1.1 	A bill for an act
1.2 	relating to taxation; making technical, policy, and clarifying changes to taxes 
1.3 	and tax-related provisions; conforming to streamlined sales tax provisions; 
1.4 	changing the taconite production tax; providing for administration of certain 
1.5 	fees, aids, tax titles, and tax sales;amending Minnesota Statutes 2004, sections 
1.6 	273.1384, subdivision 2; 273.1398, subdivision 3; 281.23, subdivision 9; 
1.7 	290.17, subdivision 1; 295.50, subdivision 4; 295.53, subdivision 3; 297A.61, 
1.8 	subdivisions 12, 17, by adding subdivisions; 297A.63; 297A.668, subdivision 
1.9 	6; 297A.669, subdivision 11; 297A.67, subdivisions 4, 5, 14, 25, 27; 297A.68, 
1.10 	subdivision 3; 297A.70, subdivisions 2, 4, 7, 13, 14, 15; 297A.94; 297A.99, 
1.11 	subdivision 7; 297F.01, by adding a subdivision; 297G.01, subdivision 7, by 
1.12 	adding a subdivision; 298.223, subdivision 3; 298.225, subdivision 2; 298.227; 
1.13 	298.28, as amended; 298.285; 477A.014, subdivision 1; Minnesota Statutes 2005 
1.14 	Supplement, sections 115B.49, subdivision 4; 270C.01, subdivision 4; 270C.304; 
1.15 	270C.33, subdivision 4; 270C.57, subdivision 3; 270C.67, subdivision 1, by 
1.16 	adding a subdivision; 271.12; 273.13, subdivisions 22, 25; 273.1384, subdivision 
1.17 	1; 284.07; 289A.121, subdivision 5; 297A.61, subdivision 3; 297A.67, 
1.18 	subdivision 6; 297A.68, subdivisions 2, 5, 37, 38, 40, 41; 297A.72, subdivision 
1.19 	2; 297A.75, subdivisions 1, 2, 3; 297A.815, subdivision 1; 298.24, subdivision 1;  
1.20 	Laws 1990, chapter 604, article 8, section 13, subdivision 4; Laws 1996, chapter 
1.21 	412, article 5, sections 20, subdivision 2; 21, subdivision 3; 22, subdivision 2; 
1.22 	Laws 1998, chapter 398, article 4, section 17, subdivision 2; Laws 2000, chapter 
1.23 	489, article 5, sections 24, subdivision 3; 25, subdivision 3; 26, subdivision 
1.24 	3; Laws 2005, chapter 152, article 1, section 39, subdivision 2; proposing 
1.25 	coding for new law in Minnesota Statutes, chapter 287; repealing Minnesota 
1.26 	Statutes 2004, sections 297A.68, subdivisions 15, 18; 298.28, subdivision 11a; 
1.27 	Minnesota Rules, parts 8130.0400, subpart 3; 8130.4800, subparts 1, 3, 4, 5, 6, 
1.28 	7, 8; 8130.5100; 8130.5400; 8130.5800, subpart 6.
1.29 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.30 	ARTICLE 1
1.31 	PROPERTY TAXES AND AIDS

1.32 	Section 1. Minnesota Statutes 2005 Supplement, section 273.13, subdivision 22, 
1.33 	is amended to read:
2.1 		Subd. 22.Class 1. (a) Except as provided in subdivision 23 and in paragraphs (b) 
2.2 	and (c), real estate which is residential and used for homestead purposes is class 1a. In the 
2.3 	case of a duplex or triplex in which one of the units is used for homestead purposes, the 
2.4 	entire property is deemed to be used for homestead purposes. The market value of class 1a 
2.5 	property must be determined based upon the value of the house, garage, and land.
2.6 	The first $500,000 of market value of class 1a property has a net class rate of 
2.7 	one percent of its market value; and the market value of class 1a property that exceeds 
2.8 	$500,000 has a class rate of 1.25 percent of its market value.
2.9 	(b) Class 1b property includes homestead real estate or homestead manufactured 
2.10 	homes used for the purposes of a homestead by
2.11 	(1) any person who is blind as defined in section 256D.35, or the blind person and 
2.12 	the blind person's spouse; or
2.13 	(2) any person, hereinafter referred to as "veteran," who:
2.14 	(i) served in the active military or naval service of the United States; and
2.15 	(ii) is entitled to compensation under the laws and regulations of the United States 
2.16 	for permanent and total service-connected disability due to the loss, or loss of use, by 
2.17 	reason of amputation, ankylosis, progressive muscular dystrophies, or paralysis, of both 
2.18 	lower extremities, such as to preclude motion without the aid of braces, crutches, canes, or 
2.19 	a wheelchair; and
2.20 	(iii) has acquired a special housing unit with special fixtures or movable facilities 
2.21 	made necessary by the nature of the veteran's disability, or the surviving spouse of the 
2.22 	deceased veteran for as long as the surviving spouse retains the special housing unit 
2.23 	as a homestead; or
2.24 	(3) any person who is permanently and totally disabled.
2.25 	Property is classified and assessed under clause (3) only if the government agency or 
2.26 	income-providing source certifies, upon the request of the homestead occupant, that the 
2.27 	homestead occupant satisfies the disability requirements of this paragraph.
2.28 	Property is classified and assessed pursuant to clause (1) only if the commissioner of 
2.29 	revenue certifies to the assessor that the homestead occupant satisfies the requirements of 
2.30 	this paragraph.
2.31 	Permanently and totally disabled for the purpose of this subdivision means a 
2.32 	condition which is permanent in nature and totally incapacitates the person from working 
2.33 	at an occupation which brings the person an income. The first $32,000 market value of 
2.34 	class 1b property has a net class rate of .45 percent of its market value. The remaining 
2.35 	market value of class 1b property has a class rate using the rates for class 1a or class 2a 
2.36 	property, whichever is appropriate, of similar market value.
3.1 	(c) Class 1c property is commercial use real property that abuts a lakeshore line and 
3.2 	is devoted to temporary and seasonal residential occupancy for recreational purposes but 
3.3 	not devoted to commercial purposes for more than 250 days in the year preceding the 
3.4 	year of assessment, and that includes a portion used as a homestead by the owner, which 
3.5 	includes a dwelling occupied as a homestead by a shareholder of a corporation that owns 
3.6 	the resort, a partner in a partnership that owns the resort, or a member of a limited liability 
3.7 	company that owns the resort even if the title to the homestead is held by the corporation, 
3.8 	partnership, or limited liability company. For purposes of this clause, property is devoted 
3.9 	to a commercial purpose on a specific day if any portion of the property, excluding the 
3.10 	portion used exclusively as a homestead, is used for residential occupancy and a fee 
3.11 	is charged for residential occupancy. The portion of the property used as a homestead 
3.12 	~~by the owner has the same class rates as~~is class 1a property under paragraph (a). The 
3.13 	remainder of the property is classified as follows: the first $500,000 of market value is tier 
3.14 	I, the next $1,700,000 of market value is tier II, and any remaining market value is tier III. 
3.15 	The class rates for class 1c are: tier I, 0.55 percent; tier II, 1.0 percent; and tier III, 1.25
3.16 	percent. If a class 1c resort property has any market value in tier III, the entire property 
3.17 	must meet the requirements of subdivision 25, paragraph (d), clause (1), to qualify for 
3.18 	class 1c treatment under this paragraph.
3.19 	(d) Class 1d property includes structures that meet all of the following criteria:
3.20 	(1) the structure is located on property that is classified as agricultural property under 
3.21 	section 273.13, subdivision 23;
3.22 	(2) the structure is occupied exclusively by seasonal farm workers during the time 
3.23 	when they work on that farm, and the occupants are not charged rent for the privilege of 
3.24 	occupying the property, provided that use of the structure for storage of farm equipment 
3.25 	and produce does not disqualify the property from classification under this paragraph;
3.26 	(3) the structure meets all applicable health and safety requirements for the 
3.27 	appropriate season; and
3.28 	(4) the structure is not salable as residential property because it does not comply 
3.29 	with local ordinances relating to location in relation to streets or roads.
3.30 	The market value of class 1d property has the same class rates as class 1a property 
3.31 	under paragraph (a).

3.32 	EFFECTIVE DATE. This section is effective for taxes payable in 2006 and 
3.33 	thereafter.

3.34 	Sec. 2. Minnesota Statutes 2005 Supplement, section 273.13, subdivision 25, is 
3.35 	amended to read:
4.1 		Subd. 25.Class 4. (a) Class 4a is residential real estate containing four or more 
4.2 	units and used or held for use by the owner or by the tenants or lessees of the owner 
4.3 	as a residence for rental periods of 30 days or more, excluding property qualifying for 
4.4 	class 4d. Class 4a also includes hospitals licensed under sections 144.50 to 144.56, other 
4.5 	than hospitals exempt under section 272.02, and contiguous property used for hospital 
4.6 	purposes, without regard to whether the property has been platted or subdivided. The 
4.7 	market value of class 4a property has a class rate of 1.25 percent.
4.8 	(b) Class 4b includes:
4.9 	(1) residential real estate containing less than four units that does not qualify as class 
4.10 	4bb, other than seasonal residential recreational property;
4.11 	(2) manufactured homes not classified under any other provision;
4.12 	(3) a dwelling, garage, and surrounding one acre of property on a nonhomestead 
4.13 	farm classified under subdivision 23, paragraph (b) containing two or three units; and
4.14 	(4) unimproved property that is classified residential as determined under subdivision 
4.15 	33.
4.16 	The market value of class 4b property has a class rate of 1.25 percent.
4.17 	(c) Class 4bb includes:
4.18 	(1) nonhomestead residential real estate containing one unit, other than seasonal 
4.19 	residential recreational property; and
4.20 	(2) a single family dwelling, garage, and surrounding one acre of property on a 
4.21 	nonhomestead farm classified under subdivision 23, paragraph (b).
4.22 	Class 4bb property has the same class rates as class 1a property under subdivision 22.
4.23 	Property that has been classified as seasonal residential recreational property at 
4.24 	any time during which it has been owned by the current owner or spouse of the current 
4.25 	owner does not qualify for class 4bb.
4.26 	(d) Class 4c property includes:
4.27 	(1) except as provided in subdivision 22, paragraph (c), real property devoted to 
4.28 	temporary and seasonal residential occupancy for recreation purposes, including real 
4.29 	property devoted to temporary and seasonal residential occupancy for recreation purposes 
4.30 	and not devoted to commercial purposes for more than 250 days in the year preceding 
4.31 	the year of assessment. For purposes of this clause, property is devoted to a commercial 
4.32 	purpose on a specific day if any portion of the property is used for residential occupancy, 
4.33 	and a fee is charged for residential occupancy. In order for a property to be classified as 
4.34 	class 4c, seasonal residential recreational for commercial purposes, at least 40 percent of 
4.35 	the annual gross lodging receipts related to the property must be from business conducted 
4.36 	during 90 consecutive days and either (i) at least 60 percent of all paid bookings by lodging 
5.1 	guests during the year must be for periods of at least two consecutive nights; or (ii) at least 
5.2 	20 percent of the annual gross receipts must be from charges for rental of fish houses, 
5.3 	boats and motors, snowmobiles, downhill or cross-country ski equipment, or charges for 
5.4 	marina services, launch services, and guide services, or the sale of bait and fishing tackle. 
5.5 	For purposes of this determination, a paid booking of five or more nights shall be counted 
5.6 	as two bookings. Class 4c also includes commercial use real property used exclusively 
5.7 	for recreational purposes in conjunction with class 4c property devoted to temporary 
5.8 	and seasonal residential occupancy for recreational purposes, up to a total of two acres, 
5.9 	provided the property is not devoted to commercial recreational use for more than 250 
5.10 	days in the year preceding the year of assessment and is located within two miles of the 
5.11 	class 4c property with which it is used. Owners of real property devoted to temporary and 
5.12 	seasonal residential occupancy for recreation purposes and all or a portion of which was 
5.13 	devoted to commercial purposes for not more than 250 days in the year preceding the year 
5.14 	of assessment desiring classification as class 1c or 4c, must submit a declaration to the 
5.15 	assessor designating the cabins or units occupied for 250 days or less in the year preceding 
5.16 	the year of assessment by January 15 of the assessment year. Those cabins or units and a 
5.17 	proportionate share of the land on which they are located will be designated class 1c or 4c 
5.18 	as otherwise provided. The remainder of the cabins or units and a proportionate share of 
5.19 	the land on which they are located will be designated as class 3a. The owner of property 
5.20 	desiring designation as class 1c or 4c property must provide guest registers or other 
5.21 	records demonstrating that the units for which class 1c or 4c designation is sought were 
5.22 	not occupied for more than 250 days in the year preceding the assessment if so requested. 
5.23 	The portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 
5.24 	nonresidential facility operated on a commercial basis not directly related to temporary and 
5.25 	seasonal residential occupancy for recreation purposes shall not qualify for class 1c or 4c;
5.26 	(2) qualified property used as a golf course if:
5.27 	(i) it is open to the public on a daily fee basis. It may charge membership fees or 
5.28 	dues, but a membership fee may not be required in order to use the property for golfing, 
5.29 	and its green fees for golfing must be comparable to green fees typically charged by 
5.30 	municipal courses; and
5.31 	(ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).
5.32 	A structure used as a clubhouse, restaurant, or place of refreshment in conjunction 
5.33 	with the golf course is classified as class 3a property;
5.34 	(3) real property up to a maximum of one acre of land owned by a nonprofit 
5.35 	community service oriented organization; provided that the property is not used for a 
5.36 	revenue-producing activity for more than six days in the calendar year preceding the year 
6.1 	of assessment and the property is not used for residential purposes on either a temporary 
6.2 	or permanent basis. For purposes of this clause, a "nonprofit community service oriented 
6.3 	organization" means any corporation, society, association, foundation, or institution 
6.4 	organized and operated exclusively for charitable, religious, fraternal, civic, or educational 
6.5 	purposes, and which is exempt from federal income taxation pursuant to section 501(c)(3), 
6.6 	(10), or (19) of the Internal Revenue Code of 1986, as amended through December 31, 
6.7 	1990. For purposes of this clause, "revenue-producing activities" shall include but not be 
6.8 	limited to property or that portion of the property that is used as an on-sale intoxicating 
6.9 	liquor or 3.2 percent malt liquor establishment licensed under chapter 340A, a restaurant 
6.10 	open to the public, bowling alley, a retail store, gambling conducted by organizations 
6.11 	licensed under chapter 349, an insurance business, or office or other space leased or 
6.12 	rented to a lessee who conducts a for-profit enterprise on the premises. Any portion of 
6.13 	the property which is used for revenue-producing activities for more than six days in the 
6.14 	calendar year preceding the year of assessment shall be assessed as class 3a. The use of 
6.15 	the property for social events open exclusively to members and their guests for periods of 
6.16 	less than 24 hours, when an admission is not charged nor any revenues are received by the 
6.17 	organization shall not be considered a revenue-producing activity;
6.18 	(4) postsecondary student housing of not more than one acre of land that is owned by 
6.19 	a nonprofit corporation organized under chapter 317A and is used exclusively by a student 
6.20 	cooperative, sorority, or fraternity for on-campus housing or housing located within two 
6.21 	miles of the border of a college campus;
6.22 	(5) manufactured home parks as defined in section 327.14, subdivision 3;
6.23 	(6) real property that is actively and exclusively devoted to indoor fitness, health, 
6.24 	social, recreational, and related uses, is owned and operated by a not-for-profit corporation, 
6.25 	and is located within the metropolitan area as defined in section 473.121, subdivision 2;
6.26 	(7) a leased or privately owned noncommercial aircraft storage hangar not exempt 
6.27 	under section 272.01, subdivision 2, and the land on which it is located, provided that:
6.28 	(i) the land is on an airport owned or operated by a city, town, county, Metropolitan 
6.29 	Airports Commission, or group thereof; and
6.30 	(ii) the land lease, or any ordinance or signed agreement restricting the use of the 
6.31 	leased premise, prohibits commercial activity performed at the hangar.
6.32 	If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must 
6.33 	be filed by the new owner with the assessor of the county where the property is located 
6.34 	within 60 days of the sale;
6.35 	(8) a privately owned noncommercial aircraft storage hangar not exempt under 
6.36 	section 272.01, subdivision 2, and the land on which it is located, provided that:
7.1 	(i) the land abuts a public airport; and
7.2 	(ii) the owner of the aircraft storage hangar provides the assessor with a signed 
7.3 	agreement restricting the use of the premises, prohibiting commercial use or activity 
7.4 	performed at the hangar; and
7.5 	(9) residential real estate, a portion of which is used by the owner for homestead 
7.6 	purposes, and that is also a place of lodging, if all of the following criteria are met:
7.7 	(i) rooms are provided for rent to transient guests that generally stay for periods 
7.8 	of 14 or fewer days;
7.9 	(ii) meals are provided to persons who rent rooms, the cost of which is incorporated 
7.10 	in the basic room rate;
7.11 	(iii) meals are not provided to the general public except for special events on fewer 
7.12 	than seven days in the calendar year preceding the year of the assessment; and
7.13 	(iv) the owner is the operator of the property.
7.14 	The market value subject to the 4c classification under this clause is limited to five rental 
7.15 	units. Any rental units on the property in excess of five, must be valued and assessed as 
7.16 	class 3a. The portion of the property used for purposes of a homestead by the owner must 
7.17 	be classified as class 1a property under subdivision 22.
7.18 	Class 4c property has a class rate of 1.5 percent of market value, except that (i) each 
7.19 	parcel of seasonal residential recreational property not used for commercial purposes has 
7.20 	the same class rates as class 4bb property, (ii) manufactured home parks assessed under 
7.21 	clause (5) have the same class rate as class 4b property, (iii) commercial-use seasonal 
7.22 	residential recreational property has a class rate of one percent for the first $500,000 
7.23 	of market value, ~~which includes any market value receiving the one percent rate under~~ 
7.24 	~~subdivision 22,~~ and 1.25 percent for the remaining market value, (iv) the market value 
7.25 	of property described in clause (4) has a class rate of one percent, (v) the market value 
7.26 	of property described in clauses (2) and (6) has a class rate of 1.25 percent, and (vi) that 
7.27 	portion of the market value of property in clause (9) qualifying for class 4c property 
7.28 	has a class rate of 1.25 percent.
7.29 	(e) Class 4d property is qualifying low-income rental housing certified to the assessor 
7.30 	by the Housing Finance Agency under section 273.128, subdivision 3. If only a portion 
7.31 	of the units in the building qualify as low-income rental housing units as certified under 
7.32 	section 273.128, subdivision 3, only the proportion of qualifying units to the total number 
7.33 	of units in the building qualify for class 4d. The remaining portion of the building shall be 
7.34 	classified by the assessor based upon its use. Class 4d also includes the same proportion of 
7.35 	land as the qualifying low-income rental housing units are to the total units in the building. 
8.1 	For all properties qualifying as class 4d, the market value determined by the assessor must 
8.2 	be based on the normal approach to value using normal unrestricted rents.
8.3 	Class 4d property has a class rate of 0.75 percent.

8.4 	EFFECTIVE DATE. This section is effective for taxes payable in 2006 and 
8.5 	subsequent years.

8.6 	Sec. 3. Minnesota Statutes 2005 Supplement, section 273.1384, subdivision 1, is 
8.7 	amended to read:
8.8 		Subdivision 1.Residential homestead market value credit. Each county auditor 
8.9 	shall determine a homestead credit for each class 1a, 1b, ~~1c,~~ and 2a homestead property 
8.10 	within the county equal to 0.4 percent of the first $76,000 of market value of the property 
8.11 	minus .09 percent of the market value in excess of $76,000. The credit amount may not 
8.12 	be less than zero. In the case of an agricultural or resort homestead, only the market 
8.13 	value of the house, garage, and immediately surrounding one acre of land is eligible 
8.14 	in determining the property's homestead credit. In the case of a property ~~which~~ that is 
8.15 	classified as part homestead and part nonhomestead, (i) the credit shall apply only to 
8.16 	the homestead portion of the property, but (ii) if a portion of a property is classified as 
8.17 	nonhomestead solely because not all the owners occupy the property, not all the owners 
8.18 	have qualifying relatives occupying the property, or solely because ~~both~~ not all the spouses 
8.19 	~~do not~~ of owners occupy the property, the credit amount shall be initially computed as 
8.20 	if that nonhomestead portion were also in the homestead class and then prorated to the 
8.21 	owner-occupant's percentage of ownership ~~or prorated to one-half if both spouses do not~~ 
8.22 	~~occupy the property~~. For the purpose of this section, when an owner-occupant's spouse 
8.23 	does not occupy the property, the percentage of ownership for the owner-occupant spouse 
8.24 	is one-half of the couple's ownership percentage.

8.25 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 and 
8.26 	thereafter.

