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  KEY: stricken = old language to be removed
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     scs0552a-1

1.1Senator .................... moves to amend S.F. No. 552 as follows:
1.2Delete everything after the enacting clause and insert:

1.3"ARTICLE 1
1.4AIDS AND CREDITS

1.5    Section 1. Minnesota Statutes 2012, section 69.021, is amended by adding a
1.6subdivision to read:
1.7    Subd. 12. Pension aid accounts. (a) $745,000 is appropriated from the general
1.8fund, in fiscal year 2015 and each year thereafter, to the commissioner of revenue for the
1.9purposes of pension aid. The commissioner shall administer the account and allocate
1.10money in the account as follows:
1.11(1) $130,065 as supplemental state pension funding paid to the executive director of
1.12the Public Employees Retirement Association for deposit in the public employees police
1.13and fire retirement fund established by section 353.65, subdivision 1;
1.14(2) $64,935 to municipalities employing firefighters with retirement coverage by the
1.15public employees police and fire retirement plan, allocated in proportion to the relationship
1.16that the preceding June 30 number of firefighters employed by each municipality who have
1.17public employees police and fire retirement plan coverage bears to the total preceding
1.18June 30 number of municipal firefighters covered by the public employees police and
1.19fire retirement plan; and
1.20(3) $550,000 for municipalities other than the municipalities receiving a
1.21disbursement under clause (2) which qualified to receive fire state aid in that calendar year,
1.22allocated in proportion to the most recent amount of fire state aid paid under subdivision 7
1.23for the municipality bears to the most recent total fire state aid for all municipalities other
1.24than the municipalities receiving a disbursement under clause (2) paid under subdivision
1.257, with the allocated amount for fire departments participating in the voluntary statewide
1.26lump-sum volunteer firefighter retirement plan paid to the executive director of the Public
1.27Employees Retirement Association for deposit in the fund established by section 353G.02,
1.28subdivision 3, and credited to the respective account and with the balance paid to the
1.29treasurer of each municipality for transmittal within 30 days of receipt to the treasurer of
1.30the applicable volunteer firefighter relief association for deposit in its special fund.
1.31(b) $1,550,00 is appropriated from the general fund in fiscal year 2015 to the
1.32commissioner of revenue for the purposes of pension aid. The commissioner shall
1.33administer the account and allocate money in the account as follows:
1.34(1) one-third to be distributed as police state aid as provided under subdivision 7a; and
2.1(2) two-thirds to be apportioned, on the basis of the number of active police officers
2.2certified for police state aid receipt under section 69.011, subdivisions 2 and 2b, between:
2.3(i) the executive director of the Public Employees Retirement Association for
2.4deposit as a supplemental state pension funding aid in the public employees police and fire
2.5retirement fund established by section 353.65, subdivision 1; and
2.6(ii) the executive director of the Minnesota State Retirement System for deposit as a
2.7supplemental state pension funding aid in the state patrol retirement fund.
2.8(c) On or before September 1, annually, the executive director of the Public
2.9Employees Retirement Association shall report to the commissioner the following:
2.10(1) the municipalities which employ firefighters with retirement coverage by the
2.11public employees police and fire retirement plan;
2.12(2) the number of firefighters with public employees police and fire retirement plan
2.13employed by each municipality;
2.14(3) the fire departments covered by the voluntary statewide lump-sum volunteer
2.15firefighter retirement plan; and
2.16(4) any other information requested by the commissioner to administer the surcharge
2.17fire pension aid account.
2.18(d) For this subdivision, (i) the number of firefighters employed by a municipality
2.19who have public employees police and fire retirement plan coverage means the number
2.20of firefighters with public employees police and fire retirement plan coverage that were
2.21employed by the municipality for not less than 30 hours per week for a minimum of six
2.22months prior to December 31 preceding the date of the payment under this section and, if
2.23the person was employed for less than the full year, prorated to the number of full months
2.24employed; and, (ii) the number of active police officers certified for police state aid receipt
2.25under section 69.011, subdivisions 2 and 2b means, for each municipality, the number of
2.26police officers meeting the definition of peace officer in section 69.011, subdivision 1,
2.27counted as provided and limited by section 69.011, subdivisions 2 and 2b.
2.28(e) The payments under this section shall be made on October 1 each year, based on
2.29the amount in the temporary fire pension aid account and the amount in the temporary
2.30police pension aid account on the preceding June 30, with interest at 1 percent for each
2.31month, or portion of a month, that the amount remains unpaid after October 1. The
2.32amounts necessary to make the payments under this subdivision are annually appropriated
2.33to the commissioner from the temporary fire and police pension aid accounts. Any
2.34necessary adjustments shall be made to subsequent payments.
2.35(f) The provisions of this chapter that prevent municipalities and relief associations
2.36from being eligible for, or receiving state aid under this chapter until the applicable
3.1financial reporting requirements have been complied with, apply to the amounts payable
3.2to municipalities and relief associations under this subdivision.
3.3(g) The appropriations in paragraphs (a) and (b) end on (i) December 31, 2020, or
3.4(ii), if earlier, on the December 31 next following the actuarial valuation date on which the
3.5assets of the retirement plan on a market value equals or exceeds 90 percent of the total
3.6actuarial accrued liabilities of the retirement plan as disclosed in an actuarial valuation
3.7prepared under Minnesota Statutes, section 356.215, and the Standards for Actuarial Work
3.8promulgated by the Legislative Commission on Pensions and Retirement, for the State
3.9Patrol retirement plan or the public employees police and fire retirement plan, whichever
3.10occurs last.
3.11(h) The base for fiscal year 2016 and thereafter under paragraph (a) is $7,450,000
3.12and the distribution in clauses (1) to (3) are adjusted accordingly. The base for fiscal year
3.132016 and thereafter, under paragraph (b), is $15,500,000.
3.14EFFECTIVE DATE.This section is effective beginning in the fiscal year beginning
3.15July 1, 2014.

3.16    Sec. 2. Minnesota Statutes 2012, section 477A.011, subdivision 30, is amended to read:
3.17    Subd. 30. Pre-1940 housing percentage. (a) Except as provided in paragraph (b),
3.18"pre-1940 housing percentage" for a city is 100 times the most recent federal census count
3.19by the United States Bureau of the Census of all housing units in the city built before
3.201940, divided by the total number of all housing units in the city. Housing units includes
3.21both occupied and vacant housing units as defined by the federal census.
3.22(b) For the city of East Grand Forks only, "pre-1940 housing percentage" is equal
3.23to 100 times the 1990 federal census count of all housing units in the city built before
3.241940, divided by the most recent counts by the United States Bureau of the Census of all
3.25housing units in the city. Housing units includes both occupied and vacant housing units
3.26as defined by the federal census.
3.27EFFECTIVE DATE.This section is effective for aids payable in calendar year
3.282014 and thereafter.

3.29    Sec. 3. Minnesota Statutes 2012, section 477A.011, is amended by adding a
3.30subdivision to read:
3.31    Subd. 30a. Percent of housing built between 1940 and 1970. "Percent of housing
3.32built between 1940 and 1970" is equal to 100 times the most recent count by the United
3.33States Bureau of the Census of all housing units in the city built after 1939 but before
4.11970, divided by the total number of all housing units in the city. Housing units includes
4.2both occupied and vacant housing units as defined by the federal census.
4.3EFFECTIVE DATE.This section is effective for aids payable in calendar year
4.42014 and thereafter.

4.5    Sec. 4. Minnesota Statutes 2012, section 477A.011, subdivision 34, is amended to read:
4.6    Subd. 34. City revenue need. (a) For a city with a population equal to or greater
4.7than 2,500 10,000, "city revenue need" is the greater of 285 or 1.15 times the sum of (1)
4.85.0734098 4.59 times the pre-1940 housing percentage; plus (2) 19.141678 times the
4.9population decline percentage 0.622 times the percent of housing built between 1940 and
4.101970; plus (3) 2504.06334 times the road accidents factor 169.415 times the jobs per
4.11capita; plus (4) 355.0547; minus (5) the metropolitan area factor; minus (6) 49.10638
4.12times the household size the sparsity adjustment, plus (5) 307.664.
4.13    (b) For a city with a population equal to or greater than 2,500 and less than 10,000,
4.14"city revenue need" is 1.15 times the sum of (1) 572.62; plus (2) 5.026 times the pre-1940
4.15housing percentage; minus (3) 53.768 times household size; plus (4) 14.022 times peak
4.16population decline.
4.17    (b) (c) For a city with a population less than 2,500, "city revenue need" is the sum of
4.18(1) 2.387 times the pre-1940 housing percentage; plus (2) 2.67591 times the commercial
4.19industrial percentage; plus (3) 3.16042 times the population decline percentage; plus (4)
4.201.206 times the transformed population; minus (5) 62.772 410 plus 0.367 times the city's
4.21population over 100. The city revenue need under this paragraph shall not exceed 630.
4.22    (c) (d) For a city with a population of at least 2,500 or more and a population in one
4.23of the most recently available five years that was less than 2,500, "city revenue need"
4.24is the sum of (1) its city revenue need calculated under paragraph (a) multiplied by its
4.25transition factor; plus (2) its city revenue need calculated under the formula in paragraph
4.26(b) multiplied by the difference between one and its transition factor. For purposes of this
4.27paragraph, a city's "transition factor" is equal to 0.2 multiplied by the number of years that
4.28the city's population estimate has been 2,500 or more. This provision only applies for aids
4.29payable in calendar years 2006 to 2008 to cities with a 2002 population of less than 2,500.
4.30It applies to any city for aids payable in 2009 and thereafter but less than 3,000, the "city
4.31revenue need" equals (1) the transition factor times the city's revenue need calculated in
4.32paragraph (b) plus (2) 630 times the difference between one and the transition factor. For
4.33a city with a population of at least 10,000 but less than 10,500, the "city revenue need"
4.34equals (1) the transition factor times the city's revenue need calculated in paragraph (a)
4.35plus (2) the city's revenue need calculated under the formula in paragraph (b) times the
5.1difference between one and the transition factor. For purposes of this paragraph "transition
5.2factor" is 0.2 percent times the amount that the city's population exceeds the minimum
5.3threshold in either of the first two sentences.
5.4    (d) (e) The city revenue need cannot be less than zero.
5.5    (e) (f) For calendar year 2005 2015 and subsequent years, the city revenue need for
5.6a city, as determined in paragraphs (a) to (d) (e), is multiplied by the ratio of the annual
5.7implicit price deflator for government consumption expenditures and gross investment for
5.8state and local governments as prepared by the United States Department of Commerce,
5.9for the most recently available year to the 2003 2013 implicit price deflator for state
5.10and local government purchases.
5.11EFFECTIVE DATE.This section is effective for aids payable in calendar year
5.122014 and thereafter.

5.13    Sec. 5. Minnesota Statutes 2012, section 477A.011, subdivision 42, is amended to read:
5.14    Subd. 42. City jobs base Jobs per capita. (a) "City jobs base" for a city with a
5.15population of 5,000 or more is equal to the product of (1) $25.20, (2) the number of
5.16jobs per capita in the city, and (3) its population. For cities with a population less than
5.175,000, the city jobs base is equal to zero. For a city receiving aid under subdivision 36,
5.18paragraph (k), its city jobs base is reduced by the lesser of 36 percent of the amount of
5.19aid received under that paragraph or $1,000,000. No city's city jobs base may exceed
5.20$4,725,000 under this paragraph.
5.21    (b) For calendar year 2010 and subsequent years, the city jobs base for a city, as
5.22determined in paragraph (a), is multiplied by the ratio of the appropriation under section
5.23477A.03, subdivision 2a, for the year in which the aid is paid to the appropriation under
5.24that section for aids payable in 2009.
5.25    (c) For purposes of this subdivision, "Jobs per capita in the city" means (1) the
5.26average annual number of employees in the city based on the data from the Quarterly
5.27Census of Employment and Wages, as reported by the Department of Employment and
5.28Economic Development, for the most recent calendar year available as of May 1, 2008
5.29 November 1 of every odd-numbered year, divided by (2) the city's population for the
5.30same calendar year as the employment data. The commissioner of the Department of
5.31Employment and Economic Development shall certify to the city the average annual
5.32number of employees for each city by June 1, 2008 January 15, of every even-numbered
5.33year beginning with January 15, 2014.. A city may challenge an estimate under this
5.34paragraph by filing its specific objection, including the names of employers that it feels
5.35may have misreported data, in writing with the commissioner by June 20, 2008 December
6.11 of every odd-numbered year. The commissioner shall make every reasonable effort
6.2to address the specific objection and adjust the data as necessary. The commissioner
6.3shall certify the estimates of the annual employment to the commissioner of revenue by
6.4July 15, 2008 January 15 of all even-numbered years, including any estimates still under
6.5objection. For aids payable in 2014 "jobs per capita" shall be based on the annual number
6.6of employees and population for calendar year 2010 without additional review.
6.7EFFECTIVE DATE.This section is effective for aids payable in calendar year
6.82014 and thereafter.

6.9    Sec. 6. Minnesota Statutes 2012, section 477A.011, is amended by adding a
6.10subdivision to read:
6.11    Subd. 44. Peak population decline. "Peak population decline" is equal to 100
6.12times the difference between one and the ratio of the city's current population, to the
6.13highest city population reported in a federal census from the 1970 census or later. "Peak
6.14population decline" shall not be less than zero.
6.15EFFECTIVE DATE.This section is effective for aids payable in calendar year
6.162014 and thereafter.

6.17    Sec. 7. Minnesota Statutes 2012, section 477A.011, is amended by adding a
6.18subdivision to read:
6.19    Subd. 45. Sparsity adjustment. For a city with a population of 10,000 or more, the
6.20sparsity adjustment is 100 for any city with an average population density less than 150
6.21per square mile. The sparsity adjustment is zero for all other cities.
6.22EFFECTIVE DATE.This section is effective for aids payable in calendar year
6.232014 and thereafter.

6.24    Sec. 8. Minnesota Statutes 2012, section 477A.013, subdivision 1, is amended to read:
6.25    Subdivision 1. Towns. In 2002, no town is eligible for a distribution under this
6.26subdivision.
6.27In 2014 and thereafter, each town is eligible for a distribution under this subdivision
6.28equal to the product of (i) its agricultural property factor, (ii) its town area factor, (iii) its
6.29population factor, and (iv) 0.00225. As used in this subdivision, the following terms
6.30have the meanings given them:
7.1(1) "agricultural property factor" means the ratio of the adjusted net tax capacity of
7.2agricultural property located in a town, divided by the adjusted net tax capacity of all other
7.3property located in the town. The agricultural property factor cannot exceed eight;
7.4(2) "agricultural property" means property classified under section 273.13, as
7.5homestead and nonhomestead agricultural property, rural vacant land, and noncommercial
7.6seasonal recreational property;
7.7(3) "town area factor" means the most recent estimate of total acreage, not to exceed
7.850,000 acres, located in the township available as of July 1 in the aid calculation year,
7.9estimated or established by:
7.10(i) the United States Bureau of the Census;
7.11(ii) the State Land Management Information Center; or
7.12(iii) the secretary of state; and
7.13(4) "population factor" means the square root of the towns population.
7.14If the sum of the aids payable to all towns under this subdivision exceeds the limit
7.15under section 477A.03, subdivision 2c, the distribution to each town must be reduced
7.16proportionately so that the total amount of aids distributed under this section does not
7.17exceed the limit in section 477A.03, subdivision 2c.
7.18EFFECTIVE DATE.This section is effective for aids payable in calendar year
7.192014 and thereafter.

7.20    Sec. 9. Minnesota Statutes 2012, section 477A.013, subdivision 8, is amended to read:
7.21    Subd. 8. City formula aid. (a) For aids payable in 2014 only, the formula aid for a
7.22city is equal to the sum of (1) its 2013 certified aid and (2) the product of (i) the difference
7.23between its unmet need and its 2013 certified aid and (ii) the aid gap percentage.
7.24    (b) For aids payable in 2015 and thereafter, the formula aid for a city is equal to
7.25the sum of (1) its city jobs base, (2) its small city aid base, and (3) the need increase
7.26percentage multiplied by the average of its unmet need for the most recently available two
7.27years formula aid in the previous year and (2) the product of (i) the difference between
7.28its unmet need and its certified aid in the previous year under subdivision 9, and (ii)
7.29the aid gap percentage.
7.30No city may have a formula aid amount less than zero. The need increase aid gap
7.31 percentage must be the same for all cities.
7.32    The applicable need increase aid gap percentage must be calculated by the
7.33Department of Revenue so that the total of the aid under subdivision 9 equals the total
7.34amount available for aid under section 477A.03. Data used in calculating aids to cities
7.35under sections 477A.011 to 477A.013 shall be the most recently available data as of
8.1January 1 in the year in which the aid is calculated except that the data used to compute "net
8.2levy" in subdivision 9 is the data most recently available at the time of the aid computation.
8.3EFFECTIVE DATE.This section is effective for aids payable in calendar year
8.42014 and thereafter.

8.5    Sec. 10. Minnesota Statutes 2012, section 477A.013, subdivision 9, is amended to read:
8.6    Subd. 9. City aid distribution. (a) In calendar year 2013 2014 and thereafter, each
8.7city shall receive an aid distribution equal to the sum of (1) the city formula aid under
8.8subdivision 8, and (2) its city aid base aid adjustment under subdivision 13.
8.9    (b) For aids payable in 2013 and 2014 only, the total aid in the previous year for
8.10any city shall mean the amount of aid it was certified to receive for aids payable in 2012
8.11under this section. For aids payable in 2015 and thereafter, the total aid in the previous
8.12year for any city means the amount of aid it was certified to receive under this section in
8.13the previous payable year.
8.14    (c) For aids payable in 2010 and thereafter, the total aid for any city shall not exceed
8.15the sum of (1) ten percent of the city's net levy for the year prior to the aid distribution
8.16plus (2) its total aid in the previous year. For aids payable in 2009 and thereafter, the total
8.17aid for any city with a population of 2,500 or more may not be less than its total aid under
8.18this section in the previous year minus the lesser of $10 multiplied by its population, or ten
8.19percent of its net levy in the year prior to the aid distribution.
8.20    (d) (b) For aids payable in 2014 only, the total aid for a city may not be less than the
8.21amount it was certified to receive in 2013. For aids payable in 2010 2015 and thereafter,
8.22the total aid for a city with a population less than 2,500 must not be less than the amount
8.23it was certified to receive in the previous year minus the lesser of $10 multiplied by its
8.24population, or five percent of its 2003 certified aid amount. For aids payable in 2009 only,
8.25the total aid for a city with a population less than 2,500 must not be less than what it
8.26received under this section in the previous year unless its total aid in calendar year 2008
8.27was aid under section 477A.011, subdivision 36, paragraph (s), in which case its minimum
8.28aid is zero its net levy in the year prior to the aid distribution.
8.29    (e) A city's aid loss under this section may not exceed $300,000 in any year in
8.30which the total city aid appropriation under section 477A.03, subdivision 2a, is equal or
8.31greater than the appropriation under that subdivision in the previous year, unless the
8.32city has an adjustment in its city net tax capacity under the process described in section
8.33469.174, subdivision 28.
8.34    (f) If a city's net tax capacity used in calculating aid under this section has decreased
8.35in any year by more than 25 percent from its net tax capacity in the previous year due to
9.1property becoming tax-exempt Indian land, the city's maximum allowed aid increase
9.2under paragraph (c) shall be increased by an amount equal to (1) the city's tax rate in the
9.3year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease
9.4resulting from the property becoming tax exempt.
9.5EFFECTIVE DATE.This section is effective for aids payable in calendar year
9.62014 and thereafter.

9.7    Sec. 11. Minnesota Statutes 2012, section 477A.013, is amended by adding a
9.8subdivision to read:
9.9    Subd. 13. Certified aid adjustments. (a) A city that received an aid base increase
9.10under Minnesota Statutes 2012, section 477A.011, subdivision 36, paragraph (e), shall
9.11have its total aid under subdivision 9 increased by an amount equal to $150,000 for aids
9.12payable in 2014 through 2018.
9.13(b) A city that received an aid base increase under section 477A.011, subdivision 36,
9.14paragraph (r), shall have its total aid under subdivision 9 increased by an amount equal to
9.15$160,000 for aids payable in 2014 and thereafter.
9.16(c) A city that received a temporary aid increase under Minnesota Statutes 2012,
9.17section 477A.011, subdivision 36, paragraph (m), (v), or (w), shall have its total aid under
9.18subdivision 9 decreased by the amount of its aid base increase under those paragraphs in
9.19calendar year 2013.

9.20    Sec. 12. Minnesota Statutes 2012, section 477A.03, subdivision 2a, is amended to read:
9.21    Subd. 2a. Cities. For aids payable in 2013 2014 and thereafter, the total aid paid
9.22under section 477A.013, subdivision 9, is $426,438,012 $506,438,012.
9.23EFFECTIVE DATE.This section is effective for aids payable in calendar year
9.242014 and thereafter.

9.25    Sec. 13. Minnesota Statutes 2012, section 477A.03, subdivision 2b, is amended to read:
9.26    Subd. 2b. Counties. (a) For aids payable in 2013 2014 and thereafter, the total aid
9.27payable under section 477A.0124, subdivision 3, is $80,795,000 $100,795,000. Each
9.28calendar year, $500,000 of this appropriation shall be retained by the commissioner
9.29of revenue to make reimbursements to the commissioner of management and budget
9.30for payments made under section 611.27. For calendar year 2004, the amount shall
9.31be in addition to the payments authorized under section 477A.0124, subdivision 1.
9.32For calendar year 2005 and subsequent years, the amount shall be deducted from the
10.1appropriation under this paragraph. The reimbursements shall be to defray the additional
10.2costs associated with court-ordered counsel under section 611.27. Any retained amounts
10.3not used for reimbursement in a year shall be included in the next distribution of county
10.4need aid that is certified to the county auditors for the purpose of property tax reduction
10.5for the next taxes payable year.
10.6    (b) For aids payable in 2013 2014 and thereafter, the total aid under section
10.7477A.0124, subdivision 4 , is $84,909,575 $104,909,575. The commissioner of
10.8management and budget shall bill the commissioner of revenue for the cost of preparation
10.9of local impact notes as required by section 3.987, not to exceed $207,000 in each fiscal
10.10year 2004 and thereafter. The commissioner of education shall bill the commissioner of
10.11revenue for the cost of preparation of local impact notes for school districts as required
10.12by section 3.987, not to exceed $7,000 in each fiscal year 2004 and thereafter. The
10.13commissioner of revenue shall deduct the amounts billed under this paragraph from
10.14the appropriation under this paragraph. The amounts deducted are appropriated to the
10.15commissioner of management and budget and the commissioner of education for the
10.16preparation of local impact notes.
10.17EFFECTIVE DATE.This section is effective for aid payable in 2014 and thereafter.

10.18    Sec. 14. Minnesota Statutes 2012, section 477A.03, is amended by adding a
10.19subdivision to read:
10.20    Subd. 2c. Towns. For aids payable in 2014, the total aids paid under section
10.21477A.013, subdivision 1, is limited to $5,000,000. For aids payable in 2015 and thereafter,
10.22the total aids paid under section 477A.013, subdivision 1, is limited to the amount certified
10.23to be paid in the previous year.
10.24EFFECTIVE DATE.This section is effective for aids payable in calendar year
10.252014 and thereafter.

10.26    Sec. 15. [477A.10] NATURAL RESOURCES LAND PAYMENTS IN LIEU;
10.27PURPOSE.
10.28The purposes of sections 477A.11 to 477A.14 are:
10.29(1) to compensate local units of government for the loss of tax base from state
10.30ownership of land and the need to provide services for state land;
10.31(2) to address the disproportionate impact of state land ownership on local units of
10.32government with a large proportion of state land; and
10.33(3) to address the need to manage state lands held in trust for the local taxing districts.

11.1    Sec. 16. Minnesota Statutes 2012, section 477A.11, subdivision 3, is amended to read:
11.2    Subd. 3. Acquired natural resources land. "Acquired natural resources land"
11.3means:
11.4(1) any land, other than wildlife management land, presently administered by the
11.5commissioner in which the state acquired by purchase, condemnation, or gift, a fee title
11.6interest in lands which were previously privately owned; and
11.7(2) lands acquired by the state under chapter 84A that are designated as state parks,
11.8state recreation areas, scientific and natural areas, or wildlife management areas.
11.9EFFECTIVE DATE.This section is effective for aids payable in calendar year
11.102013 and thereafter.

11.11    Sec. 17. Minnesota Statutes 2012, section 477A.11, subdivision 4, is amended to read:
11.12    Subd. 4. Other natural resources land. "Other natural resources land" means
11.13any other land, other than acquired natural resource land or wildlife management land,
11.14 presently owned in fee title by the state and administered by the commissioner, or
11.15any tax-forfeited land, other than platted lots within a city or those lands described
11.16under subdivision 3, clause (2), which is owned by the state and administered by the
11.17commissioner or by the county in which it is located.
11.18EFFECTIVE DATE.This section is effective for aids payable in calendar year
11.192013 and thereafter.

11.20    Sec. 18. Minnesota Statutes 2012, section 477A.11, is amended by adding a
11.21subdivision to read:
11.22    Subd. 6. Military game refuge. "Military game refuge" means land owned in
11.23fee by another state agency for military purposes and designated as a state game refuge
11.24under section 97A.085.
11.25EFFECTIVE DATE.This section is effective for aids payable in calendar year
11.262013 and thereafter.

11.27    Sec. 19. Minnesota Statutes 2012, section 477A.11, is amended by adding a
11.28subdivision to read:
11.29    Subd. 7. Transportation wetland. "Transportation wetland" means land
11.30administered by the Department of Transportation in which the state acquired, by purchase
11.31from a private owner, a fee title interest in over 500 acres of land within a county to
11.32replace wetland losses from transportation projects.
12.1EFFECTIVE DATE.This section is effective for aids payable in calendar year
12.22013 and thereafter.

12.3    Sec. 20. Minnesota Statutes 2012, section 477A.11, is amended by adding a
12.4subdivision to read:
12.5    Subd. 8. Wildlife management land. "Wildlife management land" means land
12.6administered by the commissioner in which the state acquired, from a private owner by
12.7purchase, condemnation, or gift, a fee interest under the authority granted in chapter 94 or
12.897A for wildlife management purposes and actually used as a wildlife management area.
12.9EFFECTIVE DATE.This section is effective for aids payable in calendar year
12.102013 and thereafter.

12.11    Sec. 21. Minnesota Statutes 2012, section 477A.12, subdivision 1, is amended to read:
12.12    Subdivision 1. Types of land; payments. (a) As an offset for expenses incurred
12.13by counties and towns in support of natural resources lands, The following amounts are
12.14annually appropriated to the commissioner of natural resources from the general fund for
12.15transfer to the commissioner of revenue. The commissioner of revenue shall pay the
12.16transferred funds to counties as required by sections 477A.11 to 477A.14. The amounts,
12.17based on the acreage as of July 1 of each year prior to the payment year, are:
12.18(1) for acquired natural resources land, $5.133 multiplied by the total number of acres
12.19of acquired natural resources land or, at the county's option three-fourths of one percent of
12.20the appraised value of all acquired natural resources land in the county, whichever is greater;
12.21(2) $5.133, multiplied by the total number of acres of transportation wetland or, at
12.22the county's option, three-fourths of one percent of the appraised value of all acquired
12.23natural resources land in the county, whichever is greater;
12.24(3) three-fourths of one percent of the appraised value of all wildlife management
12.25land in the county;
12.26(4) 50 percent of the dollar amount as determined under clause (1), multiplied by
12.27the number of acres of military refuge land in the county;
12.28$1.283 (5) $1.50, multiplied by the number of acres of county-administered other
12.29natural resources land in the county;
12.30(3) $1.283 (6) $5.133, multiplied by the total number of acres of land utilization
12.31project land in the county; and
12.32(4) 64.2 cents (7) $1.50, multiplied by the number of acres of
12.33commissioner-administered other natural resources land located in each the county as of
12.34July 1 of each year prior to the payment year.
13.1(b) The amount determined under paragraph (a), clause (1), is payable for land
13.2that is acquired from a private owner and owned by the Department of Transportation
13.3for the purpose of replacing wetland losses caused by transportation projects, but only
13.4if the county contains more than 500 acres of such land at the time the certification is
13.5made under subdivision 2.
13.6EFFECTIVE DATE.This section is effective for aids payable in calendar year
13.72013 and thereafter.

13.8    Sec. 22. Minnesota Statutes 2012, section 477A.12, subdivision 2, is amended to read:
13.9    Subd. 2. Procedure. Lands for which payments in lieu are made pursuant to
13.10section 97A.061, subdivision 3, and Laws 1973, chapter 567, shall not be eligible for
13.11payments under this section. Each county auditor shall certify to the Department of
13.12Natural Resources during July of each year prior to the payment year the number of acres
13.13of county-administered other natural resources land within the county. The Department of
13.14Natural resources may, in addition to the certification of acreage, require descriptive lists
13.15of land so certified. The commissioner of natural resources shall determine and certify to
13.16the commissioner of revenue by March 1 of the payment year:
13.17(1) the number of acres and most recent appraised value of acquired natural
13.18resources land, wildlife management land, and military refuge land within each county;
13.19(2) the number of acres of commissioner-administered natural resources land within
13.20each county;
13.21(3) the number of acres of county-administered other natural resources land within
13.22each county, based on the reports filed by each county auditor with the commissioner
13.23of natural resources; and
13.24(4) the number of acres of land utilization project land within each county.
13.25The commissioner of transportation shall determine and certify to the commissioner
13.26of revenue by March 1 of the payment year the number of acres of land transportation
13.27wetland and the appraised value of the land described in subdivision 1, paragraph (b), but
13.28only if it exceeds 500 acres in a county.
13.29The commissioner of revenue shall determine the distributions provided for in this
13.30section using the number of acres and appraised values certified by the commissioner of
13.31natural resources and the commissioner of transportation by March 1 of the payment year.
13.32EFFECTIVE DATE.This section is effective for aids payable in calendar year
13.332013 and thereafter.

14.1    Sec. 23. Minnesota Statutes 2012, section 477A.12, subdivision 3, is amended to read:
14.2    Subd. 3. Determination of appraised value. For the purposes of this section, the
14.3appraised value of acquired natural resources land is the purchase price for the first five
14.4years after acquisition until the next six-year appraisal required under this subdivision.
14.5The appraised value of acquired natural resources land received as a donation is the value
14.6determined for the commissioner of natural resources by a licensed appraiser, or the
14.7county assessor's estimated market value if no appraisal is done. The appraised value must
14.8be determined by the county assessor every five six years after the land is acquired. All
14.9reappraisals shall be done in the same year as county assessors are required to assess
14.10exempt land under section 273.18.
14.11EFFECTIVE DATE.This section is effective for aids payable in calendar year
14.122013 and thereafter.

14.13    Sec. 24. Minnesota Statutes 2012, section 477A.14, subdivision 1, is amended to read:
14.14    Subdivision 1. General distribution. Except as provided in subdivision 2 or in
14.15section 97A.061, subdivision 5 subdivisions 2 and 3, 40 percent of the total payment to
14.16the county shall be deposited in the county general revenue fund to be used to provide
14.17property tax levy reduction. The remainder shall be distributed by the county in the
14.18following priority:
14.19(a) 64.2 cents, for each acre of county-administered other natural resources land shall
14.20be deposited in a resource development fund to be created within the county treasury for
14.21use in resource development, forest management, game and fish habitat improvement, and
14.22recreational development and maintenance of county-administered other natural resources
14.23land. Any county receiving less than $5,000 annually for the resource development fund
14.24may elect to deposit that amount in the county general revenue fund;
14.25(b) from the funds remaining, within 30 days of receipt of the payment to the county,
14.26the county treasurer shall pay each organized township 51.3 cents ten percent of the
14.27amount received for each acre of acquired natural resources land and each acre of land
14.28described in section 477A.12, subdivision 1, paragraph (b) and transportation wetland, and
14.2912.8 cents, for each acre of other natural resources land and each acre of land utilization
14.30project land located within its boundaries. Payments for natural resources lands not
14.31located in an organized township shall be deposited in the county general revenue fund.
14.32Payments to counties and townships pursuant to this paragraph shall be used to provide
14.33property tax levy reduction, except that of the payments for natural resources lands not
14.34located in an organized township, the county may allocate the amount determined to be
14.35necessary for maintenance of roads in unorganized townships. Provided that, if the total
15.1payment to the county pursuant to section 477A.12 is not sufficient to fully fund the
15.2distribution provided for in this clause, the amount available shall be distributed to each
15.3township and the county general revenue fund on a pro rata basis; and
15.4(c) any remaining funds shall be deposited in the county general revenue fund.
15.5Provided that, if the distribution to the county general revenue fund exceeds $35,000, the
15.6excess shall be used to provide property tax levy reduction.
15.7EFFECTIVE DATE.This section is effective for aids payable in calendar year
15.82013 and thereafter.

15.9    Sec. 25. Minnesota Statutes 2012, section 477A.14, is amended by adding a
15.10subdivision to read:
15.11    Subd. 3. Distribution for wildlife management lands and military refuge lands.
15.12(a) The county treasurer shall allocate the payment for wildlife management land and
15.13military game refuge land among the county, towns, and school districts on the same basis
15.14as if the payments were taxes on the land received in the year. Payment of a town's or a
15.15school district's allocation must be made by the county treasurer to the town or school
15.16district within 30 days of receipt of the payment to the county. The county's share of the
15.17payment shall be deposited in the county general revenue fund.
15.18(b) The county treasurer of a county with a population over 39,000, but less than
15.1942,000, in the 1950 federal census shall allocate the payment only among the towns and
15.20school districts on the same basis as if the payments were taxes on the lands received
15.21in the current year.
15.22(c) If a town received a payment in calendar year 2006 or thereafter under this
15.23subdivision, and subsequently incorporated as a city, the city shall continue to receive any
15.24future year's allocations of wildlife land payments that would have been made to the town
15.25had it not incorporated, provided that the payments shall terminate if the governing body
15.26of the city passes an ordinance that prohibits hunting within the boundaries of the city.
15.27EFFECTIVE DATE.This section is effective for aids payable in calendar year
15.282013 and thereafter.

15.29    Sec. 26. Laws 2006, chapter 259, article 11, section 3, as amended by Laws 2008,
15.30chapter 154, article 1, section 4, is amended to read:
15.31    Sec. 3. MAHNOMEN COUNTY; COUNTY, CITY, SCHOOL DISTRICT,
15.32PROPERTY TAX REIMBURSEMENT.
16.1    Subdivision 1. Aid appropriation. $600,000 $1,200,000 is appropriated annually
16.2from the general fund to the commissioner of revenue to be used to make payments to
16.3compensate for the loss of property tax revenue related to the trust conversion application
16.4of the Shooting Star Casino. The commissioner shall pay the county of Mahnomen,
16.5$450,000 $900,000; the city of Mahnomen, $80,000 $160,000; and Independent School
16.6District No. 432, Mahnomen, $70,000 $140,000. The payments shall be made on July 20,
16.7of 2008 2013 and each subsequent year.
16.8EFFECTIVE DATE.This section is effective for aids payable in calendar year
16.92013 and thereafter.

16.10    Sec. 27. REPEALER.
16.11Minnesota Statutes 2012, sections 477A.011, subdivisions 2a, 19, 29, 31, 32, 33, 36,
16.1239, 40, 41, and 42; 477A.013, subdivisions 11 and 12; 477A.0133; and 477A.0134, are
16.13repealed.
16.14EFFECTIVE DATE.This section is effective for aids payable in calendar year
16.152014 and thereafter.

16.16ARTICLE 2
16.17PROPERTY TAX

16.18    Section 1. Minnesota Statutes 2012, section 103B.102, subdivision 3, is amended to
16.19read:
16.20    Subd. 3. Evaluation and report. The Board of Water and Soil Resources shall
16.21evaluate performance, financial, and activity information for each local water management
16.22entity. The board shall evaluate the entities' progress in accomplishing their adopted plans
16.23on a regular basis as determined by the board based on budget and operations of the local
16.24water management entity, but not less than once every five ten years. The board shall
16.25maintain a summary of local water management entity performance on the board's Web site.
16.26Beginning February 1, 2008, and annually thereafter, the board shall provide an analysis
16.27of local water management entity performance to the chairs of the house of representatives
16.28and senate committees having jurisdiction over environment and natural resources policy.

16.29    Sec. 2. Minnesota Statutes 2012, section 103B.335, is amended to read:
16.30103B.335 TAX LEVY AUTHORITY.
16.31    Subdivision 1. Local water planning and management. The governing body of
16.32any county, municipality, or township may levy a tax in an amount required to implement
17.1sections 103B.301 to 103B.355 or a comprehensive watershed management plan as
17.2defined in section 103B.3363.
17.3    Subd. 2. Priority programs; conservation and watershed districts. A county
17.4may levy amounts necessary to pay the reasonable increased costs to soil and water
17.5conservation districts and watershed districts of administering and implementing priority
17.6programs identified in an approved and adopted plan or a comprehensive watershed
17.7management plan as defined in section 103B.3363.

17.8    Sec. 3. Minnesota Statutes 2012, section 103B.3369, subdivision 5, is amended to read:
17.9    Subd. 5. Financial assistance. A base grant may be awarded to a county that
17.10provides a match utilizing a water implementation tax or other local source. A water
17.11implementation tax that a county intends to use as a match to the base grant must be
17.12levied at a rate sufficient to generate a minimum amount determined by the board.
17.13The board may award performance-based grants to local units of government that are
17.14responsible for implementing elements of applicable portions of watershed management
17.15plans, comprehensive plans, local water management plans, or comprehensive watershed
17.16management plans, developed or amended, adopted and approved, according to chapter
17.17103B, 103C, or 103D. Upon request by a local government unit, the board may also
17.18award performance-based grants to local units of government to carry out TMDL
17.19implementation plans as provided in chapter 114D, if the TMDL implementation plan has
17.20been incorporated into the local water management plan according to the procedures for
17.21approving comprehensive plans, watershed management plans, local water management
17.22plans, or comprehensive watershed management plans under chapter 103B, 103C, or
17.23103D, or if the TMDL implementation plan has undergone a public review process.
17.24Notwithstanding section 16A.41, the board may award performance-based grants on an
17.25advanced basis. The fee authorized in section 40A.152 may be used as a local match
17.26or as a supplement to state funding to accomplish implementation of comprehensive
17.27plans, watershed management plans, local water management plans, or comprehensive
17.28watershed management plans under chapter 103B, 103C, or 103D.

17.29    Sec. 4. Minnesota Statutes 2012, section 103C.501, subdivision 4, is amended to read:
17.30    Subd. 4. Cost-sharing funds. (a) The state board shall allocate at least 70 percent
17.31of cost-sharing funds to areas with high priority erosion, sedimentation, or water quality
17.32problems or water quantity problems due to altered hydrology. The areas must be selected
17.33based on the statewide priorities established by the state board.
18.1(b) The allocated funds must be used for conservation practices for high priority
18.2problems identified in the comprehensive and annual work plans of the districts, for
18.3the technical assistance portion of the grant funds to leverage federal or other nonstate
18.4funds, or to address high-priority needs identified in local water management plans or
18.5comprehensive watershed management plans.
18.6(b) The remaining cost-sharing funds may be allocated to districts as follows:
18.7(1) for technical and administrative assistance, not more than 20 percent of the
18.8funds; and
18.9(2) for conservation practices for lower priority erosion, sedimentation, or water
18.10quality problems.

18.11    Sec. 5. Minnesota Statutes 2012, section 103F.405, subdivision 1, is amended to read:
18.12    Subdivision 1. Authority. Each statutory or home rule charter city, town, or
18.13county that has planning and zoning authority under sections 366.10 to 366.19, 394.21
18.14to 394.37, or 462.351 to 462.365 is encouraged to adopt a soil loss ordinance. The soil
18.15loss ordinance must use the soil loss tolerance for each soil series described in the United
18.16States Soil Natural Resources Conservation Service Field Office Technical Guide, or
18.17another method approved by the Board of Water and Soil Resources, to determine the
18.18soil loss limits, but the soil loss limits must be attainable by the best practicable soil
18.19conservation practice. Ordinances adopted by local governments within the metropolitan
18.20area defined in section 473.121 must be consistent with local water management plans
18.21adopted under section 103B.235 a comprehensive plan, local water management plan, or
18.22watershed management plan developed or amended, adopted and approved, according
18.23to chapter 103B, 103C, or 103D.

18.24    Sec. 6. Minnesota Statutes 2012, section 168.012, subdivision 9, is amended to read:
18.25    Subd. 9. Manufactured homes and park trailers. Manufactured homes and park
18.26trailers shall not be taxed as motor vehicles using the public streets and highways and shall
18.27be exempt from the motor vehicle tax provisions of this chapter. Except as provided in
18.28section 273.125, manufactured homes and park trailers shall be taxed as personal property.
18.29The provisions of Minnesota Statutes 1957, section 272.02 or any other act providing for
18.30tax exemption shall be inapplicable to manufactured homes and park trailers, except
18.31such manufactured homes as are held by a licensed dealer or limited dealer, as defined
18.32in section 327B.04, and exempted as inventory under subdivision 9a. Travel trailers not
18.33conspicuously displaying current registration plates on the property tax assessment date
18.34shall be taxed as manufactured homes if occupied as human dwelling places.
19.1EFFECTIVE DATE.This section is effective for taxes payable in 2014 and
19.2thereafter.

19.3    Sec. 7. Minnesota Statutes 2012, section 168.012, is amended by adding a subdivision
19.4to read:
19.5    Subd. 9a. Manufactured home as dealer inventory. Manufactured homes as
19.6defined in section 327.31, subdivision 6, shall be considered as dealer inventory, on the
19.7January 2 assessment date, if the home is:
19.8(1) listed as inventory and held by a licensed or limited dealer;
19.9(2) unoccupied and not available for rent;
19.10(3) may or may not be permanently connected to utilities when located in a
19.11manufactured park; and
19.12(4) may or may not be temporarily connected to utilities when located at a dealer's
19.13sales center.
19.14The exemption under this subdivision is allowable for up to five assessment years after
19.15the date a home is initially claimed as dealer inventory.
19.16EFFECTIVE DATE.This section is effective for taxes payable in 2014 and
19.17thereafter.

19.18    Sec. 8. [270C.9901] ASSESSOR ACCREDITATION.
19.19Every individual that appraises or physically inspects real property for the purpose of
19.20determining its valuation or classification for property tax purposes must obtain licensure
19.21as an accredited assessor from the Minnesota State Board of Assessors by July 1, 2017, or
19.22by the time the individual is licensed as a certified assessor, whichever is later.
19.23EFFECTIVE DATE.This section is effective beginning January 1, 2014.

19.24    Sec. 9. Minnesota Statutes 2012, section 272.02, subdivision 10, is amended to read:
19.25    Subd. 10. Personal property used for pollution control. Personal property that is
19.26used primarily for the abatement and control of air, water, or land pollution, including
19.27property not otherwise required to be installed or required by a permit issued by the
19.28Minnesota Pollution Control Agency, is exempt to the extent that it is so used, and real
19.29property is exempt if it is used primarily for abatement and control of air, water, or land
19.30pollution as part of an agricultural operation, as a part of a centralized treatment and
19.31recovery facility operating under a permit issued by the Minnesota Pollution Control
19.32Agency pursuant to chapters 115 and 116 and Minnesota Rules, parts 7001.0500 to
20.17001.0730, and 7045.0020 to 7045.1260, as a wastewater treatment facility and for
20.2the treatment, recovery, and stabilization of metals, oils, chemicals, water, sludges, or
20.3inorganic materials from hazardous industrial wastes, or as part of an electric generation
20.4system. For purposes of this subdivision, personal property includes ponderous machinery
20.5and equipment used in a business or production activity that at common law is considered
20.6real property.
20.7Any taxpayer requesting exemption of all or a portion of any real property or any
20.8equipment or device, or part thereof, operated primarily for the control or abatement of
20.9air, water, or land pollution shall file an application with the commissioner of revenue.
20.10The Minnesota Pollution Control Agency shall upon request of the commissioner furnish
20.11information and advice to the commissioner.
20.12The information and advice furnished by the Minnesota Pollution Control Agency
20.13must include statements as to whether the equipment, device, or real property meets
20.14a standard, rule, criteria, guideline, policy, or order of the Minnesota Pollution Control
20.15Agency, and whether the equipment, device, or real property is installed or operated
20.16in accordance with it. On determining that property qualifies for exemption, the
20.17commissioner shall issue an order exempting the property from taxation. The equipment,
20.18device, or real property shall continue to be exempt from taxation as long as the order
20.19issued by the commissioner remains in effect.

20.20    Sec. 10. Minnesota Statutes 2012, section 272.02, is amended by adding a subdivision
20.21to read:
20.22    Subd. 98. Certain property owned by an Indian tribe. (a) Property is exempt that:
20.23(1) was classified as 3a under section 273.13, subdivision 24, for taxes payable
20.24in 2013;
20.25(2) is located in a city of the first class with a population greater than 300,000 as of
20.26the 2010 federal census;
20.27(3) was, on January 2, 2012, and for the current assessment, is owned by a federally
20.28recognized Indian tribe, or its instrumentality, that is located within the state of Minnesota;
20.29and
20.30(4) is used exclusively for tribal purposes or institutions of purely public charity as
20.31defined in subdivision 7.
20.32(b) For purposes of this subdivision, a "tribal purpose" means a public purpose
20.33as defined in subdivision 8 and includes noncommercial tribal government activities.
20.34Property that qualifies for the exemption under this subdivision is limited to no more than
20.35two contiguous parcels and structures that do not exceed in the aggregate 20,000 square
21.1feet. Property acquired for single-family housing, market-rate apartments, agricultural, or
21.2forestry does not qualify for this exemption. The exemption created by this subdivision
21.3expires with taxes payable in 2024.
21.4EFFECTIVE DATE.This section is effective beginning with taxes payable in 2014.

