Skip to main content Skip to office menu Skip to footer
Capital IconMinnesota Legislature

Office of the Revisor of Statutes

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

CHAPTER 143--H.F.No. 677

An act

relating to financing and operation of state and local government; making changes to individual income, corporate franchise, property, sales and use, estate, mineral, tobacco, alcohol, special, local, and other taxes and tax-related provisions modifying the property tax refund; changing property tax aids and credits; modifying the Sustainable Forest Incentive Act; modifying education aids and levies; providing additional pension funding; modifying definitions and distributions for property taxes; providing for property tax exemptions; modifying the payment in lieu of tax provisions; modifying education aids and levies; modifying tobacco tax provisions; making changes to additions and subtractions from federal taxable income; providing for federal conformity; changing income tax rates for individuals, estates, and trusts; providing income tax credits; modifying estate tax provisions; providing for a state gift tax; expanding the sales tax base; modifying the duty to collect and remit sales taxes for certain sellers; imposing the sales tax on digital products and selected services; modifying the definition of sale and purchase; modifying provisions for the rental motor vehicle tax rate; providing for multiple points of use certificates; modifying sales tax exemptions; authorizing local sales taxes; authorizing economic development powers; modifying tax increment financing rules; providing authority, organization, powers, duties, and requiring a prevailing wage for development of a Destination Medical Center; authorizing state infrastructure aid; modifying the distribution of taconite production taxes; authorizing taconite production tax bonds for grants to school districts; modifying and providing provisions for public finance; providing funding for legislative office facilities; modifying the definition of market value for tax, debt, and other purposes; making conforming, policy, and technical changes to tax provisions; requiring studies and reports; appropriating money;

amending Minnesota Statutes 2012, sections 13.792; 16A.46; 16A.727; 38.18; 40A.15, subdivision 2; 69.011, subdivision 1; 69.021, subdivisions 7, 8; 88.51, subdivision 3; 103B.102, subdivision 3; 103B.245, subdivision 3; 103B.251, subdivision 8; 103B.335; 103B.3369, subdivision 5; 103B.635, subdivision 2; 103B.691, subdivision 2; 103C.501, subdivision 4; 103D.905, subdivisions 2, 3, 8; 103F.405, subdivision 1; 116J.8737, subdivisions 1, 2, 8; 117.025, subdivision 7; 118A.04, subdivision 3; 118A.05, subdivision 5; 123A.455, subdivision 1; 126C.10, subdivision 1, by adding a subdivision; 126C.13, subdivision 4; 126C.17; 126C.48, subdivision 8; 127A.48, subdivision 1; 138.053; 144F.01, subdivision 4; 162.07, subdivisions 3, 4; 163.04, subdivision 3; 163.06, subdivision 6; 165.10, subdivision 1; 168.012, subdivision 9, by adding a subdivision; 216C.436, subdivision 7; 237.52, subdivision 3, by adding a subdivision; 270.077; 270.41, subdivisions 3, 5, by adding a subdivision; 270.45; 270B.01, subdivision 8; 270B.03, subdivision 1; 270B.12, subdivision 4; 270C.03, subdivision 1; 270C.34, subdivision 1; 270C.38, subdivision 1; 270C.42, subdivision 2; 270C.56, subdivision 1; 271.06, subdivision 2a, as added; 272.01, subdivision 2; 272.02, subdivisions 39, 97, by adding subdivisions; 272.03, subdivision 9, by adding subdivisions; 273.032; 273.061, subdivision 2; 273.0645; 273.11, subdivision 1; 273.114, subdivision 6; 273.117; 273.124, subdivisions 3a, 13; 273.13, subdivisions 21b, 23, 25; 273.1398, subdivisions 3, 4; 273.19, subdivision 1; 273.372, subdivision 4; 273.39; 275.011, subdivision 1; 275.077, subdivision 2; 275.71, subdivision 4; 276.04, subdivision 2; 276A.01, subdivisions 10, 12, 13, 15; 276A.06, subdivision 10; 279.01, subdivision 1, by adding a subdivision; 279.02; 279.06, subdivision 1; 279.37, subdivisions 1a, 2; 281.14; 281.17; 287.05, by adding a subdivision; 287.08; 287.20, by adding a subdivision; 287.23, subdivision 1; 287.385, subdivision 7; 289A.08, subdivision 3; 289A.10, subdivision 1, by adding a subdivision; 289A.12, subdivision 14, by adding a subdivision; 289A.18, by adding a subdivision; 289A.20, subdivisions 3, 4, by adding a subdivision; 289A.26, subdivisions 3, 4, 7, 9; 289A.55, subdivision 9; 289A.60, subdivision 4; 290.01, subdivisions 19, as amended, 19b, 19c, 19d; 290.06, subdivisions 2c, 2d, by adding a subdivision; 290.0677, subdivision 2; 290.068, subdivisions 3, 6a; 290.0681, subdivisions 1, 3, 4, 5, 10; 290.091, subdivisions 1, 2, 6; 290.0921, subdivision 3; 290.0922, subdivision 1; 290.095, subdivision 2; 290.10, subdivision 1; 290.17, subdivision 4; 290.191, subdivision 5; 290.21, subdivision 4; 290.9705, subdivision 1; 290A.03, subdivision 3; 290A.04, subdivisions 2, 2a, 4; 290B.04, subdivision 2; 290C.02, subdivision 6; 290C.03; 290C.055; 290C.07; 291.005, subdivision 1; 291.03, subdivisions 1, 8, 9, 10, 11, by adding a subdivision; 296A.01, subdivisions 7, 8, 14, 19, 20, 23, 24, 26, by adding a subdivision; 296A.09, subdivision 2; 296A.17, subdivision 3; 296A.22, subdivisions 1, 3; 297A.61, subdivisions 3, 4, 10, 25, 38, 45, by adding subdivisions; 297A.64, subdivision 1; 297A.66, subdivision 3, by adding a subdivision; 297A.665; 297A.668, by adding a subdivision; 297A.67, subdivisions 7, 13, by adding a subdivision; 297A.68, subdivisions 2, 5, 42, by adding a subdivision; 297A.70, subdivisions 2, 4, 5, 7, 13, 14, by adding subdivisions; 297A.71, by adding subdivisions; 297A.75, subdivisions 1, 2, 3; 297A.82, subdivision 4, by adding a subdivision; 297A.99, subdivision 1; 297B.11; 297E.021, subdivision 3; 297E.14, subdivision 7; 297F.01, subdivisions 3, 19, 23, by adding subdivisions; 297F.05, subdivisions 1, 3, 4, by adding subdivisions; 297F.09, subdivision 9; 297F.18, subdivision 7; 297F.24, subdivision 1; 297F.25, subdivision 1; 297G.04, subdivision 2; 297G.09, subdivision 8; 297G.17, subdivision 7; 297I.05, subdivisions 7, 11, 12; 297I.30, subdivisions 1, 2; 297I.80, subdivision 1; 298.01, subdivisions 3, 3b; 298.018; 298.17; 298.227, as amended; 298.24, subdivision 1; 298.28, subdivisions 4, 6, 9c, 10; 325D.32, subdivision 2; 325F.781, subdivision 1; 349.166, subdivision 1; 353G.08, subdivision 2; 360.531; 360.66; 365.025, subdivision 4; 366.095, subdivision 1; 366.27; 368.01, subdivision 23; 368.47; 370.01; 373.01, subdivisions 1, 3; 373.40, subdivisions 1, 2, 4; 375.167, subdivision 1; 375.18, subdivision 3; 375.555; 383A.80, subdivision 4; 383B.152; 383B.245; 383B.73, subdivision 1; 383B.80, subdivision 4; 383D.41, by adding a subdivision; 383E.20; 383E.23; 385.31; 394.36, subdivision 1; 398A.04, subdivision 8; 401.05, subdivision 3; 403.02, subdivision 21, by adding subdivisions; 403.06, subdivision 1a; 403.11, subdivision 1, by adding subdivisions; 410.32; 412.221, subdivision 2; 412.301; 428A.02, subdivision 1; 428A.101; 428A.21; 430.102, subdivision 2; 447.10; 450.19; 450.25; 458A.10; 458A.31, subdivision 1; 465.04; 469.033, subdivision 6; 469.034, subdivision 2; 469.053, subdivisions 4, 4a, 6; 469.071, subdivision 5; 469.107, subdivision 1; 469.169, by adding a subdivision; 469.176, subdivisions 4c, 4g, 6; 469.177, subdivisions 1a, 9, by adding subdivisions; 469.180, subdivision 2; 469.187; 469.206; 469.319, subdivision 4; 469.340, subdivision 4; 471.24; 471.571, subdivisions 1, 2; 471.73; 473.325, subdivision 2; 473.39, by adding a subdivision; 473.606, subdivision 3; 473.629; 473.661, subdivision 3; 473.667, subdivision 9; 473.671; 473.711, subdivision 2a; 473F.02, subdivisions 12, 14, 15, 23; 473F.08, subdivisions 3a, 10, by adding a subdivision; 474A.04, subdivision 1a; 474A.062; 474A.091, subdivision 3a; 475.521, subdivisions 1, 2, 4; 475.53, subdivisions 1, 3, 4; 475.58, subdivisions 2, 3b; 475.73, subdivision 1; 477A.011, subdivisions 20, 30, 34, 42, by adding subdivisions; 477A.0124, subdivision 2; 477A.013, subdivisions 1, 8, 9, by adding a subdivision; 477A.015; 477A.03, subdivisions 2a, 2b, by adding a subdivision; 477A.11, subdivisions 3, 4, by adding subdivisions; 477A.12, subdivisions 1, 2, 3; 477A.14, subdivision 1, by adding a subdivision; 641.23; 641.24; 645.44, by adding a subdivision; Laws 1971, chapter 773, section 1, subdivision 2, as amended; Laws 1988, chapter 645, section 3, as amended; Laws 1993, chapter 375, article 9, section 46, subdivisions 2, as amended, 5, as amended; Laws 1998, chapter 389, article 8, section 43, subdivisions 1, 3, as amended, 5, as amended; Laws 1999, chapter 243, article 6, section 11; Laws 2002, chapter 377, article 3, section 25, as amended; Laws 2005, First Special Session chapter 3, article 5, section 37, subdivisions 2, 4; Laws 2006, chapter 259, article 11, section 3, as amended; Laws 2008, chapter 366, article 5, sections 26; 33; 34, as amended; article 7, section 19, subdivision 3, as amended; Laws 2009, chapter 88, article 2, section 46, subdivisions 1, 3; Laws 2010, chapter 216, sections 11; 55; Laws 2010, chapter 389, article 1, section 12; article 5, section 6, subdivision 6; proposing coding for new law in Minnesota Statutes, chapters 116J; 116V; 124D; 136A; 270C; 287; 290A; 292; 403; 423A; 469; 477A; repealing Minnesota Statutes 2012, sections 16A.725; 97A.061; 256.9658; 272.69; 273.11, subdivisions 1a, 22; 276A.01, subdivision 11; 289A.60, subdivision 31; 290.01, subdivision 6b; 290.06, subdivision 22a; 290.0921, subdivision 7; 290.171; 290.173; 290.174; 297A.61, subdivision 27; 297A.68, subdivision 35; 473F.02, subdivision 13; 477A.011, subdivisions 2a, 19, 21, 29, 31, 32, 33, 36, 39, 40, 41; 477A.013, subdivisions 11, 12; 477A.0133; 477A.0134; Laws 1973, chapter 567, section 7, as amended; Laws 2009, chapter 88, article 4, section 23, as amended.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

ARTICLE 1

HOMESTEAD CREDIT REFUND AND RENTER PROPERTY TAX REFUND

Section 1.

Minnesota Statutes 2012, section 290A.03, subdivision 3, is amended to read:

Subd. 3.

Income.

(1) "Income" means the sum of the following:

(a) federal adjusted gross income as defined in the Internal Revenue Code; and

(b) the sum of the following amounts to the extent not included in clause (a):

(i) all nontaxable income;

(ii) the amount of a passive activity loss that is not disallowed as a result of section 469, paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity loss carryover allowed under section 469(b) of the Internal Revenue Code;

(iii) an amount equal to the total of any discharge of qualified farm indebtedness of a solvent individual excluded from gross income under section 108(g) of the Internal Revenue Code;

(iv) cash public assistance and relief;

(v) any pension or annuity (including railroad retirement benefits, all payments received under the federal Social Security Act, Supplemental Security Income, and veterans benefits), which was not exclusively funded by the claimant or spouse, or which was funded exclusively by the claimant or spouse and which funding payments were excluded from federal adjusted gross income in the years when the payments were made;

(vi) interest received from the federal or a state government or any instrumentality or political subdivision thereof;

(vii) workers' compensation;

(viii) nontaxable strike benefits;

(ix) the gross amounts of payments received in the nature of disability income or sick pay as a result of accident, sickness, or other disability, whether funded through insurance or otherwise;

(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of 1986, as amended through December 31, 1995;

(xi) contributions made by the claimant to an individual retirement account, including a qualified voluntary employee contribution; simplified employee pension plan; self-employed retirement plan; cash or deferred arrangement plan under section 401(k) of the Internal Revenue Code; or deferred compensation plan under section 457 of the Internal Revenue Codenew text begin , to the extent the sum of amounts exceeds the retirement base amount for the claimant and spousenew text end ;

(xii)new text begin to the extent not included in federal adjusted gross income, distributions received by the claimant or spouse from a traditional or Roth style retirement account or plan;new text end

new text begin (xiii)new text end nontaxable scholarship or fellowship grants;

deleted text begin (xiii)deleted text end new text begin (xiv)new text end the amount of deduction allowed under section 199 of the Internal Revenue Code;

deleted text begin (xiv)deleted text end new text begin (xv)new text end the amount of deduction allowed under section 220 or 223 of the Internal Revenue Code;

deleted text begin (xv)deleted text end new text begin (xvi)new text end the amount deleted text begin ofdeleted text end new text begin deducted for new text end tuition expenses deleted text begin required to be added to income under section 290.01, subdivision 19a, clause (12);deleted text end new text begin under section 222 of the Internal Revenue Code; andnew text end

deleted text begin (xvi)deleted text end new text begin (xvii)new text end the amount deducted for certain expenses of elementary and secondary school teachers under section 62(a)(2)(D) of the Internal Revenue Codedeleted text begin ; anddeleted text end new text begin .new text end

deleted text begin (xvii) unemployment compensation. deleted text end

In the case of an individual who files an income tax return on a fiscal year basis, the term "federal adjusted gross income" shall mean federal adjusted gross income reflected in the fiscal year ending in the calendar year. Federal adjusted gross income shall not be reduced by the amount of a net operating loss carryback or carryforward or a capital loss carryback or carryforward allowed for the year.

(2) "Income" does not include:

(a) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 102;

(b) amounts of any pension or annuity which was exclusively funded by the claimant or spouse and which funding payments were not excluded from federal adjusted gross income in the years when the payments were made;

(c)new text begin to the extent included in federal adjusted gross income, amounts contributed by the claimant or spouse to a traditional or Roth style retirement account or plan, but not to exceed the retirement base amount reduced by the amount of contributions excluded from federal adjusted gross income, but not less than zero;new text end

new text begin (d)new text end surplus food or other relief in kind supplied by a governmental agency;

deleted text begin (d)deleted text end new text begin (e)new text end relief granted under this chapter;

deleted text begin (e)deleted text end new text begin (f)new text end child support payments received under a temporary or final decree of dissolution or legal separation; or

deleted text begin (f)deleted text end new text begin (g)new text end restitution payments received by eligible individuals and excludable interest as defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of 2001, Public Law 107-16.

(3) The sum of the following amounts may be subtracted from income:

(a) for the claimant's first dependent, the exemption amount multiplied by 1.4;

(b) for the claimant's second dependent, the exemption amount multiplied by 1.3;

(c) for the claimant's third dependent, the exemption amount multiplied by 1.2;

(d) for the claimant's fourth dependent, the exemption amount multiplied by 1.1;

(e) for the claimant's fifth dependent, the exemption amount; and

(f) if the claimant or claimant's spouse was disabled or attained the age of 65 on or before December 31 of the year for which the taxes were levied or rent paid, the exemption amount.

For purposes of this subdivision, the "exemption amount" means the exemption amount under section 151(d) of the Internal Revenue Code for the taxable year for which the income is reportednew text begin ; "retirement base amount" means the deductible amount for the taxable year for the claimant and spouse under section 219(b)(5)(A) of the Internal Revenue Code, adjusted for inflation as provided in section 219(b)(5)(D) of the Internal Revenue Code, without regard to whether the claimant or spouse claimed a deduction; and "traditional or Roth style retirement account or plan" means retirement plans under sections 401, 403, 408, 408A, and 457 of the Internal Revenue Codenew text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with refunds based on property taxes payable in 2014 and rent paid in 2013. new text end

Sec. 2.

Minnesota Statutes 2012, section 290A.04, subdivision 2, is amended to read:

Subd. 2.

Homeownersnew text begin ; homestead credit refundnew text end .

A claimant whose property taxes payable are in excess of the percentage of the household income stated below shall pay an amount equal to the percent of income shown for the appropriate household income level along with the percent to be paid by the claimant of the remaining amount of property taxes payable. The state refund equals the amount of property taxes payable that remain, up to the state refund amount shown below.

deleted text begin Household Income deleted text end deleted text begin Percent of Income deleted text end deleted text begin Percent Paid by
Claimant
deleted text end
deleted text begin Maximum
State
Refund
deleted text end
deleted text begin $0 to 1,549 deleted text end deleted text begin 1.0 percent deleted text end deleted text begin 15 percent deleted text end deleted text begin $ deleted text end deleted text begin 2,460 deleted text end
deleted text begin 1,550 to 3,089 deleted text end deleted text begin 1.1 percent deleted text end deleted text begin 15 percent deleted text end deleted text begin $ deleted text end deleted text begin 2,460 deleted text end
deleted text begin 3,090 to 4,669 deleted text end deleted text begin 1.2 percent deleted text end deleted text begin 15 percent deleted text end deleted text begin $ deleted text end deleted text begin 2,460 deleted text end
deleted text begin 4,670 to 6,229 deleted text end deleted text begin 1.3 percent deleted text end deleted text begin 20 percent deleted text end deleted text begin $ deleted text end deleted text begin 2,460 deleted text end
deleted text begin 6,230 to 7,769 deleted text end deleted text begin 1.4 percent deleted text end deleted text begin 20 percent deleted text end deleted text begin $ deleted text end deleted text begin 2,460 deleted text end
deleted text begin 7,770 to 10,879 deleted text end deleted text begin 1.5 percent deleted text end deleted text begin 20 percent deleted text end deleted text begin $ deleted text end deleted text begin 2,460 deleted text end
deleted text begin 10,880 to 12,429 deleted text end deleted text begin 1.6 percent deleted text end deleted text begin 20 percent deleted text end deleted text begin $ deleted text end deleted text begin 2,460 deleted text end
deleted text begin 12,430 to 13,989 deleted text end deleted text begin 1.7 percent deleted text end deleted text begin 20 percent deleted text end deleted text begin $ deleted text end deleted text begin 2,460 deleted text end
deleted text begin 13,990 to 15,539 deleted text end deleted text begin 1.8 percent deleted text end deleted text begin 20 percent deleted text end deleted text begin $ deleted text end deleted text begin 2,460 deleted text end
deleted text begin 15,540 to 17,079 deleted text end deleted text begin 1.9 percent deleted text end deleted text begin 25 percent deleted text end deleted text begin $ deleted text end deleted text begin 2,460 deleted text end
deleted text begin 17,080 to 18,659 deleted text end deleted text begin 2.0 percent deleted text end deleted text begin 25 percent deleted text end deleted text begin $ deleted text end deleted text begin 2,460 deleted text end
deleted text begin 18,660 to 21,759 deleted text end deleted text begin 2.1 percent deleted text end deleted text begin 25 percent deleted text end deleted text begin $ deleted text end deleted text begin 2,460 deleted text end
deleted text begin 21,760 to 23,309 deleted text end deleted text begin 2.2 percent deleted text end deleted text begin 30 percent deleted text end deleted text begin $ deleted text end deleted text begin 2,460 deleted text end
deleted text begin 23,310 to 24,859 deleted text end deleted text begin 2.3 percent deleted text end deleted text begin 30 percent deleted text end deleted text begin $ deleted text end deleted text begin 2,460 deleted text end
deleted text begin 24,860 to 26,419 deleted text end deleted text begin 2.4 percent deleted text end deleted text begin 30 percent deleted text end deleted text begin $ deleted text end deleted text begin 2,460 deleted text end
deleted text begin 26,420 to 32,629 deleted text end deleted text begin 2.5 percent deleted text end deleted text begin 35 percent deleted text end deleted text begin $ deleted text end deleted text begin 2,460 deleted text end
deleted text begin 32,630 to 37,279 deleted text end deleted text begin 2.6 percent deleted text end deleted text begin 35 percent deleted text end deleted text begin $ deleted text end deleted text begin 2,460 deleted text end
deleted text begin 37,280 to 46,609 deleted text end deleted text begin 2.7 percent deleted text end deleted text begin 35 percent deleted text end deleted text begin $ deleted text end deleted text begin 2,000 deleted text end
deleted text begin 46,610 to 54,369 deleted text end deleted text begin 2.8 percent deleted text end deleted text begin 35 percent deleted text end deleted text begin $ deleted text end deleted text begin 2,000 deleted text end
deleted text begin 54,370 to 62,139 deleted text end deleted text begin 2.8 percent deleted text end deleted text begin 40 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,750 deleted text end
deleted text begin 62,140 to 69,909 deleted text end deleted text begin 3.0 percent deleted text end deleted text begin 40 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,440 deleted text end
deleted text begin 69,910 to 77,679 deleted text end deleted text begin 3.0 percent deleted text end deleted text begin 40 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,290 deleted text end
deleted text begin 77,680 to 85,449 deleted text end deleted text begin 3.0 percent deleted text end deleted text begin 40 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,130 deleted text end
deleted text begin 85,450 to 90,119 deleted text end deleted text begin 3.5 percent deleted text end deleted text begin 45 percent deleted text end deleted text begin $ deleted text end deleted text begin 960 deleted text end
deleted text begin 90,120 to 93,239 deleted text end deleted text begin 3.5 percent deleted text end deleted text begin 45 percent deleted text end deleted text begin $ deleted text end deleted text begin 790 deleted text end
deleted text begin 93,240 to 97,009 deleted text end deleted text begin 3.5 percent deleted text end deleted text begin 50 percent deleted text end deleted text begin $ deleted text end deleted text begin 650 deleted text end
deleted text begin 97,010 to 100,779 deleted text end deleted text begin 3.5 percent deleted text end deleted text begin 50 percent deleted text end deleted text begin $ deleted text end deleted text begin 480 deleted text end
new text begin Household Income new text end new text begin Percent of Income new text end new text begin Percent Paid by
Claimant
new text end
new text begin Maximum
State
Refund
new text end
new text begin $0 to 1,619 new text end new text begin 1.0 percent new text end new text begin 15 percent new text end new text begin $ new text end new text begin 2,580 new text end
new text begin 1,620 to 3,229 new text end new text begin 1.1 percent new text end new text begin 15 percent new text end new text begin $ new text end new text begin 2,580 new text end
new text begin 3,230 to 4,889 new text end new text begin 1.2 percent new text end new text begin 15 percent new text end new text begin $ new text end new text begin 2,580 new text end
new text begin 4,890 to 6,519 new text end new text begin 1.3 percent new text end new text begin 20 percent new text end new text begin $ new text end new text begin 2,580 new text end
new text begin 6,520 to 8,129 new text end new text begin 1.4 percent new text end new text begin 20 percent new text end new text begin $ new text end new text begin 2,580 new text end
new text begin 8,130 to 11,389 new text end new text begin 1.5 percent new text end new text begin 20 percent new text end new text begin $ new text end new text begin 2,580 new text end
new text begin 11,390 to 13,009 new text end new text begin 1.6 percent new text end new text begin 20 percent new text end new text begin $ new text end new text begin 2,580 new text end
new text begin 13,010 to 14,649 new text end new text begin 1.7 percent new text end new text begin 20 percent new text end new text begin $ new text end new text begin 2,580 new text end
new text begin 14,650 to 16,269 new text end new text begin 1.8 percent new text end new text begin 20 percent new text end new text begin $ new text end new text begin 2,580 new text end
new text begin 16,270 to 17,879 new text end new text begin 1.9 percent new text end new text begin 25 percent new text end new text begin $ new text end new text begin 2,580 new text end
new text begin 17,880 to 22,779 new text end new text begin 2.0 percent new text end new text begin 25 percent new text end new text begin $ new text end new text begin 2,580 new text end
new text begin 22,780 to 24,399 new text end new text begin 2.0 percent new text end new text begin 30 percent new text end new text begin $ new text end new text begin 2,580 new text end
new text begin 24,400 to 27,659 new text end new text begin 2.0 percent new text end new text begin 30 percent new text end new text begin $ new text end new text begin 2,580 new text end
new text begin 27,660 to 39,029 new text end new text begin 2.0 percent new text end new text begin 35 percent new text end new text begin $ new text end new text begin 2,580 new text end
new text begin 39,030 to 56,919 new text end new text begin 2.0 percent new text end new text begin 35 percent new text end new text begin $ new text end new text begin 2,090 new text end
new text begin 56,920 to 65,049 new text end new text begin 2.0 percent new text end new text begin 40 percent new text end new text begin $ new text end new text begin 1,830 new text end
new text begin 65,050 to 73,189 new text end new text begin 2.1 percent new text end new text begin 40 percent new text end new text begin $ new text end new text begin 1,510 new text end
new text begin 73,190 to 81,319 new text end new text begin 2.2 percent new text end new text begin 40 percent new text end new text begin $ new text end new text begin 1,350 new text end
new text begin 81,320 to 89,449 new text end new text begin 2.3 percent new text end new text begin 40 percent new text end new text begin $ new text end new text begin 1,180 new text end
new text begin 89,450 to 94,339 new text end new text begin 2.4 percent new text end new text begin 45 percent new text end new text begin $ new text end new text begin 1,000 new text end
new text begin 94,340 to 97,609 new text end new text begin 2.5 percent new text end new text begin 45 percent new text end new text begin $ new text end new text begin 830 new text end
new text begin 97,610 to 101,559 new text end new text begin 2.5 percent new text end new text begin 50 percent new text end new text begin $ new text end new text begin 680 new text end
new text begin 101,560 to 105,499 new text end new text begin 2.5 percent new text end new text begin 50 percent new text end new text begin $ new text end new text begin 500 new text end

The payment made to a claimant shall be the amount of the state refund calculated under this subdivision. No payment is allowed if the claimant's household income is deleted text begin $100,780deleted text end new text begin $105,500new text end or more.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for refund claims based on taxes payable in 2014 and thereafter. new text end

Sec. 3.

Minnesota Statutes 2012, section 290A.04, subdivision 2a, is amended to read:

Subd. 2a.

Renters.

A claimant whose rent constituting property taxes exceeds the percentage of the household income stated below must pay an amount equal to the percent of income shown for the appropriate household income level along with the percent to be paid by the claimant of the remaining amount of rent constituting property taxes. The state refund equals the amount of rent constituting property taxes that remain, up to the maximum state refund amount shown below.

Household Income Percent of Income Percent Paid by
Claimant
Maximum
State
Refund
deleted text begin $0 to 3,589 deleted text end deleted text begin 1.0 percent deleted text end deleted text begin 5 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,190 deleted text end
deleted text begin 3,590 to 4,779 deleted text end deleted text begin 1.0 percent deleted text end deleted text begin 10 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,190 deleted text end
deleted text begin 4,780 to 5,969 deleted text end deleted text begin 1.1 percent deleted text end deleted text begin 10 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,190 deleted text end
deleted text begin 5,970 to 8,369 deleted text end deleted text begin 1.2 percent deleted text end deleted text begin 10 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,190 deleted text end
deleted text begin 8,370 to 10,759 deleted text end deleted text begin 1.3 percent deleted text end deleted text begin 15 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,190 deleted text end
deleted text begin 10,760 to 11,949 deleted text end deleted text begin 1.4 percent deleted text end deleted text begin 15 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,190 deleted text end
deleted text begin 11,950 to 13,139 deleted text end deleted text begin 1.4 percent deleted text end deleted text begin 20 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,190 deleted text end
deleted text begin 13,140 to 15,539 deleted text end deleted text begin 1.5 percent deleted text end deleted text begin 20 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,190 deleted text end
deleted text begin 15,540 to 16,729 deleted text end deleted text begin 1.6 percent deleted text end deleted text begin 20 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,190 deleted text end
deleted text begin 16,730 to 17,919 deleted text end deleted text begin 1.7 percent deleted text end deleted text begin 25 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,190 deleted text end
deleted text begin 17,920 to 20,319 deleted text end deleted text begin 1.8 percent deleted text end deleted text begin 25 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,190 deleted text end
deleted text begin 20,320 to 21,509 deleted text end deleted text begin 1.9 percent deleted text end deleted text begin 30 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,190 deleted text end
deleted text begin 21,510 to 22,699 deleted text end deleted text begin 2.0 percent deleted text end deleted text begin 30 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,190 deleted text end
deleted text begin 22,700 to 23,899 deleted text end deleted text begin 2.2 percent deleted text end deleted text begin 30 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,190 deleted text end
deleted text begin 23,900 to 25,089 deleted text end deleted text begin 2.4 percent deleted text end deleted text begin 30 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,190 deleted text end
deleted text begin 25,090 to 26,289 deleted text end deleted text begin 2.6 percent deleted text end deleted text begin 35 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,190 deleted text end
deleted text begin 26,290 to 27,489 deleted text end deleted text begin 2.7 percent deleted text end deleted text begin 35 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,190 deleted text end
deleted text begin 27,490 to 28,679 deleted text end deleted text begin 2.8 percent deleted text end deleted text begin 35 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,190 deleted text end
deleted text begin 28,680 to 29,869 deleted text end deleted text begin 2.9 percent deleted text end deleted text begin 40 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,190 deleted text end
deleted text begin 29,870 to 31,079 deleted text end deleted text begin 3.0 percent deleted text end deleted text begin 40 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,190 deleted text end
deleted text begin 31,080 to 32,269 deleted text end deleted text begin 3.1 percent deleted text end deleted text begin 40 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,190 deleted text end
deleted text begin 32,270 to 33,459 deleted text end deleted text begin 3.2 percent deleted text end deleted text begin 40 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,190 deleted text end
deleted text begin 33,460 to 34,649 deleted text end deleted text begin 3.3 percent deleted text end deleted text begin 45 percent deleted text end deleted text begin $ deleted text end deleted text begin 1,080 deleted text end
deleted text begin 34,650 to 35,849 deleted text end deleted text begin 3.4 percent deleted text end deleted text begin 45 percent deleted text end deleted text begin $ deleted text end deleted text begin 960 deleted text end
deleted text begin 35,850 to 37,049 deleted text end deleted text begin 3.5 percent deleted text end deleted text begin 45 percent deleted text end deleted text begin $ deleted text end deleted text begin 830 deleted text end
deleted text begin 37,050 to 38,239 deleted text end deleted text begin 3.5 percent deleted text end deleted text begin 50 percent deleted text end deleted text begin $ deleted text end deleted text begin 720 deleted text end
deleted text begin 38,240 to 39,439 deleted text end deleted text begin 3.5 percent deleted text end deleted text begin 50 percent deleted text end deleted text begin $ deleted text end deleted text begin 600 deleted text end
deleted text begin 38,440 to 40,629 deleted text end deleted text begin 3.5 percent deleted text end deleted text begin 50 percent deleted text end deleted text begin $ deleted text end deleted text begin 360 deleted text end
deleted text begin 40,630 to 41,819 deleted text end deleted text begin 3.5 percent deleted text end deleted text begin 50 percent deleted text end deleted text begin $ deleted text end deleted text begin 120 deleted text end
new text begin $0 to 4,909 new text end new text begin 1.0 percent new text end new text begin 5 percent new text end new text begin $ new text end new text begin 2,000 new text end
new text begin 4,910 to 6,529 new text end new text begin 1.0 percent new text end new text begin 10 percent new text end new text begin $ new text end new text begin 2,000 new text end
new text begin 6,530 to 8,159 new text end new text begin 1.1 percent new text end new text begin 10 percent new text end new text begin $ new text end new text begin 1,950 new text end
new text begin 8,160 to 11,439 new text end new text begin 1.2 percent new text end new text begin 10 percent new text end new text begin $ new text end new text begin 1,900 new text end
new text begin 11,440 to 14,709 new text end new text begin 1.3 percent new text end new text begin 15 percent new text end new text begin $ new text end new text begin 1,850 new text end
new text begin 14,710 to 16,339 new text end new text begin 1.4 percent new text end new text begin 15 percent new text end new text begin $ new text end new text begin 1,800 new text end
new text begin 16,340 to 17,959 new text end new text begin 1.4 percent new text end new text begin 20 percent new text end new text begin $ new text end new text begin 1,750 new text end
new text begin 17,960 to 21,239 new text end new text begin 1.5 percent new text end new text begin 20 percent new text end new text begin $ new text end new text begin 1,700 new text end
new text begin 21,240 to 22,869 new text end new text begin 1.6 percent new text end new text begin 20 percent new text end new text begin $ new text end new text begin 1,650 new text end
new text begin 22,870 to 24,499 new text end new text begin 1.7 percent new text end new text begin 25 percent new text end new text begin $ new text end new text begin 1,650 new text end
new text begin 24,500 to 27,779 new text end new text begin 1.8 percent new text end new text begin 25 percent new text end new text begin $ new text end new text begin 1,650 new text end
new text begin 27,780 to 29,399 new text end new text begin 1.9 percent new text end new text begin 30 percent new text end new text begin $ new text end new text begin 1,650 new text end
new text begin 29,400 to 34,299 new text end new text begin 2.0 percent new text end new text begin 30 percent new text end new text begin $ new text end new text begin 1,650 new text end
new text begin 34,300 to 39,199 new text end new text begin 2.0 percent new text end new text begin 35 percent new text end new text begin $ new text end new text begin 1,650 new text end
new text begin 39,200 to 45,739 new text end new text begin 2.0 percent new text end new text begin 40 percent new text end new text begin $ new text end new text begin 1,650 new text end
new text begin 45,740 to 47,369 new text end new text begin 2.0 percent new text end new text begin 45 percent new text end new text begin $ new text end new text begin 1,500 new text end
new text begin 47,370 to 49,009 new text end new text begin 2.0 percent new text end new text begin 45 percent new text end new text begin $ new text end new text begin 1,350 new text end
new text begin 49,010 to 50,649 new text end new text begin 2.0 percent new text end new text begin 45 percent new text end new text begin $ new text end new text begin 1,150 new text end
new text begin 50,650 to 52,269 new text end new text begin 2.0 percent new text end new text begin 50 percent new text end new text begin $ new text end new text begin 1,000 new text end
new text begin 52,270 to 53,909 new text end new text begin 2.0 percent new text end new text begin 50 percent new text end new text begin $ new text end new text begin 900 new text end
new text begin 53,910 to 55,539 new text end new text begin 2.0 percent new text end new text begin 50 percent new text end new text begin $ new text end new text begin 500 new text end
new text begin 55,540 to 57,169 new text end new text begin 2.0 percent new text end new text begin 50 percent new text end new text begin $ new text end new text begin 200 new text end

The payment made to a claimant is the amount of the state refund calculated under this subdivision. No payment is allowed if the claimant's household income is deleted text begin $41,820deleted text end new text begin $57,170new text end or more.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for claims based on rent paid in 2013 and following years. new text end

Sec. 4.

Minnesota Statutes 2012, section 290A.04, subdivision 4, is amended to read:

Subd. 4.

Inflation adjustment.

(a) Beginning for property tax refunds payable in calendar year 2002, the commissioner shall annually adjust the dollar amounts of the income thresholds and the maximum refunds under subdivisions 2 and 2a for inflation. The commissioner shall make the inflation adjustments in accordance with section 1(f) of the Internal Revenue Code, except that for purposes of this subdivision the percentage increase shall be determined as provided in this subdivision.

(b) In adjusting the dollar amounts of the income thresholds and the maximum refunds under subdivision 2 for inflation, the percentage increase shall be determined from the year ending on June 30, deleted text begin 2011deleted text end new text begin 2013new text end , to the year ending on June 30 of the year preceding that in which the refund is payable.

(c) In adjusting the dollar amounts of the income thresholds and the maximum refunds under subdivision 2a for inflation, the percentage increase shall be determined from the year ending on June 30, deleted text begin 2000deleted text end new text begin 2013new text end , to the year ending on June 30 of the year preceding that in which the refund is payable.

(d) The commissioner shall use the appropriate percentage increase to annually adjust the income thresholds and maximum refunds under subdivisions 2 and 2a for inflation without regard to whether or not the income tax brackets are adjusted for inflation in that year. The commissioner shall round the thresholds and the maximum amounts, as adjusted to the nearest $10 amount. If the amount ends in $5, the commissioner shall round it up to the next $10 amount.

(e) The commissioner shall annually announce the adjusted refund schedule at the same time provided under section 290.06. The determination of the commissioner under this subdivision is not a rule under the Administrative Procedure Act.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for refund claims based on taxes payable in 2014 and rent paid in 2013 and following years. new text end

Sec. 5.

new text begin [290A.28] NOTIFICATION OF POTENTIAL ELIGIBILITY. new text end

new text begin Subdivision 1. new text end

new text begin Notification of eligibility. new text end

new text begin (a) By September 1, 2014, the commissioner shall notify, in writing or electronically, individual homeowners whom the commissioner determines may be eligible for a homestead credit refund under this chapter for that property taxes payable year as provided in this section. In determining whether to notify a homeowner, the commissioner shall consider the property tax information available to the commissioner under paragraph (b) for the homeowner and must estimate the homeowner's household income using the most recent income information available to the commissioner from filing under this chapter for the prior year, under chapter 290 for the current or prior year, and any other income information available to the commissioner. For each homeowner, the commissioner must estimate the homestead credit refund amount under the schedule in section 290A.04, subdivision 2, using the homeowner's property tax amount and estimated household income. If the estimated homestead credit refund is at least $1,000, the commissioner must notify the homeowner of potential eligibility for the homestead credit refund. The notification must include information on how to file for the homestead credit refund. The notification requirement under this section does not apply to a homeowner who has already filed for the homestead credit refund for the current or prior year. new text end

new text begin (b) By May 15, 2014, each county auditor shall transmit to the commissioner of revenue the following information for each property classified as a residential or agricultural homestead under section 273.13, subdivision 22 or 23: new text end

new text begin (1) the property taxes payable; new text end

new text begin (2) the name and address of the owner; new text end

new text begin (3) the Social Security number or numbers of the owners; and new text end

new text begin (4) any other information the commissioner deems necessary or useful to carry out the provisions of this section. new text end

new text begin The information must be provided in the form and manner prescribed by the commissioner. new text end

new text begin Subd. 2. new text end

new text begin Reports. new text end

new text begin (a) By March 15, 2015, the commissioner must provide a written report to the chairs and ranking minority members of the legislative committees with jurisdiction over taxes, in compliance with sections 3.195 and 3.197. The report must provide information on the number and dollar amount of homeowner property tax refund claims based on taxes payable in 2014, including: new text end

new text begin (1) the number and dollar amount of claims projected for homestead credit refunds based on taxes payable in 2014 prior to enactment of the notification requirement in this section; new text end

new text begin (2) the number of notifications issued as provided in this section, including the number issued by county; new text end

new text begin (3) preliminary information on the number and dollar amount of claims for homestead credit refunds based on taxes payable in 2014; and new text end

new text begin (4) a description of any outreach efforts undertaken by the commissioner for homestead credit refunds based on taxes payable in 2014, in addition to the notification required in this section. new text end

new text begin (b) By February 1, 2016, the commissioner must provide a written report to the chairs and ranking minority members of the legislative committees with jurisdiction over taxes, in compliance with sections 3.195 and 3.197. The report must include the information required in paragraph (a) and must also include final information on the number and dollar amount of claims for homestead credit refunds based on taxes payable in 2014. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for refund claims based on property taxes payable in 2014. new text end

ARTICLE 2

PROPERTY TAX AIDS AND CREDITS

Section 1.

Minnesota Statutes 2012, section 273.1398, subdivision 4, is amended to read:

Subd. 4.

Disparity reduction credit.

(a) Beginning with taxes payable in 1989, class 4a and class 3a property qualifies for a disparity reduction credit if: (1) the property is located in a border city that has an enterprise zone, as defined in section 469.166; (2) the property is located in a city with a population greater than 2,500 and less than 35,000 according to the 1980 decennial census; (3) the city is adjacent to a city in another state or immediately adjacent to a city adjacent to a city in another state; and (4) the adjacent city in the other state has a population of greater than 5,000 and less than 75,000 according to the 1980 decennial census.

(b) The credit is an amount sufficient to reduce (i) the taxes levied on class 4a property to deleted text begin 2.3deleted text end new text begin 1.9new text end percent of the property's market value and (ii) the tax on class 3a property to deleted text begin 2.3deleted text end new text begin 1.9new text end percent of market value.

