        the real estate of the society shall be taxable.  Insurance 
        premiums paid to a fraternal benefit society are exempt from the 
        taxes imposed under chapter 297I. 
           Sec. 19.  Minnesota Statutes 1998, section 71A.04, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [PREMIUM TAX.] The attorney-in-fact, in 
        lieu of all taxes, state, county, and municipal, shall pay to 
        the state with the filing of each annual report on or before 
        March 1 as an annual license fee two percent of the gross 
        premiums or deposits for the preceding calendar year, deducting 
        all amounts returned to subscribers or credited to their 
        accounts; and the attorney shall pay a filing fee of $2 shall 
        file with the commissioner of revenue all returns and pay to the 
        commissioner of revenue all amounts required under chapter 297I. 
           Sec. 20.  Minnesota Statutes 1998, section 79.252, 
        subdivision 4, is amended to read: 
           Subd. 4.  [RESPONSIBILITIES.] Assigned risk policies and 
        contracts of coverage shall be are subject to premium tax 
        pursuant to section 60A.15 taxation under chapter 297I, and 
        special compensation fund assessments pursuant to under 
        Minnesota Statutes 1990, section 176.131, subdivision 10.  The 
        assigned risk plan shall be a member of the reinsurance 
        association for the purposes of sections 79.34 to 79.40 and may 
        select either retention limit provided in section 79.34, 
        subdivision 2.  
           Sec. 21.  Minnesota Statutes 1998, section 79.34, 
        subdivision 1a, is amended to read: 
           Subd. 1a.  [GROSS PREMIUMS TAX.] The direct funded premium 
        premiums received by the reinsurance association is from 
        self-insurers approved under section 176.181 and political 
        subdivisions that self-insure are subject to the gross premium 
        tax imposed by section 60A.15 taxation under chapter 297I.  Only 
        direct funded premium payments made to the reinsurance 
        association by self-insurers approved pursuant to section 
        176.181 and each political subdivision that self-insures shall 
        be subject to the gross premiums tax. 
           Sec. 22.  Minnesota Statutes 1998, section 176A.08, is 
        amended to read: 
           176A.08 [EXEMPTION FROM AND APPLICABILITY OF CERTAIN LAWS.] 
           The fund shall not be considered a state agency for any 
        purpose including, but not limited to, chapters 13, 15, 15A, and 
        43A.  However, the fund shall be subject to sections 179A.01 to 
        179A.25.  The insurance operations of the fund are subject to 
        all of the provisions of chapters 60A and 60B.  The commissioner 
        of commerce has the same powers with respect to the board as the 
        commissioner has with respect to a private workers' compensation 
        insurer under chapters 60A and 60B.  The fund is considered an 
        insurer for the purposes of chapters 60C, 72A, 79, and 176.  The 
        fund is subject to the same tax liability as a mutual insurance 
        company in this state pursuant to section 60A.15 under chapter 
        297I.  As a condition of its authority to transact business in 
        this state the fund shall be a member of the workers' 
        compensation reinsurance association and is bound by its plan of 
        operation. 
           Sec. 23.  Minnesota Statutes 1998, section 290.35, 
        subdivision 2, is amended to read: 
           Subd. 2.  [APPORTIONMENT OF TAXABLE NET INCOME.] The 
        commissioner shall compute therefrom the taxable net income of 
        such companies by assigning to this state that proportion 
        thereof which the gross premiums collected by them during the 
        taxable year from old and new business within this state bears 
        to the total gross premiums collected by them during that year 
        from their entire old and new business, including reinsurance 
        premiums; provided, the commissioner shall add to the taxable 
        net income so apportioned to this state the amount of any taxes 
        on premiums paid by the company by virtue of any law of this 
        state (other than the surcharge on premiums imposed by sections 
        69.54 to 69.56 section 297I.10 and the surcharge imposed by 
        section 168A.40, subdivision 3) which shall have been deducted 
        from gross income by the company in arriving at its total net 
        income under the provisions of such act of Congress. 