21.5    Sec. 11. Minnesota Statutes 2012, section 272.02, is amended by adding a subdivision
21.6to read:
21.7    Subd. 99. Electric generation facility; personal property. (a) Notwithstanding
21.8subdivision 9, clause (a), and section 453.54, subdivision 20, attached machinery and
21.9other personal property which is part of an electric generation facility that exceeds five
21.10megawatts of installed capacity and meets the requirements of this subdivision is exempt.
21.11At the time of construction, the facility must be:
21.12    (1) designed to utilize natural gas as a primary fuel;
21.13    (2) owned and operated by a municipal power agency as defined in section 453.52,
21.14subdivision 8;
21.15    (3) designed to utilize reciprocating engines paired with generators to produce
21.16electrical power;
21.17    (4) located within the service territory of a municipal power agency's electrical
21.18municipal utility that serves load exclusively in a metropolitan county as defined in
21.19section 473.121, subdivision 4; and
21.20(5) designed to connect directly with a municipality's substation.
21.21    (b) Construction of the facility must be commenced after June 1, 2013, and before
21.22June 1, 2017. Property eligible for this exemption does not include electric transmission
21.23lines and interconnections or gas pipelines and interconnections appurtenant to the
21.24property or the facility.
21.25EFFECTIVE DATE.This section is effective for assessment year 2013, taxes
21.26payable in 2014, and thereafter.

21.27    Sec. 12. Minnesota Statutes 2012, section 272.025, subdivision 1, is amended to read:
21.28    Subdivision 1. Statement of exemption. (a) Except in the case of property owned
21.29by the state of Minnesota or any political subdivision thereof, and property exempt from
21.30taxation under section 272.02, subdivisions 9, 10, 13, 15, 18, 20, and 22 to 25, and at
21.31the times provided in subdivision 3, a taxpayer claiming an exemption from taxation
21.32on property described in section 272.02, subdivisions 1 to 33, must file a statement of
21.33exemption with the assessor of the assessment district in which the property is located.
22.1(b) A taxpayer claiming an exemption from taxation on property described in section
22.2272.02, subdivision 10 , must file a statement of exemption with the commissioner of
22.3revenue, and with the assessor of the assessment district in which the property is located,
22.4 on or before February 15 of each year for which the taxpayer claims an exemption.
22.5(c) In case of sickness, absence or other disability or for good cause, the assessor
22.6or the commissioner may extend the time for filing the statement of exemption for a
22.7period not to exceed 60 days.
22.8(d) The commissioner of revenue shall prescribe the form and contents of the
22.9statement of exemption.

22.10    Sec. 13. Minnesota Statutes 2012, section 273.11, is amended by adding a subdivision
22.11to read:
22.12    Subd. 24. Valuation limit for class 4d property. Notwithstanding the provisions of
22.13subdivision 1, the taxable value of any property classified as class 4d under section 273.13,
22.14subdivision 25, is limited as provided under this section. For assessment year 2013, the
22.15value may not exceed $100,000 times the number of dwelling units. For subsequent years,
22.16the limit is adjusted each year by the average statewide change in estimated market value
22.17of property classified as class 4a and 4d under section 273.13, subdivision 25, for the
22.18previous assessment year, excluding valuation change due to new construction, rounded to
22.19the nearest $1,000. Beginning with assessment year 2014, the commissioner of revenue
22.20must certify the limit for each assessment year by November 1 of the previous year.
22.21EFFECTIVE DATE.This section is effective beginning with assessment year 2013.

22.22    Sec. 14. Minnesota Statutes 2012, section 273.117, is amended to read:
22.23273.117 CONSERVATION PROPERTY TAX VALUATION.
22.24    The value of real property which is subject to a conservation restriction or easement
22.25may be adjusted shall not be reduced by the assessor if:
22.26    (a) the restriction or easement is for a conservation purpose as defined in section
22.2784.64, subdivision 2 , and is recorded on the property; and
22.28    (b) the property is being used in accordance with the terms of the conservation
22.29restriction or easement.
22.30This section does not apply to conservation restrictions or easements covering riparian
22.31buffers along lakes, rivers, and streams that are used for water quantity or quality control.
22.32EFFECTIVE DATE.This section is effective for assessment year 2013 and
22.33thereafter, and for taxes payable in 2014 and thereafter.

23.1    Sec. 15. Minnesota Statutes 2012, section 273.124, subdivision 14, is amended to read:
23.2    Subd. 14. Agricultural homesteads; special provisions. (a) Real estate of less than
23.3ten acres that is the homestead of its owner must be classified as class 2a under section
23.4273.13, subdivision 23 , paragraph (a), if:
23.5    (1) the parcel on which the house is located is contiguous on at least two sides to (i)
23.6agricultural land, (ii) land owned or administered by the United States Fish and Wildlife
23.7Service, or (iii) land administered by the Department of Natural Resources on which in
23.8lieu taxes are paid under sections 477A.11 to 477A.14;
23.9    (2) its owner also owns a noncontiguous parcel of agricultural land that is at least
23.1020 acres;
23.11    (3) the noncontiguous land is located not farther than four townships or cities, or a
23.12combination of townships or cities from the homestead; and
23.13    (4) the agricultural use value of the noncontiguous land and farm buildings is equal
23.14to at least 50 percent of the market value of the house, garage, and one acre of land.
23.15    Homesteads initially classified as class 2a under the provisions of this paragraph shall
23.16remain classified as class 2a, irrespective of subsequent changes in the use of adjoining
23.17properties, as long as the homestead remains under the same ownership, the owner owns a
23.18noncontiguous parcel of agricultural land that is at least 20 acres, and the agricultural use
23.19value qualifies under clause (4). Homestead classification under this paragraph is limited
23.20to property that qualified under this paragraph for the 1998 assessment.
23.21    (b)(i) Agricultural property shall be classified as the owner's homestead, to the same
23.22extent as other agricultural homestead property, if all of the following criteria are met:
23.23    (1) the agricultural property consists of at least 40 acres including undivided
23.24government lots and correctional 40's;
23.25    (2) the owner, the owner's spouse, or a grandchild, child, sibling, or parent of the
23.26owner or of the owner's spouse, is actively farming the agricultural property, either on the
23.27person's own behalf as an individual or on behalf of a partnership operating a family farm,
23.28family farm corporation, joint family farm venture, or limited liability company of which
23.29the person is a partner, shareholder, or member;
23.30    (3) both the owner of the agricultural property and the person who is actively
23.31farming the agricultural property under clause (2), are Minnesota residents;
23.32    (4) neither the owner nor the spouse of the owner claims another agricultural
23.33homestead in Minnesota; and
23.34    (5) neither the owner nor the person actively farming the agricultural property lives
23.35farther than four townships or cities, or a combination of four townships or cities, from the
23.36agricultural property, except that if the owner or the owner's spouse is required to live in
24.1employer-provided housing, the owner or owner's spouse, whichever is actively farming
24.2the agricultural property, may live more than four townships or cities, or combination of
24.3four townships or cities from the agricultural property.
24.4    The relationship under this paragraph may be either by blood or marriage.
24.5    (ii) Agricultural property held by a trustee under a trust is eligible for agricultural
24.6homestead classification under this paragraph if the qualifications in clause (i) are met,
24.7except that "owner" means the grantor of the trust.
24.8    (iii) Property containing the residence of an owner who owns qualified property
24.9under clause (i) shall be classified as part of the owner's agricultural homestead, if that
24.10property is also used for noncommercial storage or drying of agricultural crops.
24.11(iv) As used in this paragraph, "agricultural property" means class 2a property and
24.12any class 2b property that is contiguous to and under the same ownership as the class 2a
24.13property.
24.14    (c) (b) Noncontiguous land shall be included as part of a homestead under section
24.15273.13, subdivision 23 , paragraph (a), only if the homestead is classified as class 2a
24.16and the detached land is located in the same township or city, or not farther than four
24.17townships or cities or combination thereof from the homestead. Any taxpayer of these
24.18noncontiguous lands must notify the county assessor that the noncontiguous land is part of
24.19the taxpayer's homestead, and, if the homestead is located in another county, the taxpayer
24.20must also notify the assessor of the other county.
24.21    (d) (c) Agricultural land used for purposes of a homestead and actively farmed by a
24.22person holding a vested remainder interest in it must be classified as a homestead under
24.23section 273.13, subdivision 23, paragraph (a). If agricultural land is classified class 2a,
24.24any other dwellings on the land used for purposes of a homestead by persons holding
24.25vested remainder interests who are actively engaged in farming the property, and up to
24.26one acre of the land surrounding each homestead and reasonably necessary for the use of
24.27the dwelling as a home, must also be assessed class 2a.
24.28    (e) (d) Agricultural land and buildings that were class 2a homestead property under
24.29section 273.13, subdivision 23, paragraph (a), for the 1997 assessment shall remain
24.30classified as agricultural homesteads for subsequent assessments if:
24.31    (1) the property owner abandoned the homestead dwelling located on the agricultural
24.32homestead as a result of the April 1997 floods;
24.33    (2) the property is located in the county of Polk, Clay, Kittson, Marshall, Norman,
24.34or Wilkin;
25.1    (3) the agricultural land and buildings remain under the same ownership for the
25.2current assessment year as existed for the 1997 assessment year and continue to be used
25.3for agricultural purposes;
25.4    (4) the dwelling occupied by the owner is located in Minnesota and is within 30
25.5miles of one of the parcels of agricultural land that is owned by the taxpayer; and
25.6    (5) the owner notifies the county assessor that the relocation was due to the 1997
25.7floods, and the owner furnishes the assessor any information deemed necessary by the
25.8assessor in verifying the change in dwelling. Further notifications to the assessor are not
25.9required if the property continues to meet all the requirements in this paragraph and any
25.10dwellings on the agricultural land remain uninhabited.
25.11    (f) Agricultural land and buildings that were class 2a homestead property under
25.12section 273.13, subdivision 23, paragraph (a), for the 1998 assessment shall remain
25.13classified agricultural homesteads for subsequent assessments if:
25.14    (1) the property owner abandoned the homestead dwelling located on the agricultural
25.15homestead as a result of damage caused by a March 29, 1998, tornado;
25.16    (2) the property is located in the county of Blue Earth, Brown, Cottonwood,
25.17LeSueur, Nicollet, Nobles, or Rice;
25.18    (3) the agricultural land and buildings remain under the same ownership for the
25.19current assessment year as existed for the 1998 assessment year;
25.20    (4) the dwelling occupied by the owner is located in this state and is within 50 miles
25.21of one of the parcels of agricultural land that is owned by the taxpayer; and
25.22    (5) the owner notifies the county assessor that the relocation was due to a March 29,
25.231998, tornado, and the owner furnishes the assessor any information deemed necessary by
25.24the assessor in verifying the change in homestead dwelling. For taxes payable in 1999, the
25.25owner must notify the assessor by December 1, 1998. Further notifications to the assessor
25.26are not required if the property continues to meet all the requirements in this paragraph
25.27and any dwellings on the agricultural land remain uninhabited.
25.28    (g) Agricultural property of a family farm corporation, joint family farm venture,
25.29family farm limited liability company, or partnership operating a family farm as described
25.30under subdivision 8 shall be classified homestead, to the same extent as other agricultural
25.31homestead property, if all of the following criteria are met:
25.32    (1) the property consists of at least 40 acres including undivided government lots
25.33and correctional 40's;
25.34    (2) a shareholder, member, or partner of that entity is actively farming the
25.35agricultural property;
26.1    (3) that shareholder, member, or partner who is actively farming the agricultural
26.2property is a Minnesota resident;
26.3    (4) neither that shareholder, member, or partner, nor the spouse of that shareholder,
26.4member, or partner claims another agricultural homestead in Minnesota; and
26.5    (5) that shareholder, member, or partner does not live farther than four townships or
26.6cities, or a combination of four townships or cities, from the agricultural property.
26.7    Homestead treatment applies under this paragraph for property leased to a family
26.8farm corporation, joint farm venture, limited liability company, or partnership operating a
26.9family farm if legal title to the property is in the name of an individual who is a member,
26.10shareholder, or partner in the entity.
26.11    (h) (e) To be eligible for the special agricultural homestead under this subdivision,
26.12an initial full application must be submitted to the county assessor where the property is
26.13located. Owners and the persons who are actively farming the property shall be required
26.14to complete only a one-page abbreviated version of the application in each subsequent
26.15year provided that none of the following items have changed since the initial application:
26.16    (1) the day-to-day operation, administration, and financial risks remain the same;
26.17    (2) the owners and the persons actively farming the property continue to live within
26.18the four townships or city criteria and are Minnesota residents;
26.19    (3) the same operator of the agricultural property is listed with the Farm Service
26.20Agency;
26.21    (4) a Schedule F or equivalent income tax form was filed for the most recent year;
26.22    (5) the property's acreage is unchanged; and
26.23    (6) none of the property's acres have been enrolled in a federal or state farm program
26.24since the initial application.
26.25    The owners and any persons who are actively farming the property must include
26.26the appropriate Social Security numbers, and sign and date the application. If any of the
26.27specified information has changed since the full application was filed, the owner must
26.28notify the assessor, and must complete a new application to determine if the property
26.29continues to qualify for the special agricultural homestead. The commissioner of revenue
26.30shall prepare a standard reapplication form for use by the assessors.
26.31    (i) (f) Agricultural land and buildings that were class 2a homestead property under
26.32section 273.13, subdivision 23, paragraph (a), for the 2007 assessment shall remain
26.33classified agricultural homesteads for subsequent assessments if:
26.34    (1) the property owner abandoned the homestead dwelling located on the agricultural
26.35homestead as a result of damage caused by the August 2007 floods;
27.1    (2) the property is located in the county of Dodge, Fillmore, Houston, Olmsted,
27.2Steele, Wabasha, or Winona;
27.3    (3) the agricultural land and buildings remain under the same ownership for the
27.4current assessment year as existed for the 2007 assessment year;
27.5    (4) the dwelling occupied by the owner is located in this state and is within 50 miles
27.6of one of the parcels of agricultural land that is owned by the taxpayer; and
27.7    (5) the owner notifies the county assessor that the relocation was due to the August
27.82007 floods, and the owner furnishes the assessor any information deemed necessary by
27.9the assessor in verifying the change in homestead dwelling. For taxes payable in 2009, the
27.10owner must notify the assessor by December 1, 2008. Further notifications to the assessor
27.11are not required if the property continues to meet all the requirements in this paragraph
27.12and any dwellings on the agricultural land remain uninhabited.
27.13    (j) Agricultural land and buildings that were class 2a homestead property under
27.14section 273.13, subdivision 23, paragraph (a), for the 2008 assessment shall remain
27.15classified as agricultural homesteads for subsequent assessments if:
27.16    (1) the property owner abandoned the homestead dwelling located on the agricultural
27.17homestead as a result of the March 2009 floods;
27.18    (2) the property is located in the county of Marshall;
27.19    (3) the agricultural land and buildings remain under the same ownership for the
27.20current assessment year as existed for the 2008 assessment year and continue to be used
27.21for agricultural purposes;
27.22    (4) the dwelling occupied by the owner is located in Minnesota and is within 50
27.23miles of one of the parcels of agricultural land that is owned by the taxpayer; and
27.24    (5) the owner notifies the county assessor that the relocation was due to the 2009
27.25floods, and the owner furnishes the assessor any information deemed necessary by the
27.26assessor in verifying the change in dwelling. Further notifications to the assessor are not
27.27required if the property continues to meet all the requirements in this paragraph and any
27.28dwellings on the agricultural land remain uninhabited.
27.29EFFECTIVE DATE.This section is effective for taxes payable in 2015 and
27.30thereafter.

27.31    Sec. 16. Minnesota Statutes 2012, section 273.124, subdivision 21, is amended to read:
27.32    Subd. 21. Trust property; homestead. Real or personal property held by a trustee
27.33under a trust is eligible for classification as homestead property if the property satisfies the
27.34requirements of paragraph (a), (b), (c), or (d).
28.1    (a) The grantor or surviving spouse of the grantor of the trust occupies and uses the
28.2property as a homestead.
28.3    (b) A relative or surviving relative of the grantor who meets the requirements
28.4of subdivision 1, paragraph (c), in the case of residential real estate; or subdivision 1,
28.5paragraph (d), in the case of agricultural property, occupies and uses the property as
28.6a homestead.
28.7    (c) A family farm corporation, joint farm venture, limited liability company, or
28.8partnership operating a family farm in which the grantor or the grantor's surviving spouse
28.9is a shareholder, member, or partner rents the property; and, either (1) a shareholder,
28.10member, or partner of the corporation, joint farm venture, limited liability company, or
28.11partnership occupies and uses the property as a homestead; or (2) the property is at least
28.1240 acres, including undivided government lots and correctional 40's, and a shareholder,
28.13member, or partner of the tenant-entity is actively farming the property on behalf of the
28.14corporation, joint farm venture, limited liability company, or partnership.
28.15    (d) A person who has received homestead classification for property taxes payable in
28.162000 on the basis of an unqualified legal right under the terms of the trust agreement to
28.17occupy the property as that person's homestead and who continues to use the property as
28.18a homestead; or, a person who received the homestead classification for taxes payable
28.19in 2005 under paragraph (c) who does not qualify under paragraph (c) for taxes payable
28.20in 2006 or thereafter but who continues to qualify under paragraph (c) as it existed for
28.21taxes payable in 2005.
28.22    For purposes of this subdivision, "grantor" is defined as the person creating or
28.23establishing a testamentary, inter Vivos, revocable or irrevocable trust by written
28.24instrument or through the exercise of a power of appointment.
28.25EFFECTIVE DATE.This section is effective for taxes payable in 2015 and
28.26thereafter.

28.27    Sec. 17. Minnesota Statutes 2012, section 273.1398, subdivision 4, is amended to read:
28.28    Subd. 4. Disparity reduction credit. (a) Beginning with taxes payable in 1989,
28.29class 4a and class 3a property qualifies for a disparity reduction credit if: (1) the property
28.30is located in a border city that has an enterprise zone, as defined in section 469.166; (2)
28.31the property is located in a city with a population greater than 2,500 and less than 35,000
28.32according to the 1980 decennial census; (3) the city is adjacent to a city in another state or
28.33immediately adjacent to a city adjacent to a city in another state; and (4) the adjacent city
28.34in the other state has a population of greater than 5,000 and less than 75,000 according to
28.35the 1980 decennial census.
29.1    (b) The credit is an amount sufficient to reduce (i) the taxes levied on class 4a
29.2property to 2.3 1.9 percent of the property's market value and (ii) the tax on class 3a
29.3property to 2.3 1.9 percent of market value.
29.4    (c) The county auditor shall annually certify the costs of the credits to the
29.5Department of Revenue. The department shall reimburse local governments for the
29.6property taxes forgone as the result of the credits in proportion to their total levies.
29.7EFFECTIVE DATE.This section is effective beginning with taxes payable in 2014.

29.8    Sec. 18. Minnesota Statutes 2012, section 275.025, subdivision 1, is amended to read:
29.9    Subdivision 1. Levy amount. The state general levy is levied against
29.10commercial-industrial property and seasonal residential recreational property, as defined
29.11in this section. The state general levy base amount is $592,000,000 for taxes payable in
29.122002. For taxes payable in subsequent years on seasonal residential recreational property,
29.13the levy base amount is increased each year by multiplying the levy base amount for that
29.14class of property for the prior year by the sum of one plus the rate of increase, if any, in the
29.15implicit price deflator for government consumption expenditures and gross investment for
29.16state and local governments prepared by the Bureau of Economic Analysts of the United
29.17States Department of Commerce for the 12-month period ending March 31 of the year
29.18prior to the year the taxes are payable. For taxes payable in 2014 and subsequent years
29.19on commercial-industrial property, the tax is imposed under this subdivision at the rate
29.20of the tax imposed under this subdivision for taxes payable in 2002. The tax under this
29.21section is not treated as a local tax rate under section 469.177 and is not the levy of a
29.22governmental unit under chapters 276A and 473F.
29.23The commissioner shall increase or decrease the preliminary or final rate for a year
29.24as necessary to account for errors and tax base changes that affected a preliminary or final
29.25rate for either of the two preceding years. Adjustments are allowed to the extent that the
29.26necessary information is available to the commissioner at the time the rates for a year must
29.27be certified, and for the following reasons:
29.28(1) an erroneous report of taxable value by a local official;
29.29(2) an erroneous calculation by the commissioner; and
29.30(3) an increase or decrease in taxable value for commercial-industrial or seasonal
29.31residential recreational property reported on the abstracts of tax lists submitted under
29.32section 275.29 that was not reported on the abstracts of assessment submitted under
29.33section 270C.89 for the same year.
29.34The commissioner may, but need not, make adjustments if the total difference in the tax
29.35levied for the year would be less than $100,000.
30.1EFFECTIVE DATE.This section is effective for taxes payable in 2014 and
30.2thereafter.

30.3    Sec. 19. Minnesota Statutes 2012, section 275.025, subdivision 2, is amended to read:
30.4    Subd. 2. Commercial-industrial tax capacity. For the purposes of this section,
30.5"commercial-industrial tax capacity" means the tax capacity of all taxable property
30.6classified as class 3 or class 5(1) under section 273.13, except for electric generation
30.7attached machinery under class 3 and property described in section 473.625. County
30.8commercial-industrial tax capacity amounts are not adjusted for the captured net tax
30.9capacity of a tax increment financing district under section 469.177, subdivision 2, the
30.10net tax capacity of transmission lines deducted from a local government's total net tax
30.11capacity under section 273.425, or fiscal disparities contribution and distribution net
30.12tax capacities under chapter 276A or 473F.
30.13EFFECTIVE DATE.This section is effective for taxes payable in 2014 and
30.14thereafter.

30.15    Sec. 20. Minnesota Statutes 2012, section 279.37, subdivision 1a, is amended to read:
30.16    Subd. 1a. Class 3a property. (a) The delinquent taxes upon a parcel of property
30.17which was classified class 3a, for the previous year's assessment and had a total market
30.18value of $500,000 or less for that same assessment shall be eligible to be composed into a
30.19confession of judgment with the approval of the county auditor. Property qualifying under
30.20this subdivision shall be subject to the same provisions as provided in this section except
30.21as provided in paragraphs (b) to (d) (f).
30.22    (b) Current year taxes and penalty due at the time the confession of judgment
30.23is entered must be paid.
30.24    (c) The down payment must include all special assessments due in the current tax
30.25year, all delinquent special assessments, and 20 percent of the ad valorem tax, penalties,
30.26and interest accrued against the parcel. The balance remaining is payable in four equal
30.27annual installments. A municipality as defined in section 429.011, cities of the first class,
30.28and other special assessment authorities, who have certified special assessments against
30.29any parcel of property, may, through resolution, waive the requirement of payment of all
30.30current and delinquent special assessments at the time the confession is entered. If the
30.31municipality, city, or authority grants the waiver, 100 percent of all current year taxes,
30.32special assessments, and penalties due at the time, along with 20 percent of all delinquent
30.33taxes, special assessments, penalties, interest, and fees must be paid. The balance
30.34remaining shall be subject to and included in the installment plan.
31.1(d) When there are current and delinquent special assessments certified and billed
31.2against a parcel, the assessment authority or municipality as defined in section 429.011
31.3may abate under section 375.192, subdivision 2, all special assessments and the penalty
31.4and interest affiliated with the special assessments, and reassess the special assessments,
31.5penalties, and interest accrued thereon, under section 429.071, subdivision 2. The
31.6municipality shall notify the county auditor of its intent to reassess as a precondition
31.7to the entry of the confession of judgment. Upon the notice to abate and reassess, the
31.8municipality shall, through resolution, notify the county auditor to remove all current
31.9and delinquent special assessments and the accrued penalty and interest on the special
31.10assessments, and the payment of all or a portion of the current and delinquent assessments
31.11shall not be required as part of the down payment due at the time the confession of
31.12judgment is entered in accordance with paragraph (c).
31.13    (d) (e) The amounts entered in judgment bear interest at the rate provided in section
31.14279.03, subdivision 1a , commencing with the date the judgment is entered. The interest
31.15rate is subject to change each year on the unpaid balance in the manner provided in section
31.16279.03, subdivision 1a .
31.17(f) The county auditor may require conditions on properties including, but not
31.18limited to, environmental remediation action plan requirements, restrictions, or covenants,
31.19when considering a request for approval of eligibility for composition into a confession of
31.20judgment for delinquent taxes upon a parcel of property which was classified class 3a, for
31.21the previous year's assessment.

31.22    Sec. 21. Minnesota Statutes 2012, section 279.37, subdivision 2, is amended to read:
31.23    Subd. 2. Installment payments. The owner of any such parcel, or any person to
31.24whom the right to pay taxes has been given by statute, mortgage, or other agreement, may
31.25make and file with the county auditor of the county in which the parcel is located a written
31.26offer to pay the current taxes each year before they become delinquent, or to contest the
31.27taxes under Minnesota Statutes 1941, sections 278.01 to 278.13, and agree to confess
31.28judgment for the amount provided, as determined by the county auditor. By filing the
31.29offer, the owner waives all irregularities in connection with the tax proceedings affecting
31.30the parcel and any defense or objection which the owner may have to the proceedings, and
31.31also waives the requirements of any notice of default in the payment of any installment or
31.32interest to become due pursuant to the composite judgment to be so entered. Unless the
31.33property is subject to subdivision 1a, with the offer, the owner shall (i) tender one-tenth of
31.34the amount of the delinquent taxes, costs, penalty, and interest, and shall (ii) tender all
31.35current year taxes and penalty due at the time the confession of judgment is entered. In the
32.1offer, the owner shall agree to pay the balance in nine equal installments, with interest as
32.2provided in section 279.03, payable annually on installments remaining unpaid from time
32.3to time, on or before December 31 of each year following the year in which judgment
32.4was confessed. The offer must be substantially as follows:
32.5"To the court administrator of the district court of ........... county, I, .....................,
32.6am the owner of the following described parcel of real estate located in ....................
32.7county, Minnesota:
32.8.............................. Upon that real estate there are delinquent taxes for the year ........., and
32.9prior years, as follows: (here insert year of delinquency and the total amount of delinquent
32.10taxes, costs, interest, and penalty). By signing this document I offer to confess judgment in
32.11the sum of $...... and waive all irregularities in the tax proceedings affecting these taxes and
32.12any defense or objection which I may have to them, and direct judgment to be entered for
32.13the amount stated above, minus the sum of $............, to be paid with this document, which
32.14is one-tenth or one-fifth of the amount of the taxes, costs, penalty, and interest stated above.
32.15I agree to pay the balance of the judgment in nine or four equal, annual installments, with
32.16interest as provided in section 279.03, payable annually, on the installments remaining
32.17unpaid. I agree to pay the installments and interest on or before December 31 of each year
32.18following the year in which this judgment is confessed and current taxes each year before
32.19they become delinquent, or within 30 days after the entry of final judgment in proceedings
32.20to contest the taxes under Minnesota Statutes, sections 278.01 to 278.13.
32.21Dated .............., ......."

32.22    Sec. 22. Minnesota Statutes 2012, section 281.14, is amended to read:
32.23281.14 EXPIRATION OF TIME FOR REDEMPTION.
32.24The time for redemption from any tax sale, whether made to the state or to a private
32.25person, shall not expire until notice of expiration of redemption, as provided in section
32.26281.13 281.17, shall have been given.

32.27    Sec. 23. Minnesota Statutes 2012, section 281.17, is amended to read:
32.28281.17 PERIOD FOR REDEMPTION.
32.29Except for properties for which the period of redemption has been limited under
32.30sections 281.173 and 281.174, the following periods for redemption apply.
32.31The period of redemption for all lands sold to the state at a tax judgment sale shall
32.32be three years from the date of sale to the state of Minnesota if the land is within an
32.33incorporated area unless it is: (a) nonagricultural homesteaded land as defined in section
32.34273.13, subdivision 22; (b) homesteaded agricultural land as defined in section 273.13,
33.1subdivision 23 , paragraph (a); or (c) seasonal residential recreational land as defined in
33.2section 273.13, subdivision 22, paragraph (c), or 25, paragraph (d), clause (1), for which
33.3the period of redemption is five years from the date of sale to the state of Minnesota.
33.4The period of redemption for homesteaded lands as defined in section 273.13,
33.5subdivision 22 , located in a targeted neighborhood as defined in Laws 1987, chapter 386,
33.6article 6, section 4, and sold to the state at a tax judgment sale is three years from the date
33.7of sale. The period of redemption for all lands located in a targeted neighborhood as
33.8defined in Laws 1987, chapter 386, article 6, section 4, except (1) homesteaded lands as
33.9defined in section 273.13, subdivision 22, and (2) for periods of redemption beginning
33.10after June 30, 1991, but before July 1, 1996, lands located in the Loring Park targeted
33.11neighborhood on which a notice of lis pendens has been served, and sold to the state at a
33.12tax judgment sale is one year from the date of sale.
33.13The period of redemption for all real property constituting a mixed municipal solid
33.14waste disposal facility that is a qualified facility under section 115B.39, subdivision 1, is
33.15one year from the date of the sale to the state of Minnesota.
33.16The period of redemption for all other lands sold to the state at a tax judgment
33.17sale shall be five years from the date of sale, except that the period of redemption for
33.18nonhomesteaded agricultural land as defined in section 273.13, subdivision 23, paragraph
33.19(b), shall be two years from the date of sale if at that time that property is owned by a
33.20person who owns one or more parcels of property on which taxes are delinquent, and the
33.21delinquent taxes are more than 25 percent of the prior year's school district levy.

33.22    Sec. 24. Minnesota Statutes 2012, section 290A.03, subdivision 3, is amended to read:
33.23    Subd. 3. Income. (1) "Income" means the sum of the following:
33.24(a) federal adjusted gross income as defined in the Internal Revenue Code; and
33.25(b) the sum of the following amounts to the extent not included in clause (a):
33.26(i) all nontaxable income;
33.27(ii) the amount of a passive activity loss that is not disallowed as a result of section
33.28469, paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity
33.29loss carryover allowed under section 469(b) of the Internal Revenue Code;
33.30(iii) an amount equal to the total of any discharge of qualified farm indebtedness
33.31of a solvent individual excluded from gross income under section 108(g) of the Internal
33.32Revenue Code;
33.33(iv) cash public assistance and relief;
33.34(v) any pension or annuity (including railroad retirement benefits, all payments
33.35received under the federal Social Security Act, Supplemental Security Income, and
34.1veterans benefits), which was not exclusively funded by the claimant or spouse, or which
34.2was funded exclusively by the claimant or spouse and which funding payments were
34.3excluded from federal adjusted gross income in the years when the payments were made;
34.4(vi) interest received from the federal or a state government or any instrumentality
34.5or political subdivision thereof;
34.6(vii) workers' compensation;
34.7(viii) nontaxable strike benefits;
34.8(ix) the gross amounts of payments received in the nature of disability income or
34.9sick pay as a result of accident, sickness, or other disability, whether funded through
34.10insurance or otherwise;
34.11(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of
34.121986, as amended through December 31, 1995;
34.13(xi) contributions made by the claimant to an individual retirement account,
34.14including a qualified voluntary employee contribution; simplified employee pension plan;
34.15self-employed retirement plan; cash or deferred arrangement plan under section 401(k)
34.16of the Internal Revenue Code; or deferred compensation plan under section 457 of the
34.17Internal Revenue Code;
34.18(xii) nontaxable scholarship or fellowship grants;
34.19(xiii) the amount of deduction allowed under section 199 of the Internal Revenue
34.20Code;
34.21(xiv) the amount of deduction allowed under section 220 or 223 of the Internal
34.22Revenue Code;
34.23(xv) the amount of tuition expenses required to be added to income under section
34.24290.01, subdivision 19a , clause (12);
34.25(xvi) the amount deducted for certain expenses of elementary and secondary school
34.26teachers under section 62(a)(2)(D) of the Internal Revenue Code; and
34.27(xvii) unemployment compensation.
34.28In the case of an individual who files an income tax return on a fiscal year basis, the
34.29term "federal adjusted gross income" shall mean federal adjusted gross income reflected
34.30in the fiscal year ending in the calendar year. Federal adjusted gross income shall not be
34.31reduced by the amount of a net operating loss carryback or carryforward or a capital loss
34.32carryback or carryforward allowed for the year.
34.33(2) "Income" does not include:
34.34(a) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 102;
35.1(b) amounts of any pension or annuity which was exclusively funded by the claimant
35.2or spouse and which funding payments were not excluded from federal adjusted gross
35.3income in the years when the payments were made;
35.4(c) surplus food or other relief in kind supplied by a governmental agency;
35.5(d) relief granted under this chapter;
35.6(e) child support payments received under a temporary or final decree of dissolution
35.7or legal separation; or
35.8(f) restitution payments received by eligible individuals and excludable interest as
35.9defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of
35.102001, Public Law 107-16.
35.11(3) The sum of the following amounts may be subtracted from income A claimant,
35.12other than one who has rent constituting property taxes, may subtract from income the
35.13sum of the following amounts:
35.14(a) for the claimant's first dependent, the exemption amount multiplied by 1.4;
35.15(b) for the claimant's second dependent, the exemption amount multiplied by 1.3;
35.16(c) for the claimant's third dependent, the exemption amount multiplied by 1.2;
35.17(d) for the claimant's fourth dependent, the exemption amount multiplied by 1.1;
35.18(e) for the claimant's fifth dependent, the exemption amount; and
35.19(f) if the claimant or claimant's spouse who occupies the homestead was disabled
35.20or attained the age of 65 on or before December 31 of the year for which the taxes were
35.21levied or rent paid, the exemption amount.
35.22(4) A claimant who has rent constituting property taxes may subtract from income
35.23the sum of the following amounts:
35.24(a) for the claimant's first dependent, the exemption amount multiplied by 1.5;
35.25(b) for the claimant's second dependent, the exemption amount multiplied by 1.4;
35.26(c) for the claimant's third dependent, the exemption amount multiplied by 1.3;
35.27(d) for the claimant's fourth dependent, the exemption amount multiplied by 1.2;
35.28(e) for the claimant's fifth dependent, the exemption amount multiplied by 1.1;
35.29(f) if the claimant was disabled or attained the age of 65 on or before December 31
35.30of the year for which the rent constituting property taxes was paid, the exemption amount
35.31times 1.5; and
35.32(g) if the claimant's spouse who occupies the homestead was disabled or attained the
35.33age of 65 on or before December 31 of the year for which the rent constituting property
35.34taxes were paid, the exemption amount.
36.1For purposes of this subdivision, the "exemption amount" means the exemption
36.2amount under section 151(d) of the Internal Revenue Code for the taxable year for which
36.3the income is reported.
36.4EFFECTIVE DATE.This section is effective beginning with refunds based on rent
36.5constituting property taxes paid after December 31, 2012.

36.6    Sec. 25. Minnesota Statutes 2012, section 290A.04, subdivision 2a, is amended to read:
36.7    Subd. 2a. Renters. A claimant whose rent constituting property taxes exceeds the
36.8percentage of the household income stated below must pay an amount equal to the percent
36.9of income shown for the appropriate household income level along with the percent to
36.10be paid by the claimant of the remaining amount of rent constituting property taxes. The
36.11state refund equals the amount of rent constituting property taxes that remain, up to the
36.12maximum state refund amount shown below.
36.13
36.14
36.15
Household Income
Percent of Income
Percent Paid by
Claimant
Maximum
State
Refund
36.16
36.17
$0 to 3,589
4,910
1.0 percent
5 percent
$
1,190
1,790
36.18
36.19
3,590 to 4,779
4,911 to 6,530
1.0 percent
10
5 percent
$
1,190
1,790
36.20
36.21
4,780 to 5,969
6,531 to 8,160
1.1 percent
10
5 percent
$
1,190
1,790
36.22
36.23
5,970 to 8,369
8,161 to 11,440
1.2 percent
10
5 percent
$
1,190
1,790
36.24
36.25
8,370 to 10,759
11,441 to 14,710
1.3 percent
15
10 percent
$
1,190
1,790
36.26
36.27
10,760 to 11,949
14,711 to 16,340
1.4 percent
15
10 percent
$
1,190
1,790
36.28
36.29
11,950 to 13,139
16,341 to 17,960
1.4 percent
20
15 percent
$
1,190
1,790
36.30
36.31
13,140 to 15,539
17,961 to 21,240
1.5 percent
20
15 percent
$
1,190
1,790
36.32
36.33
15,540 to 16,729
21,241 to 22,870
1.6 percent
20
15 percent
$
1,190
1,790
36.34
36.35
16,730 to 17,919
22,871 to 24,500
1.7 percent
25
20 percent
$
1,190
1,790
36.36
36.37
17,920 to 20,319
24,501 to 27,780
1.8 percent
25
20 percent
$
1,190
1,790
36.38
36.39
20,320 to 21,509
27,781 to 29,400
1.9 percent
30
25 percent
$
1,190
1,790
36.40
36.41
21,510 to 22,699
29,401 to 31,030
2.0 percent
30
25 percent
$
1,190
1,790
37.1
37.2
22,700 to 23,899
31,031 to 32,670
2.2 percent
30
25 percent
$
1,190
1,790
37.3
37.4
23,900 to 25,089
32,671 to 34,300
2.4 percent
30
25 percent
$
1,190
1,790
37.5
37.6
25,090 to 26,289
34,301 to 35,940
2.6 percent
35
30 percent
$
1,190
1,790
37.7
37.8
26,290 to 27,489
35,941 to 37,580
2.7 percent
35
30 percent
$
1,190
1,790
37.9
37.10
27,490 to 28,679
37,581 to 39,200
2.8 percent
35
30 percent
$
1,190
1,790
37.11
37.12
28,680 to 29,869
39,201 to 40,830
2.9 percent
40
35 percent
$
1,190
1,790
37.13
37.14
29,870 to 31,079
40,831 to 42,490
3.0 percent
40
35 percent
$
1,190
1,790
37.15
37.16
31,080 to 32,269
42,491 to 44,110
3.1 percent
40
35 percent
$
1,190
1,790
37.17
37.18
32,270 to 33,459
44,111 to 45,740
3.2 percent
40
35 percent
$
1,190
1,790
37.19
37.20
33,460 to 34,649
45,741 to 47,370
3.3 percent
45
40 percent
$
1,080
1,630
37.21
37.22
34,650 to 35,849
47,371 to 49,010
3.4 percent
45
40 percent
$
960
1,440
37.23
37.24
35,850 to 37,049
49,011 to 50,650
3.5 percent
45
40 percent
$
830
1,240
37.25
37.26
37,050 to 38,239
50,651 to 52,270
3.5 percent
50
45 percent
$
720
1,080
37.27
37.28
38,240 to 39,439
52,271 to 53,910
3.5 percent
50
45 percent
$
600
900
37.29
37.30
38,440 to 40,629
53,911 to 55,540
3.5 percent
50
45 percent
$
360
540
37.31
37.32
40,630 to 41,819
55,541 to 57,170
3.5 percent
50
45 percent
$
120
180
37.33The payment made to a claimant is the amount of the state refund calculated under
37.34this subdivision. No payment is allowed if the claimant's household income is $41,820 or
37.35 more than $57,170.
37.36EFFECTIVE DATE.This section is effective beginning with refunds based on rent
37.37constituting property taxes paid after December 31, 2012.

37.38    Sec. 26. Minnesota Statutes 2012, section 290A.04, subdivision 4, is amended to read:
37.39    Subd. 4. Inflation adjustment. (a) Beginning for property tax refunds payable in
37.40calendar year 2002, the commissioner shall annually adjust the dollar amounts of the
37.41income thresholds and the maximum refunds under subdivisions 2 and 2a for inflation.
37.42The commissioner shall make the inflation adjustments in accordance with section 1(f) of
38.1the Internal Revenue Code, except that for purposes of this subdivision the percentage
38.2increase shall be determined as provided in this subdivision.
38.3(b) In adjusting the dollar amounts of the income thresholds and the maximum
38.4refunds under subdivision 2 for inflation, the percentage increase shall be determined from
38.5the year ending on June 30, 2011, to the year ending on June 30 of the year preceding that
38.6in which the refund is payable.
38.7(c) In adjusting the dollar amounts of the income thresholds and the maximum
38.8refunds under subdivision 2a for inflation, the percentage increase shall be determined
38.9from the year ending on June 30, 2000 2013, to the year ending on June 30 of the year
38.10preceding that in which the refund is payable.
38.11(d) The commissioner shall use the appropriate percentage increase to annually
38.12adjust the income thresholds and maximum refunds under subdivisions 2 and 2a for
38.13inflation without regard to whether or not the income tax brackets are adjusted for inflation
38.14in that year. The commissioner shall round the thresholds and the maximum amounts,
38.15as adjusted to the nearest $10 amount. If the amount ends in $5, the commissioner shall
38.16round it up to the next $10 amount.
38.17(e) The commissioner shall annually announce the adjusted refund schedule at the
38.18same time provided under section 290.06. The determination of the commissioner under
38.19this subdivision is not a rule under the Administrative Procedure Act.
38.20EFFECTIVE DATE.This section is effective beginning with refunds based on
38.21rent paid after December 31, 2013.

38.22    Sec. 27. Minnesota Statutes 2012, section 290C.02, subdivision 6, is amended to read:
38.23    Subd. 6. Forest land. "Forest land" means land containing a minimum of 20
38.24contiguous acres for which the owner has implemented a forest management plan that was
38.25prepared or updated within the past ten years by an approved plan writer. For purposes of
38.26this subdivision, acres are considered to be contiguous even if they are separated by a road,
38.27waterway, railroad track, or other similar intervening property. At least 50 percent of the
38.28contiguous acreage must meet the definition of forest land in section 88.01, subdivision
38.297 . For the purposes of sections 290C.01 to 290C.11, forest land does not include (i) land
38.30used for residential or agricultural purposes, (ii) land enrolled in the reinvest in Minnesota
38.31program, a state or federal conservation reserve or easement reserve program under
38.32sections 103F.501 to 103F.531, the Minnesota agricultural property tax law under section
38.33273.111 , or land subject to agricultural land preservation controls or restrictions as defined
38.34in section 40A.02 or under the Metropolitan Agricultural Preserves Act under chapter
38.35473H, or (iii) land subject to a conservation easement funded under section 97A.056 or a
39.1comparable permanent easement conveyed to a governmental or nonprofit entity; or (iv)
39.2land improved with a structure, pavement, sewer, campsite, or any road, other than a
39.3township road, used for purposes not prescribed in the forest management plan.
39.4EFFECTIVE DATE.This section is effective for calculations made in 2013 and
39.5thereafter.

39.6    Sec. 28. Minnesota Statutes 2012, section 290C.03, is amended to read:
39.7290C.03 ELIGIBILITY REQUIREMENTS.
39.8(a) Land may be enrolled in the sustainable forest incentive program under this
39.9chapter if all of the following conditions are met:
39.10(1) the land consists of at least 20 contiguous acres and at least 50 percent of the
39.11land must meet the definition of forest land in section 88.01, subdivision 7, during the
39.12enrollment;
39.13(2) a forest management plan for the land must be prepared by an approved plan
39.14writer and implemented during the period in which the land is enrolled;
39.15(3) timber harvesting and forest management guidelines must be used in conjunction
39.16with any timber harvesting or forest management activities conducted on the land during
39.17the period in which the land is enrolled;
39.18(4) the land must be enrolled for a minimum of eight years;
39.19(5) there are no delinquent property taxes on the land; and
39.20(6) claimants enrolling more than 1,920 acres in the sustainable forest incentive
39.21program must allow year-round, nonmotorized access to fish and wildlife resources and
39.22motorized access on established and maintained roads and trails, unless the road or trail is
39.23temporarily closed for safety, natural resource, or road damage reasons on enrolled land
39.24except within one-fourth mile of a permanent dwelling or during periods of high fire
39.25hazard as determined by the commissioner of natural resources.
39.26(b) Claimants required to allow access under paragraph (a), clause (6), do not by
39.27that action:
39.28(1) extend any assurance that the land is safe for any purpose;
39.29(2) confer upon the person the legal status of an invitee or licensee to whom a duty
39.30of care is owed; or
39.31(3) assume responsibility for or incur liability for any injury to the person or property
39.32caused by an act or omission of the person.
39.33EFFECTIVE DATE.This section is effective for calculations made in 2013 and
39.34thereafter.

40.1    Sec. 29. Minnesota Statutes 2012, section 290C.055, is amended to read:
40.2290C.055 LENGTH OF COVENANT.
40.3(a) The covenant remains in effect for a minimum of eight years. If land is removed
40.4from the program before it has been enrolled for four years, the covenant remains in
40.5effect for eight years from the date recorded.
40.6(b) If land that has been enrolled for four years or more is removed from the program
40.7for any reason, there is a waiting period before the covenant terminates. The covenant
40.8terminates on January 1 of the fifth calendar year that begins after the date that:
40.9(1) the commissioner receives notification from the claimant that the claimant wishes
40.10to remove the land from the program under section 290C.10; or
40.11(2) the date that the land is removed from the program under section 290C.11.
40.12(c) Notwithstanding the other provisions of this section, the covenant is terminated:
40.13(1) at the same time that the land is removed from the program due to acquisition of
40.14title or possession for a public purpose under section 290C.10; or
40.15(2) at the request of the claimant after a reduction in payments due to changes in the
40.16payment formula under section 290C.07.
40.17EFFECTIVE DATE.This section is effective for calculations made in 2013 and
40.18thereafter.