(c) The county auditor shall annually certify the costs of the credits to the Department of Revenue. The department shall reimburse local governments for the property taxes forgone as the result of the credits in proportion to their total levies.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2014. new text end

Sec. 2.

Minnesota Statutes 2012, section 290C.02, subdivision 6, is amended to read:

Subd. 6.

Forest land.

"Forest land" means land containing a minimum of 20 contiguous acres for which the owner has implemented a forest management plan that was prepared or updated within the past ten years by an approved plan writer. For purposes of this subdivision, acres are considered to be contiguous even if they are separated by a road, waterway, railroad track, or other similar intervening property. At least 50 percent of the contiguous acreage must meet the definition of forest land in section 88.01, subdivision 7. For the purposes of sections 290C.01 to 290C.11, forest land does not include (i) land used for residential or agricultural purposes, (ii) land enrolled in the reinvest in Minnesota program, a state or federal conservation reserve or easement reserve program under sections 103F.501 to 103F.531, the Minnesota agricultural property tax law under section 273.111, or land subject to agricultural land preservation controls or restrictions as defined in section 40A.02 or under the Metropolitan Agricultural Preserves Act under chapter 473H, deleted text begin ordeleted text end (iii) new text begin land exceeding 60,000 acres that is subject to a single conservation easement funded under section 97A.056 or a comparable permanent easement conveyed to a governmental or nonprofit entity; (iv) any land that becomes subject to a conservation easement funded under section 97A.056 or a comparable permanent easement conveyed to a governmental or nonprofit entity after May 30, 2013; or (v) new text end land improved with a structure, pavement, sewer, campsite, or any road, other than a township road, used for purposes not prescribed in the forest management plan.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for certifications and applications due in 2013 and thereafter. new text end

Sec. 3.

Minnesota Statutes 2012, section 290C.03, is amended to read:

290C.03 ELIGIBILITY REQUIREMENTS.

(a) Land may be enrolled in the sustainable forest incentive program under this chapter if all of the following conditions are met:

(1) the land consists of at least 20 contiguous acres and at least 50 percent of the land must meet the definition of forest land in section 88.01, subdivision 7, during the enrollment;

(2) a forest management plan for the land must be prepared by an approved plan writer and implemented during the period in which the land is enrolled;

(3) timber harvesting and forest management guidelines must be used in conjunction with any timber harvesting or forest management activities conducted on the land during the period in which the land is enrolled;

(4) the land must be enrolled for a minimum of eight years;

(5) there are no delinquent property taxes on the land; and

(6) claimants enrolling more than 1,920 acres in the sustainable forest incentive program must allow year-round, nonmotorized access to fish and wildlife resources new text begin and motorized access on established and maintained roads and trails, unless the road or trail is temporarily closed for safety, natural resource, or road damage reasons new text end on enrolled land except within one-fourth mile of a permanent dwelling or during periods of high fire hazard as determined by the commissioner of natural resources.

(b) Claimants required to allow access under paragraph (a), clause (6), do not by that action:

(1) extend any assurance that the land is safe for any purpose;

(2) confer upon the person the legal status of an invitee or licensee to whom a duty of care is owed; or

(3) assume responsibility for or incur liability for any injury to the person or property caused by an act or omission of the person.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for calculations made in 2013 and thereafter. new text end

Sec. 4.

Minnesota Statutes 2012, section 290C.055, is amended to read:

290C.055 LENGTH OF COVENANT.

new text begin (a) new text end The covenant remains in effect for a minimum of eight years. If land is removed from the program before it has been enrolled for four years, the covenant remains in effect for eight years from the date recorded.

new text begin (b) new text end If land that has been enrolled for four years or more is removed from the program for any reason, there is a waiting period before the covenant terminates. The covenant terminates on January 1 of the fifth calendar year that begins after the date that:

(1) the commissioner receives notification from the claimant that the claimant wishes to remove the land from the program under section 290C.10; or

(2) the date that the land is removed from the program under section 290C.11.

new text begin (c) new text end Notwithstanding the other provisions of this section, the covenant is terminatednew text begin :new text end

new text begin (1)new text end at the same time that the land is removed from the program due to acquisition of title or possession for a public purpose under section 290C.10new text begin ; ornew text end

new text begin (2) at the request of the claimant after a reduction in payments due to changes in the payment formula under section 290C.07new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for calculations made in 2013 and thereafter. new text end

Sec. 5.

Minnesota Statutes 2012, section 290C.07, is amended to read:

290C.07 CALCULATION OF INCENTIVE PAYMENT.

deleted text begin (a)deleted text end An approved claimant under the sustainable forest incentive program is eligible to receive an annual payment. The payment shall equal $7 per acre for each acre enrolled in the sustainable forest incentive program.

deleted text begin (b) The annual payment for each Social Security number or state or federal business tax identification number must not exceed $100,000. deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for calculations made in 2013 and thereafter. new text end

Sec. 6.

new text begin [423A.022] POLICE AND FIREFIGHTER RETIREMENT SUPPLEMENTAL STATE AID. new text end

new text begin Subdivision 1. new text end

new text begin Supplemental state aid. new text end

new text begin Annually, the commissioner of revenue shall allocate police and firefighter retirement supplemental state aid appropriated under subdivision 6 as provided in subdivision 2 and paid as provided in subdivision 4. new text end

new text begin Subd. 2. new text end

new text begin Allocation. new text end

new text begin Of the total amount appropriated as supplemental state aid: new text end

new text begin (1) 58.065 percent must be paid to the executive director of the Public Employees Retirement Association for deposit in the public employees police and fire retirement fund established by section 353.65, subdivision 1; new text end

new text begin (2) 35.484 percent must be paid to municipalities other than municipalities solely employing firefighters with retirement coverage provided by the public employees police and fire retirement plan which qualified to receive fire state aid in that calendar year, allocated in proportion to the most recent amount of fire state aid paid under section 69.021, subdivision 7, for the municipality bears to the most recent total fire state aid for all municipalities other than the municipalities solely employing firefighters with retirement coverage provided by the public employees police and fire retirement plan paid under section 69.021, subdivision 7, with the allocated amount for fire departments participating in the voluntary statewide lump-sum volunteer firefighter retirement plan paid to the executive director of the Public Employees Retirement Association for deposit in the fund established by section 353G.02, subdivision 3, and credited to the respective account and with the balance paid to the treasurer of each municipality for transmittal within 30 days of receipt to the treasurer of the applicable volunteer firefighter relief association for deposit in its special fund; and new text end

new text begin (3) 6.452 percent must be paid to the executive director of the Minnesota State Retirement System for deposit in the state patrol retirement fund. new text end

new text begin Subd. 3. new text end

new text begin Reporting; definitions. new text end

new text begin (a) On or before September 1, annually, the executive director of the Public Employees Retirement Association shall report to the commissioner of revenue the following: new text end

new text begin (1) the municipalities which employ firefighters with retirement coverage by the public employees police and fire retirement plan; new text end

new text begin (2) the number of firefighters with public employees police and fire retirement plan coverage employed by each municipality; new text end

new text begin (3) the fire departments covered by the voluntary statewide lump-sum volunteer firefighter retirement plan; and new text end

new text begin (4) any other information requested by the commissioner to administer the police and firefighter retirement supplemental state aid program. new text end

new text begin (b) For this subdivision, (i) the number of firefighters employed by a municipality who have public employees police and fire retirement plan coverage means the number of firefighters with public employees police and fire retirement plan coverage that were employed by the municipality for not less than 30 hours per week for a minimum of six months prior to December 31 preceding the date of the payment under this section and, if the person was employed for less than the full year, prorated to the number of full months employed; and (ii) the number of active police officers certified for police state aid receipt under section 69.011, subdivisions 2 and 2b, means, for each municipality, the number of police officers meeting the definition of peace officer in section 69.011, subdivision 1, counted as provided and limited by section 69.011, subdivisions 2 and 2b. new text end

new text begin Subd. 4. new text end

new text begin Payments; conditions prerequisite. new text end

new text begin (a) The payments under this section must be made on October 1 each year, with interest at one percent for each month, or portion of a month, that the amount remains unpaid after October 1. Any necessary adjustments must be made to subsequent payments. new text end

new text begin (b) The provisions of sections 69.011 to 69.051 that prevent municipalities and relief associations from being eligible for, or receiving fire state aid under sections 69.011 to 69.051 until the applicable financial reporting requirements have been complied with, apply to the amounts payable to municipalities and relief associations under this section. new text end

new text begin Subd. 5. new text end

new text begin Aid termination. new text end

new text begin The aid program under this section ends on the December 1 next following the actuarial valuation date on which the assets of the retirement plan on a market value basis equals or exceeds 90 percent of the total actuarial accrued liabilities of the retirement plan as disclosed in an actuarial valuation prepared under section 356.215 and the Standards for Actuarial Work promulgated by the Legislative Commission on Pensions and Retirement, for the State Patrol retirement plan or the public employees police and fire retirement plan, whichever occurs last. new text end

new text begin Subd. 6. new text end

new text begin Appropriation. new text end

new text begin $15,500,000 is appropriated annually to the commissioner of revenue for this aid program. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning in the fiscal year beginning July 1, 2013. new text end

Sec. 7.

Minnesota Statutes 2012, section 477A.011, subdivision 30, is amended to read:

Subd. 30.

Pre-1940 housing percentage.

new text begin (a) Except as provided in paragraph (b), new text end "pre-1940 housing percentage" for a city is 100 times the most recent deleted text begin federal censusdeleted text end count new text begin by the United States Bureau of the Censusnew text end of all housing units in the city built before 1940, divided by the total number of all housing units in the city. Housing units includes both occupied and vacant housing units as defined by the federal census.new text begin For aids payable in 2014, "pre-1940 housing percentage" shall be based on 2010 housing data.new text end

new text begin (b) For the city of East Grand Forks only, "pre-1940 housing percentage" is equal to 100 times the 1990 federal census count of all housing units in the city built before 1940, divided by the most recent count by the United States Bureau of the Census of all housing units in the city. Housing units includes both occupied and vacant housing units as defined by the federal census. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2014 and thereafter. new text end

Sec. 8.

Minnesota Statutes 2012, section 477A.011, is amended by adding a subdivision to read:

new text begin Subd. 30a. new text end

new text begin Percent of housing built between 1940 and 1970. new text end

new text begin "Percent of housing built between 1940 and 1970" is equal to 100 times the most recent count by the United States Bureau of the Census of all housing units in the city built after 1939 but before 1970, divided by the total number of all housing units in the city. Housing units includes both occupied and vacant housing units as defined by the federal census. For aids payable in 2014, "percent of housing built between 1940 and 1970" shall be based on 2010 housing data. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2014 and thereafter. new text end

Sec. 9.

Minnesota Statutes 2012, section 477A.011, subdivision 34, is amended to read:

Subd. 34.

City revenue need.

(a) For a city with a population equal to or greater than deleted text begin 2,500deleted text end new text begin 10,000new text end , "city revenue need" is deleted text begin the greater of 285 ordeleted text end new text begin 1.15 timesnew text end the sum of (1) deleted text begin 5.0734098deleted text end new text begin 4.59new text end times the pre-1940 housing percentage; plus (2) deleted text begin 19.141678 times the population decline percentagedeleted text end new text begin 0.622 times the percent of housing built between 1940 and 1970new text end ; plus (3) deleted text begin 2504.06334 times the road accidents factordeleted text end new text begin 169.415 times the jobs per capitanew text end ; plus (4) deleted text begin 355.0547; minus (5) the metropolitan area factor; minus (6) 49.10638 times the household sizedeleted text end new text begin the sparsity adjustment; plus (5) 307.664new text end .

new text begin (b) For a city with a population equal to or greater than 2,500 and less than 10,000, "city revenue need" is 1.15 times the sum of (1) 572.62; plus (2) 5.026 times the pre-1940 housing percentage; minus (3) 53.768 times household size; plus (4) 14.022 times peak population decline. new text end

deleted text begin (b)deleted text end new text begin (c)new text end For a city with a population less than 2,500, "city revenue need" is the sum of deleted text begin (1) 2.387 times the pre-1940 housing percentage; plus (2) 2.67591 times the commercial industrial percentage; plus (3) 3.16042 times the population decline percentage; plus (4) 1.206 times the transformed population; minus (5) 62.772deleted text end new text begin 410 plus 0.367 times the city's population over 100. The city revenue need under this paragraph shall not exceed 630new text end .

deleted text begin (c)deleted text end new text begin (d)new text end For a city with a population ofnew text begin at leastnew text end 2,500 deleted text begin or more and a population in one of the most recently available five years that was less than 2,500, "city revenue need" is the sum of (1) its city revenue need calculated under paragraph (a) multiplied by its transition factor; plus (2) its city revenue need calculated under the formula in paragraph (b) multiplied by the difference between one and its transition factor. For purposes of this paragraph, a city's "transition factor" is equal to 0.2 multiplied by the number of years that the city's population estimate has been 2,500 or more. This provision only applies for aids payable in calendar years 2006 to 2008 to cities with a 2002 population of less than 2,500. It applies to any city for aids payable in 2009 and thereafterdeleted text end new text begin but less than 3,000, the "city revenue need" equals (1) the transition factor times the city's revenue need calculated in paragraph (b) plus (2) 630 times the difference between one and the transition factor. For a city with a population of at least 10,000 but less than 10,500, the "city revenue need" equals (1) the transition factor times the city's revenue need calculated in paragraph (a) plus (2) the city's revenue need calculated under the formula in paragraph (b) times the difference between one and the transition factor. For purposes of this paragraph "transition factor" is 0.2 percent times the amount that the city's population exceeds the minimum threshold in either of the first two sentencesnew text end .

deleted text begin (d)deleted text end new text begin (e)new text end The city revenue need cannot be less than zero.

deleted text begin (e)deleted text end new text begin (f)new text end For calendar year deleted text begin 2005deleted text end new text begin 2015new text end and subsequent years, the city revenue need for a city, as determined in paragraphs (a) to deleted text begin (d)deleted text end new text begin (e)new text end , is multiplied by the ratio of the annual implicit price deflator for government consumption expenditures and gross investment for state and local governments as prepared by the United States Department of Commerce, for the most recently available year to the deleted text begin 2003deleted text end new text begin 2013new text end implicit price deflator for state and local government purchases.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2014 and thereafter. new text end

Sec. 10.

Minnesota Statutes 2012, section 477A.011, subdivision 42, is amended to read:

Subd. 42.

deleted text begin City jobs basedeleted text end new text begin Jobs per capitanew text end .

deleted text begin (a) "City jobs base" for a city with a population of 5,000 or more is equal to the product of (1) $25.20, (2) the number of jobs per capita in the city, and (3) its population. For cities with a population less than 5,000, the city jobs base is equal to zero. For a city receiving aid under subdivision 36, paragraph (k), its city jobs base is reduced by the lesser of 36 percent of the amount of aid received under that paragraph or $1,000,000. No city's city jobs base may exceed $4,725,000 under this paragraph. deleted text end

deleted text begin (b) For calendar year 2010 and subsequent years, the city jobs base for a city, as determined in paragraph (a), is multiplied by the ratio of the appropriation under section 477A.03, subdivision 2a, for the year in which the aid is paid to the appropriation under that section for aids payable in 2009. deleted text end

deleted text begin (c) For purposes of this subdivision,deleted text end "Jobs per capita in the city" means (1) the average annual number of employees in the city based on the data from the Quarterly Census of Employment and Wages, as reported by the Department of Employment and Economic Development, for the most recent calendar year available deleted text begin as of May 1, 2008deleted text end new text begin November 1 of every odd-numbered yearnew text end , divided by (2) the city's population for the same calendar year as the employment data. The commissioner of the Department of Employment and Economic Development shall certify to the city the average annual number of employees for each city by deleted text begin June 1, 2008deleted text end new text begin January 1, of every even-numbered year beginning with January 1, 2014new text end . A city may challenge an estimate under this paragraph by filing its specific objection, including the names of employers that it feels may have misreported data, in writing with the commissioner by deleted text begin June 20, 2008deleted text end new text begin December 1 of every odd-numbered yearnew text end . The commissioner shall make every reasonable effort to address the specific objection and adjust the data as necessary. The commissioner shall certify the estimates of the annual employment to the commissioner of revenue by deleted text begin July 15, 2008deleted text end new text begin January 1 of all even-numbered yearsnew text end , including any estimates still under objection. new text begin For aids payable in 2014, "jobs per capita" shall be based on the annual number of employees and population for calendar year 2010 without additional review.new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2014 and thereafter. new text end

Sec. 11.

Minnesota Statutes 2012, section 477A.011, is amended by adding a subdivision to read:

new text begin Subd. 44. new text end

new text begin Peak population decline. new text end

new text begin "Peak population decline" is equal to 100 times the difference between one and the ratio of the city's current population, to the highest city population reported in a federal census from the 1970 census or later. "Peak population decline" shall not be less than zero. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2014 and thereafter. new text end

Sec. 12.

Minnesota Statutes 2012, section 477A.011, is amended by adding a subdivision to read:

new text begin Subd. 45. new text end

new text begin Sparsity adjustment. new text end

new text begin For a city with a population of 10,000 or more, the sparsity adjustment is 100 for any city with an average population density less than 150 per square mile, according to the most recent federal census, and the sparsity adjustment is zero for all other cities. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2014 and thereafter. new text end

Sec. 13.

Minnesota Statutes 2012, section 477A.013, subdivision 1, is amended to read:

Subdivision 1.

Towns.

deleted text begin In 2002, no town is eligible for a distribution under this subdivision. deleted text end new text begin In 2014 and thereafter, each town is eligible for a distribution under this subdivision equal to the product of (i) its agricultural property factor, (ii) its town area factor, (iii) its population factor, and (iv) 0.0045. As used in this subdivision, the following terms have the meanings given them: new text end

new text begin (1) "agricultural property factor" means the ratio of the adjusted net tax capacity of agricultural property located in a town, divided by the adjusted net tax capacity of all other property located in the town. The agricultural property factor cannot exceed eight; new text end

new text begin (2) "agricultural property" means property classified under section 273.13, as homestead and nonhomestead agricultural property, rural vacant land, and noncommercial seasonal recreational property; new text end

new text begin (3) "town area factor" means the most recent estimate of total acreage, not to exceed 50,000 acres, located in the township available as of July 1 in the aid calculation year, estimated or established by: new text end

new text begin (i) the United States Bureau of the Census; new text end

new text begin (ii) the State Land Management Information Center; or new text end

new text begin (iii) the secretary of state; and new text end

new text begin (4) "population factor" means the square root of the towns' population. new text end

new text begin If the sum of the aids payable to all towns under this subdivision exceeds the limit under section 477A.03, subdivision 2c, the distribution to each town must be reduced proportionately so that the total amount of aids distributed under this section does not exceed the limit in section 477A.03, subdivision 2c. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2014 and thereafter. new text end

Sec. 14.

Minnesota Statutes 2012, section 477A.013, subdivision 8, is amended to read:

Subd. 8.

City formula aid.

new text begin (a) For aids payable in 2014 only, the formula aid for a city is equal to the sum of (1) its 2013 certified aid and (2) the product of (i) the difference between its unmet need and its 2013 certified aid and (ii) the aid gap percentage. new text end

new text begin (b) For aids payable in 2015 and thereafter,new text end the formula aid for a city is equal to the sum of (1) its deleted text begin city jobs base, (2) its small city aid base, and (3) the need increase percentage multiplied by the average of its unmet need for the most recently available two yearsdeleted text end new text begin formula aid in the previous year and (2) the product of (i) the difference between its unmet need and its certified aid in the previous year under subdivision 9, and (ii) the aid gap percentagenew text end .

No city may have a formula aid amount less than zero. The deleted text begin need increasedeleted text end new text begin aid gapnew text end percentage must be the same for all cities.

The applicable deleted text begin need increasedeleted text end new text begin aid gapnew text end percentage must be calculated by the Department of Revenue so that the total of the aid under subdivision 9 equals the total amount available for aid under section 477A.03. Data used in calculating aids to cities under sections 477A.011 to 477A.013 shall be the most recently available data as of January 1 in the year in which the aid is calculated deleted text begin except that the data used to compute "net levy" in subdivision 9 is the data most recently available at the time of the aid computationdeleted text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2014 and thereafter. new text end

Sec. 15.

Minnesota Statutes 2012, section 477A.013, subdivision 9, is amended to read:

Subd. 9.

City aid distribution.

(a) In calendar year deleted text begin 2013deleted text end new text begin 2014 new text end and thereafter, each city shall receive an aid distribution equal to the sum of (1) the city formula aid under subdivision 8, and (2) its deleted text begin city aid basedeleted text end new text begin aid adjustment under subdivision 13new text end .

deleted text begin (b) For aids payable in 2013 and 2014 only, the total aid in the previous year for any city shall mean the amount of aid it was certified to receive for aids payable in 2012 under this section. For aids payable in 2015 and thereafter, the total aid in the previous year for any city means the amount of aid it was certified to receive under this section in the previous payable year. deleted text end

deleted text begin (c) For aids payable in 2010 and thereafter, the total aid for any city shall not exceed the sum of (1) ten percent of the city's net levy for the year prior to the aid distribution plus (2) its total aid in the previous year. For aids payable in 2009 and thereafter, the total aid for any city with a population of 2,500 or more may not be less than its total aid under this section in the previous year minus the lesser of $10 multiplied by its population, or ten percent of its net levy in the year prior to the aid distribution. deleted text end

deleted text begin (d)deleted text end new text begin (b) For aids payable in 2014 only, the total aid for a city may not be less than the amount it was certified to receive in 2013.new text end For aids payable in deleted text begin 2010deleted text end new text begin 2015new text end and thereafter, the total aid for a city deleted text begin with a population less than 2,500deleted text end must not be less than the amount it was certified to receive in the previous year minus the lesser of $10 multiplied by its population, or five percent of deleted text begin its 2003 certified aid amount. For aids payable in 2009 only, the total aid for a city with a population less than 2,500 must not be less than what it received under this section in the previous year unless its total aid in calendar year 2008 was aid under section 477A.011, subdivision 36, paragraph (s), in which case its minimum aid is zerodeleted text end new text begin its net levy in the year prior to the aid distributionnew text end .

deleted text begin (e) A city's aid loss under this section may not exceed $300,000 in any year in which the total city aid appropriation under section 477A.03, subdivision 2a, is equal or greater than the appropriation under that subdivision in the previous year, unless the city has an adjustment in its city net tax capacity under the process described in section 469.174, subdivision 28. deleted text end

deleted text begin (f) If a city's net tax capacity used in calculating aid under this section has decreased in any year by more than 25 percent from its net tax capacity in the previous year due to property becoming tax-exempt Indian land, the city's maximum allowed aid increase under paragraph (c) shall be increased by an amount equal to (1) the city's tax rate in the year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease resulting from the property becoming tax exempt. deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2014 and thereafter. new text end

Sec. 16.

Minnesota Statutes 2012, section 477A.013, is amended by adding a subdivision to read:

new text begin Subd. 13. new text end

new text begin Certified aid adjustments. new text end

new text begin (a) A city that received an aid base increase under Minnesota Statutes 2012, section 477A.011, subdivision 36, paragraph (e), shall have its total aid under subdivision 9 increased by an amount equal to $150,000 for aids payable in 2014 through 2018. new text end

new text begin (b) A city that received an aid base increase under section 477A.011, subdivision 36, paragraph (r), shall have its total aid under subdivision 9 increased by an amount equal to $160,000 for aids payable in 2014 and thereafter. new text end

new text begin (c) A city that received a temporary aid increase under Minnesota Statutes 2012, section 477A.011, subdivision 36, paragraph (o), shall have its total aid under subdivision 9 increased by an amount equal to $1,000,000 for aids payable in 2014 only. new text end

Sec. 17.

Minnesota Statutes 2012, section 477A.015, is amended to read:

477A.015 PAYMENT DATES.

The commissioner of revenue shall make the payments of local government aid to affected taxing authorities in two installments on July 20 and December 26 annually.

When the commissioner of public safety determines that a local government has suffered financial hardship due to a natural disaster, the commissioner of public safety shall notify the commissioner of revenue, who shall make payments of aids under sections 477A.011 to 477A.014, which are otherwise due on December 26, as soon as is practical after the determination is made but not before July 20.

The commissioner may pay all or part of the payments of aids under sections 477A.011 to 477A.014, which are due on December 26 at any time after August 15 if a local government requests such payment as being necessary for meeting its cash flow needs.new text begin For aids payable in 2013 only, a city that is located in an area deemed a disaster area during the month of April 2013, as defined in section 12A.02, subdivision 5, shall receive its December 26, 2013 payment with its July 20, 2013 payment.new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2013 and thereafter. new text end

Sec. 18.

Minnesota Statutes 2012, section 477A.03, subdivision 2a, is amended to read:

Subd. 2a.

Cities.

For aids payable in deleted text begin 2013deleted text end new text begin 2014new text end deleted text begin and thereafterdeleted text end , the total aid paid under section 477A.013, subdivision 9, is deleted text begin $426,438,012deleted text end new text begin $507,598,012. The total aid paid under section 477A.013, subdivision 9, is $509,098,012 for aids payable in 2015. For aids payable in 2016 and thereafter, the total aid paid under section 477A.013, subdivision 9, is $511,598,012new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2014 and thereafter. new text end

Sec. 19.

Minnesota Statutes 2012, section 477A.03, subdivision 2b, is amended to read:

Subd. 2b.

Counties.

(a) For aids payable in deleted text begin 2013deleted text end new text begin 2014new text end and thereafter, the total aid payable under section 477A.0124, subdivision 3, is deleted text begin $80,795,000deleted text end new text begin $100,795,000new text end . Each calendar year, $500,000 new text begin of this appropriation new text end shall be retained by the commissioner of revenue to make reimbursements to the commissioner of management and budget for payments made under section 611.27. deleted text begin For calendar year 2004, the amount shall be in addition to the payments authorized under section 477A.0124, subdivision 1. For calendar year 2005 and subsequent years, the amount shall be deducted from the appropriation under this paragraph.deleted text end The reimbursements shall be to defray the additional costs associated with court-ordered counsel under section 611.27. Any retained amounts not used for reimbursement in a year shall be included in the next distribution of county need aid that is certified to the county auditors for the purpose of property tax reduction for the next taxes payable year.

(b) For aids payable in deleted text begin 2013deleted text end new text begin 2014new text end and thereafter, the total aid under section 477A.0124, subdivision 4, is deleted text begin $84,909,575deleted text end new text begin $104,909,575new text end . The deleted text begin commissioner of management and budget shall bill thedeleted text end commissioner of revenue new text begin shall transfer to the commissioner of management and budget $207,000 annually new text end for the cost of preparation of local impact notes as required by section 3.987, deleted text begin not to exceed $207,000 in fiscal year 2004 and thereafterdeleted text end new text begin and other local government activitiesnew text end . The deleted text begin commissioner of education shall bill thedeleted text end commissioner of revenue deleted text begin for the cost of preparation of local impact notes for school districts as required by section 3.987, not to exceed $7,000 in fiscal year 2004 and thereafterdeleted text end new text begin shall transfer to the commissioner of education $7,000 annually for the cost of preparation of local impact notes for school districts as required by section 3.987new text end . The commissioner of revenue shall deduct the amounts deleted text begin billeddeleted text end new text begin transferrednew text end under this paragraph from the appropriation under this paragraph. The amounts deleted text begin deducteddeleted text end new text begin transferrednew text end are appropriated to the commissioner of management and budget and the commissioner of education deleted text begin for the preparation of local impact notesdeleted text end new text begin respectivelynew text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aid payable in 2014 and thereafter. new text end

Sec. 20.

Minnesota Statutes 2012, section 477A.03, is amended by adding a subdivision to read:

new text begin Subd. 2c. new text end

new text begin Towns. new text end

new text begin For aids payable in 2014, the total aids paid under section 477A.013, subdivision 1, is limited to $10,000,000. For aids payable in 2015 and thereafter, the total aids paid under section 477A.013, subdivision 1, is limited to the amount certified to be paid in the previous year. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2014 and thereafter. new text end

Sec. 21.

new text begin [477A.085] DEBT SERVICE AID; CITY OF MINNEAPOLIS. new text end

new text begin On or before November 1, 2016, and the first day of each November thereafter, the commissioner shall pay to the city of Minneapolis an amount equal to 40 percent of the city's otherwise required levy to pay its general obligation library referendum bonds for the following calendar year. The levy excludes any amount to pay bonds, other than refunding bonds, issued after May 1, 2013. An amount sufficient to pay the aid under this section is appropriated from the general fund to the commissioner of revenue. new text end

Sec. 22.

new text begin [477A.10] NATURAL RESOURCES LAND PAYMENTS IN LIEU; PURPOSE. new text end

new text begin The purposes of sections 477A.11 to 477A.14 are: new text end

new text begin (1) to compensate local units of government for the loss of tax base from state ownership of land and the need to provide services for state land; new text end

new text begin (2) to address the disproportionate impact of state land ownership on local units of government with a large proportion of state land; and new text end

new text begin (3) to address the need to manage state lands held in trust for the local taxing districts. new text end

Sec. 23.

Minnesota Statutes 2012, section 477A.11, subdivision 3, is amended to read:

Subd. 3.

Acquired natural resources land.

"Acquired natural resources land" means:

(1) deleted text begin anydeleted text end landnew text begin , other than wildlife management land,new text end presently administered by the commissioner in which the state acquired by purchase, condemnation, or gift, a fee title interest in lands which were previously privately owned; and

(2) lands acquired by the state under chapter 84A that are designated as state parks, state recreation areas, scientific and natural areas, or wildlife management areas.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2013 and thereafter. new text end

Sec. 24.

Minnesota Statutes 2012, section 477A.11, subdivision 4, is amended to read:

Subd. 4.

Other natural resources land.

"Other natural resources land" means any deleted text begin otherdeleted text end landnew text begin , other than acquired natural resource land or wildlife management land,new text end presently owned in fee title by the state and administered by the commissioner, or any tax-forfeited land, other than platted lots within a city or those lands described under subdivision 3, clause (2), which is owned by the state and administered by the commissioner or by the county in which it is located.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2013 and thereafter. new text end

Sec. 25.

Minnesota Statutes 2012, section 477A.11, is amended by adding a subdivision to read:

new text begin Subd. 6. new text end

new text begin Military game refuge. new text end

new text begin "Military game refuge" means land owned in fee by another state agency for military purposes and designated as a state game refuge under section 97A.085. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2013 and thereafter. new text end

Sec. 26.

Minnesota Statutes 2012, section 477A.11, is amended by adding a subdivision to read:

new text begin Subd. 7. new text end

new text begin Transportation wetland. new text end

new text begin "Transportation wetland" means land administered by the Department of Transportation in which the state acquired, by purchase from a private owner, a fee title interest in over 500 acres of land within a county to replace wetland losses from transportation projects. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2013 and thereafter. new text end

Sec. 27.

Minnesota Statutes 2012, section 477A.11, is amended by adding a subdivision to read:

new text begin Subd. 8. new text end

new text begin Wildlife management land. new text end

new text begin "Wildlife management land" means land administered by the commissioner in which the state acquired, from a private owner by purchase, condemnation, or gift, a fee interest under the authority granted in chapter 94 or 97A for wildlife management purposes and actually used as a wildlife management area. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2013 and thereafter. new text end

Sec. 28.

Minnesota Statutes 2012, section 477A.12, subdivision 1, is amended to read:

Subdivision 1.

Types of land; payments.

deleted text begin (a) As an offset for expenses incurred by counties and towns in support of natural resources lands,deleted text end The following amounts are annually appropriated to the commissioner of natural resources from the general fund for transfer to the commissioner of revenue. The commissioner of revenue shall pay the transferred funds to counties as required by sections 477A.11 to 477A.14. The amountsnew text begin , based on the acreage as of July 1 of each year prior to the payment year,new text end are:

(1) deleted text begin for acquired natural resources land,deleted text end $5.133 multiplied by the total number of acres of acquired natural resources land or, at the county's option three-fourths of one percent of the appraised value of all acquired natural resources land in the county, whichever is greater;

(2) new text begin $5.133, multiplied by the total number of acres of transportation wetland or, at the county's option, three-fourths of one percent of the appraised value of all acquired natural resources land in the county, whichever is greater;new text end

new text begin (3) three-fourths of one percent of the appraised value of all wildlife management land in the county; new text end

new text begin (4) 50 percent of the dollar amount as determined under clause (1), multiplied by the number of acres of military refuge land in the county; new text end

deleted text begin $1.283deleted text end new text begin (5) $1.50, new text end multiplied by the number of acres of county-administered other natural resources landnew text begin in the countynew text end ;

deleted text begin (3) $1.283deleted text end new text begin (6) $5.133, new text end multiplied by the total number of acres of land utilization project landnew text begin in the countynew text end ; deleted text begin anddeleted text end

deleted text begin (4) 64.2 centsdeleted text end new text begin (7) $1.50, new text end multiplied by the number of acres of commissioner-administered other natural resources land deleted text begin locateddeleted text end in deleted text begin eachdeleted text end new text begin thenew text end county deleted text begin as of July 1 of each year prior to the payment year.deleted text end new text begin ; andnew text end

new text begin (8) without regard to acreage, $300,000 for local assessments under section 84A.55, subdivision 9. new text end

deleted text begin (b) The amount determined under paragraph (a), clause (1), is payable for land that is acquired from a private owner and owned by the Department of Transportation for the purpose of replacing wetland losses caused by transportation projects, but only if the county contains more than 500 acres of such land at the time the certification is made under subdivision 2. deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2013 and thereafter. new text end

Sec. 29.

Minnesota Statutes 2012, section 477A.12, subdivision 2, is amended to read:

Subd. 2.

Procedure.

deleted text begin Lands for which payments in lieu are made pursuant to section 97A.061, subdivision 3, and Laws 1973, chapter 567, shall not be eligible for payments under this section.deleted text end Each county auditor shall certify to the Department of Natural Resources during July of each year prior to the payment year the number of acres of county-administered other natural resources land within the county. The Department of Natural resources may, in addition to the certification of acreage, require descriptive lists of land so certified. The commissioner of natural resources shall determine and certify to the commissioner of revenue by March 1 of the payment year:

(1) the number of acres and most recent appraised value of acquired natural resources landnew text begin , wildlife management land, and military refuge landnew text end within each county;

(2) the number of acres of commissioner-administered natural resources land within each county;

(3) the number of acres of county-administered other natural resources land within each county, based on the reports filed by each county auditor with the commissioner of natural resources; and

(4) the number of acres of land utilization project land within each county.

The commissioner of transportation shall determine and certify to the commissioner of revenue by March 1 of the payment year the number of acres of deleted text begin landdeleted text end new text begin transportation wetlandnew text end and the appraised value of the land deleted text begin described in subdivision 1, paragraph (b)deleted text end , but only if it exceeds 500 acresnew text begin in a countynew text end .

The commissioner of revenue shall determine the distributions provided for in this section using the number of acres and appraised values certified by the commissioner of natural resources and the commissioner of transportation by March 1 of the payment year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2013 and thereafter. new text end

Sec. 30.

Minnesota Statutes 2012, section 477A.12, subdivision 3, is amended to read:

Subd. 3.

Determination of appraised value.

For the purposes of this section, the appraised value of acquired natural resources land is the purchase price deleted text begin for the first five years after acquisitiondeleted text end new text begin until the next six-year appraisal required under this subdivisionnew text end . The appraised value of acquired natural resources land received as a donation is the value determined for the commissioner of natural resources by a licensed appraiser, or the county assessor's estimated market value if no appraisal is done. The appraised value must be determined by the county assessor every deleted text begin fivedeleted text end new text begin sixnew text end years deleted text begin after the land is acquireddeleted text end .new text begin All reappraisals shall be done in the same year as county assessors are required to assess exempt land under section 273.18.new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2013 and thereafter. new text end

Sec. 31.

Minnesota Statutes 2012, section 477A.14, subdivision 1, is amended to read:

Subdivision 1.

General distribution.

Except as provided in deleted text begin subdivision 2 or in section 97A.061, subdivision 5deleted text end new text begin subdivisions 2 and 3new text end , 40 percent of the total payment to the county shall be deposited in the county general revenue fund to be used to provide property tax levy reduction. The remainder shall be distributed by the county in the following priority:

(a) 64.2 centsnew text begin , new text end for each acre of county-administered other natural resources land shall be deposited in a resource development fund to be created within the county treasury for use in resource development, forest management, game and fish habitat improvement, and recreational development and maintenance of county-administered other natural resources land. Any county receiving less than $5,000 annually for the resource development fund may elect to deposit that amount in the county general revenue fund;

(b) from the funds remaining, within 30 days of receipt of the payment to the county, the county treasurer shall pay each organized township deleted text begin 51.3 cents for each acre of acquired natural resources land and each acre of land described in section 477A.12, subdivision 1, paragraph (b), and 12.8 cents for each acre of other natural resources land and each acre of land utilization project land located within its boundariesdeleted text end new text begin ten percent of the amount received under section 477A.12, subdivision 1, clauses (1), (2), and (5) to (7)new text end . Payments for natural resources lands not located in an organized township shall be deposited in the county general revenue fund. Payments to counties and townships pursuant to this paragraph shall be used to provide property tax levy reduction, except that of the payments for natural resources lands not located in an organized township, the county may allocate the amount determined to be necessary for maintenance of roads in unorganized townships. Provided that, if the total payment to the county pursuant to section 477A.12 is not sufficient to fully fund the distribution provided for in this clause, the amount available shall be distributed to each township and the county general revenue fund on a pro rata basis; and

(c) any remaining funds shall be deposited in the county general revenue fund. Provided that, if the distribution to the county general revenue fund exceeds $35,000, the excess shall be used to provide property tax levy reduction.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2013 and thereafter. new text end

Sec. 32.

Minnesota Statutes 2012, section 477A.14, is amended by adding a subdivision to read:

new text begin Subd. 3. new text end

new text begin Distribution for wildlife management lands and military refuge lands. new text end

new text begin (a) The county treasurer shall allocate the payment for wildlife management land and military game refuge land among the county, towns, and school districts on the same basis as if the payments were taxes on the land received in the year. Payment of a town's or a school district's allocation must be made by the county treasurer to the town or school district within 30 days of receipt of the payment to the county. The county's share of the payment shall be deposited in the county general revenue fund. new text end

new text begin (b) The county treasurer of a county with a population over 39,000, but less than 42,000, in the 1950 federal census shall allocate the payment only among the towns and school districts on the same basis as if the payments were taxes on the lands received in the current year. new text end

new text begin (c) If a town received a payment in calendar year 2006 or thereafter under this subdivision, and subsequently incorporated as a city, the city shall continue to receive any future year's allocations of wildlife land payments that would have been made to the town had it not incorporated, provided that the payments shall terminate if the governing body of the city passes an ordinance that prohibits hunting within the boundaries of the city. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2013 and thereafter. new text end

Sec. 33.

Laws 2006, chapter 259, article 11, section 3, as amended by Laws 2008, chapter 154, article 1, section 4, is amended to read:

Sec. 3.

MAHNOMEN COUNTY; COUNTY, CITY, SCHOOL DISTRICT, PROPERTY TAX REIMBURSEMENT.

Subdivision 1.