8.27 	Sec. 4. Minnesota Statutes 2004, section 273.1384, subdivision 2, is amended to read:
8.28 		Subd. 2.Agricultural homestead market value credit. Property classified 
8.29 	as class 2a agricultural homestead is eligible for an agricultural credit. The credit is 
8.30 	computed using the property's agricultural credit market value, defined for this purpose 
8.31 	as the property's class 2a market value excluding the market value of the house, garage, 
8.32 	and immediately surrounding one acre of land. The credit is equal to 0.3 percent of the 
8.33 	first $115,000 of the property's agricultural credit market value~~. The credit under this~~ 
9.1 	~~subdivision is limited to $345 for each homestead. The credit is reduced by~~ minus .05 
9.2 	percent of the property's agricultural credit market value in excess of $115,000, subject to 
9.3 	a maximum reduction of $115. In the case of property that is classified in part as class 2a 
9.4 	agricultural homestead and in part as class 2b nonhomestead farm land solely because not 
9.5 	all the owners occupy or farm the property, not all the owners have qualifying relatives 
9.6 	occupying or farming the property, or solely because not all the spouses of owners occupy 
9.7 	the property, the credit must be initially computed as if that nonhomestead agricultural 
9.8 	land was also classified as class 2a agricultural homestead and then prorated to the 
9.9 	owner-occupant's percentage of ownership.

9.10 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 and 
9.11 	thereafter.

9.12 	Sec. 5. Minnesota Statutes 2004, section 273.1398, subdivision 3, is amended to read:
9.13 		Subd. 3.Disparity reduction aid. ~~For taxes payable in 2003 and subsequent years,~~
9.14 	The amount of disparity aid certified for each taxing district within each unique taxing 
9.15 	jurisdiction for taxes payable in the prior year shall be multiplied by the ratio of (1) the 
9.16 	jurisdiction's tax capacity using the class rates for taxes payable in the year for which aid 
9.17 	is being computed, to (2) its tax capacity using the class rates for taxes payable in the year 
9.18 	prior to that for which aid is being computed, both based upon market values for taxes 
9.19 	payable in the year prior to that for which aid is being computed. ~~For the purposes of this~~ 
9.20 	~~aid determination, disparity reduction aid certified for taxes payable in the prior year for~~ 
9.21 	~~a taxing entity other than a town or school district is deemed to be county government~~ 
9.22 	~~disparity reduction aid. The amount of disparity aid certified to each taxing jurisdiction~~ 
9.23 	~~shall be reduced by any reductions required in the current year or permanent reductions~~ 
9.24 	~~required in previous years under section  477A.0132.~~  If the commissioner determines that 
9.25 	insufficient information is available to reasonably and timely calculate the numerator 
9.26 	in this ratio for the first taxes payable year that a class rate change or new class rate is 
9.27 	effective, the commissioner shall omit the effects of that class rate change or new class 
9.28 	rate when calculating this ratio for aid payable in that taxes payable year. For aid payable 
9.29 	in the year following a year for which such omission was made, the commissioner shall 
9.30 	use in the denominator for the class that was changed or created, the tax capacity for taxes 
9.31 	payable two years prior to that in which the aid is payable, based on market values for 
9.32 	taxes payable in the year prior to that for which aid is being computed.

9.33 	EFFECTIVE DATE. This section is effective for taxes payable in 2006 and 
9.34 	thereafter.

10.1 	Sec. 6. Minnesota Statutes 2004, section 281.23, subdivision 9, is amended to read:
10.2 		Subd. 9.Certificate. After the time for redemption of any lands shall have expired 
10.3 	after notice given, as provided in subdivisions 2, 3, 5, and 6, the county auditor shall 
10.4 	execute a certificate describing the lands, specifying the tax judgment sale at which the 
10.5 	same were bid in for the state, and stating that the time for redemption thereof has expired 
10.6 	after notice given as provided by law and that absolute title thereto has vested in the 
10.7 	state of Minnesota. Such certificate shall be recorded in the office of the county recorder 
10.8 	~~and thereafter filed in the office of the county auditor~~, except that in case of registered 
10.9 	land such certificate shall be ~~filed~~recorded in the office of the registrar of titles ~~and a~~ 
10.10 	~~duplicate filed in the office of the county auditor~~. Such certificate and the record thereof 
10.11 	shall be prima facie evidence of the facts therein stated, but failure to execute or record or 
10.12 	file such certificate shall not affect the validity of any proceedings hereunder respecting 
10.13 	such lands or the title of the state thereto.

10.14 	EFFECTIVE DATE. This section is effective the day following final enactment.

10.15 	Sec. 7. Minnesota Statutes 2005 Supplement, section 284.07, is amended to read:
10.16 	284.07 COUNTY AUDITOR'S CERTIFICATE TO BE PRIMA FACIE 
10.17 	EVIDENCE.
10.18 	The county auditor's certificate of forfeiture ~~filed~~ recorded by the county auditor 
10.19 	as provided by section 281.23, subdivision 9, and acts supplemental thereto, or by any 
10.20 	other law hereafter enacted providing for the recording of such a certificate or a certified 
10.21 	copy of such certificate or of the record thereof, shall, for all purposes, be prima facie 
10.22 	evidence that all requirements of the law respecting the taxation and forfeiture of the 
10.23 	lands therein described were complied with, and that at the date of the certificate absolute 
10.24 	title to such lands had vested in the state by reason of forfeiture for delinquent taxes, as 
10.25 	set forth in the certificate.

10.26 	EFFECTIVE DATE. This section is effective the day following final enactment.

10.27 	Sec. 8. Minnesota Statutes 2004, section 477A.014, subdivision 1, is amended to read:
10.28 		Subdivision 1.Calculations and payments. The commissioner of revenue shall 
10.29 	make all necessary calculations and make payments pursuant to sections  477A.013,  
10.30 	477A.0132, and  477A.03 directly to the affected taxing authorities annually. In addition, 
10.31 	the commissioner shall notify the authorities of their aid amounts, as well as the 
10.32 	computational factors used in making the calculations for their authority, and those 
10.33 	statewide total figures that are pertinent, before August 1 of the year preceding the aid 
11.1 	distribution year. For the purposes of this subdivision, aid is determined for a city or town 
11.2 	based on its city or town status as of June 30 of the year preceding the aid distribution year. 
11.3 	If the effective date for a municipal incorporation, consolidation, annexation, detachment, 
11.4 	dissolution, or township organization is on or before June 30 of the year preceding the aid 
11.5 	distribution year, such change in boundaries or form of government shall be recognized 
11.6 	for aid determinations for the aid distribution year provided that reliable information 
11.7 	or estimates for all the necessary adjustments are certified by the responsible authority 
11.8 	to the commissioner by July 15 of the aid calculation year. If the effective date for a 
11.9 	municipal incorporation, consolidation, annexation, detachment, dissolution, or township 
11.10 	organization is after June 30 of the year preceding the aid distribution year, such change in 
11.11 	boundaries or form of government shall not be recognized for aid determinations until the 
11.12 	following year.  Revisions to estimates or data used in recognizing boundary changes are 
11.13 	not effective for these aid determination purposes unless certified to the commissioner by 
11.14 	July 15 of the aid calculation year. Clerical errors in the certification or use of estimates 
11.15 	and data established as of July 15 in the aid calculation year are subject to correction 
11.16 	within the time periods allowed under subdivision 3.

11.17 	EFFECTIVE DATE. This section is effective for aid payable in 2006 and thereafter.

11.18 	ARTICLE 2
11.19 	SALES AND USE TAXES

11.20 	Section 1. Minnesota Statutes 2005 Supplement, section 297A.61, subdivision 3, 
11.21 	is amended to read:
11.22 		Subd. 3.Sale and purchase. (a) "Sale" and "purchase" include, but are not limited 
11.23 	to, each of the transactions listed in this subdivision.
11.24 	(b) Sale and purchase include:
11.25 	(1) any transfer of title or possession, or both, of tangible personal property, whether 
11.26 	absolutely or conditionally, for a consideration in money or by exchange or barter; and
11.27 	(2) the leasing of or the granting of a license to use or consume, for a consideration 
11.28 	in money or by exchange or barter, tangible personal property, other than a manufactured 
11.29 	home used for residential purposes for a continuous period of 30 days or more.
11.30 	(c) Sale and purchase include the production, fabrication, printing, or processing of 
11.31 	tangible personal property for a consideration for consumers who furnish either directly or 
11.32 	indirectly the materials used in the production, fabrication, printing, or processing.
12.1 	~~(d) Sale and purchase include the preparing for a consideration of food.~~ 
12.2 	~~Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited~~ 
12.3 	~~to, the following:~~
12.4 	~~(1) prepared food sold by the retailer;~~
12.5 	~~(2) soft drinks;~~
12.6 	~~(3) candy;~~
12.7 	~~(4) dietary supplements; and~~
12.8 	~~(5) all food sold through vending machines.~~
12.9 	~~(e)~~ (d)  A sale and a purchase includes the furnishing for a consideration of electricity, 
12.10 	gas, water, or steam for use or consumption within this state.
12.11 	~~(f)~~ (e) A sale and a purchase includes the transfer for a consideration of prewritten 
12.12 	computer software whether delivered electronically, by load and leave, or otherwise.
12.13 	~~(g)~~ (f) A sale and a purchase includes the furnishing for a consideration of the 
12.14 	following services:
12.15 	(1) the privilege of admission to places of amusement, recreational areas, or athletic 
12.16 	events, and the making available of amusement devices, tanning facilities, reducing 
12.17 	salons, steam baths, turkish baths, health clubs, and spas or athletic facilities;
12.18 	(2) lodging and related services by a hotel, rooming house, resort, campground, 
12.19 	motel, or trailer camp and the granting of any similar license to use real property in a 
12.20 	specific facility, other than the renting or leasing of it for a continuous period of 30 days 
12.21 	or more under an enforceable written agreement that may not be terminated without 
12.22 	prior notice;
12.23 	(3) nonresidential parking services, whether on a contractual, hourly, or other 
12.24 	periodic basis, except for parking at a meter;
12.25 	(4) the granting of membership in a club, association, or other organization if:
12.26 	(i) the club, association, or other organization makes available for the use of its 
12.27 	members sports and athletic facilities, without regard to whether a separate charge is 
12.28 	assessed for use of the facilities; and
12.29 	(ii) use of the sports and athletic facility is not made available to the general public 
12.30 	on the same basis as it is made available to members.
12.31 	Granting of membership means both onetime initiation fees and periodic membership 
12.32 	dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and 
12.33 	squash courts; basketball and volleyball facilities; running tracks; exercise equipment; 
12.34 	swimming pools; and other similar athletic or sports facilities;
13.1 	(5) delivery of aggregate materials and concrete block by a third party if the delivery 
13.2 	would be subject to the sales tax if provided by the seller of the aggregate material or 
13.3 	concrete block; and
13.4 	(6) services as provided in this clause:
13.5 	(i) laundry and dry cleaning services including cleaning, pressing, repairing, altering, 
13.6 	and storing clothes, linen services and supply, cleaning and blocking hats, and carpet, 
13.7 	drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not 
13.8 	include services provided by coin operated facilities operated by the customer;
13.9 	(ii) motor vehicle washing, waxing, and cleaning services, including services 
13.10 	provided by coin operated facilities operated by the customer, and rustproofing, 
13.11 	undercoating, and towing of motor vehicles;
13.12 	(iii) building and residential cleaning, maintenance, and disinfecting and 
13.13 	exterminating services;
13.14 	(iv) detective, security, burglar, fire alarm, and armored car services; but not 
13.15 	including services performed within the jurisdiction they serve by off-duty licensed peace 
13.16 	officers as defined in section 626.84, subdivision 1, or services provided by a nonprofit 
13.17 	organization for monitoring and electronic surveillance of persons placed on in-home 
13.18 	detention pursuant to court order or under the direction of the Minnesota Department 
13.19 	of Corrections;
13.20 	(v) pet grooming services;
13.21 	(vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting 
13.22 	and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor 
13.23 	plant care; tree, bush, shrub, and stump removal, except when performed as part of a land 
13.24 	clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for 
13.25 	public utility lines. Services performed under a construction contract for the installation of 
13.26 	shrubbery, plants, sod, trees, bushes, and similar items are not taxable;
13.27 	(vii) massages, except when provided by a licensed health care facility or 
13.28 	professional or upon written referral from a licensed health care facility or professional for 
13.29 	treatment of illness, injury, or disease; and
13.30 	(viii) the furnishing of lodging, board, and care services for animals in kennels and 
13.31 	other similar arrangements, but excluding veterinary and horse boarding services.
13.32 	In applying the provisions of this chapter, the terms "tangible personal property" 
13.33 	and "~~sales at~~ retail sale" include taxable services listed in clause (6), items (i) to (vi) and 
13.34 	(viii), and the provision of these taxable services, unless specifically provided otherwise. 
13.35 	Services performed by an employee for an employer are not taxable. Services performed 
13.36 	by a partnership or association for another partnership or association are not taxable if one 
14.1 	of the entities owns or controls more than 80 percent of the voting power of the equity 
14.2 	interest in the other entity. Services performed between members of an affiliated group of 
14.3 	corporations are not taxable. For purposes of the preceding sentence, "affiliated group 
14.4 	of corporations" ~~includes~~means those entities that would be classified as members of an 
14.5 	affiliated group as defined under United States Code, title 26, section 1504, ~~and that are~~ 
14.6 	~~eligible to file a consolidated tax return for federal income tax purposes~~ disregarding 
14.7 	the exclusions in section 1504(b).
14.8 	~~(h)~~(g) A sale and a purchase includes the furnishing for a consideration of tangible 
14.9 	personal property or taxable services by the United States or any of its agencies or 
14.10 	instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political 
14.11 	subdivisions.
14.12 	~~(i)~~(h) A sale and a purchase includes the furnishing for a consideration of 
14.13 	telecommunications services, including cable television services and direct satellite 
14.14 	services. Telecommunications services are taxed to the extent allowed under federal law.
14.15 	~~(j)~~(i) A sale and a purchase includes the furnishing for a consideration of installation 
14.16 	if the installation charges would be subject to the sales tax if the installation were provided 
14.17 	by the seller of the item being installed.
14.18 	~~(k)~~(j) A sale and a purchase includes the rental of a vehicle by a motor vehicle 
14.19 	dealer to a customer when (1) the vehicle is rented by the customer for a consideration, 
14.20 	or (2) the motor vehicle dealer is reimbursed pursuant to a service contract as defined in 
14.21 	section 65B.29, subdivision 1, clause (1).

14.22 	EFFECTIVE DATE. This section is effective the day following final enactment.

14.23 	Sec. 2. Minnesota Statutes 2004, section 297A.61, subdivision 12, is amended to read:
14.24 		Subd. 12.Farm machinery. (a) "Farm machinery" means new or used machinery, 
14.25 	equipment, implements, accessories, and contrivances used directly and principally in 
14.26 	agricultural production of tangible personal property intended to be sold ultimately at 
14.27 	retail including, but not limited to:
14.28 	(1) machinery for the preparation, seeding, or cultivation of soil for growing 
14.29 	agricultural crops;
14.30 	(2) barn cleaners, milking systems, grain dryers, feeding systems including 
14.31 	stationary feed bunks, and similar installations, whether or not the equipment is installed 
14.32 	by the seller and becomes part of the real property; and
14.33 	(3) irrigation equipment sold for exclusively agricultural use, including pumps, pipe 
14.34 	fittings, valves, sprinklers, and other equipment necessary to the operation of an irrigation 
15.1 	system when sold as part of an irrigation system, whether or not the equipment is installed 
15.2 	by the seller and becomes part of the real property.
15.3 	(b) Farm machinery does not include:
15.4 	(1) repair or replacement parts;
15.5 	(2) tools, shop equipment, grain bins, fencing material, communication equipment, 
15.6 	and other farm supplies;
15.7 	(3) motor vehicles taxed under chapter 297B;
15.8 	(4) snowmobiles or snow blowers;
15.9 	(5) lawn mowers except those used in the production of sod for sale, or garden-type 
15.10 	tractors or garden tillers; or
15.11 	(6) machinery, equipment, implements, accessories, and contrivances used directly in 
15.12 	the production of horses not raised for slaughter, fur-bearing animals, or research animals.

15.13 	EFFECTIVE DATE. This section is effective the day following final enactment.

15.14 	Sec. 3. Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision 
15.15 	to read:
15.16 		Subd. 16a.Computer. "Computer" means an electronic device that accepts 
15.17 	information in digital or similar form and manipulates it for a result based on a sequence 
15.18 	of instructions.

15.19 	EFFECTIVE DATE. This section is effective the day following final enactment.

15.20 	Sec. 4. Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision 
15.21 	to read:
15.22 		Subd. 16b.Electronic. "Electronic" means relating to technology having electrical, 
15.23 	digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.

15.24 	EFFECTIVE DATE. This section is effective the day following final enactment.

15.25 	Sec. 5. Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision 
15.26 	to read:
15.27 		Subd. 16c.Computer software. "Computer software" means a set of coded 
15.28 	instructions designed to cause a computer or automatic data processing equipment to 
15.29 	perform a task.

15.30 	EFFECTIVE DATE. This section is effective the day following final enactment.

16.1 	Sec. 6. Minnesota Statutes 2004, section 297A.61, subdivision 17, is amended to read:
16.2 		Subd. 17.Prewritten computer software. "Prewritten computer software" means 
16.3 	computer software, including prewritten upgrades, that is not designed and developed by 
16.4 	the author or other creator to the specifications of a specific purchaser. The combining 
16.5 	of two or more "prewritten computer software" programs or prewritten portions of the 
16.6 	programs does not cause the combination to be other than "prewritten computer software." 
16.7 	"Prewritten computer software" includes software designed and developed by the author 
16.8 	or other creator to the specifications of a specific purchaser when it is sold to a person 
16.9 	other than the specific  purchaser. If a person modifies or enhances computer software 
16.10 	of which the person is not the author or creator, the person is deemed to be the author 
16.11 	or creator only of such person's modifications or enhancements. "Prewritten computer 
16.12 	software" or a prewritten portion of it that is modified or enhanced to any degree, if the 
16.13 	modification or enhancement is designed and developed to the specifications of a specific 
16.14 	purchaser, remains "prewritten computer software"; provided, however, that if there is a 
16.15 	reasonable, separately stated charge or an invoice or other statement of the price given to 
16.16 	the purchaser for such modification or enhancement, the modification or enhancement 
16.17 	does not constitute "prewritten computer software." ~~For purposes of this subdivision:~~
16.18 	~~(1) "computer" means an electronic device that accepts information in digital or~~ 
16.19 	~~similar form and manipulates it for a result based on a sequence of instructions;~~
16.20 	~~(2) "electronic" means relating to technology having electrical, digital, magnetic,~~ 
16.21 	~~wireless, optical, electromagnetic, or similar capabilities; and~~
16.22 	~~(3) "computer software" means a set of coded instructions designed to cause a~~ 
16.23 	~~"computer" or automatic data processing equipment to perform a task.~~

16.24 	EFFECTIVE DATE. This section is effective the day following final enactment.

16.25 	Sec. 7. Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision 
16.26 	to read:
16.27 		Subd. 37.Logging equipment. (a) "Logging equipment" means new or used 
16.28 	machinery, equipment, implements, accessories, and contrivances used directly and 
16.29 	principally in the commercial cutting or removal or both of timber or other solid wood 
16.30 	forest products, including, but not limited to:
16.31 	(1) machinery used for bucking, bunching, debarking, delimbing, felling, forwarding, 
16.32 	loading, piling, skidding, topping, and yarding operations performed on timber; and
16.33 	(2) chain saws.
16.34 	(b) Logging equipment does not include:
16.35 	(1) repair or replacement parts;
17.1 	(2) tools, shop equipment, communication equipment, and other logging supplies;
17.2 	(3) motor vehicles taxed under chapter 297B;
17.3 	(4) snowmobiles, snow blowers, or recreational all-terrain vehicles; or
17.4 	(5) machinery, equipment, implements, accessories, and contrivances used in the 
17.5 	creation of other commercial wood products for sale to others, including, but not limited 
17.6 	to, milling, planing, carving, wood chipping, or paper manufacturing.