40.19    Sec. 30. Minnesota Statutes 2012, section 290C.07, is amended to read:
40.20290C.07 CALCULATION OF INCENTIVE PAYMENT.
40.21    (a) An approved claimant under the sustainable forest incentive program is eligible
40.22to receive an annual payment. The payment shall equal $7 $7.25 per acre for each acre
40.23enrolled in the sustainable forest incentive program.
40.24(b) The annual payment for each Social Security number or state or federal business
40.25tax identification number must not exceed $100,000.
40.26EFFECTIVE DATE.This section is effective for calculations made in 2013 and
40.27thereafter.

40.28    Sec. 31. Minnesota Statutes 2012, section 428A.101, is amended to read:
40.29428A.101 DEADLINE FOR SPECIAL SERVICE DISTRICT UNDER
40.30GENERAL LAW.
40.31The establishment of a new special service district after June 30, 2013 2018, requires
40.32enactment of a special law authorizing the establishment.
41.1EFFECTIVE DATE.This section is effective the day following final enactment.

41.2    Sec. 32. Minnesota Statutes 2012, section 428A.21, is amended to read:
41.3428A.21 DEADLINE FOR HOUSING IMPROVEMENT DISTRICTS UNDER
41.4GENERAL LAW.
41.5The establishment of a new housing improvement area after June 30, 2013 2018,
41.6requires enactment of a special law authorizing the establishment of the area.
41.7EFFECTIVE DATE.This section is effective the day following final enactment.

41.8    Sec. 33. Minnesota Statutes 2012, section 435.19, subdivision 2, is amended to read:
41.9    Subd. 2. State property. In the case of property owned by the state or any
41.10instrumentality thereof, the governing body of the city or town may must determine
41.11the amount that would have been assessed had the land been privately owned. Such
41.12 The determination shall be made only after the governing body has held a hearing on
41.13the proposed assessment after at least two weeks' notice of the hearing has been given
41.14by registered or certified mail to the head of the instrumentality, department or agency
41.15having jurisdiction over the property. The instrumentality, department, or agency may,
41.16after consultation and agreement by the governing body of the city or town, pay an
41.17amount less than the amount determined. The amount thus determined may be paid by
41.18the instrumentality, department or agency from available funds. If no funds are available
41.19and such instrumentality, department or agency is supported in whole or in part by
41.20appropriations from the general fund, then it shall include in its next budget request the
41.21amount thus determined. No instrumentality, department or agency shall be bound by the
41.22determination of the governing body and may pay from available funds or recommend
41.23payment in such lesser amount as it determines is the measure of the benefit received by
41.24the land from the improvement.
41.25EFFECTIVE DATE.This section is effective for assessment year 2013 and
41.26thereafter, for taxes payable in 2014 and thereafter.

41.27    Sec. 34. Minnesota Statutes 2012, section 435.19, is amended by adding a subdivision
41.28to read:
41.29    Subd. 6. Appropriation. (a) There is annually appropriated from the general
41.30fund and credited to the agency assessment account in the special revenue fund,
41.31$5,000,000 in fiscal year 2014 and each year thereafter. Money in the agency assessment
41.32account is appropriated annually to the commissioner of revenue for grants to reimburse
42.1instrumentalities, departments, or agencies for payment of special assessments, as required
42.2under subdivision 2.
42.3(b) Of the amounts appropriated in paragraph (a), the commissioner shall first
42.4allocate $2,000,000 in fiscal year 2014 only to the city of Moose Lake to reimburse for
42.5payments related to connection of state facilities to the sewer line.
42.6(c) Notwithstanding the allocation under paragraph (b), the commissioner shall
42.7distribute the reimbursements equally between the metropolitan area and greater Minnesota.
42.8EFFECTIVE DATE.This section is effective July 1, 2013.

42.9    Sec. 35. Minnesota Statutes 2012, section 473F.08, is amended by adding a subdivision
42.10to read:
42.11    Subd. 3c. Bloomington computation. Effective for property taxes payable in
42.122014 through taxes payable in 2023, after the Hennepin County auditor has computed
42.13the areawide portion of the levy for the city of Bloomington pursuant to subdivision 3,
42.14clause (a), the auditor shall annually add $4,000,000 to the city of Bloomington's areawide
42.15portion of the levy. The total areawide portion of the levy for the city of Bloomington,
42.16including the additional $4,000,000 certified pursuant to this subdivision shall be certified
42.17by the Hennepin County auditor to the administrative auditor pursuant to subdivision 5.
42.18The Hennepin County auditor shall distribute to the city of Bloomington the additional
42.19areawide portion of the levy computed pursuant to this subdivision at the same time
42.20that payments are made to the other counties pursuant to subdivision 7a. The additional
42.21distribution to the city of Bloomington under this subdivision terminates effective for
42.22taxes payable year 2023.
42.23EFFECTIVE DATE.This section is effective for taxes payable years 2014 through
42.242023.

42.25    Sec. 36. Laws 1988, chapter 645, section 3, as amended by Laws 1999, chapter 243,
42.26article 6, section 9, Laws 2000, chapter 490, article 6, section 15, and Laws 2008, chapter
42.27154, article 2, section 30, is amended to read:
42.28    Sec. 3. TAX; PAYMENT OF EXPENSES.
42.29    (a) The tax levied by the hospital district under Minnesota Statutes, section 447.34,
42.30must not be levied at a rate that exceeds the amount authorized to be levied under that
42.31section. The proceeds of the tax may be used for all purposes of the hospital district,
42.32except as provided in paragraph (b).
43.1    (b) 0.015 percent of taxable market value of the tax in paragraph (a) may be used
43.2solely by the Cook ambulance service and the Orr ambulance service for the purpose of
43.3capital expenditures as it relates to:
43.4(1) ambulance acquisitions for the Cook ambulance service and the Orr ambulance
43.5service and not;
43.6(2) attached and portable equipment for use in and for the ambulances; and
43.7(3) parts and replacement parts for maintenance and repair of the ambulances.
43.8The money may not be used for administrative, operation, or salary expenses.
43.9    (c) The part of the levy referred to in paragraph (b) must be administered by the
43.10Cook Hospital and passed on in equal amounts directly to the Cook area ambulance
43.11service board and the city of Orr to be held in trust until funding for a new ambulance is
43.12needed by either the Cook ambulance service or the Orr ambulance service used for the
43.13purposes in paragraph (b).

43.14    Sec. 37. Laws 1999, chapter 243, article 6, section 11, is amended to read:
43.15    Sec. 11. CEMETERY LEVY FOR SAWYER BY CARLTON COUNTY.
43.16    Subdivision 1. Levy authorized. Notwithstanding other law to the contrary, the
43.17Carlton county board of commissioners may annually levy in and for the unorganized
43.18township of Sawyer an amount up to $1,000 annually for cemetery purposes, beginning
43.19with taxes payable in 2000 and ending with taxes payable in 2009.
43.20    Subd. 2. Effective date. This section is effective June 1, 1999, without local
43.21approval.
43.22EFFECTIVE DATE.This section applies to taxes payable in 2014 and thereafter,
43.23and is effective the day after the Carlton county board of commissioners and its chief
43.24clerical officer timely complete their compliance with Minnesota Statutes, section
43.25645.021, subdivisions 2 and 3.

43.26    Sec. 38. Laws 2008, chapter 366, article 5, section 33, the effective date, is amended to
43.27read:
43.28EFFECTIVE DATE.This section is effective for taxes levied in 2008, payable in
43.292009, and is repealed effective for taxes levied in 2013 2018, payable in 2014 2019,
43.30and thereafter.
43.31EFFECTIVE DATE.This section is effective beginning with taxes payable in 2014.

44.1    Sec. 39. Laws 2010, chapter 389, article 1, section 12, the effective date, is amended to
44.2read:
44.3EFFECTIVE DATE.This section is effective for assessment years 2010 and 2011
44.4 through 2016, for taxes payable in 2011 and 2012 through 2017.
44.5EFFECTIVE DATE.This section is effective for assessment years 2012 through
44.62016.

44.7    Sec. 40. REIMBURSEMENT FOR PROPERTY TAX ABATEMENTS;
44.8APPROPRIATION.
44.9    Subdivision 1. Reimbursement. The commissioner of revenue shall reimburse
44.10taxing jurisdictions for property tax abatements granted in Hennepin County under Laws
44.112011, First Special Session chapter 7, article 5, section 13, notwithstanding the time limits
44.12contained in that section. The reimbursements must be made to each taxing jurisdiction
44.13pursuant to the certification of the Hennepin County auditor.
44.14    Subd. 2. Appropriation. In fiscal year 2014 only, $336,000 is appropriated to the
44.15commissioner of revenue from the general fund to make the payments required in this
44.16section.
44.17EFFECTIVE DATE.This section is effective the day following final enactment.

44.18    Sec. 41. ST. PAUL BALL PARK, PROPERTY TAX EXEMPTION; SPECIAL
44.19ASSESSMENT.
44.20Any real or personal property acquired, owned, leased, controlled, used, or occupied
44.21by the city of St. Paul for the primary purpose of providing a ball park for a minor league
44.22baseball team is declared to be acquired, owned, leased, controlled, used, and occupied for
44.23public, governmental, and municipal purposes, and is exempt from ad valorem taxation
44.24by the state or any political subdivision of the state, provided that the properties are
44.25subject to special assessments levied by a political subdivision for a local improvement in
44.26amounts proportionate to and not exceeding the special benefit received by the properties
44.27from the improvement. In determining the special benefit received by the properties, no
44.28possible use of any of the properties in any manner different from their intended use
44.29for providing a minor league ballpark at the time may be considered. Notwithstanding
44.30Minnesota Statutes, sections 272.01, subdivision 2, or 273.19, real or personal property
44.31subject to a lease or use agreement between the city and another person for uses related to
44.32the purposes of the operation of the ballpark and related parking facilities is exempt from
45.1taxation regardless of the length of the lease or use agreement. This section, insofar as it
45.2provides an exemption or special treatment, does not apply to any real property that is
45.3leased for residential, business, or commercial development or other purposes different
45.4from those necessary to the provision and operation of the ball park.
45.5EFFECTIVE DATE.This section is effective the day after compliance by the
45.6governing body of the city of St. Paul with Minnesota Statutes, section 645.021,
45.7subdivisions 2 and 3.

45.8    Sec. 42. PUBLIC ENTERTAINMENT FACILITY; PROPERTY TAX
45.9EXEMPTION; SPECIAL ASSESSMENT.
45.10Any real or personal property acquired, owned, leased, controlled, used, or occupied
45.11by the city of Minneapolis for the primary purpose of providing an arena for a professional
45.12basketball team is declared to be acquired, owned, leased, controlled, used, and occupied
45.13for public, governmental, and municipal purposes, and is exempt from ad valorem taxation
45.14by the state or any political subdivision of the state, provided that the properties are
45.15subject to special assessments levied by a political subdivision for a local improvement in
45.16amounts proportionate to and not exceeding the special benefit received by the properties
45.17from the improvement. In determining the special benefit received by the properties, no
45.18possible use of any of the properties in any manner different from their intended use for
45.19providing a professional basketball arena at the time may be considered. Notwithstanding
45.20Minnesota Statutes, sections 272.01, subdivision 2, or 273.19, real or personal property
45.21subject to a lease or use agreement between the city and another person for uses related to
45.22the purposes of the operation of the arena and related parking facilities is exempt from
45.23taxation regardless of the length of the lease or use agreement. This section, insofar as
45.24it provides an exemption or special treatment, does not apply to any real property that
45.25is leased for residential, business, or commercial development, or for other purposes
45.26different from those necessary to the provision and operation of the arena.
45.27EFFECTIVE DATE.This section is effective the day after compliance by the
45.28governing body of the city of Minneapolis with Minnesota Statutes, section 645.021,
45.29subdivisions 2 and 3.

45.30    Sec. 43. PUBLIC ENTERTAINMENT FACILITY; CONSTRUCTION
45.31MANAGER AT RISK.
45.32(a) For any real or person property acquired, owned, leased, controlled, used, or
45.33occupied by the city of Minneapolis for the primary purpose of providing an arena for
46.1a professional basketball team, the city of Minneapolis may contract for construction,
46.2materials, supplies, and equipment in accordance with Minnesota Statutes, section
46.3471.345, except that the city may employ or contract with persons, firms, or corporations
46.4to perform one or more or all of the functions of an engineer, architect, construction
46.5manager, or program manager with respect to all or any part of a project to renovate,
46.6refurbish, and remodel the arena under either the traditional design-bid-build or
46.7construction manager at risk, or a combination thereof.
46.8(b) The city may prepare a request for proposals for one or more of the functions
46.9described in paragraph (a). The request must be published in a newspaper of general
46.10circulation. The city may prequalify offerors by issuing a request for qualifications, in
46.11advance of the request for proposals, and select a short list of responsible offerors to
46.12submit proposals.
46.13(c) As provided in the request for proposals, the city may conduct discussions and
46.14negotiations with responsible offerors in order to determine which proposal is most
46.15advantageous to the city and to negotiate the terms of an agreement. In conducting
46.16discussions, there shall be no disclosure of any information derived from proposals
46.17submitted by competing offerors and the content of all proposals is nonpublic data under
46.18Minnesota Statutes, chapter 13, until such time as a notice to award a contract is given
46.19by the city.
46.20(d) Upon agreement on the guaranteed maximum price, the construction manager
46.21or program manager may enter into contracts with subcontractors for labor, materials,
46.22supplies, and equipment for the renovation project through the process of public bidding,
46.23except that the construction manager or program manager may, with the consent of the city:
46.24(1) narrow the listing of eligible bidders to those that the construction manager
46.25or program manager determines to possess sufficient expertise to perform the intended
46.26functions;
46.27(2) award contracts to the subcontractors that the construction manager or program
46.28manager determines provide the best value under a request for proposals, as described
46.29in Minnesota Statutes, section 16C.28, subdivision 1, paragraph (a), clause (2)(c), that
46.30are not required to be the lowest responsible bidder; and
46.31(3) for work the construction manager or program manager determines to be
46.32critical to the completion schedule, perform work with its own forces without soliciting
46.33competitive bids or proposals, if the construction manager or program manager provides
46.34evidence of competitive pricing.
47.1EFFECTIVE DATE.This section is effective the day after compliance by the
47.2governing body of the city of Minneapolis with Minnesota Statutes, section 645.021,
47.3subdivisions 2 and 3.

47.4    Sec. 44. MORATORIUM ON CHANGES IN ASSESSMENT PRACTICE.
47.5(a) An assessor may not deviate from current practices or policies used generally in
47.6assessing or determining the taxable status of property used in the production of biofuels,
47.7wine, beer, distilled beverages, or dairy products.
47.8(b) An assessor may not change the taxable status of any existing property involved
47.9in the industrial processes identified in paragraph (a), unless the change is made as a result
47.10of a change in the use of property, or to correct an error. For currently taxable properties,
47.11the assessor may change the estimated market value of the property.
47.12EFFECTIVE DATE.This section is effective for assessment years 2013 and 2014
47.13only.

47.14    Sec. 45. STUDY AND REPORT ON CERTAIN PROPERTY USED IN
47.15BUSINESS AND PRODUCTION.
47.16In order to provide the legislature with information and recommendations related
47.17to the past, present, and future options for assessment of property used in business
47.18and production activities, the commissioner of revenue with the cooperation of the
47.19commissioners of agriculture and economic development must study the impact of
47.20alternative interpretations and application related to the real and personal property
47.21provisions contained in Minnesota Statutes, section 272.03, subdivisions 1 and 2. The
47.22commissioner must report a summary of findings and recommendations to the chairs and
47.23ranking minority members of the agriculture, energy, and tax committees of the senate and
47.24house of representatives by February 1, 2014. The commissioner shall provide for the
47.25involvement and participation stakeholders from the business and production industry in
47.26the study and recommendations. The study and recommendations shall include, but not
47.27be limited to:
47.28(1) the past and present tax application to process in the production of a product;
47.29(2) exemption from real property for process components of production such as
47.30tanks or containment vessels or other devices wherein a molecular, chemical, or biological
47.31change occurs such that the intended output from the production process is a different
47.32substance from that which was introduced into the tanks, vessels, or other devices
47.33and removal of a tank, device or vessel from the process that would stop or harm the
47.34production of the final intended product;
48.1(3) definitions for process equipment;
48.2(4) the potential economic and competitive impact in relation to other midwestern
48.3states;
48.4(5) the impact on state and local taxes from 2009 to the present and into the future;
48.5(6) the past, present, and future impact on business and production industries;
48.6(7) impact on Minnesota's renewable energy goal attainment; and
48.7(8) other elements considered important for legislative consideration.
48.8EFFECTIVE DATE.This section is effective the day following final enactment.

48.9    Sec. 46. REENROLLMENT; SUSTAINABLE FOREST INCENTIVE
48.10PROGRAM.
48.11A person who elected to terminate participation in the sustainable forest incentive
48.12program, as provided in Laws 2011, First Special Session chapter 7, article 6, section 12,
48.13may reenroll lands for which the claimant terminated participation. A person must apply
48.14for reenrollment under this section within 60 days after the effective date of this section.
48.15EFFECTIVE DATE.This section is effective the day following final enactment.

48.16    Sec. 47. PROPERTY TAX SAVINGS REPORT.
48.17(a) In addition to the certification of its proposed property tax levy under Minnesota
48.18Statutes, section 275.065, each city that has a population over 500 and each county shall
48.19also include the amount of sales and use tax paid, or was estimated to be paid, in 2012.
48.20(b) At the time the notice of the proposed property taxes is mailed as required under
48.21Minnesota Statutes, section 275.065, subdivision 3, the county treasurer shall also include
48.22a separate statement providing a list of sales and use tax certified by the county and cities
48.23within their jurisdiction.
48.24(c) At the public hearing required under Minnesota Statutes, section 275.065,
48.25subdivision 3, the county and city must discuss the estimated savings realized to their
48.26budgets that resulted from the sales tax exemption authorized under Minnesota Statutes,
48.27section 297A.70, subdivision 2, and how those savings will be used for property tax levy
48.28reductions, fee reductions, and other purposes as deemed appropriate.
48.29Reasonable costs of preparing the notice required in this section must be apportioned
48.30between taxing jurisdictions as follows:
48.31(1) one-half is allocated to the county; and
48.32(2) one-half is allocated among the cities.
49.1The amount allocated in clause (2) must be further apportioned among all the cities
49.2in the proportion that the number of parcels in the city bears to the number of parcels in all
49.3the cities that have populations over 500.
49.4EFFECTIVE DATE.This section is effective the day following final enactment,
49.5for taxes levied in 2013 and payable in 2014.

49.6    Sec. 48. METROPOLITAN FISCAL DISPARITIES WORKING GROUP.
49.7(a) The commissioner of revenue shall convene a working group of interested
49.8individuals to examine the issues faced by local governments that are required to pay for
49.9services which are otherwise generally provided throughout the seven-county metropolitan
49.10area by the Metropolitan Council. The commissioner of revenue shall chair the initial
49.11meeting, and the working group shall elect a chair at that initial meeting. The working
49.12group will meet at the call of the chair, but must meet at least three times during the
49.13legislative interim. Members of the working group shall serve without compensation. The
49.14commissioner of revenue must provide administrative support to the working group.
49.15(b) The working group may make its advisory recommendations to the chairs of
49.16house of representatives and senate tax committees on or before February 1, 2014, at
49.17which time the working group shall be finished.
49.18EFFECTIVE DATE.This section is effective the day following final enactment.

49.19    Sec. 49. REPEALER.
49.20Minnesota Statutes 2012, section 275.065, subdivision 3, is repealed.
49.21EFFECTIVE DATE.This section is effective for taxes payable in 2014.

49.22ARTICLE 3
49.23EDUCATION AIDS AND LEVIES

49.24    Section 1. Minnesota Statutes 2012, section 124D.11, subdivision 1, is amended to read:
49.25    Subdivision 1. General education revenue. (a) General education revenue must
49.26be paid to a charter school as though it were a district. The general education revenue
49.27for each adjusted marginal cost pupil unit is the state average general education revenue
49.28per pupil unit, plus the referendum equalization aid allowance in the pupil's district of
49.29residence, minus an amount equal to the product of the formula allowance according
49.30to section 126C.10, subdivision 2, times .0485 .0465, calculated without basic skills
49.31revenue, extended time revenue, alternative teacher compensation revenue, equity
49.32revenue, pension adjustment revenue, transition revenue, education advancement revenue,
50.1and transportation sparsity revenue, plus basic skills revenue, extended time revenue,
50.2basic alternative teacher compensation aid according to section 126C.10, subdivision 34,
50.3 equity revenue, pension adjustment revenue, and transition revenue as though the school
50.4were a school district. The general education revenue for each extended time marginal
50.5cost pupil unit equals $4,378 $4,722.
50.6(b) Notwithstanding paragraph (a), for charter schools in the first year of operation,
50.7general education revenue shall be computed using the number of adjusted pupil units
50.8in the current fiscal year.
50.9EFFECTIVE DATE.This section is effective for revenue for fiscal year 2015
50.10and later.

50.11    Sec. 2. Minnesota Statutes 2012, section 126C.10, subdivision 1, is amended to read:
50.12    Subdivision 1. General education revenue. (a) For fiscal years 2013 and 2014, the
50.13general education revenue for each district equals the sum of the district's basic revenue,
50.14extended time revenue, gifted and talented revenue, small schools revenue, basic skills
50.15revenue, training and experience revenue, secondary sparsity revenue, elementary sparsity
50.16revenue, transportation sparsity revenue, total operating capital revenue, equity revenue,
50.17alternative teacher compensation revenue, and transition revenue.
50.18(b) For fiscal year 2015 and later, the general education revenue for each district
50.19equals the sum of the district's basic revenue, extended time revenue, gifted and talented
50.20revenue, declining enrollment revenue, small schools revenue, basic supplemental
50.21revenue, basic skills revenue, secondary sparsity revenue, elementary sparsity revenue,
50.22transportation sparsity revenue, total operating capital revenue, education advancement
50.23revenue, equity revenue, pension adjustment revenue, safe schools revenue, and transition
50.24revenue.

50.25    Sec. 3. Minnesota Statutes 2012, section 126C.10, subdivision 27, is amended to read:
50.26    Subd. 27. District equity index. (a) A district's equity index equals the greater
50.27of zero or the ratio of the sum of the district equity gap amount to the regional equity
50.28gap amount $1,600 minus the district's referendum revenue under section 126C.17,
50.29subdivision 4, per adjusted pupil unit to $1,600.
50.30(b) A charter school's equity index equals the greater of zero or the ratio of $1,600
50.31minus the school's general education revenue attributable to referendum equalization aid
50.32under section 124D.11, subdivision 1, per adjusted pupil unit to $1,600.
51.1EFFECTIVE DATE.This section is effective for revenue for fiscal year 2015
51.2and later.

51.3    Sec. 4. Minnesota Statutes 2012, section 126C.10, is amended by adding a subdivision
51.4to read:
51.5    Subd. 37. Education advancement revenue. The education advancement revenue
51.6for each district equals the advancement allowance times the adjusted pupil units for the
51.7school year. The advancement allowance for fiscal year 2015 and later years is $300.
51.8EFFECTIVE DATE.This section is effective for revenue for fiscal year 2015
51.9and later.

51.10    Sec. 5. Minnesota Statutes 2012, section 126C.10, is amended by adding a subdivision
51.11to read:
51.12    Subd. 39. Education advancement levy. To obtain education advancement
51.13revenue, a district may levy an amount not more than the product of its education
51.14advancement revenue for the fiscal year times the lesser of one or the ratio of its
51.15referendum market value per resident pupil unit to the education advancement revenue
51.16equalizing factor. The education advancement revenue equalizing factor equals $785,000.
51.17If a district adopts a board resolution to levy less than the permitted levy, the district's
51.18education advancement aid shall be reduced proportionately.
51.19EFFECTIVE DATE.This section is effective for revenue for fiscal year 2015
51.20and later.

51.21    Sec. 6. Minnesota Statutes 2012, section 126C.10, is amended by adding a subdivision
51.22to read:
51.23    Subd. 40. Education advancement aid. For fiscal year 2015 and later, a school
51.24district's education advancement aid is the product of: (1) the difference between the
51.25district's education advancement revenue and the education advancement levy; times (2)
51.26the ratio of the actual amount levied to the permitted levy.
51.27EFFECTIVE DATE.This section is effective for revenue for fiscal year 2015
51.28and later.

51.29    Sec. 7. Minnesota Statutes 2012, section 126C.13, is amended by adding a subdivision
51.30to read:
52.1    Subd. 3c. General education levy; districts off the formula. (a) If the amount of
52.2the general education levy for a district exceeds the district's general education revenue,
52.3excluding equity revenue, transition revenue, and education advancement revenue, the
52.4amount of the general education levy must be limited to the district's general education
52.5revenue, excluding equity revenue, transition revenue, and education advancement revenue.
52.6    (b) A levy made according to this subdivision shall also be construed to be the levy
52.7made according to subdivision 3b.

52.8    Sec. 8. Minnesota Statutes 2012, section 126C.13, subdivision 4, is amended to read:
52.9    Subd. 4. General education aid. (a) For fiscal years 2007 2013 and later 2014 only,
52.10a district's general education aid is the sum of the following amounts:
52.11    (1) general education revenue, excluding equity revenue, total operating capital
52.12revenue, alternative teacher compensation revenue, and transition revenue;
52.13    (2) operating capital aid under section 126C.10, subdivision 13b;
52.14    (3) equity aid under section 126C.10, subdivision 30;
52.15    (4) alternative teacher compensation aid under section 126C.10, subdivision 36;
52.16    (5) transition aid under section 126C.10, subdivision 33;
52.17    (6) shared time aid under section 126C.01, subdivision 7;
52.18    (7) referendum aid under section 126C.17, subdivisions 7 and 7a; and
52.19    (8) online learning aid according to section 124D.096.
52.20(b) For fiscal year 2015 and later, a district's general education aid equals:
52.21(1) general education revenue, excluding equity revenue, transition revenue, and
52.22education advancement revenue, minus the general education levy, multiplied times the
52.23ratio of the actual amount of general education levied to the permitted general education
52.24levy; plus
52.25(2) equity aid under section 126C.10, subdivision 30; plus
52.26(3) transition aid under section 126C.10, subdivision 33; plus
52.27(4) education advancement aid under section 126C.10, subdivision 40; plus
52.28(5) shared time aid under section 126C.10, subdivision 7; plus
52.29(6) referendum aid under section 126C.17, subdivisions 7 and 7a; plus
52.30(7) online learning aid under section 124D.096.

52.31    Sec. 9. Minnesota Statutes 2012, section 126C.17, is amended to read:
52.32126C.17 REFERENDUM REVENUE.
52.33    Subdivision 1. Referendum allowance. (a) For fiscal year 2003 and later, a district's
52.34initial referendum revenue allowance equals the sum of the allowance under section
53.1126C.16, subdivision 2, plus any additional allowance per resident marginal cost pupil
53.2unit authorized under subdivision 9 before May 1, 2001, for fiscal year 2002 and later,
53.3plus the referendum conversion allowance approved under subdivision 13, minus $415.
53.4For districts with more than one referendum authority, the reduction must be computed
53.5separately for each authority. The reduction must be applied first to the referendum
53.6conversion allowance and next to the authority with the earliest expiration date. A
53.7district's initial referendum revenue allowance may not be less than zero.
53.8(b) For fiscal year 2003, a district's referendum revenue allowance equals the initial
53.9referendum allowance plus any additional allowance per resident marginal cost pupil unit
53.10authorized under subdivision 9 between April 30, 2001, and December 30, 2001, for
53.11fiscal year 2003 and later.
53.12(c) For fiscal year 2004 and later, a district's referendum revenue allowance equals
53.13the sum of:
53.14(1) the product of (i) the ratio of the resident marginal cost pupil units the district
53.15would have counted for fiscal year 2004 under Minnesota Statutes 2002, section 126C.05,
53.16to the district's resident marginal cost pupil units for fiscal year 2004, times (ii) the initial
53.17referendum allowance plus any additional allowance per resident marginal cost pupil unit
53.18authorized under subdivision 9 between April 30, 2001, and May 30, 2003, for fiscal
53.19year 2003 and later, plus
53.20(2) any additional allowance per resident marginal cost pupil unit authorized under
53.21subdivision 9 after May 30, 2003, for fiscal year 2005 and later.
53.22(a) A district's initial referendum allowance for fiscal year 2015 equals the result of
53.23the following calculations:
53.24(1) multiply the referendum allowance the district would have received for fiscal
53.25year 2015 under section 126C.17, subdivision 1, based on elections held before July 1,
53.262013, by the resident marginal cost pupil units the district would have counted for fiscal
53.27year 2015 under section 126C.05;
53.28(2) add to the result of clause (1) the adjustment the district would have received
53.29under section 127A.47, subdivision 7, paragraphs (a), (b), and (c), based on elections
53.30held before July 1, 2013;
53.31(3) divide the result of clause (2) by the district's adjusted pupil units for fiscal
53.32year 2015, notwithstanding section 126C.05, subdivision 1, paragraph (d), calculated as
53.33though a kindergarten pupil not included in section 126C.05, subdivision 1, paragraph
53.34(c), is counted as 0.55 pupil units, and subtract $300; and
53.35(4) if the result of clause (3) is less than zero, set the allowance to zero.
54.1(b) A district's referendum allowance equals the sum of the district's initial
54.2referendum allowance for fiscal year 2015, plus any additional referendum allowance per
54.3adjusted pupil unit authorized after June 30, 2013, minus any allowances expiring in fiscal
54.4year 2016 or later. For a district with more than one referendum allowance for fiscal year
54.52015 under section 126C.17, the allowance calculated under paragraph (a) must be divided
54.6into components such that the same percentage of the district's allowance expires at the
54.7same time as the old allowances would have expired under section 126C.17.
54.8    Subd. 2. Referendum allowance limit. (a) Notwithstanding subdivision 1, for fiscal
54.9year 2007 2015 and later, a district's referendum allowance must not exceed the greater of:
54.10(1) the sum of: (i) a district's referendum allowance for fiscal year 1994 times 1.177
54.11times the annual inflationary increase as calculated under paragraph (b) plus (ii) its
54.12referendum conversion allowance for fiscal year 2003, minus (iii) $215;
54.13(2) the greater of (i): 26 percent of the formula allowance or (ii) $1,294 times is the
54.14base referendum amount calculated in paragraph (b) minus $300. A district's referendum
54.15allowance under this subdivision must not be less than zero.
54.16(b) The base referendum amount is the annual inflationary increase as calculated
54.17under paragraph (b); or times the greatest of:
54.18(1) $1,845;
54.19(2) the sum of the referendum revenue the district would have received for fiscal year
54.202015 under section 126C.17, subdivision 4, based on elections held before July 1, 2013,
54.21and the adjustment the district would have received under section 127A.47, subdivision
54.227, paragraphs (a), (b), and (c), based on elections held before July 1, 2013, divided by
54.23the district's adjusted pupil units for fiscal year 2015, notwithstanding section 126C.05,
54.24subdivision 1, paragraph (d), calculated as though a kindergarten pupil not included in
54.25section 126C.05, subdivision 1, paragraph (c), is counted as 0.55 pupil units; or
54.26(3) the product of the referendum allowance limit the district would have received
54.27for fiscal year 2015 under section 126C.17, subdivision 2, and the resident marginal cost
54.28pupil units the district would have received for fiscal year 2015 under section 126C.05,
54.29subdivision 6, plus the adjustment the district would have received under section 127A.47,
54.30subdivision 7, paragraphs (a), (b), and (c), based on elections held before July 1, 2013,
54.31divided by the district's adjusted pupil units for fiscal year 2015, notwithstanding section
54.32126C.05, subdivision 1, paragraph (d), calculated as though a kindergarten pupil not
54.33included in section 126C.05, subdivision 1, paragraph (c), is counted as 0.55 pupil units; or
54.34(3) (4) for a newly reorganized district created after July 1, 2006 2013, the referendum
54.35revenue authority for each reorganizing district in the year preceding reorganization divided
54.36by its resident marginal cost adjusted pupil units for the year preceding reorganization.
55.1(b) (c) For purposes of this subdivision, for fiscal year 2005 2016 and later,
55.2"inflationary increase" means one plus the percentage change in the Consumer Price Index
55.3for urban consumers, as prepared by the United States Bureau of Labor Standards, for the
55.4current fiscal year to fiscal year 2004 2015. For fiscal years 2009 year 2016 and later, for
55.5purposes of paragraph (a), clause (1) (3), the inflationary increase equals the inflationary
55.6increase for fiscal year 2008 plus one-fourth of the percentage increase in the formula
55.7allowance for that year compared with the formula allowance for fiscal year 2008 2015.
55.8    Subd. 3. Sparsity exception. A district that qualifies for sparsity revenue under
55.9section 126C.10 is not subject to a referendum allowance limit.
55.10    Subd. 4. Total referendum revenue. The total referendum revenue for each district
55.11equals the district's referendum allowance times the resident marginal cost adjusted pupil
55.12units for the school year.
55.13    Subd. 5. Referendum equalization revenue. (a) For fiscal year 2003 and later,
55.14 A district's referendum equalization revenue equals the sum of the first tier referendum
55.15equalization revenue and the second tier referendum equalization revenue.
55.16(b) A district's first tier referendum equalization revenue equals the district's first
55.17tier referendum equalization allowance times the district's resident marginal cost adjusted
55.18 pupil units for that year.
55.19(c) For fiscal year 2006, a district's first tier referendum equalization allowance
55.20equals the lesser of the district's referendum allowance under subdivision 1 or $500. For
55.21fiscal year 2007, a district's first tier referendum equalization allowance equals the lesser
55.22of the district's referendum allowance under subdivision 1 or $600.
55.23For fiscal year 2008 and later, A district's first tier referendum equalization allowance
55.24equals the lesser of the district's referendum allowance under subdivision 1 or $700 $775.
55.25(d) A district's second tier referendum equalization revenue equals the district's
55.26second tier referendum equalization allowance times the district's resident marginal cost
55.27 adjusted pupil units for that year.
55.28(e) For fiscal year 2006, a district's second tier referendum equalization allowance
55.29equals the lesser of the district's referendum allowance under subdivision 1 or 18.6 percent
55.30of the formula allowance, minus the district's first tier referendum equalization allowance.
55.31For fiscal year 2007 and later, A district's second tier referendum equalization allowance
55.32equals the lesser of the district's referendum allowance under subdivision 1 or 26 25 percent
55.33of the formula allowance, minus the district's first tier referendum equalization allowance.
55.34(f) Notwithstanding paragraph (e), the second tier referendum allowance for a
55.35district qualifying for secondary sparsity revenue under section 126C.10, subdivision 7, or
55.36elementary sparsity revenue under section 126C.10, subdivision 8, equals the district's
56.1referendum allowance under subdivision 1 minus the district's first tier referendum
56.2equalization allowance.
56.3    Subd. 6. Referendum equalization levy. (a) For fiscal year 2003 and later,
56.4a district's referendum equalization levy equals the sum of the first tier referendum
56.5equalization levy and the second tier referendum equalization levy.
56.6(b) A district's first tier referendum equalization levy equals the district's first tier
56.7referendum equalization revenue times the lesser of one or the ratio of the district's
56.8referendum market value per resident marginal cost pupil unit to $476,000 $538,200.
56.9(c) A district's second tier referendum equalization levy equals the district's second
56.10tier referendum equalization revenue times the lesser of one or the ratio of the district's
56.11referendum market value per resident marginal cost pupil unit to $270,000 $259,415.
56.12    Subd. 7. Referendum equalization aid. (a) A district's referendum equalization aid
56.13equals the difference between its referendum equalization revenue and levy.
56.14(b) If a district's actual levy for first or second tier referendum equalization revenue
56.15is less than its maximum levy limit for that tier, aid shall be proportionately reduced.
56.16(c) Notwithstanding paragraph (a), the referendum equalization aid for a district,
56.17where the referendum equalization aid under paragraph (a) exceeds 90 percent of the
56.18referendum revenue, must not exceed 26 25 percent of the formula allowance times the
56.19district's resident marginal cost adjusted pupil units. A district's referendum levy is
56.20increased by the amount of any reduction in referendum aid under this paragraph.
56.21    Subd. 7a. Referendum tax base replacement aid. For each school district that
56.22had a referendum allowance for fiscal year 2002 exceeding $415, for each separately
56.23authorized referendum levy, the commissioner of revenue, in consultation with the
56.24commissioner of education, shall certify the amount of the referendum levy in taxes
56.25payable year 2001 attributable to the portion of the referendum allowance exceeding $415
56.26levied against property classified as class 2, noncommercial 4c(1), or 4c(4), under section
56.27273.13 , excluding the portion of the tax paid by the portion of class 2a property consisting
56.28of the house, garage, and surrounding one acre of land. The resulting amount must be
56.29used to reduce the district's referendum levy amount otherwise determined, and must be
56.30paid to the district each year that the referendum authority remains in effect, is renewed,
56.31or new referendum authority is approved. The aid payable under this subdivision must
56.32be subtracted from the district's referendum equalization aid under subdivision 7. The
56.33referendum equalization aid after the subtraction must not be less than zero.
56.34    Subd. 7b. Referendum aid guarantee. (a) Notwithstanding subdivision 7, a
56.35district's referendum equalization aid for fiscal year 2015 must not be less than the sum of
56.36the referendum equalization aid the district would have received for fiscal year 2015 under
57.1section 126C.17, subdivision 7, and the adjustment the district would have received under
57.2section 127A.47, subdivision 7, paragraphs (a), (b), and (c).
57.3(b) Notwithstanding subdivision 7, referendum equalization aid for fiscal year 2016
57.4and later, for a district qualifying for additional aid under paragraph (a) for fiscal year
57.52015, must not be less than the product of (1) the district's referendum equalization aid
57.6for fiscal year 2015, times (2) the lesser of one or the ratio of the district's referendum
57.7revenue for that school year to the district's referendum revenue for fiscal year 2015, times
57.8(3) the lesser of one or the ratio of the district's referendum market value used for fiscal
57.9year 2015 referendum equalization calculations to the district's referendum market value
57.10used for that year's referendum equalization calculations.
57.11    Subd. 8. Unequalized referendum levy. Each year, a district may levy an amount
57.12equal to the difference between its total referendum revenue according to subdivision 4
57.13and its referendum equalization revenue according to subdivision 5.
57.14    Subd. 9. Referendum revenue. (a) The revenue authorized by section 126C.10,
57.15subdivision 1 , may be increased in the amount approved by the voters of the district
57.16at a referendum called for the purpose. The referendum may be called by the board.
57.17The referendum must be conducted one or two calendar years before the increased levy
57.18authority, if approved, first becomes payable. Only one election to approve an increase
57.19may be held in a calendar year. Unless the referendum is conducted by mail under
57.20subdivision 11, paragraph (a), the referendum must be held on the first Tuesday after the
57.21first Monday in November. The ballot must state the maximum amount of the increased
57.22revenue per resident marginal cost adjusted pupil unit. The ballot may state a schedule,
57.23determined by the board, of increased revenue per resident marginal cost adjusted pupil
57.24unit that differs from year to year over the number of years for which the increased revenue
57.25is authorized or may state that the amount shall increase annually by the rate of inflation.
57.26For this purpose, the rate of inflation shall be the annual inflationary increase calculated
57.27under subdivision 2, paragraph (b). The ballot may state that existing referendum levy
57.28authority is expiring. In this case, the ballot may also compare the proposed levy authority
57.29to the existing expiring levy authority, and express the proposed increase as the amount, if
57.30any, over the expiring referendum levy authority. The ballot must designate the specific
57.31number of years, not to exceed ten, for which the referendum authorization applies. The
57.32ballot, including a ballot on the question to revoke or reduce the increased revenue amount
57.33under paragraph (c), must abbreviate the term "per resident marginal cost adjusted pupil
57.34unit" as "per pupil." The notice required under section 275.60 may be modified to read, in
57.35cases of renewing existing levies at the same amount per pupil as in the previous year:
58.1"BY VOTING "YES" ON THIS BALLOT QUESTION, YOU ARE VOTING
58.2TO EXTEND AN EXISTING PROPERTY TAX REFERENDUM THAT IS
58.3SCHEDULED TO EXPIRE."
58.4    The ballot may contain a textual portion with the information required in this
58.5subdivision and a question stating substantially the following:
58.6    "Shall the increase in the revenue proposed by (petition to) the board of .........,
58.7School District No. .., be approved?"
58.8    If approved, an amount equal to the approved revenue per resident marginal cost
58.9 adjusted pupil unit times the resident marginal cost adjusted pupil units for the school
58.10year beginning in the year after the levy is certified shall be authorized for certification
58.11for the number of years approved, if applicable, or until revoked or reduced by the voters
58.12of the district at a subsequent referendum.
58.13    (b) The board must prepare and deliver by first class mail at least 15 days but no more
58.14than 30 days before the day of the referendum to each taxpayer a notice of the referendum
58.15and the proposed revenue increase. The board need not mail more than one notice to any
58.16taxpayer. For the purpose of giving mailed notice under this subdivision, owners must be
58.17those shown to be owners on the records of the county auditor or, in any county where
58.18tax statements are mailed by the county treasurer, on the records of the county treasurer.
58.19Every property owner whose name does not appear on the records of the county auditor
58.20or the county treasurer is deemed to have waived this mailed notice unless the owner
58.21has requested in writing that the county auditor or county treasurer, as the case may be,
58.22include the name on the records for this purpose. The notice must project the anticipated
58.23amount of tax increase in annual dollars for typical residential homesteads, agricultural
58.24homesteads, apartments, and commercial-industrial property within the school district.
58.25    The notice for a referendum may state that an existing referendum levy is expiring
58.26and project the anticipated amount of increase over the existing referendum levy in
58.27the first year, if any, in annual dollars for typical residential homesteads, agricultural
58.28homesteads, apartments, and commercial-industrial property within the district.
58.29    The notice must include the following statement: "Passage of this referendum will
58.30result in an increase in your property taxes." However, in cases of renewing existing levies,
58.31the notice may include the following statement: "Passage of this referendum extends an
58.32existing operating referendum at the same amount per pupil as in the previous year."
58.33    (c) A referendum on the question of revoking or reducing the increased revenue
58.34amount authorized pursuant to paragraph (a) may be called by the board. A referendum to
58.35revoke or reduce the revenue amount must state the amount per resident marginal cost
58.36pupil unit by which the authority is to be reduced. Revenue authority approved by the
59.1voters of the district pursuant to paragraph (a) must be available to the school district at
59.2least once before it is subject to a referendum on its revocation or reduction for subsequent
59.3years. Only one revocation or reduction referendum may be held to revoke or reduce
59.4referendum revenue for any specific year and for years thereafter.
59.5    (d) The approval of 50 percent plus one of those voting on the question is required to
59.6pass a referendum authorized by this subdivision.
59.7    (e) At least 15 days before the day of the referendum, the district must submit a
59.8copy of the notice required under paragraph (b) to the commissioner and to the county
59.9auditor of each county in which the district is located. Within 15 days after the results
59.10of the referendum have been certified by the board, or in the case of a recount, the
59.11certification of the results of the recount by the canvassing board, the district must notify
59.12the commissioner of the results of the referendum.
59.13    Subd. 10. School referendum levy; market value. A school referendum levy must
59.14be levied against the referendum market value of all taxable property as defined in section
59.15126C.01, subdivision 3 . Any referendum levy amount subject to the requirements of this
59.16subdivision must be certified separately to the county auditor under section 275.07.
59.17    Subd. 11. Referendum date. (a) Except for a referendum held under paragraph (b),
59.18any referendum under this section held on a day other than the first Tuesday after the first
59.19Monday in November must be conducted by mail in accordance with section 204B.46.
59.20Notwithstanding subdivision 9, paragraph (b), to the contrary, in the case of a referendum
59.21conducted by mail under this paragraph, the notice required by subdivision 9, paragraph (b),
59.22must be prepared and delivered by first-class mail at least 20 days before the referendum.
59.23(b) In addition to the referenda allowed in subdivision 9, clause (a), the commissioner
59.24may grant authority to a district to hold a referendum on a different day if the district is in
59.25statutory operating debt and has an approved plan or has received an extension from the
59.26department to file a plan to eliminate the statutory operating debt.
59.27(c) The commissioner must approve, deny, or modify each district's request for a
59.28referendum levy on a different day within 60 days of receiving the request from a district.
59.29    Subd. 13. Referendum conversion allowance. A school district that received
59.30supplemental or transition revenue in fiscal year 2002 may convert its supplemental
59.31revenue conversion allowance and transition revenue conversion allowance to additional
59.32referendum allowance under subdivision 1 for fiscal year 2003 and thereafter. A majority
59.33of the school board must approve the conversion at a public meeting before November 1,
59.342001. For a district with other referendum authority, the referendum conversion allowance
59.35approved by the board continues until the portion of the district's other referendum
59.36authority with the earliest expiration date after June 30, 2006, expires. For a district
60.1with no other referendum authority, the referendum conversion allowance approved by
60.2the board continues until June 30, 2012.
60.3EFFECTIVE DATE.This section is effective for revenue for fiscal year 2015
60.4and later.