Aid appropriation.

deleted text begin $600,000deleted text end new text begin $1,200,000new text end is appropriated annually from the general fund to the commissioner of revenue to be used to make payments to compensate for the loss of property tax revenue related to the trust conversion application of the Shooting Star Casino. The commissioner shall pay the county of Mahnomen, deleted text begin $450,000deleted text end new text begin $900,000new text end ; the city of Mahnomen, deleted text begin $80,000deleted text end new text begin $160,000new text end ; and Independent School District No. 432, Mahnomen, deleted text begin $70,000deleted text end new text begin $140,000new text end . The payments shall be made on July 20, of deleted text begin 2008deleted text end new text begin 2013new text end and each subsequent year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2013 and thereafter. new text end

Sec. 34.

new text begin INELIGIBILITY; SUSTAINABLE FOREST INCENTIVE PROGRAM. new text end

new text begin Lands that no longer qualify as forest land under Minnesota Statutes, section 290C.02, subdivision 6, item (iii), are released from the covenant required under Minnesota Statutes, section 290C.04. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment. new text end

Sec. 35.

new text begin REENROLLMENT; SUSTAINABLE FOREST INCENTIVE PROGRAM. new text end

new text begin A person who elected to terminate participation in the sustainable forest incentive program, as provided in Laws 2011, First Special Session chapter 7, article 6, section 12, may reenroll lands for which the claimant terminated participation and be eligible for a payment in October 2013. A person must apply for reenrollment under this section within 60 days after the effective date of this section. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment. new text end

Sec. 36.

new text begin REPEALER. new text end

new text begin (a) new text end new text begin Minnesota Statutes 2012, sections 477A.011, subdivisions 2a, 19, 29, 31, 32, 33, 36, 39, 40, and 41; 477A.013, subdivisions 11 and 12; 477A.0133; and 477A.0134, new text end new text begin are repealed. new text end

new text begin (b) Minnesota Statutes 2012, section 97A.061, new text end new text begin and new text end new text begin Laws 1973, chapter 567, section 7, as amended by Laws 1977, chapter 403, section 12, new text end new text begin are repealed on July 1, 2013. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2014 and thereafter. new text end

ARTICLE 3

EDUCATION AIDS AND LEVIES

Section 1.

new text begin [124D.862] ACHIEVEMENT AND INTEGRATION REVENUE. new text end

new text begin Subdivision 1. new text end

new text begin Initial achievement and integration revenue. new text end

new text begin (a) An eligible district's initial achievement and integration revenue equals the sum of (1) $350 times the district's adjusted pupil units for that year times the ratio of the district's enrollment of protected students for the previous school year to total enrollment for the previous school year and (2) the greater of zero or 66 percent of the difference between the district's integration revenue for fiscal year 2013 and the district's integration revenue for fiscal year 2014 under clause (1). new text end

new text begin (b) In each year, 0.3 percent of each district's initial achievement and integration revenue is transferred to the department for the oversight and accountability activities required under this section and section 124D.861. new text end

new text begin Subd. 2. new text end

new text begin Incentive revenue. new text end

new text begin An eligible school district's maximum incentive revenue equals $10 per adjusted pupil unit. In order to receive this revenue, a district must be implementing a voluntary plan to reduce racial and economic enrollment disparities through intradistrict and interdistrict activities that have been approved as a part of the district's achievement and integration plan. new text end

new text begin Subd. 3. new text end

new text begin Achievement and integration revenue. new text end

new text begin Achievement and integration revenue equals the sum of initial achievement and integration revenue and incentive revenue. new text end

new text begin Subd. 4. new text end

new text begin Achievement and integration aid. new text end

new text begin For fiscal year 2015 and later, a district's achievement and integration aid equals 70 percent of its achievement and integration revenue. new text end

new text begin Subd. 5. new text end

new text begin Achievement and integration levy. new text end

new text begin A district's achievement and integration levy equals its achievement and integration revenue times 30 percent. For Special School District No. 1, Minneapolis; Independent School District No. 625, St. Paul; and Independent School District No. 709, Duluth, 100 percent of the levy certified under this subdivision is shifted into the prior calendar year for purposes of sections 123B.75, subdivision 5, and 127A.441. new text end

new text begin Subd. 6. new text end

new text begin Revenue uses. new text end

new text begin (a) At least 80 percent of a district's achievement and integration revenue received under this section must be used for innovative and integrated learning environments, school enrollment choices, family engagement activities, and other approved programs providing direct services to students. new text end

new text begin (b) Up to 20 percent of the revenue may be used for professional development and staff development activities and placement services. new text end

new text begin (c) No more than ten percent of the total amount of revenue may be spent on administrative services. new text end

new text begin Subd. 7. new text end

new text begin Revenue reserved. new text end

new text begin Integration revenue received under this section must be reserved and used only for the programs authorized in subdivision 2. new text end

new text begin Subd. 8. new text end

new text begin Commissioner authority to withhold revenue. new text end

new text begin (a) The commissioner must review the results of each district's integration and achievement plan by August 1 at the end of the third year of implementing the plan and determine if the district met its goals. new text end

new text begin (b) If a district met its goals, it may submit a new three-year plan to the commissioner for review. new text end

new text begin (c) If a district has not met its goals, the commissioner must: new text end

new text begin (1) develop a district improvement plan and timeline, in consultation with the affected district, that identifies strategies and practices designed to meet the district's goals under this section and section 120B.11; and new text end

new text begin (2) use up to 20 percent of the district's integration revenue, until the district's goals are reached, to implement the improvement plan. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2014 and later. Subdivision 5 is effective for taxes payable in 2014 only. new text end

Sec. 2.

Minnesota Statutes 2012, section 126C.10, subdivision 1, is amended to read:

Subdivision 1.

General education revenue.

new text begin (a) For fiscal years 2013 and 2014, new text end the general education revenue for each district equals the sum of the district's basic revenue, extended time revenue, gifted and talented revenue, small schools revenue, basic skills revenue, deleted text begin training and experience revenue,deleted text end secondary sparsity revenue, elementary sparsity revenue, transportation sparsity revenue, total operating capital revenue, equity revenue, alternative teacher compensation revenue, and transition revenue.

new text begin (b) For fiscal year 2015 and later, the general education revenue for each district equals the sum of the district's basic revenue, extended time revenue, gifted and talented revenue, declining enrollment revenue, location equity revenue, small schools revenue, basic skills revenue, secondary sparsity revenue, elementary sparsity revenue, transportation sparsity revenue, total operating capital revenue, equity revenue, pension adjustment revenue, and transition revenue. new text end

Sec. 3.

Minnesota Statutes 2012, section 126C.10, is amended by adding a subdivision to read:

new text begin Subd. 2e. new text end

new text begin Location equity revenue. new text end

new text begin (a) For a school district with any of its area located within the seven-county metropolitan area, location equity revenue equals $424 times the adjusted pupil units of the district for that school year. new text end

new text begin (b) For all other school districts with more than 2,000 pupils in adjusted average daily membership for the fiscal year ending in the year before the levy is certified, location equity revenue equals $212 times the adjusted pupil units of the district for that year. new text end

new text begin (c) A district's location equity levy equals its location equity revenue times the lesser of one or the ratio of its referendum market value per resident pupil unit to $510,000. The location equity revenue levy must be spread on referendum market value. new text end

new text begin (d) A district's location equity aid equals its location equity revenue less its location equity levy, times the ratio of the actual amount levied to the permitted levy. new text end

new text begin (e) A school district may elect not to participate in the location equity revenue program by a board vote taken prior to September 1 of the fiscal year before the fiscal year for which the decision not to participate becomes effective. The board resolution must state which fiscal years the district will not participate. A copy of the board resolution to not participate must be submitted to the commissioner. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2015 and later. new text end

Sec. 4.

Minnesota Statutes 2012, section 126C.13, subdivision 4, is amended to read:

Subd. 4.

General education aid.

new text begin (a) new text end For fiscal years deleted text begin 2007deleted text end new text begin 2013new text end and deleted text begin laterdeleted text end new text begin 2014 onlynew text end , a district's general education aid is the sum of the following amounts:

(1) general education revenue, excluding equity revenue, total operating capital revenue, alternative teacher compensation revenue, and transition revenue;

(2) operating capital aid under section 126C.10, subdivision 13b;

(3) equity aid under section 126C.10, subdivision 30;

(4) alternative teacher compensation aid under section 126C.10, subdivision 36;

(5) transition aid under section 126C.10, subdivision 33;

(6) shared time aid under section 126C.01, subdivision 7;

(7) referendum aid under section 126C.17, subdivisions 7 and 7a; and

(8) online learning aid according to section 124D.096.

new text begin (b) For fiscal year 2015 and later, a district's general education aid equals: new text end

new text begin (1) general education revenue, excluding operating capital revenue, equity revenue, location equity revenue, and transition revenue, minus the student achievement levy, multiplied times the ratio of the actual amount of student achievement levy levied to the permitted student achievement levy; plus new text end

new text begin (2) equity aid under section 126C.10, subdivision 30; plus new text end

new text begin (3) transition aid under section 126C.10, subdivision 33; plus new text end

new text begin (4) shared time aid under section 126C.10, subdivision 7; plus new text end

new text begin (5) referendum aid under section 126C.17, subdivisions 7 and 7a; new text end

new text begin (6) online learning aid under section 124D.096; plus new text end

new text begin (7) location equity aid according to section 126C.10, subdivision 2d, paragraph (d). new text end

Sec. 5.

Minnesota Statutes 2012, section 126C.17, is amended to read:

126C.17 REFERENDUM REVENUE.

Subdivision 1.

Referendum allowance.

deleted text begin (a) For fiscal year 2003 and later, a district's initial referendum revenue allowance equals the sum of the allowance under section 126C.16, subdivision 2, plus any additional allowance per resident marginal cost pupil unit authorized under subdivision 9 before May 1, 2001, for fiscal year 2002 and later, plus the referendum conversion allowance approved under subdivision 13, minus $415. For districts with more than one referendum authority, the reduction must be computed separately for each authority. The reduction must be applied first to the referendum conversion allowance and next to the authority with the earliest expiration date. A district's initial referendum revenue allowance may not be less than zero. deleted text end

deleted text begin (b) For fiscal year 2003, a district's referendum revenue allowance equals the initial referendum allowance plus any additional allowance per resident marginal cost pupil unit authorized under subdivision 9 between April 30, 2001, and December 30, 2001, for fiscal year 2003 and later. deleted text end

deleted text begin (c) For fiscal year 2004 and later, a district's referendum revenue allowance equals the sum of: deleted text end

deleted text begin (1) the product of (i) the ratio of the resident marginal cost pupil units the district would have counted for fiscal year 2004 under Minnesota Statutes 2002, section 126C.05, to the district's resident marginal cost pupil units for fiscal year 2004, times (ii) the initial referendum allowance plus any additional allowance per resident marginal cost pupil unit authorized under subdivision 9 between April 30, 2001, and May 30, 2003, for fiscal year 2003 and later, plus deleted text end

deleted text begin (2) any additional allowance per resident marginal cost pupil unit authorized under subdivision 9 after May 30, 2003, for fiscal year 2005 and later. deleted text end

new text begin (a) A district's initial referendum allowance for fiscal year 2015 equals the result of the following calculations: new text end

new text begin (1) multiply the referendum allowance the district would have received for fiscal year 2015 under Minnesota Statutes 2012, section 126C.17, subdivision 1, based on elections held before July 1, 2013, by the resident marginal cost pupil units the district would have counted for fiscal year 2015 under Minnesota Statutes 2012, section 126C.05; new text end

new text begin (2) add to the result of clause (1) the adjustment the district would have received under Minnesota Statutes 2012, section 127A.47, subdivision 7, paragraphs (a), (b), and (c), based on elections held before July 1, 2013; new text end

new text begin (3) divide the result of clause (2) by the district's adjusted pupil units for fiscal year 2015; and new text end

new text begin (4) if the result of clause (3) is less than zero, set the allowance to zero. new text end

new text begin (b) A district's referendum allowance equals the sum of the district's initial referendum allowance for fiscal year 2015, plus any additional referendum allowance per adjusted pupil unit authorized after June 30, 2013, minus (i) the location equity revenue subtraction, and (ii) any allowances expiring in fiscal year 2016 or later, provided that the allowance may not be less than zero. For a district with more than one referendum allowance for fiscal year 2015 under Minnesota Statutes 2012, section 126C.17, the allowance calculated under paragraph (a) must be divided into components such that the same percentage of the district's allowance expires at the same time as the old allowances would have expired under Minnesota Statutes 2012, section 126C.17. new text end

new text begin (c) For purposes of this subdivision, a district's location equity revenue subtraction equals $424 for a district receiving location equity revenue under section 126C.10, subdivision 2d, paragraph (a), $212 for a district receiving location equity revenue under section 126C.10, subdivision 2d, paragraph (b), and zero for all other school districts. new text end

Subd. 2.

Referendum allowance limit.

(a) Notwithstanding subdivision 1, for fiscal year deleted text begin 2007deleted text end new text begin 2015new text end and later, a district's referendum allowance must not exceed deleted text begin the greater of:deleted text end

deleted text begin (1) the sum of: (i) a district's referendum allowance for fiscal year 1994 times 1.177 times the annual inflationary increase as calculated under paragraph (b) plus (ii) its referendum conversion allowance for fiscal year 2003, minus (iii) $215; deleted text end

deleted text begin (2) the greater of (i): 26 percent of the formula allowance or (ii) $1,294 timesdeleted text end the annual inflationary increase as calculated under paragraph (b)deleted text begin ; ordeleted text end new text begin times the greatest of:new text end

new text begin (1) $1,845; new text end

new text begin (2) the sum of the referendum revenue the district would have received for fiscal year 2015 under Minnesota Statutes 2012, section 126C.17, subdivision 4, based on elections held before July 1, 2013, and the adjustment the district would have received under Minnesota Statutes 2012, section 127A.47, subdivision 7, paragraphs (a), (b), and (c), based on elections held before July 1, 2013, divided by the district's adjusted pupil units for fiscal year 2015; or new text end

new text begin (3) the product of the referendum allowance limit the district would have received for fiscal year 2015 under Minnesota Statutes 2012, section 126C.17, subdivision 2, and the resident marginal cost pupil units the district would have received for fiscal year 2015 under Minnesota Statutes 2012, section 126C.05, subdivision 6, plus the adjustment the district would have received under Minnesota Statutes 2012, section 127A.47, subdivision 7, paragraphs (a), (b), and (c), based on elections held before July 1, 2013, divided by the district's adjusted pupil units for fiscal year 2015; minus $424 for a district receiving location equity revenue under section 126C.10, subdivision 2d, paragraph (a), minus $212 for a district receiving location equity revenue under section 126C.10, subdivision 2d, paragraph (b), or new text end

deleted text begin (3)deleted text end new text begin (4)new text end for a newly reorganized district created after July 1, deleted text begin 2006deleted text end new text begin 2013new text end , the referendum revenue authority for each reorganizing district in the year preceding reorganization divided by its deleted text begin resident marginal costdeleted text end new text begin adjustednew text end pupil units for the year preceding reorganization.

(b) For purposes of this subdivision, for fiscal year deleted text begin 2005deleted text end new text begin 2016new text end and later, "inflationary increase" means one plus the percentage change in the Consumer Price Index for urban consumers, as prepared by the United States Bureau of Labor Standards, for the current fiscal year to fiscal year deleted text begin 2004deleted text end new text begin 2015new text end . For fiscal deleted text begin years 2009deleted text end new text begin year 2016new text end and later, for purposes of paragraph (a), clause deleted text begin (1)deleted text end new text begin (3)new text end , the inflationary increase equals deleted text begin the inflationary increase for fiscal year 2008 plusdeleted text end one-fourth of the percentage increase in the formula allowance for that year compared with the formula allowance for fiscal year deleted text begin 2008deleted text end new text begin 2015new text end .

Subd. 3.

Sparsity exception.

A district that qualifies for sparsity revenue under section 126C.10 is not subject to a referendum allowance limit.

Subd. 4.

Total referendum revenue.

The total referendum revenue for each district equals the district's referendum allowance times the deleted text begin resident marginal costdeleted text end new text begin adjustednew text end pupil units for the school year.

Subd. 5.

Referendum equalization revenue.

(a) deleted text begin For fiscal year 2003 and later,deleted text end A district's referendum equalization revenue equals the sum of the first tier referendum equalization revenue and the second tier referendum equalization revenuenew text begin , and the third tier referendum equalization revenuenew text end .

(b) A district's first tier referendum equalization revenue equals the district's first tier referendum equalization allowance times the district's deleted text begin resident marginal costdeleted text end new text begin adjustednew text end pupil units for that year.

(c) deleted text begin For fiscal year 2006, a district's first tier referendum equalization allowance equals the lesser of the district's referendum allowance under subdivision 1 or $500. For fiscal year 2007, a district's first tier referendum equalization allowance equals the lesser of the district's referendum allowance under subdivision 1 or $600.deleted text end

deleted text begin For fiscal year 2008 and later,deleted text end A district's first tier referendum equalization allowance equals the lesser of the district's referendum allowance under subdivision 1 or deleted text begin $700deleted text end new text begin $300new text end .

(d) A district's second tier referendum equalization revenue equals the district's second tier referendum equalization allowance times the district's deleted text begin resident marginal costdeleted text end new text begin adjustednew text end pupil units for that year.

(e) deleted text begin For fiscal year 2006, a district's second tier referendum equalization allowance equals the lesser of the district's referendum allowance under subdivision 1 or 18.6 percent of the formula allowance, minus the district's first tier referendum equalization allowance. For fiscal year 2007 and later,deleted text end A district's second tier referendum equalization allowance equals the lesser of the district's referendum allowance under subdivision 1 or deleted text begin 26 percent of the formula allowancedeleted text end new text begin $760new text end , minus the district's first tier referendum equalization allowance.

(f) deleted text begin Notwithstanding paragraph (e), the second tier referendum allowance for a district qualifying for secondary sparsity revenue under section 126C.10, subdivision 7, or elementary sparsity revenue under section 126C.10, subdivision 8, equals the district's referendum allowance under subdivision 1 minus the district's first tier referendum equalization allowance.deleted text end new text begin A district's third tier referendum equalization revenue equals the district's third tier referendum equalization allowance times the district's adjusted pupil units for that year.new text end

new text begin (g) A district's third tier referendum equalization allowance equals the lesser of the district's referendum allowance under subdivision 1 or 25 percent of the formula allowance, minus the sum of the district's first tier referendum equalization allowance and second tier referendum equalization allowance. new text end

new text begin (h) Notwithstanding paragraph (g), the third tier referendum allowance for a district qualifying for secondary sparsity revenue under section 126C.10, subdivision 7, or elementary sparsity revenue under section 126C.10, subdivision 8, equals the district's referendum allowance under subdivision 1 minus the sum of the district's first tier referendum equalization allowance and second tier referendum equalization allowance. new text end

Subd. 6.

Referendum equalization levy.

(a) For fiscal year 2003 and later, a district's referendum equalization levy equals the sum of the first tier referendum equalization levy deleted text begin anddeleted text end the second tier referendum equalization levynew text begin , and the third tier referendum equalization levynew text end .

(b) A district's first tier referendum equalization levy equals the district's first tier referendum equalization revenue times the lesser of one or the ratio of the district's referendum market value per resident deleted text begin marginal costdeleted text end pupil unit to deleted text begin $476,000deleted text end new text begin $880,000new text end .

(c) A district's second tier referendum equalization levy equals the district's second tier referendum equalization revenue times the lesser of one or the ratio of the district's referendum market value per resident deleted text begin marginal costdeleted text end pupil unit to deleted text begin $270,000deleted text end new text begin $510,000new text end .

new text begin (d) A district's third tier referendum equalization levy equals the district's third tier referendum equalization revenue times the lesser of one or the ratio of the district's referendum market value per resident pupil unit to $290,000. new text end

Subd. 7.

Referendum equalization aid.

(a) A district's referendum equalization aid equals the difference between its referendum equalization revenue and levy.

(b) If a district's actual levy for first deleted text begin ordeleted text end new text begin ,new text end secondnew text begin , or thirdnew text end tier referendum equalization revenue is less than its maximum levy limit for that tier, aid shall be proportionately reduced.

(c) Notwithstanding paragraph (a), the referendum equalization aid for a district, where the referendum equalization aid under paragraph (a) exceeds 90 percent of the referendum revenue, must not exceed deleted text begin 26deleted text end new text begin 25new text end percent of the formula allowance times the district's deleted text begin resident marginal costdeleted text end new text begin adjustednew text end pupil units. A district's referendum levy is increased by the amount of any reduction in referendum aid under this paragraph.

Subd. 7a.

Referendum tax base replacement aid.

For each school district that had a referendum allowance for fiscal year 2002 exceeding $415, for each separately authorized referendum levy, the commissioner of revenue, in consultation with the commissioner of education, shall certify the amount of the referendum levy in taxes payable year 2001 attributable to the portion of the referendum allowance exceeding $415 levied against property classified as class 2, noncommercial 4c(1), or 4c(4), under section 273.13, excluding the portion of the tax paid by the portion of class 2a property consisting of the house, garage, and surrounding one acre of land. The resulting amount must be used to reduce the district's referendum levy amount otherwise determined, and must be paid to the district each year that the referendum authority remains in effect, is renewed, or new referendum authority is approved. The aid payable under this subdivision must be subtracted from the district's referendum equalization aid under subdivision 7. The referendum equalization aid after the subtraction must not be less than zero.

new text begin Subd. 7b. new text end

new text begin Referendum aid guarantee. new text end

new text begin (a) Notwithstanding subdivision 7, a district's referendum equalization aid for fiscal year 2015 must not be less than the sum of the referendum equalization aid the district would have received for fiscal year 2015 under Minnesota Statutes 2012, section 126C.17, subdivision 7, and the adjustment the district would have received under Minnesota Statutes 2012, section 127A.47, subdivision 7, paragraphs (a), (b), and (c). new text end

new text begin (b) Notwithstanding subdivision 7, referendum equalization aid for fiscal year 2016 and later, for a district qualifying for additional aid under paragraph (a) for fiscal year 2015, must not be less than the product of (1) the district's referendum equalization aid for fiscal year 2015, times (2) the lesser of one or the ratio of the district's referendum revenue for that school year to the district's referendum revenue for fiscal year 2015, times (3) the lesser of one or the ratio of the district's referendum market value used for fiscal year 2015 referendum equalization calculations to the district's referendum market value used for that year's referendum equalization calculations. new text end

Subd. 8.

Unequalized referendum levy.

Each year, a district may levy an amount equal to the difference between its total referendum revenue according to subdivision 4 and its referendum equalization revenue according to subdivision 5.

Subd. 9.

Referendum revenue.

(a) The revenue authorized by section 126C.10, subdivision 1, may be increased in the amount approved by the voters of the district at a referendum called for the purpose. The referendum may be called by the board. The referendum must be conducted one or two calendar years before the increased levy authority, if approved, first becomes payable. Only one election to approve an increase may be held in a calendar year. Unless the referendum is conducted by mail under subdivision 11, paragraph (a), the referendum must be held on the first Tuesday after the first Monday in November. The ballot must state the maximum amount of the increased revenue per deleted text begin resident marginal costdeleted text end new text begin adjustednew text end pupil unit. The ballot may state a schedule, determined by the board, of increased revenue per deleted text begin resident marginal costdeleted text end new text begin adjustednew text end pupil unit that differs from year to year over the number of years for which the increased revenue is authorized or may state that the amount shall increase annually by the rate of inflation. For this purpose, the rate of inflation shall be the annual inflationary increase calculated under subdivision 2, paragraph (b). The ballot may state that existing referendum levy authority is expiring. In this case, the ballot may also compare the proposed levy authority to the existing expiring levy authority, and express the proposed increase as the amount, if any, over the expiring referendum levy authority. The ballot must designate the specific number of years, not to exceed ten, for which the referendum authorization applies. The ballot, including a ballot on the question to revoke or reduce the increased revenue amount under paragraph (c), must abbreviate the term "per deleted text begin resident marginal costdeleted text end new text begin adjustednew text end pupil unit" as "per pupil." The notice required under section 275.60 may be modified to read, in cases of renewing existing levies at the same amount per pupil as in the previous year:

"BY VOTING "YES" ON THIS BALLOT QUESTION, YOU ARE VOTING TO EXTEND AN EXISTING PROPERTY TAX REFERENDUM THAT IS SCHEDULED TO EXPIRE."

The ballot may contain a textual portion with the information required in this subdivision and a question stating substantially the following:

"Shall the increase in the revenue proposed by (petition to) the board of ........., School District No. .., be approved?"

If approved, an amount equal to the approved revenue per deleted text begin resident marginal costdeleted text end new text begin adjustednew text end pupil unit times the deleted text begin resident marginal costdeleted text end new text begin adjustednew text end pupil units for the school year beginning in the year after the levy is certified shall be authorized for certification for the number of years approved, if applicable, or until revoked or reduced by the voters of the district at a subsequent referendum.

(b) The board must prepare and deliver by first class mail at least 15 days but no more than 30 days before the day of the referendum to each taxpayer a notice of the referendum and the proposed revenue increase. The board need not mail more than one notice to any taxpayer. For the purpose of giving mailed notice under this subdivision, owners must be those shown to be owners on the records of the county auditor or, in any county where tax statements are mailed by the county treasurer, on the records of the county treasurer. Every property owner whose name does not appear on the records of the county auditor or the county treasurer is deemed to have waived this mailed notice unless the owner has requested in writing that the county auditor or county treasurer, as the case may be, include the name on the records for this purpose. The notice must project the anticipated amount of tax increase in annual dollars for typical residential homesteads, agricultural homesteads, apartments, and commercial-industrial property within the school district.

The notice for a referendum may state that an existing referendum levy is expiring and project the anticipated amount of increase over the existing referendum levy in the first year, if any, in annual dollars for typical residential homesteads, agricultural homesteads, apartments, and commercial-industrial property within the district.

The notice must include the following statement: "Passage of this referendum will result in an increase in your property taxes." However, in cases of renewing existing levies, the notice may include the following statement: "Passage of this referendum extends an existing operating referendum at the same amount per pupil as in the previous year."

(c) A referendum on the question of revoking or reducing the increased revenue amount authorized pursuant to paragraph (a) may be called by the board. A referendum to revoke or reduce the revenue amount must state the amount per resident marginal cost pupil unit by which the authority is to be reduced. Revenue authority approved by the voters of the district pursuant to paragraph (a) must be available to the school district at least once before it is subject to a referendum on its revocation or reduction for subsequent years. Only one revocation or reduction referendum may be held to revoke or reduce referendum revenue for any specific year and for years thereafter.

(d) The approval of 50 percent plus one of those voting on the question is required to pass a referendum authorized by this subdivision.

(e) At least 15 days before the day of the referendum, the district must submit a copy of the notice required under paragraph (b) to the commissioner and to the county auditor of each county in which the district is located. Within 15 days after the results of the referendum have been certified by the board, or in the case of a recount, the certification of the results of the recount by the canvassing board, the district must notify the commissioner of the results of the referendum.

new text begin Subd. 9a. new text end

new text begin Board-approved referendum allowance. new text end

new text begin Notwithstanding subdivision 9, a school district may convert up to $300 per adjusted pupil unit of referendum authority from voter approved to board approved by a board vote. A district with less than $300 per adjusted pupil unit of referendum authority may authorize new referendum authority up to the difference between $300 per adjusted pupil unit and the district's referendum authority. The board may authorize this levy for up to five years and may subsequently reauthorize that authority in increments of up to five years. new text end

Subd. 10.

School referendum levy; market value.

A school referendum levy must be levied against the referendum market value of all taxable property as defined in section 126C.01, subdivision 3. Any referendum levy amount subject to the requirements of this subdivision must be certified separately to the county auditor under section 275.07.

Subd. 11.

Referendum date.

(a) Except for a referendum held under paragraph (b), any referendum under this section held on a day other than the first Tuesday after the first Monday in November must be conducted by mail in accordance with section 204B.46. Notwithstanding subdivision 9, paragraph (b), to the contrary, in the case of a referendum conducted by mail under this paragraph, the notice required by subdivision 9, paragraph (b), must be prepared and delivered by first-class mail at least 20 days before the referendum.

(b) In addition to the referenda allowed in subdivision 9, clause (a), the commissioner may grant authority to a district to hold a referendum on a different day if the district is in statutory operating debt and has an approved plan or has received an extension from the department to file a plan to eliminate the statutory operating debt.

(c) The commissioner must approve, deny, or modify each district's request for a referendum levy on a different day within 60 days of receiving the request from a district.

Subd. 13.

Referendum conversion allowance.

A school district that received supplemental or transition revenue in fiscal year 2002 may convert its supplemental revenue conversion allowance and transition revenue conversion allowance to additional referendum allowance under subdivision 1 for fiscal year 2003 and thereafter. A majority of the school board must approve the conversion at a public meeting before November 1, 2001. For a district with other referendum authority, the referendum conversion allowance approved by the board continues until the portion of the district's other referendum authority with the earliest expiration date after June 30, 2006, expires. For a district with no other referendum authority, the referendum conversion allowance approved by the board continues until June 30, 2012.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2015 and later. new text end

Sec. 6.

new text begin OPERATING REFERENDUM FREEZE, FISCAL YEAR 2015. new text end

new text begin (a) Notwithstanding Minnesota Statutes, section 126C.17, subdivision 9, a school district may not authorize an increase to its operating referendum in fiscal year 2015. A school district may reauthorize an operating referendum that is expiring in fiscal year 2015. new text end

new text begin (b) Paragraph (a) shall not apply to a district if, prior to June 30, 2013, the board adopted a resolution to conduct a referendum in 2013. new text end

new text begin (c) Paragraph (a) shall not apply to a district if the district did not authorize an operating referendum in fiscal year 2014. new text end

new text begin (d) Paragraph (a) shall not apply to a district if the district is in statutory operating debt under Minnesota Statutes, section 123B.81, as of June 30, 2013, and has an approved plan with the Department of Education. new text end

ARTICLE 4

PROPERTY TAXES

Section 1.

Minnesota Statutes 2012, section 103B.102, subdivision 3, is amended to read:

Subd. 3.

Evaluation and report.

The Board of Water and Soil Resources shall evaluate performance, financial, and activity information for each local water management entity. The board shall evaluate the entities' progress in accomplishing their adopted plans on a regular basisnew text begin as determined by the board based on budget and operations of the local water management entitynew text end , but not less than once every deleted text begin fivedeleted text end new text begin tennew text end years. The board shall maintain a summary of local water management entity performance on the board's Web site. Beginning February 1, 2008, and annually thereafter, the board shall provide an analysis of local water management entity performance to the chairs of the house of representatives and senate committees having jurisdiction over environment and natural resources policy.

Sec. 2.

Minnesota Statutes 2012, section 103B.335, is amended to read:

103B.335 TAX LEVY AUTHORITY.

Subdivision 1.

Local water planning and management.

The governing body of any county, municipality, or township may levy a tax in an amount required to implement sections 103B.301 to 103B.355new text begin or a comprehensive watershed management plan as defined in section 103B.3363new text end .

Subd. 2.

Priority programs; conservation and watershed districts.

A county may levy amounts necessary to pay the reasonable deleted text begin increaseddeleted text end costs to soil and water conservation districts and watershed districts of administering and implementing priority programs identified in an approved and adopted plannew text begin or a comprehensive watershed management plan as defined in section 103B.3363new text end .

Sec. 3.

Minnesota Statutes 2012, section 103B.3369, subdivision 5, is amended to read:

Subd. 5.

Financial assistance.

A base grant may be awarded to a county that provides a match utilizing a water implementation tax or other local source. A water implementation tax that a county intends to use as a match to the base grant must be levied at a rate new text begin sufficient to generate a minimum amount new text end determined by the board. The board may award performance-based grants to local units of government that are responsible for implementing elements of applicable portions of watershed management plans, comprehensive plans, local water management plans, or comprehensive watershed management plans, developed or amended, adopted and approved, according to chapter 103B, 103C, or 103D. Upon request by a local government unit, the board may also award performance-based grants to local units of government to carry out TMDL implementation plans as provided in chapter 114D, if the TMDL implementation plan has been incorporated into the local water management plan according to the procedures for approving comprehensive plans, watershed management plans, local water management plans, or comprehensive watershed management plans under chapter 103B, 103C, or 103D, or if the TMDL implementation plan has undergone a public review process. Notwithstanding section 16A.41, the board may award performance-based grants on an advanced basis.new text begin The fee authorized in section 40A.152 may be used as a local match or as a supplement to state funding to accomplish implementation of comprehensive plans, watershed management plans, local water management plans, or comprehensive watershed management plans under chapter 103B, 103C, or 103D.new text end

Sec. 4.

Minnesota Statutes 2012, section 103C.501, subdivision 4, is amended to read:

Subd. 4.

Cost-sharing funds.

(a) The state board shall allocate deleted text begin at least 70 percent ofdeleted text end cost-sharing funds to areas with high priority erosion, sedimentation, or water quality problems or water quantity problems due to altered hydrology. The areas must be selected based on deleted text begin the statewidedeleted text end priorities established by the state board.

new text begin (b) new text end The allocated funds must be used for conservation practices for high priority problems identified in the comprehensive and annual work plans of the districtsnew text begin , for the technical assistance portion of the grant funds to leverage federal or other nonstate funds, or to address high-priority needs identified in local water management plans or comprehensive watershed management plansnew text end .

deleted text begin (b) The remaining cost-sharing funds may be allocated to districts as follows: deleted text end

deleted text begin (1) for technical and administrative assistance, not more than 20 percent of the funds; and deleted text end

deleted text begin (2) for conservation practices for lower priority erosion, sedimentation, or water quality problems. deleted text end

Sec. 5.

Minnesota Statutes 2012, section 103F.405, subdivision 1, is amended to read:

Subdivision 1.

Authority.

Each statutory or home rule charter city, town, or county that has planning and zoning authority under sections 366.10 to 366.19, 394.21 to 394.37, or 462.351 to 462.365 is encouraged to adopt a soil loss ordinance. The soil loss ordinance must use the soil loss tolerance for each soil series described in the United States deleted text begin Soildeleted text end new text begin Natural Resources new text end Conservation Service Field Office Technical Guidenew text begin , or another method approved by the Board of Water and Soil Resources,new text end to determine the soil loss limits, but the soil loss limits must be attainable by the best practicable soil conservation practice. Ordinances adopted by local governments deleted text begin within the metropolitan area defined in section 473.121deleted text end must be consistent with deleted text begin local water management plans adopted under section 103B.235deleted text end new text begin a comprehensive plan, local water management plan, or watershed management plan developed or amended, adopted, and approved according to chapter 103B, 103C, or 103Dnew text end .

Sec. 6.

Minnesota Statutes 2012, section 168.012, subdivision 9, is amended to read:

Subd. 9.

Manufactured homes and park trailers.

Manufactured homes and park trailers shall not be taxed as motor vehicles using the public streets and highways and shall be exempt from the motor vehicle tax provisions of this chapter. Except as provided in section 273.125, manufactured homes and park trailers shall be taxed as personal property. The provisions of Minnesota Statutes 1957, section 272.02 or any other act providing for tax exemption shall be inapplicable to manufactured homes and park trailers, except such manufactured homes as are held by a licensed dealer new text begin or limited dealer, as defined in section 327B.04, new text end and exempted as inventorynew text begin under subdivision 9anew text end . Travel trailers not conspicuously displaying current registration plates on the property tax assessment date shall be taxed as manufactured homes if occupied as human dwelling places.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2014 and thereafter. new text end

Sec. 7.

Minnesota Statutes 2012, section 168.012, is amended by adding a subdivision to read:

new text begin Subd. 9a. new text end

new text begin Manufactured home as dealer inventory. new text end

new text begin Manufactured homes as defined in section 327.31, subdivision 6, shall be considered as dealer inventory, on the January 2 assessment date, if the home is: new text end

new text begin (1) listed as inventory and held by a licensed or limited dealer; new text end

new text begin (2) unoccupied and not available for rent; new text end

new text begin (3) connected or not connected to utilities when located in a manufactured home park; and new text end

new text begin (4) connected or not connected to utilities when located at a dealer's sales center. new text end

new text begin The exemption under this subdivision is allowable for up to five assessment years after the date a home is initially claimed as dealer inventory. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2014 and thereafter. new text end

Sec. 8.

Minnesota Statutes 2012, section 270.41, subdivision 3, is amended to read:

Subd. 3.

deleted text begin Licenses; refusal or revocationdeleted text end new text begin Assessor sanctions; refusal to licensenew text end .

new text begin (a) new text end The board may new text begin (i) new text end refuse to grant or renew, or may suspend or revoke, a license of an applicant or licenseenew text begin , or (ii) censure, warn, or fine any licensed assessor, or any other person employed by an assessment jurisdiction or contracting with an assessment jurisdiction for the purpose of valuing or classifying property for property tax purposes,new text end for any of the following causes or acts:

(1) failure to complete required training;

(2) inefficiency or neglect of duty;

(3) failure to comply with the Code of Conduct and Ethics for Licensed Minnesota Assessors adopted by the board pursuant to Laws 2005, First Special Session chapter 3, article 1, section 38;

(4) conviction of a crime involving moral turpitude; deleted text begin ordeleted text end

new text begin (5) failure to faithfully and fully perform his or her duties through malfeasance, misfeasance, or nonfeasance; or new text end

deleted text begin (5)deleted text end new text begin (6)new text end any other cause or act that in the board's opinion warrants a refusal to issue deleted text begin or suspension or revocation ofdeleted text end a licensenew text begin or the imposition of a sanction provided under this subdivisionnew text end .

new text begin (b) When appropriate for the level of infraction, a written warning must be given to assessors who have no prior identified infractions. The warning must identify the infraction and, as appropriate, detail future expectations of performance and behavior. Fines must not exceed $1,000 for the first occurrence and must not exceed $3,000 for each occurrence thereafter, and suspensions must not exceed one year for each occurrence, depending in each case upon the severity of the infraction and the level of negligence or intent. An action by the board to impose a sanction is subject to review in a contested case hearing under chapter 14. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning July 1, 2013. new text end

Sec. 9.

Minnesota Statutes 2012, section 270.41, is amended by adding a subdivision to read:

new text begin Subd. 3a. new text end

new text begin Report on disciplinary actions. new text end

new text begin Each odd-numbered year, the board must publish a report detailing the number and types of disciplinary actions recommended by the commissioner of revenue under section 273.0645, subdivision 2, and the disposition of those recommendations by the board. The report must be presented to the house of representatives and senate committees with jurisdiction over property taxes by February 1 of each odd-numbered year. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning July 1, 2013. new text end

Sec. 10.

Minnesota Statutes 2012, section 270.45, is amended to read:

270.45 DISPOSITION OF FEESnew text begin AND FINESnew text end .

All fees new text begin and fines new text end so established and collected shall be paid to the commissioner of management and budget for deposit in the general fund. The expenses of carrying out the provisions of sections 270.41 to 270.50 shall be paid from appropriations made to the board.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning July 1, 2013. new text end

Sec. 11.

new text begin [270C.9901] ASSESSOR ACCREDITATION. new text end

new text begin Every individual who appraises or physically inspects real property for the purpose of determining its valuation or classification for property tax purposes must obtain licensure as an accredited Minnesota assessor from the State Board of Assessors by July 1, 2019, or within four years of that person having become licensed as a certified Minnesota assessor, whichever is later. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning January 1, 2014. new text end

Sec. 12.

Minnesota Statutes 2012, section 272.02, subdivision 39, is amended to read:

Subd. 39.

Economic development; public purpose.

The holding of property by a political subdivision of the state for later resale for economic development purposes shall be considered a public purpose in accordance with subdivision 8 for a period not to exceed nine years, except thatnew text begin :new text end

new text begin (1)new text end for property located in a city of deleted text begin 5,000deleted text end new text begin 20,000new text end population or under that is located outside of the metropolitan area as defined in section 473.121, subdivision 2, the period must not exceed 15 yearsdeleted text begin .deleted text end new text begin ; andnew text end

new text begin (2) for any property that was acquired on or after January 1, 2000, and on or before December 31, 2010, and is located in a city, the period must not exceed 15 years. new text end

The holding of property by a political subdivision of the state for later resale (1) which is purchased or held for housing purposes, or (2) which meets the conditions described in section 469.174, subdivision 10, shall be considered a public purpose in accordance with subdivision 8.

The governing body of the political subdivision which acquires property which is subject to this subdivision shall after the purchase of the property certify to the city or county assessor whether the property is held for economic development purposes or housing purposes, or whether it meets the conditions of section 469.174, subdivision 10. If the property is acquired for economic development purposes and buildings or other improvements are constructed after acquisition of the property, and if more than one-half of the floor space of the buildings or improvements which is available for lease to or use by a private individual, corporation, or other entity is leased to or otherwise used by a private individual, corporation, or other entity the provisions of this subdivision shall not apply to the property. This subdivision shall not create an exemption from section 272.01, subdivision 2; 272.68; 273.19; or 469.040, subdivision 3; or other provision of law providing for the taxation of or for payments in lieu of taxes for publicly held property which is leased, loaned, or otherwise made available and used by a private person.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2013 and thereafter and for taxes payable in 2014 and thereafter. new text end

Sec. 13.

Minnesota Statutes 2012, section 272.02, is amended by adding a subdivision to read:

new text begin Subd. 98. new text end

new text begin Certain property owned by an Indian tribe. new text end

new text begin (a) Property is exempt that: new text end

new text begin (1) was classified as 3a under section 273.13, subdivision 24, for taxes payable in 2013; new text end

new text begin (2) is located in a city of the first class with a population greater than 300,000 as of the 2010 federal census; new text end

new text begin (3) was on January 2, 2012, and is for the current assessment owned by a federally recognized Indian tribe, or its instrumentality, that is located within the state of Minnesota; and new text end

new text begin (4) is used exclusively for tribal purposes or institutions of purely public charity as defined in subdivision 7. new text end

new text begin (b) For purposes of this subdivision, a "tribal purpose" means a public purpose as defined in subdivision 8 and includes noncommercial tribal government activities. Property that qualifies for the exemption under this subdivision is limited to no more than two contiguous parcels and structures that do not exceed in the aggregate 20,000 square feet. Property acquired for single-family housing, market-rate apartments, agriculture, or forestry does not qualify for this exemption. The exemption created by this subdivision expires with taxes payable in 2024. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2014. new text end

Sec. 14.

Minnesota Statutes 2012, section 272.02, is amended by adding a subdivision to read:

new text begin Subd. 99. new text end

new text begin Electric generation facility; personal property. new text end

new text begin (a) Notwithstanding subdivision 9, clause (a), and section 453.54, subdivision 20, attached machinery and other personal property which is part of an electric generation facility that exceeds five megawatts of installed capacity and meets the requirements of this subdivision is exempt. At the time of construction, the facility must be: new text end

new text begin (1) designed to utilize natural gas as a primary fuel; new text end

new text begin (2) owned and operated by a municipal power agency as defined in section 453.52, subdivision 8; new text end

new text begin (3) designed to utilize reciprocating engines paired with generators to produce electrical power; new text end

new text begin (4) located within the service territory of a municipal power agency's electrical municipal utility that serves load exclusively in a metropolitan county as defined in section 473.121, subdivision 4; and new text end

new text begin (5) designed to connect directly with a municipality's substation. new text end

new text begin (b) Construction of the facility must be commenced after June 1, 2013, and before June 1, 2017. Property eligible for this exemption does not include electric transmission lines and interconnections or gas pipelines and interconnections appurtenant to the property or the facility. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2013, taxes payable in 2014, and thereafter. new text end

Sec. 15.