17.7 	EFFECTIVE DATE. This section is effective the day following final enactment.

17.8 	Sec. 8. Minnesota Statutes 2004, section 297A.63, is amended to read:
17.9 	297A.63 USE TAXES IMPOSED; RATES.
17.10 		Subdivision 1.Use of tangible personal property or taxable services. (a) For the 
17.11 	privilege of using, storing, distributing, or consuming in Minnesota tangible personal 
17.12 	property or taxable services purchased for use, storage, distribution, or consumption in 
17.13 	this state, a use tax is imposed on a person in Minnesota. The tax is imposed on the ~~sales~~
17.14 	purchase price of retail sales of the tangible personal property or taxable services at the 
17.15 	rate of tax imposed under section  297A.62. A person that purchases property from a 
17.16 	Minnesota retailer and returns the tangible personal property to a point within Minnesota, 
17.17 	except in the course of interstate commerce, after it was delivered outside of Minnesota, 
17.18 	is subject to the use tax.
17.19 	(b) No tax is imposed under paragraph (a) if the tax imposed by section  297A.62
17.20 	was paid on the sales price of the tangible personal property or taxable services. 
17.21 	(c) No tax is imposed under paragraph (a) if the purchase meets the requirements for 
17.22 	exemption under section  297A.67, subdivision 21. 
17.23 		Subd. 2.Use of tangible personal property made from materials. (a) A use tax 
17.24 	is imposed on a person who manufactures, fabricates, or assembles tangible personal 
17.25 	property from materials, either within or outside this state and who uses, stores, distributes, 
17.26 	or consumes the tangible personal property in Minnesota. The tax is imposed on the ~~sales~~
17.27 	purchase price of retail sales of the materials contained in the tangible personal property at 
17.28 	the rate of tax imposed under section  297A.62. 
17.29 	(b) No tax is imposed under paragraph (a) if the tax imposed by section  297A.62
17.30 	was paid on the sales price of materials contained in the tangible personal property. 

17.31 	EFFECTIVE DATE. This section is effective the day following final enactment.

17.32 	Sec. 9. Minnesota Statutes 2004, section 297A.668, subdivision 6, is amended to read:
18.1 		Subd. 6.Multiple points of use. (a) Notwithstanding the provisions of subdivisions 
18.2 	2 to 5, a business purchaser that is not a holder of a direct pay permit that knows at the 
18.3 	time of its purchase of a digital good, computer software delivered electronically, or a 
18.4 	service that the digital good, computer software delivered electronically, or service will 
18.5 	be concurrently available for use in more than one ~~taxing~~ jurisdiction shall deliver to 
18.6 	the seller in conjunction with its purchase a multiple points of use exemption certificate 
18.7 	disclosing this fact.
18.8 	(b) Upon receipt of the multiple points of use exemption certificate, the seller is 
18.9 	relieved of the obligation to collect, pay, or remit the applicable tax and the purchaser is 
18.10 	obligated to collect, pay, or remit the applicable tax on a direct pay basis.
18.11 	(c) A purchaser delivering the multiple points of use exemption certificate may use 
18.12 	any reasonable, but consistent and uniform, method of apportionment that is supported by 
18.13 	the purchaser's business records as they exist at the time of the consummation of the sale.
18.14 	(d) The multiple points of use exemption certificate remains in effect for all future 
18.15 	sales by the seller to the purchaser until it is revoked in writing, except as to the subsequent 
18.16 	sale's specific apportionment that is governed by the principle of paragraph (c) and the 
18.17 	facts existing at the time of the sale.
18.18 	(e) A holder of a direct pay permit is not required to deliver a multiple points or use 
18.19 	exemption certificate to the seller. A direct pay permit holder shall follow the provisions 
18.20 	of paragraph (c) in apportioning the tax due on a digital good, computer software delivered 
18.21 	electronically, or a service that will be concurrently available for use in more than one 
18.22 	~~taxing~~ jurisdiction.

18.23 	EFFECTIVE DATE. This section is effective the day following final enactment.

18.24 	Sec. 10. Minnesota Statutes 2004, section 297A.669, subdivision 11, is amended to 
18.25 	read:
18.26 		Subd. 11.Mobile telecommunications service. "Mobile telecommunications 
18.27 	service," for purposes of this section, means the same as that term is defined in Section 
18.28 	~~124(1)~~ 124(7) of Public Law 106-252 (Mobile Telecommunications Sourcing Act).

18.29 	EFFECTIVE DATE. This section is effective the day following final enactment.

18.30 	Sec. 11. Minnesota Statutes 2004, section 297A.67, subdivision 4, is amended to read:
18.31 		Subd. 4.Exempt meals at residential facilities. ~~Meals or~~Prepared food, candy, 
18.32 	and soft drinks served to patients, inmates, or persons residing at hospitals, sanitariums, 
19.1 	nursing homes, senior citizen homes, and correctional, detention, and detoxification 
19.2 	facilities are exempt. Food sold through vending machines is not exempt.

19.3 	EFFECTIVE DATE. This section is effective the day following final enactment.

19.4 	Sec. 12. Minnesota Statutes 2004, section 297A.67, subdivision 5, is amended to read:
19.5 		Subd. 5.Exempt meals at schools. ~~Meals and lunches~~ Prepared food, candy, 
19.6 	and soft drinks served at public and private elementary, middle, or secondary schools as 
19.7 	defined in section  120A.05 are exempt. ~~Meals and lunches~~  Prepared food, candy, and soft 
19.8 	drinks served to students at a college, university, or private career school under a board 
19.9 	contract are exempt. ~~For purposes of this subdivision, "meals and lunches" does not~~ 
19.10 	~~include sales from vending machines.~~  Food sold through vending machines is not exempt.

19.11 	EFFECTIVE DATE. This section is effective the day following final enactment.

19.12 	Sec. 13. Minnesota Statutes 2005 Supplement, section 297A.67, subdivision 6, is 
19.13 	amended to read:
19.14 		Subd. 6.Other exempt meals. (a) ~~Meals or~~Prepared food, candy, and soft drinks 
19.15 	purchased for and served exclusively to individuals who are 60 years of age or over and 
19.16 	their spouses or to handicapped persons and their spouses by governmental agencies, 
19.17 	nonprofit organizations, or churches, or pursuant to any program funded in whole or in 
19.18 	part through United States Code, title 42, sections 3001 through 3045, wherever delivered, 
19.19 	prepared, or served, are exempt. Food sold through vending machines is not exempt.
19.20 	(b) ~~Meals or~~ Prepared food, candy, and soft drinks purchased for and served 
19.21 	exclusively to children who are less than 14 years of age or disabled children who are less 
19.22 	than 16 years of age and who are attending a child care or early childhood education 
19.23 	program, are exempt if they are:
19.24 	(1) purchased by a nonprofit child care facility that is exempt under section 297A.70, 
19.25 	subdivision 4, and that primarily serves families with income of 250 percent or less of 
19.26 	federal poverty guidelines; and
19.27 	(2) prepared at the site of the child care facility.

19.28 	EFFECTIVE DATE. This section is effective the day following final enactment.

19.29 	Sec. 14. Minnesota Statutes 2004, section 297A.67, subdivision 14, is amended to read:
19.30 		Subd. 14.~~Personal~~ Computers prescribed for use by school. ~~Personal~~ Computers 
19.31 	and related computer software sold by a school, college, university, or private career 
19.32 	school to students who are enrolled at the institutions are exempt if:
20.1 	(1) the use of the ~~personal~~ computer, or of a substantially similar model of computer, 
20.2 	and the related computer software is prescribed by the institution in conjunction with a 
20.3 	course of study; and
20.4 	(2) each student of the institution, or of a unit of the institution in which the student 
20.5 	is enrolled, is required by the institution to have such a ~~personal~~ computer and related 
20.6 	software as a condition of enrollment.
20.7 	For the purposes of this subdivision, "school" and "private career school" have the 
20.8 	meanings given in subdivision 13.

20.9 	EFFECTIVE DATE. This section is effective the day following final enactment.

20.10 	Sec. 15. Minnesota Statutes 2004, section 297A.67, subdivision 25, is amended to read:
20.11 		Subd. 25.Maintenance of cemetery grounds. Lawn care and related services used 
20.12 	in the maintenance of cemetery grounds are exempt. For purposes of this subdivision, 
20.13 	"lawn care and related services" means the services listed in section  297A.61, subdivision 
20.14 	3, paragraph ~~(g)~~ (f), clause (6), item (vi), and "cemetery" means a cemetery for human 
20.15 	burial. 

20.16 	EFFECTIVE DATE. This section is effective the day following final enactment.

20.17 	Sec. 16. Minnesota Statutes 2004, section 297A.67, subdivision 27, is amended to read:
20.18 		Subd. 27.Sewing materials. Sewing materials are exempt. For purposes of this 
20.19 	subdivision "sewing materials" mean fabric, thread, zippers, interfacing, buttons, trim, 
20.20 	and other items that are usually directly incorporated into the construction of clothing, as 
20.21 	defined in subdivision 8, regardless of whether it is actually used for making clothing. 
20.22 	It does not include batting, foam, or fabric specifically manufactured for arts and craft 
20.23 	projects, or other materials for craft projects.

20.24 	EFFECTIVE DATE. This section is effective the day following final enactment.

20.25 	Sec. 17. Minnesota Statutes 2005 Supplement, section 297A.68, subdivision 2, is 
20.26 	amended to read:
20.27 		Subd. 2.Materials consumed in industrial production. (a) Materials stored, used, 
20.28 	or consumed in industrial production of personal property intended to be sold ultimately at 
20.29 	retail are exempt, whether or not the item so used becomes an ingredient or constituent 
20.30 	part of the property produced. Materials that qualify for this exemption include, but 
20.31 	are not limited to, the following:
21.1 	(1) chemicals, including chemicals used for cleaning food processing machinery 
21.2 	and equipment;
21.3 	(2) materials, including chemicals, fuels, and electricity purchased by persons 
21.4 	engaged in industrial production to treat waste generated as a result of the production 
21.5 	process;
21.6 	(3) fuels, electricity, gas, and steam used or consumed in the production process, 
21.7 	except that electricity, gas, or steam used for space heating, cooling, or lighting is exempt 
21.8 	if (i) it is in excess of the average climate control or lighting for the production area, and 
21.9 	(ii) it is necessary to produce that particular product;
21.10 	(4) petroleum products and lubricants;
21.11 	(5) packaging materials, including returnable containers used in packaging food 
21.12 	and beverage products;
21.13 	(6) accessory tools, equipment, and other items that are separate detachable units 
21.14 	with an ordinary useful life of less than 12 months used in producing a direct effect upon 
21.15 	the product; and
21.16 	(7) the following materials, tools, and equipment used in metalcasting: crucibles, 
21.17 	thermocouple protection sheaths and tubes, stalk tubes, refractory materials, molten metal 
21.18 	filters and filter boxes, degassing lances, and base blocks.
21.19 	(b) This exemption does not include:
21.20 	(1) machinery, equipment, implements, tools, accessories, appliances, contrivances 
21.21 	and furniture and fixtures, except those listed in paragraph (a), clause (6); and
21.22 	(2) petroleum and special fuels used in producing or generating power for propelling 
21.23 	ready-mixed concrete trucks on the public highways of this state.
21.24 	(c) Industrial production includes, but is not limited to, research, development, 
21.25 	design or production of any tangible personal property, manufacturing, processing (other 
21.26 	than by restaurants and consumers) of agricultural products (whether vegetable or animal), 
21.27 	commercial fishing, refining, smelting, reducing, brewing, distilling, printing, mining, 
21.28 	quarrying, lumbering, generating electricity, the production of road building materials, 
21.29 	and the research, development, design, or production of computer software. Industrial 
21.30 	production does not include painting, cleaning, repairing or similar processing of property 
21.31 	except as part of the original manufacturing process.
21.32 	(d) Industrial production does not include:
21.33 	(1) the furnishing of services listed in section 297A.61, subdivision 3, paragraph 
21.34 	~~(g)~~ (f), clause (6), items (i) to (vi) and (viii); or
21.35 	(2) the transportation, transmission, or distribution of petroleum, liquefied gas, 
21.36 	natural gas, water, or steam, in, by, or through pipes, lines, tanks, mains, or other means of 
22.1 	transporting those products. For purposes of this paragraph, "transportation, transmission, 
22.2 	or distribution" does not include blending of petroleum or biodiesel fuel as defined 
22.3 	in section 239.77.

22.4 	EFFECTIVE DATE. This section is effective the day following final enactment.

22.5 	Sec. 18. Minnesota Statutes 2004, section 297A.68, subdivision 3, is amended to read:
22.6 		Subd. 3.Materials used in providing certain taxable services. (a) Materials 
22.7 	stored, used, or consumed in providing a taxable service listed in section  297A.61, 
22.8 	subdivision 3, paragraph ~~(g)~~ (f), clause (6), intended to be sold ultimately at retail are 
22.9 	exempt. 
22.10 	(b) This exemption includes, but is not limited to:
22.11 	(1) chemicals, lubricants, packaging materials, seeds, trees, fertilizers, and 
22.12 	herbicides, if these items are used or consumed in providing the taxable service;
22.13 	(2) chemicals used to treat waste generated as a result of providing the taxable 
22.14 	service;
22.15 	(3) accessory tools, equipment, and other items that are separate detachable units 
22.16 	used in providing the service and that have an ordinary useful life of less than 12 months; 
22.17 	and
22.18 	(4) fuel, electricity, gas, and steam used or consumed in the production process, 
22.19 	except that electricity, gas, or steam used for space heating, cooling, or lighting is exempt 
22.20 	if (i) it is in excess of average climate control or lighting, and (ii) it is necessary to 
22.21 	produce that particular service.
22.22 	(c) This exemption does not include machinery, equipment, implements, tools, 
22.23 	accessories, appliances, contrivances, furniture, and fixtures used in providing the taxable 
22.24 	service.

22.25 	EFFECTIVE DATE. This section is effective the day following final enactment.

22.26 	Sec. 19. Minnesota Statutes 2005 Supplement, section 297A.68, subdivision 5, is 
22.27 	amended to read:
22.28 		Subd. 5.Capital equipment. (a) Capital equipment is exempt. The tax must be 
22.29 	imposed and collected as if the rate under section 297A.62, subdivision 1, applied, and 
22.30 	then refunded in the manner provided in section 297A.75.
22.31 	"Capital equipment" means machinery and equipment purchased or leased, and used 
22.32 	in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining, 
22.33 	or refining tangible personal property to be sold ultimately at retail if the machinery and 
23.1 	equipment are essential to the integrated production process of manufacturing, fabricating, 
23.2 	mining, or refining. Capital equipment also includes machinery and equipment used 
23.3 	primarily to electronically transmit results retrieved by a customer of an on-line 
23.4 	computerized data retrieval system.
23.5 	(b) Capital equipment includes, but is not limited to:
23.6 	(1) machinery and equipment used to operate, control, or regulate the production 
23.7 	equipment;
23.8 	(2) machinery and equipment used for research and development, design, quality 
23.9 	control, and testing activities;
23.10 	(3) environmental control devices that are used to maintain conditions such as 
23.11 	temperature, humidity, light, or air pressure when those conditions are essential to and are 
23.12 	part of the production process;
23.13 	(4) materials and supplies used to construct and install machinery or equipment;
23.14 	(5) repair and replacement parts, including accessories, whether purchased as spare 
23.15 	parts, repair parts, or as upgrades or modifications to machinery or equipment;
23.16 	(6) materials used for foundations that support machinery or equipment;
23.17 	(7) materials used to construct and install special purpose buildings used in the 
23.18 	production process;
23.19 	(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed 
23.20 	as part of the delivery process regardless if mounted on a chassis, repair parts for 
23.21 	ready-mixed concrete trucks, and leases of ready-mixed concrete trucks; and
23.22 	(9) machinery or equipment used for research, development, design, or production 
23.23 	of computer software.
23.24 	(c) Capital equipment does not include the following:
23.25 	(1) motor vehicles taxed under chapter 297B;
23.26 	(2) machinery or equipment used to receive or store raw materials;
23.27 	(3) building materials, except for materials included in paragraph (b), clauses (6) 
23.28 	and (7);
23.29 	(4) machinery or equipment used for nonproduction purposes, including, but not 
23.30 	limited to, the following: plant security, fire prevention, first aid, and hospital stations; 
23.31 	support operations or administration; pollution control; and plant cleaning, disposal of 
23.32 	scrap and waste, plant communications, space heating, cooling, lighting, or safety;
23.33 	(5) farm machinery and aquaculture production equipment as defined by section 
23.34 	297A.61, subdivisions 12 and 13;
23.35 	(6) machinery or equipment purchased and installed by a contractor as part of an 
23.36 	improvement to real property;
24.1 	(7) machinery and equipment used by restaurants in the furnishing, preparing, or 
24.2 	serving of prepared foods as defined in section 297A.61, subdivision 31;
24.3 	(8) machinery and equipment used to furnish the services listed in section 297A.61, 
24.4 	subdivision 3, paragraph ~~(g)~~ (f), clause (6), items (i) to (vi) and (viii);
24.5 	(9) machinery or equipment used in the transportation, transmission, or distribution 
24.6 	of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines, 
24.7 	tanks, mains, or other means of transporting those products. This clause does not apply to 
24.8 	machinery or equipment used to blend petroleum or biodiesel fuel as defined in section 
24.9 	239.77; or
24.10 	(10) any other item that is not essential to the integrated process of manufacturing, 
24.11 	fabricating, mining, or refining.
24.12 	(d) For purposes of this subdivision:
24.13 	(1) "Equipment" means independent devices or tools separate from machinery but 
24.14 	essential to an integrated production process, including computers and computer software, 
24.15 	used in operating, controlling, or regulating machinery and equipment; and any subunit or 
24.16 	assembly comprising a component of any machinery or accessory or attachment parts of 
24.17 	machinery, such as tools, dies, jigs, patterns, and molds.
24.18 	(2) "Fabricating" means to make, build, create, produce, or assemble components or 
24.19 	property to work in a new or different manner.
24.20 	(3) "Integrated production process" means a process or series of operations through 
24.21 	which tangible personal property is manufactured, fabricated, mined, or refined. For 
24.22 	purposes of this clause, (i) manufacturing begins with the removal of raw materials 
24.23 	from inventory and ends when the last process prior to loading for shipment has been 
24.24 	completed; (ii) fabricating begins with the removal from storage or inventory of the 
24.25 	property to be assembled, processed, altered, or modified and ends with the creation 
24.26 	or production of the new or changed product; (iii) mining begins with the removal of 
24.27 	overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and 
24.28 	ends when the last process before stockpiling is completed; and (iv) refining begins with 
24.29 	the removal from inventory or storage of a natural resource and ends with the conversion 
24.30 	of the item to its completed form.
24.31 	(4) "Machinery" means mechanical, electronic, or electrical devices, including 
24.32 	computers and computer software, that are purchased or constructed to be used for the 
24.33 	activities set forth in paragraph (a), beginning with the removal of raw materials from 
24.34 	inventory through completion of the product, including packaging of the product.
25.1 	(5) "Machinery and equipment used for pollution control" means machinery and 
25.2 	equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity 
25.3 	described in paragraph (a).
25.4 	(6) "Manufacturing" means an operation or series of operations where raw materials 
25.5 	are changed in form, composition, or condition by machinery and equipment and which 
25.6 	results in the production of a new article of tangible personal property. For purposes of 
25.7 	this subdivision, "manufacturing" includes the generation of electricity or steam to be 
25.8 	sold at retail.
25.9 	(7) "Mining" means the extraction of minerals, ores, stone, or peat.
25.10 	(8) "On-line data retrieval system" means a system whose cumulation of information 
25.11 	is equally available and accessible to all its customers.
25.12 	(9) "Primarily" means machinery and equipment used 50 percent or more of the time 
25.13 	in an activity described in paragraph (a).
25.14 	(10) "Refining" means the process of converting a natural resource to an intermediate 
25.15 	or finished product, including the treatment of water to be sold at retail.
25.16 	(11) This subdivision does not apply to telecommunications equipment as 
25.17 	provided in subdivision 35, and does not apply to wire, cable, fiber, poles, or conduit 
25.18 	for telecommunications services.