60.5    Sec. 10. DIRECTION TO THE COMMISSIONER.
60.6In computing the reduction to a school district's referendum allowance, the
60.7commissioner of education must first reduce a district's referendum allowance with the
60.8earliest expiration date and then, if necessary, reduce to additional referendum authority
60.9allowances based on the next earliest expiration date.

60.10    Sec. 11. OPERATING REFERENDUM FREEZE, FISCAL YEAR 2015.
60.11Notwithstanding Minnesota Statutes, section 126C.17, subdivision 9, a school district
60.12may not authorize an increase to its operating referendum in fiscal year 2015. A school
60.13district may reauthorize an operating referendum that is expiring in fiscal year 2015. If a
60.14school district asks the voters to reauthorize operating referendum authority that is expiring
60.15in fiscal year 2015, it may request a reauthorization of that expiring authority minus $300.

60.16    Sec. 12. CURRENT YEAR AID PERCENTAGE; APPROPRIATION
60.17ADJUSTMENTS.
60.18(a) Notwithstanding Minnesota Statutes, section 127A.45, subdivision 2, paragraph
60.19(d), in fiscal year 2014 and later, the commissioner of education shall reduce the current
60.20year aid payment percentage under Minnesota Statutes, section 127A.45, subdivision
60.212, paragraph (d), by 0.2.
60.22(b) For fiscal year 2014 and later, the commissioner of education shall adjust all
60.23appropriations in 2013 Senate File No. 453, if enacted, that are calculated based on a
60.24current year aid payment percentage and a final adjustment payment to reflect the current
60.25year aid payment percentage, under Minnesota Statutes, section 127A.45, subdivision 2,
60.26paragraph (d), as modified by paragraph (a).

60.27    Sec. 13. APPROPRIATIONS.
60.28    Subdivision 1. Department of Education. The sums indicated in this section are
60.29appropriated from the general fund to the Department of Education for the fiscal years
60.30designated and are in addition to any amounts appropriated in any other bill for the same
60.31purpose.
61.1    Subd. 2. General education aid. For general education aid under Minnesota
61.2Statutes, section 126C.13, subdivision 4:
61.3
$36,460,000
....
2014
61.4
$54,765,000
....
2015
61.5The 2014 appropriation includes $0 for fiscal year 2013 and $36,460,000 for fiscal
61.6year 2014.
61.7The 2015 appropriation includes $12,185,000 for fiscal year 2014 and $42,580,000
61.8for fiscal year 2015.

61.9ARTICLE 4
61.10SPECIAL TAXES

61.11    Section 1. Minnesota Statutes 2012, section 237.52, subdivision 3, is amended to read:
61.12    Subd. 3. Collection. Every provider of services capable of originating a TRS call,
61.13including cellular communications and other nonwire access services, in this state shall,
61.14except as provided in subdivision 3a, collect the charges established by the commission
61.15under subdivision 2 and transfer amounts collected to the commissioner of public
61.16safety in the same manner as provided in section 403.11, subdivision 1, paragraph (d).
61.17The commissioner of public safety must deposit the receipts in the fund established in
61.18subdivision 1.
61.19EFFECTIVE DATE.This section is effective January 1, 2014.

61.20    Sec. 2. Minnesota Statutes 2012, section 237.52, is amended by adding a subdivision
61.21to read:
61.22    Subd. 3a. Fee for prepaid wireless telecommunications service. The fee
61.23established in subdivision 2 does not apply to prepaid wireless telecommunications
61.24services as defined in section 403.02, subdivision 17b, which are instead subject to the
61.25prepaid wireless telecommunications access Minnesota fee established in section 403.161,
61.26subdivision 1, paragraph (b). Collection, remittance, and deposit of prepaid wireless
61.27telecommunications access Minnesota fees are governed by sections 403.161 and 403.162.
61.28EFFECTIVE DATE.This section is effective January 1, 2014.

61.29    Sec. 3. Minnesota Statutes 2012, section 270B.01, subdivision 8, is amended to read:
61.30    Subd. 8. Minnesota tax laws. For purposes of this chapter only, unless expressly
61.31stated otherwise, "Minnesota tax laws" means:
62.1    (1) the taxes, refunds, and fees administered by or paid to the commissioner under
62.2chapters 115B, 289A (except taxes imposed under sections 298.01, 298.015, and 298.24),
62.3290, 290A, 291, 295, 297A, 297B, and 297H, and 403, or any similar Indian tribal tax
62.4administered by the commissioner pursuant to any tax agreement between the state and
62.5the Indian tribal government, and includes any laws for the assessment, collection, and
62.6enforcement of those taxes, refunds, and fees; and
62.7    (2) section 273.1315.
62.8EFFECTIVE DATE.This section is effective January 1, 2014.

62.9    Sec. 4. Minnesota Statutes 2012, section 270B.12, subdivision 4, is amended to read:
62.10    Subd. 4. Department of Public Safety. The commissioner may disclose return
62.11information to the Department of Public Safety for the purpose of and to the extent
62.12necessary to administer section sections 270C.725 and 403.16 to 403.162.
62.13EFFECTIVE DATE.This section is effective January 1, 2014.

62.14    Sec. 5. Minnesota Statutes 2012, section 270C.03, subdivision 1, is amended to read:
62.15    Subdivision 1. Powers and duties. The commissioner shall have and exercise
62.16the following powers and duties:
62.17    (1) administer and enforce the assessment and collection of taxes;
62.18    (2) make determinations, corrections, and assessments with respect to taxes,
62.19including interest, additions to taxes, and assessable penalties;
62.20    (3) use statistical or other sampling techniques consistent with generally accepted
62.21auditing standards in examining returns or records and making assessments;
62.22    (4) investigate the tax laws of other states and countries, and formulate and submit
62.23to the legislature such legislation as the commissioner may deem expedient to prevent
62.24evasions of state revenue laws and to secure just and equal taxation and improvement in
62.25the system of state revenue laws;
62.26    (5) consult and confer with the governor upon the subject of taxation, the
62.27administration of the laws in regard thereto, and the progress of the work of the
62.28department, and furnish the governor, from time to time, such assistance and information
62.29as the governor may require relating to tax matters;
62.30    (6) execute and administer any agreement with the secretary of the treasury or the
62.31Bureau of Alcohol, Tobacco, Firearms and Explosives in the Department of Justice of the
62.32United States or a representative of another state regarding the exchange of information
62.33and administration of the state revenue laws;
63.1    (7) require town, city, county, and other public officers to report information as to the
63.2collection of taxes received from licenses and other sources, and such other information
63.3as may be needful in the work of the commissioner, in such form as the commissioner
63.4may prescribe;
63.5    (8) authorize the use of unmarked motor vehicles to conduct seizures or criminal
63.6investigations pursuant to the commissioner's authority;
63.7    (9) authorize the participation in audits performed by the Multistate Tax Commission.
63.8For the purposes of chapter 270B, the Multistate Tax Commission will be considered to be
63.9a state for the purposes of auditing corporate sales, excise, and income tax returns.
63.10    (10) maintain toll-free telephone access for taxpayer assistance for calls from
63.11locations within the state; and
63.12    (10) (11) exercise other powers and authority and perform other duties required of or
63.13imposed upon the commissioner by law.
63.14EFFECTIVE DATE.This section is effective the day following final enactment.

63.15    Sec. 6. Minnesota Statutes 2012, section 270C.56, subdivision 1, is amended to read:
63.16    Subdivision 1. Liability imposed. A person who, either singly or jointly with
63.17others, has the control of, supervision of, or responsibility for filing returns or reports,
63.18paying taxes, or collecting or withholding and remitting taxes and who fails to do so, or a
63.19person who is liable under any other law, is liable for the payment of taxes arising under
63.20chapters 295, 296A, 297A, 297F, and 297G, or sections 256.9658, 290.92, and 297E.02,
63.21and the applicable penalties and interest on those taxes.
63.22EFFECTIVE DATE.This section is effective July 1, 2013.

63.23    Sec. 7. Minnesota Statutes 2012, section 287.05, is amended by adding a subdivision
63.24to read:
63.25    Subd. 10. Hennepin and Ramsey County. For properties located in Hennepin and
63.26Ramsey County, the county may impose an additional mortgage registry tax as defined in
63.27sections 383A.80 and 383B.80.
63.28EFFECTIVE DATE.This section is effective the day following final enactment.

63.29    Sec. 8. [287.40] HENNEPIN AND RAMSEY COUNTY.
63.30    For properties located in Hennepin or Ramsey County, the county may impose an
63.31additional deed tax as defined in sections 383A.80 and 383B.80.
64.1EFFECTIVE DATE.This section is effective the day following final enactment.

64.2    Sec. 9. [295.61] SPORTS MEMORABILIA GROSS RECEIPTS TAX.
64.3    Subdivision 1. Definitions. (a) For purposes of this section, the following terms
64.4have the meanings given, unless the context clearly indicates otherwise.
64.5(b) "Commissioner" means the commissioner of revenue.
64.6(c) "Sale" means a transfer of title or possession of tangible personal property,
64.7whether absolutely or conditionally.
64.8(d) "Sports memorabilia" means items available for sale to the public that are sold
64.9under a license granted by any professional or Collegiate Division I sports league or
64.10association, a team that is a franchise of a professional sports league or association, or
64.11a team that is an affiliate or subsidiary of a professional sports league or association,
64.12including:
64.13(1) one-of-a-kind items related to sports figures, teams, or events;
64.14(2) trading cards;
64.15(3) photographs;
64.16(4) clothing;
64.17(5) sports event licensed items;
64.18(6) sports equipment; and
64.19(7) similar items, but not food or beverage items.
64.20(e) "Wholesale" or "sale at wholesale" means a sale to a retailer, as defined in
64.21section 297A.61, subdivision 9, for the purpose of reselling the property to a third party.
64.22Wholesale does not mean a sale to a wholesaler.
64.23(f) "Wholesaler" means any person making wholesale sales of sports memorabilia
64.24to purchasers in the state.
64.25    Subd. 2. Imposition. A tax is imposed on each sale at wholesale of sports
64.26memorabilia equal to 13 percent of the gross revenues from the sale.
64.27    Subd. 3. Quarterly returns. Each wholesaler must file quarterly returns and make
64.28payments by April 18 for the quarter ending March 31; July 18 for the quarter ending June
64.2930; October 18 for the quarter ending September 30; and January 18 of the following
64.30calendar year for the quarter ending December 31.
64.31    Subd. 4. Compensating use tax. If the tax is not paid under subdivision 2, a
64.32compensating tax is imposed on a retailer or possessor for sale of sports memorabilia in
64.33the state. The rate of tax equals the rate under subdivision 2 and must be paid by the
64.34retailer or possessor for sale of the items.
65.1    Subd. 5. Allocation for youth sports. Ten percent of the revenue collected under
65.2subdivision 2 is appropriated to the commissioner for grants to counties to reimburse costs
65.3associated with the tax imposed under subdivision 2 for youth and amateur sports.
65.4    Subd. 6. Administrative provisions. Unless specifically provided otherwise by this
65.5section, the relevant audit, assessment, refund, penalty, interest, enforcement, collection
65.6remedies, appeal, and administrative provisions of chapters 270C and 289A apply to
65.7taxes imposed under this section.
65.8    Subd. 7. Disposition of revenues. The commissioner shall deposit the revenues
65.9from the tax, less the amount allocated in under subdivision 5, in the general fund.
65.10EFFECTIVE DATE.This section is effective for sales and purchases made after
65.11June 30, 2013.

65.12    Sec. 10. Minnesota Statutes 2012, section 296A.09, subdivision 2, is amended to read:
65.13    Subd. 2. Jet fuel and special fuel tax imposed. There is imposed an excise tax
65.14of the same rate 15 cents per gallon as the aviation gasoline on all jet fuel or special
65.15fuel received, sold, stored, or withdrawn from storage in this state, for use as substitutes
65.16for aviation gasoline and not otherwise taxed as gasoline. Jet fuel is defined in section
65.17296A.01, subdivision 8 .
65.18EFFECTIVE DATE.This section is effective July 1, 2014, and applied to sales
65.19and purchases made on or after that date.

65.20    Sec. 11. Minnesota Statutes 2012, section 296A.17, subdivision 3, is amended to read:
65.21    Subd. 3. Refund on graduated basis. Any person who has directly or indirectly
65.22paid the excise tax on aviation gasoline or special fuel for aircraft use provided for by this
65.23chapter under subdivision 2, and the airflight property tax under section 270.72, shall, as
65.24to all such aviation gasoline and special fuel received, stored, or withdrawn from storage
65.25by the person in this state in any calendar year and not sold or otherwise disposed of to
65.26others, or intended for sale or other disposition to others, on which such tax has been so
65.27paid, be entitled to the following graduated reductions in such tax for that calendar year, to
65.28be obtained by means of the following refunds:
65.29(1) on each gallon of such aviation gasoline or special fuel up to 50,000 gallons, all
65.30but five cents per gallon;
65.31(2) on each gallon of such aviation gasoline or special fuel above 50,000 gallons and
65.32not more than 150,000 gallons, all but two cents per gallon;
66.1(3) on each gallon of such aviation gasoline or special fuel above 150,000 gallons
66.2and not more than 200,000 gallons, all but one cent per gallon;
66.3(4) on each gallon of such aviation gasoline or special fuel above 200,000, all but
66.4one-half cent per gallon.
66.5EFFECTIVE DATE.This section is effective July 1, 2014, and applied to sales
66.6and purchases made on or after that date.

66.7    Sec. 12. Minnesota Statutes 2012, section 297A.82, subdivision 4, is amended to read:
66.8    Subd. 4. Exemptions. (a) The following transactions are exempt from the tax
66.9imposed in this chapter to the extent provided.
66.10(b) The purchase or use of aircraft previously registered in Minnesota by a
66.11corporation or partnership is exempt if the transfer constitutes a transfer within the
66.12meaning of section 351 or 721 of the Internal Revenue Code.
66.13(c) The sale to or purchase, storage, use, or consumption by a licensed aircraft dealer
66.14of an aircraft for which a commercial use permit has been issued pursuant to section
66.15360.654 is exempt, if the aircraft is resold while the permit is in effect.
66.16(d) Air flight equipment when sold to, or purchased, stored, used, or consumed by
66.17airline companies, as defined in section 270.071, subdivision 4, is exempt. For purposes
66.18of this subdivision, "air flight equipment" includes airplanes and parts necessary for the
66.19repair and maintenance of such air flight equipment, and flight simulators, but does
66.20not include airplanes with a gross weight of less than 30,000 pounds that are used on
66.21intermittent or irregularly timed flights.
66.22(e) Sales of, and the storage, distribution, use, or consumption of aircraft, as defined
66.23in section 360.511 and approved by the Federal Aviation Administration, and which the
66.24seller delivers to a purchaser outside Minnesota or which, without intermediate use, is
66.25shipped or transported outside Minnesota by the purchaser are exempt, but only if the
66.26purchaser is not a resident of Minnesota and provided that the aircraft is not thereafter
66.27returned to a point within Minnesota, except in the course of interstate commerce or
66.28isolated and occasional use, and will be registered in another state or country upon its
66.29removal from Minnesota. This exemption applies even if the purchaser takes possession of
66.30the aircraft in Minnesota and uses the aircraft in the state exclusively for training purposes
66.31for a period not to exceed ten days prior to removing the aircraft from this state.
66.32(f) The sale or purchase of the following items that relate to aircraft operated under
66.33Federal Aviation Regulations, Parts 91 and 135, and associated installation charges:
66.34equipment and parts necessary for repair and maintenance of aircraft; and equipment
66.35and parts to upgrade and improve aircraft.
67.1EFFECTIVE DATE.This section is effective July 1, 2014, and applied to sales
67.2and purchases made on or after that date.

67.3    Sec. 13. Minnesota Statutes 2012, section 297A.82, is amended by adding a
67.4subdivision to read:
67.5    Subd. 4a. Deposit in state airports fund. Tax revenue collected from the sale or
67.6purchase of an aircraft taxable under this chapter must be deposited in the state airports
67.7fund, established in section 360.017.
67.8EFFECTIVE DATE.This section is effective July 1, 2014, and applied to sales
67.9and purchases made on or after that date.

67.10    Sec. 14. Minnesota Statutes 2012, section 297E.02, subdivision 1, is amended to read:
67.11    Subdivision 1. Imposition. (a) A tax is imposed on all lawful gambling other than
67.12(1) paper or electronic pull-tab deals or games; (2) tipboard deals or games; (3) electronic
67.13linked bingo; and (4) items listed in section 297E.01, subdivision 8, clauses (4) and (5), at
67.14the rate of 8.5 percent on the gross receipts as defined in section 297E.01, subdivision 8,
67.15less prizes actually paid.
67.16(b) A tax is imposed on the conduct of paper pull-tabs, at the rate of 9 percent on
67.17the gross receipts as defined in section 297E.01, subdivision 8, less prizes actually paid.
67.18The tax imposed under this paragraph applies only to an organization that conducts lawful
67.19gambling in a location where at least 50 percent of its annual gross receipts are received
67.20from paper bingo as of January 1, 2013.
67.21(c) The tax imposed by this subdivision is in lieu of the tax imposed by section
67.22297A.62 and all local taxes and license fees except a fee authorized under section 349.16,
67.23subdivision 8 , or a tax authorized under subdivision 5.
67.24(d) The tax imposed under this subdivision is payable by the organization or party
67.25conducting, directly or indirectly, the gambling.
67.26EFFECTIVE DATE.This section is effective July 1, 2013.

67.27    Sec. 15. Minnesota Statutes 2012, section 297E.02, subdivision 6, is amended to read:
67.28    Subd. 6. Combined net receipts tax. (a) In addition to the taxes imposed under
67.29subdivision 1, a tax is imposed on the combined receipts of the organization. As used in
67.30this section, "combined net receipts" is the sum of the organization's gross receipts from
67.31lawful gambling less gross receipts directly derived from the conduct of paper bingo,
67.32raffles, and paddle wheels, as defined in section 297E.01, subdivision 8, and less the net
68.1prizes actually paid, other than prizes actually paid for paper bingo, raffles, and paddle
68.2wheels, for the fiscal year. The combined net receipts of an organization are subject to a
68.3tax computed according to the following schedule:
68.4
68.5
68.6
If the combined net
receipts for the fiscal year
are:
The tax is:
68.7
Not over $87,500
nine percent
68.8
68.9
Over $87,500, but not over
$122,500
$7,875 plus 18 percent of the amount
over $87,500, but not over $122,500
68.10
68.11
Over $122,500, but not
over $157,500
$14,175 plus 27 percent of the amount
over $122,500, but not over $157,500
68.12
68.13
Over $157,500
$23,625 plus 36 percent of the
amount over $157,500
68.14(b) On or before April 1, 2016, the commissioner shall estimate the total amount of
68.15revenue, including interest and penalties, that will be collected for fiscal year 2016 from
68.16taxes imposed under this chapter. If the amount estimated by the commissioner equals
68.17or exceeds $94,800,000, the commissioner shall certify that effective July 1, 2016, the
68.18rates under this paragraph apply in lieu of the rates under paragraph (a) and shall publish a
68.19notice to that effect in the State Register and notify each taxpayer by June 1, 2016. If the
68.20rates under this section apply, the combined net receipts of an organization are subject to a
68.21tax computed according to the following schedule:
68.22
68.23
68.24
If the combined net
receipts for the fiscal year
are:
The tax is:
68.25
Not over $87,500
8.5 percent
68.26
68.27
Over $87,500, but not over
$122,500
$7,438 plus 17 percent of the amount
over $87,500, but not over $122,500
68.28
68.29
68.30
Over $122,500, but not
over $157,500
$13,388 plus 25.5 percent of the
amount over $122,500, but not over
$157,500
68.31
68.32
Over $157,500
$22,313 plus 34 percent of the
amount over $157,500
68.33(c) Gross receipts derived from sports-themed tipboards are exempt from taxation
68.34under this section. For purposes of this paragraph, a sports-themed tipboard means a
68.35sports-themed tipboard as defined in section 349.12, subdivision 34, under which the
68.36winning numbers are determined by the numerical outcome of a professional sporting event.
68.37(d) If an organization conducts lawful gambling in a location where, as of January 1,
68.382013, at least 50 percent of its annual gross receipts are derived from paper bingo, the
68.39organization is exempt from taxation under this subdivision with respect to its receipts
68.40from paper pull-tabs.
68.41EFFECTIVE DATE.This section is effective July 1, 2013.

69.1    Sec. 16. Minnesota Statutes 2012, section 297F.01, is amended by adding a subdivision
69.2to read:
69.3    Subd. 9b. Little cigar. "Little cigar" means any roll for smoking made in whole or
69.4in part of tobacco if the product is wrapped in a substance containing tobacco other than
69.5natural leaf tobacco, uses an integrated cellulose acetate or other similar filter, and weighs
69.6not more than 4-1/2 pounds per thousand.
69.7EFFECTIVE DATE.This section is effective July 1, 2013.

69.8    Sec. 17. Minnesota Statutes 2012, section 297F.01, is amended by adding a subdivision
69.9to read:
69.10    Subd. 10b. Moist snuff. "Moist snuff" means any finely cut, ground, or powdered
69.11smokeless tobacco that is intended to be placed or dipped in the mouth.
69.12EFFECTIVE DATE.This section is effective July 1, 2013.

69.13    Sec. 18. Minnesota Statutes 2012, section 297F.01, is amended by adding a subdivision
69.14to read:
69.15    Subd. 13a. Premium cigar. "Premium cigar" means any cigar that is
69.16hand-constructed and hand-rolled, has a wrapper that is made entirely from whole tobacco
69.17leaf, has a filler and binder that is made entirely of tobacco, except for adhesives or other
69.18materials used to maintain size, texture, or flavor, and has a wholesale price of no less
69.19than $2.
69.20EFFECTIVE DATE.This section is effective July 1, 2013.

69.21    Sec. 19. Minnesota Statutes 2012, section 297F.01, subdivision 19, is amended to read:
69.22    Subd. 19. Tobacco products. (a) "Tobacco products" means any product
69.23containing, made, or derived from tobacco that is intended for human consumption,
69.24whether chewed, smoked, absorbed, dissolved, inhaled, snorted, sniffed, or ingested by
69.25any other means, or any component, part, or accessory of a tobacco product, including,
69.26but not limited to, cigars; little cigars; cheroots; stogies; periques; granulated, plug cut,
69.27crimp cut, ready rubbed, and other smoking tobacco; snuff; snuff flour; cavendish; plug
69.28and twist tobacco; fine-cut and other chewing tobacco; shorts; refuse scraps, clippings,
69.29cuttings and sweepings of tobacco, and other kinds and forms of tobacco; but does not
69.30include cigarettes as defined in this section. Tobacco products excludes any tobacco
69.31product that has been approved by the United States Food and Drug Administration for
70.1sale as a tobacco cessation product, as a tobacco dependence product, or for other medical
70.2purposes, and is being marketed and sold solely for such an approved purpose.
70.3(b) Except for the imposition of tax under section 297F.05, subdivisions 3 and 4,
70.4tobacco products includes a premium cigar, as defined in subdivision 13a.
70.5EFFECTIVE DATE.This section is effective July 1, 2013.

70.6    Sec. 20. Minnesota Statutes 2012, section 297F.05, subdivision 1, is amended to read:
70.7    Subdivision 1. Rates; cigarettes. A tax is imposed upon the sale of cigarettes in
70.8this state, upon having cigarettes in possession in this state with intent to sell, upon any
70.9person engaged in business as a distributor, and upon the use or storage by consumers, at
70.10the following rates:
70.11(1) on cigarettes weighing not more than three pounds per thousand, 24 108.5 mills,
70.12or 10.85 cents, on each such cigarette; and
70.13(2) on cigarettes weighing more than three pounds per thousand, 48 217 mills, or
70.1421.7 cents, on each such cigarette.
70.15EFFECTIVE DATE.This section is effective July 1, 2013.

70.16    Sec. 21. Minnesota Statutes 2012, section 297F.05, is amended by adding a subdivision
70.17to read:
70.18    Subd. 1a. Annual indexing. (a) Each year the commissioner shall adjust the
70.19tax rates under subdivision 1, including any adjustment made in prior years under this
70.20subdivision, by multiplying the mill rates for the current calendar year by an adjustment
70.21factor. The adjustment factor equals the in-lieu sales tax rate that applies to the following
70.22calendar year divided by the in-lieu sales tax rate for the current calendar year. For
70.23purposes of this subdivision, "in-lieu sales tax rate" means the tax rate established under
70.24section 297F.25, subdivision 1, rounded to 1/100 of one cent per cigarette.
70.25    (b) The commissioner shall publish the resulting rate by November 1 and the rate
70.26applies to sales made on or after January 1 of the following year.
70.27(c) The determination of the commissioner under this subdivision is not a rule and is
70.28not subject to the Administrative Procedure Act in chapter 14.
70.29EFFECTIVE DATE.This section is effective July 1, 2013.

70.30    Sec. 22. Minnesota Statutes 2012, section 297F.05, subdivision 3, is amended to read:
70.31    Subd. 3. Rates; tobacco products. (a) Except as provided in subdivision 3a, a tax is
70.32imposed upon all tobacco products in this state and upon any person engaged in business
71.1as a distributor, at the rate of 35 90 percent of the wholesale sales price of the tobacco
71.2products. The tax is imposed at the time the distributor:
71.3(1) brings, or causes to be brought, into this state from outside the state tobacco
71.4products for sale;
71.5(2) makes, manufactures, or fabricates tobacco products in this state for sale in
71.6this state; or
71.7(3) ships or transports tobacco products to retailers in this state, to be sold by those
71.8retailers.
71.9(b) Notwithstanding paragraph (a), a minimum tax equal to the rate imposed on a pack
71.10of 20 cigarettes weighing not more than three pounds per thousand, as established under
71.11subdivision 1, and adjusted by subdivision 1a, is imposed on each container of moist snuff.
71.12For purposes of this subdivision, a "container" means the smallest consumer-size can,
71.13package, or other container that is marketed or packaged by the manufacturer, distributor,
71.14or retailer for separate sale to a retail purchaser.
71.15(c) Notwithstanding paragraph (a), for little cigars, the tax on each little cigar shall
71.16be equal to the tax imposed per cigarette under subdivision 1, clause (1), and adjusted by
71.17subdivision 1a, and any successor provision taxing cigarettes.
71.18EFFECTIVE DATE.This section is effective July 1, 2013, except the minimum
71.19tax under paragraph (b) is effective January 1, 2014.

71.20    Sec. 23. Minnesota Statutes 2012, section 297F.05, is amended by adding a subdivision
71.21to read:
71.22    Subd. 3a. Rates; tobacco. (a) A tax is imposed upon all premium cigars in this state
71.23and upon any person engaged in business as a tobacco product distributor, at the lesser of:
71.24(1) the rate of 70 percent of the wholesale sales price of the premium cigars; or
71.25(2) $3.50 per premium cigar.
71.26(b) The tax imposed under paragraph (a) is imposed at the time the tobacco products
71.27distributor:
71.28(1) brings, or causes to be brought, into this state from outside the state premium
71.29cigars for sale;
71.30(2) makes, manufactures, or fabricates premium cigars in this state for sale in this
71.31state; or
71.32(3) ships or transports premium cigars to retailers in this state, to be sold by those
71.33retailers.
71.34EFFECTIVE DATE.This section is effective July 1, 2013.

72.1    Sec. 24. Minnesota Statutes 2012, section 297F.05, subdivision 4, is amended to read:
72.2    Subd. 4. Use tax; tobacco products. (a) Except as provided in subdivision 4a, a tax
72.3is imposed upon the use or storage by consumers of tobacco products in this state, and
72.4upon such consumers, at the rate of 35 90 percent of the cost to the consumer of the tobacco
72.5products or the minimum tax under subdivision 3, paragraph (b), whichever is greater.
72.6(b) Notwithstanding paragraph (a), for little cigars, the tax on each little cigar
72.7shall be equal to the tax imposed per cigarette under subdivision 1, clause (1), and any
72.8successor provision taxing cigarettes.
72.9EFFECTIVE DATE.This section is effective July 1, 2013.

72.10    Sec. 25. Minnesota Statutes 2012, section 297F.05, is amended by adding a subdivision
72.11to read:
72.12    Subd. 4a. Use tax; premium cigars. A tax is imposed upon the use or storage by
72.13consumers of all premium cigars in this state, and upon such consumers, at the lesser of:
72.14(1) the rate of 70 percent of the cost to the consumer of the premium cigars; or
72.15(2) $3.50 per premium cigar.
72.16EFFECTIVE DATE.This section is effective July 1, 2013.

72.17    Sec. 26. Minnesota Statutes 2012, section 297F.24, subdivision 1, is amended to read:
72.18    Subdivision 1. Fee imposed. (a) A fee is imposed upon the sale of nonsettlement
72.19cigarettes in this state, upon having nonsettlement cigarettes in possession in this state
72.20with intent to sell, upon any person engaged in business as a distributor, and upon the use
72.21or storage by consumers of nonsettlement cigarettes. The fee equals a rate of 1.75 2.5
72.22cents per cigarette.
72.23(b) The purpose of this fee is to:
72.24(1) ensure that manufacturers of nonsettlement cigarettes pay fees to the state that
72.25are comparable to costs attributable to the use of the cigarettes;
72.26(2) prevent manufacturers of nonsettlement cigarettes from undermining the state's
72.27policy of discouraging underage smoking by offering nonsettlement cigarettes at prices
72.28substantially below the cigarettes of other manufacturers; and
72.29(3) fund such other purposes as the legislature determines appropriate.

72.30    Sec. 27. Minnesota Statutes 2012, section 297F.25, subdivision 1, is amended to read:
72.31    Subdivision 1. Imposition. (a) A tax is imposed on distributors on the sale of
72.32cigarettes by a cigarette distributor to a retailer or cigarette subjobber for resale in this
73.1state. The tax is equal to 6.5 percent of the weighted average retail price and must be
73.2expressed in cents per pack rounded to the nearest one-tenth of a cent. The weighted
73.3average retail price must be determined annually, with new rates published by November
73.41, and effective for sales on or after January 1 of the following year. The weighted average
73.5retail price must be established by surveying cigarette retailers statewide in a manner
73.6and time determined by the commissioner. The commissioner shall make an inflation
73.7adjustment in accordance with the Consumer Price Index for all urban consumers inflation
73.8indicator as published in the most recent state budget forecast. The commissioner shall use
73.9the inflation factor for the calendar year in which the new tax rate takes effect. If the survey
73.10indicates that the average retail price of cigarettes has not increased relative to the average
73.11retail price in the previous year's survey, then the commissioner shall not make an inflation
73.12adjustment. The determination of the commissioner pursuant to this subdivision is not a
73.13"rule" and is not subject to the Administrative Procedure Act contained in chapter 14. For
73.14packs of cigarettes with other than 20 cigarettes, the tax must be adjusted proportionally.
73.15(b) Notwithstanding paragraph (a), and in lieu of a survey of cigarette retailers, the
73.16tax calculation of the weighted average retail price for the sales of cigarettes from August
73.171, 2011, through December 31, 2011, shall be calculated by: (1) increasing the average
73.18retail price per pack of 20 cigarettes from the most recent survey by the percentage change
73.19in a weighted average of the presumed legal prices for cigarettes during the year after
73.20completion of that survey, as reported and published by the Department of Commerce
73.21under section 325D.371; (2) subtracting the sales tax included in the retail price; and (3)
73.22adjusting for expected inflation. The rate must be published by May 1 and is effective for
73.23sales after July 31. If the weighted average of the presumed legal prices indicates that the
73.24average retail price of cigarettes has not increased relative to the average retail price in the
73.25most recent survey, then no inflation adjustment must be made for any period that a rate
73.26change in section 297F.05, subdivision 1, is enacted after the current effective January 1
73.27rate and prior to the following January 1, the commissioner of revenue shall make a
73.28proportionate adjustment to the sales tax rate. For packs of cigarettes with other than 20
73.29cigarettes, the sales tax must be adjusted proportionally.
73.30EFFECTIVE DATE.This section is effective July 1, 2013.

73.31    Sec. 28. Minnesota Statutes 2012, section 325F.781, subdivision 1, is amended to read:
73.32    Subdivision 1. Definitions. (a) For purposes of this section, the following terms
73.33have the meanings given, unless the language or context clearly provides otherwise.
73.34(b) "Consumer" means an individual who purchases, receives, or possesses tobacco
73.35products for personal consumption and not for resale.
74.1(c) "Delivery sale" means:
74.2(1) a sale of tobacco products to a consumer in this state when:
74.3(i) the purchaser submits the order for the sale by means of a telephonic or other
74.4method of voice transmission, the mail or any other delivery service, or the Internet or
74.5other online service; or
74.6(ii) the tobacco products are delivered by use of the mail or other delivery service; or
74.7(2) a sale of tobacco products that satisfies the criteria in clause (1), item (i),
74.8regardless of whether the seller is located inside or outside of the state.
74.9A sale of tobacco products to an individual in this state must be treated as a sale to a
74.10consumer, unless the individual is licensed as a distributor or retailer of tobacco products.
74.11(d) "Delivery service" means a person, including the United States Postal Service,
74.12that is engaged in the commercial delivery of letters, packages, or other containers.
74.13(e) "Distributor" means a person, whether located inside or outside of this state,
74.14other than a retailer, who sells or distributes tobacco products in the state. Distributor does
74.15not include a tobacco products manufacturer, export warehouse proprietor, or importer
74.16with a valid permit under United States Code, title 26, section 5712 (1997), if the person
74.17sells or distributes tobacco products in this state only to distributors who hold valid and
74.18current licenses under the laws of a state, or to an export warehouse proprietor or another
74.19manufacturer. Distributor does not include a common or contract carrier that is transporting
74.20tobacco products under a proper bill of lading or freight bill that states the quantity, source,
74.21and destination of tobacco products, or a person who ships tobacco products through this
74.22state by common or contract carrier under a bill of lading or freight bill.
74.23(f) "Retailer" means a person, whether located inside or outside this state, who sells
74.24or distributes tobacco products to a consumer in this state.
74.25(g) "Tobacco products" means:
74.26(1) cigarettes, as defined in section 297F.01, subdivision 3; and
74.27(2) smokeless tobacco as defined in section 325F.76.; and
74.28(3) premium cigars as defined in section 297F.01, subdivision 13a.
74.29EFFECTIVE DATE.This section is effective July 1, 2013.

74.30    Sec. 29. Minnesota Statutes 2012, section 360.531, is amended to read:
74.31360.531 TAXATION.
74.32    Subdivision 1. In lieu tax. All aircraft using the air space overlying the state of
74.33Minnesota or the airports thereof, except as set forth in section 360.55, shall be taxed in
75.1lieu of all other taxes thereon, on the basis and at the rate for the period January 1, 1966, to
75.2June 30, 1967, and for each fiscal year as follows.
75.3    Subd. 2. Rate. The tax shall be at the rate of one percent of value; provided that
75.4the minimum tax on an aircraft subject to the provisions of sections 360.511 to 360.67
75.5 shall not be less than 25 percent of the tax on said aircraft computed on its base price or
75.6$50 whichever is the higher. as follows:
75.7
Base Price
Tax
75.8
Under $499,999
$100
75.9
$500,000 to $999,999
$200
75.10
$1,000,000 to $2,499,999
$2,000
75.11
$2,500,000 to $4,999,999
$4,000
75.12
$5,000,000 to $7,499,999
$7,500
75.13
$7,500,000 to $9,999,999
$10,000
75.14
$10,000,000 to $12,499,999
$12,500
75.15
$12,500,000 to $14,999,999
$15,000
75.16
$15,000,000 to $17,499,999
$17,500
75.17
$17,500,000 to $19,999,999
$20,000
75.18
$20,000,000 to $22,499,999
$22,500
75.19
$22,500,000 to $24,999,999
$25,000
75.20
$25,000,000 to $27,499,999
$27,500
75.21
$27,500,000 to $29,999,999
$30,000
75.22
$30,000,000 to $39,999,999
$50,000
75.23
$40,000,000 and over
$75,000
75.24    Subd. 3. First year of life. "First year of life" means the year the aircraft was
75.25manufactured.
75.26    Subd. 4. Base price for taxation. For the purpose of fixing a base price for taxation
75.27from which depreciation in value at a fixed percent per annum can be counted, such , the
75.28base price is defined as follows:
75.29(a) The base price for taxation of an aircraft shall be the manufacturer's list price.
75.30(b) The commissioner shall have authority to fix the base value for taxation purposes
75.31of any aircraft of which no such similar or corresponding model has been manufactured,
75.32and of any rebuilt or foreign aircraft, any aircraft on which a record of the list price is not
75.33available, or any military aircraft converted for civilian use, using as a basis for such
75.34valuation the list price of aircraft with comparable performance characteristics, and taking
75.35into consideration the age and condition of the aircraft.
75.36    Subd. 5. Similarity of corresponding model. Models shall be deemed similar if
75.37substantially alike and of the same make. Models shall be deemed to be corresponding
75.38models for the purpose of taxation under sections 360.54 to 360.67 if of the same make
76.1and having approximately the same weight and type of frame and the same style and
76.2size of motor.
76.3    Subd. 6. Depreciation. After the first year of aircraft life the base value for taxation
76.4purposes shall be reduced as follows: ten percent the second year, and 15 percent the third
76.5and each succeeding year thereafter, but in no event shall such tax be reduced below
76.6the minimum.
76.7    Subd. 7. Prorating tax. When an aircraft first becomes subject to taxation during the
76.8period for which the tax is to be paid, the tax on it shall be for the remainder of that period,
76.9prorated on a monthly basis of 1/12 of the annual tax for each calendar month counting the
76.10month during which it becomes subject to the tax as the first month of such period.
76.11    Subd. 8. Tax, fiscal year. Every aircraft subject to the provisions of sections
76.12360.511 to 360.67 which has at any time since April 19, 1945, used the air space overlying
76.13the state of Minnesota or the airports thereof shall be taxed for the period from January 1,
76.141966, through June 30, 1967, and for each fiscal year thereafter in which it is so used. Any
76.15aircraft which does not use the air space overlying the state of Minnesota or the airports
76.16thereof at any time during the period of January 1, 1966, to and including June 30, 1967,
76.17or at any time during any fiscal year thereafter shall not be subject to the tax provided by
76.18sections 360.511 to 360.67 for such period. Rebuilt aircraft shall be subject to the tax
76.19provided by sections 360.511 to 360.67 for that portion of the aforesaid periods remaining
76.20after the aircraft has been rebuilt, prorated on a monthly basis.
76.21    Subd. 9. Assessed as personal property in certain cases. Aircraft subject to
76.22taxation under the provisions of sections 360.54 to 360.67 shall not be assessed as personal
76.23property and shall be subject to no tax except as provided for by these sections. Aircraft
76.24not subject to taxation as provided in these sections, but subject to taxation as personal
76.25property within the state of Minnesota shall be assessed and valued at 33-1/3 percent of
76.26the market value thereof and taxed at the rate and in the manner provided by law for the
76.27taxation of ordinary personal property. If the person against whom any tax has been levied
76.28on the ad valorem basis because of any aircraft shall, during the calendar year for which
76.29such ad valorem tax is levied, be also taxed under provisions of these sections, then and in
76.30that event, upon proper showing, the commissioner of revenue shall grant to the person
76.31against whom said ad valorem tax was levied, such reduction or abatement of net tax
76.32capacity or taxes as was occasioned by the so-called ad valorem tax imposed. If the ad
76.33valorem tax upon any aircraft has been assessed against a dealer in new and used aircraft,
76.34and the tax imposed by these sections for the required period is thereafter paid by the
76.35owner, then and in that event, upon proper showing, the commissioner of revenue, upon
76.36the application of said dealer, shall grant to such dealer against whom said ad valorem tax
77.1was levied such reduction or abatement of net tax capacity or taxes as was occasioned
77.2by the so-called ad valorem tax imposed.
77.3EFFECTIVE DATE.This section is effective July 1, 2014, and applies to aircraft
77.4tax due on or after that date.

77.5    Sec. 30. Minnesota Statutes 2012, section 360.66, is amended to read:
77.6360.66 STATE AIRPORTS FUND.
77.7    Subdivision 1. Tax credited to fund. The proceeds of the tax imposed on aircraft
77.8under sections 360.54 360.531 to 360.67 and all fees and penalties provided for therein
77.9shall be collected by the commissioner and paid into the state treasury and credited to the
77.10state airports fund created by other statutes of this state.
77.11    Subd. 2. Reimbursement for expenses. There shall be transferred by the
77.12commissioner of management and budget each year from the state airports fund to the
77.13general fund in the state treasury the amount expended from the latter fund for expenses of
77.14administering the provisions of sections 360.54 360.531 to 360.67.
77.15EFFECTIVE DATE.This section is effective July 1, 2014, and applies to aircraft
77.16tax due on or after that date.

77.17    Sec. 31. Minnesota Statutes 2012, section 383A.80, subdivision 4, is amended to read:
77.18    Subd. 4. Expiration. The authority to impose the tax under this section expires
77.19January 1, 2013 2023.
77.20EFFECTIVE DATE.This section is effective for all deeds and mortgages executed
77.21on or after July 1, 2013.

77.22    Sec. 32. Minnesota Statutes 2012, section 383B.80, subdivision 4, is amended to read:
77.23    Subd. 4. Expiration. The authority to impose the tax under this section expires
77.24January 1, 2013 2023.
77.25EFFECTIVE DATE.This section is effective for all deeds and mortgages executed
77.26on or after July 1, 2013.

77.27    Sec. 33. Minnesota Statutes 2012, section 403.02, is amended by adding a subdivision
77.28to read:
78.1    Subd. 17b. Prepaid wireless telecommunications service. "Prepaid wireless
78.2telecommunications service" means a wireless telecommunications service that allows the
78.3caller to dial 911 to access the 911 system, which service must be paid for in advance and is:
78.4(1) sold in predetermined units or dollars of which the number declines with use in a
78.5known amount; or
78.6(2) provides unlimited use for a predetermined time period.
78.7The inclusion of nontelecommunications services, including the download of digital
78.8products delivered electronically, content, and ancillary services, with a prepaid wireless
78.9telephone service does not preclude that service from being considered a prepaid wireless
78.10telephone service under this chapter.
78.11EFFECTIVE DATE.This section is effective January 1, 2014.

78.12    Sec. 34. Minnesota Statutes 2012, section 403.02, is amended by adding a subdivision
78.13to read:
78.14    Subd. 20a. Wireless telecommunications service. "Wireless telecommunications
78.15service" means a commercial mobile radio service, as that term is defined in United
78.16States Code, title 47, section 332, subsection (d), including all broadband personal
78.17communication services, wireless radio telephone services, and geographic area
78.18specialized mobile radio licensees, that offer real-time, two-way voice service
78.19interconnected with the public switched telephone network.
78.20EFFECTIVE DATE.This section is effective January 1, 2014.

78.21    Sec. 35. Minnesota Statutes 2012, section 403.02, subdivision 21, is amended to read:
78.22    Subd. 21. Wireless telecommunications service provider. "Wireless
78.23telecommunications service provider" means a provider of commercial mobile radio
78.24services, as that term is defined in United States Code, title 47, section 332, subsection
78.25(d), including all broadband personal communications services, wireless radio telephone
78.26services, geographic area specialized and enhanced specialized mobile radio services, and
78.27incumbent wide area specialized mobile radio licensees, that offers real-time, two-way
78.28voice service interconnected with the public switched telephone network and that is doing
78.29business in the state of Minnesota wireless telecommunications service.
78.30EFFECTIVE DATE.This section is effective January 1, 2014.

78.31    Sec. 36. Minnesota Statutes 2012, section 403.06, subdivision 1a, is amended to read:
79.1    Subd. 1a. Biennial budget; annual financial report. The commissioner shall
79.2prepare a biennial budget for maintaining the 911 system. By December 15 of each year,
79.3the commissioner shall submit a report to the legislature detailing the expenditures for
79.4maintaining the 911 system, the 911 fees collected, the balance of the 911 fund, and the
79.5911-related administrative expenses of the commissioner, and of a separate accounting
79.6of E911 fees from prepaid wireless customers. The commissioner is authorized to
79.7expend money that has been appropriated to pay for the maintenance, enhancements,
79.8and expansion of the 911 system.
79.9EFFECTIVE DATE.This section is effective January 1, 2014.