           (a) For purposes of determining the Minnesota apportionment 
        percentage, premiums from reinsurance contracts in connection 
        with property in or liability arising out of activity in, or in 
        connection with the lives or health of Minnesota residents shall 
        be assigned to Minnesota and premiums from reinsurance contracts 
        in connection with property in or liability arising out of 
        activity in, or in connection with the lives or health of 
        non-Minnesota residents shall be assigned outside of Minnesota. 
        Reinsurance premiums are presumed to be received for a Minnesota 
        risk and are assigned to Minnesota, if:  
           (1) the reinsurance contract is assumed for a company 
        domiciled in Minnesota; and 
           (2) the taxpayer, upon request of the commissioner, fails 
        to provide reliable records indicating the reinsured contract 
        covered non-Minnesota risks. 
        For purposes of this paragraph, "Minnesota risk" means coverage 
        in connection with property in or liability arising out of 
        activity in Minnesota, or in connection with the lives or health 
        of Minnesota residents. 
           (b) The apportionment method prescribed by paragraph (a) 
        shall be presumed to fairly and correctly determine the 
        taxpayer's taxable net income.  If the method prescribed in 
        paragraph (a) does not fairly reflect all or any part of taxable 
        net income, the taxpayer may petition for or the commissioner 
        may require the determination of taxable net income by use of 
        another method if that method fairly reflects taxable net 
        income.  A petition within the meaning of this section must be 
        filed by the taxpayer on such form as the commissioner shall 
        require. 
           Sec. 24.  Minnesota Statutes 1998, section 290.35, 
        subdivision 3, is amended to read: 
           Subd. 3.  [CREDIT.] An insurance company shall receive a 
        credit against the tax computed under sections 290.06, 
        subdivision 1, and 290.0921, equal to any taxes based on 
        premiums paid by it that are attributable to the period for 
        which the tax under this chapter is imposed by virtue of any law 
        of this state, other than the surcharge on premiums imposed by 
        sections 69.54 to 69.56 section 297I.10. 
           Sec. 25.  Minnesota Statutes 1998, section 290.35, 
        subdivision 6, is amended to read: 
           Subd. 6.  [GUARANTY ASSOCIATION ASSESSMENT OFFSET.] (a) An 
        insurance company may offset against its corporate franchise tax 
        liability under this chapter any amount paid pursuant to 
        assessments made for insolvencies which occur after July 31, 
        1994, under sections 60C.01 to 60C.22, and any amount paid 
        pursuant to assessments made after July 31, 1994, under 
        Minnesota Statutes 1992, sections 61B.01 to 61B.16, or sections 
        61B.18 to 61B.32, as follows: 
           (a) (1) Each such assessment shall give rise to an amount 
        of offset equal to 20 percent of the amount of the assessment 
        for each of the five calendar years following the year in which 
        the assessment was paid. 
           (b) (2) The amount of offset initially determined for each 
        taxable year is the sum of the amounts determined under 
        paragraph (a) clause (1) for that taxable year. 
           (c) (b)(1) Each year the commissioner of revenue shall 
        compare total guaranty association assessments levied over the 
        preceding five calendar years to the sum of all premium tax and 
        corporate franchise tax revenues collected from insurance 
        companies without reduction for any guaranty association 
        assessment offset, in the preceding calendar year, referred to 
        in this subdivision as "preceding year insurance tax revenues." 
           (2) If total guaranty association assessments levied over 
        the preceding five years exceed the preceding year insurance tax 
        revenues, insurance companies shall be are allowed only a 
        proportionate part of the corporate franchise tax offset 
        calculated under paragraph (b) (a) for the current calendar year.
           (3) The proportionate part of the corporate franchise tax 
        offset allowed in the current calendar year is determined by 
        multiplying the amount calculated under paragraph (b) (a) by a 
        fraction, the numerator of which equals the preceding year 
        insurance tax revenues and the denominator of which equals total 
        guaranty association assessments levied over the preceding 
        five-year period. 
           (4) The proportionate part of the premium tax offset that 
        is not allowed shall must be carried forward to subsequent tax 
        years and added to the amount of corporate franchise tax offset 
        calculated under paragraph (b) (a) before application of the 
        limitation imposed by this paragraph. 
           (5) Any amount carried forward from prior years must be 
        allowed before allowance of the offset for the current year 
        calculated under paragraph (b) (a). 