25.19 	EFFECTIVE DATE. This section is effective the day following final enactment.

25.20 	Sec. 20. Minnesota Statutes 2005 Supplement, section 297A.68, subdivision 37, 
25.21 	is amended to read:
25.22 		Subd. 37.Job opportunity building zones. (a) Purchases of tangible personal 
25.23 	property or taxable services by a qualified business, as defined in section 469.310, are 
25.24 	exempt if the property or services are primarily used or consumed in a job opportunity 
25.25 	building zone designated under section 469.314. For purposes of this subdivision, an aerial 
25.26 	camera package, including any camera, computer, and navigation device contained in the 
25.27 	package, that is used in an aircraft that is operated under a Federal Aviation Administration 
25.28 	Restricted Airworthiness Certificate according to Code of Federal Regulations, title 14, 
25.29 	part 21, section 21.25(b)(3), relating to aerial surveying, and that is based, maintained, and 
25.30 	dispatched from a job opportunity building zone, qualifies as primarily used or consumed 
25.31 	in a job opportunity building zone if the imagery acquired from the aerial camera package 
25.32 	is returned to the job opportunity building zone for processing. The exemption for an 
25.33 	aerial camera package is limited ~~to$50,000 in taxes~~  as provided in this subdivision and 
25.34 	the tax must be imposed and collected as if the rate under section 297A.62, subdivision 1, 
25.35 	applied and then refunded in the manner provided in section 297A.75. The total amount 
26.1 	of the aerial camera package exemption refunded for all taxpayers for all fiscal years is 
26.2 	limited to $50,000 in taxes.
26.3 	(b) Purchase and use of construction materials~~,~~and supplies~~, or equipment~~ used or 
26.4 	consumed in, and equipment incorporated into,  the construction of improvements to 
26.5 	real property in a job opportunity building zone are exempt if the improvements after 
26.6 	completion of construction are to be used in the conduct of a qualified business, as defined 
26.7 	in section 469.310. This exemption applies regardless of whether the purchases are made 
26.8 	by the business or a contractor.
26.9 	(c) The exemptions under this subdivision apply to a local sales and use tax 
26.10 	regardless of whether the local sales tax is imposed on the sales taxable as defined under 
26.11 	this chapter.
26.12 	(d) This subdivision applies to sales, if the purchase was made and delivery received 
26.13 	during the duration of the zone.
26.14 	(e) Notwithstanding the restriction in paragraph (a), which requires items purchased 
26.15 	to be primarily used or consumed in the zone, purchases by a qualified business that is 
26.16 	an electrical cooperative located in Meeker County of equipment and materials used for 
26.17 	the generation, transmission, and distribution of electrical energy are exempt under this 
26.18 	subdivision, except that:
26.19 	(1) the exemption for materials and equipment used or consumed outside the zone 
26.20 	must not exceed $200,000 in taxes for all taxpayers for all fiscal years; and
26.21 	(2) no sales and use tax exemption is allowed for equipment purchased for resale.
26.22 	For purposes of this paragraph, the tax must be imposed and collected as if the rate 
26.23 	under section 297A.62, subdivision 1, applied and then refunded in the manner provided 
26.24 	in section 297A.75.

26.25 	EFFECTIVE DATE. Paragraphs (a) and (e) are effective for sales and purchases 
26.26 	made on or after August 1, 2005. Paragraph (b) is effective for sales and purchases made 
26.27 	on or after January 1, 2004.

26.28 	Sec. 21. Minnesota Statutes 2005 Supplement, section 297A.68, subdivision 38, 
26.29 	is amended to read:
26.30 		Subd. 38.Biotechnology and health sciences industry zone. (a) Purchases of 
26.31 	tangible personal property or taxable services by a qualified business, as defined in section 
26.32 	469.330, are exempt if the property or services are primarily used or consumed in a 
26.33 	biotechnology and health sciences industry zone designated under section 469.334.
27.1 	(b) Purchase and use of construction materials~~,~~and supplies~~, or equipment~~ used 
27.2 	or consumed in, and equipment incorporated into,  the construction of improvements 
27.3 	to real property in a biotechnology and health sciences industry zone are exempt if the 
27.4 	improvements after completion of construction are to be used in the conduct of a qualified 
27.5 	business, as defined in section 469.330. This exemption applies regardless of whether the 
27.6 	purchases are made by the business or a contractor.
27.7 	(c) The exemptions under this subdivision apply to a local sales and use tax 
27.8 	regardless of whether the local sales tax is imposed on the sales taxable as defined under 
27.9 	this chapter.
27.10 	(d)(1) The tax on sales of goods or services exempted under this subdivision are 
27.11 	imposed and collected as if the applicable rate under section 297A.62 applied. Upon 
27.12 	application by the purchaser, on forms prescribed by the commissioner, a refund equal 
27.13 	to the tax paid must be paid to the purchaser. The application must include sufficient 
27.14 	information to permit the commissioner to verify the sales tax paid and the eligibility of 
27.15 	the claimant to receive the credit. No more than two applications for refunds may be filed 
27.16 	under this subdivision in a calendar year. The provisions of section 289A.40 apply to 
27.17 	the refunds payable under this subdivision.
27.18 	(2) The amount required to make the refunds is annually appropriated to the 
27.19 	commissioner of revenue.
27.20 	(3) The aggregate amount refunded to a qualified business must not exceed the 
27.21 	amount allocated to the qualified business under section 469.335.
27.22 	(e) This subdivision applies only to sales made during the duration of the designation 
27.23 	of the zone.

27.24 	EFFECTIVE DATE. This section is effective for sales and purchases made on 
27.25 	or after January 1, 2004.

27.26 	Sec. 22. Minnesota Statutes 2005 Supplement, section 297A.68, subdivision 40, 
27.27 	is amended to read:
27.28 		Subd. 40.Land clearing. Tree, bush, shrub, and stump removal are exempt when 
27.29 	sold ~~to contractors or subcontractors~~ as part of a land clearing contract. For purposes of 
27.30 	this subdivision, "land clearing contract" means a contract for the removal of trees, bushes, 
27.31 	and shrubs, including the removal of roots and stumps, to develop a site. For purposes of 
27.32 	this subdivision, developing a site includes the construction and maintenance of public 
27.33 	roads, trails, and fire breaks. This exemption does not apply to land clearing of a portion 
27.34 	of a site to allow for remodeling, improvement, or expansion of an existing structure.

28.1 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
28.2 	October 28, 2002, but for land clearing contracts entered into after October 28, 2002, 
28.3 	and before July 15, 2005, no refunds may be claimed under Minnesota Statutes, section 
28.4 	289A.50, for sales taxes collected and remitted to the state on land clearing contracts.

28.5 	Sec. 23. Minnesota Statutes 2005 Supplement, section 297A.68, subdivision 41, 
28.6 	is amended to read:
28.7 		Subd. 41.International economic development zones. (a) Purchases of tangible 
28.8 	personal property or taxable services by a qualified business, as defined in section 469.321, 
28.9 	are exempt if the property or services are primarily used or consumed in the international 
28.10 	economic development zone designated under section 469.322. This exemption applies 
28.11 	only if the purchase is made and delivery received after the business signs the business 
28.12 	subsidy agreement required under chapter 469. For such purchases made during the 
28.13 	duration of the zone but on or before June 30, 2007, the tax must be imposed and collected 
28.14 	as if the rate under section 297A.62, subdivision 1, applies, and then refunded in the 
28.15 	manner provided in section 297A.75 beginning July 1, 2007. The taxpayer must attach to 
28.16 	the claim for refund sufficient information for the commissioner to be able to determine 
28.17 	that the purchases are exempt.
28.18 	(b) Purchase and use of construction materials, supplies, and equipment incorporated 
28.19 	into the construction of improvements to real property in the international economic 
28.20 	development zone are exempt if the improvements after completion of construction are to 
28.21 	be used as a regional distribution center as defined in section 469.321 or otherwise used in 
28.22 	the conduct of freight forwarding activities of a qualified business as defined in section 
28.23 	469.321. For such purchases made on or before June 30, 2007, or for such purchases made 
28.24 	to improve real property to be occupied by a business that has not signed a business 
28.25 	subsidy agreement at the time of the purchase, the tax must be imposed and collected as if 
28.26 	the rate under section 297A.62, subdivision 1, applies, and then refunded in the manner 
28.27 	provided in section 297A.75 beginning July 1, 2007. The taxpayer must attach to the 
28.28 	claim for refund sufficient information for the commissioner to be able to determine that 
28.29 	the improvements are being occupied by a business that has signed a business subsidy 
28.30 	agreement. This exemption applies regardless of whether the purchases are made by the 
28.31 	business or a contractor.
28.32 	(c) The exemptions under this subdivision apply to a local sales and use tax, 
28.33 	regardless of whether the local tax is imposed on sales taxable under this chapter or in 
28.34 	another law, ordinance, or charter provision.
29.1 	~~(d) The exemption in paragraph (a) applies to sales during the duration of the zone~~ 
29.2 	~~and after June 30, 2007, if the purchase was made and delivery received after the business~~ 
29.3 	~~signs the business subsidy agreement required under chapter 469.~~
29.4 	~~(e) For purchases made for improvements to real property to be occupied by a~~ 
29.5 	~~business that has not signed a business subsidy agreement at the time of the purchase, the~~ 
29.6 	~~tax must be imposed and collected as if the rate under section 297A.62, subdivision 1,~~ 
29.7 	~~applied, and then refunded in the manner provided in section 297A.75 beginning in fiscal~~ 
29.8 	~~year 2008. The taxpayer must attach to the claim for refund information sufficient for~~ 
29.9 	~~the commissioner to be able to determine that the improvements are being occupied by~~ 
29.10 	~~a business that has signed a business subsidy agreement.~~

29.11 	EFFECTIVE DATE. This section is effective the day following final enactment.

29.12 	Sec. 24. Minnesota Statutes 2004, section 297A.70, subdivision 2, is amended to read:
29.13 		Subd. 2.Sales to government. (a) All sales, except those listed in paragraph (b), 
29.14 	to the following governments and political subdivisions, or to the listed agencies or 
29.15 	instrumentalities of governments and political subdivisions, are exempt:
29.16 	(1) the United States and its agencies and instrumentalities;
29.17 	(2) school districts, the University of Minnesota, state universities, community 
29.18 	colleges, technical colleges, state academies, the Perpich Minnesota Center for Arts 
29.19 	Education, and an instrumentality of a political subdivision that is accredited as an 
29.20 	optional/special function school by the North Central Association of Colleges and Schools;
29.21 	(3) hospitals and nursing homes owned and operated by political subdivisions of 
29.22 	the state of tangible personal property and taxable services used at or by hospitals and 
29.23 	nursing homes;
29.24 	(4) the Metropolitan Council, for its purchases of vehicles and repair parts to equip 
29.25 	operations provided for in section  473.4051; 
29.26 	(5) other states or political subdivisions of other states, if the sale would be exempt 
29.27 	from taxation if it occurred in that state; and
29.28 	(6) sales to public libraries, public library systems, multicounty, multitype library 
29.29 	systems as defined in section  134.001, county law libraries under chapter 134A, state 
29.30 	agency libraries, the state library under section  480.09, and the Legislative Reference 
29.31 	Library. 
29.32 	(b) This exemption does not apply to the sales of the following products and services:
29.33 	(1) building, construction, or reconstruction materials purchased by a contractor 
29.34 	or a subcontractor as a part of a lump-sum contract or similar type of contract with a 
30.1 	guaranteed maximum price covering both labor and materials for use in the construction, 
30.2 	alteration, or repair of a building or facility;
30.3 	(2) construction materials purchased by tax exempt entities or their contractors to 
30.4 	be used in constructing buildings or facilities which will not be used principally by the 
30.5 	tax exempt entities;
30.6 	(3) the leasing of a motor vehicle as defined in section  297B.01, subdivision 5, 
30.7 	except for leases entered into by the United States or its agencies or instrumentalities; or 
30.8 	(4) ~~meals and~~ lodging as defined under section  297A.61, subdivision 3, ~~paragraphs~~ 
30.9 	~~(d) and (g)~~ paragraph (f), clause (2), and prepared food, candy, and soft drinks, except for 
30.10 	~~meals and~~ lodging, prepared food, candy, and soft drinks  purchased directly by the United 
30.11 	States or its agencies or instrumentalities. 
30.12 	(c) As used in this subdivision, "school districts" means public school entities and 
30.13 	districts of every kind and nature organized under the laws of the state of Minnesota, and 
30.14 	any instrumentality of a school district, as defined in section  471.59. 

30.15 	EFFECTIVE DATE. This section is effective the day following final enactment.

30.16 	Sec. 25. Minnesota Statutes 2004, section 297A.70, subdivision 4, is amended to read:
30.17 		Subd. 4.Sales to nonprofit groups. (a) All sales, except those listed in paragraph 
30.18 	(b), to the following "nonprofit organizations" are exempt:
30.19 	(1) a corporation, society, association, foundation, or institution organized and 
30.20 	operated exclusively for charitable, religious, or educational purposes if the item 
30.21 	purchased is used in the performance of charitable, religious, or educational functions; and
30.22 	(2) any senior citizen group or association of groups that:
30.23 	(i) in general limits membership to persons who are either age 55 or older, or 
30.24 	physically disabled; and
30.25 	(ii) is organized and operated exclusively for pleasure, recreation, and other 
30.26 	nonprofit purposes, no part of the net earnings of which inures to the benefit of any private 
30.27 	shareholders.
30.28 	For purposes of this subdivision, charitable purpose includes the maintenance of a 
30.29 	cemetery owned by a religious organization.
30.30 	(b) This exemption does not apply to the following sales:
30.31 	(1) building, construction, or reconstruction materials purchased by a contractor 
30.32 	or a subcontractor as a part of a lump-sum contract or similar type of contract with a 
30.33 	guaranteed maximum price covering both labor and materials for use in the construction, 
30.34 	alteration, or repair of a building or facility;
31.1 	(2) construction materials purchased by tax-exempt entities or their contractors to 
31.2 	be used in constructing buildings or facilities that will not be used principally by the 
31.3 	tax-exempt entities; and
31.4 	(3) ~~meals and~~ lodging as defined under section  297A.61, subdivision 3, ~~paragraphs~~ 
31.5 	~~(d) and (g)~~ paragraph (f), clause (2), and prepared food, candy, and soft drinks; and 
31.6 	(4) leasing of a motor vehicle as defined in section  297B.01, subdivision 5, except as 
31.7 	provided in paragraph (c). 
31.8 	(c) This exemption applies to the leasing of a motor vehicle as defined in section  
31.9 	297B.01, subdivision 5, only if the vehicle is: 
31.10 	(1) a truck, as defined in section  168.011, a bus, as defined in section  168.011, or a 
31.11 	passenger automobile, as defined in section  168.011, if the automobile is designed and 
31.12 	used for carrying more than nine persons including the driver; and 
31.13 	(2) intended to be used primarily to transport tangible personal property or 
31.14 	individuals, other than employees, to whom the organization provides service in 
31.15 	performing its charitable, religious, or educational purpose.
31.16 	(d) A limited liability company also qualifies for exemption under this subdivision if 
31.17 	(1) it consists of a sole member that would qualify for the exemption, and (2) the items 
31.18 	purchased qualify for the exemption.

31.19 	EFFECTIVE DATE. This section is effective the day following final enactment.

31.20 	Sec. 26. Minnesota Statutes 2004, section 297A.70, subdivision 7, is amended to read:
31.21 		Subd. 7.Hospitals and outpatient surgical centers. (a) Sales, except for those 
31.22 	listed in paragraph (c), to a hospital are exempt, if the items purchased are used in 
31.23 	providing hospital services. For purposes of this subdivision, "hospital" means a hospital 
31.24 	organized and operated for charitable purposes within the meaning of section 501(c)(3) of 
31.25 	the Internal Revenue Code, and licensed under chapter 144 or by any other jurisdiction, 
31.26 	and "hospital services" are services authorized or required to be performed by a "hospital" 
31.27 	under chapter 144.
31.28 	(b) Sales, except for those listed in paragraph (c), to an outpatient surgical center 
31.29 	are exempt, if the items purchased are used in providing outpatient surgical services. For 
31.30 	purposes of this subdivision, "outpatient surgical center" means an outpatient surgical 
31.31 	center organized and operated for charitable purposes within the meaning of section 
31.32 	501(c)(3) of the Internal Revenue Code, and licensed under chapter 144 or by any other 
31.33 	jurisdiction. For the purposes of this subdivision, "outpatient surgical services" means: 
31.34 	(1) services authorized or required to be performed by an outpatient surgical center under 
31.35 	chapter 144; and (2) urgent care. For purposes of this subdivision, "urgent care" means 
32.1 	health services furnished to a person whose medical condition is sufficiently acute to 
32.2 	require treatment unavailable through, or inappropriate to be provided by, a clinic or 
32.3 	physician's office, but not so acute as to require treatment in a hospital emergency room.
32.4 	(c) This exemption does not apply to the following products and services:
32.5 	(1) purchases made by a clinic, physician's office, or any other medical facility not 
32.6 	operating as a hospital or outpatient surgical center, even though the clinic, office, or 
32.7 	facility may be owned and operated by a hospital or outpatient surgical center;
32.8 	(2) sales under section  297A.61, subdivision 3, ~~paragraphs (d) and (g)~~ paragraph 
32.9 	(f), clause (2), and prepared food, candy, and soft drinks; 
32.10 	(3) building and construction materials used in constructing buildings or facilities 
32.11 	that will not be used principally by the hospital or outpatient surgical center;
32.12 	(4) building, construction, or reconstruction materials purchased by a contractor 
32.13 	or a subcontractor as a part of a lump-sum contract or similar type of contract with a 
32.14 	guaranteed maximum price covering both labor and materials for use in the construction, 
32.15 	alteration, or repair of a hospital or outpatient surgical center; or
32.16 	(5) the leasing of a motor vehicle as defined in section  297B.01, subdivision 5. 
32.17 	(d) A limited liability company also qualifies for exemption under this subdivision if 
32.18 	(1) it consists of a sole member that would qualify for the exemption, and (2) the items 
32.19 	purchased qualify for the exemption.

32.20 	EFFECTIVE DATE. This section is effective the day following final enactment.

32.21 	Sec. 27. Minnesota Statutes 2004, section 297A.70, subdivision 13, is amended to read:
32.22 		Subd. 13.Fund-raising sales by or for nonprofit groups. (a) The following 
32.23 	sales by the specified organizations for fund-raising purposes are exempt, subject to the 
32.24 	limitations listed in paragraph (b):
32.25 	(1) all sales made by an organization that exists solely for the purpose of providing 
32.26 	educational or social activities for young people primarily age 18 and under;
32.27 	(2) all sales made by an organization that is a senior citizen group or association of 
32.28 	groups if (i) in general it limits membership to persons age 55 or older; (ii) it is organized 
32.29 	and operated exclusively for pleasure, recreation, and other nonprofit purposes; and (iii) 
32.30 	no part of its net earnings inures to the benefit of any private shareholders;
32.31 	(3) the sale or use of tickets or admissions to a golf tournament held in Minnesota if 
32.32 	the beneficiary of the tournament's net proceeds qualifies as a tax-exempt organization 
32.33 	under section 501(c)(3) of the Internal Revenue Code; and
33.1 	(4) sales of ~~gum,~~ candy~~, and candy products~~ sold for fund-raising purposes by a 
33.2 	nonprofit organization that provides educational and social activities primarily for young 
33.3 	people age 18 and under.
33.4 	(b) The exemptions listed in paragraph (a) are limited in the following manner:
33.5 	(1) the exemption under paragraph (a), clauses (1) and (2), applies only if the gross 
33.6 	annual receipts of the organization from fund-raising do not exceed $10,000; and
33.7 	(2) the exemption under paragraph (a), clause (1), does not apply if the sales are 
33.8 	derived from admission charges or from activities for which the money must be deposited 
33.9 	with the school district treasurer under section  123B.49, subdivision 2, or be recorded in 
33.10 	the same manner as other revenues or expenditures of the school district under section  
33.11 	123B.49, subdivision 4. 
33.12 	(c) Sales of tangible personal property are exempt if the entire proceeds, less the 
33.13 	necessary expenses for obtaining the property, will be contributed to a registered combined 
33.14 	charitable organization described in section  309.501, to be used exclusively for charitable, 
33.15 	religious, or educational purposes, and the registered combined charitable organization 
33.16 	has given its written permission for the sale. Sales that occur over a period of more than 
33.17 	24 days per year are not exempt under this paragraph. 
33.18 	(d) For purposes of this subdivision, a club, association, or other organization of 
33.19 	elementary or secondary school students organized for the purpose of carrying on sports, 
33.20 	educational, or other extracurricular activities is a separate organization from the school 
33.21 	district or school for purposes of applying the $10,000 limit.

33.22 	EFFECTIVE DATE. This section is effective the day following final enactment.

33.23 	Sec. 28. Minnesota Statutes 2004, section 297A.70, subdivision 14, is amended to read:
33.24 		Subd. 14.Fund-raising events sponsored by nonprofit groups. (a) Sales of 
33.25 	tangible personal property at, and admission charges for fund-raising events sponsored 
33.26 	by, a nonprofit organization are exempt if:
33.27 	(1) all gross receipts are recorded as such, in accordance with generally accepted 
33.28 	accounting practices, on the books of the nonprofit organization; and
33.29 	(2) the entire proceeds, less the necessary expenses for the event, will be used 
33.30 	solely and exclusively for charitable, religious, or educational purposes. Exempt sales 
33.31 	include the sale of ~~food, meals, and drinks~~prepared food, candy, and soft drinks at the 
33.32 	fund-raising event.
33.33 	(b) This exemption is limited in the following manner:
34.1 	(1) it does not apply to admission charges for events involving bingo or other 
34.2 	gambling activities or to charges for use of amusement devices involving bingo or other 
34.3 	gambling activities;
34.4 	(2) all gross receipts are taxable if the profits are not used solely and exclusively for 
34.5 	charitable, religious, or educational purposes;
34.6 	(3) it does not apply unless the organization keeps a separate accounting record, 
34.7 	including receipts and disbursements from each fund-raising event that documents all 
34.8 	deductions from gross receipts with receipts and other records;
34.9 	(4) it does not apply to any sale made by or in the name of a nonprofit corporation as 
34.10 	the active or passive agent of a person that is not a nonprofit corporation;
34.11 	(5) all gross receipts are taxable if fund-raising events exceed 24 days per year;
34.12 	(6) it does not apply to fund-raising events conducted on premises leased for more 
34.13 	than five days but less than 30 days; and
34.14 	(7) it does not apply if the risk of the event is not borne by the nonprofit organization 
34.15 	and the benefit to the nonprofit organization is less than the total amount of the state and 
34.16 	local tax revenues foregone by this exemption.
34.17 	(c) For purposes of this subdivision, a "nonprofit organization" means any unit of 
34.18 	government, corporation, society, association, foundation, or institution organized and 
34.19 	operated for charitable, religious, educational, civic, fraternal, and senior citizens' or 
34.20 	veterans' purposes, no part of the net earnings of which inures to the benefit of a private 
34.21 	individual.