79.10    Sec. 37. Minnesota Statutes 2012, section 403.11, subdivision 1, is amended to read:
79.11    Subdivision 1. Emergency telecommunications service fee; account. (a) Each
79.12customer of a wireless or wire-line switched or packet-based telecommunications service
79.13provider connected to the public switched telephone network that furnishes service capable
79.14of originating a 911 emergency telephone call is assessed a fee based upon the number
79.15of wired or wireless telephone lines, or their equivalent, to cover the costs of ongoing
79.16maintenance and related improvements for trunking and central office switching equipment
79.17for 911 emergency telecommunications service, to offset administrative and staffing costs
79.18of the commissioner related to managing the 911 emergency telecommunications service
79.19program, to make distributions provided for in section 403.113, and to offset the costs,
79.20including administrative and staffing costs, incurred by the State Patrol Division of the
79.21Department of Public Safety in handling 911 emergency calls made from wireless phones.
79.22    (b) Money remaining in the 911 emergency telecommunications service account
79.23after all other obligations are paid must not cancel and is carried forward to subsequent
79.24years and may be appropriated from time to time to the commissioner to provide financial
79.25assistance to counties for the improvement of local emergency telecommunications
79.26services. The improvements may include providing access to 911 service for
79.27telecommunications service subscribers currently without access and upgrading existing
79.28911 service to include automatic number identification, local location identification,
79.29automatic location identification, and other improvements specified in revised county
79.30911 plans approved by the commissioner.
79.31    (c) The fee may not be less than eight cents nor more than 65 cents a month until
79.32June 30, 2008, not less than eight cents nor more than 75 cents a month until June 30,
79.332009, not less than eight cents nor more than 85 cents a month until June 30, 2010, and
79.34not less than eight cents nor more than 95 cents a month on or after July 1, 2010, for
79.35each customer access line or other basic access service, including trunk equivalents as
80.1designated by the Public Utilities Commission for access charge purposes and including
80.2wireless telecommunications services. With the approval of the commissioner of
80.3management and budget, the commissioner of public safety shall establish the amount of
80.4the fee within the limits specified and inform the companies and carriers of the amount to
80.5be collected. When the revenue bonds authorized under section 403.27, subdivision 1,
80.6have been fully paid or defeased, the commissioner shall reduce the fee to reflect that debt
80.7service on the bonds is no longer needed. The commissioner shall provide companies and
80.8carriers a minimum of 45 days' notice of each fee change. The fee must be the same for all
80.9customers, except that the fee imposed under this subdivision does not apply to prepaid
80.10wireless telecommunications service, which is instead subject to the fee imposed under
80.11section 403.161, subdivision 1, paragraph (a).
80.12    (d) The fee must be collected by each wireless or wire-line telecommunications
80.13service provider subject to the fee. Fees are payable to and must be submitted to the
80.14commissioner monthly before the 25th of each month following the month of collection,
80.15except that fees may be submitted quarterly if less than $250 a month is due, or annually if
80.16less than $25 a month is due. Receipts must be deposited in the state treasury and credited
80.17to a 911 emergency telecommunications service account in the special revenue fund. The
80.18money in the account may only be used for 911 telecommunications services.
80.19    (e) This subdivision does not apply to customers of interexchange carriers.
80.20    (f) The installation and recurring charges for integrating wireless 911 calls into
80.21enhanced 911 systems are eligible for payment by the commissioner if the 911 service
80.22provider is included in the statewide design plan and the charges are made pursuant to
80.23contract.
80.24    (g) Competitive local exchanges carriers holding certificates of authority from the
80.25Public Utilities Commission are eligible to receive payment for recurring 911 services.
80.26EFFECTIVE DATE.This section is effective January 1, 2014.

80.27    Sec. 38. Minnesota Statutes 2012, section 403.11, is amended by adding a subdivision
80.28to read:
80.29    Subd. 6. Report. (a) Beginning September 1, 2013, and continuing semiannually
80.30thereafter, each wireless telecommunications service provider shall report to the
80.31commissioner, based on the mobile telephone number, both the total number of prepaid
80.32wireless telecommunications subscribers sourced to Minnesota and the total number of
80.33wireless telecommunications subscribers sourced to Minnesota. The report must be filed
80.34on the same schedule as Federal Communications Commission Form 477.
81.1(b) The commissioner shall make a standard form available to all wireless
81.2telecommunications service providers for submitting information required to compile
81.3the report required under this subdivision.
81.4(c) The information provided to the commissioner under this subdivision is
81.5considered trade secret data under section 13.37 and may only be used for purposes of
81.6administering this chapter.
81.7EFFECTIVE DATE.This section is effective the day following final enactment.

81.8    Sec. 39. [403.16] DEFINITIONS.
81.9    Subdivision 1. Scope. For the purposes of sections 403.16 to 403.164, the terms
81.10defined in this section have the meanings given them.
81.11    Subd. 2. Consumer. "Consumer" means a person who purchases prepaid wireless
81.12telecommunications service in a retail transaction.
81.13    Subd. 3. Department. "Department" means the Department of Revenue.
81.14    Subd. 4. Prepaid wireless E911 fee. "Prepaid wireless E911 fee" means the fee that
81.15is required to be collected by a seller from a consumer as established in section 403.161,
81.16subdivision 1, paragraph (a).
81.17    Subd. 5. Prepaid wireless telecommunications access Minnesota fee. "Prepaid
81.18wireless telecommunications access Minnesota fee" means the fee that is required to be
81.19collected by a seller from a consumer as established in section 403.161, subdivision 1,
81.20paragraph (b).
81.21    Subd. 6. Provider. "Provider" means a person that provides prepaid wireless
81.22telecommunications service under a license issued by the Federal Communications
81.23Commission.
81.24    Subd. 7. Retail transaction. "Retail transaction" means the purchase of prepaid
81.25wireless telecommunications service from a seller for any purpose other than resale.
81.26    Subd. 8. Seller. "Seller" means a person who sells prepaid wireless
81.27telecommunications service to another person.
81.28EFFECTIVE DATE.This section is effective the day following final enactment.

81.29    Sec. 40. [403.161] PREPAID WIRELESS FEES IMPOSED; COLLECTION;
81.30REMITTANCE.
81.31    Subdivision 1. Fees imposed. (a) A prepaid wireless E911 fee of 80 cents per retail
81.32transaction is imposed on prepaid wireless telecommunications service until the fee is
81.33adjusted as an amount per retail transaction under subdivision 6.
82.1(b) A prepaid wireless telecommunications access Minnesota fee, in the amount of
82.2the monthly charge provided for in section 237.52, subdivision 2, is imposed on each
82.3retail transaction for prepaid wireless telecommunications service until the fee is adjusted
82.4as an amount per retail transaction under subdivision 6.
82.5    Subd. 2. Exemption. The fees established under subdivision 1 are not imposed on a
82.6minimal amount of prepaid wireless telecommunications service that is sold with a prepaid
82.7wireless device and is charged a single nonitemized price, and a seller may not apply the
82.8fees to such a transaction. For purposes of this subdivision, a minimal amount of service
82.9means an amount of service denominated as either ten minutes or less or $5 or less.
82.10    Subd. 3. Fee collected. The prepaid wireless E911 and telecommunications
82.11access Minnesota fees must be collected by the seller from the consumer for each retail
82.12transaction occurring in this state. The amount of each fee must be combined into one
82.13amount, which must be separately stated on an invoice, receipt, or other similar document
82.14that is provided to the consumer by the seller, or otherwise disclosed to the consumer.
82.15    Subd. 4. Sales and use tax treatment. For purposes of this section, a retail
82.16transaction conducted in person by a consumer at a business location of the seller must
82.17be treated as occurring in this state if that business location is in this state, and any other
82.18retail transaction must be treated as occurring in this state if the retail transaction is treated
82.19as occurring in this state for purposes of the sales and use tax as specified in section
82.20297A.669, subdivision 3, paragraph (c).
82.21    Subd. 5. Remittance. The prepaid wireless E911 and telecommunications access
82.22Minnesota fees are the liability of the consumer and not of the seller or of any provider,
82.23except that the seller is liable to remit all fees that the seller collects from consumers as
82.24provided in section 403.162, including all fees that the seller is deemed to collect in which
82.25the amount of the fee has not been separately stated on an invoice, receipt, or other similar
82.26document provided to the consumer by the seller.
82.27    Subd. 6. Exclusion for calculating other charges. The combined amount of the
82.28prepaid wireless E911 and telecommunications access Minnesota fees collected by a seller
82.29from a consumer must not be included in the base for measuring any tax, fee, surcharge,
82.30or other charge that is imposed by this state, any political subdivision of this state, or
82.31any intergovernmental agency.
82.32    Subd. 7. Fee changes. (a) The prepaid wireless E911 and telecommunications
82.33access Minnesota fee must be proportionately increased or reduced upon any change to
82.34the fee imposed under section 403.11, subdivision 1, paragraph (c), after July 1, 2013, or
82.35the fee imposed under section 237.52, subdivision 2, as applicable.
83.1(b) The department shall post notice of any fee changes on its Web site at least 30
83.2days in advance of the effective date of the fee changes. It is the responsibility of sellers to
83.3monitor the department's Web site for notice of fee changes.
83.4(c) Fee changes are effective 60 days after the first day of the first calendar month
83.5after the commissioner of public safety or the Public Utilities Commission, as applicable,
83.6changes the fee.
83.7EFFECTIVE DATE.This section is effective January 1, 2014.

83.8    Sec. 41. [403.162] ADMINISTRATION OF PREPAID WIRELESS E911 FEES.
83.9    Subdivision 1. Remittance. Prepaid wireless E911 and telecommunications access
83.10Minnesota fees collected by sellers must be remitted to the commissioner of revenue
83.11at the times and in the manner provided by chapter 297A with respect to the general
83.12sales and use tax. The commissioner of revenue shall establish registration and payment
83.13procedures that substantially coincide with the registration and payment procedures that
83.14apply in chapter 297A.
83.15    Subd. 2. Seller's fee retention. A seller may deduct and retain three percent of
83.16prepaid wireless E911 and telecommunications access Minnesota fees collected by the
83.17seller from consumers.
83.18    Subd. 3. Audit; appeal. The audit and appeal procedures applicable under chapter
83.19297A apply to any fee imposed under section 403.161.
83.20    Subd. 4. Procedures for resale transactions. The commissioner of revenue shall
83.21establish procedures by which a seller of prepaid wireless telecommunications service
83.22may document that a sale is not a retail transaction. These procedures must substantially
83.23coincide with the procedures for documenting sale for resale transactions as provided in
83.24chapter 297A.
83.25    Subd. 5. Fees deposited. (a) The commissioner of revenue shall, based on
83.26the relative proportion of the prepaid wireless E911 fee and the prepaid wireless
83.27telecommunications access Minnesota fee imposed per retail transaction, divide the fees
83.28collected in corresponding proportions. Within 30 days of receipt of the collected fees,
83.29the commissioner shall:
83.30(1) deposit the proportion of the collected fees attributable to the prepaid wireless
83.31E911 fee in the 911 emergency telecommunications service account in the special revenue
83.32fund; and
83.33(2) deposit the proportion of collected fees attributable to the prepaid wireless
83.34telecommunications access Minnesota fee in the telecommunications access fund
83.35established in section 237.52, subdivision 1.
84.1(b) The department may deduct and retain an amount, not to exceed two percent of
84.2collected fees, to reimburse its direct costs of administering the collection and remittance
84.3of prepaid wireless E911 fees and prepaid wireless telecommunications access Minnesota
84.4fees.
84.5EFFECTIVE DATE.This section is effective January 1, 2014.

84.6    Sec. 42. [403.163] LIABILITY PROTECTION FOR SELLERS AND
84.7PROVIDERS.
84.8(a) A provider or seller of prepaid wireless telecommunications service is not liable
84.9for damages to any person resulting from or incurred in connection with providing any
84.10lawful assistance in good faith to any investigative or law enforcement officer of the
84.11United States, this or any other state, or any political subdivision of this or any other state.
84.12(b) In addition to the protection from liability provided by paragraphs (a) and (b),
84.13section 403.08, subdivision 11, applies to sellers and providers.
84.14EFFECTIVE DATE.This section is effective January 1, 2014.

84.15    Sec. 43. [403.164] EXCLUSIVITY OF PREPAID WIRELESS E911 FEE.
84.16The prepaid wireless E911 fee imposed by section 403.161 is the only E911 funding
84.17obligation imposed with respect to prepaid wireless telecommunications service in this
84.18state, and no tax, fee, surcharge, or other charge may be imposed by this state, any political
84.19subdivision of this state, or any intergovernmental agency, for E911 funding purposes,
84.20upon any provider, seller, or consumer with respect to the sale, purchase, use, or provision
84.21of prepaid wireless telecommunications service.
84.22EFFECTIVE DATE.This section is effective January 1, 2014.

84.23    Sec. 44. FLOOR STOCKS TAX.
84.24(a) A floor stocks cigarette tax is imposed on every person engaged in the business
84.25in this state as a distributor, retailer, subjobber, vendor, manufacturer, or manufacturer's
84.26representative of cigarettes, on the stamped cigarettes and unaffixed stamps in the person's
84.27possession or under the person's control at 12:01 a.m. on July 1, 2013. The tax is imposed
84.28at the following rates:
84.29(1) on cigarettes weighing not more than three pounds per thousand, 47 mills on
84.30each cigarette; and
84.31(2) on cigarettes weighing more than three pounds per thousand, 94 mills on each
84.32cigarette.
85.1(b) Each distributor, on or before July 10, 2013, shall file a return with the
85.2commissioner of revenue, in the form the commissioner prescribes, showing the stamped
85.3cigarettes and unaffixed stamps on hand at 12:01 a.m. on July 1, 2013, and the amount of
85.4tax due on the cigarettes and unaffixed stamps.
85.5(c) Each retailer, subjobber, vendor, manufacturer, or manufacturer's representative,
85.6on or before July 10, 2013, shall file a return with the commissioner of revenue, in the
85.7form the commissioner prescribes, showing the cigarettes on hand at 12:01 a.m. on July 1,
85.82013, and the amount of tax due on the cigarettes.
85.9(d) The tax imposed by this section is due and payable on or before September 4,
85.102013, and after that date bears interest at the rate of one percent per month.
85.11EFFECTIVE DATE.This section is effective July 1, 2013.

85.12    Sec. 45. TAXES AND FEES PAID BY INDIANS AND INDIAN TRIBES.
85.13    Subdivision 1. Health impact fees imposed from 2005 through 2009. (a) The
85.14commissioner of revenue shall recompute all cigarette and tobacco products excise tax
85.15refunds and payments for periods after July 31, 2005, but before January 1, 2010, that
85.16were made to Indian tribes under agreements entered into under Minnesota Statutes,
85.17section 270C.19.
85.18(b) In making the recomputation for each year, the commissioner must (1) use a per
85.19capita amount, as that phrase is used in the agreements, equal to the sum of (i) the average
85.20statewide per capita cigarette and tobacco products excise tax paid during the applicable
85.21state fiscal year plus (ii) the statewide average per capita health impact fee paid on cigarette
85.22and tobacco products during the applicable state fiscal year, and (2) add the health impact
85.23fees collected on cigarettes and tobacco products delivered onto the reservation to the total
85.24cigarette and tobacco products excise tax collected on cigarettes and tobacco products
85.25delivered onto the reservation to determine the tax base to share under the agreements.
85.26(c) The additional payments to each tribe payable under this section are equal to the
85.27amount determined under the recomputation for the tribe minus the amount previously
85.28paid as a cigarette and tobacco products excise tax or health impact fee refund or payment
85.29to the tribe under any agreement entered into under Minnesota Statutes, section 270C.19.
85.30(d) The commissioner shall compute the additional payments required under this
85.31section based on information available to the commissioner. The tribe does not need to
85.32file a claim for payment.
85.33(e) The additional payments under this subdivision must only be paid to a tribe that
85.34has entered into an agreement under Minnesota Statutes, section 270C.19, subdivision 5,
86.1that covers health impact fees imposed on cigarettes and tobacco products delivered onto
86.2the reservation after December 31, 2009.
86.3    Subd. 2. Limited authority to enter into health impact fee agreements. (a)
86.4Notwithstanding Minnesota Statutes, section 270C.19, or any other law, the commissioner
86.5must not enter into any agreement covering health impact fees imposed on cigarettes and
86.6tobacco products sold, purchased, or delivered onto a reservation before January 1, 2010.
86.7(b) Notwithstanding Minnesota Statutes, section 270C.19, or any other law, the
86.8commissioner is not authorized to enter into any agreement covering the health impact
86.9fee imposed on cigarettes and tobacco products sold, purchased, or delivered onto a
86.10reservation after December 31, 2009.
86.11    Subd. 3. Payments to tribes under existing agreements. (a) The commissioner
86.12must not make refunds and payments of health impact fees required under any agreement
86.13entered into under Minnesota Statutes, section 270C.19, subdivision 5, for any period after
86.14the health impact fee has been repealed.
86.15(b) The commissioner must adjust all annual cigarette and tobacco products excise
86.16tax per capita amounts under existing tax agreements entered into under Minnesota
86.17Statutes, section 270C.19, subdivisions 1 and 2, to $95, effective for refunds due for the
86.18quarter ending September 30, 2013. This amount may be changed upon mutual agreement
86.19of the parties to the agreement to more accurately reflect taxes paid on the reservation
86.20by tribal members.
86.21    Subd. 4. Appropriation. An amount necessary to make refunds and payments
86.22under this section is appropriated to the commissioner from the general fund.
86.23EFFECTIVE DATE.This section is effective the day following final enactment,
86.24except that subdivision 2, paragraph (b), is effective January 2, 2014.

86.25    Sec. 46. REPORT.
86.26On or before June 30, 2016, and every four years thereafter, the commissioner of
86.27transportation, in consultation with the commissioner of revenue, shall prepare and submit
86.28to the chairs and ranking minority members of the senate and house of representatives
86.29committees with jurisdiction over transportation policy and budget, a report that identifies
86.30the amount and sources of annual revenues attributable to each type of aviation tax, along
86.31with annual expenditures from the state airports fund, and any other transfers out of the
86.32fund, during the previous four years. The report must include draft legislation for any
86.33recommended statutory changes to ensure the future adequacy of the state airports fund.
87.1EFFECTIVE DATE.This section is effective July 1, 2014, and applies to aircraft
87.2tax due on or after that date.

87.3    Sec. 47. ARMER GRANTS.
87.4$1,500,000 in fiscal year 2014 and $1,500,000 in fiscal year 2015 is appropriated
87.5from the 911 account of the state government special revenue fund to the commissioner of
87.6public safety for grants to counties to reimburse for the sales tax costs associated with
87.7upgrading public safety radio systems prior to January 1, 2013. The commissioner of
87.8public safety shall give preference to counties that did not receive state or federal grants to
87.9upgrade their public safety radio systems. This is a onetime appropriation.
87.10EFFECTIVE DATE.This section is effective January 1, 2014.

87.11    Sec. 48. TOBACCO TAX COLLECTION REPORT.
87.12    Subdivision 1. Report to legislature. (a) The commissioner of revenue shall report
87.13to the 2014 legislature on the tobacco tax collection system, including recommendations
87.14to improve compliance under the excise tax for both cigarettes and other tobacco products.
87.15The purpose of the report is to provide information and guidance to the legislature on
87.16improvements to the tobacco tax collection system to:
87.17(1) provide a unified system of collecting both the cigarette and other tobacco
87.18taxes, regardless of category, size, or shape, that ensures the highest reasonable rates of
87.19tax collection;
87.20(2) discourage tax evasion; and
87.21(3) help to prevent illegal sale of tobacco products, which may make these products
87.22more accessible to youth.
87.23(b) In the report, the commissioner shall:
87.24(1) provide a detailed review of the present excise tax collection and compliance
87.25system as it applies to both cigarettes and other tobacco products. This must include
87.26an assessment of the levels of compliance for each category of products and the effect
87.27of the stamping requirement on compliance for each category of products and the effect
87.28of the stamping requirement on compliance rates for cigarettes relative to other tobacco
87.29products. It also must identify any weaknesses in the system;
87.30(2) survey the methods of collection and enforcement used by other states or nations,
87.31including identifying and discussing emerging best practices that ensure tracking of both
87.32cigarettes and other tobacco products and result in the highest rates of tax collection and
87.33compliance. These best practices must consider high-technology alternatives, such as use
88.1of bar codes, radio-frequency identification tags, or similar mechanisms for tracking
88.2compliance;
88.3(3) evaluate the adequacy and effectiveness of the existing penalties and other
88.4sanctions for noncompliance;
88.5(4) evaluate the adequacy of the resources allocated by the state to enforce the
88.6tobacco tax and prevention laws; and
88.7(5) make recommendations on implementation of a comprehensive tobacco tax
88.8collection system for Minnesota that can be implemented by January 1, 2014, including:
88.9(i) recommendations on the specific steps needed to institute and implement the new
88.10system, including estimates of the state's costs of doing so and any additional personnel
88.11requirements;
88.12(ii) recommendations on methods to recover the cost of implementing the system
88.13from the industry;
88.14(iii) evaluation of the extent to which the proposed system is sufficiently flexible
88.15and adaptable to adjust to modifications in the construction, packaging, formatting, and
88.16marketing of tobacco products by the industry; and
88.17(iv) recommendations to modify existing penalties or to impose new penalties or
88.18other sanctions to ensure compliance with the system.
88.19    Subd. 2. Due date. The report required by subdivision 1 is due January 1, 2014.
88.20    Subd. 3. Procedure. The report required under this section must be made in the
88.21manner provided under Minnesota Statutes, section 3.195. In addition, copies must be
88.22provided to the chairs and ranking minority members of the legislative committees and
88.23divisions with jurisdiction over taxation.
88.24    Subd. 4. Appropriation. (a) $100,000 is appropriated from the general fund to the
88.25commissioner of revenue for fiscal year 2014 for the cost of preparing the report under
88.26subdivision 1.
88.27(b) The appropriation under this subdivision is a onetime appropriation and is not
88.28included in the base budget.
88.29EFFECTIVE DATE.This section is effective the day following final enactment.

88.30    Sec. 49. REPEALER.
88.31Minnesota Statutes 2012, sections 16A.725; 256.9658; 290.171; 290.173; and
88.32290.174, are repealed.
88.33EFFECTIVE DATE.This section is effective July 1, 2013.

89.1ARTICLE 5
89.2INDIVIDUAL INCOME AND CORPORATE FRANCHISE TAXES

89.3    Section 1. [116J.3738] QUALIFIED EXPANSIONS OF GREATER MINNESOTA
89.4BUSINESSES.
89.5    Subdivision 1. Definitions. (a) For purposes of this section, the following terms
89.6have the meanings given unless the context clearly indicates otherwise.
89.7(b) "Agricultural processing facility" means one or more facilities or operations
89.8that transform, package, sort, or grade livestock or livestock products, agricultural
89.9commodities, or plants or plant products into goods that are used for intermediate or final
89.10consumption including goods for nonfood use, and surrounding property.
89.11(c) "Business" means an individual, corporation, partnership, limited liability
89.12company, association, or any other entity engaged in operating a trade or business located
89.13in greater Minnesota.
89.14(d) "City" means a statutory or home rule charter city.
89.15(e) "Greater Minnesota" means the area of the state that excludes the metropolitan
89.16area, as defined in section 473.121, subdivision 2.
89.17(f) "Qualified business" means a business that satisfies the requirements of subdivision
89.182, has been certified under subdivision 3, and has not been terminated under subdivision 5.
89.19    Subd. 2. Qualified business. (a) A business is a qualified business if it satisfies the
89.20requirement of this paragraph and is not disqualified under the provisions of paragraph
89.21(b). To qualify, the business must:
89.22(1) have operated its trade or business in a city or cities in greater Minnesota for at
89.23least one year before applying under subdivision 3;
89.24(2) pay or agree to pay in the future each employee compensation, including benefits
89.25not mandated by law, that on an annualized basis equal at least 120 percent of the federal
89.26poverty level for a family of four;
89.27(3) plan and agree to expand its employment in one or more cities in greater Minnesota
89.28by the minimum number of employees required under subdivision 3, paragraph (c); and
89.29(4) received certification from the commissioner under subdivision 3 that it is a
89.30qualified business.
89.31(b) A business is not a qualified business if it is either:
89.32(1) primarily engaged in making retail sales to purchasers who are physically present
89.33at the business's location or locations in greater Minnesota; or
89.34(2) a public utility, as defined in section 336B.01.
89.35(c) The requirements in paragraph (a) that the business' operations and expansion be
89.36located in a city do not apply to an agricultural processing facility.
90.1    Subd. 3. Certification of qualified business. (a) A business may apply to
90.2the commissioner for certification as a qualified business under this section. The
90.3commissioner shall specify the form of the application, the manner and times for applying,
90.4and the information required to be included in the application. The commissioner may
90.5impose an application fee in an amount sufficient to defray the commissioner's cost of
90.6processing certifications. A business must file a copy of its application with the chief
90.7clerical officer of the city at the same it applies to the commissioner. For an agricultural
90.8processing facility located outside the boundaries of a city, the business must file a copy
90.9of the application with the county auditor.
90.10(b) The commissioner shall certify each business as a qualified business that:
90.11(1) satisfies the requirements of subdivision 2;
90.12(2) the commissioner determines would not expand its operations in greater
90.13Minnesota without the tax incentives available under subdivision 4; and
90.14(3) enters a business subsidy agreement with the commissioner that pledges to
90.15satisfy the minimum expansion requirements of paragraph (c) within three years or less
90.16following execution of the agreement.
90.17The commissioner must act on an application within 60 days after its filing. Failure
90.18by the commissioner to take action within the 60-day period is deemed approval of the
90.19application.
90.20(c) The following minimum expansion requirements apply, based on the number of
90.21employees of the business at locations in greater Minnesota:
90.22(1) a business that employees 50 or fewer full-time equivalent employees in greater
90.23Minnesota when the agreement is executed must increase its employment by five or more
90.24full-time equivalent employees;
90.25(2) a business that employees more than 50 but fewer than 200 full-time equivalent
90.26employees in greater Minnesota when the agreement is executed must increase the number
90.27of its full-time equivalent employees in greater Minnesota by at least ten percent; or
90.28(3) a business that employees 200 or more full-time equivalent employees in greater
90.29Minnesota when the agreement is executed must increase its employment by at least 21
90.30full-time equivalent employees.
90.31(d) The city, or a county for an agricultural processing facility located outside the
90.32boundaries of a city, in which the business proposes to expand its operations may file
90.33comments supporting or opposing the application with the commissioner. The comments
90.34must be filed within 30 days after receipt by the city of the application and may include a
90.35notice of any contribution the city or county intends to make to encourage or support the
91.1business expansion, such as the use of tax increment financing, property tax abatement,
91.2additional city or county services, or other financial assistance.
91.3(e) Certification of a qualified business is effective for the 12-year period beginning
91.4on the first day of the calendar month immediately following execution of the business
91.5subsidy agreement.
91.6    Subd. 4. Available tax incentives. A qualified business is entitled to one or more
91.7of the following tax incentives as provided under its business subsidy agreement with
91.8the commissioner:
91.9(1) a sales tax exemption, as provided in section 297A.68, subdivision 44, for
91.10purchases made during the period the business was certified as a qualified business under
91.11this section; and
91.12(2) the jobs credit, as provided in section 290.0682, effective for taxable years
91.13beginning during a calendar year in which certification of the business as a qualified
91.14business applies under this section.
91.15    Subd. 5. Termination of status as a qualified business. (a) The commissioner shall
91.16put in place a system for monitoring and ensuring that each certified business meets within
91.17three years or less the minimum expansion requirement in its business subsidy agreement
91.18and continues to satisfy those requirements for the rest of the duration of the certification
91.19under subdivision 3. This system must include regular reporting by the business to the
91.20commissioner of its baseline and current employment levels and any other information
91.21the commissioner determines may be useful to ensure compliance and for legislative
91.22evaluation of the effectiveness of the tax incentives.
91.23(b) A business ceases to be a qualified business and to qualify for the sales tax
91.24exemption under section 297A.68, subdivision 49, under this subdivision upon the earlier
91.25of the following dates:
91.26(1) the end of the duration of its designation under subdivision 3, paragraph (e),
91.27effective as provided under this subdivision or other provision of law for the tax incentive;
91.28or
91.29(2) the date the commissioner finds that the business has breached its business
91.30subsidy agreement and failed to satisfy the minimum expansion required by subdivision 3
91.31and its agreement.
91.32(c) A business may contest the commissioner's finding that it breached its business
91.33subsidy agreement under paragraph (b), clause (2), under the contested case procedures in
91.34the Administrative Procedure Act, chapter 14.
91.35(d) The commissioner, after consulting with the commissioner of revenue, may
91.36waive a breach of the business subsidy agreement and permit continued receipt of tax
92.1incentives, if the commissioner determines that termination of the tax incentives is not in
92.2the best interest of the state or the local government units and the business' breach of the
92.3agreement is a result of circumstances beyond its control including, but not limited to:
92.4(1) a natural disaster;
92.5(2) unforeseen industry trends;
92.6(3) a decline in economic activity in the overall or greater Minnesota economy; or
92.7(4) loss of a major supplier or customer of the business.
92.8EFFECTIVE DATE.This section is effective the day following final enactment.

92.9    Sec. 2. Minnesota Statutes 2012, section 116J.8737, subdivision 1, is amended to read:
92.10    Subdivision 1. Definitions. (a) For the purposes of this section, the following terms
92.11have the meanings given.
92.12(b) "Qualified small business" means a business that has been certified by the
92.13commissioner under subdivision 2.
92.14(c) "Qualified investor" means an investor who has been certified by the
92.15commissioner under subdivision 3.
92.16(d) "Qualified fund" means a pooled angel investment network fund that has been
92.17certified by the commissioner under subdivision 4.
92.18(e) "Qualified investment" means a cash investment in a qualified small business
92.19of a minimum of:
92.20(1) $10,000 in a calendar year by a qualified investor; or
92.21(2) $30,000 in a calendar year by a qualified fund.
92.22A qualified investment must be made in exchange for common stock, a partnership
92.23or membership interest, preferred stock, debt with mandatory conversion to equity, or an
92.24equivalent ownership interest as determined by the commissioner.
92.25(f) "Family" means a family member within the meaning of the Internal Revenue
92.26Code, section 267(c)(4).
92.27(g) "Pass-through entity" means a corporation that for the applicable taxable year is
92.28treated as an S corporation or a general partnership, limited partnership, limited liability
92.29partnership, trust, or limited liability company and which for the applicable taxable year is
92.30not taxed as a corporation under chapter 290.
92.31(h) "Intern" means a student of an accredited institution of higher education, or a
92.32former student who has graduated in the past six months from an accredited institution
92.33of higher education, who is employed by a qualified small business in a nonpermanent
92.34position for a duration of nine months or less that provides training and experience in the
92.35primary business activity of the business.
93.1(i) "Qualified greater Minnesota business" means a qualified small business that
93.2is also certified by the commissioner as a qualified greater Minnesota business under
93.3subdivision 2, paragraph (h).
93.4(j) "Liquidation event" means a conversion of qualified investment for cash, cash
93.5and other consideration, or any other form of equity or debt interest.
93.6EFFECTIVE DATE.This section is effective the day following final enactment.

93.7    Sec. 3. Minnesota Statutes 2012, section 116J.8737, subdivision 2, is amended to read:
93.8    Subd. 2. Certification of qualified small businesses. (a) Businesses may apply
93.9to the commissioner for certification as a qualified small business for a calendar year.
93.10In addition, the business' application may request certification as a qualified greater
93.11Minnesota business under paragraph (h). The application must be in the form and
93.12be made under the procedures specified by the commissioner, accompanied by an
93.13application fee of $150. Application fees are deposited in the small business investment
93.14tax credit administration account in the special revenue fund. The application for
93.15certification for 2010 must be made available on the department's Web site by August 1,
93.162010. Applications for subsequent years' certification must be made available on the
93.17department's Web site by November 1 of the preceding year.
93.18(b) Within 30 days of receiving an application for certification under this
93.19subdivision, the commissioner must either certify the business as satisfying the conditions
93.20required of a qualified small business or a qualified greater Minnesota business, request
93.21additional information from the business, or reject the application for certification. If
93.22the commissioner requests additional information from the business, the commissioner
93.23must either certify the business or reject the application within 30 days of receiving the
93.24additional information. If the commissioner neither certifies the business nor rejects
93.25the application within 30 days of receiving the original application or within 30 days of
93.26receiving the additional information requested, whichever is later, then the application is
93.27deemed rejected, and the commissioner must refund the $150 application fee. A business
93.28that applies for certification and is rejected may reapply.
93.29(c) To receive certification as a qualified small business, a business must satisfy
93.30all of the following conditions:
93.31(1) the business has its headquarters in Minnesota;
93.32(2) at least 51 percent of the business's employees are employed in Minnesota, and
93.3351 percent of the business's total payroll is paid or incurred in the state;
93.34(3) the business is engaged in, or is committed to engage in, innovation in Minnesota
93.35in one of the following as its primary business activity:
94.1(i) using proprietary technology to add value to a product, process, or service in a
94.2qualified high-technology field;
94.3(ii) researching or developing a proprietary product, process, or service in a qualified
94.4high-technology field; or
94.5(iii) researching, developing, or producing a new proprietary technology for use in
94.6the fields of agriculture, tourism, forestry, mining, manufacturing, or transportation;
94.7(4) other than the activities specifically listed in clause (3), the business is not
94.8engaged in real estate development, insurance, banking, lending, lobbying, political
94.9consulting, information technology consulting, wholesale or retail trade, leisure,
94.10hospitality, transportation, construction, ethanol production from corn, or professional
94.11services provided by attorneys, accountants, business consultants, physicians, or health
94.12care consultants;
94.13(5) the business has fewer than 25 employees;
94.14(6) the business must pay its employees annual wages of at least 175 percent of the
94.15federal poverty guideline for the year for a family of four and must pay its interns annual
94.16wages of at least 175 percent of the federal minimum wage used for federally covered
94.17employers, except that this requirement must be reduced proportionately for employees
94.18and interns who work less than full-time, and does not apply to an executive, officer, or
94.19member of the board of the business, or to any employee who owns, controls, or holds
94.20power to vote more than 20 percent of the outstanding securities of the business;
94.21(7) the business has not been in operation for more than ten years;
94.22(8) the business has not previously received private equity investments of more
94.23than $4,000,000; and
94.24    (9) the business is not an entity disqualified under section 80A.50, paragraph (b),
94.25clause (3); and
94.26    (10) the business has not issued securities that are traded on a public exchange.
94.27(d) In applying the limit under paragraph (c), clause (5), the employees in all members
94.28of the unitary business, as defined in section 290.17, subdivision 4, must be included.
94.29(e) In order for a qualified investment in a business to be eligible for tax credits, the
94.30business:
94.31(1) the business must have applied for and received certification for the calendar
94.32year in which the investment was made prior to the date on which the qualified investment
94.33was made;
94.34(2) must not have issued securities that are traded on a public exchange;
94.35(3) must not issue securities that are traded on a public exchange within 180 days
94.36after the date on which the qualified investment was made; and
95.1(4) must not have a liquidation event within 180 days after the date on which a
95.2qualified investment was made.
95.3(f) The commissioner must maintain a list of qualified small businesses and qualified
95.4greater Minnesota businesses certified under this subdivision for the calendar year and
95.5make the list accessible to the public on the department's Web site.
95.6(g) For purposes of this subdivision, the following terms have the meanings given:
95.7(1) "qualified high-technology field" includes aerospace, agricultural processing,
95.8renewable energy, energy efficiency and conservation, environmental engineering, food
95.9technology, cellulosic ethanol, information technology, materials science technology,
95.10nanotechnology, telecommunications, biotechnology, medical device products,
95.11pharmaceuticals, diagnostics, biologicals, chemistry, veterinary science, and similar
95.12fields; and
95.13(2) "proprietary technology" means the technical innovations that are unique and
95.14legally owned or licensed by a business and includes, without limitation, those innovations
95.15that are patented, patent pending, a subject of trade secrets, or copyrighted.; and
95.16(3) "greater Minnesota" means the area of Minnesota located outside of the
95.17metropolitan area as defined in section 473.121, subdivision 2.
95.18(h) To receive certification as a qualified greater Minnesota business, a business must
95.19satisfy all of the requirements of paragraph (c) and must satisfy the following conditions:
95.20(1) the business has its headquarters in greater Minnesota; and
95.21(2) at least 51 percent of the business's employees are employed in greater Minnesota,
95.22and 51 percent of the business's total payroll is paid or incurred in greater Minnesota.
95.23EFFECTIVE DATE.This section is effective the day following final enactment.

95.24    Sec. 4. Minnesota Statutes 2012, section 116J.8737, subdivision 5, is amended to read:
95.25    Subd. 5. Credit allowed. (a) A qualified investor or qualified fund is eligible for a
95.26credit equal to 25 percent of the qualified investment in a qualified small business.
95.27 Investments made by a pass-through entity qualify for a credit only if the entity is a
95.28qualified fund. The commissioner must not allocate more than $11,000,000 in credits to
95.29qualified investors or qualified funds for taxable years beginning after December 31, 2009,
95.30and before January 1, 2011, and must not allocate more than $12,000,000 in credits per
95.31year for taxable years beginning after December 31, 2010, and before January 1, 2015
95.32 2013, or more than $17,000,000 in credits per year for taxable years beginning after
95.33December 31, 2012, and before January 1, 2016. Any portion of a taxable year's credits
95.34that is not allocated by the commissioner does not cancel and may be carried forward to
95.35subsequent taxable years until all credits have been allocated.
96.1(b) The commissioner may not allocate more than a total maximum amount in credits
96.2for a taxable year to a qualified investor for the investor's cumulative qualified investments
96.3as an individual qualified investor and as an investor in a qualified fund; for married
96.4couples filing joint returns the maximum is $250,000, and for all other filers the maximum
96.5is $125,000. The commissioner may not allocate more than a total of $1,000,000 in credits
96.6over all taxable years for qualified investments in any one qualified small business.
96.7(c) The commissioner may not allocate a credit to a qualified investor either as an
96.8individual qualified investor or as an investor in a qualified fund if the investor receives
96.9more than 50 percent of the investor's gross annual income from the qualified small
96.10business in which the qualified investment is proposed. A member of the family of an
96.11individual disqualified by this paragraph is not eligible for a credit under this section. For
96.12a married couple filing a joint return, the limitations in this paragraph apply collectively
96.13to the investor and spouse. For purposes of determining the ownership interest of an
96.14investor under this paragraph, the rules under section 267(c) and 267(e) of the Internal
96.15Revenue Code apply.
96.16(d) Applications for tax credits for 2010 must be made available on the department's
96.17Web site by September 1, 2010, and the department must begin accepting applications
96.18by September 1, 2010. Applications for subsequent years must be made available by
96.19November 1 of the preceding year.
96.20(e) Qualified investors and qualified funds must apply to the commissioner for tax
96.21credits. Tax credits must be allocated to qualified investors or qualified funds in the order
96.22that the tax credit request applications are filed with the department. The commissioner
96.23must approve or reject tax credit request applications within 15 days of receiving the
96.24application. The investment specified in the application must be made within 60 days of
96.25the allocation of the credits. If the investment is not made within 60 days, the credit
96.26allocation is canceled and available for reallocation. A qualified investor or qualified fund
96.27that fails to invest as specified in the application, within 60 days of allocation of the
96.28credits, must notify the commissioner of the failure to invest within five business days of
96.29the expiration of the 60-day investment period.
96.30(f) All tax credit request applications filed with the department on the same day must
96.31be treated as having been filed contemporaneously. If two or more qualified investors or
96.32qualified funds file tax credit request applications on the same day, and the aggregate
96.33amount of credit allocation claims exceeds the aggregate limit of credits under this section
96.34or the lesser amount of credits that remain unallocated on that day, then the credits must
96.35be allocated among the qualified investors or qualified funds who filed on that day on a
96.36pro rata basis with respect to the amounts claimed. The pro rata allocation for any one
97.1qualified investor or qualified fund is the product obtained by multiplying a fraction,
97.2the numerator of which is the amount of the credit allocation claim filed on behalf of
97.3a qualified investor and the denominator of which is the total of all credit allocation
97.4claims filed on behalf of all applicants on that day, by the amount of credits that remain
97.5unallocated on that day for the taxable year.
97.6(g) A qualified investor or qualified fund, or a qualified small business acting on their
97.7behalf, must notify the commissioner when an investment for which credits were allocated
97.8has been made, and the taxable year in which the investment was made. A qualified fund
97.9must also provide the commissioner with a statement indicating the amount invested by
97.10each investor in the qualified fund based on each investor's share of the assets of the
97.11qualified fund at the time of the qualified investment. After receiving notification that the
97.12investment was made, the commissioner must issue credit certificates for the taxable year
97.13in which the investment was made to the qualified investor or, for an investment made by
97.14a qualified fund, to each qualified investor who is an investor in the fund. The certificate
97.15must state that the credit is subject to revocation if the qualified investor or qualified
97.16fund does not hold the investment in the qualified small business for at least three years,
97.17consisting of the calendar year in which the investment was made and the two following
97.18years. The three-year holding period does not apply if:
97.19(1) the investment by the qualified investor or qualified fund becomes worthless
97.20before the end of the three-year period;
97.21(2) 80 percent or more of the assets of the qualified small business is sold before
97.22the end of the three-year period;
97.23(3) the qualified small business is sold before the end of the three-year period; or
97.24(4) the qualified small business's common stock begins trading on a public exchange
97.25before the end of the three-year period.
97.26(h) The commissioner must notify the commissioner of revenue of credit certificates
97.27issued under this section.
97.28EFFECTIVE DATE.This section is effective the day following final enactment for
97.29taxable years beginning after December 31, 2012.

97.30    Sec. 5. Minnesota Statutes 2012, section 116J.8737, is amended by adding a
97.31subdivision to read:
97.32    Subd. 5a. Promotion of credit in greater Minnesota. (a) By July 1, 2013, the
97.33commissioner shall develop a plan to increase awareness of and use of the credit for
97.34investments in greater Minnesota businesses with a target goal that a minimum of 30
97.35percent of the credit will be awarded for those investments during the second half
98.1of calendar year 2013 and for each full calendar year thereafter. Beginning with the
98.2legislative report due on March 15, 2014, under subdivision 9, the commissioner shall
98.3report on its plan under this subdivision and the results achieved.
98.4(b) If the target goal of 30 percent under paragraph (a) is not achieved for the
98.5six-month period ending on December 31, 2013, the credit percentage under subdivision
98.65, paragraph (a), is increased to 40 percent for a qualified investment made after December
98.731, 2013, in a greater Minnesota business. This paragraph does not apply and the credit
98.8percentage for all qualified investments is the rate provided under subdivision 5 for any
98.9calendar year beginning after a calendar year for which the commissioner determines the
98.1030 percent target has been satisfied. The commissioner shall timely post notification of
98.11changes in the credit rate under this paragraph on the department's Web site.
98.12EFFECTIVE DATE.This section is effective the day following final enactment.

98.13    Sec. 6. Minnesota Statutes 2012, section 116J.8737, subdivision 7, is amended to read:
98.14    Subd. 7. Revocation of credits. (a) If the commissioner determines that a
98.15qualified investor or qualified fund did not meet the three-year holding period required in
98.16subdivision 5, paragraph (g), any credit allocated and certified to the investor or fund is
98.17revoked and must be repaid by the investor.
98.18(b) If the commissioner determines that a business did not meet the employment
98.19and payroll requirements in subdivision 2, paragraph (c), clause (2), or paragraph (h), as
98.20applicable, in any of the five calendar years following the year in which an investment in the
98.21business that qualified for a tax credit under this section was made, the business must repay
98.22the following percentage of the credits allowed for qualified investments in the business:
98.23
Year following the year in which
Percentage of credit required
98.24
the investment was made:
to be repaid:
98.25
First
100%
98.26
Second
80%
98.27
Third
60%
98.28
Fourth
40%
98.29
Fifth
20%
98.30
Sixth and later
0
98.31(c) The commissioner must notify the commissioner of revenue of every credit
98.32revoked and subject to full or partial repayment under this section.
98.33(d) For the repayment of credits allowed under this section and section 290.0692,
98.34a qualified small business, qualified investor, or investor in a qualified fund must file an
98.35amended return with the commissioner of revenue and pay any amounts required to be
98.36repaid within 30 days after becoming subject to repayment under this section.
99.1EFFECTIVE DATE.This section is effective the day following final enactment.

99.2    Sec. 7. Minnesota Statutes 2012, section 116J.8737, subdivision 9, is amended to read:
99.3    Subd. 9. Report to legislature. Beginning in 2011, the commissioner must
99.4annually report by March 15 to the chairs and ranking minority members of the legislative
99.5committees having jurisdiction over taxes and economic development in the senate and
99.6the house of representatives, in compliance with sections 3.195 and 3.197, on the tax
99.7credits issued under this section. The report must include:
99.8(1) the number and amount of the credits issued;
99.9(2) the recipients of the credits;
99.10(3) for each qualified small business, its location, line of business, and if it received
99.11an investment resulting in certification of tax credits;
99.12(4) the total amount of investment in each qualified small business resulting in
99.13certification of tax credits;
99.14(5) for each qualified small business that received investments resulting in tax
99.15credits, the total amount of additional investment that did not qualify for the tax credit;
99.16(6) the number and amount of credits revoked under subdivision 7;
99.17(7) the number and amount of credits that are no longer subject to the three-year
99.18holding period because of the exceptions under subdivision 5, paragraph (g), clauses
99.19(1) to (4); and
99.20(8) the number of qualified small businesses that are women or minority-owned; and
99.21(9) any other information relevant to evaluating the effect of these credits.
99.22EFFECTIVE DATE.This section is effective the day following final enactment.

99.23    Sec. 8. Minnesota Statutes 2012, section 116J.8737, subdivision 12, is amended to read:
99.24    Subd. 12. Sunset. This section expires for taxable years beginning after December
99.2531, 2014 2015, except that reporting requirements under subdivision 6 and revocation
99.26of credits under subdivision 7 remain in effect through 2016 2017 for qualified
99.27investors and qualified funds, and through 2018 2019 for qualified small businesses,
99.28reporting requirements under subdivision 9 remain in effect through 2019 2020, and the
99.29appropriation in subdivision 11 remains in effect through 2018 2019.
99.30EFFECTIVE DATE.This section is effective the day following final enactment.