Minnesota Statutes 2012, section 273.061, subdivision 2, is amended to read:

Subd. 2.

Term; vacancy.

(a) The terms of county assessors appointed under this section shall be four years. A new term shall begin on January 1 of every fourth year after 1973. When any vacancy in the office occurs, the board of county commissioners, within 90 days thereafter, shall fill the same by appointment for the remainder of the term, following the procedure prescribed in subdivision 1. The term of the county assessor may be terminated by the board of county commissioners at any time, on charges of malfeasance, misfeasance, or nonfeasance by the commissioner of revenue. If the board of county commissioners does not intend to reappoint a county assessor who has been certified by the state Board of Assessors, the board shall present written notice to the county assessor not later than 90 days prior to the termination of the assessor's term, that it does not intend to reappoint the assessor. If written notice is not timely made, the county assessor will automatically be reappointed by the board of county commissioners.

deleted text begin The commissioner of revenue may recommend to the state Board of Assessors the nonrenewal, suspension, or revocation of an assessor's license as provided in sections 270.41 to 270.50. deleted text end

(b) In the event of a vacancy in the office of county assessor, through death, resignation or other reasons, the deputy (or chief deputy, if more than one) shall perform the functions of the office. If there is no deputy, the county auditor shall designate a person to perform the duties of the office until an appointment is made as provided in clause (a). Such person shall perform the duties of the office for a period not exceeding 90 days during which the county board must appoint a county assessor. Such 90-day period may, however, be extended by written approval of the commissioner of revenue.

(c) In the case of the first appointment under paragraph (a) of a county assessor who is accredited but who does not have senior accreditation, an approval of the appointment by the commissioner shall be provisional, provided that a county assessor appointed to a provisional term under this paragraph must reapply to the commissioner at the end of the provisional term. A provisional term may not exceed two years. The commissioner shall not approve the appointment for the remainder of the four-year term unless the assessor has obtained senior accreditation.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning July 1, 2013. new text end

Sec. 16.

Minnesota Statutes 2012, section 273.0645, is amended to read:

273.0645 COMMISSIONER REVIEW OF deleted text begin LOCALdeleted text end ASSESSMENT PRACTICES.

new text begin Subdivision 1. new text end

new text begin Local assessment practices. new text end

The commissioner of revenue must review the assessment practices in a taxing jurisdiction if requested in writing by a qualifying number of property owners in that taxing jurisdiction. The request must be signed by the greater of:

(1) ten percent of the registered voters who voted in the last general election; or

(2) five property owners.

The request must identify the city, town, or county and describe why a review is sought for that taxing jurisdiction. The commissioner must conduct the review in a reasonable amount of time and report the findings to the county board of the affected county, to the affected city council or town board, if the review is for a specific city or town, and to the property owner designated in the request as the person to receive the report on behalf of all the property owners who signed the request. The commissioner must also provide the report electronically to all property owners who signed the request and provided an e-mail address in order to receive the report electronically.

new text begin Subd. 2. new text end

new text begin Nonfeasance, misfeasance, and malfeasance. new text end

new text begin County assessors may file a written complaint with the commissioner of revenue detailing allegations of nonfeasance, misfeasance, or malfeasance by a local assessor. After receiving a complaint from a county assessor, the commissioner must complete an investigation and recommend an appropriate action to the State Board of Assessors. The commissioner is not required to have a written complaint from a county assessor in order to conduct an investigation and recommend an action to the board. Active investigative data relating to the investigation of complaints against an assessor by the commissioner of revenue are subject to section 13.39. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013. new text end

Sec. 17.

Minnesota Statutes 2012, section 273.117, is amended to read:

273.117 CONSERVATION PROPERTY TAX VALUATION.

The value of real property which is subject to a conservation restriction or easement deleted text begin may be adjusteddeleted text end new text begin shall not be reducednew text end by the assessor if:

(a) the restriction or easement is for a conservation purpose as defined in section 84.64, subdivision 2, and is recorded on the property;new text begin andnew text end

(b) the property is being used in accordance with the terms of the conservation restriction or easement.

new text begin This section does not apply to (1) conservation restrictions or easements covering riparian buffers along lakes, rivers, and streams that are used for water quantity or quality control; or (2) to easements in a county that has adopted, by referendum, a program to protect farmland and natural areas since 1999. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2013 and thereafter, and for taxes payable in 2014 and thereafter. new text end

Sec. 18.

Minnesota Statutes 2012, section 273.13, subdivision 25, is amended to read:

Subd. 25.

Class 4.

(a) Class 4a is residential real estate containing four or more units and used or held for use by the owner or by the tenants or lessees of the owner as a residence for rental periods of 30 days or more, excluding property qualifying for class 4d. Class 4a also includes hospitals licensed under sections 144.50 to 144.56, other than hospitals exempt under section 272.02, and contiguous property used for hospital purposes, without regard to whether the property has been platted or subdivided. The market value of class 4a property has a class rate of 1.25 percent.

(b) Class 4b includes:

(1) residential real estate containing less than four units that does not qualify as class 4bb, other than seasonal residential recreational property;

(2) manufactured homes not classified under any other provision;

(3) a dwelling, garage, and surrounding one acre of property on a nonhomestead farm classified under subdivision 23, paragraph (b) containing two or three units; and

(4) unimproved property that is classified residential as determined under subdivision 33.

The market value of class 4b property has a class rate of 1.25 percent.

(c) Class 4bb includesdeleted text begin :deleted text end

deleted text begin (1)deleted text end nonhomestead residential real estate containing one unit, other than seasonal residential recreational property; and

deleted text begin (2)deleted text end a single family dwelling, garage, and surrounding one acre of property on a nonhomestead farm classified under subdivision 23, paragraph (b).

Class 4bb property has the same class rates as class 1a property under subdivision 22.

Property that has been classified as seasonal residential recreational property at any time during which it has been owned by the current owner or spouse of the current owner does not qualify for class 4bb.

(d) Class 4c property includes:

(1) except as provided in subdivision 22, paragraph (c), real and personal property devoted to commercial temporary and seasonal residential occupancy for recreation purposes, for not more than 250 days in the year preceding the year of assessment. For purposes of this clause, property is devoted to a commercial purpose on a specific day if any portion of the property is used for residential occupancy, and a fee is charged for residential occupancy. Class 4c property under this clause must contain three or more rental units. A "rental unit" is defined as a cabin, condominium, townhouse, sleeping room, or individual camping site equipped with water and electrical hookups for recreational vehicles. A camping pad offered for rent by a property that otherwise qualifies for class 4c under this clause is also class 4c under this clause regardless of the term of the rental agreement, as long as the use of the camping pad does not exceed 250 days. In order for a property to be classified under this clause, either (i) the business located on the property must provide recreational activities, at least 40 percent of the annual gross lodging receipts related to the property must be from business conducted during 90 consecutive days, and either (A) at least 60 percent of all paid bookings by lodging guests during the year must be for periods of at least two consecutive nights; or (B) at least 20 percent of the annual gross receipts must be from charges for providing recreational activities, or (ii) the business must contain 20 or fewer rental units, and must be located in a township or a city with a population of 2,500 or less located outside the metropolitan area, as defined under section 473.121, subdivision 2, that contains a portion of a state trail administered by the Department of Natural Resources. For purposes of item (i)(A), a paid booking of five or more nights shall be counted as two bookings. Class 4c property also includes commercial use real property used exclusively for recreational purposes in conjunction with other class 4c property classified under this clause and devoted to temporary and seasonal residential occupancy for recreational purposes, up to a total of two acres, provided the property is not devoted to commercial recreational use for more than 250 days in the year preceding the year of assessment and is located within two miles of the class 4c property with which it is used. In order for a property to qualify for classification under this clause, the owner must submit a declaration to the assessor designating the cabins or units occupied for 250 days or less in the year preceding the year of assessment by January 15 of the assessment year. Those cabins or units and a proportionate share of the land on which they are located must be designated class 4c under this clause as otherwise provided. The remainder of the cabins or units and a proportionate share of the land on which they are located will be designated as class 3a. The owner of property desiring designation as class 4c property under this clause must provide guest registers or other records demonstrating that the units for which class 4c designation is sought were not occupied for more than 250 days in the year preceding the assessment if so requested. The portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, (4) conference center or meeting room, and (5) other nonresidential facility operated on a commercial basis not directly related to temporary and seasonal residential occupancy for recreation purposes does not qualify for class 4c. For the purposes of this paragraph, "recreational activities" means renting ice fishing houses, boats and motors, snowmobiles, downhill or cross-country ski equipment; providing marina services, launch services, or guide services; or selling bait and fishing tackle;

(2) qualified property used as a golf course if:

(i) it is open to the public on a daily fee basis. It may charge membership fees or dues, but a membership fee may not be required in order to use the property for golfing, and its green fees for golfing must be comparable to green fees typically charged by municipal courses; and

(ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).

A structure used as a clubhouse, restaurant, or place of refreshment in conjunction with the golf course is classified as class 3a property;

(3) real property up to a maximum of three acres of land owned and used by a nonprofit community service oriented organization and not used for residential purposes on either a temporary or permanent basis, provided that:

(i) the property is not used for a revenue-producing activity for more than six days in the calendar year preceding the year of assessment; or

(ii) the organization makes annual charitable contributions and donations at least equal to the property's previous year's property taxes and the property is allowed to be used for public and community meetings or events for no charge, as appropriate to the size of the facility.

For purposes of this clause:

(A) "charitable contributions and donations" has the same meaning as lawful gambling purposes under section 349.12, subdivision 25, excluding those purposes relating to the payment of taxes, assessments, fees, auditing costs, and utility payments;

(B) "property taxes" excludes the state general tax;

(C) a "nonprofit community service oriented organization" means any corporation, society, association, foundation, or institution organized and operated exclusively for charitable, religious, fraternal, civic, or educational purposes, and which is exempt from federal income taxation pursuant to section 501(c)(3), (8), (10), or (19) of the Internal Revenue Code; and

(D) "revenue-producing activities" shall include but not be limited to property or that portion of the property that is used as an on-sale intoxicating liquor or 3.2 percent malt liquor establishment licensed under chapter 340A, a restaurant open to the public, bowling alley, a retail store, gambling conducted by organizations licensed under chapter 349, an insurance business, or office or other space leased or rented to a lessee who conducts a for-profit enterprise on the premises.

Any portion of the property not qualifying under either item (i) or (ii) is class 3a. The use of the property for social events open exclusively to members and their guests for periods of less than 24 hours, when an admission is not charged nor any revenues are received by the organization shall not be considered a revenue-producing activity.

The organization shall maintain records of its charitable contributions and donations and of public meetings and events held on the property and make them available upon request any time to the assessor to ensure eligibility. An organization meeting the requirement under item (ii) must file an application by May 1 with the assessor for eligibility for the current year's assessment. The commissioner shall prescribe a uniform application form and instructions;

(4) postsecondary student housing of not more than one acre of land that is owned by a nonprofit corporation organized under chapter 317A and is used exclusively by a student cooperative, sorority, or fraternity for on-campus housing or housing located within two miles of the border of a college campus;

(5)(i) manufactured home parks as defined in section 327.14, subdivision 3, excluding manufactured home parks described in section 273.124, subdivision 3a, and (ii) manufactured home parks as defined in section 327.14, subdivision 3, that are described in section 273.124, subdivision 3a;

(6) real property that is actively and exclusively devoted to indoor fitness, health, social, recreational, and related uses, is owned and operated by a not-for-profit corporation, and is located within the metropolitan area as defined in section 473.121, subdivision 2;

(7) a leased or privately owned noncommercial aircraft storage hangar not exempt under section 272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land is on an airport owned or operated by a city, town, county, Metropolitan Airports Commission, or group thereof; and

(ii) the land lease, or any ordinance or signed agreement restricting the use of the leased premise, prohibits commercial activity performed at the hangar.

If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must be filed by the new owner with the assessor of the county where the property is located within 60 days of the sale;

(8) a privately owned noncommercial aircraft storage hangar not exempt under section 272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land abuts a public airport; and

(ii) the owner of the aircraft storage hangar provides the assessor with a signed agreement restricting the use of the premises, prohibiting commercial use or activity performed at the hangar; and

(9) residential real estate, a portion of which is used by the owner for homestead purposes, and that is also a place of lodging, if all of the following criteria are met:

(i) rooms are provided for rent to transient guests that generally stay for periods of 14 or fewer days;

(ii) meals are provided to persons who rent rooms, the cost of which is incorporated in the basic room rate;

(iii) meals are not provided to the general public except for special events on fewer than seven days in the calendar year preceding the year of the assessment; and

(iv) the owner is the operator of the property.

The market value subject to the 4c classification under this clause is limited to five rental units. Any rental units on the property in excess of five, must be valued and assessed as class 3a. The portion of the property used for purposes of a homestead by the owner must be classified as class 1a property under subdivision 22;

(10) real property up to a maximum of three acres and operated as a restaurant as defined under section 157.15, subdivision 12, provided it: (A) is located on a lake as defined under section 103G.005, subdivision 15, paragraph (a), clause (3); and (B) is either devoted to commercial purposes for not more than 250 consecutive days, or receives at least 60 percent of its annual gross receipts from business conducted during four consecutive months. Gross receipts from the sale of alcoholic beverages must be included in determining the property's qualification under subitem (B). The property's primary business must be as a restaurant and not as a bar. Gross receipts from gift shop sales located on the premises must be excluded. Owners of real property desiring 4c classification under this clause must submit an annual declaration to the assessor by February 1 of the current assessment year, based on the property's relevant information for the preceding assessment year;

(11) lakeshore and riparian property and adjacent land, not to exceed six acres, used as a marina, as defined in section 86A.20, subdivision 5, which is made accessible to the public and devoted to recreational use for marina services. The marina owner must annually provide evidence to the assessor that it provides services, including lake or river access to the public by means of an access ramp or other facility that is either located on the property of the marina or at a publicly owned site that abuts the property of the marina. No more than 800 feet of lakeshore may be included in this classification. Buildings used in conjunction with a marina for marina services, including but not limited to buildings used to provide food and beverage services, fuel, boat repairs, or the sale of bait or fishing tackle, are classified as class 3a property; and

(12) real and personal property devoted to noncommercial temporary and seasonal residential occupancy for recreation purposes.

Class 4c property has a class rate of 1.5 percent of market value, except that (i) each parcel of noncommercial seasonal residential recreational property under clause (12) has the same class rates as class 4bb property, (ii) manufactured home parks assessed under clause (5), item (i), have the same class rate as class 4b property, and the market value of manufactured home parks assessed under clause (5), item (ii), has the same class rate as class 4d property if more than 50 percent of the lots in the park are occupied by shareholders in the cooperative corporation or association and a class rate of one percent if 50 percent or less of the lots are so occupied, (iii) commercial-use seasonal residential recreational property and marina recreational land as described in clause (11), has a class rate of one percent for the first $500,000 of market value, and 1.25 percent for the remaining market value, (iv) the market value of property described in clause (4) has a class rate of one percent, (v) the market value of property described in clauses (2), (6), and (10) has a class rate of 1.25 percent, and (vi) that portion of the market value of property in clause (9) qualifying for class 4c property has a class rate of 1.25 percent.

(e) Class 4d property is qualifying low-income rental housing certified to the assessor by the Housing Finance Agency under section 273.128, subdivision 3. If only a portion of the units in the building qualify as low-income rental housing units as certified under section 273.128, subdivision 3, only the proportion of qualifying units to the total number of units in the building qualify for class 4d. The remaining portion of the building shall be classified by the assessor based upon its use. Class 4d also includes the same proportion of land as the qualifying low-income rental housing units are to the total units in the building. For all properties qualifying as class 4d, the market value determined by the assessor must be based on the normal approach to value using normal unrestricted rents.

new text begin (f) The first tier of market value of new text end class 4d property has a class rate of 0.75 percent.new text begin The remaining value of class 4d property has a class rate of 0.25 percent. For the purposes of this paragraph, the "first tier of market value of class 4d property" means the market value of each housing unit up to the first tier limit. For the purposes of this paragraph, all class 4d property value must be assigned to individual housing units. The first tier limit is $100,000 for assessment year 2014. For subsequent years, the limit is adjusted each year by the average statewide change in estimated market value of property classified as class 4a and 4d under this section for the previous assessment year, excluding valuation change due to new construction, rounded to the nearest $1,000, provided, however, that the limit may never be less than $100,000. Beginning with assessment year 2015, the commissioner of revenue must certify the limit for each assessment year by November 1 of the previous year.new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2014. new text end

Sec. 19.

Minnesota Statutes 2012, section 279.01, subdivision 1, is amended to read:

Subdivision 1.

Due dates; penalties.

Except as provided in deleted text begin subdivisiondeleted text end new text begin subdivisionsnew text end 3 deleted text begin or 4deleted text end new text begin to 5new text end , on May 16 or 21 days after the postmark date on the envelope containing the property tax statement, whichever is later, a penalty accrues and thereafter is charged upon all unpaid taxes on real estate on the current lists in the hands of the county treasurer. The penalty is at a rate of two percent on homestead property until May 31 and four percent on June 1. The penalty on nonhomestead property is at a rate of four percent until May 31 and eight percent on June 1. This penalty does not accrue until June 1 of each year, or 21 days after the postmark date on the envelope containing the property tax statements, whichever is later, on commercial use real property used for seasonal residential recreational purposes and classified as class 1c or 4c, and on other commercial use real property classified as class 3a, provided that over 60 percent of the gross income earned by the enterprise on the class 3a property is earned during the months of May, June, July, and August. In order for the first half of the tax due on class 3a property to be paid after May 15 and before June 1, or 21 days after the postmark date on the envelope containing the property tax statement, whichever is later, without penalty, the owner of the property must attach an affidavit to the payment attesting to compliance with the income provision of this subdivision. Thereafter, for both homestead and nonhomestead property, on the first day of each month beginning July 1, up to and including October 1 following, an additional penalty of one percent for each month accrues and is charged on all such unpaid taxes provided that if the due date was extended beyond May 15 as the result of any delay in mailing property tax statements no additional penalty shall accrue if the tax is paid by the extended due date. If the tax is not paid by the extended due date, then all penalties that would have accrued if the due date had been May 15 shall be charged. When the taxes against any tract or lot exceed $100, one-half thereof may be paid prior to May 16 or 21 days after the postmark date on the envelope containing the property tax statement, whichever is later; and, if so paid, no penalty attaches; the remaining one-half may be paid at any time prior to October 16 following, without penalty; but, if not so paid, then a penalty of two percent accrues thereon for homestead property and a penalty of four percent on nonhomestead property. Thereafter, for homestead property, on the first day of November an additional penalty of four percent accrues and on the first day of December following, an additional penalty of two percent accrues and is charged on all such unpaid taxes. Thereafter, for nonhomestead property, on the first day of November and December following, an additional penalty of four percent for each month accrues and is charged on all such unpaid taxes. If one-half of such taxes are not paid prior to May 16 or 21 days after the postmark date on the envelope containing the property tax statement, whichever is later, the same may be paid at any time prior to October 16, with accrued penalties to the date of payment added, and thereupon no penalty attaches to the remaining one-half until October 16 following.

This section applies to payment of personal property taxes assessed against improvements to leased property, except as provided by section 277.01, subdivision 3.

A county may provide by resolution that in the case of a property owner that has multiple tracts or parcels with aggregate taxes exceeding $100, payments may be made in installments as provided in this subdivision.

The county treasurer may accept payments of more or less than the exact amount of a tax installment due. Payments must be applied first to the oldest installment that is due but which has not been fully paid. If the accepted payment is less than the amount due, payments must be applied first to the penalty accrued for the year or the installment being paid. Acceptance of partial payment of tax does not constitute a waiver of the minimum payment required as a condition for filing an appeal under section 278.03 or any other law, nor does it affect the order of payment of delinquent taxes under section 280.39.

Sec. 20.

Minnesota Statutes 2012, section 279.01, is amended by adding a subdivision to read:

new text begin Subd. 5. new text end

new text begin Federal active service exception. new text end

new text begin In the case of a homestead property owned by an individual who is on federal active service, as defined in section 190.05, subdivision 5c, as a member of the National Guard or a reserve component, a four-month grace period is granted for complying with the due dates imposed by subdivision 1. During this period, no late fees or penalties shall accrue against the property. The due date for property taxes owed under this chapter for an individual covered by this subdivision shall be September 15 for taxes due on May 15, and February 15 of the following year for taxes due on October 15. A taxpayer making a payment under this subdivision must accompany the payment with a signed copy of the taxpayer's orders or form DD214 showing the dates of active service which clearly indicate that the taxpayer was in active service as a member of the National Guard or a reserve component on the date the payment was due. This grace period applies to all homestead property owned by individuals on federal active service, as herein defined, for all of that property's due dates which fall on a day that is included in the taxpayer's federal active service. new text end

Sec. 21.

Minnesota Statutes 2012, section 279.02, is amended to read:

279.02 DUTIES OF COUNTY AUDITOR AND TREASURER.

new text begin Subdivision 1. new text end

new text begin Delinquent property; rates. new text end

On the first business day in January, of each year, the county treasurer shall return the tax lists on hand to the county auditor, who shall compare the same with the statements receipted for by the treasurer on file in the auditor's office and each tract or lot of real property against which the taxes, or any part thereof, remain unpaid, shall be deemed delinquent, and thereupon an additional penalty of two percent on the amount of the original tax remaining unpaid shall immediately accrue and thereafter be charged upon all such delinquent taxes; and any auditor who shall make out and deliver any statement of delinquent taxes without including therein the penalties imposed by law, and any treasurer who shall receive payment of such taxes without including in such payment all items as shown on the auditor's statement, shall be liable to the county for the amounts of any items omitted.

new text begin Subd. 2. new text end

new text begin Federal active service exception. new text end

new text begin Notwithstanding subdivision 1, a homestead property owned by an individual who is on federal active service, as defined in section 190.05, subdivision 5c, as a member of the National Guard or a reserve component, shall not be deemed delinquent under this section if the due dates imposed under section 279.01 fall on a day in which the individual was on federal active service. new text end

Sec. 22.

Minnesota Statutes 2012, section 279.37, subdivision 1a, is amended to read:

Subd. 1a.

Class 3a property.

(a) The delinquent taxes upon a parcel of property which was classified class 3a, for the previous year's assessment deleted text begin and had a total market value of $500,000 or less for that same assessmentdeleted text end shall be eligible to be composed into a confession of judgmentnew text begin with the approval of the county auditornew text end . Property qualifying under this subdivision shall be subject to the same provisions as provided in this section except as provided in paragraphs (b) to deleted text begin (d)deleted text end new text begin (f)new text end .

(b) Current year taxes and penalty due at the time the confession of judgment is entered must be paid.

(c) The down payment must include all special assessments due in the current tax year, all delinquent special assessments, and 20 percent of the ad valorem tax, penalties, and interest accrued against the parcel. The balance remaining is payable in four equal annual installments.new text begin A municipality as defined in section 429.011, cities of the first class, and other special assessment authorities, that have certified special assessments against any parcel of property, may, through resolution, waive the requirement of payment of all current and delinquent special assessments at the time the confession is entered. If the municipality, city, or authority grants the waiver, 100 percent of all current year taxes, special assessments, and penalties due at the time, along with 20 percent of all delinquent taxes, special assessments, penalties, interest, and fees must be paid. The balance remaining shall be subject to and included in the installment plan.new text end

new text begin (d) When there are current and delinquent special assessments certified and billed against a parcel, the assessment authority or municipality as defined in section 429.011 may abate under section 375.192, subdivision 2, all special assessments and the penalty and interest affiliated with the special assessments, and reassess the special assessments, penalties, and interest accrued thereon, under section 429.071, subdivision 2. The municipality shall notify the county auditor of its intent to reassess as a precondition to the entry of the confession of judgment. Upon the notice to abate and reassess, the municipality shall, through resolution, notify the county auditor to remove all current and delinquent special assessments and the accrued penalty and interest on the special assessments, and the payment of all or a portion of the current and delinquent assessments shall not be required as part of the down payment due at the time the confession of judgment is entered in accordance with paragraph (c). new text end

deleted text begin (d)deleted text end new text begin (e)new text end The amounts entered in judgment bear interest at the rate provided in section 279.03, subdivision 1a, commencing with the date the judgment is entered. The interest rate is subject to change each year on the unpaid balance in the manner provided in section 279.03, subdivision 1a.

new text begin (f) The county auditor may require conditions on properties including, but not limited to, environmental remediation action plan requirements, restrictions, or covenants, when considering a request for approval of eligibility for composition into a confession of judgment for delinquent taxes upon a parcel of property which was classified class 3a for the previous year's assessment. new text end

Sec. 23.

Minnesota Statutes 2012, section 279.37, subdivision 2, is amended to read:

Subd. 2.

Installment payments.

The owner of any such parcel, or any person to whom the right to pay taxes has been given by statute, mortgage, or other agreement, may make and file with the county auditor of the county in which the parcel is located a written offer to pay the current taxes each year before they become delinquent, or to contest the taxes under Minnesota Statutes 1941, sections 278.01 to 278.13, and agree to confess judgment for the amount provided, as determined by the county auditor. By filing the offer, the owner waives all irregularities in connection with the tax proceedings affecting the parcel and any defense or objection which the owner may have to the proceedings, and also waives the requirements of any notice of default in the payment of any installment or interest to become due pursuant to the composite judgment to be so entered. new text begin Unless the property is subject to subdivision 1a, new text end with the offer, the owner shallnew text begin (i)new text end tender one-tenth of the amount of the delinquent taxes, costs, penalty, and interest, and deleted text begin shalldeleted text end new text begin (ii)new text end tender all current year taxes and penalty due at the time the confession of judgment is entered. In the offer, the owner shall agree to pay the balance in nine equal installments, with interest as provided in section 279.03, payable annually on installments remaining unpaid from time to time, on or before December 31 of each year following the year in which judgment was confessed. The offer must be substantially as follows:

"To the court administrator of the district court of ........... county, I, ....................., am the owner of the following described parcel of real estate located in .................... county, Minnesota:

.............................. Upon that real estate there are delinquent taxes for the year ........., and prior years, as follows: (here insert year of delinquency and the total amount of delinquent taxes, costs, interest, and penalty). By signing this document I offer to confess judgment in the sum of $...... and waive all irregularities in the tax proceedings affecting these taxes and any defense or objection which I may have to them, and direct judgment to be entered for the amount stated above, minus the sum of $............, to be paid with this document, which is one-tenth new text begin or one-fifth new text end of the amount of the taxes, costs, penalty, and interest stated above. I agree to pay the balance of the judgment in ninenew text begin or fournew text end equal, annual installments, with interest as provided in section 279.03, payable annually, on the installments remaining unpaid. I agree to pay the installments and interest on or before December 31 of each year following the year in which this judgment is confessed and current taxes each year before they become delinquent, or within 30 days after the entry of final judgment in proceedings to contest the taxes under Minnesota Statutes, sections 278.01 to 278.13.

Dated .............., ......."

Sec. 24.

Minnesota Statutes 2012, section 281.14, is amended to read:

281.14 EXPIRATION OF TIME FOR REDEMPTION.

The time for redemption from any tax sale, whether made to the state or to a private person, shall not expire until notice of expiration of redemption, as provided in section deleted text begin 281.13deleted text end new text begin 281.17new text end , shall have been given.

Sec. 25.

Minnesota Statutes 2012, section 281.17, is amended to read:

281.17 PERIOD FOR REDEMPTION.

Except for properties for which the period of redemption has been limited under sections 281.173 and 281.174, the following periods for redemption apply.

The period of redemption for all lands sold to the state at a tax judgment sale shall be three years from the date of sale to the state of Minnesota deleted text begin if the land is within an incorporated area unless it is: (a) nonagricultural homesteaded land as defined in section 273.13, subdivision 22; (b) homesteaded agricultural land as defined in section 273.13, subdivision 23, paragraph (a); or (c) seasonal residential recreational land as defined in section 273.13, subdivision 22, paragraph (c), or 25, paragraph (d), clause (1), for which the period of redemption is five years from the date of sale to the state of Minnesotadeleted text end .

The period of redemption for homesteaded lands as defined in section 273.13, subdivision 22, located in a targeted neighborhood as defined in Laws 1987, chapter 386, article 6, section 4, and sold to the state at a tax judgment sale is three years from the date of sale. The period of redemption for all lands located in a targeted neighborhood as defined in Laws 1987, chapter 386, article 6, section 4, except (1) homesteaded lands as defined in section 273.13, subdivision 22, and (2) for periods of redemption beginning after June 30, 1991, but before July 1, 1996, lands located in the Loring Park targeted neighborhood on which a notice of lis pendens has been served, and sold to the state at a tax judgment sale is one year from the date of sale.

The period of redemption for all real property constituting a mixed municipal solid waste disposal facility that is a qualified facility under section 115B.39, subdivision 1, is one year from the date of the sale to the state of Minnesota.

deleted text begin The period of redemption for all other lands sold to the state at a tax judgment sale shall be five years from the date of sale, except that the period of redemption for nonhomesteaded agricultural land as defined in section 273.13, subdivision 23, paragraph (b), shall be two years from the date of sale if at that time that property is owned by a person who owns one or more parcels of property on which taxes are delinquent, and the delinquent taxes are more than 25 percent of the prior year's school district levy. deleted text end

Sec. 26.

Minnesota Statutes 2012, section 287.05, is amended by adding a subdivision to read:

new text begin Subd. 10. new text end

new text begin Hennepin and Ramsey Counties. new text end

new text begin For properties located in Hennepin and Ramsey Counties, the county may impose an additional mortgage registry tax as defined in sections 383A.80 and 383B.80. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for deeds and mortgages acknowledged on or after July 1, 2013. new text end

Sec. 27.

new text begin [287.223] HENNEPIN AND RAMSEY COUNTIES. new text end

new text begin For properties located in Hennepin and Ramsey Counties, the county may impose an additional deed tax as defined in sections 383A.80 and 383B.80. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for deeds and mortgages acknowledged on or after July 1, 2013. new text end

Sec. 28.

Minnesota Statutes 2012, section 383A.80, subdivision 4, is amended to read:

Subd. 4.

Expiration.

The authority to impose the tax under this section expires January 1, deleted text begin 2013deleted text end new text begin 2028new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for all deeds and mortgages acknowledged on or after July 1, 2013. new text end

Sec. 29.

Minnesota Statutes 2012, section 383B.80, subdivision 4, is amended to read:

Subd. 4.

Expiration.

The authority to impose the tax under this section expires January 1, deleted text begin 2013deleted text end new text begin 2028new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for all deeds and mortgages acknowledged on or after July 1, 2013. new text end

Sec. 30.

Minnesota Statutes 2012, section 428A.101, is amended to read:

428A.101 DEADLINE FOR SPECIAL SERVICE DISTRICT UNDER GENERAL LAW.

The establishment of a new special service district after June 30, deleted text begin 2013deleted text end new text begin 2028new text end , requires enactment of a special law authorizing the establishment.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment. new text end

Sec. 31.

Minnesota Statutes 2012, section 428A.21, is amended to read:

428A.21 DEADLINE FOR HOUSING IMPROVEMENT DISTRICTS UNDER GENERAL LAW.

The establishment of a new housing improvement area after June 30, deleted text begin 2013deleted text end new text begin 2028new text end , requires enactment of a special law authorizing the establishment of the area.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment. new text end

Sec. 32.

Minnesota Statutes 2012, section 473F.08, subdivision 3a, is amended to read:

Subd. 3a.

Bloomington computation.

new text begin (a) new text end Beginning in 1987 and each subsequent year through 1998, the city of Bloomington shall determine the interest payments for that year for the bonds which have been sold for the highway improvements pursuant to Laws 1986, chapter 391, section 2, paragraph (g). Effective for property taxes payable in 1988 through property taxes payable in 1999, after the Hennepin County auditor has computed the areawide portion of the levy for the city of Bloomington pursuant to subdivision 3, clause (a), the auditor shall annually add a dollar amount to the city of Bloomington's areawide portion of the levy equal to the amount which has been certified to the auditor by the city of Bloomington for the interest payments for that year for the bonds which were sold for highway improvements. The total areawide portion of the levy for the city of Bloomington including the additional amount for interest repayment certified pursuant to this subdivision shall be certified by the Hennepin County auditor to the administrative auditor pursuant to subdivision 5. The Hennepin County auditor shall distribute to the city of Bloomington the additional areawide portion of the levy computed pursuant to this subdivision at the same time that payments are made to the other counties pursuant to subdivision 7a. For property taxes payable from the year 2009 through deleted text begin 2018deleted text end new text begin 2014new text end , the Hennepin County auditor shall adjust Bloomington's contribution to the areawide gross tax capacity upward each year by a value equal to ten percent of the total additional areawide levy distributed to Bloomington under this subdivision from 1988 to 1999, divided by the areawide tax rate for taxes payable in the previous year.

new text begin (b) For property taxes payable from 2015 through 2018, the administrative auditor shall increase the areawide net tax capacity each year by an amount equal to ten percent of the total additional areawide levy distributed to Bloomington under this subdivision from 1988 to 1999, divided by the areawide tax rate for taxes payable in the previous year. The administrative auditor must notify the commissioner of revenue of the amount determined by multiplying the increase in the areawide net tax capacity by the areawide tax rate determined under subdivision 5. The commissioner of revenue must pay the amount determined each payable year to the administrative auditor in two installments on July 10 and November 10, for distribution and settlement as provided in subdivision 7a. new text end

new text begin (c) A sum sufficient to meet the obligations under this subdivision is annually appropriated from the general fund to the commissioner of revenue. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2015. new text end

Sec. 33.

Laws 1988, chapter 645, section 3, as amended by Laws 1999, chapter 243, article 6, section 9, Laws 2000, chapter 490, article 6, section 15, and Laws 2008, chapter 154, article 2, section 30, is amended to read:

Sec. 3.

TAX; PAYMENT OF EXPENSES.

(a) The tax levied by the hospital district under Minnesota Statutes, section 447.34, must not be levied at a rate that exceeds the amount authorized to be levied under that section. The proceeds of the tax may be used for all purposes of the hospital district, except as provided in paragraph (b).

(b) 0.015 percent of taxable market value of the tax in paragraph (a) may be used deleted text begin solelydeleted text end new text begin by the Cook ambulance service and the Orr ambulance servicenew text end for the purpose of deleted text begin capital expenditures as it relates todeleted text end new text begin :new text end

new text begin (1)new text end ambulance acquisitions for the Cook ambulance service and the Orr ambulance service deleted text begin and notdeleted text end new text begin ;new text end

new text begin (2) attached and portable equipment for use in and for the ambulances; and new text end

new text begin (3) parts and replacement parts for maintenance and repair of the ambulances. new text end

new text begin The money may not be usednew text end for administrativenew text begin , operation, new text end or salary expenses.

new text begin (c) new text end The part of the levy referred to in paragraph (b) must be administered by the Cook Hospital and passed on new text begin in equal amounts new text end directly to the Cook area ambulance service board and the city of Orr to be deleted text begin held in trust until funding for a new ambulance is needed by either the Cook ambulance service or the Orr ambulance servicedeleted text end new text begin used for the purposes in paragraph (b)new text end .

Sec. 34.

Laws 1999, chapter 243, article 6, section 11, is amended to read:

Sec. 11.

CEMETERY LEVY FOR SAWYER BY CARLTON COUNTY.

deleted text begin Subdivision 1. deleted text end

deleted text begin Levy authorized. deleted text end

Notwithstanding other law to the contrary, the Carlton county board of commissioners maynew text begin annuallynew text end levy in and for the unorganized deleted text begin townshipdeleted text end new text begin territorynew text end of Sawyer an amount deleted text begin up to $1,000 annuallydeleted text end for cemetery purposesdeleted text begin , beginning with taxes payable in 2000 and ending with taxes payable in 2009deleted text end .

deleted text begin Subd. 2. deleted text end

deleted text begin Effective date. deleted text end

deleted text begin This section is effective June 1, 1999, without local approval. deleted text end

new text begin EFFECTIVE DATE; LOCAL APPROVAL. new text end

new text begin This section applies to taxes payable in 2014 and thereafter, and is effective the day after the Carlton County Board of Commissioners and its chief clerical officer timely complete their compliance with Minnesota Statutes, section 645.021, subdivisions 2 and 3. new text end

Sec. 35.

Laws 2008, chapter 366, article 5, section 33, the effective date, is amended to read:

EFFECTIVE DATE.

This section is effective for taxes levied in 2008, payable in 2009, and is repealed effective for taxes levied in deleted text begin 2013deleted text end new text begin 2018new text end , payable in deleted text begin 2014deleted text end new text begin 2019new text end , and thereafter.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2014. new text end

Sec. 36.

Laws 2009, chapter 88, article 2, section 46, subdivision 1, is amended to read:

Subdivision 1.

Agreement.

The city of Cloquet and Perch Lake Township, by resolution of each of their governing bodies, may establish the Cloquet Area Fire and Ambulance Taxing District for the purpose of providing fire deleted text begin anddeleted text end new text begin ornew text end ambulance servicesnew text begin , or both, new text end throughout the district. In this section, "municipality" means home rule charter and statutory cities, towns, and Indian tribes. The district may exercise all the powers relating to fire and ambulance services of the municipalities that receive fire deleted text begin anddeleted text end new text begin ornew text end ambulance servicesnew text begin , or both, new text end from the district. new text begin Upon application, new text end any other municipality deleted text begin that is contiguous to a municipality that is a member of the districtdeleted text end may join the district with the agreement of the municipalities that comprise the district at the time of its application to join.

Sec. 37.

Laws 2009, chapter 88, article 2, section 46, subdivision 3, is amended to read:

Subd. 3.

Tax.

The district board may impose a property tax on taxable property deleted text begin in the districtdeleted text end new text begin as provided in this subdivisionnew text end . deleted text begin Thisdeleted text end new text begin The board shall annually determine the total amount of the levy that is attributable to the cost of providing fire services and the cost of providing ambulance services within the primary service area. For those municipalities that only receive ambulance services, the costs for the provision of ambulance services shall be levied against taxable property within those municipalities at a rate necessary not to exceed 0.019 percent of the estimated market value. For those municipalities that receive both fire and ambulance services, thenew text end tax shall be imposed at a rate that does not exceed 0.2835 percent of deleted text begin taxabledeleted text end new text begin estimatednew text end market value deleted text begin for taxes payable in 2010. The board shall annually determine the separate amounts of the levy that are attributable to the cost of providing fire services and the cost of providing ambulance services. Costs for the provision of ambulance services shall be levied against taxable property within the area of the district that receive the services. Costs for the provision of fire services shall be levied against taxable property within the area of the district that receive the servicesdeleted text end .

When new text begin a member municipality opts to receive fire service from the district or new text end an additional municipality becomes a member of the district, the deleted text begin additionaldeleted text end cost of providing deleted text begin ambulance anddeleted text end fire services to that deleted text begin municipality willdeleted text end new text begin community shallnew text end be determined by the board and added to the maximum levy amount.

Each county auditor of a county that contains a municipality subject to the tax under this section must collect the tax and pay it to the Fire and Ambulance Special Taxing District. The district may also impose other fees or charges as allowed by law for the provision of fire and ambulance services.

Sec. 38.

Laws 2010, chapter 389, article 1, section 12, the effective date, is amended to read:

EFFECTIVE DATE.