           (6) The corporate franchise tax offset limitation must be 
        calculated separately for (1) insurance companies subject to 
        assessment under sections 60C.01 to 60C.22, and (2) insurance 
        companies subject to assessment under Minnesota Statutes 1992, 
        sections 61B.01 to 61B.16, or sections 61B.18 to 61B.32. 
           (7) When the corporate franchise tax offset is limited by 
        this provision, the commissioner of revenue will notify affected 
        insurance companies on a timely basis for purposes of completing 
        premium and corporate franchise tax returns. 
           (8) The guaranty associations created under sections 60C.01 
        to 60C.22, Minnesota Statutes 1992, sections 61B.01 to 61B.16, 
        and sections 61B.18 to 61B.32, shall provide the commissioner of 
        revenue with the necessary information on guaranty association 
        assessments.  The limitation in this paragraph is effective for 
        offsets allowable in 1999 and thereafter. 
           (d) (c)(1) If the offset determined by the application of 
        paragraphs (a) to (c) and (b) exceeds the greater of the 
        insurance company's corporate franchise tax liability under this 
        chapter prior to allowance of the credit provided by subdivision 
        3 or its premium tax liability under chapter 60A 297I, then the 
        insurance company may carry forward the excess, referred to in 
        this subdivision as the "carryforward credit," to subsequent 
        taxable years. 
           (2) The carryforward credit must be allowed as an offset 
        against corporate franchise tax liability for the first 
        succeeding year to the extent that the corporate franchise tax 
        liability for that year exceeds the amount of the allowable 
        offset for the year determined under paragraphs (a) to (c) and 
        (b). 
           (3) The carryforward credit shall must be reduced, but not 
        below zero, by the greater of the amount of the carryforward 
        credit allowed as an offset against the corporate franchise tax 
        pursuant to this paragraph or the amount of the carryforward 
        credit allowed as an offset against the insurance company's 
        premium tax liability under chapter 60A 297I pursuant to section 
        60A.15, subdivision 15, paragraph (d) 297I.20, paragraph (c).  
        The remainder, if any, of the carryforward credit must be 
        carried forward to succeeding taxable years until the entire 
        carryforward credit has been credited against the insurance 
        company's liability for corporate franchise tax under this 
        chapter and premium tax under chapter 60A 297I. 
           (e) (d) A refund paid by the Minnesota Life and Health 
        Insurance Guaranty Association to member insurers under 
        Minnesota Statutes 1992, section 61B.07, subdivision 6, or 
        section 61B.24, subdivision 6, with respect to an assessment 
        payment which has been offset against taxes shall reduce the 
        carryforward credit determined under paragraph (d) and, if the 
        refund exceeds the amount of the carryforward credit, shall be 
        repaid by the insurers to the extent of the offset to the state 
        in the manner the commissioner of revenue requires. When an 
        insurer has offset against taxes its payment of an assessment of 
        the Minnesota life and health guaranty association, and the 
        association pays the insurer a refund with respect to the 
        assessment under Minnesota Statutes 1992, section 61B.07, 
        subdivision 6, or 61B.24, subdivision 6, then the refund reduces 
        the insurer's carryforward credit under paragraph (c).  If the 
        refund exceeds the amount of the carryforward credit, the excess 
        amount must be repaid to the state by the insurers to the extent 
        of the offset in the manner the commissioner requires. 
           Sec. 26.  Minnesota Statutes 1998, section 295.58, is 
        amended to read: 
           295.58 [DEPOSIT OF REVENUES AND PAYMENT OF REFUNDS.] 
           The commissioner shall deposit all revenues, including 
        penalties and interest, derived from the taxes imposed by 
        sections 295.50 to 295.57 and from the insurance premiums 
        tax imposed by section 297I.05, subdivision 5, on health 
        maintenance organizations, community integrated service 
        networks, and nonprofit health service plan corporations in the 
        health care access fund in the state treasury.  Refunds of 
        overpayments must be paid from the health care access fund in 
        the state treasury.  There is annually appropriated from the 
        health care access fund to the commissioner of revenue the 
        amount necessary to make any refunds required under section 
        295.54. 