99.31    Sec. 9. [136A.129] GREATER MINNESOTA INTERNSHIP PROGRAM.
100.1    Subdivision 1. Definitions. (a) For the purposes of this section, the terms defined in
100.2this subdivision have the meanings given to them.
100.3(b) "Eligible employer" means a taxpayer under section 290.01 with employees
100.4located in greater Minnesota.
100.5(c) "Eligible institution" means a Minnesota public postsecondary institution or a
100.6Minnesota private, nonprofit, baccalaureate degree-granting college or university.
100.7(d) "Eligible student" means a student enrolled in an eligible institution who has
100.8completed one-half of the credits necessary for the respective degree or certification.
100.9(e) "Greater Minnesota" means the area of the state outside of the counties of Anoka,
100.10Carver, Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, Sherburne, Washington, and
100.11Wright.
100.12    Subd. 2. Program established. The Office of Higher Education shall administer
100.13a greater Minnesota internship program through eligible institutions to provide credit at
100.14the eligible institution for internships and tax credits for eligible employers who hire
100.15interns for employment in greater Minnesota. The purpose of the program is to encourage
100.16Minnesota businesses to:
100.17(1) employ and provide valuable experience to Minnesota students; and
100.18(2) foster long-term relationships between the students and greater Minnesota
100.19employers.
100.20    Subd. 3. Program components. (a) An intern must be an eligible student who has
100.21been admitted to a major program that is related to the intern experience as determined
100.22by the eligible institution.
100.23(b) To participate in the program, an eligible institution must:
100.24(1) enter into written agreements with eligible employers to provide internships that
100.25are at least 12 weeks long and located in greater Minnesota;
100.26(2) determine that the work experience of the internship is related to the eligible
100.27student's course of study; and
100.28(3) provide academic credit for the successful completion of the internship or ensure
100.29that it fulfills requirements necessary to complete a vocational technical education program.
100.30(c) To participate in the program, an eligible employer must enter into a written
100.31agreement with an eligible institution specifying that the intern:
100.32(1) would not have been hired without the tax credit described in subdivision 4;
100.33(2) did not work for the employer in the same or a similar job prior to entering
100.34the agreement;
100.35(3) does not replace an existing employee;
100.36(4) has not previously participated in the program;
101.1(5) will be employed at a location in greater Minnesota;
101.2(6) will be paid at least minimum wage for a minimum of 16 hours per week for a
101.3period of at least 12 weeks; and
101.4(7) will be supervised and evaluated by the employer.
101.5(d) Participating eligible institutions and eligible employers must report annually to
101.6the office. The report must include at least the following:
101.7(1) the number of interns hired;
101.8(2) the number of hours and weeks worked by interns; and
101.9(3) the compensation paid to interns.
101.10(e) An internship required to complete an academic program does not qualify for the
101.11greater Minnesota internship program under this section.
101.12    Subd. 4. Tax credit allowed. An employer is entitled to a tax credit as provided
101.13in section 290.06, subdivision 3b. The office shall allocate tax credits authorized in
101.14subdivision 4 to eligible institutions. The office shall determine relevant criteria to
101.15allocate the tax credits including the geographic distribution of credits to work locations
101.16outside the metropolitan area. Any credits allocated to an institution but not used may be
101.17reallocated to eligible institutions. The office shall allocate a portion of the administrative
101.18fee under section 290.06, subdivision 36, to participating eligible institutions for their
101.19administrative costs.
101.20    Subd. 5. Reports to the legislature. (a) By February 1, 2015, the office and the
101.21Department of Revenue shall report to the legislature on the greater Minnesota internship
101.22program. The report must include at least the following:
101.23(1) the number and dollar amount of credits allowed;
101.24(2) the number of interns employed under the program; and
101.25(3) the cost of administering the program.
101.26(b) By February 1, 2016, the office and the Department of Revenue shall report to the
101.27legislature with an analysis of the effectiveness of the program in stimulating businesses
101.28to hire interns and in assisting participating interns in finding permanent career positions.
101.29This report must include the number of students who participated in the program who
101.30were subsequently employed full-time by the employer.
101.31EFFECTIVE DATE.This section is effective for taxable years beginning after
101.32December 31, 2013.

101.33    Sec. 10. Minnesota Statutes 2012, section 289A.08, subdivision 3, is amended to read:
102.1    Subd. 3. Corporations. (a) A corporation that is subject to the state's jurisdiction to
102.2tax under section 290.014, subdivision 5, must file a return, except that a foreign operating
102.3corporation as defined in section 290.01, subdivision 6b, is not required to file a return.
102.4(b) Members of a unitary business that are required to file a combined report on one
102.5return must designate a member of the unitary business to be responsible for tax matters,
102.6including the filing of returns, the payment of taxes, additions to tax, penalties, interest,
102.7or any other payment, and for the receipt of refunds of taxes or interest paid in excess of
102.8taxes lawfully due. The designated member must be a member of the unitary business that
102.9is filing the single combined report and either:
102.10(1) a corporation that is subject to the taxes imposed by chapter 290; or
102.11(2) a corporation that is not subject to the taxes imposed by chapter 290:
102.12(i) Such corporation consents by filing the return as a designated member under this
102.13clause to remit taxes, penalties, interest, or additions to tax due from the members of the
102.14unitary business subject to tax, and receive refunds or other payments on behalf of other
102.15members of the unitary business. The member designated under this clause is a "taxpayer"
102.16for the purposes of this chapter and chapter 270C, and is liable for any liability imposed
102.17on the unitary business under this chapter and chapter 290.
102.18(ii) If the state does not otherwise have the jurisdiction to tax the member designated
102.19under this clause, consenting to be the designated member does not create the jurisdiction
102.20to impose tax on the designated member, other than as described in item (i).
102.21(iii) The member designated under this clause must apply for a business tax account
102.22identification number.
102.23(c) The commissioner shall adopt rules for the filing of one return on behalf of the
102.24members of an affiliated group of corporations that are required to file a combined report.
102.25All members of an affiliated group that are required to file a combined report must file one
102.26return on behalf of the members of the group under rules adopted by the commissioner.
102.27(d) If a corporation claims on a return that it has paid tax in excess of the amount of
102.28taxes lawfully due, that corporation must include on that return information necessary for
102.29payment of the tax in excess of the amount lawfully due by electronic means.
102.30EFFECTIVE DATE.This section is effective for taxable years beginning after
102.31December 31, 2012.

102.32    Sec. 11. Minnesota Statutes 2012, section 290.01, subdivision 19b, is amended to read:
102.33    Subd. 19b. Subtractions from federal taxable income. For individuals, estates,
102.34and trusts, there shall be subtracted from federal taxable income:
103.1    (1) net interest income on obligations of any authority, commission, or
103.2instrumentality of the United States to the extent includable in taxable income for federal
103.3income tax purposes but exempt from state income tax under the laws of the United States;
103.4    (2) if included in federal taxable income, the amount of any overpayment of income
103.5tax to Minnesota or to any other state, for any previous taxable year, whether the amount
103.6is received as a refund or as a credit to another taxable year's income tax liability;
103.7    (3) the amount paid to others, less the amount used to claim the credit allowed under
103.8section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten
103.9to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
103.10transportation of each qualifying child in attending an elementary or secondary school
103.11situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
103.12resident of this state may legally fulfill the state's compulsory attendance laws, which
103.13is not operated for profit, and which adheres to the provisions of the Civil Rights Act
103.14of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
103.15tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause,
103.16"textbooks" includes books and other instructional materials and equipment purchased
103.17or leased for use in elementary and secondary schools in teaching only those subjects
103.18legally and commonly taught in public elementary and secondary schools in this state.
103.19Equipment expenses qualifying for deduction includes expenses as defined and limited in
103.20section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional
103.21books and materials used in the teaching of religious tenets, doctrines, or worship, the
103.22purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
103.23or materials for, or transportation to, extracurricular activities including sporting events,
103.24musical or dramatic events, speech activities, driver's education, or similar programs. No
103.25deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or
103.26the qualifying child's vehicle to provide such transportation for a qualifying child. For
103.27purposes of the subtraction provided by this clause, "qualifying child" has the meaning
103.28given in section 32(c)(3) of the Internal Revenue Code;
103.29    (4) income as provided under section 290.0802;
103.30    (5) to the extent included in federal adjusted gross income, income realized on
103.31disposition of property exempt from tax under section 290.491;
103.32    (6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E)
103.33of the Internal Revenue Code in determining federal taxable income by an individual
103.34who does not itemize deductions for federal income tax purposes for the taxable year, an
103.35amount equal to 50 percent of the excess of charitable contributions over $500 allowable
104.1as a deduction for the taxable year under section 170(a) of the Internal Revenue Code,
104.2under the provisions of Public Law 109-1 and Public Law 111-126;
104.3    (7) for individuals who are allowed a federal foreign tax credit for taxes that do not
104.4qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover
104.5of subnational foreign taxes for the taxable year, but not to exceed the total subnational
104.6foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
104.7"federal foreign tax credit" means the credit allowed under section 27 of the Internal
104.8Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
104.9under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
104.10the extent they exceed the federal foreign tax credit;
104.11    (8) in each of the five tax years immediately following the tax year in which an
104.12addition is required under subdivision 19a, clause (7), or 19c, clause (15) (14), in the case
104.13of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
104.14delayed depreciation. For purposes of this clause, "delayed depreciation" means the amount
104.15of the addition made by the taxpayer under subdivision 19a, clause (7), or subdivision 19c,
104.16clause (15) (14), in the case of a shareholder of an S corporation, minus the positive value
104.17of any net operating loss under section 172 of the Internal Revenue Code generated for the
104.18tax year of the addition. The resulting delayed depreciation cannot be less than zero;
104.19    (9) job opportunity building zone income as provided under section 469.316;
104.20    (10) to the extent included in federal taxable income, the amount of compensation
104.21paid to members of the Minnesota National Guard or other reserve components of the
104.22United States military for active service, excluding compensation for services performed
104.23under the Active Guard Reserve (AGR) program. For purposes of this clause, "active
104.24service" means (i) state active service as defined in section 190.05, subdivision 5a, clause
104.25(1); or (ii) federally funded state active service as defined in section 190.05, subdivision
104.265b , but "active service" excludes service performed in accordance with section 190.08,
104.27subdivision 3 ;
104.28    (11) to the extent included in federal taxable income, the amount of compensation
104.29paid to Minnesota residents who are members of the armed forces of the United States
104.30or United Nations for active duty performed under United States Code, title 10; or the
104.31authority of the United Nations;
104.32    (12) an amount, not to exceed $10,000, equal to qualified expenses related to a
104.33qualified donor's donation, while living, of one or more of the qualified donor's organs
104.34to another person for human organ transplantation. For purposes of this clause, "organ"
104.35means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
104.36"human organ transplantation" means the medical procedure by which transfer of a human
105.1organ is made from the body of one person to the body of another person; "qualified
105.2expenses" means unreimbursed expenses for both the individual and the qualified donor
105.3for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
105.4may be subtracted under this clause only once; and "qualified donor" means the individual
105.5or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
105.6individual may claim the subtraction in this clause for each instance of organ donation for
105.7transplantation during the taxable year in which the qualified expenses occur;
105.8    (13) in each of the five tax years immediately following the tax year in which an
105.9addition is required under subdivision 19a, clause (8), or 19c, clause (16) (15), in the case
105.10of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth of
105.11the addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16)
105.12 (15), in the case of a shareholder of a corporation that is an S corporation, minus the
105.13positive value of any net operating loss under section 172 of the Internal Revenue Code
105.14generated for the tax year of the addition. If the net operating loss exceeds the addition for
105.15the tax year, a subtraction is not allowed under this clause;
105.16    (14) to the extent included in the federal taxable income of a nonresident of
105.17Minnesota, compensation paid to a service member as defined in United States Code, title
105.1810, section 101(a)(5), for military service as defined in the Servicemembers Civil Relief
105.19Act, Public Law 108-189, section 101(2);
105.20    (15) to the extent included in federal taxable income, the amount of national service
105.21educational awards received from the National Service Trust under United States Code,
105.22title 42, sections 12601 to 12604, for service in an approved Americorps National Service
105.23program;
105.24(16) to the extent included in federal taxable income, discharge of indebtedness
105.25income resulting from reacquisition of business indebtedness included in federal taxable
105.26income under section 108(i) of the Internal Revenue Code. This subtraction applies only
105.27to the extent that the income was included in net income in a prior year as a result of the
105.28addition under section 290.01, subdivision 19a, clause (16); and
105.29(17) the amount of the net operating loss allowed under section 290.095, subdivision
105.3011 , paragraph (c); and
105.31(18) in the year that the expenditures are made for railroad track maintenance, as
105.32defined in section 45G(d) of the Internal Revenue Code, in the case of a shareholder of a
105.33corporation that is an S corporation or a partner in a partnership, an amount equal to the
105.34credit awarded pursuant to section 45G(a) of the Internal Revenue Code. The subtraction
105.35shall be reduced to an amount equal to the percentage of the shareholder's or partner's
105.36share of the net income of the S corporation or partnership.
106.1EFFECTIVE DATE.This section is effective for taxable years beginning after
106.2December 31, 2012.

106.3    Sec. 12. Minnesota Statutes 2012, section 290.01, subdivision 19c, is amended to read:
106.4    Subd. 19c. Corporations; additions to federal taxable income. For corporations,
106.5there shall be added to federal taxable income:
106.6    (1) the amount of any deduction taken for federal income tax purposes for income,
106.7excise, or franchise taxes based on net income or related minimum taxes, including but not
106.8limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
106.9another state, a political subdivision of another state, the District of Columbia, or any
106.10foreign country or possession of the United States;
106.11    (2) interest not subject to federal tax upon obligations of: the United States, its
106.12possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
106.13state, any of its political or governmental subdivisions, any of its municipalities, or any
106.14of its governmental agencies or instrumentalities; the District of Columbia; or Indian
106.15tribal governments;
106.16    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
106.17Revenue Code;
106.18    (4) the amount of any net operating loss deduction taken for federal income tax
106.19purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
106.20deduction under section 810 of the Internal Revenue Code;
106.21    (5) the amount of any special deductions taken for federal income tax purposes
106.22under sections 241 to 247 and 965 of the Internal Revenue Code;
106.23    (6) losses from the business of mining, as defined in section 290.05, subdivision 1,
106.24clause (a), that are not subject to Minnesota income tax;
106.25    (7) the amount of any capital losses deducted for federal income tax purposes under
106.26sections 1211 and 1212 of the Internal Revenue Code;
106.27    (8) the exempt foreign trade income of a foreign sales corporation under sections
106.28921(a) and 291 of the Internal Revenue Code;
106.29    (9) the amount of percentage depletion deducted under sections 611 through 614 and
106.30291 of the Internal Revenue Code;
106.31    (10) for certified pollution control facilities placed in service in a taxable year
106.32beginning before December 31, 1986, and for which amortization deductions were elected
106.33under section 169 of the Internal Revenue Code of 1954, as amended through December
106.3431, 1985, the amount of the amortization deduction allowed in computing federal taxable
106.35income for those facilities;
107.1    (11) the amount of any deemed dividend from a foreign operating corporation
107.2determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend
107.3shall be reduced by the amount of the addition to income required by clauses (20), (21),
107.4(22), and (23);
107.5    (12) (11) the amount of a partner's pro rata share of net income which does not flow
107.6through to the partner because the partnership elected to pay the tax on the income under
107.7section 6242(a)(2) of the Internal Revenue Code;
107.8    (13) (12) the amount of net income excluded under section 114 of the Internal
107.9Revenue Code;
107.10    (14) (13) any increase in subpart F income, as defined in section 952(a) of the
107.11Internal Revenue Code, for the taxable year when subpart F income is calculated without
107.12regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
107.13    (15) (14) 80 percent of the depreciation deduction allowed under section
107.14168(k)(1)(A) and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if
107.15the taxpayer has an activity that in the taxable year generates a deduction for depreciation
107.16under section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable
107.17year that the taxpayer is not allowed to claim for the taxable year, "the depreciation
107.18allowed under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess
107.19of the depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A)
107.20over the amount of the loss from the activity that is not allowed in the taxable year. In
107.21succeeding taxable years when the losses not allowed in the taxable year are allowed, the
107.22depreciation under section 168(k)(1)(A) and (k)(4)(A) is allowed;
107.23    (16) (15) 80 percent of the amount by which the deduction allowed by section 179 of
107.24the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
107.25Revenue Code of 1986, as amended through December 31, 2003;
107.26    (17) (16) to the extent deducted in computing federal taxable income, the amount of
107.27the deduction allowable under section 199 of the Internal Revenue Code;
107.28    (18) (17) for taxable years beginning before January 1, 2013, the exclusion allowed
107.29under section 139A of the Internal Revenue Code for federal subsidies for prescription
107.30drug plans;
107.31    (19) (18) the amount of expenses disallowed under section 290.10, subdivision 2;
107.32    (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
107.33accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
107.34of a corporation that is a member of the taxpayer's unitary business group that qualifies
107.35as a foreign operating corporation. For purposes of this clause, intangible expenses and
107.36costs include:
108.1    (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
108.2use, maintenance or management, ownership, sale, exchange, or any other disposition of
108.3intangible property;
108.4    (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
108.5transactions;
108.6    (iii) royalty, patent, technical, and copyright fees;
108.7    (iv) licensing fees; and
108.8    (v) other similar expenses and costs.
108.9For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
108.10applications, trade names, trademarks, service marks, copyrights, mask works, trade
108.11secrets, and similar types of intangible assets.
108.12This clause does not apply to any item of interest or intangible expenses or costs paid,
108.13accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
108.14to such item of income to the extent that the income to the foreign operating corporation
108.15is income from sources without the United States as defined in subtitle A, chapter 1,
108.16subchapter N, part 1, of the Internal Revenue Code;
108.17    (21) except as already included in the taxpayer's taxable income pursuant to clause
108.18(20), any interest income and income generated from intangible property received or
108.19accrued by a foreign operating corporation that is a member of the taxpayer's unitary
108.20group. For purposes of this clause, income generated from intangible property includes:
108.21    (i) income related to the direct or indirect acquisition, use, maintenance or
108.22management, ownership, sale, exchange, or any other disposition of intangible property;
108.23    (ii) income from factoring transactions or discounting transactions;
108.24    (iii) royalty, patent, technical, and copyright fees;
108.25    (iv) licensing fees; and
108.26    (v) other similar income.
108.27For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
108.28applications, trade names, trademarks, service marks, copyrights, mask works, trade
108.29secrets, and similar types of intangible assets.
108.30This clause does not apply to any item of interest or intangible income received or accrued
108.31by a foreign operating corporation with respect to such item of income to the extent that
108.32the income is income from sources without the United States as defined in subtitle A,
108.33chapter 1, subchapter N, part 1, of the Internal Revenue Code;
108.34    (22) the dividends attributable to the income of a foreign operating corporation that
108.35is a member of the taxpayer's unitary group in an amount that is equal to the dividends
108.36paid deduction of a real estate investment trust under section 561(a) of the Internal
109.1Revenue Code for amounts paid or accrued by the real estate investment trust to the
109.2foreign operating corporation;
109.3    (23) the income of a foreign operating corporation that is a member of the taxpayer's
109.4unitary group in an amount that is equal to gains derived from the sale of real or personal
109.5property located in the United States;
109.6    (24) (19) for taxable years beginning before January 1, 2010, the additional amount
109.7allowed as a deduction for donation of computer technology and equipment under section
109.8170(e)(6) of the Internal Revenue Code, to the extent deducted from taxable income; and
109.9(25) (20) discharge of indebtedness income resulting from reacquisition of business
109.10indebtedness and deferred under section 108(i) of the Internal Revenue Code.
109.11EFFECTIVE DATE.This section is effective for taxable years beginning after
109.12December 31, 2012.

109.13    Sec. 13. Minnesota Statutes 2012, section 290.01, subdivision 19d, is amended to read:
109.14    Subd. 19d. Corporations; modifications decreasing federal taxable income. For
109.15corporations, there shall be subtracted from federal taxable income after the increases
109.16provided in subdivision 19c:
109.17    (1) the amount of foreign dividend gross-up added to gross income for federal
109.18income tax purposes under section 78 of the Internal Revenue Code;
109.19    (2) the amount of salary expense not allowed for federal income tax purposes due to
109.20claiming the work opportunity credit under section 51 of the Internal Revenue Code;
109.21    (3) any dividend (not including any distribution in liquidation) paid within the
109.22taxable year by a national or state bank to the United States, or to any instrumentality of
109.23the United States exempt from federal income taxes, on the preferred stock of the bank
109.24owned by the United States or the instrumentality;
109.25    (4) amounts disallowed for intangible drilling costs due to differences between
109.26this chapter and the Internal Revenue Code in taxable years beginning before January
109.271, 1987, as follows:
109.28    (i) to the extent the disallowed costs are represented by physical property, an amount
109.29equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09,
109.30subdivision 7 , subject to the modifications contained in subdivision 19e; and
109.31    (ii) to the extent the disallowed costs are not represented by physical property, an
109.32amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
109.33290.09, subdivision 8 ;
109.34    (5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
109.35Internal Revenue Code, except that:
110.1    (i) for capital losses incurred in taxable years beginning after December 31, 1986,
110.2capital loss carrybacks shall not be allowed;
110.3    (ii) for capital losses incurred in taxable years beginning after December 31, 1986,
110.4a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
110.5allowed;
110.6    (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
110.7capital loss carryback to each of the three taxable years preceding the loss year, subject to
110.8the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
110.9    (iv) for capital losses incurred in taxable years beginning before January 1, 1987,
110.10a capital loss carryover to each of the five taxable years succeeding the loss year to the
110.11extent such loss was not used in a prior taxable year and subject to the provisions of
110.12Minnesota Statutes 1986, section 290.16, shall be allowed;
110.13    (6) an amount for interest and expenses relating to income not taxable for federal
110.14income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
110.15expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
110.16291 of the Internal Revenue Code in computing federal taxable income;
110.17    (7) in the case of mines, oil and gas wells, other natural deposits, and timber for
110.18which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a
110.19reasonable allowance for depletion based on actual cost. In the case of leases the deduction
110.20must be apportioned between the lessor and lessee in accordance with rules prescribed
110.21by the commissioner. In the case of property held in trust, the allowable deduction must
110.22be apportioned between the income beneficiaries and the trustee in accordance with the
110.23pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
110.24of the trust's income allocable to each;
110.25    (8) for certified pollution control facilities placed in service in a taxable year
110.26beginning before December 31, 1986, and for which amortization deductions were elected
110.27under section 169 of the Internal Revenue Code of 1954, as amended through December
110.2831, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
110.291986, section 290.09, subdivision 7;
110.30    (9) amounts included in federal taxable income that are due to refunds of income,
110.31excise, or franchise taxes based on net income or related minimum taxes paid by the
110.32corporation to Minnesota, another state, a political subdivision of another state, the
110.33District of Columbia, or a foreign country or possession of the United States to the extent
110.34that the taxes were added to federal taxable income under section 290.01, subdivision 19c,
110.35clause (1), in a prior taxable year;
111.1    (10) 80 percent of royalties, fees, or other like income accrued or received from a
111.2foreign operating corporation or a foreign corporation which is part of the same unitary
111.3business as the receiving corporation, unless the income resulting from such payments or
111.4accruals is income from sources within the United States as defined in subtitle A, chapter
111.51, subchapter N, part 1, of the Internal Revenue Code;
111.6    (11) (10) income or gains from the business of mining as defined in section 290.05,
111.7subdivision 1 , clause (a), that are not subject to Minnesota franchise tax;
111.8    (12) (11) the amount of disability access expenditures in the taxable year which are not
111.9allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
111.10    (13) (12) the amount of qualified research expenses not allowed for federal income
111.11tax purposes under section 280C(c) of the Internal Revenue Code, but only to the extent
111.12that the amount exceeds the amount of the credit allowed under section 290.068;
111.13    (14) (13) the amount of salary expenses not allowed for federal income tax purposes
111.14due to claiming the Indian employment credit under section 45A(a) of the Internal
111.15Revenue Code;
111.16    (15) (14) for a corporation whose foreign sales corporation, as defined in section
111.17922 of the Internal Revenue Code, constituted a foreign operating corporation during any
111.18taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
111.19claiming the deduction under section 290.21, subdivision 4, for income received from
111.20the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of
111.21income excluded under section 114 of the Internal Revenue Code, provided the income is
111.22not income of a foreign operating company;
111.23    (16) (15) any decrease in subpart F income, as defined in section 952(a) of the
111.24Internal Revenue Code, for the taxable year when subpart F income is calculated without
111.25regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
111.26    (17) (16) in each of the five tax years immediately following the tax year in which an
111.27addition is required under subdivision 19c, clause (15) (14), an amount equal to one-fifth
111.28of the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
111.29amount of the addition made by the taxpayer under subdivision 19c, clause (15) (14). The
111.30resulting delayed depreciation cannot be less than zero;
111.31    (18) (17) in each of the five tax years immediately following the tax year in which an
111.32addition is required under subdivision 19c, clause (16) (15), an amount equal to one-fifth
111.33of the amount of the addition; and
111.34(19) (18) to the extent included in federal taxable income, discharge of indebtedness
111.35income resulting from reacquisition of business indebtedness included in federal taxable
111.36income under section 108(i) of the Internal Revenue Code. This subtraction applies only
112.1to the extent that the income was included in net income in a prior year as a result of the
112.2addition under section 290.01, subdivision 19c, clause (25) (20); and
112.3(19) in the year that the expenditures are made for railroad track maintenance, as
112.4defined in section 45G(d) of the Internal Revenue Code, an amount equal to the credit
112.5awarded pursuant to section 45G(a) of the Internal Revenue Code.
112.6EFFECTIVE DATE.This section is effective for taxable years beginning after
112.7December 31, 2012.

112.8    Sec. 14. Minnesota Statutes 2012, section 290.06, subdivision 1, is amended to read:
112.9    Subdivision 1. Computation, corporations. The franchise tax imposed upon
112.10corporations shall be computed by applying to their taxable income the rate of 9.8 9.0
112.11percent.
112.12EFFECTIVE DATE.This section is effective for taxable years beginning after
112.13December 31, 2012.

112.14    Sec. 15. Minnesota Statutes 2012, section 290.06, subdivision 2c, is amended to read:
112.15    Subd. 2c. Schedules of rates for individuals, estates, and trusts. (a) The income
112.16taxes imposed by this chapter upon married individuals filing joint returns and surviving
112.17spouses as defined in section 2(a) of the Internal Revenue Code must be computed by
112.18applying to their taxable net income the following schedule of rates:
112.19    (1) On the first $25,680 $35,480, 5.35 percent;
112.20    (2) On all over $25,680 $35,480, but not over $102,030 $140,960, 7.05 percent;
112.21    (3) On all over $102,030 $140,960, 7.85 9.4 percent.
112.22    Married individuals filing separate returns, estates, and trusts must compute their
112.23income tax by applying the above rates to their taxable income, except that the income
112.24brackets will be one-half of the above amounts.
112.25    (b) The income taxes imposed by this chapter upon unmarried individuals must be
112.26computed by applying to taxable net income the following schedule of rates:
112.27    (1) On the first $17,570 $24,270, 5.35 percent;
112.28    (2) On all over $17,570 $24,270, but not over $57,710 $79,730, 7.05 percent;
112.29    (3) On all over $57,710 $79,730, 7.85 9.4 percent.
112.30    (c) The income taxes imposed by this chapter upon unmarried individuals qualifying
112.31as a head of household as defined in section 2(b) of the Internal Revenue Code must be
112.32computed by applying to taxable net income the following schedule of rates:
112.33    (1) On the first $21,630 $29,880, 5.35 percent;
113.1    (2) On all over $21,630 $29,880, but not over $86,910 $120,070, 7.05 percent;
113.2    (3) On all over $86,910 $120,070, 7.85 9.4 percent.
113.3    (d) In lieu of a tax computed according to the rates set forth in this subdivision, the
113.4tax of any individual taxpayer whose taxable net income for the taxable year is less than
113.5an amount determined by the commissioner must be computed in accordance with tables
113.6prepared and issued by the commissioner of revenue based on income brackets of not
113.7more than $100. The amount of tax for each bracket shall be computed at the rates set
113.8forth in this subdivision, provided that the commissioner may disregard a fractional part of
113.9a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.
113.10    (e) An individual who is not a Minnesota resident for the entire year must compute
113.11the individual's Minnesota income tax as provided in this subdivision. After the
113.12application of the nonrefundable credits provided in this chapter, the tax liability must
113.13then be multiplied by a fraction in which:
113.14    (1) the numerator is the individual's Minnesota source federal adjusted gross income
113.15as defined in section 62 of the Internal Revenue Code and increased by the additions
113.16required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12),
113.17(13), and (16) to (18), and reduced by the Minnesota assignable portion of the subtraction
113.18for United States government interest under section 290.01, subdivision 19b, clause
113.19(1), and the subtractions under section 290.01, subdivision 19b, clauses (8), (9), (13),
113.20(14), (16), and (17), after applying the allocation and assignability provisions of section
113.21290.081 , clause (a), or 290.17; and
113.22    (2) the denominator is the individual's federal adjusted gross income as defined in
113.23section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in
113.24section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), (13), and (16) to
113.25(18), and reduced by the amounts specified in section 290.01, subdivision 19b, clauses (1),
113.26(8), (9), (13), (14), (16), and (17).
113.27EFFECTIVE DATE.This section is effective for taxable years beginning after
113.28December 31, 2012.

113.29    Sec. 16. Minnesota Statutes 2012, section 290.06, subdivision 2d, is amended to read:
113.30    Subd. 2d. Inflation adjustment of brackets. (a) For taxable years beginning after
113.31December 31, 2000 2013, the minimum and maximum dollar amounts for each rate
113.32bracket for which a tax is imposed in subdivision 2c shall be adjusted for inflation by the
113.33percentage determined under paragraph (b). For the purpose of making the adjustment as
113.34provided in this subdivision all of the rate brackets provided in subdivision 2c shall be the
113.35rate brackets as they existed for taxable years beginning after December 31, 1999 2012,
114.1and before January 1, 2001 2014. The rate applicable to any rate bracket must not be
114.2changed. The dollar amounts setting forth the tax shall be adjusted to reflect the changes
114.3in the rate brackets. The rate brackets as adjusted must be rounded to the nearest $10
114.4amount. If the rate bracket ends in $5, it must be rounded up to the nearest $10 amount.
114.5(b) The commissioner shall adjust the rate brackets and by the percentage determined
114.6pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in
114.7section 1(f)(3)(B) the word "1999" "2012" shall be substituted for the word "1992." For
114.82001 2014, the commissioner shall then determine the percent change from the 12 months
114.9ending on August 31, 1999 2012, to the 12 months ending on August 31, 2000 2013, and
114.10in each subsequent year, from the 12 months ending on August 31, 1999 2012, to the 12
114.11months ending on August 31 of the year preceding the taxable year. The determination of
114.12the commissioner pursuant to this subdivision shall not be considered a "rule" and shall
114.13not be subject to the Administrative Procedure Act contained in chapter 14.
114.14No later than December 15 of each year, the commissioner shall announce the
114.15specific percentage that will be used to adjust the tax rate brackets.
114.16EFFECTIVE DATE.This section is effective for taxable years beginning after
114.17December 31, 2012.

114.18    Sec. 17. Minnesota Statutes 2012, section 290.06, is amended by adding a subdivision
114.19to read:
114.20    Subd. 36. Greater Minnesota internship credit. (a) A taxpayer may take a credit
114.21against the tax due under this chapter equal to the lesser of:
114.22(1) 40 percent of the compensation paid to an intern qualifying under the program
114.23established under section 136A.129, but not to exceed $2,000 per intern; or
114.24(2) the amount certified by the Office of Higher Education under section 136A.129
114.25to the taxpayer.
114.26(b) Credits allowed to a partnership, a limited liability company taxed as a
114.27partnership, an S corporation, or multiple owners of property are passed through to the
114.28partners, members, shareholders, or owners, respectively, pro rata to each partner, member,
114.29shareholder, or owner based on their share of the entity's income for the taxable year.
114.30(c) If the amount of credit which the taxpayer is eligible to receive under this
114.31subdivision exceeds the taxpayer's tax liability under this chapter, the commissioner of
114.32revenue shall refund the excess to the taxpayer.
114.33(d) The amount necessary to:
114.34(1) pay claims for the refund provided in this subdivision; and
115.1(2) an amount equal to one percent of the total amount of the credits authorized
115.2under this subdivision for an administrative fee for the Office of Higher Education
115.3and participating eligible institutions is appropriated from the general fund to the
115.4commissioner of revenue, not to exceed $2,020,000.
115.5The commissioner of revenue shall transfer the amount of the administrative fee to
115.6the Office of Higher Education.
115.7EFFECTIVE DATE.This section is effective for taxable years beginning after
115.8December 31, 2012.

115.9    Sec. 18. Minnesota Statutes 2012, section 290.0677, subdivision 1, is amended to read:
115.10    Subdivision 1. Credit allowed; current military service. (a) An individual is
115.11allowed a credit against the tax due under this chapter equal to $59 for each month or
115.12portion thereof that the individual was in active military service in a designated area after
115.13September 11, 2001, and before January 1, 2009, while a Minnesota domiciliary.
115.14    (b) An individual is allowed a credit against the tax due under this chapter equal
115.15to $120 $200 for each month or portion thereof that the individual was in active military
115.16service in a designated area after December 31, 2008, while a Minnesota domiciliary.
115.17    (c) For active service performed after September 11, 2001, and before December 31,
115.182006, the individual may claim the credit in the taxable year beginning after December 31,
115.192005, and before January 1, 2007.
115.20    (d) For active service performed after December 31, 2006, the individual may claim
115.21the credit for the taxable year in which the active service was performed.
115.22    (e) If an individual entitled to the credit died prior to January 1, 2006, the individual's
115.23estate or heirs at law, if the individual's probate estate has closed or the estate was not
115.24probated, may claim the credit.
115.25EFFECTIVE DATE.This section is effective for taxable years beginning after
115.26December 31, 2012.

115.27    Sec. 19. Minnesota Statutes 2012, section 290.0677, subdivision 1a, is amended to read:
115.28    Subd. 1a. Credit allowed; past military service. (a) A qualified individual is
115.29allowed a credit against the tax imposed under this chapter for past military service. The
115.30credit equals $750 $1,500. The credit allowed under this subdivision is reduced by ten
115.31percent of adjusted gross income in excess of $30,000, but in no case is the credit less
115.32than zero.
116.1    (b) For a nonresident or a part-year resident, the credit under this subdivision
116.2must be allocated based on the percentage calculated under section 290.06, subdivision
116.32c , paragraph (e).
116.4EFFECTIVE DATE.This section is effective for taxable years beginning after
116.5December 31, 2012.

116.6    Sec. 20. Minnesota Statutes 2012, section 290.0677, subdivision 2, is amended to read:
116.7    Subd. 2. Definitions. (a) For purposes of this section, the following terms have
116.8the meanings given.
116.9    (b) "Designated area" means a:
116.10    (1) combat zone designated by Executive Order from the President of the United
116.11States;
116.12    (2) qualified hazardous duty area, designated in Public Law; or
116.13    (3) location certified by the U. S. Department of Defense as eligible for combat zone
116.14tax benefits due to the location's direct support of military operations.
116.15    (c) "Active military service" means active duty service in any of the United States
116.16armed forces, the National Guard, or reserves.
116.17    (d) "Qualified individual" means an individual who has:
116.18    (1) either (i) met one of the following criteria:
116.19    (i) has served at least 20 years in the military or;
116.20    (ii) has a service-connected disability rating of 100 percent for a total and permanent
116.21disability; or
116.22    (iii) has been determined by the military to be eligible for compensation from a
116.23pension or other retirement pay from the federal government for service in the military,
116.24as computed under United States Code, title 10, sections 1401 to 1414, 1447 to 1455,
116.25or 12733; and
116.26    (2) separated from military service before the end of the taxable year.
116.27    (e) "Adjusted gross income" has the meaning given in section 61 of the Internal
116.28Revenue Code.
116.29EFFECTIVE DATE.This section is effective for taxable years beginning after
116.30December 31, 2012.

116.31    Sec. 21. Minnesota Statutes 2012, section 290.068, subdivision 1, is amended to read:
117.1    Subdivision 1. Credit allowed. A corporation, partners in a partnership, or
117.2shareholders in a corporation treated as an "S" corporation under section 290.9725 are
117.3allowed a credit against the tax computed under this chapter for the taxable year equal to:
117.4    (a) ten percent of the first $2,000,000 of the excess (if any) of
117.5    (1) the qualified research expenses for the taxable year, over
117.6    (2) the base amount; and
117.7    (b) 2.5 4.5 percent on all of such excess expenses over $2,000,000.
117.8EFFECTIVE DATE.This section is effective for taxable years beginning after
117.9December 31, 2012.

117.10    Sec. 22. Minnesota Statutes 2012, section 290.0681, subdivision 1, is amended to read:
117.11    Subdivision 1. Definitions. (a) For purposes of this section, the following terms
117.12have the meanings given.
117.13(b) "Account" means the historic credit administration account in the special
117.14revenue fund.
117.15(c) "Office" means the State Historic Preservation Office of the Minnesota Historical
117.16Society.
117.17(d) "Project" means rehabilitation of a certified historic structure, as defined in
117.18section 47(c)(3)(A) of the Internal Revenue Code, that is located in Minnesota and is
117.19allowed a federal credit under section 47(a)(2) of the Internal Revenue Code.
117.20(e) "Society" means the Minnesota Historical Society.
117.21(f) "Federal credit" means the credit allowed under section 47(a)(2) of the Internal
117.22Revenue Code.
117.23(g) "Placed in service" has the meaning used in section 47 of the Internal Revenue
117.24Code.
117.25(h) "Qualified rehabilitation expenditures" has the meaning given in section 47 of
117.26the Internal Revenue Code.
117.27EFFECTIVE DATE.This section is effective the day following final enactment.

117.28    Sec. 23. Minnesota Statutes 2012, section 290.0681, subdivision 3, is amended to read:
117.29    Subd. 3. Applications; allocations. (a) To qualify for a credit or grant under this
117.30section, the developer of a project must apply to the office before the rehabilitation begins.
117.31The application must contain the information and be in the form prescribed by the office.
117.32The office may collect a fee for application of up to $5,000 0.5 percent of qualified
117.33rehabilitation expenditures, up to $45,000, based on estimated qualified rehabilitation
118.1expenses expenditures, to offset costs associated with personnel and administrative
118.2expenses related to administering the credit and preparing the economic impact report
118.3in subdivision 9. Application fees are deposited in the account. The application must
118.4indicate if the application is for a credit or a grant in lieu of the credit or a combination of
118.5the two and designate the taxpayer qualifying for the credit or the recipient of the grant.
118.6    (b) Upon approving an application for credit, the office shall issue allocation
118.7certificates that:
118.8    (1) verify eligibility for the credit or grant;
118.9    (2) state the amount of credit or grant anticipated with the project, with the credit
118.10amount equal to 100 percent and the grant amount equal to 90 percent of the federal
118.11credit anticipated in the application;
118.12    (3) state that the credit or grant allowed may increase or decrease if the federal
118.13credit the project receives at the time it is placed in service is different than the amount
118.14anticipated at the time the allocation certificate is issued; and
118.15    (4) state the fiscal year in which the credit or grant is allocated, and that the taxpayer
118.16or grant recipient is entitled to receive the credit or grant at the time the project is placed
118.17in service, provided that date is within three calendar years following the issuance of
118.18the allocation certificate.
118.19    (c) The office, in consultation with the commissioner of revenue, shall determine
118.20if the project is eligible for a credit or a grant under this section and must notify the
118.21developer in writing of its determination. Eligibility for the credit is subject to review
118.22and audit by the commissioner of revenue.
118.23    (d) The federal credit recapture and repayment requirements under section 50 of the
118.24Internal Revenue Code do not apply to the credit allowed under this section.
118.25(e) Any decision of the office under paragraph (c) may be challenged as a contested
118.26case under chapter 14. The contested case proceeding must be initiated within 45 days of
118.27the date of written notification by the office.
118.28EFFECTIVE DATE.This section is effective the day following final enactment.

118.29    Sec. 24. Minnesota Statutes 2012, section 290.0681, subdivision 4, is amended to read:
118.30    Subd. 4. Credit certificates; grants. (a)(1) The developer of a project for which
118.31the office has issued an allocation certificate must notify the office when the project is
118.32placed in service. Upon verifying that the project has been placed in service, and was
118.33allowed a federal credit, the office must issue a credit certificate to the taxpayer designated
118.34in the application or must issue a grant to the recipient designated in the application.
118.35Credit certificates will be issued on a first come, first served basis according to the date
119.1and time of verification required under this clause. The credit certificate must state the
119.2amount of the credit.
119.3    (2) The credit amount equals the federal credit allowed for the project.
119.4    (3) The grant amount equals 90 percent of the federal credit allowed for the project.
119.5    (b) The recipient of a credit certificate may assign the certificate to another taxpayer,
119.6which is then allowed the credit under this section or section 297I.20, subdivision 3. An
119.7assignment is not valid unless the assignee notifies the commissioner within 30 days of the
119.8date that the assignment is made. The commissioner shall prescribe the forms necessary
119.9for notifying the commissioner of the assignment of a credit certificate and for claiming
119.10a credit by assignment.
119.11    (c) Credits passed through to partners, members, shareholders, or owners pursuant to
119.12subdivision 5 are not an assignment of a credit certificate under this subdivision.
119.13    (d) A grant agreement between the office and the recipient of a grant may allow the
119.14grant to be issued to another individual or entity.
119.15EFFECTIVE DATE.Paragraph (a) is effective beginning fiscal year 2016.
119.16Paragraph (b) is effective the day following final enactment.

119.17    Sec. 25. Minnesota Statutes 2012, section 290.0681, subdivision 5, is amended to read:
119.18    Subd. 5. Partnerships; multiple owners. Credits granted to a partnership, a limited
119.19liability company taxed as a partnership, S corporation, or multiple owners of property
119.20are passed through to the partners, members, shareholders, or owners, respectively, pro
119.21rata to each partner, member, shareholder, or owner based on their share of the entity's
119.22assets or as specially allocated in their organizational documents or any other executed
119.23agreement, as of the last day of the taxable year.
119.24EFFECTIVE DATE.This section is effective the day following final enactment.

119.25    Sec. 26. Minnesota Statutes 2012, section 290.0681, subdivision 7, is amended to read:
119.26    Subd. 7. Appropriations. (a) An amount sufficient to pay the refunds authorized
119.27under this section is appropriated to the commissioner from the general fund, not to
119.28exceed $15,000,000 per fiscal year.
119.29(b) Subject to the limitation in paragraph (a), an amount sufficient to pay the grants
119.30authorized under this section is appropriated to the society from the general fund.
119.31(c) Amounts in the account are appropriated to the society for costs associated with
119.32personnel and administrative expenses related to administering the credit for historic
119.33structure rehabilitation in this section, for refunding application fees under subdivision
120.13, and for costs associated with preparing the determination of economic impact report
120.2required in subdivision 9.
120.3EFFECTIVE DATE.This section is effective beginning fiscal year 2016.

120.4    Sec. 27. Minnesota Statutes 2012, section 290.0681, subdivision 10, is amended to read:
120.5    Subd. 10. Sunset. This section expires after fiscal year 2015 2021, except that
120.6the office's authority to issue credit certificates under subdivision 4 based on allocation
120.7certificates that were issued before fiscal year 2016 2022 remains in effect through 2018
120.8 2024, and the reporting requirements in subdivision 9 remain in effect through the year
120.9following the year in which all allocation certificates have either been canceled or resulted
120.10in issuance of credit certificates, or 2019 2025, whichever is earlier.
120.11EFFECTIVE DATE.This section is effective the day following final enactment.

120.12    Sec. 28. [290.0682] JOBS CREDIT; GREATER MINNESOTA BUSINESS
120.13EXPANSIONS.
120.14    Subdivision 1. Credit allowed. If authorized by its business subsidy agreement, a
120.15qualified business is allowed a credit against the taxes imposed under chapter 290. The
120.16credit equals seven percent of the:
120.17(1) lesser of:
120.18(i) the greater Minnesota payroll for the taxable year, less the greater Minnesota
120.19payroll for the base year; or
120.20(ii) the total Minnesota payroll for the taxable year, less the total Minnesota payroll
120.21for the base year; minus
120.22(2)(i) $35,000 multiplied by (ii) the number of full-time equivalent employees that
120.23the qualified business employs in greater Minnesota for the taxable year, minus the
120.24number of full-time equivalent employees the business employed in greater Minnesota in
120.25the base year, but not less than zero.
120.26    Subd. 2. Definitions. (a) For purposes of this section, the following terms have
120.27the meanings given.
120.28(b) "Base year" means the taxable year beginning during the calendar year prior to
120.29the calendar year in which the qualified business was certified under section 116J.3738.
120.30(c) "Full-time equivalent employees" means the equivalent of annualized expected
120.31hours of work equal to 2,080 hours.
120.32(d) "Greater Minnesota" has the meaning given in section 116J.3738.
121.1(e) "Greater Minnesota payroll" is that portion of the payroll factor under section
121.2290.191 that represents:
121.3(1) wages or salaries paid to an individual for services performed in greater
121.4Minnesota; plus
121.5(2) wages or salaries paid to individuals working from offices within greater
121.6Minnesota if their employment requires them to work outside of greater Minnesota and the
121.7work is incidental to the work performed by the individual within greater Minnesota; less
121.8(3) the amount of compensation attributable to any employee whose wages or salary
121.9are included in clause (1) or (2) that exceeds $125,000.
121.10(f) "Minnesota payroll" means the wages or salaries attributed to Minnesota under
121.11section 290.191, subdivision 12, for the qualified business or the unitary business of which
121.12the qualified business is a part, whichever is greater.
121.13(g) "Qualified business" means a qualified business certified under section
121.14116J.3738, subdivision 3.
121.15    Subd. 3. Inflation adjustment. For taxable years beginning after December 31,
121.162014, the dollar amounts in subdivision 1, clause (2), and subdivision 2, paragraph (e), are
121.17annually adjusted for inflation. The commissioner of revenue shall adjust the amounts by
121.18the percentage determined under section 290.06, subdivision 2d, for the taxable year.
121.19    Subd. 4. Refundable. If the amount of the credit exceeds the liability for tax under
121.20this chapter, the commissioner of revenue shall refund the excess to the qualified business.
121.21    Subd. 5. Appropriation. An amount sufficient to pay the refunds authorized by
121.22this section is appropriated to the commissioner of revenue from the general fund, not to
121.23exceed $5,000,000 in a taxable year.
121.24EFFECTIVE DATE.This section is effective for taxable years beginning after
121.25December 31, 2013.