This section is effective for assessment deleted text begin yearsdeleted text end new text begin yearnew text end 2010 and deleted text begin 2011, for taxes payable in 2011 and 2012deleted text end new text begin thereafternew text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2012 and thereafter. new text end

Sec. 39.

new text begin MINNEAPOLIS AND ST. PAUL ENTERTAINMENT FACILITIES COORDINATION STUDY; APPROPRIATION. new text end

new text begin Subdivision 1. new text end

new text begin Statement of purpose. new text end

new text begin The legislature finds that the national economic structure of professional sports financing, as directly or indirectly sanctioned by federal law, compels state and local governments in smaller metropolitan areas, such as Minneapolis and St. Paul, to help finance the construction and operation of venues for professional sports franchises as a condition of hosting these franchises. The burden and risk associated with providing this assistance justifies authorizing and directing the cities and any associated private entities to enter into arrangements that attempt to maximize the combined revenues of these facilities from direct users, including those unrelated to professional sports, such as, but not limited to, joint booking of concerts and other events, to minimize the cost and risk to general taxpayers. Any efforts to put in place such joint marketing, promotion, and scheduling arrangements by the cities or associated private entities, in the view of the legislature, is a petition for enactment of this or subsequent enabling legislation under the Noerr-Pennington doctrine or state action under the Parker antitrust doctrine. This legislation and any resulting arrangements are intended to minimize the potential burden on general taxpayers of financing and operation of the arenas. new text end

new text begin Subd. 2. new text end

new text begin Study and report. new text end

new text begin On or before February 1, 2014, the cities of Minneapolis and St. Paul, in consultation with representatives of the primary professional sports team tenant of each arena, shall study and report to the legislature on establishing a joint governing structure to be responsible for the joint administration, financing, and operations of the facilities and the possible effects of joint governance on the finances of each arena and each city. The commissioner of administration, in consultation with the two cities, shall contract with an independent consultant to conduct all or a portion of the study. The cities of Minneapolis and St. Paul together shall pay one-half of the cost of the consultant contract. The commissioner may accept funding from other public entities and private organizations to pay for the contract. The study must: new text end

new text begin (1) examine the current finances of each arena including past and projected costs and revenues, projected capital improvements, and the current and projected impact of each arena on each city's general fund; new text end

new text begin (2) determine the impact of joint governance on the future finances of each city; new text end

new text begin (3) examine joint scheduling, marketing, and promotion of events at the arenas, either within a joint governance structure or as separate entities; and new text end

new text begin (4) estimate the amount of funding, if any, that would be required to operate and maintain the arenas under a joint governing structure. new text end

new text begin Subd. 3. new text end

new text begin Appropriation. new text end

new text begin Up to $50,000 is appropriated to the commissioner of administration from the general fund for fiscal year 2014 to pay up to one-half of the costs of the consultant contract under subdivision 2. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment. new text end

Sec. 40.

new text begin REIMBURSEMENT FOR PROPERTY TAX ABATEMENTS; APPROPRIATION. new text end

new text begin Subdivision 1. new text end

new text begin Reimbursement. new text end

new text begin The commissioner of revenue shall reimburse taxing jurisdictions for property tax abatements granted in Hennepin County under Laws 2011, First Special Session chapter 7, article 5, section 13, notwithstanding the time limits contained in that section. The reimbursements must be made to each taxing jurisdiction pursuant to the certification of the Hennepin County auditor. new text end

new text begin Subd. 2. new text end

new text begin Appropriation. new text end

new text begin In fiscal year 2014 only, $336,000 is appropriated to the commissioner of revenue from the general fund to make the payments required in this section. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment. new text end

Sec. 41.

new text begin ST. PAUL BALLPARK PROPERTY TAX EXEMPTION; SPECIAL ASSESSMENT. new text end

new text begin Any real or personal property acquired, owned, leased, controlled, used, or occupied by the city of St. Paul for the primary purpose of providing a ballpark for a minor league baseball team is declared to be acquired, owned, leased, controlled, used, and occupied for public, governmental, and municipal purposes, and is exempt from ad valorem taxation by the state or any political subdivision of the state, provided that the properties are subject to special assessments levied by a political subdivision for a local improvement in amounts proportionate to and not exceeding the special benefit received by the properties from the improvement. In determining the special benefit received by the properties, no possible use of any of the properties in any manner different from their intended use for providing a minor league ballpark at the time may be considered. Notwithstanding Minnesota Statutes, section 272.01, subdivision 2, or 273.19, real or personal property subject to a lease or use agreement between the city and another person for uses related to the purposes of the operation of the ballpark and related parking facilities is exempt from taxation regardless of the length of the lease or use agreement. This section, insofar as it provides an exemption or special treatment, does not apply to any real property that is leased for residential, business, or commercial development or other purposes different from those necessary to the provision and operation of the ballpark. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by the governing body of the city of St. Paul with Minnesota Statutes, section 645.021, subdivisions 2 and 3. new text end

Sec. 42.

new text begin PUBLIC ENTERTAINMENT FACILITY; PROPERTY TAX EXEMPTION; SPECIAL ASSESSMENT. new text end

new text begin Any real or personal property acquired, owned, leased, controlled, used, or occupied by the city of Minneapolis for the primary purpose of providing an arena for a professional basketball team is declared to be acquired, owned, leased, controlled, used, and occupied for public, governmental, and municipal purposes, and is exempt from ad valorem taxation by the state or any political subdivision of the state, provided that the properties are subject to special assessments levied by a political subdivision for a local improvement in amounts proportionate to and not exceeding the special benefit received by the properties from the improvement. In determining the special benefit received by the properties, no possible use of any of the properties in any manner different from their intended use for providing a professional basketball arena at the time may be considered. Notwithstanding Minnesota Statutes, section 272.01, subdivision 2, or 273.19, real or personal property subject to a lease or use agreement between the city and another person for uses related to the purposes of the operation of the arena and related parking facilities is exempt from taxation regardless of the length of the lease or use agreement. This section, insofar as it provides an exemption or special treatment, does not apply to any real property that is leased for residential, business, or commercial development, or for other purposes different from those necessary to the provision and operation of the arena. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by the governing body of the city of Minneapolis with Minnesota Statutes, section 645.021, subdivisions 2 and 3. new text end

Sec. 43.

new text begin PUBLIC ENTERTAINMENT FACILITY; CONSTRUCTION MANAGER AT RISK. new text end

new text begin (a) For any real or personal property acquired, owned, leased, controlled, used, or occupied by the city of Minneapolis for the primary purpose of providing an arena for a professional basketball team, the city of Minneapolis may contract for construction, materials, supplies, and equipment in accordance with Minnesota Statutes, section 471.345, except that the city may employ or contract with persons, firms, or corporations to perform one or more or all of the functions of an engineer, architect, construction manager, or program manager with respect to all or any part of a project to renovate, refurbish, and remodel the arena under either the traditional design-bid-build plan or construction manager at risk plan, or a combination thereof. new text end

new text begin (b) The city may prepare a request for proposals for one or more of the functions described in paragraph (a). The request must be published in a newspaper of general circulation. The city may prequalify offerors by issuing a request for qualifications, in advance of the request for proposals, and select a short list of responsible offerors to submit proposals. new text end

new text begin (c) As provided in the request for proposals, the city may conduct discussions and negotiations with responsible offerors in order to determine which proposal is most advantageous to the city and to negotiate the terms of an agreement. In conducting discussions, there shall be no disclosure of any information derived from proposals submitted by competing offerors and the content of all proposals is nonpublic data under Minnesota Statutes, chapter 13, until such time as a notice to award a contract is given by the city. new text end

new text begin (d) Upon agreement on the guaranteed maximum price, the construction manager or program manager may enter into contracts with subcontractors for labor, materials, supplies, and equipment for the renovation project through the process of public bidding, except that the construction manager or program manager may, with the consent of the city: new text end

new text begin (1) narrow the listing of eligible bidders to those that the construction manager or program manager determines to possess sufficient expertise to perform the intended functions; new text end

new text begin (2) award contracts to the subcontractors that the construction manager or program manager determines provide the best value under a request for proposals, as described in Minnesota Statutes, section 16C.28, subdivision 1, paragraph (a), clause (2), that are not required to be the lowest responsible bidder; and new text end

new text begin (3) for work the construction manager or program manager determines to be critical to the completion schedule, perform work with its own forces without soliciting competitive bids or proposals, if the construction manager or program manager provides evidence of competitive pricing. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by the governing body of the city of Minneapolis with Minnesota Statutes, section 645.021, subdivisions 2 and 3. new text end

Sec. 44.

new text begin EXTENSION OF PROPERTY TAX DUE DATE; COMMERCIAL SEASONAL RECREATIONAL PROPERTIES. new text end

new text begin Notwithstanding the provisions of Minnesota Statutes, section 279.01, subdivision 1, for taxes payable in 2013 only, the penalty on first-half property taxes does not accrue until June 15 on commercial use real property used for seasonal residential recreational purposes and classified as class 1c or 4c, and on other commercial use real property classified as class 3a, provided that over 60 percent of the gross income earned by the enterprise on the class 3a property is earned during the months of May, June, July, and August. In order for the first half of the tax due on class 3a property to be paid after May 15 and before June 15 without penalty, the owner of the property must attach an affidavit to the payment attesting to compliance with the income provision of this subdivision. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment. new text end

Sec. 45.

new text begin REPORT ON CLASS 4D TIER STRUCTURE. new text end

new text begin The commissioners of revenue and housing finance shall report to the legislature by January 31, 2015, on the implementation of a second tier of market value for class 4d property under Minnesota Statutes, section 273.13, subdivision 25, paragraph (f). The report shall include the number of class 4d properties subject to the second tier of market value for taxes payable in 2015 and the tax impact of the application of the second tier of market value. The report shall also include an analysis of the characteristics of the properties to which the second tier of market value applies, such as location, building type, and number of units. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013. new text end

Sec. 46.

new text begin REPORT AND STUDY ON CERTAIN PROPERTY USED IN BUSINESS AND PRODUCTION; ASSESSMENT MORATORIUM. new text end

new text begin Subdivision 1. new text end

new text begin Study and report. new text end

new text begin (a) In order to facilitate a legislative review of property tax assessment procedures for facilities used in the production of biofuels, wine, beer, distilled beverages, and dairy products, and the development of standards and criteria for determining the taxable status of these facilities, the commissioner of revenue must conduct a study and report the findings of the study. The study must: new text end

new text begin (1) include a detailed survey of counties identifying the components and tax status of biofuel facilities; new text end

new text begin (2) identify the function of components in facilities of the affected industries; new text end

new text begin (3) consider the taxability for certain components related to size, function, and use; new text end

new text begin (4) develop recommendations for assessment guidelines and policies for facilities of the affected industries; and new text end

new text begin (5) identify possible impacts to state and local taxes resulting from study recommendations. new text end

new text begin (b) The commissioner shall request the involvement and participation of stakeholders, including the affected industries, the assessment community, and others identified by the commissioner. new text end

new text begin (c) The commissioner shall report the findings to the chairs of the house of representatives and senate committees with jurisdiction over taxes, agriculture, and economic development as well as the commissioners of agriculture and employment and economic development by February 1, 2014. new text end

new text begin Subd. 2. new text end

new text begin Moratorium on changes in assessment practices. new text end

new text begin (a) For the 2013 and 2014 assessments, assessors must continue to use assessment practices or policies in effect in that county on January 2, 2012, for determining the taxable status of property used in the production of biofuels, wine, beer, distilled beverages, or dairy products. new text end

new text begin (b) An assessor must not change the taxable status of any existing property described in paragraph (a) from its status on January 2, 2012, unless the change is due to a change in the use of property, or to correct an error. For taxable properties, the assessor may change the estimated market value of the property and add value for any new construction that would have been taxable under practices and policies in place on January 2, 2012. new text end

new text begin (c) This subdivision expires on December 31, 2014. Any changes to the taxable status of the properties in paragraph (a) resulting from the study will not be effective until the 2015 assessment. new text end

Sec. 47.

new text begin PROPERTY TAX SAVINGS REPORT. new text end

new text begin (a) In addition to the certification of its proposed property tax levy under Minnesota Statutes, section 275.065, each city that has a population over 500 and each county shall also include the amount of sales and use tax paid, or was estimated to be paid, in 2012. new text end

new text begin (b) At the time the notice of the proposed property taxes is mailed as required under Minnesota Statutes, section 275.065, subdivision 3, the county treasurer shall also include a separate statement providing a list of sales and use tax certified by the county and cities within their jurisdiction. new text end

new text begin (c) At the public hearing required under Minnesota Statutes, section 275.065, subdivision 3, the county and city must discuss the estimated savings realized to their budgets that resulted from the sales tax exemption authorized under Minnesota Statutes, section 297A.70, subdivision 2, and how those savings will be used for property tax levy reductions, fee reductions, and other purposes as deemed appropriate. new text end

new text begin Reasonable costs of preparing the notice required in this section must be apportioned between taxing jurisdictions as follows: new text end

new text begin (1) one-half is allocated to the county; and new text end

new text begin (2) one-half is allocated among the cities. new text end

new text begin The amount allocated in clause (2) must be further apportioned among all the cities in the proportion that the number of parcels in the city bears to the number of parcels in all the cities that have populations over 500. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment, for taxes levied in 2013 and payable in 2014. new text end

Sec. 48.

new text begin LEVY LIMITS FOR TAXES LEVIED IN 2013. new text end

new text begin Subdivision 1. new text end

new text begin Population. new text end

new text begin "Population" means the population for the local governmental unit as established by the last federal census, by a census taken under section Minnesota Statutes, section 275.14, or by an estimate made by the metropolitan council or by the state demographer under Minnesota Statutes, section 4A.02, whichever is most recent as to the stated date of the count or estimate up to and including June 1 of the current levy year. new text end

new text begin Subd. 2. new text end

new text begin Local government unit. new text end

new text begin "Local governmental unit" means a county with a population greater than 5,000, or a statutory or home rule charter city with a population greater than 2,500. new text end

new text begin Subd. 3. new text end

new text begin Levy limit base. new text end

new text begin "Levy limit base" for a local governmental unit for levy year 2013 means the sum of its certified net tax capacity levy plus the total of aids and reimbursements that the local governmental unit is certified to receive under Minnesota Statutes, sections 477A.011 to 477A.014, minus any amounts that would qualify as a special levy under Minnesota Statutes, section 275.70, subdivision 5, clauses (1) to (4) and (7), for taxes levied in 2011 or 2012, whichever is greater. The levy limit base must be increased by three percent. new text end

new text begin Subd. 4. new text end

new text begin Property tax levy limit. new text end

new text begin For taxes levied in 2013, the net tax capacity levy limit for a local governmental unit is equal to its levy limit base determined under subdivision 3 plus any additional levy authorized under Minnesota Statutes, section 275.73, which is levied against net tax capacity, reduced by the total amount of aids and reimbursements that the local governmental unit is certified to receive under Minnesota Statutes, sections 477A.011 to 477A.014. The property tax levy limit for any local government cannot be less than the greater of its certified net tax capacity levies for taxes levied in 2011 or 2012. new text end

new text begin Subd. 5. new text end

new text begin Limit on levies. new text end

new text begin Notwithstanding any other provision of law or municipal charter to the contrary which authorize ad valorem taxes in excess of the limits established by this section, the provisions of this section apply to local governmental units for all purposes other than those for which special levies under Minnesota Statutes, section 275.70, subdivision 5, clauses (1) to (5) and (7), and special assessments are made. new text end

new text begin Subd. 6. new text end

new text begin Levies in excess of levy limits. new text end

new text begin If the levy made by a city or county exceeds the levy limit provided in this section, except when the excess levy is due to the rounding of the rate in accordance with Minnesota Statutes, section 275.28, the county auditor shall only extend the amount of taxes permitted under this section as provided for in Minnesota Statutes, section 275.16. new text end

new text begin Subd. 7. new text end

new text begin Calculation and notification. new text end

new text begin The commissioner of revenue shall make all necessary calculations for determining levy limits for local governmental units and notify the affected governmental units of their levy limits directly by September 1, 2013. The local governmental units shall, upon request, provide the commissioner with any information needed to make the calculations. The local governmental unit shall report by September 30, in a manner prescribed by the commissioner, the maximum amount of taxes it plans to levy for each of the purposes listed under special levies and any additional levy authorized under Minnesota Statutes, section 275.73, along with any necessary documentation. The commissioner shall review the proposed special levies and make any adjustments needed. The commissioner's decision is final. The final allowed special levy amounts and any levy limit adjustments must be certified back to the local governments by December 10. In addition, the commissioner of revenue shall notify all county auditors on or before five working days after December 20 of the sum of the levy limit plus the total of allowed special levies for each local governmental unit located within their boundaries so that they may fix the levies as required in Minnesota Statutes, section 275.16. The local governmental units shall provide the commissioner of revenue with all information that the commissioner deems necessary to make the calculations provided for in this section. new text end

new text begin Subd. 8. new text end

new text begin Information necessary to calculate levy limit base. new text end

new text begin A local governmental unit must provide the commissioner with the information required to calculate the amount under subdivision 3, by July 20, 2013. If the information is not received by the commissioner by that date, or is not deemed sufficient to make the calculation under that clause, the commissioner has the discretion to set the local governmental unit's levy limit for all purposes including those purposes for which special levies may be made, equal to the amount of the local governmental unit's certified levy for the prior year. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2013, payable in 2014, only. new text end

Sec. 49.

new text begin APPROPRIATION. new text end

new text begin $2,000,000 in fiscal year 2014 only is appropriated from the general fund to the commissioner of revenue for a grant to the city of Moose Lake to reimburse for costs related to connection of state facilities to the sewer line. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013. new text end

ARTICLE 5

SPECIAL TAXES

Section 1.

Minnesota Statutes 2012, section 270C.56, subdivision 1, is amended to read:

Subdivision 1.

Liability imposed.

A person who, either singly or jointly with others, has the control of, supervision of, or responsibility for filing returns or reports, paying taxes, or collecting or withholding and remitting taxes and who fails to do so, or a person who is liable under any other law, is liable for the payment of taxes arising under chapters 295, 296A, 297A, 297F, and 297G, or sections deleted text begin 256.9658,deleted text end 290.92, and 297E.02, and the applicable penalties and interest on those taxes.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013. new text end

Sec. 2.

Minnesota Statutes 2012, section 296A.09, subdivision 2, is amended to read:

Subd. 2.

new text begin Jet fuel and new text end special fuel tax imposed.

There is imposed an excise tax of deleted text begin the same ratedeleted text end new text begin 15 cents new text end per gallon deleted text begin as the aviation gasolinedeleted text end on all jet fuel or special fuel received, sold, stored, or withdrawn from storage in this state, for use as substitutes for aviation gasoline and not otherwise taxed as gasoline. Jet fuel is defined in section 296A.01, subdivision 8.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2014, and applied to sales and purchases made on or after that date. new text end

Sec. 3.

Minnesota Statutes 2012, section 296A.17, subdivision 3, is amended to read:

Subd. 3.

Refund on graduated basis.

Any person who has directly or indirectly paid the excise tax on aviation gasoline or special fuel for aircraft use provided for by this chapternew text begin and the airflight property tax under section 270.72new text end , shall, as to all such aviation gasoline and special fuel received, stored, or withdrawn from storage by the person in this state in any calendar year and not sold or otherwise disposed of to others, or intended for sale or other disposition to others, on which such tax has been so paid, be entitled to the following graduated reductions in such tax for that calendar year, to be obtained by means of the following refunds:

(1) on each gallon of such aviation gasoline or special fuel up to 50,000 gallons, all but five cents per gallon;

(2) on each gallon of such aviation gasoline or special fuel above 50,000 gallons and not more than 150,000 gallons, all but two cents per gallon;

(3) on each gallon of such aviation gasoline or special fuel above 150,000 gallons and not more than 200,000 gallons, all but one cent per gallon;

(4) on each gallon of such aviation gasoline or special fuel above 200,000, all but one-half cent per gallon.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2014, and applied to sales and purchases made on or after that date. new text end

Sec. 4.

Minnesota Statutes 2012, section 297A.82, subdivision 4, is amended to read:

Subd. 4.

Exemptions.

(a) The following transactions are exempt from the tax imposed in this chapter to the extent provided.

(b) The purchase or use of aircraft previously registered in Minnesota by a corporation or partnership is exempt if the transfer constitutes a transfer within the meaning of section 351 or 721 of the Internal Revenue Code.

(c) The sale to or purchase, storage, use, or consumption by a licensed aircraft dealer of an aircraft for which a commercial use permit has been issued pursuant to section 360.654 is exempt, if the aircraft is resold while the permit is in effect.

(d) Air flight equipment when sold to, or purchased, stored, used, or consumed by airline companies, as defined in section 270.071, subdivision 4, is exempt. For purposes of this subdivision, "air flight equipment" includes airplanes and parts necessary for the repair and maintenance of such air flight equipment, and flight simulators, but does not include airplanes with a gross weight of less than 30,000 pounds that are used on intermittent or irregularly timed flights.

(e) Sales of, and the storage, distribution, use, or consumption of aircraft, as defined in section 360.511 and approved by the Federal Aviation Administration, and which the seller delivers to a purchaser outside Minnesota or which, without intermediate use, is shipped or transported outside Minnesota by the purchaser are exempt, but only if the purchaser is not a resident of Minnesota and provided that the aircraft is not thereafter returned to a point within Minnesota, except in the course of interstate commerce or isolated and occasional use, and will be registered in another state or country upon its removal from Minnesota. This exemption applies even if the purchaser takes possession of the aircraft in Minnesota and uses the aircraft in the state exclusively for training purposes for a period not to exceed ten days prior to removing the aircraft from this state.

new text begin (f) The sale or purchase of the following items that relate to aircraft operated under Federal Aviation Regulations, Parts 91 and 135, and associated installation charges: equipment and parts necessary for repair and maintenance of aircraft; and equipment and parts to upgrade and improve aircraft. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June 30, 2013. new text end

Sec. 5.

Minnesota Statutes 2012, section 297A.82, is amended by adding a subdivision to read:

new text begin Subd. 4a. new text end

new text begin Deposit in state airports fund. new text end

new text begin Tax revenue collected from the sale or purchase of an aircraft taxable under this chapter must be deposited in the state airports fund, established in section 360.017. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013, and applied to sales and purchases made on or after that date. new text end

Sec. 6.

Minnesota Statutes 2012, section 297F.01, subdivision 3, is amended to read:

Subd. 3.

Cigarette.

"Cigarette" means any roll for smoking made wholly or in part of tobaccodeleted text begin ,deleted text end new text begin that weighs 4.5 pounds or less per thousand:new text end

new text begin (1)new text end the wrapper or cover of which is made of paper or another substance or material except tobacconew text begin ; ornew text end

new text begin (2) wrapped in any substance containing tobacco, however labeled or named, which, because of its appearance, size, the type of tobacco used in the filler, or its packaging, pricing, marketing, or labeling, is likely to be offered to or purchased by consumers as a cigarette, as defined in clause (1), unless it is wrapped in whole tobacco leaf and does not have a cellulose acetate or other cigarette-like filternew text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013. new text end

Sec. 7.

Minnesota Statutes 2012, section 297F.01, is amended by adding a subdivision to read:

new text begin Subd. 10b. new text end

new text begin Moist snuff. new text end

new text begin "Moist snuff" means any finely cut, ground, or powdered smokeless tobacco that is intended to be placed or dipped in the mouth. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2014. new text end

Sec. 8.

Minnesota Statutes 2012, section 297F.01, is amended by adding a subdivision to read:

new text begin Subd. 13a. new text end

new text begin Premium cigar. new text end

new text begin "Premium cigar" means any cigar that is hand-constructed and hand-rolled, has a wrapper that is made entirely from whole tobacco leaf, has a filler and binder that is made entirely of tobacco, except for adhesives or other materials used to maintain size, texture, or flavor, and has a wholesale price of no less than $2. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013. new text end

Sec. 9.

Minnesota Statutes 2012, section 297F.01, subdivision 19, is amended to read:

Subd. 19.

Tobacco products.

new text begin (a) new text end "Tobacco products" means any product containing, made, or derived from tobacco that is intended for human consumption, whether chewed, smoked, absorbed, dissolved, inhaled, snorted, sniffed, or ingested by any other means, or any component, part, or accessory of a tobacco product, including, but not limited to, cigars;deleted text begin little cigars;deleted text end cheroots; stogies; periques; granulated, plug cut, crimp cut, ready rubbed, and other smoking tobacco; snuff; snuff flour; cavendish; plug and twist tobacco; fine-cut and other chewing tobacco; shorts; refuse scraps, clippings, cuttings and sweepings of tobacco, and other kinds and forms of tobacco; but does not include cigarettes as defined in this section. Tobacco products excludes any tobacco product that has been approved by the United States Food and Drug Administration for sale as a tobacco cessation product, as a tobacco dependence product, or for other medical purposes, and is being marketed and sold solely for such an approved purpose.

new text begin (b) Except for the imposition of tax under section 297F.05, subdivisions 3 and 4, tobacco products includes a premium cigar, as defined in subdivision 13a. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013. new text end

Sec. 10.

Minnesota Statutes 2012, section 297F.05, subdivision 1, is amended to read:

Subdivision 1.

Rates; cigarettes.

A tax is imposed upon the sale of cigarettes in this state, upon having cigarettes in possession in this state with intent to sell, upon any person engaged in business as a distributor, and upon the use or storage by consumers, at the following rates:

(1) on cigarettes weighing not more than three pounds per thousand, deleted text begin 24deleted text end new text begin 141.5 new text end mills on each such cigarette; and

(2) on cigarettes weighing more than three pounds per thousand, deleted text begin 48deleted text end new text begin 283new text end mills on each such cigarette.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013. new text end

Sec. 11.

Minnesota Statutes 2012, section 297F.05, is amended by adding a subdivision to read:

new text begin Subd. 1a. new text end

new text begin Annual indexing. new text end

new text begin (a) Each year the commissioner shall adjust the tax rates under subdivision 1, including any adjustment made in prior years under this subdivision, by multiplying the mill rates for the current calendar year by an adjustment factor and rounding the result to the nearest mill. The adjustment factor equals the in-lieu sales tax rate that applies to the following calendar year divided by the in-lieu sales tax rate for the current calendar year. For purposes of this subdivision, "in-lieu sales tax rate" means the tax rate established under section 297F.25, subdivision 1. For purposes of the calculations under this subdivision to be made in any year in which an increase in the federal or state excise tax on cigarettes is implemented, the commissioner shall exclude from the calculated average price for the current year an amount equal to any increase in the state or federal excise tax rate. new text end

new text begin (b) The commissioner shall publish the resulting rate by November 1 and the rate applies to sales made on or after January 1 of the following year. new text end

new text begin (c) The determination of the commissioner under this subdivision is not a rule and is not subject to the Administrative Procedure Act in chapter 14. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2014. new text end

Sec. 12.

Minnesota Statutes 2012, section 297F.05, subdivision 3, is amended to read:

Subd. 3.

Rates; tobacco products.

new text begin (a) Except as provided in subdivision 3a, new text end a tax is imposed upon all tobacco products in this state and upon any person engaged in business as a distributor, at the rate of deleted text begin 35deleted text end new text begin 95 new text end percent of the wholesale sales price of the tobacco products. The tax is imposed at the time the distributor:

(1) brings, or causes to be brought, into this state from outside the state tobacco products for sale;

(2) makes, manufactures, or fabricates tobacco products in this state for sale in this state; or

(3) ships or transports tobacco products to retailers in this state, to be sold by those retailers.

new text begin (b) Notwithstanding paragraph (a), a minimum tax equal to the rate imposed on a pack of 20 cigarettes weighing not more than three pounds per thousand, as established under subdivision 1, is imposed on each container of moist snuff. new text end

new text begin For purposes of this subdivision, a "container" means the smallest consumer-size can, package, or other container that is marketed or packaged by the manufacturer, distributor, or retailer for separate sale to a retail purchaser. When more than one container is packaged together, each container is subject to tax. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013, except the minimum tax under paragraph (b) is effective January 1, 2014. new text end

Sec. 13.

Minnesota Statutes 2012, section 297F.05, is amended by adding a subdivision to read:

new text begin Subd. 3a. new text end

new text begin Rates; tobacco. new text end

new text begin (a) A tax is imposed upon all premium cigars in this state and upon any person engaged in business as a tobacco product distributor, at the lesser of: new text end

new text begin (1) the rate of 95 percent of the wholesale sales price of the premium cigars; or new text end

new text begin (2) $3.50 per premium cigar. new text end

new text begin (b) The tax imposed under paragraph (a) is imposed at the time the tobacco products distributor: new text end

new text begin (1) brings, or causes to be brought, into this state from outside the state premium cigars for sale; new text end

new text begin (2) makes, manufactures, or fabricates premium cigars in this state for sale in this state; or new text end

new text begin (3) ships or transports premium cigars to retailers in this state, to be sold by those retailers. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013. new text end

Sec. 14.

Minnesota Statutes 2012, section 297F.05, subdivision 4, is amended to read:

Subd. 4.

Use tax; tobacco products.

new text begin Except as provided in subdivision 4a, new text end a tax is imposed upon the use or storage by consumers of tobacco products in this state, and upon such consumers, at the rate of deleted text begin 35deleted text end new text begin 95new text end percent of the cost to the consumer of the tobacco productsnew text begin or the minimum tax under subdivision 3, paragraph (b), whichever is greaternew text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013. new text end

Sec. 15.

Minnesota Statutes 2012, section 297F.05, is amended by adding a subdivision to read:

new text begin Subd. 4a. new text end

new text begin Use tax; premium cigars. new text end

new text begin A tax is imposed upon the use or storage by consumers of all premium cigars in this state, and upon such consumers, at the lesser of: new text end

new text begin (1) the rate of 95 percent of the cost to the consumer of the premium cigars; or new text end

new text begin (2) $3.50 per premium cigar. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013. new text end

Sec. 16.

Minnesota Statutes 2012, section 297F.24, subdivision 1, is amended to read:

Subdivision 1.

Fee imposed.

(a) A fee is imposed upon the sale of nonsettlement cigarettes in this state, upon having nonsettlement cigarettes in possession in this state with intent to sell, upon any person engaged in business as a distributor, and upon the use or storage by consumers of nonsettlement cigarettes. The fee equals a rate of deleted text begin 1.75deleted text end new text begin 2.5 new text end cents per cigarette.

(b) The purpose of this fee is to:

(1) ensure that manufacturers of nonsettlement cigarettes pay fees to the state that are comparable to costs attributable to the use of the cigarettes;

(2) prevent manufacturers of nonsettlement cigarettes from undermining the state's policy of discouraging underage smoking by offering nonsettlement cigarettes at prices substantially below the cigarettes of other manufacturers; and

(3) fund such other purposes as the legislature determines appropriate.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013. new text end

Sec. 17.

Minnesota Statutes 2012, section 297F.25, subdivision 1, is amended to read:

Subdivision 1.

Imposition.

(a) A tax is imposed on distributors on the sale of cigarettes by a cigarette distributor to a retailer or cigarette subjobber for resale in this state. The tax is equal to deleted text begin 6.5 percent ofdeleted text end new text begin the combined tax rate under section 297A.62, multiplied by new text end the weighted average retail price and must be expressed in cents per pack rounded to the nearest one-tenth of a cent. The weighted average retail price must be determined annually, with new rates published by November 1, and effective for sales on or after January 1 of the following year. The weighted average retail price must be established by surveying cigarette retailers statewide in a manner and time determined by the commissioner. The commissioner shall make an inflation adjustment in accordance with the Consumer Price Index for all urban consumers inflation indicator as published in the most recent state budget forecast. The commissioner shall use the inflation factor for the calendar year in which the new tax rate takes effect. If the survey indicates that the average retail price of cigarettes has not increased relative to the average retail price in the previous year's survey, then the commissioner shall not make an inflation adjustment. The determination of the commissioner pursuant to this subdivision is not a "rule" and is not subject to the Administrative Procedure Act contained in chapter 14. For packs of cigarettes with other than 20 cigarettes, the tax must be adjusted proportionally.

(b) Notwithstanding paragraph (a), and in lieu of a survey of cigarette retailers, the tax calculation of the weighted average retail price for the sales of cigarettes from August 1, 2011, through December 31, 2011, shall be calculated by: (1) increasing the average retail price per pack of 20 cigarettes from the most recent survey by the percentage change in a weighted average of the presumed legal prices for cigarettes during the year after completion of that survey, as reported and published by the Department of Commerce under section 325D.371; (2) subtracting the sales tax included in the retail price; and (3) adjusting for expected inflation. The rate must be published by May 1 and is effective for sales after July 31. If the weighted average of the presumed legal prices indicates that the average retail price of cigarettes has not increased relative to the average retail price in the most recent survey, then no inflation adjustment must be made. For packs of cigarettes with other than 20 cigarettes, the tax must be adjusted proportionally.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013. new text end

Sec. 18.

Minnesota Statutes 2012, section 297G.04, subdivision 2, is amended to read:

Subd. 2.

Tax credit.

A qualified brewer producing fermented malt beverages is entitled to a tax credit of $4.60 per barrel on 25,000 barrels sold in any fiscal year beginning July 1, regardless of the alcohol content of the product. Qualified brewers may take the credit on the 18th day of each month, but the total credit allowed may not exceed in any fiscal year the lesser of:

(1) the liability for tax; or

(2) $115,000.

For purposes of this subdivision, a "qualified brewer" means a brewer, whether or not located in this state, manufacturing less than deleted text begin 100,000deleted text end new text begin 250,000new text end barrels of fermented malt beverages in the calendar year immediately preceding the calendar year for which the credit under this subdivision is claimed. In determining the number of barrels, all brands or labels of a brewer must be combined. All facilities for the manufacture of fermented malt beverages owned or controlled by the same person, corporation, or other entity must be treated as a single brewer.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for determinations based on calendar year 2012 production and thereafter. new text end

Sec. 19.

Minnesota Statutes 2012, section 325D.32, subdivision 2, is amended to read:

Subd. 2.

Cigarettes.

"Cigarettes" means and includes any roll for smoking, made wholly or in part of tobacco, irrespective of size and shape and whether or not such tobacco is flavored, adulterated or mixed with any other ingredient, the wrapper or cover of which is made of paper or any other substance or material except new text begin whole new text end tobacconew text begin leaf, and includes any cigarette as defined in section 297F.01, subdivision 3new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013. new text end

Sec. 20.

Minnesota Statutes 2012, section 325F.781, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) For purposes of this section, the following terms have the meanings given, unless the language or context clearly provides otherwise.

(b) "Consumer" means an individual who purchases, receives, or possesses tobacco products for personal consumption and not for resale.

(c) "Delivery sale" means:

(1) a sale of tobacco products to a consumer in this state when:

(i) the purchaser submits the order for the sale by means of a telephonic or other method of voice transmission, the mail or any other delivery service, or the Internet or other online service; or

(ii) the tobacco products are delivered by use of the mail or other delivery service; or

(2) a sale of tobacco products that satisfies the criteria in clause (1), item (i), regardless of whether the seller is located inside or outside of the state.

A sale of tobacco products to an individual in this state must be treated as a sale to a consumer, unless the individual is licensed as a distributor or retailer of tobacco products.

(d) "Delivery service" means a person, including the United States Postal Service, that is engaged in the commercial delivery of letters, packages, or other containers.

(e) "Distributor" means a person, whether located inside or outside of this state, other than a retailer, who sells or distributes tobacco products in the state. Distributor does not include a tobacco products manufacturer, export warehouse proprietor, or importer with a valid permit under United States Code, title 26, section 5712 (1997), if the person sells or distributes tobacco products in this state only to distributors who hold valid and current licenses under the laws of a state, or to an export warehouse proprietor or another manufacturer. Distributor does not include a common or contract carrier that is transporting tobacco products under a proper bill of lading or freight bill that states the quantity, source, and destination of tobacco products, or a person who ships tobacco products through this state by common or contract carrier under a bill of lading or freight bill.

(f) "Retailer" means a person, whether located inside or outside this state, who sells or distributes tobacco products to a consumer in this state.

(g) "Tobacco products" means:

(1) cigarettes, as defined in section 297F.01, subdivision 3; deleted text begin anddeleted text end

(2) smokeless tobacco as defined in section 325F.76deleted text begin .deleted text end new text begin ; andnew text end

new text begin (3) premium cigars as defined in section 297F.01, subdivision 13a. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013. new text end

Sec. 21.

Minnesota Statutes 2012, section 349.166, subdivision 1, is amended to read:

Subdivision 1.

Exclusions.

(a) Bingo, with the exception of linked bingo games, may be conducted without a license and without complying with sections 349.168, subdivisions 1 and 2; 349.17, subdivisions 4 and 5; 349.18, subdivision 1; and 349.19, if it is conducted:

(1) by an organization in connection with a county fair, the state fair, or a civic celebration and is not conducted for more than 12 consecutive days and is limited to no more than four separate applications for activities applied for and approved in a calendar year; or

(2) by an organization that conducts bingo on four or fewer days in a calendar year.

An organization that holds a license to conduct lawful gambling under this chapter may not conduct bingo under this subdivision.

(b) Bingo may be conducted within a nursing home or a senior citizen housing project or by a senior citizen organization if the prizes for a single bingo game do not exceed $10, total prizes awarded at a single bingo occasion do not exceed $200, no more than two bingo occasions are held by the organization or at the facility each week, only members of the organization or residents of the nursing home or housing project are allowed to play in a bingo game, no compensation is paid for any persons who conduct the bingo, and a manager is appointed to supervise the bingo. Bingo conducted under this paragraph is exempt from sections 349.11 to 349.23, and the board may not require an organization that conducts bingo under this paragraph, or the manager who supervises the bingo, to register or file a report with the board. The gross receipts from bingo conducted under the limitations of this subdivision are exempt from taxation under chapter 297A.

(c) Raffles may be conducted by an organization without registering with the board if the value of all raffle prizes awarded by the organization in a calendar year does not exceed $1,500new text begin or, if the organization is a 501(c)(3) organization, if the value of all raffle prizes awarded by the organization at one event in a calendar year does not exceed $5,000new text end .

(d) Except as provided in paragraph (b), the organization must maintain all required records of excluded gambling activity for 3-1/2 years.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013. new text end

Sec. 22.

Minnesota Statutes 2012, section 360.531, is amended to read:

360.531 TAXATION.

Subdivision 1.

In lieu tax.

All aircraft using the air space overlying the state of Minnesota or the airports thereof, except as set forth in section 360.55, shall be taxed in lieu of all other taxes thereon, on the basis and at the rate for the period January 1, 1966, to June 30, 1967, and for each fiscal year as follows.

Subd. 2.

Rate.

The tax shall be deleted text begin at the rate of one percent of value; provided that the minimum tax on an aircraft subject to the provisions of sections 360.511 to 360.67 shall not be less than 25 percent of the tax on said aircraft computed on its base price or $50 whichever is the higher.deleted text end new text begin as follows:new text end

new text begin Base Price new text end new text begin Tax new text end
new text begin Under $499,999 new text end new text begin $100 new text end
new text begin $500,000 to $999,999 new text end new text begin $200 new text end
new text begin $1,000,000 to $2,499,999 new text end new text begin $2,000 new text end
new text begin $2,500,000 to $4,999,999 new text end new text begin $4,000 new text end
new text begin $5,000,000 to $7,499,999 new text end new text begin $7,500 new text end
new text begin $7,500,000 to $9,999,999 new text end new text begin $10,000 new text end
new text begin $10,000,000 to $12,499,999 new text end new text begin $12,500 new text end
new text begin $12,500,000 to $14,999,999 new text end new text begin $15,000 new text end
new text begin $15,000,000 to $17,499,999 new text end new text begin $17,500 new text end
new text begin $17,500,000 to $19,999,999 new text end new text begin $20,000 new text end
new text begin $20,000,000 to $22,499,999 new text end new text begin $22,500 new text end
new text begin $22,500,000 to $24,999,999 new text end new text begin $25,000 new text end
new text begin $25,000,000 to $27,499,999 new text end new text begin $27,500 new text end
new text begin $27,500,000 to $29,999,999 new text end new text begin $30,000 new text end
new text begin $30,000,000 to $39,999,999 new text end new text begin $50,000 new text end
new text begin $40,000,000 and over new text end new text begin $75,000 new text end

Subd. 3.

First year of life.

"First year of life" means the year the aircraft was manufactured.

Subd. 4.

Base price for taxation.

For the purpose of fixing a base price for taxation deleted text begin from which depreciation in value at a fixed percent per annum can be counted, suchdeleted text end new text begin , the base new text end price is defined as follows:

(a) The base price for taxation of an aircraft shall be the manufacturer's list price.

(b) The commissioner shall have authority to fix the base value for taxation purposes of any aircraft of which no such similar or corresponding model has been manufactured, and of any rebuilt or foreign aircraft, any aircraft on which a record of the list price is not available, or any military aircraft converted for civilian use, using as a basis for deleted text begin such deleted text end valuation the list price of aircraft with comparable performance characteristics, and taking into consideration the age and condition of the aircraft.

Subd. 5.

Similarity of corresponding model.

Models shall be deemed similar if substantially alike and of the same make. Models shall be deemed to be corresponding models for the purpose of taxation under sections 360.54 to 360.67 if of the same make and having approximately the same weight and type of frame and the same style and size of motor.

deleted text begin Subd. 6. deleted text end

deleted text begin Depreciation. deleted text end

deleted text begin After the first year of aircraft life the base value for taxation purposes shall be reduced as follows: ten percent the second year, and 15 percent the third and each succeeding year thereafter, but in no event shall such tax be reduced below the minimum. deleted text end

Subd. 7.

Prorating tax.

When an aircraft first becomes subject to taxation during the period for which the tax is to be paid, the tax on it shall be for the remainder of that period, prorated on a monthly basis of 1/12 of the annual tax for each calendar month counting the month during which it becomes subject to the tax as the first month of such period.

Subd. 8.

Tax, fiscal year.

Every aircraft subject to the provisions of sections 360.511 to 360.67 which has at any time since April 19, 1945, used the air space overlying the state of Minnesota or the airports thereof shall be taxed for the period from January 1, 1966, through June 30, 1967, and for each fiscal year thereafter in which it is so used. Any aircraft which does not use the air space overlying the state of Minnesota or the airports thereof at any time during the period of January 1, 1966, to and including June 30, 1967, or at any time during any fiscal year thereafter shall not be subject to the tax provided by sections 360.511 to 360.67 for such period. Rebuilt aircraft shall be subject to the tax provided by sections 360.511 to 360.67 for that portion of the aforesaid periods remaining after the aircraft has been rebuilt, prorated on a monthly basis.

Subd. 9.

Assessed as personal property in certain cases.