34.22 	EFFECTIVE DATE. This section is effective the day following final enactment.

34.23 	Sec. 29. Minnesota Statutes 2004, section 297A.70, subdivision 15, is amended to read:
34.24 		Subd. 15.Statewide amateur athletic games. Notwithstanding section  297A.61, 
34.25 	subdivision 3, or any other provision of this chapter, the gross receipts from the following 
34.26 	sales made to or by a nonprofit corporation designated by the Minnesota Amateur Sports 
34.27 	Commission to conduct a series of statewide amateur athletic games and related events, 
34.28 	workshops, and clinics are exempt: 
34.29 	(1) sales of tangible personal property to or the storage, use, or other consumption of 
34.30 	tangible personal property by the nonprofit corporation; and
34.31 	(2) sales of tangible personal property, admission charges, and sales of ~~food,~~ 
34.32 	~~meals, and drinks~~prepared food, candy, and soft drinks by the nonprofit corporation at 
34.33 	fund-raising events, athletic events, or athletic facilities.

34.34 	EFFECTIVE DATE. This section is effective the day following final enactment.

35.1 	Sec. 30. Minnesota Statutes 2005 Supplement, section 297A.72, subdivision 2, is 
35.2 	amended to read:
35.3 		Subd. 2.Content and form of exemption certificate. An exemption certificate 
35.4 	must be substantially in the form prescribed by the commissioner and:
35.5 	(1) be signed by the purchaser or meet the requirements of section 270C.304;
35.6 	(2) bear the name and address of the purchaser; and
35.7 	(3) indicate the sales tax account number, if any, issued to the purchaser~~;~~.
35.8 	~~(4) indicate the general character of the property sold by the purchaser in the regular~~ 
35.9 	~~course of business or the activities carried on by the organization; and~~
35.10 	~~(5) identify the property purchased.~~

35.11 	EFFECTIVE DATE. This section is effective the day following final enactment.

35.12 	Sec. 31. Minnesota Statutes 2005 Supplement, section 297A.75, subdivision 1, is 
35.13 	amended to read:
35.14 		Subdivision 1.Tax collected. The tax on the gross receipts from the sale of the 
35.15 	following exempt items must be imposed and collected as if the sale were taxable and the 
35.16 	rate under section 297A.62, subdivision 1, applied. The exempt items include:
35.17 	(1) capital equipment exempt under section 297A.68, subdivision 5;
35.18 	(2) building materials for an agricultural processing facility exempt under section 
35.19 	297A.71, subdivision 13;
35.20 	(3) building materials for mineral production facilities exempt under section 
35.21 	297A.71, subdivision 14;
35.22 	(4) building materials for correctional facilities under section 297A.71, subdivision 
35.23 	3;
35.24 	(5) building materials used in a residence for disabled veterans exempt under section 
35.25 	297A.71, subdivision 11;
35.26 	(6) elevators and building materials exempt under section 297A.71, subdivision 12;
35.27 	(7) building materials for the Long Lake Conservation Center exempt under section 
35.28 	297A.71, subdivision 17;
35.29 	(8) materials, supplies, fixtures, furnishings, and equipment for a county law 
35.30 	enforcement and family service center under section 297A.71, subdivision 26;
35.31 	(9) materials and supplies for qualified low-income housing under section 297A.71, 
35.32 	subdivision 23; ~~and~~
35.33 	(10) materials, supplies, and equipment for municipal electric utility facilities under 
35.34 	section 297A.71, subdivision 35~~.~~;
36.1 	(11) equipment and materials used for the generation, transmission, and distribution 
36.2 	of electrical energy and an aerial camera package exempt under section 297A.68, 
36.3 	subdivision 37; and
36.4 	(12) tangible personal property and taxable services and construction materials, 
36.5 	supplies, and equipment exempt under section 297A.68, subdivision 41.

36.6 	EFFECTIVE DATE. This section is effective the day following final enactment.

36.7 	Sec. 32. Minnesota Statutes 2005 Supplement, section 297A.75, subdivision 2, is 
36.8 	amended to read:
36.9 		Subd. 2.Refund; eligible persons. Upon application on forms prescribed by the 
36.10 	commissioner, a refund equal to the tax paid on the gross receipts of the exempt items 
36.11 	must be paid to the applicant. Only the following persons may apply for the refund:
36.12 	(1) for subdivision 1, clauses (1) to (3), the applicant must be the purchaser;
36.13 	(2) for subdivision 1, clauses (4), (7), and (8), the applicant must be the governmental 
36.14 	subdivision;
36.15 	(3) for subdivision 1, clause (5), the applicant must be the recipient of the benefits 
36.16 	provided in United States Code, title 38, chapter 21;
36.17 	(4) for subdivision 1, clause (6), the applicant must be the owner of the homestead 
36.18 	property;
36.19 	(5) for subdivision 1, clause (9), the owner of the qualified low-income housing 
36.20 	project; ~~and~~
36.21 	(6) for subdivision 1, clause (10), the applicant must be a municipal electric utility or 
36.22 	a joint venture of municipal electric utilities~~.~~; and 
36.23 	(7) for subdivision 1, clauses (11) and (12), the owner of the qualifying business.

36.24 	EFFECTIVE DATE. This section is effective the day following final enactment.

36.25 	Sec. 33. Minnesota Statutes 2005 Supplement, section 297A.75, subdivision 3, is 
36.26 	amended to read:
36.27 		Subd. 3.Application. (a) The application must include sufficient information 
36.28 	to permit the commissioner to verify the tax paid. If the tax was paid by a contractor, 
36.29 	subcontractor, or builder, under subdivision 1, clause (4), (5), (6), (7), (8), (9), ~~or~~ (10), 
36.30 	 (11), or (12), the contractor, subcontractor, or builder must furnish to the refund applicant 
36.31 	a statement including the cost of the exempt items and the taxes paid on the items unless 
36.32 	otherwise specifically provided by this subdivision. The provisions of sections 289A.40
36.33 	and 289A.50 apply to refunds under this section.
37.1 	(b) An applicant may not file more than two applications per calendar year for 
37.2 	refunds for taxes paid on capital equipment exempt under section 297A.68, subdivision 5.

37.3 	EFFECTIVE DATE. This section is effective the day following final enactment.

37.4 	Sec. 34. Minnesota Statutes 2005 Supplement, section 297A.815, subdivision 1, 
37.5 	is amended to read:
37.6 		Subdivision 1.Motor vehicle lease price; payment. (a) In the case of a lease of a 
37.7 	motor vehicle as provided in section 297A.61, subdivision 4, paragraph (k), clause (2), the 
37.8 	tax is imposed on the total amount to be paid by the lessee under the lease agreement. The 
37.9 	lessor shall collect the tax in full at the time the lease is executed or, if the tax is included 
37.10 	in the lease and the lease is assigned, the tax is due from the original lessor at the time the 
37.11 	lease is assigned. The total amount to be paid by the lessee under the lease agreement 
37.12 	equals the agreed-upon value of the vehicle less manufacturer's rebates, the stated residual 
37.13 	value of the leased vehicle, and the total value allowed for a vehicle owned by the lessee 
37.14 	taken in trade by the lessor, plus the price of any taxable goods and services included in 
37.15 	the lease and the rent charge as provided by Code of Federal Regulations, title 12, section 
37.16 	213.4, excluding any rent charge related to the capitalization of the tax.
37.17 	(b) If the total amount paid by the lessee for use of the leased vehicle includes 
37.18 	amounts that are not calculated at the time the lease is executed, the tax is imposed and 
37.19 	must be collected by the lessor at the time the amounts are paid by the lessee. In the case 
37.20 	of a lease which by its terms may be renewed, the sales tax is due and payable on the 
37.21 	total amount to be paid during the initial term of the lease, and then for each subsequent 
37.22 	renewal period on the total amount to be paid during the renewal period.
37.23 	(c) If a lease is canceled or rescinded on or before 90 days of its execution or if a 
37.24 	vehicle is returned to the manufacturer under section 325F.665, the lessor may file a claim 
37.25 	for a refund of the total tax paid minus the amount of tax due for the period the vehicle is 
37.26 	used by the lessee.
37.27 	(d) If a lessee's obligation to make payments on a lease is canceled more than 90 
37.28 	days after its execution, a credit is allowed against sales tax or motor vehicles sales tax 
37.29 	due on a subsequent lease or purchase of a motor vehicle if that lease or purchase is 
37.30 	consummated within 30 days of the date the prior lease was canceled. The amount of the 
37.31 	credit is equal to (1) the sales tax paid at the inception of the lease, multiplied by (2) 
37.32 	the ratio of the number of full months remaining in the lease at the time of termination 
37.33 	compared to the term of the lease used in calculating sales tax paid at the inception of the 
37.34 	lease. The credit or any part of it cannot be assigned or transferred to another person.

38.1 	EFFECTIVE DATE. This section is effective for leases entered into after 
38.2 	September 30, 2005.

38.3 	Sec. 35. Minnesota Statutes 2004, section 297A.94, is amended to read:
38.4 	297A.94 DEPOSIT OF REVENUES.
38.5 	(a) Except as provided in this section, the commissioner shall deposit the revenues, 
38.6 	including interest and penalties, derived from the taxes imposed by this chapter in the state 
38.7 	treasury and credit them to the general fund.
38.8 	(b) The commissioner shall deposit taxes in the Minnesota agricultural and economic 
38.9 	account in the special revenue fund if:
38.10 	(1) the taxes are derived from sales and use of property and services purchased for 
38.11 	the construction and operation of an agricultural resource project; and
38.12 	(2) the purchase was made on or after the date on which a conditional commitment 
38.13 	was made for a loan guaranty for the project under section  41A.04, subdivision 3. 
38.14 	The commissioner of finance shall certify to the commissioner the date on which the 
38.15 	project received the conditional commitment. The amount deposited in the loan guaranty 
38.16 	account must be reduced by any refunds and by the costs incurred by the Department of 
38.17 	Revenue to administer and enforce the assessment and collection of the taxes.
38.18 	(c) The commissioner shall deposit the revenues, including interest and penalties, 
38.19 	derived from the taxes imposed on sales and purchases included in section  297A.61, 
38.20 	subdivision 3, paragraph ~~(g)~~ (f), clauses (1) and (4), in the state treasury, and credit them 
38.21 	as follows: 
38.22 	(1) first to the general obligation special tax bond debt service account in each fiscal 
38.23 	year the amount required by section  16A.661, subdivision 3, paragraph (b); and 
38.24 	(2) after the requirements of clause (1) have been met, the balance to the general 
38.25 	fund.
38.26 	(d) The commissioner shall deposit the revenues, including interest and penalties, 
38.27 	collected under section  297A.64, subdivision 5, in the state treasury and credit them to the 
38.28 	general fund. By July 15 of each year the commissioner shall transfer to the highway user 
38.29 	tax distribution fund an amount equal to the excess fees collected under section  297A.64, 
38.30 	subdivision 5, for the previous calendar year. 
38.31 	(e) For fiscal year 2001, 97 percent; for fiscal years 2002 and 2003, 87 percent; and 
38.32 	for fiscal year 2004 and thereafter,  72.43 percent of the revenues, including interest and 
38.33 	penalties, transmitted to the commissioner under section  297A.65, must be deposited by 
38.34 	the commissioner in the state treasury as follows: 
39.1 	(1) 50 percent of the receipts must be deposited in the heritage enhancement account 
39.2 	in the game and fish fund, and may be spent only on activities that improve, enhance, or 
39.3 	protect fish and wildlife resources, including conservation, restoration, and enhancement 
39.4 	of land, water, and other natural resources of the state;
39.5 	(2) 22.5 percent of the receipts must be deposited in the natural resources fund, and 
39.6 	may be spent only for state parks and trails;
39.7 	(3) 22.5 percent of the receipts must be deposited in the natural resources fund, and 
39.8 	may be spent only on metropolitan park and trail grants;
39.9 	(4) three percent of the receipts must be deposited in the natural resources fund, and 
39.10 	may be spent only on local trail grants; and
39.11 	(5) two percent of the receipts must be deposited in the natural resources fund, 
39.12 	and may be spent only for the Minnesota Zoological Garden, the Como Park Zoo and 
39.13 	Conservatory, and the Duluth Zoo.
39.14 	(f) The revenue dedicated under paragraph (e) may not be used as a substitute 
39.15 	for traditional sources of funding for the purposes specified, but the dedicated revenue 
39.16 	shall supplement traditional sources of funding for those purposes. Land acquired with 
39.17 	money deposited in the game and fish fund under paragraph (e) must be open to public 
39.18 	hunting and fishing during the open season, except that in aquatic management areas or 
39.19 	on lands where angling easements have been acquired, fishing may be prohibited during 
39.20 	certain times of the year and hunting may be prohibited. At least 87 percent of the money 
39.21 	deposited in the game and fish fund for improvement, enhancement, or protection of fish 
39.22 	and wildlife resources under paragraph (e) must be allocated for field operations.

39.23 	EFFECTIVE DATE. This section is effective the day following final enactment.

39.24 	Sec. 36. Minnesota Statutes 2004, section 297A.99, subdivision 7, is amended to read:
39.25 		Subd. 7.Exemptions. (a) All goods or services that are otherwise exempt from 
39.26 	taxation under this chapter are exempt from a political subdivision's tax.
39.27 	(b) ~~The gross receipts from the sale of tangible personal property that meets the~~ 
39.28 	~~requirement of section  297A.68, subdivision 15, are exempt, except the qualification~~ 
39.29 	~~test applies based on the boundaries of the political subdivision instead of the state~~ 
39.30 	~~of Minnesota.~~
39.31 	~~(c)~~ All mobile transportation equipment, and parts and accessories attached to or 
39.32 	to be attached to the equipment are exempt, if purchased by a holder of a motor carrier 
39.33 	direct pay permit under section  297A.90. 

39.34 	EFFECTIVE DATE. This section is effective the day following final enactment.

40.1 	Sec. 37.  REPEALER.
 40.2 	(a) Minnesota Statutes 2004, section 297A.68, subdivisions 15 and 18, are repealed.
40.3 	(b) Minnesota Rules, parts 8130.0400, subpart 3; 8130.4800, subparts 1, 3, 4, 5, 6, 7, 
40.4 	and 8; 8130.5100; 8130.5400; and 8130.5800, subpart 6, are repealed.

40.5 	EFFECTIVE DATE. This section is effective the day following final enactment.

40.6 	ARTICLE 3
40.7 	SPECIAL TAXES AND FEES

40.8 	Section 1. Minnesota Statutes 2005 Supplement, section 115B.49, subdivision 4, is 
40.9 	amended to read:
40.10 		Subd. 4.Registration; fees. (a) The owner or operator of a dry cleaning facility 
40.11 	shall register on or before October 1 of each year with the commissioner of revenue in 
40.12 	a manner prescribed by the commissioner of revenue and pay a registration fee for the 
40.13 	facility. The amount of the fee is:
40.14 	(1) $500, for facilities with a full-time equivalence of fewer than five;
40.15 	(2) $1,000, for facilities with a full-time equivalence of five to ten; and
40.16 	(3) $1,500, for facilities with a full-time equivalence of more than ten.
40.17 	The registration fee must be paid on or before October 18 or the owner or operator 
40.18 	of a dry cleaning facility may elect to pay the fee in equal installments. Installment 
40.19 	payments must be paid on or before October 18, on or before January 18, on or before 
40.20 	April 18, and on or before June 18. All payments made after October 18 bear interest 
40.21 	at the rate specified in section 270C.40.
40.22 	(b) A person who sells dry cleaning solvents for use by dry cleaning facilities in the 
40.23 	state shall collect and remit to the commissioner of revenue in a manner prescribed by the 
40.24 	commissioner of revenue, on or before the 20th day of the month following the month in 
40.25 	which the sales of dry cleaning solvents are made, a fee of:
40.26 	(1) $3.50 for each gallon of perchloroethylene sold for use by dry cleaning facilities 
40.27 	in the state;
40.28 	(2) 70 cents for each gallon of hydrocarbon-based dry cleaning solvent sold for use 
40.29 	by dry cleaning facilities in the state; and
40.30 	(3) 35 cents for each gallon of other nonaqueous solvents sold for use by dry 
40.31 	cleaning facilities in the state.
40.32 	(c) The audit, assessment, appeal, collection, enforcement, and administrative 
40.33 	provisions of chapters 270C and 289A apply to the fee imposed by this subdivision. 
40.34 	To enforce this subdivision, the commissioner of revenue may grant extensions to file 
41.1 	returns and pay fees, impose penalties and interest on the annual registration fee under 
41.2 	paragraph (a) and the monthly fee under paragraph (b), and abate penalties and interest in 
41.3 	the manner provided in chapters 270C and 289A. The penalties and interest imposed on 
41.4 	taxes under chapter 297A apply to the fees imposed under this subdivision. Disclosure 
41.5 	of data collected by the commissioner of revenue under this subdivision is governed by 
41.6 	chapter 270B.

41.7 	EFFECTIVE DATE. This section is effective for returns and payments due on 
41.8 	or after October 1, 2006.

41.9 	Sec. 2. [287.222] TRANSFER TO OBTAIN FINANCING.
41.10 	The deed tax is $1.65 on a deed or other instrument that transfers real property if 
41.11 	the transfer is (1) to a person who is a builder or contractor, (2) intended to be temporary, 
41.12 	and (3) done solely to enable the builder or contractor to obtain financing to build an 
41.13 	improvement on the conveyed property under a contract for improvement with the grantor 
41.14 	that calls for the conveyed property to be reconveyed to the grantor upon completion of 
41.15 	and payment for the improvement. The deed tax is $1.65 on a deed or other instrument 
41.16 	that transfers the real property back from the builder or contractor to the grantor.

41.17 	EFFECTIVE DATE. This section is effective for deeds both executed and recorded 
41.18 	on or after July 1, 2006.

41.19 	Sec. 3. Minnesota Statutes 2004, section 295.50, subdivision 4, is amended to read:
41.20 		Subd. 4.Health care provider. (a) "Health care provider" means:
41.21 	(1) a person whose health care occupation is regulated or required to be regulated by 
41.22 	the state of Minnesota furnishing any or all of the following goods or services directly to a 
41.23 	patient or consumer: medical, surgical, optical, visual, dental, hearing, nursing services, 
41.24 	drugs, laboratory, diagnostic or therapeutic services;
41.25 	(2) a person who provides goods and services not listed in clause (1) that qualify for 
41.26 	reimbursement under the medical assistance program provided under chapter 256B;
41.27 	(3) a staff model health plan company;
41.28 	(4) an ambulance service required to be licensed; or
41.29 	(5) a person who sells or repairs hearing aids and related equipment or prescription 
41.30 	eyewear.
41.31 	(b) Health care provider does not include:
41.32 	(1) hospitals; medical supplies distributors, except as specified under paragraph 
41.33 	(a), clause (5); nursing homes licensed under chapter 144A or licensed in any other 
42.1 	jurisdiction; pharmacies; surgical centers; bus and taxicab transportation, or any other 
42.2 	providers of transportation services other than ambulance services required to be licensed; 
42.3 	supervised living facilities for persons with mental retardation or related conditions, 
42.4 	licensed under Minnesota Rules, parts 4665.0100 to 4665.9900; ~~residential care homes~~ 
42.5 	~~licensed under chapter 144B;~~ housing with services establishments required to be 
42.6 	registered under chapter 144D; board and lodging establishments providing only custodial 
42.7 	services that are licensed under chapter 157 and registered under section  157.17 to 
42.8 	provide supportive services or health supervision services; adult foster homes as defined 
42.9 	in Minnesota Rules, part 9555.5105; day training and habilitation services for adults 
42.10 	with mental retardation and related conditions as defined in section  252.41, subdivision 
42.11 	3; boarding care homes, as defined in Minnesota Rules, part 4655.0100; and adult day 
42.12 	care centers as defined in Minnesota Rules, part 9555.9600; 
42.13 	(2) home health agencies as defined in Minnesota Rules, part 9505.0175, subpart 
42.14 	15; a person providing personal care services and supervision of personal care services 
42.15 	as defined in Minnesota Rules, part 9505.0335; a person providing private duty nursing 
42.16 	services as defined in Minnesota Rules, part 9505.0360; and home care providers required 
42.17 	to be licensed under chapter 144A;
42.18 	(3) a person who employs health care providers solely for the purpose of providing 
42.19 	patient services to its employees; and
42.20 	(4) an educational institution that employs health care providers solely for the 
42.21 	purpose of providing patient services to its students if the institution does not receive fee 
42.22 	for service payments or payments for extended coverage.