121.26    Sec. 29. [290.0683] CLOTHING SALES TAX CREDIT.
121.27    Subdivision 1. Definitions. (a) For purposes of this section, the following terms
121.28have the meanings given.
121.29(b) "Income" has the meaning given in section 290.067, subdivision 2a.
121.30(c) "Dependent" has the meaning given in section 152 of the Internal Revenue Code.
121.31    Subd. 2. Credit allowed. A taxpayer is allowed a refundable credit against the tax
121.32imposed under this chapter. The credit is equal to $60 for a married couple filing a joint
121.33return, and $30 for all other filers, plus $30 for the first dependent claimed on the return,
121.34$15 for each of the second and third dependents claimed on the return, $10 for the fourth
121.35dependent claimed on the return, and $5 for each subsequent dependent.
122.1    Subd. 3. Limitations. The credit allowed in this section is reduced by $10 for every
122.2$1,000 of income in excess of 200 percent of the federal poverty guidelines.
122.3    Subd. 4. Appropriation. An amount sufficient to pay the refunds required by this
122.4section is appropriated to the commissioner from the general fund.
122.5EFFECTIVE DATE.This section is effective for taxable years beginning after
122.6December 31, 2012.

122.7    Sec. 30. Minnesota Statutes 2012, section 290.091, subdivision 2, is amended to read:
122.8    Subd. 2. Definitions. For purposes of the tax imposed by this section, the following
122.9terms have the meanings given:
122.10    (a) "Alternative minimum taxable income" means the sum of the following for
122.11the taxable year:
122.12    (1) the taxpayer's federal alternative minimum taxable income as defined in section
122.1355(b)(2) of the Internal Revenue Code;
122.14    (2) the taxpayer's itemized deductions allowed in computing federal alternative
122.15minimum taxable income, but excluding:
122.16    (i) the charitable contribution deduction under section 170 of the Internal Revenue
122.17Code;
122.18    (ii) the medical expense deduction;
122.19    (iii) the casualty, theft, and disaster loss deduction; and
122.20    (iv) the impairment-related work expenses of a disabled person;
122.21    (3) for depletion allowances computed under section 613A(c) of the Internal
122.22Revenue Code, with respect to each property (as defined in section 614 of the Internal
122.23Revenue Code), to the extent not included in federal alternative minimum taxable income,
122.24the excess of the deduction for depletion allowable under section 611 of the Internal
122.25Revenue Code for the taxable year over the adjusted basis of the property at the end of the
122.26taxable year (determined without regard to the depletion deduction for the taxable year);
122.27    (4) to the extent not included in federal alternative minimum taxable income, the
122.28amount of the tax preference for intangible drilling cost under section 57(a)(2) of the
122.29Internal Revenue Code determined without regard to subparagraph (E);
122.30    (5) to the extent not included in federal alternative minimum taxable income, the
122.31amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and
122.32    (6) the amount of addition required by section 290.01, subdivision 19a, clauses (7)
122.33to (9), (12), (13), and (16) to (18);
122.34    less the sum of the amounts determined under the following:
122.35    (1) interest income as defined in section 290.01, subdivision 19b, clause (1);
123.1    (2) an overpayment of state income tax as provided by section 290.01, subdivision
123.219b , clause (2), to the extent included in federal alternative minimum taxable income;
123.3    (3) the amount of investment interest paid or accrued within the taxable year on
123.4indebtedness to the extent that the amount does not exceed net investment income, as
123.5defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include
123.6amounts deducted in computing federal adjusted gross income;
123.7    (4) amounts subtracted from federal taxable income as provided by section 290.01,
123.8subdivision 19b , clauses (6), (8) to (14), and (16), and (18); and
123.9(5) the amount of the net operating loss allowed under section 290.095, subdivision
123.1011 , paragraph (c).
123.11    In the case of an estate or trust, alternative minimum taxable income must be
123.12computed as provided in section 59(c) of the Internal Revenue Code.
123.13    (b) "Investment interest" means investment interest as defined in section 163(d)(3)
123.14of the Internal Revenue Code.
123.15    (c) "Net minimum tax" means the minimum tax imposed by this section.
123.16    (d) "Regular tax" means the tax that would be imposed under this chapter (without
123.17regard to this section and section 290.032), reduced by the sum of the nonrefundable
123.18credits allowed under this chapter.
123.19    (e) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable
123.20income after subtracting the exemption amount determined under subdivision 3.
123.21EFFECTIVE DATE.This section is effective for taxable years beginning after
123.22December 31, 2012.

123.23    Sec. 31. Minnesota Statutes 2012, section 290.0921, subdivision 1, is amended to read:
123.24    Subdivision 1. Tax imposed. In addition to the taxes computed under this chapter
123.25without regard to this section, the franchise tax imposed on corporations includes a tax
123.26equal to the excess, if any, for the taxable year of:
123.27(1) 5.8 5.3 percent of Minnesota alternative minimum taxable income; over
123.28(2) the tax imposed under section 290.06, subdivision 1, without regard to this section.
123.29EFFECTIVE DATE.This section is effective for taxable years beginning after
123.30December 31, 2012.

123.31    Sec. 32. Minnesota Statutes 2012, section 290.0921, subdivision 3, is amended to read:
123.32    Subd. 3. Alternative minimum taxable income. "Alternative minimum taxable
123.33income" is Minnesota net income as defined in section 290.01, subdivision 19, and
124.1includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e),
124.2(f), and (h) of the Internal Revenue Code. If a corporation files a separate company
124.3Minnesota tax return, the minimum tax must be computed on a separate company basis.
124.4If a corporation is part of a tax group filing a unitary return, the minimum tax must be
124.5computed on a unitary basis. The following adjustments must be made.
124.6(1) For purposes of the depreciation adjustments under section 56(a)(1) and
124.756(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in
124.8service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal
124.9income tax purposes, including any modification made in a taxable year under section
124.10290.01, subdivision 19e , or Minnesota Statutes 1986, section 290.09, subdivision 7,
124.11paragraph (c).
124.12For taxable years beginning after December 31, 2000, the amount of any remaining
124.13modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986,
124.14section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation
124.15allowance in the first taxable year after December 31, 2000.
124.16(2) The portion of the depreciation deduction allowed for federal income tax
124.17purposes under section 168(k) of the Internal Revenue Code that is required as an addition
124.18under section 290.01, subdivision 19c, clause (15) (14), is disallowed in determining
124.19alternative minimum taxable income.
124.20(3) The subtraction for depreciation allowed under section 290.01, subdivision
124.2119d , clause (17) (16), is allowed as a depreciation deduction in determining alternative
124.22minimum taxable income.
124.23(4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d)
124.24of the Internal Revenue Code does not apply.
124.25(5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal
124.26Revenue Code does not apply.
124.27(6) The special rule for dividends from section 936 companies under section
124.2856(g)(4)(C)(iii) does not apply.
124.29(7) The tax preference for depletion under section 57(a)(1) of the Internal Revenue
124.30Code does not apply.
124.31(8) The tax preference for intangible drilling costs under section 57(a)(2) of the
124.32Internal Revenue Code must be calculated without regard to subparagraph (E) and the
124.33subtraction under section 290.01, subdivision 19d, clause (4).
124.34(9) The tax preference for tax exempt interest under section 57(a)(5) of the Internal
124.35Revenue Code does not apply.
125.1(10) The tax preference for charitable contributions of appreciated property under
125.2section 57(a)(6) of the Internal Revenue Code does not apply.
125.3(11) For purposes of calculating the tax preference for accelerated depreciation or
125.4amortization on certain property placed in service before January 1, 1987, under section
125.557(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the
125.6deduction allowed under section 290.01, subdivision 19e.
125.7For taxable years beginning after December 31, 2000, the amount of any remaining
125.8modification made under section 290.01, subdivision 19e, not previously deducted is a
125.9depreciation or amortization allowance in the first taxable year after December 31, 2004.
125.10(12) For purposes of calculating the adjustment for adjusted current earnings in
125.11section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable
125.12income" as it is used in section 56(g) of the Internal Revenue Code, means alternative
125.13minimum taxable income as defined in this subdivision, determined without regard to the
125.14adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code.
125.15(13) For purposes of determining the amount of adjusted current earnings under
125.16section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section
125.1756(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign dividend
125.18gross-up subtracted as provided in section 290.01, subdivision 19d, clause (1), (ii) the
125.19amount of refunds of income, excise, or franchise taxes subtracted as provided in section
125.20290.01, subdivision 19d , clause (9), or (iii) the amount of royalties, fees or other like
125.21income subtracted as provided in section 290.01, subdivision 19d, clause (10).
125.22(14) Alternative minimum taxable income excludes the income from operating in a
125.23job opportunity building zone as provided under section 469.317.
125.24(15) Alternative minimum taxable income excludes the income from operating in a
125.25biotechnology and health sciences industry zone as provided under section 469.337.
125.26Items of tax preference must not be reduced below zero as a result of the
125.27modifications in this subdivision.
125.28EFFECTIVE DATE.This section is effective for taxable years beginning after
125.29December 31, 2012.

125.30    Sec. 33. Minnesota Statutes 2012, section 290.0922, subdivision 1, is amended to read:
125.31    Subdivision 1. Imposition. (a) In addition to the tax imposed by this chapter without
125.32regard to this section, the franchise tax imposed on a corporation required to file under
125.33section 289A.08, subdivision 3, other than a corporation treated as an "S" corporation
125.34under section 290.9725 for the taxable year includes a tax equal to the following amounts:
126.1
126.2
If the sum of the corporation's Minnesota
property, payrolls, and sales or receipts is:
the tax equals:
126.3
126.4
less than
$
500,000
930,000
$
0
126.5
126.6
$
500,000
930,000
to
$
999,999
1,869,999
$
100
190
126.7
126.8
$
1,000,000
1,870,000
to
$
4,999,999
9,339,999
$
300
560
126.9
126.10
$
5,000,000
9,340,000
to
$
9,999,999
18,679,999
$
1,000
1,870
126.11
126.12
$
10,000,000
18,680,000
to
$
19,999,999
37,359,999
$
2,000
3,740
126.13
126.14
$
20,000,000
37,360,000
or
more
$
5,000
9,340
126.15(b) A tax is imposed for each taxable year on a corporation required to file a return
126.16under section 289A.12, subdivision 3, that is treated as an "S" corporation under section
126.17290.9725 and on a partnership required to file a return under section 289A.12, subdivision
126.183 , other than a partnership that derives over 80 percent of its income from farming. The
126.19tax imposed under this paragraph is due on or before the due date of the return for the
126.20taxpayer due under section 289A.18, subdivision 1. The commissioner shall prescribe
126.21the return to be used for payment of this tax. The tax under this paragraph is equal to
126.22the following amounts:
126.23
126.24
126.25
126.26
If the sum of the S corporation's
or partnership's Minnesota
property, payrolls, and sales or
receipts is:
the tax equals:
126.27
126.28
less than
$
500,000
930,000
$
0
126.29
126.30
$
500,000
930,000
to
$
999,999
1,869,999
$
100
190
126.31
126.32
$
1,000,000
1,870,000
to
$
4,999,999
9,339,999
$
300
560
126.33
126.34
$
5,000,000
9,340,000
to
$
9,999,999
18,679,999
$
1,000
1,870
126.35
126.36
$
10,000,000
18,680,000
to
$
19,999,999
37,359,999
$
2,000
3,740
126.37
126.38
$
20,000,000
37,360,000
or
more
$
5,000
9,340
126.39(c) The commissioner shall adjust the dollar amounts of both the tax and the property,
126.40payrolls, and sales or receipts thresholds in paragraphs (a) and (b) by the percentage
126.41determined pursuant to the provisions of section 1(f) of the Internal Revenue Code, except
126.42that in section 1(f)(3)(B) the year 2012 must be substituted for the year 1992. For 2014,
126.43the commissioner shall determine the percentage change from the 12 months ending on
126.44August 31, 2012, to the 12 months ending on August 31, 2013, and in each subsequent
127.1year, from the 12 months ending on August 31, 2012, to the 12 months ending on August
127.231 of the year preceding the taxable year. The determination of the commissioner pursuant
127.3to this subdivision is not a rule subject to the Administrative Procedure Act contained in
127.4chapter 14. The tax amounts as adjusted must be rounded to the nearest $10 amount and
127.5the threshold amounts must be adjusted to the nearest $10,000 amount. For tax amounts
127.6that end in $5, the amount is rounded up to the nearest $10 amount and for threshold
127.7amounts that end in $5,000, the amount is rounded up to the nearest $10,000.
127.8EFFECTIVE DATE.This section is effective for taxable years beginning after
127.9December 31, 2012.

127.10    Sec. 34. Minnesota Statutes 2012, section 290.095, subdivision 2, is amended to read:
127.11    Subd. 2. Defined and limited. (a) The term "net operating loss" as used in this
127.12section shall mean a net operating loss as defined in section 172(c) of the Internal Revenue
127.13Code, with the modifications specified in subdivision 4. The deductions provided in
127.14section 290.21 and the modification provided in section 290.01, subdivision 19d, clause
127.15(10), cannot be used in the determination of a net operating loss.
127.16(b) The term "net operating loss deduction" as used in this section means the
127.17aggregate of the net operating loss carryovers to the taxable year, computed in accordance
127.18with subdivision 3. The provisions of section 172(b) of the Internal Revenue Code relating
127.19to the carryback of net operating losses, do not apply.
127.20EFFECTIVE DATE.This section is effective for taxable years beginning after
127.21December 31, 2012.

127.22    Sec. 35. Minnesota Statutes 2012, section 290.17, subdivision 4, is amended to read:
127.23    Subd. 4. Unitary business principle. (a) If a trade or business conducted wholly
127.24within this state or partly within and partly without this state is part of a unitary business,
127.25the entire income of the unitary business is subject to apportionment pursuant to section
127.26290.191 . Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary
127.27business is considered to be derived from any particular source and none may be allocated
127.28to a particular place except as provided by the applicable apportionment formula. The
127.29provisions of this subdivision do not apply to business income subject to subdivision 5,
127.30income of an insurance company, or income of an investment company determined under
127.31section 290.36.
127.32(b) The term "unitary business" means business activities or operations which
127.33result in a flow of value between them. The term may be applied within a single legal
128.1entity or between multiple entities and without regard to whether each entity is a sole
128.2proprietorship, a corporation, a partnership or a trust.
128.3(c) Unity is presumed whenever there is unity of ownership, operation, and use,
128.4evidenced by centralized management or executive force, centralized purchasing,
128.5advertising, accounting, or other controlled interaction, but the absence of these
128.6centralized activities will not necessarily evidence a nonunitary business. Unity is also
128.7presumed when business activities or operations are of mutual benefit, dependent upon or
128.8contributory to one another, either individually or as a group.
128.9(d) Where a business operation conducted in Minnesota is owned by a business
128.10entity that carries on business activity outside the state different in kind from that
128.11conducted within this state, and the other business is conducted entirely outside the state, it
128.12is presumed that the two business operations are unitary in nature, interrelated, connected,
128.13and interdependent unless it can be shown to the contrary.
128.14(e) Unity of ownership is not deemed to exist when a corporation is involved unless
128.15that corporation is a member of a group of two or more business entities and more than 50
128.16percent of the voting stock of each member of the group is directly or indirectly owned
128.17by a common owner or by common owners, either corporate or noncorporate, or by one
128.18or more of the member corporations of the group. For this purpose, the term "voting
128.19stock" shall include membership interests of mutual insurance holding companies formed
128.20under section 66A.40.
128.21(f) The net income and apportionment factors under section 290.191 or 290.20 of
128.22foreign corporations and other foreign entities which are part of a unitary business shall not
128.23be included in the net income or the apportionment factors of the unitary business; except
128.24that the income and apportionment factors of a foreign corporation, foreign partnership, or
128.25other foreign entity, that are included in the federal taxable income, as defined in section
128.2663 of the Internal Revenue Code as amended through the date named in section 290.01,
128.27subdivision 19, of a domestic corporation, domestic entity, or individual must be included
128.28in determining net income and the factors to be used in the apportionment of net income
128.29pursuant to section 290.191 or 290.20. A foreign corporation or other foreign entity which
128.30is not part of a unitary business and which is required to file a return under this chapter shall
128.31file on a separate return basis. The net income and apportionment factors under section
128.32290.191 or 290.20 of foreign operating corporations shall not be included in the net income
128.33or the apportionment factors of the unitary business except as provided in paragraph (g).
128.34(g) The adjusted net income of a foreign operating corporation shall be deemed to
128.35be paid as a dividend on the last day of its taxable year to each shareholder thereof, in
128.36proportion to each shareholder's ownership, with which such corporation is engaged in
129.1a unitary business. Such deemed dividend shall be treated as a dividend under section
129.2290.21, subdivision 4.
129.3Dividends actually paid by a foreign operating corporation to a corporate shareholder
129.4which is a member of the same unitary business as the foreign operating corporation shall
129.5be eliminated from the net income of the unitary business in preparing a combined report
129.6for the unitary business. The adjusted net income of a foreign operating corporation
129.7shall be its net income adjusted as follows:
129.8(1) any taxes paid or accrued to a foreign country, the commonwealth of Puerto
129.9Rico, or a United States possession or political subdivision of any of the foregoing shall
129.10be a deduction; and
129.11(2) the subtraction from federal taxable income for payments received from foreign
129.12corporations or foreign operating corporations under section 290.01, subdivision 19d,
129.13clause (10), shall not be allowed.
129.14If a foreign operating corporation incurs a net loss, neither income nor deduction from
129.15that corporation shall be included in determining the net income of the unitary business.
129.16(h) (g) For purposes of determining the net income of a unitary business and the
129.17factors to be used in the apportionment of net income pursuant to section 290.191 or
129.18290.20 , there must be included only the income and apportionment factors of domestic
129.19corporations or other domestic entities other than foreign operating corporations that are
129.20determined to be part of the unitary business pursuant to this subdivision, notwithstanding
129.21that foreign corporations or other foreign entities might be included in the unitary
129.22business; except that the income and apportionment factors of a foreign corporation,
129.23foreign partnership, or other foreign entity, that is included in the federal taxable income,
129.24as defined in section 63 of the Internal Revenue Code as amended through the date
129.25named in section 290.01, subdivision 19, of a domestic corporation, domestic entity, or
129.26individual must be included in determining net income and the factors to be used in the
129.27apportionment of net income pursuant to section 290.191 or 290.20.
129.28(i) Deductions for expenses, interest, or taxes otherwise allowable under this chapter
129.29that are connected with or allocable against dividends, deemed dividends described
129.30in paragraph (g), or royalties, fees, or other like income described in section 290.01,
129.31subdivision 19d , clause (10), shall not be disallowed.
129.32(j) (h) Each corporation or other entity, except a sole proprietorship, that is part of
129.33a unitary business must file combined reports as the commissioner determines. On the
129.34reports, all intercompany transactions between entities included pursuant to paragraph (h)
129.35 (g) must be eliminated and the entire net income of the unitary business determined in
129.36accordance with this subdivision is apportioned among the entities by using each entity's
130.1Minnesota factors for apportionment purposes in the numerators of the apportionment
130.2formula and the total factors for apportionment purposes of all entities included pursuant to
130.3paragraph (h) (g) in the denominators of the apportionment formula. All sales of the unitary
130.4business made within this state pursuant to section 290.191 or 290.20 must be included
130.5on the combined report of a corporation or other entity that is a member of the unitary
130.6business and is subject to the jurisdiction of this state to impose tax under this chapter.
130.7(k) (i) If a corporation has been divested from a unitary business and is included in a
130.8combined report for a fractional part of the common accounting period of the combined
130.9report:
130.10(1) its income includable in the combined report is its income incurred for that part
130.11of the year determined by proration or separate accounting; and
130.12(2) its sales, property, and payroll included in the apportionment formula must
130.13be prorated or accounted for separately.
130.14EFFECTIVE DATE.This section is effective for taxable years beginning after
130.15December 31, 2012.

130.16    Sec. 36. Minnesota Statutes 2012, section 290.191, subdivision 5, is amended to read:
130.17    Subd. 5. Determination of sales factor. For purposes of this section, the following
130.18rules apply in determining the sales factor.
130.19    (a) The sales factor includes all sales, gross earnings, or receipts received in the
130.20ordinary course of the business, except that the following types of income are not included
130.21in the sales factor:
130.22    (1) interest;
130.23    (2) dividends;
130.24    (3) sales of capital assets as defined in section 1221 of the Internal Revenue Code;
130.25    (4) sales of property used in the trade or business, except sales of leased property of
130.26a type which is regularly sold as well as leased; and
130.27    (5) sales of debt instruments as defined in section 1275(a)(1) of the Internal Revenue
130.28Code or sales of stock; and.
130.29    (6) royalties, fees, or other like income of a type which qualify for a subtraction from
130.30federal taxable income under section 290.01, subdivision 19d, clause (10).
130.31    (b) Sales of tangible personal property are made within this state if the property is
130.32received by a purchaser at a point within this state, and the taxpayer is taxable in this state,
130.33regardless of the f.o.b. point, other conditions of the sale, or the ultimate destination
130.34of the property.
131.1    (c) Tangible personal property delivered to a common or contract carrier or foreign
131.2vessel for delivery to a purchaser in another state or nation is a sale in that state or nation,
131.3regardless of f.o.b. point or other conditions of the sale.
131.4    (d) Notwithstanding paragraphs (b) and (c), when intoxicating liquor, wine,
131.5fermented malt beverages, cigarettes, or tobacco products are sold to a purchaser who is
131.6licensed by a state or political subdivision to resell this property only within the state of
131.7ultimate destination, the sale is made in that state.
131.8    (e) Sales made by or through a corporation that is qualified as a domestic
131.9international sales corporation under section 992 of the Internal Revenue Code are not
131.10considered to have been made within this state.
131.11    (f) Sales, rents, royalties, and other income in connection with real property is
131.12attributed to the state in which the property is located.
131.13    (g) Receipts from the lease or rental of tangible personal property, including finance
131.14leases and true leases, must be attributed to this state if the property is located in this
131.15state and to other states if the property is not located in this state. Receipts from the
131.16lease or rental of moving property including, but not limited to, motor vehicles, rolling
131.17stock, aircraft, vessels, or mobile equipment are included in the numerator of the receipts
131.18factor to the extent that the property is used in this state. The extent of the use of moving
131.19property is determined as follows:
131.20    (1) A motor vehicle is used wholly in the state in which it is registered.
131.21    (2) The extent that rolling stock is used in this state is determined by multiplying
131.22the receipts from the lease or rental of the rolling stock by a fraction, the numerator of
131.23which is the miles traveled within this state by the leased or rented rolling stock and the
131.24denominator of which is the total miles traveled by the leased or rented rolling stock.
131.25    (3) The extent that an aircraft is used in this state is determined by multiplying the
131.26receipts from the lease or rental of the aircraft by a fraction, the numerator of which is
131.27the number of landings of the aircraft in this state and the denominator of which is the
131.28total number of landings of the aircraft.
131.29    (4) The extent that a vessel, mobile equipment, or other mobile property is used in
131.30the state is determined by multiplying the receipts from the lease or rental of the property
131.31by a fraction, the numerator of which is the number of days during the taxable year the
131.32property was in this state and the denominator of which is the total days in the taxable year.
131.33    (h) Royalties and other income not described in paragraph (a), clause (6), received
131.34for the use of or for the privilege of using intangible property, including patents,
131.35know-how, formulas, designs, processes, patterns, copyrights, trade names, service names,
131.36franchises, licenses, contracts, customer lists, or similar items, must be attributed to the
132.1state in which the property is used by the purchaser. If the property is used in more
132.2than one state, the royalties or other income must be apportioned to this state pro rata
132.3according to the portion of use in this state. If the portion of use in this state cannot be
132.4determined, the royalties or other income must be excluded from both the numerator
132.5and the denominator. Intangible property is used in this state if the purchaser uses the
132.6intangible property or the rights therein in the regular course of its business operations in
132.7this state, regardless of the location of the purchaser's customers.
132.8    (i) Sales of intangible property are made within the state in which the property is
132.9used by the purchaser. If the property is used in more than one state, the sales must be
132.10apportioned to this state pro rata according to the portion of use in this state. If the
132.11portion of use in this state cannot be determined, the sale must be excluded from both the
132.12numerator and the denominator of the sales factor. Intangible property is used in this
132.13state if the purchaser used the intangible property in the regular course of its business
132.14operations in this state.
132.15    (j) Receipts from the performance of services must be attributed to the state where
132.16the services are received. For the purposes of this section, receipts from the performance
132.17of services provided to a corporation, partnership, or trust may only be attributed to a state
132.18where it has a fixed place of doing business. If the state where the services are received is
132.19not readily determinable or is a state where the corporation, partnership, or trust receiving
132.20the service does not have a fixed place of doing business, the services shall be deemed
132.21to be received at the location of the office of the customer from which the services were
132.22ordered in the regular course of the customer's trade or business. If the ordering office
132.23cannot be determined, the services shall be deemed to be received at the office of the
132.24customer to which the services are billed.
132.25    (k) For the purposes of this subdivision and subdivision 6, paragraph (l), receipts
132.26from management, distribution, or administrative services performed by a corporation
132.27or trust for a fund of a corporation or trust regulated under United States Code, title 15,
132.28sections 80a-1 through 80a-64, must be attributed to the state where the shareholder of
132.29the fund resides. Under this paragraph, receipts for services attributed to shareholders are
132.30determined on the basis of the ratio of: (1) the average of the outstanding shares in the
132.31fund owned by shareholders residing within Minnesota at the beginning and end of each
132.32year; and (2) the average of the total number of outstanding shares in the fund at the
132.33beginning and end of each year. Residence of the shareholder, in the case of an individual,
132.34is determined by the mailing address furnished by the shareholder to the fund. Residence
132.35of the shareholder, when the shares are held by an insurance company as a depositor for
132.36the insurance company policyholders, is the mailing address of the policyholders. In
133.1the case of an insurance company holding the shares as a depositor for the insurance
133.2company policyholders, if the mailing address of the policyholders cannot be determined
133.3by the taxpayer, the receipts must be excluded from both the numerator and denominator.
133.4Residence of other shareholders is the mailing address of the shareholder.
133.5EFFECTIVE DATE.This section is effective for taxable years beginning after
133.6December 31, 2012.

133.7    Sec. 37. Minnesota Statutes 2012, section 290.21, subdivision 4, is amended to read:
133.8    Subd. 4. Dividends received from another corporation. (a)(1) Eighty percent
133.9of dividends received by a corporation during the taxable year from another corporation,
133.10in which the recipient owns 20 percent or more of the stock, by vote and value, not
133.11including stock described in section 1504(a)(4) of the Internal Revenue Code when the
133.12corporate stock with respect to which dividends are paid does not constitute the stock in
133.13trade of the taxpayer or would not be included in the inventory of the taxpayer, or does not
133.14constitute property held by the taxpayer primarily for sale to customers in the ordinary
133.15course of the taxpayer's trade or business, or when the trade or business of the taxpayer
133.16does not consist principally of the holding of the stocks and the collection of the income
133.17and gains therefrom; and
133.18    (2)(i) the remaining 20 percent of dividends if the dividends received are the stock in
133.19an affiliated company transferred in an overall plan of reorganization and the dividend
133.20is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as
133.21amended through December 31, 1989;
133.22    (ii) the remaining 20 percent of dividends if the dividends are received from a
133.23corporation which is subject to tax under section 290.36 and which is a member of an
133.24affiliated group of corporations as defined by the Internal Revenue Code and the dividend
133.25is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as
133.26amended through December 31, 1989, or is deducted under an election under section
133.27243(b) of the Internal Revenue Code; or
133.28    (iii) the remaining 20 percent of the dividends if the dividends are received from a
133.29property and casualty insurer as defined under section 60A.60, subdivision 8, which is a
133.30member of an affiliated group of corporations as defined by the Internal Revenue Code
133.31and either: (A) the dividend is eliminated in consolidation under Treasury Regulation
133.321.1502-14(a), as amended through December 31, 1989; or (B) the dividend is deducted
133.33under an election under section 243(b) of the Internal Revenue Code.
133.34    (b) Seventy percent of dividends received by a corporation during the taxable year
133.35from another corporation in which the recipient owns less than 20 percent of the stock,
134.1by vote or value, not including stock described in section 1504(a)(4) of the Internal
134.2Revenue Code when the corporate stock with respect to which dividends are paid does not
134.3constitute the stock in trade of the taxpayer, or does not constitute property held by the
134.4taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or
134.5business, or when the trade or business of the taxpayer does not consist principally of the
134.6holding of the stocks and the collection of income and gain therefrom.
134.7    (c) The dividend deduction provided in this subdivision shall be allowed only with
134.8respect to dividends that are included in a corporation's Minnesota taxable net income
134.9for the taxable year.
134.10    The dividend deduction provided in this subdivision does not apply to a dividend
134.11from a corporation which, for the taxable year of the corporation in which the distribution
134.12is made or for the next preceding taxable year of the corporation, is a corporation exempt
134.13from tax under section 501 of the Internal Revenue Code.
134.14The dividend deduction provided in this subdivision does not apply to a dividend
134.15received from a real estate investment trust as defined in section 856 of the Internal
134.16Revenue Code.
134.17    The dividend deduction provided in this subdivision applies to the amount of
134.18regulated investment company dividends only to the extent determined under section
134.19854(b) of the Internal Revenue Code.
134.20    The dividend deduction provided in this subdivision shall not be allowed with
134.21respect to any dividend for which a deduction is not allowed under the provisions of
134.22section 246(c) of the Internal Revenue Code.
134.23    (d) If dividends received by a corporation that does not have nexus with Minnesota
134.24under the provisions of Public Law 86-272 are included as income on the return of
134.25an affiliated corporation permitted or required to file a combined report under section
134.26290.17, subdivision 4 , or 290.34, subdivision 2, then for purposes of this subdivision the
134.27determination as to whether the trade or business of the corporation consists principally
134.28of the holding of stocks and the collection of income and gains therefrom shall be made
134.29with reference to the trade or business of the affiliated corporation having a nexus with
134.30Minnesota.
134.31    (e) The deduction provided by this subdivision does not apply if the dividends are
134.32paid by a FSC as defined in section 922 of the Internal Revenue Code.
134.33    (f) If one or more of the members of the unitary group whose income is included on
134.34the combined report received a dividend, the deduction under this subdivision for each
134.35member of the unitary business required to file a return under this chapter is the product
134.36of: (1) 100 percent of the dividends received by members of the group; (2) the percentage
135.1allowed pursuant to paragraph (a) or (b); and (3) the percentage of the taxpayer's business
135.2income apportionable to this state for the taxable year under section 290.191 or 290.20.
135.3EFFECTIVE DATE.This section is effective for taxable years beginning after
135.4December 31, 2012.

135.5    Sec. 38. Minnesota Statutes 2012, section 298.01, subdivision 3b, is amended to read:
135.6    Subd. 3b. Deductions. (a) For purposes of determining taxable income under
135.7subdivision 3, the deductions from gross income include only those expenses necessary
135.8to convert raw ores to marketable quality. Such expenses include costs associated with
135.9refinement but do not include expenses such as transportation, stockpiling, marketing, or
135.10marine insurance that are incurred after marketable ores are produced, unless the expenses
135.11are included in gross income. The allowable deductions from a mine or plant that mines
135.12and produces more than one mineral, metal, or energy resource must be determined
135.13separately for the purposes of computing the deduction in section 290.01, subdivision 19c,
135.14clause (9). These deductions may be combined on one occupation tax return to arrive at
135.15the deduction from gross income for all production.
135.16(b) The provisions of section 290.01, subdivisions 19c, clauses (6) and (9), and 19d,
135.17clauses (7) and (11) (10), are not used to determine taxable income.
135.18EFFECTIVE DATE.This section is effective for taxable years beginning after
135.19December 31, 2012.

135.20    Sec. 39. Laws 2010, chapter 216, section 11, the effective date, is amended to read:
135.21EFFECTIVE DATE.This section is effective for taxable years beginning
135.22after December 31, 2009, for certified historic structures for which qualified costs of
135.23rehabilitation are first paid under construction contracts entered into after May 1, 2010
135.24 rehabilitation expenditures are first paid by the developer or taxpayer after May 1, 2010,
135.25for rehabilitation that occurs after May 1, 2010, provided that the application under
135.26subdivision 3 is submitted before the project is placed in service.
135.27EFFECTIVE DATE.This section is effective the day following final enactment
135.28and applies retroactively for taxable years beginning after December 31, 2009, and for
135.29certified historic structures placed in service after May 1, 2010, but the office may not
135.30issue certificates allowed under the change to this section until July 1, 2013.

135.31    Sec. 40. CLOTHING SALES TAX CREDIT; TAX YEAR 2013.
136.1For tax year 2013 only, the credit calculated under Minnesota Statutes, section
136.2290.0683, is the credit under Minnesota Statutes, section 290.0683, subdivision 2, after
136.3limitations imposed under Minnesota Statutes, section 290.0683, subdivision 3, multiplied
136.4by one-half.
136.5EFFECTIVE DATE.This section is effective for taxable years beginning after
136.6December 31, 2012.

136.7    Sec. 41. REPEALER.
136.8Minnesota Statutes 2012, sections 290.01, subdivision 6b; and 290.0921, subdivision
136.97, are repealed.
136.10EFFECTIVE DATE.This section is effective for taxable years beginning after
136.11December 31, 2012.

136.12ARTICLE 6
136.13ESTATE TAXES

136.14    Section 1. Minnesota Statutes 2012, section 291.03, subdivision 8, is amended to read:
136.15    Subd. 8. Definitions. (a) For purposes of this section, the following terms have the
136.16meanings given in this subdivision.
136.17(b) "Family member" means a family member as defined in section 2032A(e)(2) of
136.18the Internal Revenue Code, or a trust whose present beneficiaries are all family members
136.19as defined in section 2032A(e)(2) of the Internal Revenue Code.
136.20(c) "Qualified heir" means a family member who acquired qualified property from
136.21 upon the death of the decedent and satisfies the requirement under subdivision 9, clause
136.22(6) (7), or subdivision 10, clause (4) (5), for the property.
136.23(d) "Qualified property" means qualified small business property under subdivision
136.249 and qualified farm property under subdivision 10.
136.25EFFECTIVE DATE.This section is effective retroactively for estates of decedents
136.26dying after June 30, 2011.

136.27    Sec. 2. Minnesota Statutes 2012, section 291.03, subdivision 9, is amended to read:
136.28    Subd. 9. Qualified small business property. Property satisfying all of the following
136.29requirements is qualified small business property:
136.30(1) The value of the property was included in the federal adjusted taxable estate.
136.31(2) The property consists of the assets of a trade or business or shares of stock or
136.32other ownership interests in a corporation or other entity engaged in a trade or business.
137.1The decedent or the decedent's spouse must have materially participated in the trade or
137.2business within the meaning of section 469 of the Internal Revenue Code during the
137.3taxable year that ended before the date of the decedent's death. Shares of stock in a
137.4corporation or an ownership interest in another type of entity do not qualify under this
137.5subdivision if the shares or ownership interests are traded on a public stock exchange at
137.6any time during the three-year period ending on the decedent's date of death. For purposes
137.7of this subdivision, an ownership interest includes the interest the decedent is deemed to
137.8own under sections 2036, 2037, and 2038 of the Internal Revenue Code.
137.9(3) During the taxable year that ended before the decedent's death, the trade or
137.10business must not have been a passive activity within the meaning of section 469(c) of the
137.11Internal Revenue Code, and the decedent or the decedent's spouse must have materially
137.12participated in the trade or business within the meaning of section 469(h) of the Internal
137.13Revenue Code, excluding section 469(h)(3) of the Internal Revenue Code and any other
137.14provision provided by United States Treasury Department regulation that substitutes
137.15material participation in prior taxable years for material participation in the taxable year
137.16that ended before the decedent's death.
137.17(4) The gross annual sales of the trade or business were $10,000,000 or less for the
137.18last taxable year that ended before the date of the death of the decedent.
137.19(4) (5) The property does not consist of cash or, cash equivalents, publicly traded
137.20securities, or assets not used in the operation of the trade or business. For property
137.21consisting of shares of stock or other ownership interests in an entity, the amount value of
137.22cash or, cash equivalents, publicly traded securities, or assets not used in the operation of
137.23the trade or business held by the corporation or other entity must be deducted from the
137.24value of the property qualifying under this subdivision in proportion to the decedent's
137.25share of ownership of the entity on the date of death.
137.26(5) (6) The decedent continuously owned the property, including property the
137.27decedent is deemed to own under sections 2036, 2037, and 2038 of the Internal Revenue
137.28Code, for the three-year period ending on the date of death of the decedent. In the case of
137.29a sole proprietor, if the property replaced similar property within the three-year period,
137.30the replacement property will be treated as having been owned for the three-year period
137.31ending on the date of death of the decedent.
137.32(6) A family member continuously uses the property in the operation of the trade or
137.33business for three years following the date of death of the decedent.
137.34(7) For three years following the date of death of the decedent, the trade or business
137.35is not a passive activity within the meaning of section 469(c) of the Internal Revenue Code,
137.36and a family member materially participates in the operation of the trade or business within
138.1the meaning of section 469(h) of the Internal Revenue Code, excluding section 469(h)(3)
138.2of the Internal Revenue Code and any other provision provided by United States Treasury
138.3Department regulation that substitutes material participation in prior taxable years for
138.4material participation in the three years following the date of death of the decedent.
138.5(8) The estate and the qualified heir elect to treat the property as qualified small
138.6business property and agree, in the form prescribed by the commissioner, to pay the
138.7recapture tax under subdivision 11, if applicable.
138.8EFFECTIVE DATE.This section is effective retroactively for estates of decedents
138.9dying after June 30, 2011.

138.10    Sec. 3. Minnesota Statutes 2012, section 291.03, subdivision 10, is amended to read:
138.11    Subd. 10. Qualified farm property. Property satisfying all of the following
138.12requirements is qualified farm property:
138.13(1) The value of the property was included in the federal adjusted taxable estate.
138.14(2) The property consists of a farm meeting the requirements of agricultural land as
138.15defined in section 500.24, subdivision 2, paragraph (g), and is owned by a person or entity
138.16that is either not subject to or is in compliance with section 500.24, and was classified for
138.17property tax purposes as the homestead of the decedent or the decedent's spouse or both
138.18under section 273.124, and as class 2a property under section 273.13, subdivision 23.
138.19(3) For property taxes payable in the taxable year of the decedent's death, the
138.20decedent's interest in the property was classified as the homestead of the decedent, the
138.21decedent's spouse, or both under section 273.124 and as class 2a property under section
138.22273.13, subdivision 23.
138.23(4) The decedent continuously owned the property, including property the decedent
138.24is deemed to own under sections 2036, 2037, and 2038 of the Internal Revenue Code, for
138.25the three-year period ending on the date of death of the decedent either by ownership of
138.26the agricultural land or pursuant to holding an interest in an entity that is not subject to
138.27or is in compliance with section 500.24.
138.28(4) A family member continuously uses the property in the operation of the trade or
138.29business (5) The property is classified for property tax purposes as class 2a property under
138.30section 273.13, subdivision 23, for three years following the date of death of the decedent.
138.31(5) (6) The estate and the qualified heir elect to treat the property as qualified farm
138.32property and agree, in a form prescribed by the commissioner, to pay the recapture tax
138.33under subdivision 11, if applicable.
139.1EFFECTIVE DATE.This section is effective retroactively for estates of decedents
139.2dying after June 30, 2011.

139.3    Sec. 4. Minnesota Statutes 2012, section 291.03, subdivision 11, is amended to read:
139.4    Subd. 11. Recapture tax. (a) If, within three years after the decedent's death and
139.5before the death of the qualified heir, the qualified heir disposes of any interest in the
139.6qualified property, other than by a disposition to a family member, or a family member
139.7ceases to use the qualified property which was acquired or passed from the decedent
139.8 satisfy the requirement under subdivision 9, clause (7); or 10, clause (5), an additional
139.9estate tax is imposed on the property. In the case of a sole proprietor, if the qualified heir
139.10replaces qualified small business property excluded under subdivision 9 with similar
139.11property, then the qualified heir will not be treated as having disposed of an interest in the
139.12qualified property.
139.13(b) The amount of the additional tax equals the amount of the exclusion claimed by
139.14the estate under subdivision 8, paragraph (d), multiplied by 16 percent.
139.15(c) The additional tax under this subdivision is due on the day which is six months
139.16after the date of the disposition or cessation in paragraph (a).
139.17EFFECTIVE DATE.This section is effective retroactively for estates of decedents
139.18dying after June 30, 2011.

139.19ARTICLE 7
139.20SALES AND USE TAXES; LOCAL SALES TAXES

139.21    Section 1. Minnesota Statutes 2012, section 16C.03, subdivision 18, is amended to read:
139.22    Subd. 18. Contracts with foreign vendors. (a) The commissioner and other
139.23agencies to which this section applies and the legislative branch of government shall,
139.24subject to paragraph (d), cancel a contract for goods or services from a vendor or an
139.25affiliate of a vendor or suspend or debar a vendor or an affiliate of a vendor from future
139.26contracts upon notification from the commissioner of revenue that the vendor or an
139.27affiliate of the vendor has not registered to collect the sales and use tax imposed under
139.28chapter 297A on its sales in Minnesota or to a destination in Minnesota. This subdivision
139.29shall not apply to state colleges and universities, the courts, and any agency in the judicial
139.30branch of government. For purposes of this subdivision, the term "affiliate" means any
139.31person or entity that is controlled by, or is under common control of, a vendor through
139.32stock ownership or other affiliation.
139.33    (b) Beginning January 1, 2006, Each vendor or affiliate of a vendor selling goods or
139.34services, subject to tax under chapter 297A, to an agency or the legislature must register
140.1with the commissioner of revenue as provided in section 297A.83, and comply with all legal
140.2requirements imposed on a person maintaining a place of business in this state, including
140.3the requirement to collect and remit sales and use tax on all taxable sales to customers in
140.4the state, and provide its Minnesota sales and use tax business identification number, upon
140.5request, to show that the vendor is registered to collect Minnesota sales or use tax.
140.6    (c) The commissioner of revenue shall periodically provide to the commissioner
140.7and the legislative branch a list of vendors who have not registered to collect Minnesota
140.8sales and use tax and who are subject to being suspended or debarred as vendors or having
140.9their contracts canceled.
140.10    (d) The provisions of this subdivision may be waived by the commissioner or the
140.11legislative branch when the vendor is the single source of such goods or services, in the
140.12event of an emergency, or when it is in the best interests of the state as determined by the
140.13commissioner in consultation with the commissioner of revenue. Such consultation is not
140.14a disclosure violation under chapter 270B.
140.15EFFECTIVE DATE.This section is effective for sales and purchases made after
140.16June 30, 2013.