Aircraft subject to taxation under the provisions of sections 360.54 to 360.67 shall not be assessed as personal property and shall be subject to no tax except as provided for by these sections. Aircraft not subject to taxation as provided in these sections, but subject to taxation as personal property within the state of Minnesota shall be assessed and valued at 33-1/3 percent of the market value thereof and taxed at the rate and in the manner provided by law for the taxation of ordinary personal property. If the person against whom any tax has been levied on the ad valorem basis because of any aircraft shall, during the calendar year for which such ad valorem tax is levied, be also taxed under provisions of these sections, then and in that event, upon proper showing, the commissioner of revenue shall grant to the person against whom said ad valorem tax was levied, such reduction or abatement of net tax capacity or taxes as was occasioned by the so-called ad valorem tax imposed. If the ad valorem tax upon any aircraft has been assessed against a dealer in new and used aircraft, and the tax imposed by these sections for the required period is thereafter paid by the owner, then and in that event, upon proper showing, the commissioner of revenue, upon the application of said dealer, shall grant to such dealer against whom said ad valorem tax was levied such reduction or abatement of net tax capacity or taxes as was occasioned by the so-called ad valorem tax imposed.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2014, and applies to aircraft tax due on or after that date. new text end

Sec. 23.

Minnesota Statutes 2012, section 360.66, is amended to read:

360.66 STATE AIRPORTS FUND.

Subdivision 1.

Tax credited to fund.

The proceeds of the tax imposed on aircraft under sections deleted text begin 360.54deleted text end new text begin 360.531 new text end to 360.67 and all fees and penalties provided for therein shall be collected by the commissioner and paid into the state treasury and credited to the state airports fund created by other statutes of this state.

Subd. 2.

Reimbursement for expenses.

There shall be transferred by the commissioner of management and budget each year from the state airports fund to the general fund in the state treasury the amount expended from the latter fund for expenses of administering the provisions of sections deleted text begin 360.54deleted text end new text begin 360.531 new text end to 360.67.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2014, and applies to aircraft tax due on or after that date. new text end

Sec. 24.

new text begin [360.675] AVIATION TAX REPORT. new text end

new text begin On or before June 30, 2016, and every four years thereafter, the commissioner of transportation, in consultation with the commissioner of revenue, shall prepare and submit to the chairs and ranking minority members of the senate and house of representatives committees with jurisdiction over transportation policy and budget, a report that identifies the amount and sources of annual revenues attributable to each type of aviation tax, along with annual expenditures from the state airports fund, and any other transfers out of the fund, during the previous four years. The report must include draft legislation for any recommended statutory changes to ensure the future adequacy of the state airports fund. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2014, and applies to aircraft tax due on or after that date. new text end

Sec. 25.

new text begin FLOOR STOCKS TAX. new text end

new text begin Subdivision 1. new text end

new text begin Cigarettes. new text end

new text begin (a) A floor stocks tax is imposed on every person engaged in the business in this state as a distributor, retailer, subjobber, vendor, manufacturer, or manufacturer's representative of cigarettes, on the stamped cigarettes and unaffixed stamps in the person's possession or under the person's control at 12:01 a.m. on July 1, 2013. The tax is imposed at the rate of 80 mills on each cigarette plus the additional cigarette sales tax determined by an adjustment to the weighted average retail price which reflects the price including the increased tax. new text end

new text begin (b) Each distributor, on or before July 11, 2013, shall file a return with the commissioner of revenue, in the form the commissioner prescribes, showing the stamped cigarettes and unaffixed stamps on hand at 12:01 a.m. on July 1, 2013, and the amount of tax due on the cigarettes and unaffixed stamps. Each retailer, subjobber, vendor, manufacturer, or manufacturer's representative, on or before July 11, 2013, shall file a return with the commissioner, in the form the commissioner prescribes, showing the cigarettes on hand at 12:01 a.m. on July 1, 2013, and the amount of tax due on the cigarettes. The tax imposed by this section is due and payable on or before September 4, 2013, and after that date bears interest at the rate of one percent per month. new text end

new text begin Subd. 2. new text end

new text begin Audit and enforcement. new text end

new text begin The tax imposed by this section is subject to the audit, assessment, interest, appeal, refund, penalty, enforcement, administrative, and collection provisions of Minnesota Statutes, chapters 270C and 297F. The commissioner of revenue may require a distributor to receive and maintain copies of floor stocks fee returns filed by all persons requesting a credit for returned cigarettes. new text end

new text begin Subd. 3. new text end

new text begin Deposit of proceeds. new text end

new text begin (a) The commissioner of revenue shall deposit $26,500,000 of the revenues from the tax under this section in the state treasury and credit them to the general reserve account established under Minnesota Statutes 297E.021, subdivision 4. new text end

new text begin (b) The commissioner of revenue shall deposit any revenue remaining after the transfer under paragraph (a) to the general fund. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013. new text end

Sec. 26.

new text begin INTERIM SALES TAX RATE. new text end

new text begin Notwithstanding the provisions of Minnesota Statutes, section 297F.25, the commissioner shall adjust the weighted average retail price in section 297F.25, subdivision 1, on July 1, 2013, to reflect the price changes under this act. This weighted average shall be used to compute cigarette sales tax under Minnesota Statutes, section 297F.25, subdivision 1, until December 31, 2013, when the commissioner shall resume annual adjustments to the weighted average sales price. The commissioner's determination of the adjustment that takes effect on January 1, 2014, must be limited to the change in the weighted average retail price that occurs during calendar year 2013 but after July 15, 2013. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013. new text end

Sec. 27.

new text begin TOBACCO TAX COLLECTION REPORT. new text end

new text begin Subdivision 1. new text end

new text begin Report to legislature. new text end

new text begin (a) The commissioner of revenue shall report to the 2014 legislature on the tobacco tax collection system, including recommendations to improve compliance under the excise tax for both cigarettes and other tobacco products. The purpose of the report is to provide information and guidance to the legislature on improvements to the tobacco tax collection system to: new text end

new text begin (1) provide a unified system of collecting both the cigarette and other tobacco taxes, regardless of category, size, or shape, that ensures the highest reasonable rates of tax collection; new text end

new text begin (2) discourage tax evasion; and new text end

new text begin (3) help to prevent illegal sale of tobacco products, which may make these products more accessible to youth. new text end

new text begin (b) In the report, the commissioner shall: new text end

new text begin (1) provide a detailed review of the present excise tax collection and compliance system as it applies to both cigarettes and other tobacco products. This must include an assessment of the levels of compliance for each category of products and the effect of the stamping requirement on compliance for each category of products and the effect of the stamping requirement on compliance rates for cigarettes relative to other tobacco products. It also must identify any weaknesses in the system; new text end

new text begin (2) survey the methods of collection and enforcement used by other states or nations, including identifying and discussing emerging best practices that ensure tracking of both cigarettes and other tobacco products and result in the highest rates of tax collection and compliance. These best practices must consider high-technology alternatives, such as use of bar codes, radio-frequency identification tags, or similar mechanisms for tracking compliance; new text end

new text begin (3) evaluate the adequacy and effectiveness of the existing penalties and other sanctions for noncompliance; new text end

new text begin (4) evaluate the adequacy of the resources allocated by the state to enforce the tobacco tax and prevention laws; and new text end

new text begin (5) make recommendations on implementation of a comprehensive tobacco tax collection system for Minnesota that can be implemented by January 1, 2014, including: new text end

new text begin (i) recommendations on the specific steps needed to institute and implement the new system, including estimates of the state's costs of doing so and any additional personnel requirements; new text end

new text begin (ii) recommendations on methods to recover the cost of implementing the system from the industry; new text end

new text begin (iii) evaluation of the extent to which the proposed system is sufficiently flexible and adaptable to adjust to modifications in the construction, packaging, formatting, and marketing of tobacco products by the industry; and new text end

new text begin (iv) recommendations to modify existing penalties or to impose new penalties or other sanctions to ensure compliance with the system. new text end

new text begin Subd. 2. new text end

new text begin Due date. new text end

new text begin The report required by subdivision 1 is due February 15, 2014. new text end

new text begin Subd. 3. new text end

new text begin Procedure. new text end

new text begin The report required under this section must be made in the manner provided under Minnesota Statutes, section 3.195. In addition, copies must be provided to the chairs and ranking minority members of the legislative committees and divisions with jurisdiction over taxation. new text end

new text begin Subd. 4. new text end

new text begin Appropriation. new text end

new text begin (a) $100,000 is appropriated from the general fund to the commissioner of revenue for fiscal year 2014 for the cost of preparing the report under subdivision 1. new text end

new text begin (b) The appropriation under this subdivision is a onetime appropriation and is not included in the base budget. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment. new text end

Sec. 28.

new text begin REPEALER. new text end

new text begin Minnesota Statutes 2012, sections 16A.725; and 256.9658, new text end new text begin are repealed. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013. new text end

ARTICLE 6

INDIVIDUAL INCOME AND CORPORATE FRANCHISE TAXES

Section 1.

Minnesota Statutes 2012, section 116J.8737, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) For the purposes of this section, the following terms have the meanings given.

(b) "Qualified small business" means a business that has been certified by the commissioner under subdivision 2.

(c) "Qualified investor" means an investor who has been certified by the commissioner under subdivision 3.

(d) "Qualified fund" means a pooled angel investment network fund that has been certified by the commissioner under subdivision 4.

(e) "Qualified investment" means a cash investment in a qualified small business of a minimum of:

(1) $10,000 in a calendar year by a qualified investor; or

(2) $30,000 in a calendar year by a qualified fund.

A qualified investment must be made in exchange for common stock, a partnership or membership interest, preferred stock, debt with mandatory conversion to equity, or an equivalent ownership interest as determined by the commissioner.

(f) "Family" means a family member within the meaning of the Internal Revenue Code, section 267(c)(4).

(g) "Pass-through entity" means a corporation that for the applicable taxable year is treated as an S corporation or a general partnership, limited partnership, limited liability partnership, trust, or limited liability company and which for the applicable taxable year is not taxed as a corporation under chapter 290.

(h) "Intern" means a student of an accredited institution of higher education, or a former student who has graduated in the past six months from an accredited institution of higher education, who is employed by a qualified small business in a nonpermanent position for a duration of nine months or less that provides training and experience in the primary business activity of the business.

new text begin (i) "Liquidation event" means a conversion of qualified investment for cash, cash and other consideration, or any other form of equity or debt interest. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for qualified small businesses certified after June 30, 2013. new text end

Sec. 2.

Minnesota Statutes 2012, section 116J.8737, subdivision 2, is amended to read:

Subd. 2.

Certification of qualified small businesses.

(a) Businesses may apply to the commissioner for certification as a qualified small business for a calendar year. The application must be in the form and be made under the procedures specified by the commissioner, accompanied by an application fee of $150. Application fees are deposited in the small business investment tax credit administration account in the special revenue fund. The application for certification for 2010 must be made available on the department's Web site by August 1, 2010. Applications for subsequent years' certification must be made available on the department's Web site by November 1 of the preceding year.

(b) Within 30 days of receiving an application for certification under this subdivision, the commissioner must either certify the business as satisfying the conditions required of a qualified small business, request additional information from the business, or reject the application for certification. If the commissioner requests additional information from the business, the commissioner must either certify the business or reject the application within 30 days of receiving the additional information. If the commissioner neither certifies the business nor rejects the application within 30 days of receiving the original application or within 30 days of receiving the additional information requested, whichever is later, then the application is deemed rejected, and the commissioner must refund the $150 application fee. A business that applies for certification and is rejected may reapply.

(c) To receive certification, a business must satisfy all of the following conditions:

(1) the business has its headquarters in Minnesota;

(2) at least 51 percent of the business's employees are employed in Minnesota, and 51 percent of the business's total payroll is paid or incurred in the state;

(3) the business is engaged in, or is committed to engage in, innovation in Minnesota in one of the following as its primary business activity:

(i) using proprietary technology to add value to a product, process, or service in a qualified high-technology field;

(ii) researching or developing a proprietary product, process, or service in a qualified high-technology field; or

(iii) researching, developing, or producing a new proprietary technology for use in the fields of agriculture, tourism, forestry, mining, manufacturing, or transportation;

(4) other than the activities specifically listed in clause (3), the business is not engaged in real estate development, insurance, banking, lending, lobbying, political consulting, information technology consulting, wholesale or retail trade, leisure, hospitality, transportation, construction, ethanol production from corn, or professional services provided by attorneys, accountants, business consultants, physicians, or health care consultants;

(5) the business has fewer than 25 employees;

(6) the business must pay its employees annual wages of at least 175 percent of the federal poverty guideline for the year for a family of four and must pay its interns annual wages of at least 175 percent of the federal minimum wage used for federally covered employers, except that this requirement must be reduced proportionately for employees and interns who work less than full-time, and does not apply to an executive, officer, or member of the board of the business, or to any employee who owns, controls, or holds power to vote more than 20 percent of the outstanding securities of the business;

(7) the business hasnew text begin (i)new text end not been in operation for more than ten yearsnew text begin , or (ii) the business has not been in operation for more than 20 years if the business is engaged in the research, development, or production of medical devices or pharmaceuticals for which United States Food and Drug Administration approval is required for use in the treatment or diagnosis of a disease or conditionnew text end ;

(8) the business has not previously received private equity investments of more than $4,000,000; deleted text begin anddeleted text end

(9) the business is not an entity disqualified under section 80A.50, paragraph (b), clause (3)deleted text begin .deleted text end new text begin ; andnew text end

new text begin (10) the business has not issued securities that are traded on a public exchange. new text end

(d) In applying the limit under paragraph (c), clause (5), the employees in all members of the unitary business, as defined in section 290.17, subdivision 4, must be included.

(e) In order for a qualified investment in a business to be eligible for tax creditsdeleted text begin ,deleted text end new text begin :new text end

new text begin (1)new text end the business must have applied for and received certification for the calendar year in which the investment was made prior to the date on which the qualified investment was madedeleted text begin .deleted text end new text begin ;new text end

new text begin (2) the business must not have issued securities that are traded on a public exchange; new text end

new text begin (3) the business must not issue securities that are traded on a public exchange within 180 days after the date on which the qualified investment was made; and new text end

new text begin (4) the business must not have a liquidation event within 180 days after the date on which the qualified investment was made. new text end

(f) The commissioner must maintain a list of businesses certified under this subdivision for the calendar year and make the list accessible to the public on the department's Web site.

(g) For purposes of this subdivision, the following terms have the meanings given:

(1) "qualified high-technology field" includes aerospace, agricultural processing, renewable energy, energy efficiency and conservation, environmental engineering, food technology, cellulosic ethanol, information technology, materials science technology, nanotechnology, telecommunications, biotechnology, medical device products, pharmaceuticals, diagnostics, biologicals, chemistry, veterinary science, and similar fields; and

(2) "proprietary technology" means the technical innovations that are unique and legally owned or licensed by a business and includes, without limitation, those innovations that are patented, patent pending, a subject of trade secrets, or copyrighted.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for qualified small businesses certified after June 30, 2013, except the amendments to paragraph (c), clause (7), are effective the day following final enactment. new text end

Sec. 3.

Minnesota Statutes 2012, section 116J.8737, subdivision 8, is amended to read:

Subd. 8.

Data privacy.

(a) Data contained in an application submitted to the commissioner under subdivision 2, 3, or 4 are nonpublic data, or private data on individuals, as defined in section 13.02, subdivision 9 or 12, except that the following data items are public:

(1) the namenew text begin , mailing address, telephone number, e-mail address, contact person's name, and industry typenew text end of a qualified small business upon approval of the application and certification by the commissioner under subdivision 2;

(2) the name of a qualified investor upon approval of the application and certification by the commissioner under subdivision 3;

(3) the name of a qualified fund upon approval of the application and certification by the commissioner under subdivision 4;

(4) for credit certificates issued under subdivision 5, the amount of the credit certificate issued, amount of the qualifying investment, the name of the qualifying investor or qualifying fund that received the certificate, and the name of the qualifying small business in which the qualifying investment was made;

(5) for credits revoked under subdivision 7, paragraph (a), the amount revoked and the name of the qualified investor or qualified fund; and

(6) for credits revoked under subdivision 7, paragraphs (b) and (c), the amount revoked and the name of the qualified small business.

(b) The following data, including data classified as nonpublic or private, must be provided to the consultant for use in conducting the program evaluation under subdivision 10:

(1) the commissioner of employment and economic development shall provide data contained in an application for certification received from a qualified small business, qualified investor, or qualified fund, and any annual reporting information received on a qualified small business, qualified investor, or qualified fund; and

(2) the commissioner of revenue shall provide data contained in any applicable tax returns of a qualified small business, qualified investor, or qualified fund.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment. new text end

Sec. 4.

new text begin [136A.129] GREATER MINNESOTA INTERNSHIP PROGRAM. new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the terms defined in this subdivision have the meanings given to them. new text end

new text begin (b) "Eligible employer" means a taxpayer under section 290.01 with employees located in greater Minnesota. new text end

new text begin (c) "Eligible institution" means a Minnesota public postsecondary institution or a Minnesota private, nonprofit, baccalaureate degree-granting college or university. new text end

new text begin (d) "Eligible student" means a student enrolled in an eligible institution who has completed one-half of the credits necessary for the respective degree or certification. new text end

new text begin (e) "Greater Minnesota" means the area of the state outside of the counties of Anoka, Carver, Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, Sherburne, Washington, and Wright. new text end

new text begin Subd. 2. new text end

new text begin Program established. new text end

new text begin The Office of Higher Education shall administer a greater Minnesota internship program through eligible institutions to provide credit at the eligible institution for internships and tax credits for eligible employers who hire interns for employment in greater Minnesota. new text end

new text begin Subd. 3. new text end

new text begin Program components. new text end

new text begin (a) An intern must be an eligible student who has been admitted to a major program that is related to the intern experience as determined by the eligible institution. new text end

new text begin (b) To participate in the program, an eligible institution must: new text end

new text begin (1) enter into written agreements with eligible employers to provide internships that are at least 12 weeks long and located in greater Minnesota; new text end

new text begin (2) determine that the work experience of the internship is related to the eligible student's course of study; and new text end

new text begin (3) provide academic credit for the successful completion of the internship or ensure that it fulfills requirements necessary to complete a vocational technical education program. new text end

new text begin (c) To participate in the program, an eligible employer must enter into a written agreement with an eligible institution specifying that the intern: new text end

new text begin (1) would not have been hired without the tax credit described in subdivision 4; new text end

new text begin (2) did not work for the employer in the same or a similar job prior to entering the agreement; new text end

new text begin (3) does not replace an existing employee; new text end

new text begin (4) has not previously participated in the program; new text end

new text begin (5) will be employed at a location in greater Minnesota; new text end

new text begin (6) will be paid at least minimum wage for a minimum of 16 hours per week for a period of at least 12 weeks; and new text end

new text begin (7) will be supervised and evaluated by the employer. new text end

new text begin (d) The written agreement between the eligible institution and the eligible employer must certify a credit amount to the employer, not to exceed $2,000 per intern. The total dollar amount of credits that an eligible institution certifies to eligible employers in a calendar year may not exceed the amount of its allocation under subdivision 4. new text end

new text begin (e) Participating eligible institutions and eligible employers must report annually to the office. The report must include at least the following: new text end

new text begin (1) the number of interns hired; new text end

new text begin (2) the number of hours and weeks worked by interns; and new text end

new text begin (3) the compensation paid to interns. new text end

new text begin (f) An internship required to complete an academic program does not qualify for the greater Minnesota internship program under this section. new text end

new text begin Subd. 4. new text end

new text begin Tax credit allowed. new text end

new text begin An employer is entitled to a tax credit as provided in section 290.06, subdivision 36. The total amount of credits allocated in a calendar year must not exceed $2,000,000. The office shall determine relevant criteria to allocate the tax credits including the geographic distribution of credits to work locations outside the metropolitan area, and shall allocate credits to eligible institutions that meet the criteria on a first come, first served basis. Any credits allocated to an institution but not used may be reallocated to eligible institutions. The office shall allocate a portion of the administrative fee under section 290.06, subdivision 36, to participating eligible institutions for their administrative costs. new text end

new text begin Subd. 5. new text end

new text begin Reports to the legislature. new text end

new text begin (a) By February 1, 2015, the office and the Department of Revenue shall report to the legislature on the greater Minnesota internship program. The report must include at least the following: new text end

new text begin (1) the number and dollar amount of credits allowed; new text end

new text begin (2) the number of interns employed under the program; and new text end

new text begin (3) the cost of administering the program. new text end

new text begin (b) By February 1, 2016, the office and the Department of Revenue shall report to the legislature with an analysis of the effectiveness of the program in stimulating businesses to hire interns and in assisting participating interns in finding permanent career positions. This report must include the number of students who participated in the program who were subsequently employed full-time by the employer. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December 31, 2013. new text end

Sec. 5.

Minnesota Statutes 2012, section 289A.08, subdivision 3, is amended to read:

Subd. 3.

Corporations.

(a) A corporation that is subject to the state's jurisdiction to tax under section 290.014, subdivision 5, must file a returndeleted text begin , except that a foreign operating corporation as defined in section 290.01, subdivision 6b, is not required to file a returndeleted text end .

(b) Members of a unitary business that are required to file a combined report on one return must designate a member of the unitary business to be responsible for tax matters, including the filing of returns, the payment of taxes, additions to tax, penalties, interest, or any other payment, and for the receipt of refunds of taxes or interest paid in excess of taxes lawfully due. The designated member must be a member of the unitary business that is filing the single combined report and either:

(1) a corporation that is subject to the taxes imposed by chapter 290; or

(2) a corporation that is not subject to the taxes imposed by chapter 290:

(i) Such corporation consents by filing the return as a designated member under this clause to remit taxes, penalties, interest, or additions to tax due from the members of the unitary business subject to tax, and receive refunds or other payments on behalf of other members of the unitary business. The member designated under this clause is a "taxpayer" for the purposes of this chapter and chapter 270C, and is liable for any liability imposed on the unitary business under this chapter and chapter 290.

(ii) If the state does not otherwise have the jurisdiction to tax the member designated under this clause, consenting to be the designated member does not create the jurisdiction to impose tax on the designated member, other than as described in item (i).

(iii) The member designated under this clause must apply for a business tax account identification number.

(c) The commissioner shall adopt rules for the filing of one return on behalf of the members of an affiliated group of corporations that are required to file a combined report. All members of an affiliated group that are required to file a combined report must file one return on behalf of the members of the group under rules adopted by the commissioner.

(d) If a corporation claims on a return that it has paid tax in excess of the amount of taxes lawfully due, that corporation must include on that return information necessary for payment of the tax in excess of the amount lawfully due by electronic means.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December 31, 2012. new text end

Sec. 6.

Minnesota Statutes 2012, section 290.01, subdivision 19, as amended by Laws 2013, chapter 3, section 3, is amended to read:

Subd. 19.

Net income.

The term "net income" means the federal taxable income, as defined in section 63 of the Internal Revenue Code of 1986, as amended through the date named in this subdivision, incorporating the federal effective dates of changes to the Internal Revenue Code and any elections made by the taxpayer in accordance with the Internal Revenue Code in determining federal taxable income for federal income tax purposes, and with the modifications provided in subdivisions 19a to 19f.

In the case of a regulated investment company or a fund thereof, as defined in section 851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment company taxable income as defined in section 852(b)(2) of the Internal Revenue Code, except that:

(1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal Revenue Code does not apply;

(2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal Revenue Code must be applied by allowing a deduction for capital gain dividends and exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal Revenue Code; and

(3) the deduction for dividends paid must also be applied in the amount of any undistributed capital gains which the regulated investment company elects to have treated as provided in section 852(b)(3)(D) of the Internal Revenue Code.

The net income of a real estate investment trust as defined and limited by section 856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust taxable income as defined in section 857(b)(2) of the Internal Revenue Code.

The net income of a designated settlement fund as defined in section 468B(d) of the Internal Revenue Code means the gross income as defined in section 468B(b) of the Internal Revenue Code.

The Internal Revenue Code of 1986, as amended through April 14, 2011, shall be in effect for taxable years beginning after December 31, 1996, and before January 1, 2012, and for taxable years beginning after December 31, 2012. The Internal Revenue Code of 1986, as amended through January 3, 2013, is in effect for taxable years beginning after December 31, 2011, and before January 1, 2013.

new text begin The provisions of sections 315 and 331 of the American Taxpayer Relief Act of 2012, Public Law 112-240, extension of increased expensing limitations and treatment of certain real property as section 179 property and extension and modification of bonus depreciation, are effective at the same time they become effective for federal purposes. new text end

Except as otherwise provided, references to the Internal Revenue Code in subdivisions 19 to 19f mean the code in effect for purposes of determining net income for the applicable year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December 31, 2012. new text end

Sec. 7.

Minnesota Statutes 2012, section 290.01, subdivision 19b, is amended to read:

Subd. 19b.

Subtractions from federal taxable income.

For individuals, estates, and trusts, there shall be subtracted from federal taxable income:

(1) net interest income on obligations of any authority, commission, or instrumentality of the United States to the extent includable in taxable income for federal income tax purposes but exempt from state income tax under the laws of the United States;

(2) if included in federal taxable income, the amount of any overpayment of income tax to Minnesota or to any other state, for any previous taxable year, whether the amount is received as a refund or as a credit to another taxable year's income tax liability;

(3) the amount paid to others, less the amount used to claim the credit allowed under section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and transportation of each qualifying child in attending an elementary or secondary school situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of this state may legally fulfill the state's compulsory attendance laws, which is not operated for profit, and which adheres to the provisions of the Civil Rights Act of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause, "textbooks" includes books and other instructional materials and equipment purchased or leased for use in elementary and secondary schools in teaching only those subjects legally and commonly taught in public elementary and secondary schools in this state. Equipment expenses qualifying for deduction includes expenses as defined and limited in section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional books and materials used in the teaching of religious tenets, doctrines, or worship, the purpose of which is to instill such tenets, doctrines, or worship, nor does it include books or materials for, or transportation to, extracurricular activities including sporting events, musical or dramatic events, speech activities, driver's education, or similar programs. No deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or the qualifying child's vehicle to provide such transportation for a qualifying child. For purposes of the subtraction provided by this clause, "qualifying child" has the meaning given in section 32(c)(3) of the Internal Revenue Code;

(4) income as provided under section 290.0802;

(5) to the extent included in federal adjusted gross income, income realized on disposition of property exempt from tax under section 290.491;

(6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E) of the Internal Revenue Code in determining federal taxable income by an individual who does not itemize deductions for federal income tax purposes for the taxable year, an amount equal to 50 percent of the excess of charitable contributions over $500 allowable as a deduction for the taxable year under section 170(a) of the Internal Revenue Code, under the provisions of Public Law 109-1 and Public Law 111-126;

(7) for individuals who are allowed a federal foreign tax credit for taxes that do not qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover of subnational foreign taxes for the taxable year, but not to exceed the total subnational foreign taxes reported in claiming the foreign tax credit. For purposes of this clause, "federal foreign tax credit" means the credit allowed under section 27 of the Internal Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed under section 904(c) of the Internal Revenue Code minus national level foreign taxes to the extent they exceed the federal foreign tax credit;

(8) in each of the five tax years immediately following the tax year in which an addition is required under subdivision 19a, clause (7), or 19c, clause deleted text begin (15)deleted text end new text begin (12)new text end , in the case of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the delayed depreciation. For purposes of this clause, "delayed depreciation" means the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or subdivision 19c, clause deleted text begin (15)deleted text end new text begin (12)new text end , in the case of a shareholder of an S corporation, minus the positive value of any net operating loss under section 172 of the Internal Revenue Code generated for the tax year of the addition. The resulting delayed depreciation cannot be less than zero;

(9) job opportunity building zone income as provided under section 469.316;

(10) to the extent included in federal taxable income, the amount of compensation paid to members of the Minnesota National Guard or other reserve components of the United States military for active service, excluding compensation for services performed under the Active Guard Reserve (AGR) program. For purposes of this clause, "active service" means (i) state active service as defined in section 190.05, subdivision 5a, clause (1); or (ii) federally funded state active service as defined in section 190.05, subdivision 5b, but "active service" excludes service performed in accordance with section 190.08, subdivision 3;

(11) to the extent included in federal taxable income, the amount of compensation paid to Minnesota residents who are members of the armed forces of the United States or United Nations for active duty performed under United States Code, title 10; or the authority of the United Nations;

(12) an amount, not to exceed $10,000, equal to qualified expenses related to a qualified donor's donation, while living, of one or more of the qualified donor's organs to another person for human organ transplantation. For purposes of this clause, "organ" means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow; "human organ transplantation" means the medical procedure by which transfer of a human organ is made from the body of one person to the body of another person; "qualified expenses" means unreimbursed expenses for both the individual and the qualified donor for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses may be subtracted under this clause only once; and "qualified donor" means the individual or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An individual may claim the subtraction in this clause for each instance of organ donation for transplantation during the taxable year in which the qualified expenses occur;

(13) in each of the five tax years immediately following the tax year in which an addition is required under subdivision 19a, clause (8), or 19c, clause deleted text begin (16)deleted text end new text begin (13)new text end , in the case of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause deleted text begin (16)deleted text end new text begin (13)new text end , in the case of a shareholder of a corporation that is an S corporation, minus the positive value of any net operating loss under section 172 of the Internal Revenue Code generated for the tax year of the addition. If the net operating loss exceeds the addition for the tax year, a subtraction is not allowed under this clause;

(14) to the extent included in the federal taxable income of a nonresident of Minnesota, compensation paid to a service member as defined in United States Code, title 10, section 101(a)(5), for military service as defined in the Servicemembers Civil Relief Act, Public Law 108-189, section 101(2);

(15) to the extent included in federal taxable income, the amount of national service educational awards received from the National Service Trust under United States Code, title 42, sections 12601 to 12604, for service in an approved Americorps National Service program;

(16) to the extent included in federal taxable income, discharge of indebtedness income resulting from reacquisition of business indebtedness included in federal taxable income under section 108(i) of the Internal Revenue Code. This subtraction applies only to the extent that the income was included in net income in a prior year as a result of the addition under section 290.01, subdivision 19a, clause (16); deleted text begin anddeleted text end

(17) the amount of the net operating loss allowed under section 290.095, subdivision 11, paragraph (c)new text begin ; andnew text end

new text begin (18) the amount of expenses not allowed for federal income tax purposes due to claiming the railroad track maintenance credit under section 45G(a) of the Internal Revenue Codenew text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December 31, 2012. new text end

Sec. 8.

Minnesota Statutes 2012, section 290.01, subdivision 19c, is amended to read:

Subd. 19c.

Corporations; additions to federal taxable income.

For corporations, there shall be added to federal taxable income:

(1) the amount of any deduction taken for federal income tax purposes for income, excise, or franchise taxes based on net income or related minimum taxes, including but not limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota, another state, a political subdivision of another state, the District of Columbia, or any foreign country or possession of the United States;

(2) interest not subject to federal tax upon obligations of: the United States, its possessions, its agencies, or its instrumentalities; the state of Minnesota or any other state, any of its political or governmental subdivisions, any of its municipalities, or any of its governmental agencies or instrumentalities; the District of Columbia; or Indian tribal governments;

(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal Revenue Code;

(4) the amount of any net operating loss deduction taken for federal income tax purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss deduction under section 810 of the Internal Revenue Code;

(5) the amount of any special deductions taken for federal income tax purposes under sections 241 to 247 and 965 of the Internal Revenue Code;

(6) losses from the business of mining, as defined in section 290.05, subdivision 1, clause (a), that are not subject to Minnesota income tax;

(7) the amount of any capital losses deducted for federal income tax purposes under sections 1211 and 1212 of the Internal Revenue Code;

deleted text begin (8) the exempt foreign trade income of a foreign sales corporation under sections 921(a) and 291 of the Internal Revenue Code; deleted text end

deleted text begin (9)deleted text end new text begin (8)new text end the amount of percentage depletion deducted under sections 611 through 614 and 291 of the Internal Revenue Code;

deleted text begin (10)deleted text end new text begin (9)new text end for certified pollution control facilities placed in service in a taxable year beginning before December 31, 1986, and for which amortization deductions were elected under section 169 of the Internal Revenue Code of 1954, as amended through December 31, 1985, the amount of the amortization deduction allowed in computing federal taxable income for those facilities;

deleted text begin (11) the amount of any deemed dividend from a foreign operating corporation determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend shall be reduced by the amount of the addition to income required by clauses (20), (21), (22), and (23); deleted text end

deleted text begin (12)deleted text end new text begin (10)new text end the amount of a partner's pro rata share of net income which does not flow through to the partner because the partnership elected to pay the tax on the income under section 6242(a)(2) of the Internal Revenue Code;

deleted text begin (13) the amount of net income excluded under section 114 of the Internal Revenue Code; deleted text end

deleted text begin (14)deleted text end new text begin (11)new text end any increase in subpart F income, as defined in section 952(a) of the Internal Revenue Code, for the taxable year when subpart F income is calculated without regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;

deleted text begin (15)deleted text end new text begin (12)new text end 80 percent of the depreciation deduction allowed under section 168(k)(1)(A) and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that in the taxable year generates a deduction for depreciation under section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the amount of the loss from the activity that is not allowed in the taxable year. In succeeding taxable years when the losses not allowed in the taxable year are allowed, the depreciation under section 168(k)(1)(A) and (k)(4)(A) is allowed;

deleted text begin (16)deleted text end new text begin (13)new text end 80 percent of the amount by which the deduction allowed by section 179 of the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal Revenue Code of 1986, as amended through December 31, 2003;

deleted text begin (17)deleted text end new text begin (14)new text end to the extent deducted in computing federal taxable income, the amount of the deduction allowable under section 199 of the Internal Revenue Code;

deleted text begin (18) for taxable years beginning before January 1, 2013, the exclusion allowed under section 139A of the Internal Revenue Code for federal subsidies for prescription drug plans; deleted text end

deleted text begin (19)deleted text end new text begin (15)new text end the amount of expenses disallowed under section 290.10, subdivision 2;new text begin andnew text end

deleted text begin (20) an amount equal to the interest and intangible expenses, losses, and costs paid, accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit of a corporation that is a member of the taxpayer's unitary business group that qualifies as a foreign operating corporation. For purposes of this clause, intangible expenses and costs include: deleted text end

deleted text begin (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition, use, maintenance or management, ownership, sale, exchange, or any other disposition of intangible property; deleted text end

deleted text begin (ii) losses incurred, directly or indirectly, from factoring transactions or discounting transactions; deleted text end

deleted text begin (iii) royalty, patent, technical, and copyright fees; deleted text end

deleted text begin (iv) licensing fees; and deleted text end

deleted text begin (v) other similar expenses and costs. deleted text end

deleted text begin For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent applications, trade names, trademarks, service marks, copyrights, mask works, trade secrets, and similar types of intangible assets. deleted text end

deleted text begin This clause does not apply to any item of interest or intangible expenses or costs paid, accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect to such item of income to the extent that the income to the foreign operating corporation is income from sources without the United States as defined in subtitle A, chapter 1, subchapter N, part 1, of the Internal Revenue Code; deleted text end

deleted text begin (21) except as already included in the taxpayer's taxable income pursuant to clause (20), any interest income and income generated from intangible property received or accrued by a foreign operating corporation that is a member of the taxpayer's unitary group. For purposes of this clause, income generated from intangible property includes: deleted text end

deleted text begin (i) income related to the direct or indirect acquisition, use, maintenance or management, ownership, sale, exchange, or any other disposition of intangible property; deleted text end

deleted text begin (ii) income from factoring transactions or discounting transactions; deleted text end

deleted text begin (iii) royalty, patent, technical, and copyright fees; deleted text end

deleted text begin (iv) licensing fees; and deleted text end

deleted text begin (v) other similar income. deleted text end

deleted text begin For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent applications, trade names, trademarks, service marks, copyrights, mask works, trade secrets, and similar types of intangible assets. deleted text end

deleted text begin This clause does not apply to any item of interest or intangible income received or accrued by a foreign operating corporation with respect to such item of income to the extent that the income is income from sources without the United States as defined in subtitle A, chapter 1, subchapter N, part 1, of the Internal Revenue Code; deleted text end

deleted text begin (22) the dividends attributable to the income of a foreign operating corporation that is a member of the taxpayer's unitary group in an amount that is equal to the dividends paid deduction of a real estate investment trust under section 561(a) of the Internal Revenue Code for amounts paid or accrued by the real estate investment trust to the foreign operating corporation; deleted text end

deleted text begin (23) the income of a foreign operating corporation that is a member of the taxpayer's unitary group in an amount that is equal to gains derived from the sale of real or personal property located in the United States; deleted text end

deleted text begin (24) for taxable years beginning before January 1, 2010, the additional amount allowed as a deduction for donation of computer technology and equipment under section 170(e)(6) of the Internal Revenue Code, to the extent deducted from taxable income; and deleted text end

deleted text begin (25)deleted text end new text begin (16)new text end discharge of indebtedness income resulting from reacquisition of business indebtedness and deferred under section 108(i) of the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December 31, 2012. new text end

Sec. 9.

Minnesota Statutes 2012, section 290.01, subdivision 19d, is amended to read:

Subd. 19d.

Corporations; modifications decreasing federal taxable income.

For corporations, there shall be subtracted from federal taxable income after the increases provided in subdivision 19c:

(1) the amount of foreign dividend gross-up added to gross income for federal income tax purposes under section 78 of the Internal Revenue Code;

(2) the amount of salary expense not allowed for federal income tax purposes due to claiming the work opportunity credit under section 51 of the Internal Revenue Code;

(3) any dividend (not including any distribution in liquidation) paid within the taxable year by a national or state bank to the United States, or to any instrumentality of the United States exempt from federal income taxes, on the preferred stock of the bank owned by the United States or the instrumentality;

(4) amounts disallowed for intangible drilling costs due to differences between this chapter and the Internal Revenue Code in taxable years beginning before January 1, 1987, as follows:

(i) to the extent the disallowed costs are represented by physical property, an amount equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09, subdivision 7, subject to the modifications contained in subdivision 19e; and

(ii) to the extent the disallowed costs are not represented by physical property, an amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section 290.09, subdivision 8;

(5) the deduction for capital losses pursuant to sections 1211 and 1212 of the Internal Revenue Code, except that:

(i) for capital losses incurred in taxable years beginning after December 31, 1986, capital loss carrybacks shall not be allowed;

(ii) for capital losses incurred in taxable years beginning after December 31, 1986, a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be allowed;

(iii) for capital losses incurred in taxable years beginning before January 1, 1987, a capital loss carryback to each of the three taxable years preceding the loss year, subject to the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and

(iv) for capital losses incurred in taxable years beginning before January 1, 1987, a capital loss carryover to each of the five taxable years succeeding the loss year to the extent such loss was not used in a prior taxable year and subject to the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed;

(6) an amount for interest and expenses relating to income not taxable for federal income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or 291 of the Internal Revenue Code in computing federal taxable income;

(7) in the case of mines, oil and gas wells, other natural deposits, and timber for which percentage depletion was disallowed pursuant to subdivision 19c, clause deleted text begin (9)deleted text end new text begin (8)new text end , a reasonable allowance for depletion based on actual cost. In the case of leases the deduction must be apportioned between the lessor and lessee in accordance with rules prescribed by the commissioner. In the case of property held in trust, the allowable deduction must be apportioned between the income beneficiaries and the trustee in accordance with the pertinent provisions of the trust, or if there is no provision in the instrument, on the basis of the trust's income allocable to each;

(8) for certified pollution control facilities placed in service in a taxable year beginning before December 31, 1986, and for which amortization deductions were elected under section 169 of the Internal Revenue Code of 1954, as amended through December 31, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09, subdivision 7;

(9) amounts included in federal taxable income that are due to refunds of income, excise, or franchise taxes based on net income or related minimum taxes paid by the corporation to Minnesota, another state, a political subdivision of another state, the District of Columbia, or a foreign country or possession of the United States to the extent that the taxes were added to federal taxable income under deleted text begin section deleted text end deleted text begin 290.01,deleted text end subdivision 19c, clause (1), in a prior taxable year;

deleted text begin (10) 80 percent of royalties, fees, or other like income accrued or received from a foreign operating corporation or a foreign corporation which is part of the same unitary business as the receiving corporation, unless the income resulting from such payments or accruals is income from sources within the United States as defined in subtitle A, chapter 1, subchapter N, part 1, of the Internal Revenue Code; deleted text end

deleted text begin (11)deleted text end new text begin (10)new text end income or gains from the business of mining as defined in section 290.05, subdivision 1, clause (a), that are not subject to Minnesota franchise tax;

deleted text begin (12)deleted text end new text begin (11)new text end the amount of disability access expenditures in the taxable year which are not allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;

deleted text begin (13)deleted text end new text begin (12)new text end the amount of qualified research expenses not allowed for federal income tax purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that the amount exceeds the amount of the credit allowed under section 290.068;

deleted text begin (14)deleted text end new text begin (13)new text end the amount of salary expenses not allowed for federal income tax purposes due to claiming the Indian employment credit under section 45A(a) of the Internal Revenue Code;

deleted text begin (15) for a corporation whose foreign sales corporation, as defined in section 922 of the Internal Revenue Code, constituted a foreign operating corporation during any taxable year ending before January 1, 1995, and a return was filed by August 15, 1996, claiming the deduction under section 290.21, subdivision 4, for income received from the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of income excluded under section 114 of the Internal Revenue Code, provided the income is not income of a foreign operating company; deleted text end

deleted text begin (16)deleted text end new text begin (14)new text end any decrease in subpart F income, as defined in section 952(a) of the Internal Revenue Code, for the taxable year when subpart F income is calculated without regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;

deleted text begin (17)deleted text end new text begin (15)new text end in each of the five tax years immediately following the tax year in which an addition is required under subdivision 19c, clause deleted text begin (15)deleted text end new text begin (12)new text end , an amount equal to one-fifth of the delayed depreciation. For purposes of this clause, "delayed depreciation" means the amount of the addition made by the taxpayer under subdivision 19c, clause deleted text begin (15)deleted text end new text begin (12)new text end . The resulting delayed depreciation cannot be less than zero;

deleted text begin (18)deleted text end new text begin (16)new text end in each of the five tax years immediately following the tax year in which an addition is required under subdivision 19c, clause deleted text begin (16)deleted text end new text begin (13)new text end , an amount equal to one-fifth of the amount of the addition; deleted text begin anddeleted text end

deleted text begin (19)deleted text end new text begin (17)new text end to the extent included in federal taxable income, discharge of indebtedness income resulting from reacquisition of business indebtedness included in federal taxable income under section 108(i) of the Internal Revenue Code. This subtraction applies only to the extent that the income was included in net income in a prior year as a result of the addition under deleted text begin section deleted text end deleted text begin 290.01,deleted text end subdivision 19c, clause deleted text begin (25).deleted text end new text begin (16); andnew text end

new text begin (18) the amount of expenses not allowed for federal income tax purposes due to claiming the railroad track maintenance credit under section 45G(a) of the Internal Revenue Code. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December 31, 2012. new text end

Sec. 10.