42.23 	EFFECTIVE DATE. This section is effective the day following final enactment.

42.24 	Sec. 4. Minnesota Statutes 2004, section 295.53, subdivision 3, is amended to read:
42.25 		Subd. 3.Separate statement of tax. A hospital, surgical center, ~~or~~ health care 
42.26 	provider, or wholesale drug distributor  must not state the tax obligation under section  
42.27 	295.52 in a deceptive or misleading manner. It must not separately state tax obligations 
42.28 	on bills provided to patients, consumers, or other payers when the amount received for 
42.29 	the services or goods is not subject to tax. 
42.30 	Pharmacies that separately state the tax obligations on bills provided to consumers 
42.31 	or to other payers who purchase legend drugs may state the tax obligation as the wholesale 
42.32 	price of the legend drugs multiplied by the tax percentage specified in section  295.52. 
42.33 	Pharmacies must not state the tax obligation based on the retail price. 
42.34 	Whenever the commissioner determines that a person has engaged in any act or 
42.35 	practice constituting a violation of this subdivision, the commissioner may bring an action 
43.1 	in the name of the state in the district court of the appropriate county to enjoin the act 
43.2 	or practice and to enforce compliance with this subdivision, or the commissioner may 
43.3 	refer the matter to the attorney general or the county attorney of the appropriate county. 
43.4 	Upon a proper showing, a permanent or temporary injunction, restraining order, or other 
43.5 	appropriate relief must be granted.

43.6 	EFFECTIVE DATE. This section is effective the day following final enactment.

43.7 	Sec. 5. Minnesota Statutes 2004, section 297F.01, is amended by adding a subdivision 
43.8 	to read:
43.9 		Subd. 22a.Weighted average retail price. "Weighted average retail price" means 
43.10 	(1) the average retail price per pack of 20 cigarettes, with the average price weighted by 
43.11 	the number of packs sold at each price, (2) reduced by the sales tax included in the retail 
43.12 	price, and (3) adjusted for the expected inflation from the time of the survey to the average 
43.13 	of the 12 months that the sales tax will be imposed. The commissioner shall make the 
43.14 	inflation adjustment in accordance with the Consumer Price Index for all urban consumers 
43.15 	inflation indicator as published in the most recent state budget forecast. The inflation 
43.16 	factor for the calendar year in which the new tax rate takes effect must be used.

43.17 	EFFECTIVE DATE. This section is effective April 30, 2006.

43.18 	Sec. 6. Minnesota Statutes 2004, section 297G.01, subdivision 7, is amended to read:
43.19 		Subd. 7.Distilled spirits. "Distilled spirits" ~~is~~ means:
43.20 	(1) intoxicating liquors, including ethyl alcohol, hydrated oxide of ethyl, spirits of 
43.21 	wine, whiskey, rum, brandy, gin, and other distilled spirits, including all dilutions and 
43.22 	mixtures, for nonindustrial use~~.~~;
43.23 	(2) any beverage that would be classified as a flavored malt beverage except that the 
43.24 	alcohol contribution from flavors and other nonbeverage materials exceeds 49 percent 
43.25 	of the alcohol content of the product; or 
43.26 	(3) any beverage that would be classified as a flavored malt beverage except that the 
43.27 	beverage contains more than six percent alcohol by volume, and more than 1.5 percent 
43.28 	of the volume of the finished product consists of alcohol derived from flavors and other 
43.29 	nonbeverage ingredients that contain alcohol.

43.30 	EFFECTIVE DATE. This section is effective July 1, 2006.

43.31 	Sec. 7. Minnesota Statutes 2004, section 297G.01, is amended by adding a subdivision 
43.32 	to read:
44.1 		Subd. 8a.Flavored malt beverage. (a) "Flavored malt beverage" means a 
44.2 	fermented malt beverage that:
44.3 	(1) contains six percent or less alcohol by volume and derives at least 51 percent of 
44.4 	its alcohol content by volume from the fermentation of grain, as long as not more than 49 
44.5 	percent of the beverage's overall alcohol content is obtained from flavors and other added 
44.6 	nonbeverage ingredients containing alcohol; or
44.7 	(2) contains more than six percent alcohol by volume that derives not more than 1.5 
44.8 	percent of its overall alcohol content by volume from flavors and other added nonbeverage 
44.9 	ingredients containing alcohol.
44.10 	(b) Flavored malt beverage does not include cider or an alcoholic beverage obtained 
44.11 	primarily by fermentation of rice, such as sake.

44.12 	EFFECTIVE DATE. This section is effective July 1, 2006.

44.13 	ARTICLE 4
44.14 	TACONITE PRODUCTION TAX

44.15 	Section 1. Minnesota Statutes 2004, section 298.223, subdivision 3, is amended to read:
44.16 		Subd. 3.Appropriation. There is hereby annually appropriated to the commissioner 
44.17 	of Iron Range resources and rehabilitation such funds as are necessary to carry out the 
44.18 	projects approved and such funds as are necessary for administration of this section. 
44.19 	Annual administrative costs, not including detailed engineering expenses for the projects, 
44.20 	shall not exceed five percent of the amount annually expended from the fund.
44.21 	Funds for the purposes of this section are provided by section  298.28, subdivision 
44.22 	~~11~~ 9c, relating to the taconite environmental protection fund. 

44.23 	EFFECTIVE DATE. This section is effective for distributions payable pursuant to 
44.24 	Minnesota Statutes, section 298.28, subdivision 9c, in 2007 and thereafter.

44.25 	Sec. 2. Minnesota Statutes 2004, section 298.225, subdivision 2, is amended to read:
44.26 		Subd. 2.Funding guaranteed distribution level. The money necessary for 
44.27 	funding the difference between the initial distribution made pursuant to section  298.28
44.28 	and the amount guaranteed in subdivision 1 is appropriated ~~in equal proportions~~ from the 
44.29 	initial current year distributions to ~~the taconite environmental protection fund and to~~ the 
44.30 	Douglas J. Johnson economic protection trust pursuant to section  298.28. If the initial 
44.31 	distributions to ~~the taconite environmental protection fund and~~ the Douglas J. Johnson 
44.32 	economic protection trust are insufficient to fund the difference, the commissioner of Iron 
44.33 	Range resources and rehabilitation shall make the payments of any remaining difference 
45.1 	from the ~~corpus of the taconite environmental protection fund and the~~ corpus of the 
45.2 	Douglas J. Johnson economic protection trust fund ~~in equal proportions~~ as directed by the 
45.3 	commissioner of revenue. 
45.4 	If a taconite producer ceases beneficiation operations permanently and is required 
45.5 	by a special law to make bond payments for a school district, the Douglas J. Johnson 
45.6 	economic protection trust fund shall assume the payments of the taconite producer if 
45.7 	the producer ceases to make the needed payments. The commissioner of Iron Range 
45.8 	resources and rehabilitation shall make these school bond payments from the corpus of 
45.9 	the Douglas J. Johnson economic protection trust fund in the amounts certified by the 
45.10 	commissioner of revenue.

45.11 	EFFECTIVE DATE. This section is effective for taxes and distributions payable in 
45.12 	2007 and thereafter.

45.13 	Sec. 3. Minnesota Statutes 2004, section 298.227, is amended to read:
45.14 	298.227 TACONITE ECONOMIC DEVELOPMENT FUND.
45.15 	An amount equal to that distributed pursuant to each taconite producer's taxable 
45.16 	production and qualifying sales under section  298.28, subdivision 9a, shall be held by 
45.17 	the Iron Range Resources and Rehabilitation Board in a separate taconite economic 
45.18 	development fund for each taconite and direct reduced ore producer. Money from the 
45.19 	fund for each producer shall be released by the commissioner after review by a joint 
45.20 	committee consisting of an equal number of representatives of the salaried employees and 
45.21 	the nonsalaried production and maintenance employees of that producer. The District 11 
45.22 	director of the United States Steelworkers of America, on advice of each local employee 
45.23 	president, shall select the employee members. In nonorganized operations, the employee 
45.24 	committee shall be elected by the nonsalaried production and maintenance employees. 
45.25 	The review must be completed no later than six months after the producer presents a 
45.26 	proposal for expenditure of the funds to the committee. The funds held pursuant to this 
45.27 	section may be released only for acquisition of equipment and facilities for the producer 
45.28 	or for research and development in Minnesota on new mining, or taconite, iron, or steel 
45.29 	production technology, but only if the producer provides a matching expenditure to be 
45.30 	used for the same purpose of at least 50 percent of the distribution based on 14.7 cents per 
45.31 	taxable ton beginning with distributions in 2002. If a taconite production facility is sold 
45.32 	after operations at the facility had ceased, any money remaining in the fund for the former 
45.33 	producer may be released to the purchaser of the facility on the terms otherwise applicable 
45.34 	to the former producer under this section. If a producer fails to provide matching funds 
46.1 	for a proposed expenditure within six months after the commissioner approves release 
46.2 	of the funds, the funds are available for release to another producer in proportion to the 
46.3 	distribution provided and under the conditions of this section. Any portion of the fund 
46.4 	which is not released by the commissioner within two years of its deposit in the fund shall 
46.5 	be divided between the taconite environmental protection fund created in section  298.223
46.6 	and the Douglas J. Johnson economic protection trust fund created in section  298.292 for 
46.7 	placement in their respective special accounts. Two-thirds of the unreleased funds shall be 
46.8 	distributed to the taconite environmental protection fund and one-third to the Douglas J. 
46.9 	Johnson economic protection trust fund. 

46.10 	EFFECTIVE DATE. This section is effective for taxes and distributions payable in 
46.11 	2007 and thereafter.

46.12 	Sec. 4. Minnesota Statutes 2005 Supplement, section 298.24, subdivision 1, is 
46.13 	amended to read:
46.14 		Subdivision 1.Imposed; calculation. (a) For concentrate produced in ~~2001, 2002,~~ 
46.15 	~~and 2003~~ 2005, there is imposed upon taconite and iron sulphides, and upon the mining 
46.16 	and quarrying thereof, and upon the production of iron ore concentrate therefrom, and 
46.17 	upon the concentrate so produced, a tax of ~~$2.103~~ $2.137 per gross ton of merchantable 
46.18 	iron ore concentrate produced therefrom. ~~For concentrates produced in 2005, the tax rate~~ 
46.19 	~~is the same rate imposed for concentrates produced in 2004.~~
46.20 	(b) For concentrates produced in 2006 and subsequent years, the tax rate shall be 
46.21 	equal to the preceding year's tax rate plus an amount equal to the preceding year's tax rate 
46.22 	multiplied by the percentage increase in the implicit price deflator from the fourth quarter 
46.23 	of the second preceding year to the fourth quarter of the preceding year. "Implicit price 
46.24 	deflator" means the implicit price deflator for the gross domestic product prepared by the 
46.25 	Bureau of Economic Analysis of the United States Department of Commerce.
46.26 	(c) On concentrates produced in 1997 and thereafter, an additional tax is imposed 
46.27 	equal to three cents per gross ton of merchantable iron ore concentrate for each one 
46.28 	percent that the iron content of the product exceeds 72 percent, when dried at 212 degrees 
46.29 	Fahrenheit.
46.30 	(d) ~~The tax shall be imposed on the average of the production for the current year~~ 
46.31 	~~and the previous two years. The rate of the tax imposed will be the current year's tax~~ 
46.32 	~~rate. This clause~~ The taxes imposed by this subdivision and the exemption from taxes 
46.33 	that is allowed in section 298.25 shall not apply in the case of the closing of a taconite 
46.34 	facility if the property taxes on the facility would be higher if this ~~clause~~ subdivision
46.35 	and section 298.25 were not applicable.
47.1 	(e) If the tax or any part of the tax imposed by this subdivision is held to be 
47.2 	unconstitutional, a tax of ~~$2.103~~ $2.137 per gross ton of merchantable iron ore concentrate 
47.3 	produced shall be imposed.
47.4 	(f) Consistent with the intent of this subdivision to impose a tax based upon the 
47.5 	weight of merchantable iron ore concentrate, the commissioner of revenue may indirectly 
47.6 	determine the weight of merchantable iron ore concentrate included in fluxed pellets by 
47.7 	subtracting the weight of the limestone, dolomite, or olivine derivatives or other basic 
47.8 	flux additives included in the pellets from the weight of the pellets. For purposes of this 
47.9 	paragraph, "fluxed pellets" are pellets produced in a process in which limestone, dolomite, 
47.10 	olivine, or other basic flux additives are combined with merchantable iron ore concentrate. 
47.11 	No subtraction from the weight of the pellets shall be allowed for binders, mineral and 
47.12 	chemical additives other than basic flux additives, or moisture.
47.13 	(g)(1) Notwithstanding any other provision of this subdivision, for the first two years 
47.14 	of a plant's commercial production of direct reduced ore, no tax is imposed under this 
47.15 	section. As used in this paragraph, "commercial production" is production of more than 
47.16 	50,000 tons of direct reduced ore in the current year or in any prior year, "noncommercial 
47.17 	production" is production of 50,000 tons or less of direct reduced ore in any year, and 
47.18 	"direct reduced ore" is ore that results in a product that has an iron content of at least 75 
47.19 	percent. For the third year of a plant's commercial production of direct reduced ore, the 
47.20 	rate to be applied to direct reduced ore is 25 percent of the rate otherwise determined 
47.21 	under this subdivision. For the fourth commercial production year, the rate is 50 percent of 
47.22 	the rate otherwise determined under this subdivision; for the fifth commercial production 
47.23 	year, the rate is 75 percent of the rate otherwise determined under this subdivision; and for 
47.24 	all subsequent commercial production years, the full rate is imposed.
47.25 	(2) Subject to clause (1), production of direct reduced ore in this state is subject to 
47.26 	the tax imposed by this section, but if that production is not produced by a producer 
47.27 	of taconite or iron sulfides, the production of taconite or iron sulfides consumed in the 
47.28 	production of direct reduced iron in this state is not subject to the tax imposed by this 
47.29 	section on taconite or iron sulfides.
47.30 	(3) Notwithstanding any other provision of this subdivision, no tax is imposed on 
47.31 	direct reduced ore under this section during the facility's noncommercial production 
47.32 	of direct reduced ore. The taconite or iron sulphides consumed in the noncommercial 
47.33 	production of direct reduced ore is subject to the tax imposed by this section on taconite 
47.34 	and iron sulphides. ~~Three-year average production of direct reduced ore does not~~ 
47.35 	~~include production of direct reduced ore in any noncommercial year. Three-year average~~ 
47.36 	~~production for a direct reduced ore facility that has noncommercial production is the~~ 
48.1 	~~average of the commercial production of direct reduced ore for the current year and the~~ 
48.2 	~~previous two commercial years.~~

48.3 	EFFECTIVE DATE. The change to paragraph (a) is effective for taxes payable in 
48.4 	2006. The rest of this section is effective for taxes payable in 2007 and thereafter.