           Sec. 27.  Minnesota Statutes 1998, section 424.165, is 
        amended to read: 
           424.165 [SPECIAL FUND, MAINTENANCE.] 
           Subdivision 1.  [SURCHARGE.] When the balance in the 
        special fund of any firefighter's relief association in any city 
        of the second class is less than $50,000 as determined by any 
        such association's board of trustees, which fact shall be duly 
        certified to by the state auditor, such board of trustees may 
        thereupon file its duly verified petition for relief, 
        accompanied by such certificate, with the commissioner of 
        revenue.  The commissioner of revenue shall thereupon order and 
        direct a surcharge to be collected of two percent of the fire, 
        lightning and sprinkler leakage gross premiums, less return 
        premiums, on all direct business received by any foreign or 
        domestic fire insurance company on property in such city of the 
        second class, or by its agents for it, in cash or otherwise, 
        until the balance in the special funds of such relief 
        association amounts to $50,000 and for a period of 15 days 
        thereafter.  As soon as the balance in said special fund amounts 
        to $50,000 the board of trustees of such relief association 
        shall certify that fact to the commissioner of revenue and the 
        commissioner of revenue shall forthwith issue an order ordering 
        and directing that the collection of such surcharge shall be 
        discontinued after the expiration of said 15-day period and 
        shall forthwith mail a copy of the order last mentioned to each 
        insurance company affected thereby.  Said surcharge shall be due 
        and payable from such companies to the state treasurer in 
        semiannual installments on June 30 and December 31 of each 
        calendar year to be kept by the state treasurer in a separate 
        fund and if not paid within 30 days after such dates a penalty 
        of three percent shall accrue thereon and thereafter such sum 
        and penalty shall draw interest at the rate of one percent per 
        month until paid. 
           Subd. 2.  [ISSUANCE OF WARRANT.] The commissioner of 
        finance on July 31, 1938, and semiannually thereafter, shall 
        issue and deliver to the treasurer of such relief association in 
        such city a warrant upon the state treasurer for an amount equal 
        to the total amount of said surcharge on said premiums within 
        such city theretofore so collected and transmitted to the state 
        treasurer by such insurance companies.  Said warrants shall be 
        paid out of said separate fund hereinbefore provided for, and 
        the payment in each case shall be made to the treasurer of the 
        relief association presenting the warrant. 
           There is hereby appropriated to such firefighter's relief 
        association, from such fund or account in the state treasury to 
        which the money was credited, such sums as may, from time to 
        time, be necessary to pay these warrants. 
           Subd. 3.  [FUNDS TO BE KEPT IN SPECIAL FUND.] The treasurer 
        of such relief association shall place the money received in 
        payment of any such warrant in the special fund of such relief 
        association. 
           Subd. 4.  [EMERGENCY DECLARED TO EXIST.] An emergency 
        exists and this section shall be construed as a relief measure 
        for firefighter's relief associations in any city of the second 
        class. 
           When the balance in the special fund of any firefighter's 
        relief association in any city of the second class is less than 
        $50,000 as determined by the board of trustees of the 
        association, and as certified by the state auditor, the board of 
        trustees may file with the commissioner a request to impose the 
        surcharge on fire, lightning, and sprinkler leakage insurance 
        premiums authorized under section 297I.10, subdivision 2. 
           Sec. 28.  [REPEALER.] 
           Minnesota Statutes 1998, sections 60A.15; 60A.152; 60A.198, 
        subdivision 6; 60A.199, subdivisions 2, 3, 4, 5, 6, 6a, 7, 8, 9, 
        10, and 11; 60A.209, subdivisions 4 and 5; 69.54; 69.55; 69.56; 
        69.57; 69.58; 69.59; 69.60; 69.61; 71A.04, subdivision 2; 
        299F.21; 299F.22; 299F.23; 299F.24; 299F.25; and 299F.26; and 
        Minnesota Rules, part 2765.1500, subpart 6, are repealed. 
           Sec. 29.  [EFFECTIVE DATE.] 
           This article is effective January 1, 2001. 
           Presented to the governor April 11, 2000 
           Signed by the governor April 14, 2000, 2:11 p.m.