Minnesota Statutes 2012, section 290.06, subdivision 2c, is amended to read:

Subd. 2c.

Schedules of rates for individuals, estates, and trusts.

(a) The income taxes imposed by this chapter upon married individuals filing joint returns and surviving spouses as defined in section 2(a) of the Internal Revenue Code must be computed by applying to their taxable net income the following schedule of rates:

(1) On the first deleted text begin $25,680deleted text end new text begin $35,480new text end , 5.35 percent;

(2) On all over deleted text begin $25,680deleted text end new text begin $35,480new text end , but not over deleted text begin $102,030deleted text end new text begin $140,960new text end , 7.05 percent;

(3) On all over deleted text begin $102,030deleted text end new text begin $140,960, but not over $250,000new text end , 7.85 percentdeleted text begin .deleted text end new text begin ;new text end

new text begin (4) On all over $250,000, 9.85 percent. new text end

Married individuals filing separate returns, estates, and trusts must compute their income tax by applying the above rates to their taxable income, except that the income brackets will be one-half of the above amounts.

(b) The income taxes imposed by this chapter upon unmarried individuals must be computed by applying to taxable net income the following schedule of rates:

(1) On the first deleted text begin $17,570deleted text end new text begin $24,270new text end , 5.35 percent;

(2) On all over deleted text begin $17,570deleted text end new text begin $24,270new text end , but not over deleted text begin $57,710deleted text end new text begin $79,730new text end , 7.05 percent;

(3) On all over deleted text begin $57,710deleted text end new text begin $79,730, but not over $150,000new text end , 7.85 percentdeleted text begin .deleted text end new text begin ;new text end

new text begin (4) On all over $150,000, 9.85 percent. new text end

(c) The income taxes imposed by this chapter upon unmarried individuals qualifying as a head of household as defined in section 2(b) of the Internal Revenue Code must be computed by applying to taxable net income the following schedule of rates:

(1) On the first deleted text begin $21,630deleted text end new text begin $29,880new text end , 5.35 percent;

(2) On all over deleted text begin $21,630deleted text end new text begin $29,880new text end , but not over deleted text begin $86,910deleted text end new text begin $120,070new text end , 7.05 percent;

(3) On all over deleted text begin $86,910deleted text end new text begin $120,070, but not over $200,000new text end , 7.85 percentdeleted text begin .deleted text end new text begin ;new text end

new text begin (4) On all over $200,000, 9.85 percent. new text end

(d) In lieu of a tax computed according to the rates set forth in this subdivision, the tax of any individual taxpayer whose taxable net income for the taxable year is less than an amount determined by the commissioner must be computed in accordance with tables prepared and issued by the commissioner of revenue based on income brackets of not more than $100. The amount of tax for each bracket shall be computed at the rates set forth in this subdivision, provided that the commissioner may disregard a fractional part of a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.

(e) An individual who is not a Minnesota resident for the entire year must compute the individual's Minnesota income tax as provided in this subdivision. After the application of the nonrefundable credits provided in this chapter, the tax liability must then be multiplied by a fraction in which:

(1) the numerator is the individual's Minnesota source federal adjusted gross income as defined in section 62 of the Internal Revenue Code and increased by the additions required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), (13), and (16) to (18), and reduced by the Minnesota assignable portion of the subtraction for United States government interest under section 290.01, subdivision 19b, clause (1), and the subtractions under section 290.01, subdivision 19b, clauses (8), (9), (13), (14), (16), and (17), after applying the allocation and assignability provisions of section 290.081, clause (a), or 290.17; and

(2) the denominator is the individual's federal adjusted gross income as defined in section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), (13), and (16) to (18), and reduced by the amounts specified in section 290.01, subdivision 19b, clauses (1), (8), (9), (13), (14), (16), and (17).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December 31, 2012. new text end

Sec. 11.

Minnesota Statutes 2012, section 290.06, subdivision 2d, is amended to read:

Subd. 2d.

Inflation adjustment of brackets.

(a) For taxable years beginning after December 31, deleted text begin 2000deleted text end new text begin 2013new text end , the minimum and maximum dollar amounts for each rate bracket for which a tax is imposed in subdivision 2c shall be adjusted for inflation by the percentage determined under paragraph (b). For the purpose of making the adjustment as provided in this subdivision all of the rate brackets provided in subdivision 2c shall be the rate brackets as they existed for taxable years beginning after December 31, deleted text begin 1999deleted text end new text begin 2012new text end , and before January 1, deleted text begin 2001deleted text end new text begin 2014new text end . The rate applicable to any rate bracket must not be changed. The dollar amounts setting forth the tax shall be adjusted to reflect the changes in the rate brackets. The rate brackets as adjusted must be rounded to the nearest $10 amount. If the rate bracket ends in $5, it must be rounded up to the nearest $10 amount.

(b) The commissioner shall adjust the rate brackets and by the percentage determined pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in section 1(f)(3)(B) the word deleted text begin "1999"deleted text end new text begin "2012"new text end shall be substituted for the word "1992." For deleted text begin 2001deleted text end new text begin 2014new text end , the commissioner shall then determine the percent change from the 12 months ending on August 31, deleted text begin 1999deleted text end new text begin 2012new text end , to the 12 months ending on August 31, deleted text begin 2000deleted text end new text begin 2013new text end , and in each subsequent year, from the 12 months ending on August 31, deleted text begin 1999deleted text end new text begin 2012new text end , to the 12 months ending on August 31 of the year preceding the taxable year. The determination of the commissioner pursuant to this subdivision shall not be considered a "rule" and shall not be subject to the Administrative Procedure Act contained in chapter 14.

No later than December 15 of each year, the commissioner shall announce the specific percentage that will be used to adjust the tax rate brackets.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December 31, 2012. new text end

Sec. 12.

Minnesota Statutes 2012, section 290.06, is amended by adding a subdivision to read:

new text begin Subd. 36. new text end

new text begin Greater Minnesota internship credit. new text end

new text begin (a) A taxpayer who is an eligible employer may take a credit against the tax due under this chapter equal to the lesser of: new text end

new text begin (1) 40 percent of the compensation paid to an intern qualifying under the program established under section 136A.129, but not to exceed $2,000 per intern; or new text end

new text begin (2) the amount certified to the taxpayer by an eligible institution out of the institution's allocation of credits for the calendar year, as provided in section 136A.129. new text end

new text begin (b) Credits allowed to a partnership, a limited liability company taxed as a partnership, an S corporation, or multiple owners of property are passed through to the partners, members, shareholders, or owners, respectively, pro rata to each partner, member, shareholder, or owner based on their share of the entity's income for the taxable year. new text end

new text begin (c) If the amount of credit which the taxpayer is eligible to receive under this subdivision exceeds the taxpayer's tax liability under this chapter, the commissioner of revenue shall refund the excess to the taxpayer. new text end

new text begin (d) An amount necessary to pay claims for refund provided in this subdivision is appropriated from the general fund to the commissioner of revenue. new text end

new text begin (e) An amount equal to one percent of the total amount of the credits authorized under section 136A.129, subdivision 4, for an administrative fee for the Office of Higher Education and participating eligible institutions is appropriated from the general fund to the commissioner of revenue, for a transfer to the Office of Higher Education. new text end

new text begin (f) For purposes of this subdivision, the terms "eligible employer" and "eligible institution" have the meanings given in section 136A.129. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December 31, 2013. new text end

Sec. 13.

Minnesota Statutes 2012, section 290.0677, subdivision 2, is amended to read:

Subd. 2.

Definitions.

(a) For purposes of this sectionnew text begin ,new text end the following terms have the meanings given.

(b) "Designated area" means a:

(1) combat zone designated by Executive Order from the President of the United States;

(2) qualified hazardous duty area, designated in Public Law; or

(3) location certified by the U. S. Department of Defense as eligible for combat zone tax benefits due to the location's direct support of military operations.

(c) "Active military service" means active duty service in any of the United States armed forces, the National Guard, or reserves.

(d) "Qualified individual" means an individual who hasnew text begin :new text end

(1) deleted text begin either (i)deleted text end new text begin met one of the following criteria:new text end

new text begin (i) hasnew text end served at least 20 years in the military deleted text begin ordeleted text end new text begin ;new text end

(ii) has a service-connected disability rating of 100 percent for a total and permanent disability; new text begin ornew text end

new text begin (iii) has been determined by the military to be eligible for compensation from a pension or other retirement pay from the federal government for service in the military, as computed under United States Code, title 10, sections 1401 to 1414, 1447 to 1455, or 12733; new text end and

(2) separated from military service before the end of the taxable year.

(e) "Adjusted gross income" has the meaning given in section 61 of the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December 31, 2012. new text end

Sec. 14.

Minnesota Statutes 2012, section 290.068, subdivision 3, is amended to read:

Subd. 3.

Limitation; carryover.

(a)(1) The credit for a taxable year beginning before January 1, 2010, new text begin and after December 31, 2012, new text end shall not exceed the liability for tax. "Liability for tax" for purposes of this section means the new text begin sum of the new text end tax imposed under section 290.06, deleted text begin subdivisiondeleted text end new text begin subdivisionsnew text end 1new text begin and 2cnew text end , for the taxable year reduced by the sum of the nonrefundable credits allowed under this chapternew text begin , on all of the entities required to be included on the combined report of the unitary business. If the amount of the credit allowed exceeds the liability for tax of the taxpayer, but is allowed as a result of the liability for tax of other members of the unitary group for the taxable year, the taxpayer must allocate the excess as a research credit to another member of the unitary groupnew text end .

(2) In the case of a corporation which is a partner in a partnership, the credit allowed for the taxable year shall not exceed the lesser of the amount determined under clause (1) for the taxable year or an amount (separately computed with respect to the corporation's interest in the trade or business or entity) equal to the amount of tax attributable to that portion of taxable income which is allocable or apportionable to the corporation's interest in the trade or business or entity.

(b) If the amount of the credit determined under this section for any taxable year exceeds the limitation under clause (a)new text begin including amounts allocated to other members of the unitary groupnew text end , the excess shall be a research credit carryover to each of the 15 succeeding taxable years. The entire amount of the excess unused credit for the taxable year shall be carried first to the earliest of the taxable years to which the credit may be carried and then to each successive year to which the credit may be carried. The amount of the unused credit which may be added under this clause shall not exceed the taxpayer's liability for tax less the research credit for the taxable year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December 31, 2012. new text end

Sec. 15.

Minnesota Statutes 2012, section 290.068, subdivision 6a, is amended to read:

Subd. 6a.

Credit to be refundable.

If the amount of credit allowed in this section for qualified research expenses incurred in taxable years beginning after December 31, 2009, new text begin and before January 1, 2013, new text end exceeds the taxpayer's tax liability under this chapter, the commissioner shall refund the excess amount. The credit allowed for qualified research expenses incurred in taxable years beginning after December 31, 2009,new text begin and before January 1, 2013, new text end must be used before any research credit earned under subdivision 3.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December 31, 2012. new text end

Sec. 16.

Minnesota Statutes 2012, section 290.0681, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) For purposes of this section, the following terms have the meanings given.

(b) "Account" means the historic credit administration account in the special revenue fund.

(c) "Office" means the State Historic Preservation Office of the Minnesota Historical Society.

(d) "Project" means rehabilitation of a certified historic structure, as defined in section 47(c)(3)(A) of the Internal Revenue Code, that is located in Minnesota and is allowed a federal credit deleted text begin under section 47(a)(2) of the Internal Revenue Codedeleted text end .

(e) "Society" means the Minnesota Historical Society.

new text begin (f) "Federal credit" means the credit allowed under section 47(a)(2) of the Internal Revenue Code. new text end

new text begin (g) "Placed in service" has the meaning used in section 47 of the Internal Revenue Code. new text end

new text begin (h) "Qualified rehabilitation expenditures" has the meaning given in section 47 of the Internal Revenue Code. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment. new text end

Sec. 17.

Minnesota Statutes 2012, section 290.0681, subdivision 3, is amended to read:

Subd. 3.

Applications; allocations.

(a) To qualify for a credit or grant under this section, the developer of a project must apply to the office before the rehabilitation begins. The application must contain the information and be in the form prescribed by the office. The office may collect a fee for application of up to deleted text begin $5,000deleted text end new text begin 0.5 percent of qualified rehabilitation expenditures, up to $40,000new text end , based on estimated qualified rehabilitation deleted text begin expensesdeleted text end new text begin expendituresnew text end , to offset costs associated with personnel and administrative expenses related to administering the credit and preparing the economic impact report in subdivision 9. Application fees are deposited in the account. The application must indicate if the application is for a credit or a grant in lieu of the credit or a combination of the two and designate the taxpayer qualifying for the credit or the recipient of the grant.

(b) Upon approving an application for credit, the office shall issue allocation certificates that:

(1) verify eligibility for the credit or grant;

(2) state the amount of credit or grant anticipated with the project, with the credit amount equal to 100 percent and the grant amount equal to 90 percent of the federal credit anticipated in the application;

(3) state that the credit or grant allowed may increase or decrease if the federal credit the project receives at the time it is placed in service is different than the amount anticipated at the time the allocation certificate is issued; and

(4) state the fiscal year in which the credit or grant is allocated, and that the taxpayer or grant recipient is entitled to receive the credit or grant at the time the project is placed in service, provided that date is within three calendar years following the issuance of the allocation certificate.

(c) The office, in consultation with the commissioner deleted text begin of revenuedeleted text end , shall determine if the project is eligible for a credit or a grant under this section new text begin and must notify the developer in writing of its determinationnew text end . Eligibility for the credit is subject to review and audit by the commissioner deleted text begin of revenuedeleted text end .

(d) The federal credit recapture and repayment requirements under section 50 of the Internal Revenue Code do not apply to the credit allowed under this section.

new text begin (e) Any decision of the office under paragraph (c) may be challenged as a contested case under chapter 14. The contested case proceeding must be initiated within 45 days of the date of written notification by the office. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment and the change in paragraph (a) applies to applications first received on or after the day following final enactment. new text end

Sec. 18.

Minnesota Statutes 2012, section 290.0681, subdivision 4, is amended to read:

Subd. 4.

Credit certificatesnew text begin ; grantsnew text end .

(a)(1) The developer of a project for which the office has issued an allocation certificate must notify the office when the project is placed in service. Upon verifying that the project has been placed in service, and was allowed a federal credit, the office must issue a credit certificate to the taxpayer designated in the application or must issue a grant to the recipient designated in the application. The credit certificate must state the amount of the credit.

(2) The credit amount equals the federal credit allowed for the project.

(3) The grant amount equals 90 percent of the federal credit allowed for the project.

(b) The recipient of a credit certificate may assign the certificate to another taxpayer, which is then allowed the credit under this section or section 297I.20, subdivision 3. new text begin An assignment is not valid unless the assignee notifies the commissioner within 30 days of the date that the assignment is made. new text end The commissioner shall prescribe the forms necessary for new text begin notifying the commissioner of the assignment of a credit certificate and for new text end claiming a credit by assignment.

new text begin (c) Credits passed through to partners, members, shareholders, or owners pursuant to subdivision 5 are not an assignment of a credit certificate under this subdivision. new text end

new text begin (d) A grant agreement between the office and the recipient of a grant may allow the grant to be issued to another individual or entity. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment. new text end

Sec. 19.

Minnesota Statutes 2012, section 290.0681, subdivision 5, is amended to read:

Subd. 5.

Partnerships; multiple owners.

Credits granted to a partnership, a limited liability company taxed as a partnership, S corporation, or multiple owners of property are passed through to the partners, members, shareholders, or owners, respectively, pro rata to each partner, member, shareholder, or owner based on their share of the entity's assets or as specially allocated in their organizational documentsnew text begin or any other executed agreementnew text end , as of the last day of the taxable year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment. new text end

Sec. 20.

Minnesota Statutes 2012, section 290.0681, subdivision 10, is amended to read:

Subd. 10.

Sunset.

This section expires after fiscal year deleted text begin 2015deleted text end new text begin 2021new text end , except that the office's authority to issue credit certificates under subdivision 4 based on allocation certificates that were issued before fiscal year deleted text begin 2016deleted text end new text begin 2022new text end remains in effect through deleted text begin 2018deleted text end new text begin 2024new text end , and the reporting requirements in subdivision 9 remain in effect through the year following the year in which all allocation certificates have either been canceled or resulted in issuance of credit certificates, or deleted text begin 2019deleted text end new text begin 2025new text end , whichever is earlier.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment. new text end

Sec. 21.

Minnesota Statutes 2012, section 290.091, subdivision 1, is amended to read:

Subdivision 1.

Imposition of tax.

In addition to all other taxes imposed by this chapter a tax is imposed on individuals, estates, and trusts equal to the excess (if any) of

(a) an amount equal to deleted text begin 6.4deleted text end new text begin 6.75new text end percent of alternative minimum taxable income after subtracting the exemption amount, over

(b) the regular tax for the taxable year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December 31, 2012. new text end

Sec. 22.

Minnesota Statutes 2012, section 290.091, subdivision 2, is amended to read:

Subd. 2.

Definitions.

For purposes of the tax imposed by this section, the following terms have the meanings given:

(a) "Alternative minimum taxable income" means the sum of the following for the taxable year:

(1) the taxpayer's federal alternative minimum taxable income as defined in section 55(b)(2) of the Internal Revenue Code;

(2) the taxpayer's itemized deductions allowed in computing federal alternative minimum taxable income, but excluding:

(i) the charitable contribution deduction under section 170 of the Internal Revenue Code;

(ii) the medical expense deduction;

(iii) the casualty, theft, and disaster loss deduction; and

(iv) the impairment-related work expenses of a disabled person;

(3) for depletion allowances computed under section 613A(c) of the Internal Revenue Code, with respect to each property (as defined in section 614 of the Internal Revenue Code), to the extent not included in federal alternative minimum taxable income, the excess of the deduction for depletion allowable under section 611 of the Internal Revenue Code for the taxable year over the adjusted basis of the property at the end of the taxable year (determined without regard to the depletion deduction for the taxable year);

(4) to the extent not included in federal alternative minimum taxable income, the amount of the tax preference for intangible drilling cost under section 57(a)(2) of the Internal Revenue Code determined without regard to subparagraph (E);

(5) to the extent not included in federal alternative minimum taxable income, the amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and

(6) the amount of addition required by section 290.01, subdivision 19a, clauses (7) to (9), (12), (13), and (16) to (18);

less the sum of the amounts determined under the following:

(1) interest income as defined in section 290.01, subdivision 19b, clause (1);

(2) an overpayment of state income tax as provided by section 290.01, subdivision 19b, clause (2), to the extent included in federal alternative minimum taxable income;

(3) the amount of investment interest paid or accrued within the taxable year on indebtedness to the extent that the amount does not exceed net investment income, as defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include amounts deducted in computing federal adjusted gross income;

(4) amounts subtracted from federal taxable income as provided by section 290.01, subdivision 19b, clauses (6), (8) to (14), and (16); and

(5) the amount of the net operating loss allowed under section 290.095, subdivision 11, paragraph (c).

In the case of an estate or trust, alternative minimum taxable income must be computed as provided in section 59(c) of the Internal Revenue Code.

(b) "Investment interest" means investment interest as defined in section 163(d)(3) of the Internal Revenue Code.

(c) "Net minimum tax" means the minimum tax imposed by this section.

(d) "Regular tax" means the tax that would be imposed under this chapter (without regard to this section and section 290.032), reduced by the sum of the nonrefundable credits allowed under this chapter.

(e) "Tentative minimum tax" equals deleted text begin 6.4deleted text end new text begin 6.75new text end percent of alternative minimum taxable income after subtracting the exemption amount determined under subdivision 3.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December 31, 2012. new text end

Sec. 23.

Minnesota Statutes 2012, section 290.091, subdivision 6, is amended to read:

Subd. 6.

Credit for prior years' liability.

(a) A credit is allowed against the tax imposed by this chapter on individuals, trusts, and estates equal to the minimum tax credit for the taxable year. The minimum tax credit equals the adjusted net minimum tax for taxable years beginning after December 31, 1988, reduced by the minimum tax credits allowed in a prior taxable year. The credit may not exceed the excess (if any) for the taxable year of

(1) the regular tax, over

(2) the greater of (i) the tentative alternative minimum tax, or (ii) zero.

(b) The adjusted net minimum tax for a taxable year equals the lesser of the net minimum tax or the excess (if any) of

(1) the tentative minimum tax, over

(2) deleted text begin 6.4deleted text end new text begin 6.75new text end percent of the sum of

(i) adjusted gross income as defined in section 62 of the Internal Revenue Code,

(ii) interest income as defined in section 290.01, subdivision 19a, clause (1),

(iii) interest on specified private activity bonds, as defined in section 57(a)(5) of the Internal Revenue Code, to the extent not included under clause (ii),

(iv) depletion as defined in section 57(a)(1), determined without regard to the last sentence of paragraph (1), of the Internal Revenue Code, less

(v) the deductions allowed in computing alternative minimum taxable income provided in subdivision 2, paragraph (a), clause (2) of the first series of clauses and clauses (1), (2), and (3) of the second series of clauses, and

(vi) the exemption amount determined under subdivision 3.

In the case of an individual who is not a Minnesota resident for the entire year, adjusted net minimum tax must be multiplied by the fraction defined in section 290.06, subdivision 2c, paragraph (e). In the case of a trust or estate, adjusted net minimum tax must be multiplied by the fraction defined under subdivision 4, paragraph (b).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December 31, 2012. new text end

Sec. 24.

Minnesota Statutes 2012, section 290.0921, subdivision 3, is amended to read:

Subd. 3.

Alternative minimum taxable income.

"Alternative minimum taxable income" is Minnesota net income as defined in section 290.01, subdivision 19, and includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e), (f), and (h) of the Internal Revenue Code. If a corporation files a separate company Minnesota tax return, the minimum tax must be computed on a separate company basis. If a corporation is part of a tax group filing a unitary return, the minimum tax must be computed on a unitary basis. The following adjustments must be made.

(1) For purposes of the depreciation adjustments under section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal income tax purposes, including any modification made in a taxable year under section 290.01, subdivision 19e, or Minnesota Statutes 1986, section 290.09, subdivision 7, paragraph (c).

For taxable years beginning after December 31, 2000, the amount of any remaining modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986, section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation allowance in the first taxable year after December 31, 2000.

(2) The portion of the depreciation deduction allowed for federal income tax purposes under section 168(k) of the Internal Revenue Code that is required as an addition under section 290.01, subdivision 19c, clause deleted text begin (15)deleted text end new text begin (12)new text end , is disallowed in determining alternative minimum taxable income.

(3) The subtraction for depreciation allowed under section 290.01, subdivision 19d, clause deleted text begin (17)deleted text end new text begin (15)new text end , is allowed as a depreciation deduction in determining alternative minimum taxable income.

(4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d) of the Internal Revenue Code does not apply.

(5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal Revenue Code does not apply.

deleted text begin (6) The special rule for dividends from section 936 companies under section 56(g)(4)(C)(iii) does not apply. deleted text end

deleted text begin (7)deleted text end new text begin (6)new text end The tax preference for depletion under section 57(a)(1) of the Internal Revenue Code does not apply.

deleted text begin (8)deleted text end new text begin (7)new text end The tax preference for intangible drilling costs under section 57(a)(2) of the Internal Revenue Code must be calculated without regard to subparagraph (E) and the subtraction under section 290.01, subdivision 19d, clause (4).

deleted text begin (9)deleted text end new text begin (8)new text end The tax preference for tax exempt interest under section 57(a)(5) of the Internal Revenue Code does not apply.

deleted text begin (10)deleted text end new text begin (9)new text end The tax preference for charitable contributions of appreciated property under section 57(a)(6) of the Internal Revenue Code does not apply.

deleted text begin (11)deleted text end new text begin (10)new text end For purposes of calculating the tax preference for accelerated depreciation or amortization on certain property placed in service before January 1, 1987, under section 57(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the deduction allowed under section 290.01, subdivision 19e.

For taxable years beginning after December 31, 2000, the amount of any remaining modification made under section 290.01, subdivision 19e, not previously deducted is a depreciation or amortization allowance in the first taxable year after December 31, 2004.

deleted text begin (12)deleted text end new text begin (11)new text end For purposes of calculating the adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable income" as it is used in section 56(g) of the Internal Revenue Code, means alternative minimum taxable income as defined in this subdivision, determined without regard to the adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code.

deleted text begin (13)deleted text end new text begin (12)new text end For purposes of determining the amount of adjusted current earnings under section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section 56(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign dividend gross-up subtracted as provided in section 290.01, subdivision 19d, clause (1), new text begin or new text end (ii) the amount of refunds of income, excise, or franchise taxes subtracted as provided in section 290.01, subdivision 19d, clause (9)deleted text begin , or (iii) the amount of royalties, fees or other like income subtracted as provided in section 290.01, subdivision 19d, clause (10)deleted text end .

deleted text begin (14)deleted text end new text begin (13)new text end Alternative minimum taxable income excludes the income from operating in a job opportunity building zone as provided under section 469.317.

deleted text begin (15)deleted text end new text begin (14)new text end Alternative minimum taxable income excludes the income from operating in a biotechnology and health sciences industry zone as provided under section 469.337.

Items of tax preference must not be reduced below zero as a result of the modifications in this subdivision.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December 31, 2012. new text end

Sec. 25.

Minnesota Statutes 2012, section 290.0922, subdivision 1, is amended to read:

Subdivision 1.

Imposition.

(a) In addition to the tax imposed by this chapter without regard to this section, the franchise tax imposed on a corporation required to file under section 289A.08, subdivision 3, other than a corporation treated as an "S" corporation under section 290.9725 for the taxable year includes a tax equal to the following amounts:

If the sum of the corporation's Minnesota property, payrolls, and sales or receipts is: the tax equals:
deleted text begin less thandeleted text end deleted text begin $ deleted text end deleted text begin 500,000 deleted text end deleted text begin $ deleted text end deleted text begin 0 deleted text end
deleted text begin $ deleted text end deleted text begin 500,000 deleted text end deleted text begin to deleted text end deleted text begin $ deleted text end deleted text begin 999,999 deleted text end deleted text begin $ deleted text end deleted text begin 100 deleted text end
deleted text begin $ deleted text end deleted text begin 1,000,000 deleted text end deleted text begin to deleted text end deleted text begin $ deleted text end deleted text begin 4,999,999 deleted text end deleted text begin $ deleted text end deleted text begin 300 deleted text end
deleted text begin $ deleted text end deleted text begin 5,000,000 deleted text end deleted text begin to deleted text end deleted text begin $ deleted text end deleted text begin 9,999,999 deleted text end deleted text begin $ deleted text end deleted text begin 1,000 deleted text end
deleted text begin $ deleted text end deleted text begin 10,000,000 deleted text end deleted text begin to deleted text end deleted text begin $ deleted text end deleted text begin 19,999,999 deleted text end deleted text begin $ deleted text end deleted text begin 2,000 deleted text end
deleted text begin $ deleted text end deleted text begin 20,000,000 deleted text end deleted text begin ordeleted text end deleted text begin more deleted text end deleted text begin $ deleted text end deleted text begin 5,000 deleted text end
new text begin less than new text end new text begin $ new text end new text begin 930,000 new text end new text begin $ new text end new text begin 0 new text end
new text begin $ new text end new text begin 930,000 new text end new text begin to new text end new text begin $ new text end new text begin 1,869,999 new text end new text begin $ new text end new text begin 190 new text end
new text begin $ new text end new text begin 1,870,000 new text end new text begin to new text end new text begin $ new text end new text begin 9,339,999 new text end new text begin $ new text end new text begin 560 new text end
new text begin $ new text end new text begin 9,340,000 new text end new text begin to new text end new text begin $ new text end new text begin 18,679,999 new text end new text begin $ new text end new text begin 1,870 new text end
new text begin $ new text end new text begin 18,680,000 new text end new text begin to new text end new text begin $ new text end new text begin 37,359,999 new text end new text begin $ new text end new text begin 3,740 new text end
new text begin $ new text end new text begin 37,360,000 new text end new text begin or new text end new text begin more new text end new text begin $ new text end new text begin 9,340 new text end

(b) A tax is imposed for each taxable year on a corporation required to file a return under section 289A.12, subdivision 3, that is treated as an "S" corporation under section 290.9725 and on a partnership required to file a return under section 289A.12, subdivision 3, other than a partnership that derives over 80 percent of its income from farming. The tax imposed under this paragraph is due on or before the due date of the return for the taxpayer due under section 289A.18, subdivision 1. The commissioner shall prescribe the return to be used for payment of this tax. The tax under this paragraph is equal to the following amounts:

If the sum of the S corporation's or partnership's Minnesota property, payrolls, and sales or receipts is: the tax equals:
deleted text begin less than deleted text end deleted text begin $ deleted text end deleted text begin 500,000 deleted text end deleted text begin $ deleted text end deleted text begin 0 deleted text end
deleted text begin $ deleted text end deleted text begin 500,000 deleted text end deleted text begin to deleted text end deleted text begin $ deleted text end deleted text begin 999,999 deleted text end deleted text begin $ deleted text end deleted text begin 100 deleted text end
deleted text begin $ deleted text end deleted text begin 1,000,000 deleted text end deleted text begin to deleted text end deleted text begin $ deleted text end deleted text begin 4,999,999 deleted text end deleted text begin $ deleted text end deleted text begin 300 deleted text end
deleted text begin $ deleted text end deleted text begin 5,000,000 deleted text end deleted text begin to deleted text end deleted text begin $ deleted text end deleted text begin 9,999,999 deleted text end deleted text begin $ deleted text end deleted text begin 1,000 deleted text end
deleted text begin $ deleted text end deleted text begin 10,000,000 deleted text end deleted text begin to deleted text end deleted text begin $ deleted text end deleted text begin 19,999,999 deleted text end deleted text begin $ deleted text end deleted text begin 2,000 deleted text end
deleted text begin $ deleted text end deleted text begin 20,000,000 deleted text end deleted text begin or deleted text end deleted text begin more deleted text end deleted text begin $ deleted text end deleted text begin 5,000 deleted text end
new text begin less than new text end new text begin $ new text end new text begin 930,000 new text end new text begin $ new text end new text begin 0 new text end
new text begin $ new text end new text begin 930,000 new text end new text begin to new text end new text begin $ new text end new text begin 1,869,999 new text end new text begin $ new text end new text begin 190 new text end
new text begin $ new text end new text begin 1,870,000 new text end new text begin to new text end new text begin $ new text end new text begin 9,339,999 new text end new text begin $ new text end new text begin 560 new text end
new text begin $ new text end new text begin 9,340,000 new text end new text begin to new text end new text begin $ new text end new text begin 18,679,999 new text end new text begin $ new text end new text begin 1,870 new text end
new text begin $ new text end new text begin 18,680,000 new text end new text begin to new text end new text begin $ new text end new text begin 37,359,999 new text end new text begin $ new text end new text begin 3,740 new text end
new text begin $ new text end new text begin 37,360,000 new text end new text begin or new text end new text begin more new text end new text begin $ new text end new text begin 9,340 new text end

new text begin (c) The commissioner shall adjust the dollar amounts of both the tax and the property, payrolls, and sales or receipts thresholds in paragraphs (a) and (b) by the percentage determined pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in section 1(f)(3)(B) the word "2012" must be substituted for the word "1992." For 2014, the commissioner shall determine the percentage change from the 12 months ending on August 31, 2012, to the 12 months ending on August 31, 2013, and in each subsequent year, from the 12 months ending on August 31, 2012, to the 12 months ending on August 31 of the year preceding the taxable year. The determination of the commissioner pursuant to this subdivision is not a "rule" subject to the Administrative Procedure Act contained in chapter 14. The tax amounts as adjusted must be rounded to the nearest $10 amount and the threshold amounts must be adjusted to the nearest $10,000 amount. For tax amounts that end in $5, the amount is rounded up to the nearest $10 amount and for the threshold amounts that end in $5,000, the amount is rounded up to the nearest $10,000. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December 31, 2012. new text end

Sec. 26.

Minnesota Statutes 2012, section 290.095, subdivision 2, is amended to read:

Subd. 2.

Defined and limited.

(a) The term "net operating loss" as used in this section shall mean a net operating loss as defined in section 172(c) of the Internal Revenue Code, with the modifications specified in subdivision 4. The deductions provided in section 290.21 deleted text begin and the modification provided in section 290.01, subdivision 19d, clause (10),deleted text end cannot be used in the determination of a net operating loss.

(b) The term "net operating loss deduction" as used in this section means the aggregate of the net operating loss carryovers to the taxable year, computed in accordance with subdivision 3. The provisions of section 172(b) of the Internal Revenue Code relating to the carryback of net operating losses, do not apply.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December 31, 2012. new text end

Sec. 27.

Minnesota Statutes 2012, section 290.10, subdivision 1, is amended to read:

Subdivision 1.

Expenses, interest, and taxes.

deleted text begin Except as provided in section 290.17, subdivision 4, paragraph (i),deleted text end In computing the net income of a taxpayer no deduction shall in any case be allowed for expenses, interest and taxes connected with or allocable against the production or receipt of all income not included in the measure of the tax imposed by this chapter, except that for corporations engaged in the business of mining or producing iron ore, the mining of which is subject to the occupation tax imposed by section 298.01, subdivision 4, this shall not prevent the deduction of expenses and other items to the extent that the expenses and other items are allowable under this chapter and are not deductible, capitalizable, retainable in basis, or taken into account by allowance or otherwise in computing the occupation tax and do not exceed the amounts taken for federal income tax purposes for that year. Occupation taxes imposed under chapter 298, royalty taxes imposed under chapter 299, or depletion expenses may not be deducted under this subdivision.

Sec. 28.

Minnesota Statutes 2012, section 290.17, subdivision 4, is amended to read:

Subd. 4.

Unitary business principle.

(a) If a trade or business conducted wholly within this state or partly within and partly without this state is part of a unitary business, the entire income of the unitary business is subject to apportionment pursuant to section 290.191. Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary business is considered to be derived from any particular source and none may be allocated to a particular place except as provided by the applicable apportionment formula. The provisions of this subdivision do not apply to business income subject to subdivision 5, income of an insurance company, or income of an investment company determined under section 290.36.

(b) The term "unitary business" means business activities or operations which result in a flow of value between them. The term may be applied within a single legal entity or between multiple entities and without regard to whether each entity is a sole proprietorship, a corporation, a partnership or a trust.

(c) Unity is presumed whenever there is unity of ownership, operation, and use, evidenced by centralized management or executive force, centralized purchasing, advertising, accounting, or other controlled interaction, but the absence of these centralized activities will not necessarily evidence a nonunitary business. Unity is also presumed when business activities or operations are of mutual benefit, dependent upon or contributory to one another, either individually or as a group.

(d) Where a business operation conducted in Minnesota is owned by a business entity that carries on business activity outside the state different in kind from that conducted within this state, and the other business is conducted entirely outside the state, it is presumed that the two business operations are unitary in nature, interrelated, connected, and interdependent unless it can be shown to the contrary.

(e) Unity of ownership deleted text begin is not deemed todeleted text end new text begin does notnew text end exist when deleted text begin a corporation isdeleted text end new text begin two or more corporations arenew text end involved unless deleted text begin that corporation is a member of a group of two or more business entities anddeleted text end more than 50 percent of the voting stock of each deleted text begin member of the groupdeleted text end new text begin corporationnew text end is directly or indirectly owned by a common owner or by common owners, either corporate or noncorporate, or by one or more of the member corporations of the group. For this purpose, the term "voting stock" shall include membership interests of mutual insurance holding companies formed under section 66A.40.

(f) The net income and apportionment factors under section 290.191 or 290.20 of foreign corporations and other foreign entities which are part of a unitary business shall not be included in the net income or the apportionment factors of the unitary businessnew text begin ; except that the income and apportionment factors of a foreign entity, other than an entity treated as a C corporation for federal income tax purposes, that are included in the federal taxable income, as defined in section 63 of the Internal Revenue Code as amended through the date named in section 290.01, subdivision 19, of a domestic corporation, domestic entity, or individual must be included in determining net income and the factors to be used in the apportionment of net income pursuant to section 290.191 or 290.20new text end . A foreign corporation or other foreign entity which is new text begin not included on a combined report and which is new text end required to file a return under this chapter shall file on a separate return basis. deleted text begin The net income and apportionment factors under section 290.191 or 290.20 of foreign operating corporations shall not be included in the net income or the apportionment factors of the unitary business except as provided in paragraph (g).deleted text end

deleted text begin (g) The adjusted net income of a foreign operating corporation shall be deemed to be paid as a dividend on the last day of its taxable year to each shareholder thereof, in proportion to each shareholder's ownership, with which such corporation is engaged in a unitary business. Such deemed dividend shall be treated as a dividend under section 290.21, subdivision 4. deleted text end

deleted text begin Dividends actually paid by a foreign operating corporation to a corporate shareholder which is a member of the same unitary business as the foreign operating corporation shall be eliminated from the net income of the unitary business in preparing a combined report for the unitary business. The adjusted net income of a foreign operating corporation shall be its net income adjusted as follows: deleted text end

deleted text begin (1) any taxes paid or accrued to a foreign country, the commonwealth of Puerto Rico, or a United States possession or political subdivision of any of the foregoing shall be a deduction; and deleted text end

deleted text begin (2) the subtraction from federal taxable income for payments received from foreign corporations or foreign operating corporations under section 290.01, subdivision 19d, clause (10), shall not be allowed. deleted text end

deleted text begin If a foreign operating corporation incurs a net loss, neither income nor deduction from that corporation shall be included in determining the net income of the unitary business. deleted text end

deleted text begin (h)deleted text end new text begin (g)new text end For purposes of determining the net income of a unitary business and the factors to be used in the apportionment of net income pursuant to section 290.191 or 290.20, there must be included only the income and apportionment factors of domestic corporations or other domestic entities deleted text begin other than foreign operating corporationsdeleted text end that are determined to be part of the unitary business pursuant to this subdivision, notwithstanding that foreign corporations or other foreign entities might be included in the unitary businessnew text begin ; except that the income and apportionment factors of a foreign entity, other than an entity treated as a C corporation for federal income tax purposes, that is included in the federal taxable income, as defined in section 63 of the Internal Revenue Code as amended through the date named in section 290.01, subdivision 19, of a domestic corporation, domestic entity, or individual must be included in determining net income and the factors to be used in the apportionment of net income pursuant to section 290.191 or 290.20new text end .

deleted text begin (i) Deductions for expenses, interest, or taxes otherwise allowable under this chapter that are connected with or allocable against dividends, deemed dividends described in paragraph (g), or royalties, fees, or other like income described in section 290.01, subdivision 19d, clause (10), shall not be disallowed. deleted text end

deleted text begin (j)deleted text end new text begin (h)new text end Each corporation or other entity, except a sole proprietorship, that is part of a unitary business must file combined reports as the commissioner determines. On the reports, all intercompany transactions between entities included pursuant to paragraph deleted text begin (h)deleted text end new text begin (g)new text end must be eliminated and the entire net income of the unitary business determined in accordance with this subdivision is apportioned among the entities by using each entity's Minnesota factors for apportionment purposes in the numerators of the apportionment formula and the total factors for apportionment purposes of all entities included pursuant to paragraph deleted text begin (h)deleted text end new text begin (g)new text end in the denominators of the apportionment formula.new text begin Except as otherwise provided by paragraph (f), all sales of the unitary business made within this state pursuant to section 290.191 or 290.20 must be included on the combined report of a corporation or other entity that is a member of the unitary business and is subject to the jurisdiction of this state to impose tax under this chapter.new text end

deleted text begin (k)deleted text end new text begin (i)new text end If a corporation has been divested from a unitary business and is included in a combined report for a fractional part of the common accounting period of the combined report:

(1) its income includable in the combined report is its income incurred for that part of the year determined by proration or separate accounting; and

(2) its sales, property, and payroll included in the apportionment formula must be prorated or accounted for separately.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December 31, 2012. new text end

Sec. 29.