48.5 	Sec. 5. Minnesota Statutes 2004, section 298.28, as amended by Laws 2005, First 
48.6 	Special Session chapter 1, article 4, sections 89 and 90, is amended to read:
48.7 	298.28 DIVISION AND DISTRIBUTION OF PROCEEDS.
48.8 		Subdivision 1.Distribution. (a) The proceeds of the taxes collected under 
48.9 	section  298.24, except the tax collected under section  298.24, subdivision 2, shall, upon 
48.10 	certification of the commissioner of revenue, be allocated under subdivisions 2 to 12. 
48.11 	(b) Except for the distribution in subdivision 9a, the allocations and distributions 
48.12 	in this section shall be calculated using "distribution tonnage." "Distribution tonnage" 
48.13 	means the average of: 
48.14 	(1) the taxable gross tons of merchantable iron ore concentrate for the tax year; and
48.15 	(2) the taxable gross tons of merchantable iron ore concentrate for the previous 
48.16 	two years.
48.17 	(c) The allocations and distributions in this section are subject to the provisions 
48.18 	of section 298.225.
48.19 		Subd. 2.City or town where quarried or produced. (a) 4.5 cents per ~~gross~~ ton 
48.20 	~~of merchantable iron ore concentrate, hereinafter referred to as "taxable ton,"~~ must be 
48.21 	allocated to the city or town in the county in which the lands from which taconite was 
48.22 	mined or quarried were located or within which the concentrate was produced. If the 
48.23 	mining, quarrying, and concentration, or different steps in either thereof are carried on in 
48.24 	more than one taxing district, the commissioner shall apportion equitably the proceeds of 
48.25 	the part of the tax going to cities and towns among such subdivisions upon the basis of 
48.26 	attributing 40 percent of the proceeds of the tax to the operation of mining or quarrying the 
48.27 	taconite, and the remainder to the concentrating plant and to the processes of concentration, 
48.28 	and with respect to each thereof giving due consideration to the relative extent of such 
48.29 	operations performed in each such taxing district. The commissioner's order making such 
48.30 	apportionment shall be subject to review by the Tax Court at the instance of any of the 
48.31 	interested taxing districts, in the same manner as other orders of the commissioner.
48.32 	(b) Four cents per ~~taxable~~ ton shall be allocated to cities and organized townships 
48.33 	affected by mining because their boundaries are within three miles of a taconite mine pit 
48.34 	that has been actively mined in at least one of the prior three years. If a city or town is 
49.1 	located near more than one mine meeting these criteria, the city or town is eligible to 
49.2 	receive aid calculated from only the mine producing the largest taxable tonnage. When 
49.3 	more than one municipality qualifies for aid based on one company's production, the aid 
49.4 	must be apportioned among the municipalities in proportion to their populations. Of the 
49.5 	amounts distributed under this paragraph to each municipality, one-half must be used for 
49.6 	infrastructure improvement projects, and one-half must be used for projects in which two 
49.7 	or more municipalities cooperate. Each municipality that receives a distribution under this 
49.8 	paragraph must report annually to the Iron Range Resources and Rehabilitation Board and 
49.9 	the commissioner of Iron Range resources and rehabilitation on the projects involving 
49.10 	cooperation with other municipalities.
Subd. 3.MS 1984 [Renumbered  298.23 subd 14] 49.11 		Subd. 3.Cities; towns. (a) 12.5 cents per ~~taxable~~ ton, less any amount distributed 
49.12 	under subdivision 8, and paragraph (b), must be allocated to the taconite municipal aid 
49.13 	account to be distributed as provided in section  298.282. 
49.14 	(b) An amount must be allocated to towns or cities that is annually certified by 
49.15 	the county auditor of a county containing a taconite tax relief area as defined in section  
49.16 	273.134, paragraph (b), within which there is (1) an organized township if, as of January 
49.17 	2, 1982, more than 75 percent of the assessed valuation of the township consists of iron 
49.18 	ore or (2) a city if, as of January 2, 1980, more than 75 percent of the assessed valuation 
49.19 	of the city consists of iron ore. 
49.20 	(c) The amount allocated under paragraph (b) will be the portion of a township's or 
49.21 	city's certified levy equal to the proportion of (1) the difference between 50 percent of 
49.22 	January 2, 1982, assessed value in the case of a township and 50 percent of the January 2, 
49.23 	1980, assessed value in the case of a city and its current assessed value to (2) the sum of 
49.24 	its current assessed value plus the difference determined in (1), provided that the amount 
49.25 	distributed shall not exceed $55 per capita in the case of a township or $75 per capita in 
49.26 	the case of a city. For purposes of this limitation, population will be determined according 
49.27 	to the 1980 decennial census conducted by the United States Bureau of the Census. If the 
49.28 	current assessed value of the township exceeds 50 percent of the township's January 2, 
49.29 	1982, assessed value, or if the current assessed value of the city exceeds 50 percent of the 
49.30 	city's January 2, 1980, assessed value, this paragraph shall not apply. For purposes of this 
49.31 	paragraph, "assessed value," when used in reference to years other than 1980 or 1982, 
49.32 	means the appropriate net tax capacities multiplied by 10.2.
49.33 		Subd. 4.School districts. (a)  17.15 cents per ~~taxable~~ ton plus the increase provided 
49.34 	in paragraph (d) must be allocated to qualifying school districts to be distributed, based 
49.35 	upon the certification of the commissioner of revenue, under paragraphs (b) and (c), 
49.36 	except as otherwise provided in paragraph (f). 
50.1 	(b)  3.43 cents per ~~taxable~~ ton must be distributed to the school districts in which 
50.2 	the lands from which taconite was mined or quarried were located or within which the 
50.3 	concentrate was produced. The distribution must be based on the apportionment formula 
50.4 	prescribed in subdivision 2. 
50.5 	(c)(i)  13.72 cents per ~~taxable~~ ton, less any amount distributed under paragraph (e), 
50.6 	shall be distributed to a group of school districts comprised of those school districts which 
50.7 	qualify as a tax relief area under section  273.134, paragraph (b), or in which there is a 
50.8 	qualifying municipality as defined by section  273.134, paragraph (a), in direct proportion 
50.9 	to school district indexes as follows: for each school district, its pupil units determined 
50.10 	under section  126C.05 for the prior school year shall be multiplied by the ratio of the 
50.11 	average adjusted net tax capacity per pupil unit for school districts receiving aid under 
50.12 	this clause as calculated pursuant to chapters 122A, 126C, and 127A for the school year 
50.13 	ending prior to distribution to the adjusted net tax capacity per pupil unit of the district. 
50.14 	Each district shall receive that portion of the distribution which its index bears to the sum 
50.15 	of the indices for all school districts that receive the distributions. 
50.16 	(ii) Notwithstanding clause (i), each school district that receives a distribution 
50.17 	under sections  298.018;  298.23 to  298.28, exclusive of any amount received under this 
50.18 	clause;  298.34 to  298.39;  298.391 to  298.396;  298.405; or any law imposing a tax on 
50.19 	severed mineral values after reduction for any portion distributed to cities and towns under 
50.20 	section  126C.48, subdivision 8, paragraph (5), that is less than the amount of its levy 
50.21 	reduction under section  126C.48, subdivision 8, for the second year prior to the year of the 
50.22 	distribution shall receive a distribution equal to the difference; the amount necessary to 
50.23 	make this payment shall be derived from proportionate reductions in the initial distribution 
50.24 	to other school districts under clause (i). 
50.25 	(d) Any school district described in paragraph (c) where a levy increase pursuant to 
50.26 	section  126C.17, subdivision 9, was authorized by referendum for taxes payable in 2001, 
50.27 	shall receive a distribution of 21.3 cents per ton. Each district shall receive $175 times the 
50.28 	pupil units identified in section  126C.05, subdivision 1, enrolled in the second previous 
50.29 	year or the 1983-1984 school year, whichever is greater, less the product of 1.8 percent 
50.30 	times the district's taxable net tax capacity in the second previous year. 
50.31 	If the total amount provided by paragraph (d) is insufficient to make the payments 
50.32 	herein required then the entitlement of $175 per pupil unit shall be reduced uniformly 
50.33 	so as not to exceed the funds available. Any amounts received by a qualifying school 
50.34 	district in any fiscal year pursuant to paragraph (d) shall not be applied to reduce general 
50.35 	education aid which the district receives pursuant to section  126C.13 or the permissible 
50.36 	levies of the district. Any amount remaining after the payments provided in this paragraph 
51.1 	shall be paid to the commissioner of Iron Range resources and rehabilitation who shall 
51.2 	deposit the same in ~~the taconite environmental protection fund and~~ the Douglas J. Johnson 
51.3 	economic protection trust fund as provided in subdivision 11. 
51.4 	Each district receiving money according to this paragraph shall reserve the lesser of 
51.5 	the amount received under this paragraph or $25 times the number of pupil units served 
51.6 	in the district. It may use the money for early childhood programs or for outcome-based 
51.7 	learning programs that enhance the academic quality of the district's curriculum. The 
51.8 	outcome-based learning programs must be approved by the commissioner of education.
51.9 	(e) There shall be distributed to any school district the amount which the school 
51.10 	district was entitled to receive under section  298.32 in 1975. 
51.11 	(f) Effective for the distribution in 2003 only, five percent of the distributions to 
51.12 	school districts under paragraphs (b), (c), and (e); subdivision 6, paragraph (c); subdivision 
51.13 	11; and section  298.225, shall be distributed to the general fund. The remainder less any 
51.14 	portion distributed to cities and towns under section  126C.48, subdivision 8, paragraph 
51.15 	(5), shall be distributed to the Douglas J. Johnson economic protection trust fund created 
51.16 	in section  298.292. Fifty percent of the amount distributed to the Douglas J. Johnson 
51.17 	economic protection trust fund shall be made available for expenditure under section  
51.18 	298.293 as governed by section  298.296. Effective in 2003 only, 100 percent of the 
51.19 	distributions to school districts under section  477A.15 less any portion distributed to 
51.20 	cities and towns under section  126C.48, subdivision 8, paragraph (5), shall be distributed 
51.21 	to the general fund. 
51.22 		Subd. 5.Counties. (a)  26.05 cents per ~~taxable~~ ton is allocated to counties to be 
51.23 	distributed, based upon certification by the commissioner of revenue, under paragraphs 
51.24 	(b) to (d). 
51.25 	(b)  20.525 cents per ~~taxable~~ ton shall be distributed to the county in which the 
51.26 	taconite is mined or quarried or in which the concentrate is produced, less any amount 
51.27 	which is to be distributed pursuant to paragraph (c). The apportionment formula prescribed 
51.28 	in subdivision 2 is the basis for the distribution. 
51.29 	(c) If an electric power plant owned by and providing the primary source of power 
51.30 	for a taxpayer mining and concentrating taconite is located in a county other than the 
51.31 	county in which the mining and the concentrating processes are conducted, one cent per 
51.32 	~~taxable~~ ton of the tax distributed to the counties pursuant to paragraph (b) and imposed 
51.33 	on and collected from such taxpayer shall be paid to the county in which the power plant 
51.34 	is located.
51.35 	(d)  5.525 cents per ~~taxable~~ ton shall be paid to the county from which the taconite 
51.36 	was mined, quarried or concentrated to be deposited in the county road and bridge fund. 
52.1 	If the mining, quarrying and concentrating, or separate steps in any of those processes 
52.2 	are carried on in more than one county, the commissioner shall follow the apportionment 
52.3 	formula prescribed in subdivision 2. 
52.4 		Subd. 6.Property tax relief. (a) In 2002 and thereafter, 33.9 cents per ~~taxable~~ ton, 
52.5 	less any amount required to be distributed under paragraphs (b) and (c), must be allocated 
52.6 	to St. Louis County acting as the counties' fiscal agent, to be distributed as provided 
52.7 	in sections  273.134 to  273.136. 
52.8 	(b) If an electric power plant owned by and providing the primary source of power 
52.9 	for a taxpayer mining and concentrating taconite is located in a county other than the 
52.10 	county in which the mining and the concentrating processes are conducted, .1875 cent per 
52.11 	~~taxable~~ ton of the tax imposed and collected from such taxpayer shall be paid to the county.
52.12 	(c) If an electric power plant owned by and providing the primary source of power 
52.13 	for a taxpayer mining and concentrating taconite is located in a school district other than 
52.14 	a school district in which the mining and concentrating processes are conducted, .4541 
52.15 	cent per ~~taxable~~ ton of the tax imposed and collected from the taxpayer shall be paid to 
52.16 	the school district.
52.17 		Subd. 7.Iron Range Resources and Rehabilitation Board. For the 1998 
52.18 	distribution, 6.5 cents per ~~taxable~~ ton shall be paid to the Iron Range Resources and 
52.19 	Rehabilitation Board for the purposes of section  298.22. That amount shall be increased 
52.20 	in 1999 and subsequent years in the same proportion as the increase in the implicit price 
52.21 	deflator as provided in section  298.24, subdivision 1. The amount distributed pursuant 
52.22 	to this subdivision shall be expended within or for the benefit of the taconite assistance 
52.23 	area defined in section  273.1341. No part of the fund provided in this subdivision may be 
52.24 	used to provide loans for the operation of private business unless the loan is approved by 
52.25 	the governor. 
52.26 		Subd. 8.Range Association of Municipalities and Schools. .20 cent per ~~taxable~~
52.27 	ton shall be paid to the Range Association of Municipalities and Schools, for the purpose of 
52.28 	providing an areawide approach to problems which demand coordinated and cooperative 
52.29 	actions and which are common to those areas of northeast Minnesota affected by 
52.30 	operations involved in mining iron ore and taconite and producing concentrate therefrom, 
52.31 	and for the purpose of promoting the general welfare and economic development of the 
52.32 	cities, towns and school districts within the iron range area of northeast Minnesota.
52.33 		Subd. 9.Douglas J. Johnson economic protection trust fund. In 1999,  3.35 cents 
52.34 	per ~~taxable~~ ton shall be paid to the Douglas J. Johnson economic protection trust fund. 
52.35 		Subd. 9a.Taconite economic development fund. (a) 30.1 cents per taxable ton for 
52.36 	distributions in 2002 and thereafter must be paid to the taconite economic development 
53.1 	fund. No distribution shall be made under this paragraph in 2004 or any subsequent year 
53.2 	in which total industry production falls below 30 million tons. Distribution shall only be 
53.3 	made to a taconite producer's fund under section  298.227 if the producer timely pays its 
53.4 	tax under section  298.24 by the dates provided under section  298.27, or pursuant to the 
53.5 	due dates provided by an administrative agreement with the commissioner. 
53.6 	(b) An amount equal to 50 percent of the tax under section  298.24 for concentrate 
53.7 	sold in the form of pellet chips and fines not exceeding 5/16 inch in size and not including 
53.8 	crushed pellets shall be paid to the taconite economic development fund. The amount 
53.9 	paid shall not exceed $700,000 annually for all companies. If the initial amount to be 
53.10 	paid to the fund exceeds this amount, each company's payment shall be prorated so the 
53.11 	total does not exceed $700,000. 
53.12 		Subd. 9b.Taconite environmental protection fund. Five cents per ton must 
53.13 	be paid to the taconite environmental protection fund for use under section 298.2961, 
53.14 	subdivision 4.
53.15 		Subd. 9c.Taconite environmental protection fund. Twenty-five cents per ton for 
53.16 	distributions in 2007 and thereafter must be paid to the taconite environmental protection 
53.17 	fund.
53.18 		Subd. 10.Increase. (a) Except as provided in paragraph (b), beginning with 
53.19 	distributions in 2000, the amount determined under subdivision 9 shall be increased in 
53.20 	the same proportion as the increase in the implicit price deflator as provided in section 
53.21 	298.24, subdivision 1. Beginning with distributions in 2003, the amount determined under 
53.22 	subdivision 6, paragraph (a), shall be increased in the same proportion as the increase in 
53.23 	the implicit price deflator as provided in section 298.24, subdivision 1.
53.24 	(b) For distributions in 2005 and subsequent years, an amount equal to the increased 
53.25 	tax proceeds attributable to the increase in the implicit price deflator as provided in 
53.26 	section 298.24, subdivision 1, for taxes paid in 2005, except for the amount of revenue 
53.27 	increases provided in subdivision 4, paragraph (d), is distributed to the grant and loan fund 
53.28 	established in section 298.2961, subdivision 4.
53.29 		Subd. 11.Remainder. (a) The proceeds of the tax imposed by section  298.24 which 
53.30 	remain after the distributions and payments in subdivisions 2 to 10a, as certified by the 
53.31 	commissioner of revenue, and paragraphs (b), (c), (d), and (e) have been made, together 
53.32 	with interest earned on all money ~~distributed~~ available for distribution under this section 
53.33 	prior to its distribution, shall be ~~divided between the taconite environmental protection~~ 
53.34 	~~fund created in section  298.223 and the Douglas J. Johnson economic protection trust fund~~ 
53.35 	~~created in section  298.292 as follows: Two-thirds to the taconite environmental protection~~ 
54.1 	~~fund and one-third~~ distributed to the Douglas J. Johnson economic protection trust fund. 
54.2 	~~The proceeds shall be placed in the respective special accounts.~~
54.3 	(b) There shall be distributed to each city, town, and county the amount that it 
54.4 	received under section  294.26 in calendar year 1977; provided, however, that the amount 
54.5 	distributed in 1981 to the unorganized territory number 2 of Lake County and the town 
54.6 	of Beaver Bay based on the between-terminal trackage of Erie Mining Company will be 
54.7 	distributed in 1982 and subsequent years to the unorganized territory number 2 of Lake 
54.8 	County and the towns of Beaver Bay and Stony River based on the miles of track of Erie 
54.9 	Mining Company in each taxing district. 
54.10 	(c) There shall be distributed to the Iron Range Resources and Rehabilitation Board 
54.11 	the amounts it received in 1977 under section  298.22. The amount distributed under 
54.12 	this paragraph shall be expended within or for the benefit of the taconite assistance area 
54.13 	defined in section  273.1341. 
54.14 	(d) There shall be distributed to each school district 62 percent of the amount that it 
54.15 	received under section  294.26 in calendar year 1977. 
54.16 	~~(e) In 2003 only, $100,000 must be distributed to a township located in a taconite~~ 
54.17 	~~tax relief area as defined in section  273.134, paragraph (a), that received $119,259 of~~ 
54.18 	~~homestead and agricultural credit aid and $182,014 in local government aid in 2001.~~ 
54.19 		~~Subd. 11a.Prorated distributions.~~ ~~For production years 1994 through 1999,~~ 
54.20 	~~distributions under this section that are based on a number of cents per ton explicitly~~ 
54.21 	~~provided in this section shall be reduced on a pro rata basis to reflect the reduction in tax~~ 
54.22 	~~proceeds as a result of the tax rate reduction applied to direct reduced ore under section~~  
54.23 	~~298.24, subdivision 1, paragraph (f).~~ 
54.24 		Subd. 12.Estimates. On or before October 10 of each calendar year each producer 
54.25 	of taconite or iron sulphides subject to taxation under section  298.24 (hereinafter called 
54.26 	"taxpayer") shall file with the commissioner of revenue an estimate of the amount of tax 
54.27 	which would be payable by such taxpayer under said law for such calendar year; provided 
54.28 	such estimate shall be in an amount not less than the amount due on the mining and 
54.29 	production of concentrates up to September 30 of said year plus the amount becoming due 
54.30 	because of probable production between September 30 and December 31 of said year, 
54.31 	less any credit allowable as provided in subdivision 13. The commissioner of revenue 
54.32 	shall annually on or before October 10 report an estimated distribution amount to each 
54.33 	taxing district and the officers with whom such report is so filed shall use the amount so 
54.34 	indicated as being distributable to each taxing district in computing the permissible tax 
54.35 	levy of such county or city in the year in which such estimate is made, and payable in the 
54.36 	next ensuing calendar year, except that one cent per ~~taxable~~ ton of the amount distributed 
55.1 	under subdivision 5, paragraph (d), shall not be deducted in calculating the permissible 
55.2 	levy. In any calendar year in which a general property tax levy has been made, if the 
55.3 	taxes distributable to any such county or city are greater than the amount estimated by 
55.4 	the commissioner to be paid to any such county or city in such year, the excess of such 
55.5 	distribution shall be held in a special fund by the county or city and shall not be expended 
55.6 	until the succeeding calendar year, and shall be included in computing the permissible 
55.7 	levies of such county or city payable in such year. If the amounts distributable to any 
55.8 	such county or city after final determination by the commissioner of revenue under this 
55.9 	section are less than the amounts by which a taxing district's levies were reduced pursuant 
55.10 	to this section, such county or city may issue certificates of indebtedness in the amount 
55.11 	of the shortage, and may include in its next tax levy an amount sufficient to pay such 
55.12 	certificates of indebtedness and interest thereon, or, if no certificates were issued, an 
55.13 	amount equal to such shortage. 
55.14 		Subd. 13.Deduction for credits; payment. In determining the distributions and 
55.15 	payments of the proceeds of the tax collected under section  298.24, the commissioner 
55.16 	of revenue shall deduct the amount of any credits authorized under section  298.24, 
55.17 	subdivision 3, against the tax imposed under subdivision 1 of said section, from 
55.18 	the amount which would otherwise have been paid to the Iron Range Resources and 
55.19 	Rehabilitation Board for credit to the Douglas J. Johnson economic protection trust fund. 
Subd. 14.[Repealed, 1987 c 268 art 9 s 43]55.20 		Subd. 15.Distribution of delayed payments. Notwithstanding any other provision 
55.21 	of this section or any other law, if payment of taxes collected under section  298.24 is 
55.22 	delayed past the due date because the taxpayer is a debtor in a pending bankruptcy 
55.23 	proceeding, the amount paid shall be distributed as follows when received: 
55.24 	(1) 50 percent to St. Louis County acting as the counties' fiscal agent, to be 
55.25 	distributed as provided in sections  273.134 to  273.136; 
55.26 	(2) 25 percent to the Douglas J. Johnson economic protection trust fund; and
55.27 	(3) 25 percent to the taconite environmental protection fund.

55.28 	EFFECTIVE DATE. This section is effective for taxes and distributions payable in 
55.29 	2007 and thereafter.

55.30 	Sec. 6. Minnesota Statutes 2004, section 298.285, is amended to read:
55.31 	298.285 STATE AID AMOUNT; APPROPRIATION.
55.32 	The commissioner of revenue shall determine a state aid amount equal to a tax of 
55.33 	~~33 cents per taxable ton of iron ore concentrates for production your 2001 and~~ 22 cents per 
55.34 	~~taxable~~ ton of iron ore concentrates ~~for production years 2002 and thereafter~~. The state 
56.1 	aid provided for in this section shall be calculated using "distribution tonnage," which is 
56.2 	defined in section 298.28, subdivision 1. There is appropriated from the general fund to 
56.3 	the commissioner an amount equal to the state aid determined under this section. It must 
56.4 	be distributed under section  298.28, as if the aid were production tax revenues. 

56.5 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 and 
56.6 	thereafter.

56.7 	Sec. 7. Laws 1990, chapter 604, article 8, section 13, subdivision 4, is amended to read:
56.8 	
56.9 	Subd. 4.  Appropriation. There is annually appropriated  from the distribution of 
56.10 	taconite production tax revenues to the  ~~taconite environmental protection fund pursuant~~ 
56.11 	~~to Minnesota  Statutes, section 298.28, subdivision 11, and to the northeast Minnesota~~
56.12 	Douglas J. Johnson economic protection trust fund pursuant to Minnesota Statutes, section 
56.13 	298.28,  subdivisions 9 and 11, ~~in equal shares,~~ an amount sufficient to  pay when due 80 
56.14 	percent of the principal and interest on the  bonds issued under subdivision 1 and 100 
56.15 	percent of the  principal and interest on the bonds issued under subdivision 2.  If the annual 
56.16 	distribution to the ~~northeast Minnesota~~ Douglas J. Johnson economic  protection trust fund 
56.17 	is insufficient to pay its share after  fulfilling any obligations of the trust under Minnesota  
56.18 	Statutes, section 298.225 or 298.293, the deficiency shall be  appropriated from the ~~taconite~~ 
56.19 	~~environmental protection~~ corpus of the Douglas J. Johnson economic protection trust fund.  
56.20 	

56.21 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 and 
56.22 	thereafter.

56.23 	Sec. 8. Laws 1996, chapter 412, article 5, section 20, subdivision 2, is amended to read:
56.24 	
56.25 	Subd. 2.  Appropriation. There is annually appropriated  from the distribution of 
56.26 	taconite production tax revenues to the  ~~taconite environmental protection fund pursuant~~ 
56.27 	~~to Minnesota  Statutes, section 298.28, subdivision 11, and to the northeast Minnesota~~
56.28 	Douglas J. Johnson economic protection trust fund pursuant to Minnesota Statutes, section 
56.29 	298.28,  subdivisions 9 and 11, ~~in equal shares,~~ an amount sufficient to  pay when due 80 
56.30 	percent of the principal and interest on the  bonds issued pursuant to subdivision 1.  If the 
56.31 	annual  distribution to the ~~northeast Minnesota~~ Douglas J. Johnson economic protection  
56.32 	trust fund is insufficient to pay its share after fulfilling any  obligations of the trust under 
56.33 	Minnesota Statutes, section 298.225 or 298.293, the  deficiency shall be appropriated 
57.1 	from the ~~taconite environmental protection~~ corpus of the Douglas J. Johnson economic 
57.2 	protection trust fund.  
57.3 	

57.4 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 and 
57.5 	thereafter.

57.6 	Sec. 9. Laws 1996, chapter 412, article 5, section 21, subdivision 3, is amended to read:
57.7 	
57.8 	Subd. 3.  Appropriation. There is annually appropriated  from the distribution of 
57.9 	taconite production tax revenues to the  ~~taconite environmental protection fund pursuant~~ 
57.10 	~~to Minnesota  Statutes, section 298.28, subdivision 11, and to the northeast  Minnesota~~
57.11 	Douglas J. Johnson economic protection trust fund pursuant to Minnesota  Statutes, section 
57.12 	298.28, subdivisions 9 and 11, ~~in equal  shares,~~ an amount sufficient to pay when due 70 
57.13 	percent of the  principal and interest on the bonds issued under subdivision 1.  If the annual 
57.14 	distribution to the ~~northeast Minnesota~~ Douglas J. Johnson economic  protection trust fund 
57.15 	is insufficient to pay its share after  fulfilling any obligations of the trust under Minnesota  
57.16 	Statutes, section 298.225 or 298.293, the deficiency shall be  appropriated from the ~~taconite~~ 
57.17 	~~environmental protection~~ corpus of the Douglas J. Johnson economic protection trust fund.  
57.18 	

57.19 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 and 
57.20 	thereafter.

57.21 	Sec. 10. Laws 1996, chapter 412, article 5, section 22, subdivision 2, is amended to 
57.22 	read:
57.23 	
57.24 	Subd. 2.  Appropriation. There is annually appropriated  from the distribution of 
57.25 	taconite production tax revenues to the  ~~taconite environmental protection fund pursuant~~ 
57.26 	~~to Minnesota  Statutes, section 298.28, subdivision 11, and to the northeast  Minnesota~~
57.27 	Douglas J. Johnson economic protection trust fund pursuant to Minnesota  Statutes, section 
57.28 	298.28, subdivisions 9 and 11, ~~in equal  shares,~~ an amount sufficient to pay when due 80 
57.29 	percent of the  principal and interest on the bonds issued pursuant to  subdivision 1.  If the 
57.30 	annual distribution to the ~~northeast  Minnesota~~ Douglas J. Johnson economic protection 
57.31 	trust fund is insufficient to pay its  share after fulfilling any obligations of the trust under  
57.32 	Minnesota Statutes, section 298.225 or 298.293, the deficiency  shall be appropriated 
58.1 	from the ~~taconite environmental protection~~ corpus of the Douglas J. Johnson economic 
58.2 	protection trust  fund.  
58.3 	

58.4 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 and 
58.5 	thereafter.

58.6 	Sec. 11. Laws 1998, chapter 398, article 4, section 17, subdivision 2, is amended to 
58.7 	read:
58.8 	
58.9 	Subd. 2.  Appropriation. There is annually appropriated  from the distribution of 
58.10 	taconite production tax revenues to the  ~~taconite environmental protection fund pursuant~~ 
58.11 	~~to Minnesota  Statutes, section 298.28, subdivision 11, and to the northeast  Minnesota~~
58.12 	Douglas J. Johnson economic protection trust fund pursuant to Minnesota  Statutes, section 
58.13 	298.28, subdivisions 9 and 11, ~~in equal  shares,~~ an amount sufficient to pay when due 80 
58.14 	percent of the  principal and interest on the bonds issued pursuant to  subdivision 1.  If the 
58.15 	annual distribution to the ~~northeast  Minnesota~~ Douglas J. Johnson economic protection 
58.16 	trust fund is insufficient to pay its  share after fulfilling any obligations of the trust under  
58.17 	Minnesota Statutes, section 298.225 or 298.293, the deficiency  shall be appropriated 
58.18 	from the ~~taconite environmental protection~~ corpus of the Douglas J. Johnson economic 
58.19 	protection trust fund.  
58.20 	

58.21 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 and 
58.22 	thereafter.

58.23 	Sec. 12. Laws 2000, chapter 489, article 5, section 24, subdivision 3, is amended to 
58.24 	read:
58.25 	
58.26 	Subd. 3.  Appropriation. There is annually appropriated  from the distribution of 
58.27 	taconite production tax revenues to the  ~~taconite environmental protection fund pursuant~~ 
58.28 	~~to Minnesota  Statutes, section 298.28, subdivision 11, and to the northeast  Minnesota~~
58.29 	Douglas J. Johnson economic protection trust fund pursuant to Minnesota  Statutes, section 
58.30 	298.28, subdivisions 9 and 11, ~~in equal  shares,~~ an amount sufficient to pay when due 80 
58.31 	percent of the  principal and interest on the bonds issued under subdivision 1.  If the annual 
58.32 	distribution to the ~~northeast Minnesota~~ Douglas J. Johnson economic  protection trust fund 
58.33 	is insufficient to pay its share after  fulfilling any obligations of the trust under Minnesota  
59.1 	Statutes, section 298.225 or 298.293, the deficiency shall be  appropriated from the ~~taconite~~ 
59.2 	~~environmental protection~~ corpus of the Douglas J. Johnson economic protection trust fund.  
59.3 	

59.4 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 and 
59.5 	thereafter.

59.6 	Sec. 13. Laws 2000, chapter 489, article 5, section 25, subdivision 3, is amended to 
59.7 	read:
59.8 	
59.9 	Subd. 3.  Appropriation. There is annually appropriated  from the distribution of 
59.10 	taconite production tax revenues to the  ~~taconite environmental protection fund pursuant~~ 
59.11 	~~to Minnesota  Statutes, section 298.28, subdivision 11, and to the northeast  Minnesota~~
59.12 	Douglas J. Johnson economic protection trust fund pursuant to Minnesota  Statutes, section 
59.13 	298.28, subdivisions 9 and 11, ~~in equal  shares,~~ an amount sufficient to pay when due 80 
59.14 	percent of the  principal and interest on the bonds issued under subdivision 1.  If the annual 
59.15 	distribution to the ~~northeast Minnesota~~ Douglas J. Johnson economic  protection trust fund 
59.16 	is insufficient to pay its share after  fulfilling any obligations of the trust under Minnesota  
59.17 	Statutes, section 298.225 or 298.293, the deficiency shall be  appropriated from the ~~taconite~~ 
59.18 	~~environmental protection~~ corpus of the Douglas J. Johnson economic protection trust fund.  
59.19 	

59.20 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 and 
59.21 	thereafter.

59.22 	Sec. 14. Laws 2000, chapter 489, article 5, section 26, subdivision 3, is amended to 
59.23 	read:
59.24 	
59.25 	Subd. 3.  Appropriation. There is annually appropriated  from the distribution of 
59.26 	taconite production tax revenues to the  ~~taconite environmental protection fund pursuant~~ 
59.27 	~~to Minnesota  Statutes, section 298.28, subdivision 11, and to the northeast  Minnesota~~
59.28 	Douglas J. Johnson economic protection trust fund pursuant to Minnesota  Statutes, section 
59.29 	298.28, subdivisions 9 and 11, ~~in equal  shares,~~ an amount sufficient to pay when due 80 
59.30 	percent of the  principal and interest on the bonds issued under subdivision 1.  If the annual 
59.31 	distribution to the ~~northeast Minnesota~~ Douglas J. Johnson economic  protection trust fund 
59.32 	is insufficient to pay its share after  fulfilling any obligations of the trust under Minnesota  
60.1 	Statutes, section 298.225 or 298.293, the deficiency shall be  appropriated from the ~~taconite~~ 
60.2 	~~environmental protection~~ corpus of the Douglas J. Johnson economic protection trust fund.  
60.3 	

60.4 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 and 
60.5 	thereafter.

60.6 	Sec. 15. Laws 2005, chapter 152, article 1, section 39, subdivision 2, is amended to 
60.7 	read:
60.8 	
60.9 	Subd. 2.  Appropriation. There is annually appropriated  from the distribution 
60.10 	of taconite production tax revenues to the  ~~taconite environmental protection fund~~ 
60.11 	~~pursuant to Minnesota  Statutes, section 298.28, subdivision 11, and to the~~ Douglas J.  
60.12 	Johnson economic protection trust fund pursuant to Minnesota  Statutes, section 298.28, 
60.13 	subdivisions 9 and 11, ~~in equal  shares,~~ an amount sufficient to pay when due the principal 
60.14 	and  interest on the bonds issued pursuant to subdivision 1.  If the  annual distribution to 
60.15 	the Douglas J. Johnson economic  protection trust fund is insufficient to pay its share 
60.16 	after  fulfilling any obligations of the trust under Minnesota  Statutes, section 298.225 or 
60.17 	298.293, the deficiency is  appropriated from the ~~taconite environmental protection~~ corpus 
60.18 	of the Douglas J. Johnson economic protection trust fund.  The appropriation under this 
60.19 	subdivision terminates upon payment  or maturity of the last of the bonds issued under 
60.20 	this section.  
60.21 	

60.22 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 and 
60.23 	thereafter.

60.24 	Sec. 16.  REPEALER.
 60.25 	Minnesota Statutes 2004, section 298.28, subdivision 11a, is repealed.

60.26 	ARTICLE 5
60.27 	MISCELLANEOUS

60.28 	Section 1. Minnesota Statutes 2005 Supplement, section 270C.01, subdivision 4, is 
60.29 	amended to read:
60.30 		Subd. 4.Electronic means; electronically. "Electronic means" and "electronically" 
60.31 	mean a method that is electronic, as defined in section 325L.02, paragraph (e), and that 
61.1 	is prescribed by the commissioner. Electronic means includes the use of a touch-tone 
61.2 	telephone to transmit return information in a manner prescribed by the commissioner.

61.3 	EFFECTIVE DATE. This section is effective the day following final enactment.

61.4 	Sec. 2. Minnesota Statutes 2005 Supplement, section 270C.304, is amended to read:
61.5 	270C.304 ELECTRONICALLY FILED RETURNS; SIGNATURES.
61.6 	For purposes of a law administered by the commissioner, the name of the taxpayer, 
61.7 	the name of the taxpayer's authorized agent, or the taxpayer's identification number, 
61.8 	will constitute a signature when transmitted as part of the return information on returns 
61.9 	filed by electronic means by the taxpayer or at the taxpayer's direction. ~~"Electronic~~ 
61.10 	~~means" includes, but is not limited to, the use of a touch-tone telephone to transmit return~~ 
61.11 	~~information in a manner prescribed by the commissioner.~~

61.12 	EFFECTIVE DATE. This section is effective the day following final enactment.

61.13 	Sec. 3. Minnesota Statutes 2005 Supplement, section 270C.33, subdivision 4, is 
61.14 	amended to read:
61.15 		Subd. 4.Orders of assessment. (a) The commissioner may issue an order of 
61.16 	assessment in any of the following circumstances:
61.17 	(1) the commissioner determines that the correct amount of tax is different than that 
61.18 	assessed on a return filed with the commissioner;
61.19 	(2) no return has been filed and the commissioner determines the amount of tax 
61.20 	that should have been assessed;
61.21 	(3) the commissioner determines that the correct amount of a refundable credit 
61.22 	is different than the amount claimed by a taxpayer. For purposes of this subdivision, 
61.23 	"refundable credit" means a refund benefit or credit due a person that is unrelated to the 
61.24 	person's liability for a tax. "Refundable credit" does not include estimated tax payments 
61.25 	or withholding taxes. An assessment for an overpayment of a refundable credit may be 
61.26 	collected in the same manner as a tax collected by the commissioner; ~~and~~
61.27 	(4) the commissioner determines the correct amount of a tax that the taxpayer is not 
61.28 	required to assess by a return filed with the commissioner~~.~~; and
61.29 	(5) the commissioner determines that a penalty other than a penalty for late payment 
61.30 	of tax, late filing of a return, or failure to pay tax by electronic means should be imposed, 
61.31 	and the penalty is not included on an order of assessment made under clauses (1) to (4).
61.32 	(b) An order of assessment must be in writing.
62.1 	(c) An order of assessment must be signed by the commissioner or a delegate, or 
62.2 	have their facsimile signature, if the change in tax, excluding penalties and interest, 
62.3 	exceeds $1,000.
62.4 	(d) An order of assessment is final when made but, as applicable, is reviewable 
62.5 	administratively under section 270C.35, or appealable to Tax Court under chapter 271.

62.6 	EFFECTIVE DATE. This section is effective the day following final enactment.

62.7 	Sec. 4. Minnesota Statutes 2005 Supplement, section 270C.57, subdivision 3, is 
62.8 	amended to read:
62.9 		Subd. 3.Assessment; abatement; review. The commissioner may assess liability 
62.10 	against a successor business under this section within the time prescribed for collecting 
62.11 	the underlying sales and withholding taxes, interest, and penalties. The assessment is 
62.12 	presumed to be valid, and the burden is upon the successor to show it is incorrect or 
62.13 	invalid. An order assessing successor liability is reviewable administratively under section 
62.14 	270C.35 and is appealable to Tax Court under chapter 271. The commissioner may abate 
62.15 	an assessment if the successor's failure to give the notice required under this section is due 
62.16 	to reasonable cause. The procedural and appeal provisions under section 270C.34 apply 
62.17 	to abatement requests under this subdivision. Collection remedies available against the 
62.18 	transferring business are available against the successor from the date of assessment of 
62.19 	successor liability.

62.20 	EFFECTIVE DATE. This section is effective the day following final enactment.

62.21 	Sec. 5. Minnesota Statutes 2005 Supplement, section 270C.67, subdivision 1, is 
62.22 	amended to read:
62.23 		Subdivision 1.Authority. If any tax payable to the commissioner or to the 
62.24 	department is not paid when due, such tax may be collected by the commissioner within 
62.25 	five years after the date of assessment of the tax, or if a lien has been filed, during the 
62.26 	period the lien is enforceable, or if the tax judgment has been filed, within the statutory 
62.27 	period of enforcement of a valid tax judgment, by a levy upon all property and rights 
62.28 	to property, including any property in the possession of law enforcement officials, of 
62.29 	the person liable for the payment or collection of such tax ~~(except that which is exempt~~ 
62.30 	~~from execution pursuant to section 550.37)~~ or property on which there is a lien provided 
62.31 	in section 270C.63. For this purpose, "tax" includes any penalty, interest, and costs, 
62.32 	properly payable.

62.33 	EFFECTIVE DATE. This section is effective the day following final enactment.

63.1 	Sec. 6. Minnesota Statutes 2005 Supplement, section 270C.67, is amended by adding a 
63.2 	subdivision to read:
63.3 		Subd. 1a.Exempt property.  A levy under this section is not enforceable against:
63.4 	(1) a purchaser with respect to tangible personal property purchased at retail in 
63.5 	the ordinary course of the seller's trade or business, unless at the time of purchase the 
63.6 	purchaser intends the purchase to or knows the purchase will hinder, evade, or defeat 
63.7 	the collection of a tax; or
63.8 	(2) the personal property listed as exempt in sections 550.37, 550.38, and 550.39.

63.9 	EFFECTIVE DATE. This section is effective the day following final enactment.

63.10 	Sec. 7. Minnesota Statutes 2005 Supplement, section 271.12, is amended to read:
63.11 	271.12 WHEN ORDER EFFECTIVE.
63.12 	No order for refundment by the commissioner of revenue, the appropriate unit of 
63.13 	government, or the Tax Court shall take effect until the time for appeal therefrom or 
63.14 	review thereof by all parties entitled thereto has expired. Otherwise every order of the 
63.15 	commissioner, the appropriate unit of government, or the Tax Court shall take effect 
63.16 	immediately upon the filing thereof, and no appeal therefrom or review thereof shall 
63.17 	stay the execution thereof or extend the time for payment of any tax or other obligation 
63.18 	unless otherwise expressly provided by law; provided, that in case an order which has 
63.19 	been acted upon, in whole or in part, shall thereafter be set aside or modified upon appeal, 
63.20 	the determination upon appeal or review shall supersede the order appealed from and be 
63.21 	binding upon all parties affected thereby, and such adjustments as may be necessary 
63.22 	to give effect thereto shall be made accordingly; and provided further, the Tax Court 
63.23 	may enjoin enforcement of the order of the commissioner being appealed. If it be finally 
63.24 	determined upon such appeal or review that any person is entitled to refundment of any 
63.25 	amount which has been paid for a tax or other obligation, such amount, unless otherwise 
63.26 	provided by law, shall be paid to the person by the commissioner of finance, or other 
63.27 	proper officer, out of funds derived from taxes of the same kind, if available for the 
63.28 	purpose, or out of other available funds, if any, with interest at the rate specified in section 
63.29 	270C.405 from the date of payment of the tax, unless a different rate or date of accrual 
63.30 	of interest is otherwise provided by law, in which case such other rate or date of accrual 
63.31 	shall apply, upon certification by the commissioner of revenue, the appropriate unit of 
63.32 	government, the Tax Court or the Supreme Court.
63.33 	If, within 120 days after a decision of the Tax Court becomes final, the commissioner 
63.34 	does not refund the overpayment determined by the court, together with interest, on 
64.1 	motion by the taxpayer, the Tax Court shall have jurisdiction to order the refund of 
64.2 	the overpayment and interest, and to award reasonable litigation costs for bringing the 
64.3 	motion. If any tax, assessment, or other obligation be increased upon such appeal or 
64.4 	review, the increase shall be added to the original amount, and may be enforced and 
64.5 	collected therewith.

64.6 	EFFECTIVE DATE. This section is effective the day following final enactment.

64.7 	Sec. 8. Minnesota Statutes 2005 Supplement, section 289A.121, subdivision 5, is 
64.8 	amended to read:
64.9 		Subd. 5.Reportable transactions. (a) For each taxable year in which a taxpayer 
64.10 	must make a return or a statement under Code of Federal Regulations, title 26, section 
64.11 	1.6011-4, for a reportable transaction, including a listed transaction, in which the taxpayer 
64.12 	participated in a taxable year for which a return is required under chapter 290, the taxpayer 
64.13 	must file a copy of the disclosure with the commissioner.
64.14 	(b) Any taxpayer that is a member of a unitary business group that includes any 
64.15 	person that must make a disclosure statement under Code of Federal Regulations, title 26, 
64.16 	section 1.6011-4, must file a disclosure under this subdivision.
64.17 	(c) Disclosure under this subdivision is required for any transaction entered into after 
64.18 	December 31, 2001, that the Internal Revenue Service determines is a listed transaction 
64.19 	at any time, and must be made in the manner prescribed by the commissioner. For 
64.20 	transactions in which the taxpayer participated for taxable years ending before December 
64.21 	31, 2005, disclosure must be made by the extended due date of the first return required 
64.22 	under chapter 290 that occurs 60 days or more after July 14, 2005. With respect to 
64.23 	transactions in which the taxpayer participated for taxable years ending on and after 
64.24 	December 31, 2005, disclosure must be made in the time and manner prescribed in Code 
64.25 	of Federal Regulations, title 26, section 1.6011-4(e).
64.26 	(d) Notwithstanding paragraphs (a) to (c), no disclosure is required for transactions 
64.27 	entered into after December 31, 2001, and before January 1, 2006, if (1) the taxpayer 
64.28 	has filed an amended income tax return which reverses the tax benefits of the tax 
64.29 	shelter transaction, or (2) as a result of a federal audit the Internal Revenue Service has 
64.30 	determined the tax treatment of the transaction and an amended return has been filed 
64.31 	to reflect the federal treatment.

64.32 	EFFECTIVE DATE. This section is effective for disclosures of reportable 
64.33 	transactions in which the taxpayer participated for taxable years ending before December 
64.34 	31, 2005.

65.1 	Sec. 9. Minnesota Statutes 2004, section 290.17, subdivision 1, is amended to read:
65.2 		Subdivision 1.Scope of allocation rules. (a) The income of resident individuals 
65.3 	is not subject to allocation outside this state. The allocation rules apply to nonresident 
65.4 	individuals, estates, trusts, nonresident partners of partnerships, nonresident shareholders 
65.5 	of corporations treated as "S" corporations under section  290.9725, and all corporations 
65.6 	not having such an election in effect. If a partnership or corporation would not otherwise 
65.7 	be subject to the allocation rules, but conducts a trade or business that is part of a 
65.8 	unitary business involving another legal entity that is subject to the allocation rules, the 
65.9 	partnership or corporation is subject to the allocation rules. 
65.10 	(b) Expenses, losses, and other deductions (referred to collectively in this paragraph 
65.11 	as "deductions") must be allocated along with the item or class of gross income to which 
65.12 	they are definitely related for purposes of assignment under this section or apportionment 
65.13 	under section  290.191,  290.20, or  290.36. Deductions ~~not~~ definitely related to any item 
65.14 	~~or class~~ of gross income ~~are~~ assigned under subdivision 2, paragraph (e), are assigned to 
65.15 	the taxpayer's domicile. 
65.16 	(c) In the case of an individual who is a resident for only part of a taxable year, 
65.17 	the individual's income, gains, losses, and deductions from the distributive share of a 
65.18 	partnership, S corporation, trust, or estate are not subject to allocation outside this state 
65.19 	to the extent of the distributive share multiplied by a ratio, the numerator of which is 
65.20 	the number of days the individual was a resident of this state during the tax year of the 
65.21 	partnership, S corporation, trust, or estate, and the denominator of which is the number of 
65.22 	days in the taxable year of the partnership, S corporation, trust, or estate.

65.23 	EFFECTIVE DATE. This section is effective the day following final enactment.