Minnesota Statutes 2012, section 290.191, subdivision 5, is amended to read:

Subd. 5.

Determination of sales factor.

For purposes of this section, the following rules apply in determining the sales factor.

(a) The sales factor includes all sales, gross earnings, or receipts received in the ordinary course of the business, except that the following types of income are not included in the sales factor:

(1) interest;

(2) dividends;

(3) sales of capital assets as defined in section 1221 of the Internal Revenue Code;

(4) sales of property used in the trade or business, except sales of leased property of a type which is regularly sold as well as leased;new text begin andnew text end

(5) sales of debt instruments as defined in section 1275(a)(1) of the Internal Revenue Code or sales of stockdeleted text begin ; anddeleted text end new text begin .new text end

deleted text begin (6) royalties, fees, or other like income of a type which qualify for a subtraction from federal taxable income under section 290.01, subdivision 19d, clause (10). deleted text end

(b) Sales of tangible personal property are made within this state if the property is received by a purchaser at a point within this state, and the taxpayer is taxable in this state, regardless of the f.o.b. point, other conditions of the sale, or the ultimate destination of the property.

(c) Tangible personal property delivered to a common or contract carrier or foreign vessel for delivery to a purchaser in another state or nation is a sale in that state or nation, regardless of f.o.b. point or other conditions of the sale.

(d) Notwithstanding paragraphs (b) and (c), when intoxicating liquor, wine, fermented malt beverages, cigarettes, or tobacco products are sold to a purchaser who is licensed by a state or political subdivision to resell this property only within the state of ultimate destination, the sale is made in that state.

(e) Sales made by or through a corporation that is qualified as a domestic international sales corporation under section 992 of the Internal Revenue Code are not considered to have been made within this state.

(f) Sales, rents, royalties, and other income in connection with real property is attributed to the state in which the property is located.

(g) Receipts from the lease or rental of tangible personal property, including finance leases and true leases, must be attributed to this state if the property is located in this state and to other states if the property is not located in this state. Receipts from the lease or rental of moving property including, but not limited to, motor vehicles, rolling stock, aircraft, vessels, or mobile equipment are included in the numerator of the receipts factor to the extent that the property is used in this state. The extent of the use of moving property is determined as follows:

(1) A motor vehicle is used wholly in the state in which it is registered.

(2) The extent that rolling stock is used in this state is determined by multiplying the receipts from the lease or rental of the rolling stock by a fraction, the numerator of which is the miles traveled within this state by the leased or rented rolling stock and the denominator of which is the total miles traveled by the leased or rented rolling stock.

(3) The extent that an aircraft is used in this state is determined by multiplying the receipts from the lease or rental of the aircraft by a fraction, the numerator of which is the number of landings of the aircraft in this state and the denominator of which is the total number of landings of the aircraft.

(4) The extent that a vessel, mobile equipment, or other mobile property is used in the state is determined by multiplying the receipts from the lease or rental of the property by a fraction, the numerator of which is the number of days during the taxable year the property was in this state and the denominator of which is the total days in the taxable year.

(h) Royalties and other income deleted text begin not described in paragraph (a), clause (6),deleted text end received for the use of or for the privilege of using intangible property, including patents, know-how, formulas, designs, processes, patterns, copyrights, trade names, service names, franchises, licenses, contracts, customer lists, or similar items, must be attributed to the state in which the property is used by the purchaser. If the property is used in more than one state, the royalties or other income must be apportioned to this state pro rata according to the portion of use in this state. If the portion of use in this state cannot be determined, the royalties or other income must be excluded from both the numerator and the denominator. Intangible property is used in this state if the purchaser uses the intangible property or the rights therein in the regular course of its business operations in this state, regardless of the location of the purchaser's customers.

(i) Sales of intangible property are made within the state in which the property is used by the purchaser. If the property is used in more than one state, the sales must be apportioned to this state pro rata according to the portion of use in this state. If the portion of use in this state cannot be determined, the sale must be excluded from both the numerator and the denominator of the sales factor. Intangible property is used in this state if the purchaser used the intangible property in the regular course of its business operations in this state.

(j) Receipts from the performance of services must be attributed to the state where the services are received. For the purposes of this section, receipts from the performance of services provided to a corporation, partnership, or trust may only be attributed to a state where it has a fixed place of doing business. If the state where the services are received is not readily determinable or is a state where the corporation, partnership, or trust receiving the service does not have a fixed place of doing business, the services shall be deemed to be received at the location of the office of the customer from which the services were ordered in the regular course of the customer's trade or business. If the ordering office cannot be determined, the services shall be deemed to be received at the office of the customer to which the services are billed.

(k) For the purposes of this subdivision and subdivision 6, paragraph (l), receipts from management, distribution, or administrative services performed by a corporation or trust for a fund of a corporation or trust regulated under United States Code, title 15, sections 80a-1 through 80a-64, must be attributed to the state where the shareholder of the fund resides. Under this paragraph, receipts for services attributed to shareholders are determined on the basis of the ratio of: (1) the average of the outstanding shares in the fund owned by shareholders residing within Minnesota at the beginning and end of each year; and (2) the average of the total number of outstanding shares in the fund at the beginning and end of each year. Residence of the shareholder, in the case of an individual, is determined by the mailing address furnished by the shareholder to the fund. Residence of the shareholder, when the shares are held by an insurance company as a depositor for the insurance company policyholders, is the mailing address of the policyholders. In the case of an insurance company holding the shares as a depositor for the insurance company policyholders, if the mailing address of the policyholders cannot be determined by the taxpayer, the receipts must be excluded from both the numerator and denominator. Residence of other shareholders is the mailing address of the shareholder.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December 31, 2012. new text end

Sec. 30.

Minnesota Statutes 2012, section 290.21, subdivision 4, is amended to read:

Subd. 4.

Dividends received from another corporation.

(a)(1) Eighty percent of dividends received by a corporation during the taxable year from another corporation, in which the recipient owns 20 percent or more of the stock, by vote and value, not including stock described in section 1504(a)(4) of the Internal Revenue Code when the corporate stock with respect to which dividends are paid does not constitute the stock in trade of the taxpayer or would not be included in the inventory of the taxpayer, or does not constitute property held by the taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or business, or when the trade or business of the taxpayer does not consist principally of the holding of the stocks and the collection of the income and gains therefrom; and

(2)(i) the remaining 20 percent of dividends if the dividends received are the stock in an affiliated company transferred in an overall plan of reorganization and the dividend is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as amended through December 31, 1989;

(ii) the remaining 20 percent of dividends if the dividends are received from a corporation which is subject to tax under section 290.36 and which is a member of an affiliated group of corporations as defined by the Internal Revenue Code and the dividend is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as amended through December 31, 1989, or is deducted under an election under section 243(b) of the Internal Revenue Code; or

(iii) the remaining 20 percent of the dividends if the dividends are received from a property and casualty insurer as defined under section 60A.60, subdivision 8, which is a member of an affiliated group of corporations as defined by the Internal Revenue Code and either: (A) the dividend is eliminated in consolidation under Treasury Regulation 1.1502-14(a), as amended through December 31, 1989; or (B) the dividend is deducted under an election under section 243(b) of the Internal Revenue Code.

(b) Seventy percent of dividends received by a corporation during the taxable year from another corporation in which the recipient owns less than 20 percent of the stock, by vote or value, not including stock described in section 1504(a)(4) of the Internal Revenue Code when the corporate stock with respect to which dividends are paid does not constitute the stock in trade of the taxpayer, or does not constitute property held by the taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or business, or when the trade or business of the taxpayer does not consist principally of the holding of the stocks and the collection of income and gain therefrom.

(c) The dividend deduction provided in this subdivision shall be allowed only with respect to dividends that are included in a corporation's Minnesota taxable net income for the taxable year.

The dividend deduction provided in this subdivision does not apply to a dividend from a corporation which, for the taxable year of the corporation in which the distribution is made or for the next preceding taxable year of the corporation, is a corporation exempt from tax under section 501 of the Internal Revenue Code.

new text begin The dividend deduction provided in this subdivision does not apply to a dividend received from a real estate investment trust as defined in section 856 of the Internal Revenue Code. new text end

The dividend deduction provided in this subdivision applies to the amount of regulated investment company dividends only to the extent determined under section 854(b) of the Internal Revenue Code.

The dividend deduction provided in this subdivision shall not be allowed with respect to any dividend for which a deduction is not allowed under the provisions of section 246(c) of the Internal Revenue Code.

(d) If dividends received by a corporation that does not have nexus with Minnesota under the provisions of Public Law 86-272 are included as income on the return of an affiliated corporation permitted or required to file a combined report under section 290.17, subdivision 4, or 290.34, subdivision 2, then for purposes of this subdivision the determination as to whether the trade or business of the corporation consists principally of the holding of stocks and the collection of income and gains therefrom shall be made with reference to the trade or business of the affiliated corporation having a nexus with Minnesota.

(e) The deduction provided by this subdivision does not apply if the dividends are paid by a FSC as defined in section 922 of the Internal Revenue Code.

(f) If one or more of the members of the unitary group whose income is included on the combined report received a dividend, the deduction under this subdivision for each member of the unitary business required to file a return under this chapter is the product of: (1) 100 percent of the dividends received by members of the group; (2) the percentage allowed pursuant to paragraph (a) or (b); and (3) the percentage of the taxpayer's business income apportionable to this state for the taxable year under section 290.191 or 290.20.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December 31, 2012. new text end

Sec. 31.

Minnesota Statutes 2012, section 298.01, subdivision 3b, is amended to read:

Subd. 3b.

Deductions.

(a) For purposes of determining taxable income under subdivision 3, the deductions from gross income include only those expenses necessary to convert raw ores to marketable quality. Such expenses include costs associated with refinement but do not include expenses such as transportation, stockpiling, marketing, or marine insurance that are incurred after marketable ores are produced, unless the expenses are included in gross income. The allowable deductions from a mine or plant that mines and produces more than one mineral, metal, or energy resource must be determined separately for the purposes of computing the deduction in section 290.01, subdivision 19c, clause deleted text begin (9)deleted text end new text begin (8)new text end . These deductions may be combined on one occupation tax return to arrive at the deduction from gross income for all production.

(b) The provisions of section 290.01, subdivisions 19c, clauses (6) and (9), and 19d, clauses (7) and deleted text begin (11)deleted text end new text begin (10)new text end , are not used to determine taxable income.

Sec. 32.

Laws 2010, chapter 216, section 11, the effective date, is amended to read:

EFFECTIVE DATE.

This section is effective for taxable years beginning after December 31, 2009, for certified historic structures for which qualified deleted text begin costs of rehabilitation are first paid under construction contracts entered into after May 1, 2010deleted text end new text begin rehabilitation expenditures are first paid by the developer or taxpayer after May 1, 2010, for rehabilitation that occurs after May 1, 2010, provided that the application under subdivision 3 is submitted before the project is placed in servicenew text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment and applies retroactively for taxable years beginning after December 31, 2009, and for certified historic structures placed in service after May 1, 2010, but the office may not issue certificates allowed under the change to this section until July 1, 2013. new text end

Sec. 33.

new text begin ESTIMATED TAXES; EXCEPTIONS. new text end

new text begin No addition to tax, penalties, or interest may be made under Minnesota Statutes, section 289A.25, for any period before September 15, 2013, with respect to an underpayment of estimated tax, to the extent that the underpayment was created or increased by the increase in income tax rates under this article. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December 31, 2012. new text end

Sec. 34.

new text begin REPEALER. new text end

new text begin Minnesota Statutes 2012, sections 290.01, subdivision 6b; 290.06, subdivision 22a; and 290.0921, subdivision 7, new text end new text begin are repealed. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December 31, 2012. new text end

ARTICLE 7

ESTATE AND GIFT TAXES

Section 1.

Minnesota Statutes 2012, section 270B.01, subdivision 8, is amended to read:

Subd. 8.

Minnesota tax laws.

For purposes of this chapter only, unless expressly stated otherwise, "Minnesota tax laws" means:

(1) the taxes, refunds, and fees administered by or paid to the commissioner under chapters 115B, 289A (except taxes imposed under sections 298.01, 298.015, and 298.24), 290, 290A, 291, new text begin 292, new text end 295, 297A, 297B, and 297H, or any similar Indian tribal tax administered by the commissioner pursuant to any tax agreement between the state and the Indian tribal government, and includes any laws for the assessment, collection, and enforcement of those taxes, refunds, and fees; and

(2) section 273.1315.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for gifts made after December 31, 2012. new text end

Sec. 2.

Minnesota Statutes 2012, section 270B.03, subdivision 1, is amended to read:

Subdivision 1.

Who may inspect.

Returns and return information must, on request, be made open to inspection by or disclosure to the data subject. The request must be made in writing or in accordance with written procedures of the chief disclosure officer of the department that have been approved by the commissioner to establish the identification of the person making the request as the data subject. For purposes of this chapter, the following are the data subject:

(1) in the case of an individual return, that individual;

(2) in the case of an income tax return filed jointly, either of the individuals with respect to whom the return is filed;

(3) in the case of a return filed by a business entity, an officer of a corporation, a shareholder owning more than one percent of the stock, or any shareholder of an S corporation; a general partner in a partnership; the owner of a sole proprietorship; a member or manager of a limited liability company; a participant in a joint venture; the individual who signed the return on behalf of the business entity; or an employee who is responsible for handling the tax matters of the business entity, such as the tax manager, bookkeeper, or managing agent;

(4) in the case of an estate return:

(i) the personal representative or trustee of the estate; and

(ii) any beneficiary of the estate as shown on the federal estate tax return;

(5) in the case of a trust return:

(i) the trustee or trustees, jointly or separately; and

(ii) any beneficiary of the trust as shown in the trust instrument;

(6) if liability has been assessed to a transferee under section 270C.58, subdivision 1, the transferee is the data subject with regard to the returns and return information relating to the assessed liability;

(7) in the case of an Indian tribal government or an Indian tribal government-owned entity,

(i) the chair of the tribal government, or

(ii) any person authorized by the tribal government; deleted text begin anddeleted text end

(8) in the case of a successor as defined in section 270C.57, subdivision 1, paragraph (b), the successor is the data subject and information may be disclosed as provided by section 270C.57, subdivision 4deleted text begin .deleted text end new text begin ; andnew text end

new text begin (9) in the case of a gift return, the donor. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment. new text end

Sec. 3.

Minnesota Statutes 2012, section 289A.10, subdivision 1, is amended to read:

Subdivision 1.

Return required.

In the case of a decedent who has an interest in property with a situs in Minnesota, the personal representative must submit a Minnesota estate tax return to the commissioner, on a form prescribed by the commissioner, if:

(1) a federal estate tax return is required to be filed; or

(2) the new text begin sum of the new text end federal gross estatenew text begin and federal adjusted taxable gifts made within three years of the date of the decedent's death new text end exceeds $1,000,000.

The return must contain a computation of the Minnesota estate tax due. The return must be signed by the personal representative.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for estates of decedents dying after December 31, 2012. new text end

Sec. 4.

Minnesota Statutes 2012, section 291.005, subdivision 1, is amended to read:

Subdivision 1.

Scope.

Unless the context otherwise clearly requires, the following terms used in this chapter shall have the following meanings:

(1) "Commissioner" means the commissioner of revenue or any person to whom the commissioner has delegated functions under this chapter.

(2) "Federal gross estate" means the gross estate of a decedent as required to be valued and otherwise determined for federal estate tax purposes under the Internal Revenue Code.

(3) "Internal Revenue Code" means the United States Internal Revenue Code of 1986, as amended through deleted text begin April 14, 2011deleted text end new text begin January 3, 2013new text end , but without regard to the provisions of deleted text begin sections 501 and 901 of Public Law 107-16, as amended by Public Law 111-312, and section 301(c) of Public Law 111-312deleted text end new text begin section 2011, paragraph (f), of the Internal Revenue Codenew text end .

(4) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as defined by section 2011(b)(3) of the Internal Revenue Code, plus

(i) the amount of deduction for state death taxes allowed under section 2058 of the Internal Revenue Code;

new text begin (ii) the amount of taxable gifts, as defined in section 292.16, and made by the decedent within three years of the decedent's date of death; new text end less

deleted text begin (ii)deleted text end new text begin (iii)new text end (A) the value of qualified small business property under section 291.03, subdivision 9, and the value of qualified farm property under section 291.03, subdivision 10, or (B) $4,000,000, whichever is less.

(5) "Minnesota gross estate" means the federal gross estate of a decedent after (a) excluding therefrom any property included therein which has its situs outside Minnesota, and (b) including therein any property omitted from the federal gross estate which is includable therein, has its situs in Minnesota, and was not disclosed to federal taxing authorities.

(6) "Nonresident decedent" means an individual whose domicile at the time of death was not in Minnesota.

(7) "Personal representative" means the executor, administrator or other person appointed by the court to administer and dispose of the property of the decedent. If there is no executor, administrator or other person appointed, qualified, and acting within this state, then any person in actual or constructive possession of any property having a situs in this state which is included in the federal gross estate of the decedent shall be deemed to be a personal representative to the extent of the property and the Minnesota estate tax due with respect to the property.

(8) "Resident decedent" means an individual whose domicile at the time of death was in Minnesota.

(9) "Situs of property" means, with respect tonew text begin :new text end

new text begin (i)new text end real property, the state or country in which it is located; deleted text begin with respect todeleted text end

new text begin (ii) new text end tangible personal property, the state or country in which it was normally kept or located at the time of the decedent's deathnew text begin or for a gift of tangible personal property within three years of death, the state or country in which it was normally kept or located when the gift was executednew text end ; and deleted text begin with respect todeleted text end

new text begin (iii)new text end intangible personal property, the state or country in which the decedent was domiciled at deathnew text begin or for a gift of intangible personal property within three years of death, the state or country in which the decedent was domiciled when the gift was executednew text end .

new text begin For a nonresident decedent with an ownership interest in a pass-through entity with assets that include real or tangible personal property, situs of the real or tangible personal property is determined as if the pass-through entity does not exist and the real or tangible personal property is personally owned by the decedent. If the pass-through entity is owned by a person or persons in addition to the decedent, ownership of the property is attributed to the decedent in proportion to the decedent's capital ownership share of the pass-through entity. new text end

new text begin (10) "Pass-through entity" includes the following: new text end

new text begin (i) an entity electing S corporation status under section 1362 of the Internal Revenue Code; new text end

new text begin (ii) an entity taxed as a partnership under subchapter K of the Internal Revenue Code; new text end

new text begin (iii) a single-member limited liability company or similar entity, regardless of whether it is taxed as an association or is disregarded for federal income tax purposes under Code of Federal Regulations, title 26, section 301.7701-3; or new text end

new text begin (iv) a trust to the extent the property is includible in the decedent's federal gross estate. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for decedents dying after December 31, 2012. new text end

Sec. 5.

Minnesota Statutes 2012, section 291.03, subdivision 1, is amended to read:

Subdivision 1.

Tax amount.

(a) The tax imposed shall be an amount equal to the proportion of the maximum credit for state death taxes computed under section 2011 of the Internal Revenue Code, but using Minnesota adjusted taxable estate instead of federal adjusted taxable estate, as the Minnesota gross estate bears to the value of the federal gross estate.new text begin The tax is reduced by:new text end

new text begin (1) the gift tax paid by the decedent under section 292.17 on gifts included in the Minnesota adjusted taxable estate and not subtracted as qualified farm or small business property; and new text end

new text begin (2) any credit allowed under subdivision 1c. new text end

(b) The tax determined under this subdivision must not be greater than the sum of the following amounts multiplied by a fraction, the numerator of which is the Minnesota gross estate and the denominator of which is the federal gross estate:

(1) the rates and brackets under section 2001(c) of the Internal Revenue Code multiplied by the sum of:

(i) the taxable estate, as defined under section 2051 of the Internal Revenue Code; plus

(ii) adjusted taxable gifts, as defined in section 2001(b) of the Internal Revenue Code; less

(iii) the lesser of (A) the sum of the value of qualified small business property under subdivision 9, and the value of qualified farm property under subdivision 10, or (B) $4,000,000; less

(2) the amount of tax allowed under section 2001(b)(2) of the Internal Revenue Code; and less

(3) the federal credit allowed under section 2010 of the Internal Revenue Code.

(c) For purposes of this subdivision, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended through December 31, 2000.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for decedents dying after December 31, 2012. new text end

Sec. 6.

Minnesota Statutes 2012, section 291.03, is amended by adding a subdivision to read:

new text begin Subd. 1c. new text end

new text begin Nonresident decedent tax credit. new text end

new text begin (a) The estate of a nonresident decedent that is subject to tax under this chapter on the value of Minnesota situs property held in a pass-through entity is allowed a credit against the tax due under this section equal to the lesser of: new text end

new text begin (1) the amount of estate or inheritance tax paid to another state that is attributable to the Minnesota situs property held in the pass-through entity; or new text end

new text begin (2) the amount of tax paid under this section attributable to the Minnesota situs property held in the pass-through entity. new text end

new text begin (b) The amount of tax attributable to the Minnesota situs property held in the pass-through entity must be determined by the increase in the estate or inheritance tax that results from including the market value of the property in the estate or treating the value as a taxable inheritance to the recipient of the property. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for decedents dying after December 31, 2012. new text end

Sec. 7.

Minnesota Statutes 2012, section 291.03, subdivision 8, is amended to read:

Subd. 8.

Definitions.

(a) For purposes of this section, the following terms have the meanings given in this subdivision.

(b) "Family member" means a family member as defined in section 2032A(e)(2) of the Internal Revenue Codenew text begin , or a trust whose present beneficiaries are all family members as defined in section 2032A(e)(2) of the Internal Revenue Codenew text end .

(c) "Qualified heir" means a family member who acquired qualified property deleted text begin fromdeleted text end new text begin upon the death ofnew text end the decedent and satisfies the requirement under subdivision 9, clause deleted text begin (6)deleted text end new text begin (7)new text end , or subdivision 10, clause deleted text begin (4)deleted text end new text begin (5)new text end , for the property.

(d) "Qualified property" means qualified small business property under subdivision 9 and qualified farm property under subdivision 10.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for estates of decedents dying after June 30, 2011. new text end

Sec. 8.

Minnesota Statutes 2012, section 291.03, subdivision 9, is amended to read:

Subd. 9.

Qualified small business property.

Property satisfying all of the following requirements is qualified small business property:

(1) The value of the property was included in the federal adjusted taxable estate.

(2) The property consists of the assets of a trade or business or shares of stock or other ownership interests in a corporation or other entity engaged in a trade or business. deleted text begin The decedent or the decedent's spouse must have materially participated in the trade or business within the meaning of section 469 of the Internal Revenue Code during the taxable year that ended before the date of the decedent's death.deleted text end Shares of stock in a corporation or an ownership interest in another type of entity do not qualify under this subdivision if the shares or ownership interests are traded on a public stock exchange at any time during the three-year period ending on the decedent's date of death.new text begin For purposes of this subdivision, an ownership interest includes the interest the decedent is deemed to own under sections 2036, 2037, and 2038 of the Internal Revenue Code.new text end

(3) new text begin During the taxable year that ended before the decedent's death, the trade or business must not have been a passive activity within the meaning of section 469(c) of the Internal Revenue Code, and the decedent or the decedent's spouse must have materially participated in the trade or business within the meaning of section 469(h) of the Internal Revenue Code, excluding section 469(h)(3) of the Internal Revenue Code and any other provision provided by United States Treasury Department regulation that substitutes material participation in prior taxable years for material participation in the taxable year that ended before the decedent's death.new text end

new text begin (4) new text end The gross annual sales of the trade or business were $10,000,000 or less for the last taxable year that ended before the date of the death of the decedent.

deleted text begin (4)deleted text end new text begin (5)new text end The property does not consist of cash deleted text begin ordeleted text end new text begin ,new text end cash equivalentsnew text begin , publicly traded securities, or assets not used in the operation of the trade or businessnew text end . For property consisting of shares of stock or other ownership interests in an entity, the deleted text begin amountdeleted text end new text begin valuenew text end of cash deleted text begin ordeleted text end new text begin ,new text end cash equivalentsnew text begin , publicly traded securities, or assets not used in the operation of the trade or businessnew text end held by the corporation or other entity must be deducted from the value of the property qualifying under this subdivision in proportion to the decedent's share of ownership of the entity on the date of death.

deleted text begin (5)deleted text end new text begin (6)new text end The decedent continuously owned the propertynew text begin , including property the decedent is deemed to own under sections 2036, 2037, and 2038 of the Internal Revenue Code,new text end for the three-year period ending on the date of death of the decedent.new text begin In the case of a sole proprietor, if the property replaced similar property within the three-year period, the replacement property will be treated as having been owned for the three-year period ending on the date of death of the decedent.new text end

deleted text begin (6) A family member continuously uses the property in the operation of the trade or business for three years following the date of death of the decedent. deleted text end

(7) new text begin For three years following the date of death of the decedent, the trade or business is not a passive activity within the meaning of section 469(c) of the Internal Revenue Code, and a family member materially participates in the operation of the trade or business within the meaning of section 469(h) of the Internal Revenue Code, excluding section 469(h)(3) of the Internal Revenue Code and any other provision provided by United States Treasury Department regulation that substitutes material participation in prior taxable years for material participation in the three years following the date of death of the decedent.new text end

new text begin (8) new text end The estate and the qualified heir elect to treat the property as qualified small business property and agree, in the form prescribed by the commissioner, to pay the recapture tax under subdivision 11, if applicable.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for estates of decedents dying after June 30, 2011. new text end

Sec. 9.

Minnesota Statutes 2012, section 291.03, subdivision 10, is amended to read:

Subd. 10.

Qualified farm property.

Property satisfying all of the following requirements is qualified farm property:

(1) The value of the property was included in the federal adjusted taxable estate.

(2) The property consists of deleted text begin a farm meeting the requirements ofdeleted text end new text begin agricultural land and is owned by a person or entity that is either not subject to or is in compliance with new text end section 500.24deleted text begin , and was classified for property tax purposes as the homestead of the decedent or the decedent's spouse or both under section 273.124, and as class 2a property under section 273.13, subdivision 23deleted text end .

(3) new text begin For property taxes payable in the taxable year of the decedent's death, the property is classified as class 2a property under section 273.13, subdivision 23, and is classified as agricultural homestead, agricultural relative homestead, or special agricultural homestead under section 273.124.new text end

new text begin (4) new text end The decedent continuously owned the propertynew text begin , including property the decedent is deemed to own under sections 2036, 2037, and 2038 of the Internal Revenue Code,new text end for the three-year period ending on the date of death of the decedentnew text begin either by ownership of the agricultural land or pursuant to holding an interest in an entity that is not subject to or is in compliance with section 500.24new text end .

deleted text begin (4) A family member continuously uses the property in the operation of the trade or businessdeleted text end new text begin (5) The property is classified for property tax purposes as class 2a property under section 273.13, subdivision 23,new text end for three years following the date of death of the decedent.

deleted text begin (5)deleted text end new text begin (6) new text end The estate and the qualified heir elect to treat the property as qualified farm property and agree, in a form prescribed by the commissioner, to pay the recapture tax under subdivision 11, if applicable.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for estates of decedents dying after June 30, 2011. new text end

Sec. 10.

Minnesota Statutes 2012, section 291.03, subdivision 11, is amended to read:

Subd. 11.

Recapture tax.

(a) If, within three years after the decedent's death and before the death of the qualified heir, the qualified heir disposes of any interest in the qualified property, other than by a disposition to a family member, or a family member ceases to deleted text begin use the qualified property which was acquired or passed from the decedentdeleted text end new text begin satisfy the requirement under subdivision 9, clause (7); or 10, clause (5)new text end , an additional estate tax is imposed on the property.new text begin In the case of a sole proprietor, if the qualified heir replaces qualified small business property excluded under subdivision 9 with similar property, then the qualified heir will not be treated as having disposed of an interest in the qualified property.new text end

(b) The amount of the additional tax equals the amount of the exclusion claimed by the estate under subdivision 8, paragraph (d), multiplied by 16 percent.

(c) The additional tax under this subdivision is due on the day which is six months after the date of the disposition or cessation in paragraph (a).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for estates of decedents dying after June 30, 2011. new text end

Sec. 11.

new text begin [292.16] DEFINITIONS. new text end

new text begin (a) For purposes of this chapter, the following definitions apply. new text end

new text begin (b) The definitions of terms defined in section 291.005 apply. new text end

new text begin (c) "Resident" has the meaning given in section 290.01, subdivision 7, paragraph (a). new text end

new text begin (d) "Taxable gifts" means: new text end

new text begin (1) the transfers by gift which are included in taxable gifts for federal gift tax purposes under the following sections of the Internal Revenue Code: new text end

new text begin (i) section 2503; new text end

new text begin (ii) sections 2511 to 2514; and new text end

new text begin (iii) sections 2516 to 2519; less new text end

new text begin (2) the deductions allowed in sections 2522 to 2524 of the Internal Revenue Code. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June 30, 2013. new text end

Sec. 12.

new text begin [292.17] GIFT TAX. new text end

new text begin Subdivision 1. new text end

new text begin Imposition. new text end

new text begin (a) A tax is imposed on the transfer of property by gift by any individual resident or nonresident in an amount equal to ten percent of the amount of the taxable gift. new text end

new text begin (b) The donor is liable for payment of the tax. If the gift tax is not paid when due, the donee of any gift is personally liable for the tax to the extent of the value of the gift. new text end

new text begin Subd. 2. new text end

new text begin Lifetime credit. new text end

new text begin A credit is allowed against the tax imposed under this section equal to $100,000. This credit applies to the cumulative amount of taxable gifts made by the donor during the donor's lifetime. new text end

new text begin Subd. 3. new text end

new text begin Out-of-state gifts. new text end

new text begin Taxable gifts exclude the transfer of: new text end

new text begin (1) real property located outside of this state; new text end

new text begin (2) tangible personal property that was normally kept at a location outside of the state on the date the gift was executed; and new text end

new text begin (3) intangible personal property made by an individual who is not a resident at the time the gift was executed. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June 30, 2013. new text end

Sec. 13.

new text begin [292.18] RETURNS. new text end

new text begin (a) Any individual who makes a taxable gift during the taxable year shall file a gift tax return in the form and manner prescribed by the commissioner. new text end

new text begin (b) If the donor dies before filing the return, the executor of the donor's will or the administrator of the donor's estate shall file the return. If the donor becomes legally incompetent before filing the return, the guardian or conservator shall file the return. new text end

new text begin (c) The return must include: new text end

new text begin (1) each gift made during the calendar year which is to be included in computing the taxable gifts; new text end

new text begin (2) the deductions claimed and allowable under section 292.16, paragraph (d), clause (2); new text end

new text begin (3) a description of the gift, and the donee's name, address, and Social Security number; new text end

new text begin (4) the fair market value of gifts not made in money; and new text end

new text begin (5) any other information the commissioner requires to administer the gift tax. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June 30, 2013. new text end

Sec. 14.

new text begin [292.19] FILING REQUIREMENTS. new text end

new text begin Gift tax returns must be filed by the April 15 following the close of the calendar year, except if a gift is made during the calendar year in which the donor dies, the return for the donor must be filed by the last date, including extensions, for filing the gift tax return for federal gift tax purposes for the donor. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June 30, 2013. new text end

Sec. 15.

new text begin [292.20] APPRAISAL OF PROPERTY; DECLARATION BY DONOR. new text end

new text begin The commissioner may require the donor or the donee to show the property subject to the tax under section 292.17 to the commissioner upon demand and may employ a suitable person to appraise the property. The donor shall submit a declaration, in a form prescribed by the commissioner and including any certification required by the commissioner, that the property shown by the donor on the gift tax return includes all of the property transferred by gift for the calendar year and not deductible under section 292.16, paragraph (d), clause (2). new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June 30, 2013. new text end

Sec. 16.

new text begin [292.21] ADMINISTRATIVE PROVISIONS. new text end

new text begin Subdivision 1. new text end

new text begin Payment of tax; penalty for late payment. new text end

new text begin The tax imposed under section 292.17 is due and payable to the commissioner by the April 15 following the close of the calendar year during which the gift was made. The return required under section 292.19 must be included with the payment. If a taxable gift is made during the calendar year in which the donor dies, the due date is the last date, including extensions, for filing the gift tax return for federal gift tax purposes for the donor. If any person fails to pay the tax due within the time specified under this section, a penalty applies equal to ten percent of the amount due and unpaid or $100, whichever is greater. The unpaid tax and penalty bear interest at the rate under section 270C.40 from the due date of the return. new text end

new text begin Subd. 2. new text end

new text begin Extensions. new text end

new text begin The commissioner may, for good cause, extend the time for filing a gift tax return, if a written request is filed with a tentative return accompanied by a payment of the tax, which is estimated in the tentative return, on or before the last day for filing the return. Any person to whom an extension is granted must pay, in addition to the tax, interest at the rate under section 270C.40 from the date on which the tax would have been due without the extension. new text end

new text begin Subd. 3. new text end

new text begin Changes in federal gift tax. new text end

new text begin If the amount of a taxpayer's taxable gifts for federal gift tax purposes, as reported on the taxpayer's federal gift tax return for any calendar year, is changed or corrected by the Internal Revenue Service or other officer of the United States or other competent authority, the taxpayer shall report the change or correction in federal taxable gifts within 180 days after the final determination of the change or correction, and concede the accuracy of the determination or provide a letter detailing how the federal determination is incorrect or does not change the Minnesota gift tax. Any taxpayer filing an amended federal gift tax return shall also file within 180 days an amended return under this chapter and shall include any information the commissioner requires. The time for filing the report or amended return may be extended by the commissioner upon due cause shown. Notwithstanding any limitation of time in this chapter, if, upon examination, the commissioner finds that the taxpayer is liable for the payment of an additional tax, the commissioner shall, within a reasonable time from the receipt of the report or amended return, notify the taxpayer of the amount of additional tax, together with interest computed at the rate under section 270C.40 from the date when the original tax was due and payable. Within 30 days of the mailing of the notice, the taxpayer shall pay the commissioner the amount of the additional tax and interest. If, upon examination of the report or amended return and related information, the commissioner finds that the taxpayer has overpaid the tax due the state, the commissioner shall refund the overpayment to the taxpayer. new text end

new text begin Subd. 4. new text end

new text begin Application of federal rules. new text end

new text begin In administering the tax under this chapter, the commissioner shall apply the provisions of sections 2701 to 2704 of the Internal Revenue Code. The words "secretary or his delegate," as used in those sections of the Internal Revenue Code, mean the commissioner. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June 30, 2013. new text end

ARTICLE 8

SALES AND USE TAXES; LOCAL SALES TAXES

Section 1.

new text begin [116J.8738] QUALIFIED EXPANSIONS OF GREATER MINNESOTA BUSINESSES. new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have the meanings given unless the context clearly indicates otherwise. new text end

new text begin (b) "Agricultural processing facility" means one or more facilities or operations that transform, package, sort, or grade livestock or livestock products, agricultural commodities, or plants or plant products into goods that are used for intermediate or final consumption including goods for nonfood use, and surrounding property. new text end

new text begin (c) "Business" means an individual, corporation, partnership, limited liability company, association, or any other entity engaged in operating a trade or business located in greater Minnesota. new text end

new text begin (d) "City" means a statutory or home rule charter city. new text end

new text begin (e) "Greater Minnesota" means the area of the state that excludes the metropolitan area, as defined in section 473.121, subdivision 2. new text end

new text begin (f) "Qualified business" means a business that satisfies the requirements of subdivision 2, has been certified under subdivision 3, and has not been terminated under subdivision 5. new text end

new text begin Subd. 2. new text end

new text begin Qualified business. new text end

new text begin (a) A business is a qualified business if it satisfies the requirement of this paragraph and is not disqualified under the provisions of paragraph (b). To qualify, the business must: new text end

new text begin (1) have operated its trade or business in a city or cities in greater Minnesota for at least one year before applying under subdivision 3; new text end

new text begin (2) pay or agree to pay in the future each employee compensation, including benefits not mandated by law, that on an annualized basis equal at least 120 percent of the federal poverty level for a family of four; new text end

new text begin (3) plan and agree to expand its employment in one or more cities in greater Minnesota by the minimum number of employees required under subdivision 3, paragraph (c); and new text end

new text begin (4) received certification from the commissioner under subdivision 3 that it is a qualified business. new text end

new text begin (b) A business is not a qualified business if it is either: new text end

new text begin (1) primarily engaged in making retail sales to purchasers who are physically present at the business's location or locations in greater Minnesota; or new text end

new text begin (2) a public utility, as defined in section 336B.01. new text end

new text begin (c) The requirements in paragraph (a) that the business' operations and expansion be located in a city do not apply to an agricultural processing facility. new text end

new text begin Subd. 3. new text end

new text begin Certification of qualified business. new text end

new text begin (a) A business may apply to the commissioner for certification as a qualified business under this section. The commissioner shall specify the form of the application, the manner and times for applying, and the information required to be included in the application. The commissioner may impose an application fee in an amount sufficient to defray the commissioner's cost of processing certifications. A business must file a copy of its application with the chief clerical officer of the city at the same time it applies to the commissioner. For an agricultural processing facility located outside the boundaries of a city, the business must file a copy of the application with the county auditor. new text end

new text begin (b) The commissioner shall certify each business as a qualified business that: new text end

new text begin (1) satisfies the requirements of subdivision 2; new text end

new text begin (2) the commissioner determines would not expand its operations in greater Minnesota without the tax incentives available under subdivision 4; and new text end

new text begin (3) enters a business subsidy agreement with the commissioner that pledges to satisfy the minimum expansion requirements of paragraph (c) within three years or less following execution of the agreement. new text end

new text begin The commissioner must act on an application within 60 days after its filing. Failure by the commissioner to take action within the 60-day period is deemed approval of the application. new text end

new text begin (c) The following minimum expansion requirements apply, based on the number of employees of the business at locations in greater Minnesota: new text end

new text begin (1) a business that employees 50 or fewer full-time equivalent employees in greater Minnesota when the agreement is executed must increase its employment by five or more full-time equivalent employees; new text end

new text begin (2) a business that employees more than 50 but fewer than 200 full-time equivalent employees in greater Minnesota when the agreement is executed must increase the number of its full-time equivalent employees in greater Minnesota by at least ten percent; or new text end

new text begin (3) a business that employees 200 or more full-time equivalent employees in greater Minnesota when the agreement is executed must increase its employment by at least 21 full-time equivalent employees. new text end

new text begin (d) The city, or a county for an agricultural processing facility located outside the boundaries of a city, in which the business proposes to expand its operations may file comments supporting or opposing the application with the commissioner. The comments must be filed within 30 days after receipt by the city of the application and may include a notice of any contribution the city or county intends to make to encourage or support the business expansion, such as the use of tax increment financing, property tax abatement, additional city or county services, or other financial assistance. new text end

new text begin (e) Certification of a qualified business is effective for the 12-year period beginning on the first day of the calendar month immediately following execution of the business subsidy agreement. new text end

new text begin Subd. 4. new text end

new text begin Available tax incentives. new text end

new text begin A qualified business is entitled to a sales tax exemption, as provided in section 297A.68, subdivision 49, for purchases made during the period the business was certified as a qualified business under this section. new text end

new text begin Subd. 5. new text end

new text begin Termination of status as a qualified business. new text end

new text begin (a) The commissioner shall put in place a system for monitoring and ensuring that each certified business meets within three years or less the minimum expansion requirement in its business subsidy agreement and continues to satisfy those requirements for the rest of the duration of the certification under subdivision 3. This system must include regular reporting by the business to the commissioner of its baseline and current employment levels and any other information the commissioner determines may be useful to ensure compliance and for legislative evaluation of the effectiveness of the tax incentives. new text end

new text begin (b) A business ceases to be a qualified business and to qualify for the sales tax exemption under section 297A.68, subdivision 49, under this subdivision upon the earlier of the following dates: new text end

new text begin (1) the end of the duration of its designation under subdivision 3, paragraph (e), effective as provided under this subdivision or other provision of law for the tax incentive; or new text end

new text begin (2) the date the commissioner finds that the business has breached its business subsidy agreement and failed to satisfy the minimum expansion required by subdivision 3 and its agreement. new text end

new text begin (c) A business may contest the commissioner's finding that it breached its business subsidy agreement under paragraph (b), clause (2), under the contested case procedures in the Administrative Procedure Act, chapter 14. new text end

new text begin (d) The commissioner, after consulting with the commissioner of revenue, may waive a breach of the business subsidy agreement and permit continued receipt of tax incentives, if the commissioner determines that termination of the tax incentives is not in the best interest of the state or the local government units and the business' breach of the agreement is a result of circumstances beyond its control including, but not limited to: new text end

new text begin (1) a natural disaster; new text end

new text begin (2) unforeseen industry trends; new text end

new text begin (3) a decline in economic activity in the overall or greater Minnesota economy; or new text end

new text begin