140.17    Sec. 2. Minnesota Statutes 2012, section 297A.61, subdivision 3, is amended to read:
140.18    Subd. 3. Sale and purchase. (a) "Sale" and "purchase" include, but are not
140.19limited to, each of the transactions listed in this subdivision. In applying the provisions
140.20of this chapter, the terms "tangible personal property" and "retail sale" include taxable
140.21services listed in clause (6), items (i) to (vi) and (viii), and the provision of these taxable
140.22services, unless specifically provided otherwise. Services performed by an employee
140.23for an employer are not taxable. Services performed by a partnership or association for
140.24another partnership or association are not taxable if one of the entities owns or controls
140.25more than 80 percent of the voting power of the equity interest in the other entity. Services
140.26performed between members of an affiliated group of corporations are not taxable. For
140.27purposes of the preceding sentence, "affiliated group of corporations" means those entities
140.28that would be classified as members of an affiliated group as defined under United States
140.29Code, title 26, section 1504, disregarding the exclusions in section 1504(b).
140.30    (b) Sale and purchase include:
140.31    (1) any transfer of title or possession, or both, of tangible personal property, whether
140.32absolutely or conditionally, for a consideration in money or by exchange or barter; and
140.33    (2) the leasing of or the granting of a license to use or consume, for a consideration
140.34in money or by exchange or barter, tangible personal property, other than a manufactured
140.35home used for residential purposes for a continuous period of 30 days or more.
141.1    (c) Sale and purchase include the production, fabrication, printing, or processing of
141.2tangible personal property for a consideration for consumers who furnish either directly or
141.3indirectly the materials used in the production, fabrication, printing, or processing.
141.4    (d) Sale and purchase include the preparing for a consideration of food.
141.5Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited
141.6to, the following:
141.7    (1) prepared food sold by the retailer;
141.8    (2) soft drinks;
141.9    (3) candy;
141.10    (4) dietary supplements; and
141.11    (5) all food sold through vending machines.
141.12    (e) A sale and a purchase includes the furnishing for a consideration of electricity,
141.13gas, water, or steam for use or consumption within this state.
141.14    (f) A sale and a purchase includes:
141.15    (1) the transfer for a consideration of prewritten computer software whether
141.16delivered electronically, by load and leave, or otherwise.; and
141.17    (2) the receipt of custom computer software whether delivered electronically, by
141.18load and leave, or otherwise.
141.19    (g) A sale and a purchase includes the furnishing for a consideration of the following
141.20services:
141.21    (1) the privilege of admission to places of amusement, exhibitions, recreational
141.22areas, or professional athletic events, including the rental of box seats and suites at
141.23professional athletic events, and the making available of amusement devices, tanning
141.24facilities, reducing salons, steam baths, Turkish baths, health clubs, and spas or athletic
141.25facilities. "Exhibitions" means trade shows, boat shows, home shows, garden shows,
141.26and other similar events;
141.27    (2) lodging and related services by a hotel, rooming house, resort, campground,
141.28motel, or trailer camp, including furnishing the guest of the facility with access to
141.29telecommunication services, and the granting of any similar license to use real property in
141.30a specific facility, other than the renting or leasing of it for a continuous period of 30 days
141.31or more under an enforceable written agreement that may not be terminated without prior
141.32notice and including accommodations intermediary services provided in connection with
141.33other services provided under this clause;
141.34    (3) nonresidential parking services, whether on a contractual, hourly, or other
141.35periodic basis, except for parking at a meter;
141.36    (4) the granting of membership in a club, association, or other organization if:
142.1    (i) the club, association, or other organization makes available for the use of its
142.2members sports and athletic facilities, without regard to whether a separate charge is
142.3assessed for use of the facilities; and
142.4    (ii) use of the sports and athletic facility is not made available to the general public
142.5on the same basis as it is made available to members.
142.6Granting of membership means both onetime initiation fees and periodic membership
142.7dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and
142.8squash courts; basketball and volleyball facilities; running tracks; exercise equipment;
142.9swimming pools; and other similar athletic or sports facilities;
142.10    (5) delivery of aggregate materials by a third party, excluding delivery of aggregate
142.11material used in road construction; and delivery of concrete block by a third party if the
142.12delivery would be subject to the sales tax if provided by the seller of the concrete block.
142.13For purposes of this clause, "road construction" means construction of:
142.14    (i) public roads;
142.15    (ii) cartways; and
142.16    (iii) private roads in townships located outside of the seven-county metropolitan area
142.17up to the point of the emergency response location sign; and
142.18    (6) services as provided in this clause:
142.19    (i) laundry and dry cleaning services including cleaning, pressing, repairing, altering,
142.20and storing clothes, linen services and supply, cleaning and blocking hats, and carpet,
142.21drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not
142.22include services provided by coin operated facilities operated by the customer;
142.23    (ii) motor vehicle washing, waxing, and cleaning services, including services
142.24provided by coin operated facilities operated by the customer, and rustproofing,
142.25undercoating, and towing of motor vehicles;
142.26    (iii) building and residential cleaning, maintenance, and disinfecting services and
142.27pest control and exterminating services;
142.28    (iv) detective, security, burglar, fire alarm, and armored car services; but not
142.29including services performed within the jurisdiction they serve by off-duty licensed peace
142.30officers as defined in section 626.84, subdivision 1, or services provided by a nonprofit
142.31organization or any organization at the direction of a county for monitoring and electronic
142.32surveillance of persons placed on in-home detention pursuant to court order or under the
142.33direction of the Minnesota Department of Corrections;
142.34    (v) pet grooming services;
142.35    (vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting
142.36and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor
143.1plant care; tree, bush, shrub, and stump removal, except when performed as part of a land
143.2clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for
143.3public utility lines. Services performed under a construction contract for the installation of
143.4shrubbery, plants, sod, trees, bushes, and similar items are not taxable;
143.5    (vii) massages, except when provided by a licensed health care facility or
143.6professional or upon written referral from a licensed health care facility or professional for
143.7treatment of illness, injury, or disease; and
143.8    (viii) the furnishing of lodging, board, and care services for animals in kennels and
143.9other similar arrangements, but excluding veterinary and horse boarding services.
143.10    In applying the provisions of this chapter, the terms "tangible personal property"
143.11and "retail sale" include taxable services listed in clause (6), items (i) to (vi) and (viii),
143.12and the provision of these taxable services, unless specifically provided otherwise.
143.13Services performed by an employee for an employer are not taxable. Services performed
143.14by a partnership or association for another partnership or association are not taxable if
143.15one of the entities owns or controls more than 80 percent of the voting power of the
143.16equity interest in the other entity. Services performed between members of an affiliated
143.17group of corporations are not taxable. For purposes of the preceding sentence, "affiliated
143.18group of corporations" means those entities that would be classified as members of an
143.19affiliated group as defined under United States Code, title 26, section 1504, disregarding
143.20the exclusions in section 1504(b).
143.21    For purposes of clause (5), "road construction" means construction of (1) public
143.22roads, (2) cartways, and (3) private roads in townships located outside of the seven-county
143.23metropolitan area up to the point of the emergency response location sign.
143.24    (h) A sale and a purchase includes the furnishing for a consideration of tangible
143.25personal property or taxable services by the United States or any of its agencies or
143.26instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political
143.27subdivisions.
143.28    (i) A sale and a purchase includes the furnishing for a consideration of
143.29telecommunications services, ancillary services associated with telecommunication
143.30services, cable and pay television services, and direct satellite services. Telecommunication
143.31services include, but are not limited to, the following services, as defined in section
143.32297A.669 : air-to-ground radiotelephone service, mobile telecommunication service,
143.33postpaid calling service, prepaid calling service, prepaid wireless calling service, and
143.34private communication services. The services in this paragraph are taxed to the extent
143.35allowed under federal law.
144.1    (j) A sale and a purchase includes the furnishing for a consideration of installation if
144.2the installation charges would be subject to the sales tax if the installation were provided
144.3by the seller of the item being installed.
144.4    (k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer
144.5to a customer when (1) the vehicle is rented by the customer for a consideration, or (2)
144.6the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section
144.759B.02, subdivision 11.
144.8    (l) A sale and a purchase includes the furnishing for a consideration of specified
144.9digital products or other digital products and granting the right for a consideration to use
144.10specified digital products or other digital products on a temporary or permanent basis and
144.11regardless of whether the purchaser is required to make continued payments for such
144.12right. Wherever the term "tangible personal property" is used in this chapter, other than in
144.13subdivisions 10 and 38, the provisions also apply to specified digital products, or other
144.14digital products, unless specifically provided otherwise or the context indicates otherwise.
144.15(m) A sale and purchase includes:
144.16(1) any service performed for the care, cleansing, beautification, or alteration of the
144.17appearance of the body, skin, nails, or hair, or in the enhancement of personal relaxation,
144.18appearance, or health, but excluding mortuary services;
144.19(2) repair labor for:
144.20(i) farm machinery as defined under section 297A.61, subdivision 12;
144.21(ii) motor vehicles as defined under section 297B.01, subdivision 11, except for
144.22motor vehicles sold at wholesale auction at an auto auction facility; and
144.23(iii) any other tangible personal property;
144.24(3) warehousing or storage services for tangible personal property excluding storage
144.25of farm products, refrigerated food, and electronic data; and
144.26(4) the furnishing for consideration of documents prepared in connection with any
144.27legal proceeding, including a trial hearing, deposition, arbitration, or mediation, except
144.28for such documents prepared for a public defender or a public defender corporation
144.29under chapter 611.
144.30(n) A sale and purchase also is the personal services of event planning, dating
144.31services, personal shopping, personal concierge services, or personal or household
144.32organizing services.
144.33(o) In applying the provisions of this chapter, the terms "tangible personal property"
144.34and "retail sale" include taxable services listed in paragraph (g), clause (6), items (i) to (vi)
144.35and (viii), and paragraphs (m) and (n), and the provision of these taxable services, unless
144.36specifically provided otherwise.
145.1EFFECTIVE DATE.This section is effective for sales and purchases made after
145.2June 30, 2013.

145.3    Sec. 3. Minnesota Statutes 2012, section 297A.61, subdivision 4, is amended to read:
145.4    Subd. 4. Retail sale. (a) A "retail sale" means:
145.5    (1) any sale, lease, or rental of tangible personal property for any purpose, other than
145.6resale, sublease, or subrent of items by the purchaser in the normal course of business
145.7as defined in subdivision 21; and
145.8    (2) any sale of a service enumerated in subdivision 3, for any purpose other than
145.9resale by the purchaser in the normal course of business as defined in subdivision 21.
145.10    (b) A sale of property used by the owner only by leasing it to others or by holding it
145.11in an effort to lease it, and put to no use by the owner other than resale after the lease or
145.12effort to lease, is a sale of property for resale.
145.13    (c) A sale of master computer software that is purchased and used to make copies for
145.14sale or lease is a sale of property for resale.
145.15    (d) A sale of building materials, supplies, and equipment to owners, contractors,
145.16subcontractors, or builders for the erection of buildings or the alteration, repair, or
145.17improvement of real property is a retail sale in whatever quantity sold, whether the sale is
145.18for purposes of resale in the form of real property or otherwise.
145.19    (e) A sale of carpeting, linoleum, or similar floor covering to a person who provides
145.20for installation of the floor covering is a retail sale and not a sale for resale since a sale of
145.21floor covering which includes installation is a contract for the improvement of real property.
145.22    (f) A sale of shrubbery, plants, sod, trees, and similar items to a person who provides
145.23for installation of the items is a retail sale and not a sale for resale since a sale of
145.24shrubbery, plants, sod, trees, and similar items that includes installation is a contract for
145.25the improvement of real property.
145.26    (g) A sale of tangible personal property that is awarded as prizes is a retail sale and
145.27is not considered a sale of property for resale.
145.28    (h) A sale of tangible personal property utilized or employed in the furnishing or
145.29providing of services under subdivision 3, paragraph (g), clause (1), including, but not
145.30limited to, property given as promotional items, is a retail sale and is not considered a
145.31sale of property for resale.
145.32    (i) A sale of tangible personal property used in conducting lawful gambling under
145.33chapter 349 or the State Lottery under chapter 349A, including, but not limited to, property
145.34given as promotional items, is a retail sale and is not considered a sale of property for resale.
146.1    (j) A sale of machines, equipment, or devices that are used to furnish, provide, or
146.2dispense goods or services, including, but not limited to, coin-operated devices, is a retail
146.3sale and is not considered a sale of property for resale.
146.4    (k) In the case of a lease, a retail sale occurs (1) when an obligation to make a lease
146.5payment becomes due under the terms of the agreement or the trade practices of the
146.6lessor or (2) in the case of a lease of a motor vehicle, as defined in section 297B.01,
146.7subdivision 11 , but excluding vehicles with a manufacturer's gross vehicle weight rating
146.8greater than 10,000 pounds and rentals of vehicles for not more than 28 days, at the time
146.9the lease is executed.
146.10    (l) In the case of a conditional sales contract, a retail sale occurs upon the transfer of
146.11title or possession of the tangible personal property.
146.12    (m) A sale of a bundled transaction in which one or more of the products included
146.13in the bundle is a taxable product is a retail sale, except that if one of the products
146.14is a telecommunication service, ancillary service, Internet access, or audio or video
146.15programming service, and the seller has maintained books and records identifying through
146.16reasonable and verifiable standards the portions of the price that are attributable to the
146.17distinct and separately identifiable products, then the products are not considered part of a
146.18bundled transaction. For purposes of this paragraph:
146.19    (1) the books and records maintained by the seller must be maintained in the regular
146.20course of business, and do not include books and records created and maintained by the
146.21seller primarily for tax purposes;
146.22    (2) books and records maintained in the regular course of business include, but are
146.23not limited to, financial statements, general ledgers, invoicing and billing systems and
146.24reports, and reports for regulatory tariffs and other regulatory matters; and
146.25    (3) books and records are maintained primarily for tax purposes when the books
146.26and records identify taxable and nontaxable portions of the price, but the seller maintains
146.27other books and records that identify different prices attributable to the distinct products
146.28included in the same bundled transaction.
146.29(n) A sale of motor vehicle repair paint and materials by a motor vehicle repair or
146.30body shop business is a retail sale and the sales tax is imposed on the gross receipts from the
146.31retail sale of the paint and materials. The motor vehicle repair or body shop that purchases
146.32motor vehicle repair paint and motor vehicle repair materials for resale must either:
146.33(1) separately state each item of paint and each item of materials, and the sales price
146.34of each, on the invoice to the purchaser; or
146.35(2) in order to calculate the sales price of the paint and materials, use a method
146.36which estimates the amount and monetary value of the paint and materials used in
147.1the repair of the motor vehicle by multiplying the number of labor hours by a rate of
147.2consideration for the paint and materials used in the repair of the motor vehicle following
147.3industry standard practices that fairly calculate the gross receipts from the retail sale of
147.4the motor vehicle repair paint and motor vehicle repair materials. An industry standard
147.5practice fairly calculates the gross receipts if the sales price of the paint and materials used
147.6or consumed in the repair of a motor vehicle equals or exceeds the purchase price paid
147.7by the motor vehicle repair or body shop business. Under clause (1), the invoice must
147.8either separately state the "paint and materials" as a single taxable item, or separately state
147.9"paint" as a taxable item and "materials" as a taxable item. This clause does not apply to
147.10wholesale transactions at an auto auction facility.
147.11    (o) A sale of specified digital products or other digital products to an end user with
147.12or without rights of permanent use and regardless of whether rights of use are conditioned
147.13upon continued payment by the purchaser is a retail sale. When a digital code has been
147.14purchased that relates to specified digital products or other digital products, the subsequent
147.15receipt of or access to the related specified digital products or other digital products
147.16is not a retail sale.
147.17EFFECTIVE DATE.This section is effective for sales and purchases made after
147.18June 30, 2013.

147.19    Sec. 4. Minnesota Statutes 2012, section 297A.61, subdivision 10, is amended to read:
147.20    Subd. 10. Tangible personal property. (a) "Tangible personal property" means
147.21personal property that can be seen, weighed, measured, felt, or touched, or that is in any
147.22other manner perceptible to the senses. "Tangible personal property" includes, but is not
147.23limited to, electricity, water, gas, steam, and prewritten computer software.
147.24    (b) Tangible personal property does not include:
147.25    (1) large ponderous machinery and equipment used in a business or production
147.26activity which at common law would be considered to be real property;
147.27    (2) property which is subject to an ad valorem property tax;
147.28    (3) property described in section 272.02, subdivision 9, clauses (a) to (d); and
147.29    (4) property described in section 272.03, subdivision 2, clauses (3) and (5).; and
147.30(5) specified digital products, or other digital products, transferred electronically,
147.31except that prewritten computer software delivered electronically is tangible personal
147.32property.
147.33EFFECTIVE DATE.This section is effective for sales and purchases made after
147.34June 30, 2013.

148.1    Sec. 5. Minnesota Statutes 2012, section 297A.61, subdivision 17a, is amended to read:
148.2    Subd. 17a. Delivered electronically. "Delivered electronically" means delivered
148.3to the purchaser by means other than tangible storage media and, unless the context
148.4indicates otherwise, applies to the delivery of computer software. Computer software is
148.5not considered delivered electronically to a purchaser simply because the purchaser has
148.6access to the product.
148.7EFFECTIVE DATE.This section is effective for sales and purchases the day
148.8following final enactment.

148.9    Sec. 6. Minnesota Statutes 2012, section 297A.61, subdivision 25, is amended to read:
148.10    Subd. 25. Cable Pay television service. "Cable Pay television service" means
148.11the transmission of video, audio, or other programming service to purchasers, and the
148.12subscriber interaction, if any, required for the selection or use of the programming service,
148.13regardless of whether the programming is transmitted over facilities owned or operated
148.14by the cable service provider or over facilities owned or operated by one or more dealers
148.15of communications services. The term includes point-to-multipoint distribution direct to
148.16home satellite services by which programming is transmitted or broadcast by microwave
148.17or other equipment directly to the subscriber's premises, or any similar or comparable
148.18method of service. The term includes basic, extended, premium, all programming services,
148.19including subscriptions, digital video recorders, pay-per-view, digital, and music services.
148.20EFFECTIVE DATE.This section is effective for sales and purchases made after
148.21June 30, 2013.

148.22    Sec. 7. Minnesota Statutes 2012, section 297A.61, subdivision 38, is amended to read:
148.23    Subd. 38. Bundled transaction. (a) "Bundled transaction" means the retail sale
148.24of two or more products when the products are otherwise distinct and identifiable, and
148.25the products are sold for one nonitemized price. As used in this subdivision, "product"
148.26includes tangible personal property, services, intangibles, and digital goods, including
148.27specified digital products or other digital products, but does not include real property or
148.28services to real property. A bundled transaction does not include the sale of any products
148.29in which the sales price varies, or is negotiable, based on the selection by the purchaser of
148.30the products included in the transaction.
148.31    (b) For purposes of this subdivision, "distinct and identifiable" products does not
148.32include:
149.1    (1) packaging and other materials, such as containers, boxes, sacks, bags, and
149.2bottles, wrapping, labels, tags, and instruction guides, that accompany the retail sale of the
149.3products and are incidental or immaterial to the retail sale. Examples of packaging that are
149.4incidental or immaterial include grocery sacks, shoe boxes, dry cleaning garment bags,
149.5and express delivery envelopes and boxes;
149.6    (2) a promotional product provided free of charge with the required purchase of
149.7another product. A promotional product is provided free of charge if the sales price of
149.8another product, which is required to be purchased in order to receive the promotional
149.9product, does not vary depending on the inclusion of the promotional product; and
149.10    (3) items included in the definition of sales price.
149.11    (c) For purposes of this subdivision, the term "one nonitemized price" does not
149.12include a price that is separately identified by product on binding sales or other supporting
149.13sales-related documentation made available to the customer in paper or electronic form
149.14including but not limited to an invoice, bill of sale, receipt, contract, service agreement,
149.15lease agreement, periodic notice of rates and services, rate card, or price list.
149.16    (d) A transaction that otherwise meets the definition of a bundled transaction is
149.17not a bundled transaction if it is:
149.18    (1) the retail sale of tangible personal property and a service and the tangible
149.19personal property is essential to the use of the service, and is provided exclusively in
149.20connection with the service, and the true object of the transaction is the service;
149.21    (2) the retail sale of services if one service is provided that is essential to the use or
149.22receipt of a second service and the first service is provided exclusively in connection with
149.23the second service and the true object of the transaction is the second service;
149.24    (3) a transaction that includes taxable products and nontaxable products and the
149.25purchase price or sales price of the taxable products is de minimis; or
149.26    (4) the retail sale of exempt tangible personal property and taxable tangible personal
149.27property if:
149.28    (i) the transaction includes food and food ingredients, drugs, durable medical
149.29equipment, mobility enhancing equipment, over-the-counter drugs, prosthetic devices,
149.30or medical supplies; and
149.31    (ii) the seller's purchase price or sales price of the taxable tangible personal property is
149.3250 percent or less of the total purchase price or sales price of the bundled tangible personal
149.33property. Sellers must not use a combination of the purchase price and sales price of the
149.34tangible personal property when making the 50 percent determination for a transaction.
149.35    (e) For purposes of this subdivision, "purchase price" means the measure subject to
149.36use tax on purchases made by the seller, and "de minimis" means that the seller's purchase
150.1price or sales price of the taxable products is ten percent or less of the total purchase
150.2price or sales price of the bundled products. Sellers shall use either the purchase price
150.3or the sales price of the products to determine if the taxable products are de minimis.
150.4Sellers must not use a combination of the purchase price and sales price of the products
150.5to determine if the taxable products are de minimis. Sellers shall use the full term of a
150.6service contract to determine if the taxable products are de minimis.
150.7EFFECTIVE DATE.This section is effective for sales and purchases made after
150.8June 30, 2013.

150.9    Sec. 8. Minnesota Statutes 2012, section 297A.61, subdivision 45, is amended to read:
150.10    Subd. 45. Ring tone. "Ring tone" means a digitized sound file that is downloaded
150.11onto a device and that may be used to alert the customer of a telecommunication service
150.12 with respect to a communication. A ring tone does not include ring back tones or other
150.13digital audio files that are not stored on the purchaser's communication device.
150.14EFFECTIVE DATE.This section is effective for sales and purchases made after
150.15June 30, 2013.

150.16    Sec. 9. Minnesota Statutes 2012, section 297A.61, is amended by adding a subdivision
150.17to read:
150.18    Subd. 49. Motor vehicle repair paint and motor vehicle repair materials.
150.19"Motor vehicle repair paint" means a substance composed of solid matter suspended in a
150.20liquid medium and applied as a protective or decorative coating to the surface of a motor
150.21vehicle in order to restore the motor vehicle to its original condition, and includes primer,
150.22body paint, clear coat, and paint thinner used to paint motor vehicles, as defined in section
150.23297B.01. "Motor vehicle repair materials" means items, other than motor vehicle repair
150.24paint or motor vehicle parts, that become a part of a repaired motor vehicle or are consumed
150.25in repairing the motor vehicle at retail, and include abrasives, battery water, body filler or
150.26putty, bolts and nuts, brake fluid, buffing pads, chamois, cleaning compounds, degreasing
150.27compounds, glaze, grease, grinding discs, hydraulic jack oil, lubricants, masking tape,
150.28oxygen and acetylene, polishes, rags, razor blades, sandpaper, sanding discs, scuff pads,
150.29sealer, solder, solvents, striping tape, tack cloth, thinner, waxes, and welding rods. Motor
150.30vehicle repair materials do not include items that are not used directly on the motor vehicle,
150.31such as floor dry that is used to clean the shop, or cleaning compounds and rags that are
150.32used to clean tools, equipment, or the shop and are not used to clean the motor vehicle.
151.1EFFECTIVE DATE.This section is effective for sales and purchases made after
151.2June 30, 2013.

151.3    Sec. 10. Minnesota Statutes 2012, section 297A.61, is amended by adding a
151.4subdivision to read:
151.5    Subd. 50. Digital audio works. "Digital audio works" means works that result from
151.6a fixation of a series of musical, spoken, or other sounds, that are transferred electronically.
151.7Digital audio works includes such items as the following which may either be prerecorded
151.8or live: songs, music, readings of books or other written materials, speeches, ring tones, or
151.9other sound recordings. Digital audio works does not include audio greeting cards sent by
151.10electronic mail. Unless the context provides otherwise, in this chapter digital audio works
151.11includes the digital code, or a subscription to or access to a digital code, for receiving,
151.12accessing, or otherwise obtaining digital audio works.
151.13EFFECTIVE DATE.This section is effective for sales and purchases made after
151.14June 30, 2013.

151.15    Sec. 11. Minnesota Statutes 2012, section 297A.61, is amended by adding a
151.16subdivision to read:
151.17    Subd. 51. Digital audiovisual works. "Digital audiovisual works" means a series
151.18of related images which, when shown in succession, impart an impression of motion,
151.19together with accompanying sounds, if any, that are transferred electronically. Digital
151.20audiovisual works includes such items as motion pictures, movies, musical videos, news
151.21and entertainment, and live events. Digital audiovisual works does not include video
151.22greeting cards sent by electronic mail. Unless the context provides otherwise, in this
151.23chapter digital audiovisual works includes the digital code, or a subscription to or access to
151.24a digital code, for receiving, accessing, or otherwise obtaining digital audiovisual works.
151.25EFFECTIVE DATE.This section is effective for sales and purchases made after
151.26June 30, 2013.

151.27    Sec. 12. Minnesota Statutes 2012, section 297A.61, is amended by adding a
151.28subdivision to read:
151.29    Subd. 52. Digital books. "Digital books" means any literary works, other than
151.30digital audiovisual works or digital audio works, expressed in words, numbers, or other
151.31verbal or numerical symbols or indicia so long as the product is generally recognized in
151.32the ordinary and usual sense as a "book." It includes works of fiction and nonfiction and
152.1short stories. It does not include periodicals, magazines, newspapers, or other news or
152.2information products, chat rooms, or weblogs. Unless the context provides otherwise, in
152.3this chapter digital books includes the digital code, or a subscription to or access to a
152.4digital code, for receiving, accessing, or otherwise obtaining digital books.
152.5EFFECTIVE DATE.This section is effective for sales and purchases made after
152.6June 30, 2013.

152.7    Sec. 13. Minnesota Statutes 2012, section 297A.61, is amended by adding a
152.8subdivision to read:
152.9    Subd. 53. Digital code. "Digital code" means a code which provides a purchaser
152.10with a right to obtain one or more specified digital products or other digital products.
152.11A digital code may be transferred electronically, such as through electronic mail, or it
152.12may be transferred on a tangible medium, such as on a plastic card, a piece of paper or
152.13invoice, or imprinted on another product. A digital code is not a code that represents a
152.14stored monetary value that is deducted from a total as it is used by the purchaser, and it
152.15is not a code that represents a redeemable card, gift card, or gift certificate that entitles
152.16the holder to select a digital product of an indicated cash value. The end user of a digital
152.17code is any purchaser except one who receives the contractual right to redistribute a digital
152.18product which is the subject of the transaction.
152.19EFFECTIVE DATE.This section is effective for sales and purchases made after
152.20June 30, 2013.

152.21    Sec. 14. Minnesota Statutes 2012, section 297A.61, is amended by adding a
152.22subdivision to read:
152.23    Subd. 54. Other digital products. "Other digital products" means the following
152.24items when transferred electronically:
152.25(1) greeting cards;
152.26(2) finished artwork available for reproduction, display, or similar purposes;
152.27(3) video or electronic games;
152.28(4) periodicals;
152.29(5) magazines; and
152.30(6) other news or information products, excluding newspapers.
152.31EFFECTIVE DATE.This section is effective for sales and purchases made after
152.32June 30, 2013.

153.1    Sec. 15. Minnesota Statutes 2012, section 297A.61, is amended by adding a
153.2subdivision to read:
153.3    Subd. 55. Specified digital products. "Specified digital products" means digital
153.4audio works, digital audiovisual works, and digital books that are transferred electronically
153.5to a customer.
153.6EFFECTIVE DATE.This section is effective for sales and purchases made after
153.7June 30, 2013.

153.8    Sec. 16. Minnesota Statutes 2012, section 297A.61, is amended by adding a
153.9subdivision to read:
153.10    Subd. 56. Transferred electronically. "Transferred electronically" means obtained
153.11by the purchaser by means other than tangible storage media. For purposes of this
153.12subdivision, it is not necessary that a copy of the product be physically transferred to
153.13the purchaser. A product will be considered to have been transferred electronically to a
153.14purchaser if the purchaser has access to the product.
153.15EFFECTIVE DATE.This section is effective for sales and purchases made after
153.16June 30, 2013.

153.17    Sec. 17. Minnesota Statutes 2012, section 297A.61, is amended by adding a
153.18subdivision to read:
153.19    Subd. 57. Service. "Service" means all activities engaged in for a fee, retainer,
153.20commission, or other consideration, as distinguished from sales and purchases of tangible
153.21personal property. In determining what is a service, the intended use, or the principal or
153.22ultimate objective of the contracting parties, shall not be controlling.
153.23EFFECTIVE DATE.This section is effective for sales and purchases made after
153.24June 30, 2013.

153.25    Sec. 18. Minnesota Statutes 2012, section 297A.62, subdivision 1, is amended to read:
153.26    Subdivision 1. Generally. Except as otherwise provided in subdivision 3 or in this
153.27chapter, a sales tax of 6.5 5.675 percent is imposed on the gross receipts from retail sales
153.28as defined in section 297A.61, subdivision 4, made in this state or to a destination in this
153.29state by a person who is required to have or voluntarily obtains a permit under section
153.30297A.83, subdivision 1 .
154.1EFFECTIVE DATE.This section is effective for sales and purchases made after
154.2June 30, 2013.

154.3    Sec. 19. Minnesota Statutes 2012, section 297A.62, subdivision 1a, is amended to read:
154.4    Subd. 1a. Constitutionally required sales tax increase. Except as otherwise
154.5provided in subdivision 3 or in this chapter, an additional sales tax of 0.375 0.325 percent,
154.6as required under the Minnesota Constitution, article XI, section 15, is imposed on the gross
154.7receipts from retail sales as defined in section 297A.61, subdivision 4, made in this state or
154.8to a destination in this state by a person who is required to have or voluntarily obtains a
154.9permit under section 297A.83, subdivision 1. This additional tax expires July 1, 2034.
154.10EFFECTIVE DATE.This section is effective for sales and purchases made after
154.11June 30, 2013.

154.12    Sec. 20. Minnesota Statutes 2012, section 297A.64, subdivision 1, is amended to read:
154.13    Subdivision 1. Tax imposed. A tax is imposed on the lease or rental in this state
154.14for not more than 28 days of a passenger automobile as defined in section 168.002,
154.15subdivision 24 , a van as defined in section 168.002, subdivision 40, or a pickup truck as
154.16defined in section 168.002, subdivision 26. The rate of tax is 6.2 9.05 percent of the sales
154.17price. The tax applies whether or not the vehicle is licensed in the state.
154.18EFFECTIVE DATE.This section is effective for sales and purchases made after
154.19June 30, 2013.

154.20    Sec. 21. Minnesota Statutes 2012, section 297A.65, is amended to read:
154.21297A.65 LOTTERY TICKETS; IN LIEU TAX.
154.22Sales of state lottery tickets are exempt from the tax imposed under section
154.23297A.62 . The State Lottery must on or before the 20th day of each month transmit to
154.24the commissioner of revenue an amount equal to the gross receipts from the sale of
154.25lottery tickets for the previous month multiplied by the a tax rate under section 297A.62,
154.26subdivision 1 of 6.5 percent. The resulting payment is in lieu of the sales tax that otherwise
154.27would be imposed by this chapter. The commissioner shall deposit the money transmitted
154.28as provided by section 297A.94 and the money must be treated as other proceeds of the
154.29sales tax. For purposes of this section, "gross receipts" means the proceeds of the sale
154.30of tickets before deduction of a commission or other compensation paid to the vendor or
154.31retailer for selling tickets.
155.1EFFECTIVE DATE.This section is effective for sales and purchases made after
155.2June 30, 2013.

155.3    Sec. 22. Minnesota Statutes 2012, section 297A.66, subdivision 1, is amended to read:
155.4    Subdivision 1. Definitions. (a) To the extent allowed by the United States
155.5Constitution and the laws of the United States, A"retailer maintaining a place of business
155.6in this state," or a similar term, means a retailer:
155.7    (1) having or maintaining within this state, directly or by a subsidiary or an affiliate,
155.8 an office, place of distribution, sales or sample room or place, warehouse, or other place
155.9of business; or
155.10    (2) having utilizing a representative, including, but not limited to, an affiliate, agent,
155.11salesperson, canvasser, or solicitor operating in this state under the authority of the retailer
155.12or its subsidiary, for any purpose, including the repairing, selling, delivering, installing, or
155.13soliciting of orders for the retailer's goods or services, or the leasing of tangible personal
155.14property located in this state, whether the place of business or agent, representative, affiliate,
155.15 salesperson, canvasser, or solicitor is located in the state permanently or temporarily, or
155.16whether or not the retailer, subsidiary, or affiliate is authorized to do business in this state.
155.17    (b) "Destination of a sale" means the location to which the retailer makes delivery of
155.18the property sold, or causes the property to be delivered, to the purchaser of the property,
155.19or to the agent or designee of the purchaser. The delivery may be made by any means,
155.20including the United States Postal Service or a for-hire carrier.
155.21    (c) A retailer shall be presumed to be "maintaining a place of business in this state" if:
155.22    (1) any person, other than a person acting in the person's capacity as a common
155.23carrier, that has substantial nexus with this state:
155.24    (i) sells a similar line of products as the retailer and does so under the same or
155.25a similar business name;
155.26    (ii) maintains an office, distribution facility, warehouse or storage place, or similar
155.27place of business in the state to facilitate the delivery of property or services sold by the
155.28retailer to the retailer's customers;
155.29    (iii) uses trademarks, service marks, or trade names in the state that are substantially
155.30the same or substantially similar to those used by the retailer;
155.31    (iv) delivers, installs, assembles, or performs maintenance services for the retailer's
155.32customers within the state;
155.33    (v) facilitates the retailer's delivery of property to customers in the state by allowing
155.34the retailer's customers to pick up property sold by the retailer at an office, distribution
156.1facility, warehouse, storage space, or similar place of business maintained by the person in
156.2the state;
156.3    (vi) conducts any other activities in the state that are significantly associated with the
156.4retailer's ability to establish and maintain a market in the state for the retailer's sales; or
156.5    (2) any affiliated person has substantial nexus with the state.
156.6    (d) The presumptions in paragraph (c) may be rebutted by demonstrating that the
156.7activities of the person or affiliated person in the state are not significantly associated with
156.8the retailer's ability to establish or maintain a market in this state for the retailer's sales.
156.9    (e) "Affiliated person" means any person that is a member of the same controlled
156.10group of corporations, as defined in section 1563(a) of the Internal Revenue Code as
156.11the retailer, or any other entity that, notwithstanding its form of organization, bears the
156.12same ownership relationship to the retailer as a corporation that is a member of the same
156.13controlled group of corporations as defined in section 1563(a) of the Internal Revenue Code.
156.14    (f) "Solicitor" means a person, whether an independent contractor or other
156.15representative, who directly or indirectly solicits business for the retailer.
156.16     (1) A retailer is presumed to have a solicitor in this state if it enters into an agreement
156.17with one or more persons under which the person, for a commission or other consideration,
156.18while within this state directly or indirectly refers potential customers, whether by a link
156.19on an Internet Web site, by telemarketing, by an in-person oral presentation, or otherwise,
156.20to the retailer, if the cumulative gross receipts from the sales by the retailer to customers in
156.21the state who are referred to the retailer by all persons within this state with this type of an
156.22agreement with the retailer is in excess of $10,000 during the preceding 12 months.
156.23    (2) The presumption in clause (1) may be rebutted by submitting proof that the
156.24persons with whom the retailer has an agreement did not engage in any activity within the
156.25state that was significantly associated with the retailer's ability to establish or maintain
156.26the retailer's market in the state during the preceding 12 months. Such proof may consist
156.27of sworn written statements from all of the persons within this state with whom the
156.28retailer has an agreement stating that they did not engage in any solicitation in this state
156.29on behalf of the retailer during the preceding year, provided that such statements were
156.30provided and obtained in good faith.
156.31    (3) Nothing in this section shall be construed to narrow the scope of the terms
156.32"agent," "salesperson," "canvasser," or "other representative" for purposes of subdivision
156.331, paragraph (a).
156.34EFFECTIVE DATE.This section is effective for sales and purchases made after
156.35June 30, 2013.

157.1    Sec. 23. Minnesota Statutes 2012, section 297A.66, subdivision 3, is amended to read:
157.2    Subd. 3. Retailer not maintaining place of business in this state. (a) To the
157.3extent allowed by the United States Constitution and the laws of the United States, a
157.4retailer making retail sales from outside this state to a destination within this state and
157.5not maintaining a place of business in this state shall collect sales and use taxes and remit
157.6them to the commissioner under section 297A.77, if the retailer engages in the regular or
157.7systematic soliciting of sales from potential customers in this state by:
157.8    (1) distribution, by mail or otherwise, of catalogs, periodicals, advertising flyers, or
157.9other written solicitations of business to customers in this state;
157.10    (2) display of advertisements on billboards or other outdoor advertising in this state;
157.11    (3) advertisements in newspapers published in this state;
157.12    (4) advertisements in trade journals or other periodicals the circulation of which is
157.13primarily within this state;
157.14    (5) advertisements in a Minnesota edition of a national or regional publication or
157.15a limited regional edition in which this state is included as part of a broader regional or
157.16national publication which are not placed in other geographically defined editions of the
157.17same issue of the same publication;
157.18    (6) advertisements in regional or national publications in an edition which is not
157.19by its contents geographically targeted to Minnesota but which is sold over the counter
157.20in Minnesota or by subscription to Minnesota residents;
157.21    (7) advertisements broadcast on a radio or television station located in Minnesota; or
157.22    (8) any other solicitation by telegraphy, telephone, computer database, cable, optic,
157.23microwave, or other communication system.
157.24    This paragraph (a) must be construed without regard to the state from which
157.25distribution of the materials originated or in which they were prepared.
157.26    (b) The location within or without this state of independent vendors that provide
157.27products or services to the retailer in connection with its solicitation of customers within this
157.28state, including such products and services as creation of copy, printing, distribution, and
157.29recording, is not considered in determining whether the retailer is required to collect tax.
157.30    (c) A retailer not maintaining a place of business in this state is presumed, subject to
157.31rebuttal, to be engaged in regular solicitation within this state if it engages in any of the
157.32activities in paragraph (a) and:
157.33    (1) makes 100 or more retail sales from outside this state to destinations in this state
157.34during a period of 12 consecutive months; or
157.35    (2) makes ten or more retail sales totaling more than $100,000 from outside this state
157.36to destinations in this state during a period of 12 consecutive months.
158.1EFFECTIVE DATE.This section is effective for sales and purchases made after
158.2June 30, 2013.

158.3    Sec. 24. Minnesota Statutes 2012, section 297A.66, is amended by adding a
158.4subdivision to read:
158.5    Subd. 7. Severability. The legislature intends that the provisions of this section
158.6are severable. If any provision contained in this bill is held invalid or unconstitutional, or
158.7its application is held invalid or unconstitutional, that finding shall not affect the other
158.8provisions or applications that can be given effect without the invalid or unconstitutional
158.9provision or application.
158.10EFFECTIVE DATE.This section is effective July 1, 2013.

158.11    Sec. 25. Minnesota Statutes 2012, section 297A.665, is amended to read:
158.12297A.665 PRESUMPTION OF TAX; BURDEN OF PROOF.
158.13    (a) For the purpose of the proper administration of this chapter and to prevent
158.14evasion of the tax, until the contrary is established, it is presumed that:
158.15    (1) all gross receipts are subject to the tax; and
158.16    (2) all retail sales for delivery in Minnesota are for storage, use, or other consumption
158.17in Minnesota.
158.18    (b) The burden of proving that a sale is not a taxable retail sale is on the seller.
158.19However, a seller is relieved of liability if:
158.20    (1) the seller obtains a fully completed exemption certificate or all the relevant
158.21information required by section 297A.72, subdivision 2, at the time of the sale or within
158.2290 days after the date of the sale; or
158.23    (2) if the seller has not obtained a fully completed exemption certificate or all the
158.24relevant information required by section 297A.72, subdivision 2, within the time provided
158.25in clause (1), within 120 days after a request for substantiation by the commissioner,
158.26the seller either:
158.27    (i) obtains in good faith a fully completed exemption certificate or all the relevant
158.28information required by section 297A.72, subdivision 2, from the purchaser; or
158.29    (ii) proves by other means that the transaction was not subject to tax;
158.30    (3) in the case of drop shipment sales, a seller engaged in drop shipping may claim a
158.31resale exemption based on an exemption certificate provided by its customer or reseller,
158.32or any other acceptable information available to the seller engaged in drop shipping
159.1evidencing qualification for a resale exemption, regardless of whether the customer or
159.2e-seller is registered to collect and remit sales and use tax in the state.
159.3    (c) Notwithstanding paragraph (b), relief from liability does not apply to a seller who:
159.4    (1) fraudulently fails to collect the tax; or
159.5    (2) solicits purchasers to participate in the unlawful claim of an exemption.
159.6    (d) A certified service provider, as defined in section 297A.995, subdivision 2, is
159.7relieved of liability under this section to the extent a seller who is its client is relieved of
159.8liability.
159.9    (e) A purchaser of tangible personal property or any items listed in section 297A.63
159.10that are shipped or brought to Minnesota by the purchaser has the burden of proving that the
159.11property was not purchased from a retailer for storage, use, or consumption in Minnesota.
159.12    (f) If a seller claims that certain sales are exempt and does not provide the certificate,
159.13information, or proof required by paragraph (b), clause (2), within 120 days after the date
159.14of the commissioner's request for substantiation, then the exemptions claimed by the seller
159.15that required substantiation are disallowed.
159.16EFFECTIVE DATE.This section is effective for sales and purchases made after
159.17June 30, 2013.

159.18    Sec. 26. Minnesota Statutes 2012, section 297A.668, is amended by adding a
159.19subdivision to read:
159.20    Subd. 6a. Multiple points of use. (a) Notwithstanding the provisions of
159.21subdivisions 2 and 3, a business purchaser that is not a holder of a direct pay permit that
159.22purchases electronically delivered goods or services that will be concurrently available for
159.23use in more than one taxing jurisdiction may deliver to the seller in conjunction with its
159.24purchase a multiple points of use certificate disclosing this fact.
159.25(b) Upon receipt of the multiple points of use certificate, the seller is relieved of the
159.26obligation to collect, pay, or remit the applicable tax and the purchaser is obligated to
159.27collect, pay, or remit the applicable tax on a direct pay basis.
159.28(c) The purchaser delivering the multiple points of use certificate has sole discretion
159.29to use any reasonable but consistent and uniform method of apportionment that is supported
159.30by the purchaser's business records as they exist at the time of the consummation of the sale.
159.31(d) The multiple points of use certificate remains in effect for all future sales by the
159.32seller to the purchaser until it is revoked by the purchaser in writing.
159.33(e) A holder of a direct pay permit is not required to deliver a multiple points of use
159.34certificate to the seller. A direct pay permit holder shall follow the provisions of paragraph
160.1(c) in apportioning the tax due on electronically delivered goods or services that will be
160.2concurrently available for use in more than one taxing jurisdiction.
160.3(f) A seller is relieved of liability if:
160.4(1) the seller obtains a fully completed multiple points of use certificate or all the
160.5relevant information required by section 297A.72, subdivision 2, at the time of the sale or
160.6within 90 days after the date of the sale; or
160.7(2) within 120 days after a request for substantiation by the commissioner, the
160.8seller either:
160.9(i) obtains in good faith a fully completed multiple points of use certificate or all the
160.10relevant information required by section 297A.72, subdivision 2, from the purchaser; or
160.11(ii) proves by other means that the transaction was not subject to tax.
160.12EFFECTIVE DATE.This section is effective for sales and purchases made after
160.13June 30, 2013.

160.14    Sec. 27. Minnesota Statutes 2012, section 297A.67, subdivision 7, is amended to read:
160.15    Subd. 7. Drugs; medical devices. (a) Sales of the following drugs and medical
160.16devices for human use are exempt:
160.17    (1) prescription drugs, including over-the-counter drugs;
160.18    (2) single-use finger-pricking devices for the extraction of blood and other single-use
160.19devices and single-use diagnostic agents used in diagnosing, monitoring, or treating
160.20diabetes;
160.21    (3) insulin and medical oxygen for human use, regardless of whether prescribed
160.22or sold over the counter;
160.23    (4) prosthetic devices;
160.24    (5) durable medical equipment for home use only;
160.25    (6) mobility enhancing equipment;
160.26    (7) prescription corrective eyeglasses; and
160.27    (8) kidney dialysis equipment, including repair and replacement parts.
160.28(b) Items purchased in transactions covered by:
160.29(1) Medicare as defined under title XVIII of the Social Security Act, United States
160.30Code, title 42, section 1395, et seq.; or
160.31(2) Medicaid as defined under title XIX of the Social Security Act, United States
160.32Code, title 42, section 1396, et. seq.
160.33    (b) (c) For purposes of this subdivision:
161.1    (1) "Drug" means a compound, substance, or preparation, and any component of
161.2a compound, substance, or preparation, other than food and food ingredients, dietary
161.3supplements, or alcoholic beverages that is:
161.4    (i) recognized in the official United States Pharmacopoeia, official Homeopathic
161.5Pharmacopoeia of the United States, or official National Formulary, and supplement
161.6to any of them;
161.7    (ii) intended for use in the diagnosis, cure, mitigation, treatment, or prevention
161.8of disease; or
161.9    (iii) intended to affect the structure or any function of the body.
161.10    (2) "Durable medical equipment" means equipment, including repair and
161.11replacement parts, including single-patient use items, but not including mobility enhancing
161.12equipment, that:
161.13    (i) can withstand repeated use;
161.14    (ii) is primarily and customarily used to serve a medical purpose;
161.15    (iii) generally is not useful to a person in the absence of illness or injury; and
161.16    (iv) is not worn in or on the body.
161.17    For purposes of this clause, "repair and replacement parts" includes all components
161.18or attachments used in conjunction with the durable medical equipment, but does not
161.19include including repair and replacement parts which are for single patient use only.
161.20    (3) "Mobility enhancing equipment" means equipment, including repair and
161.21replacement parts, but not including durable medical equipment, that:
161.22    (i) is primarily and customarily used to provide or increase the ability to move from
161.23one place to another and that is appropriate for use either in a home or a motor vehicle;
161.24    (ii) is not generally used by persons with normal mobility; and
161.25    (iii) does not include any motor vehicle or equipment on a motor vehicle normally
161.26provided by a motor vehicle manufacturer.
161.27    (4) "Over-the-counter drug" means a drug that contains a label that identifies the
161.28product as a drug as required by Code of Federal Regulations, title 21, section 201.66. The
161.29label must include a "drug facts" panel or a statement of the active ingredients with a list of
161.30those ingredients contained in the compound, substance, or preparation. Over-the-counter
161.31drugs do not include grooming and hygiene products, regardless of whether they otherwise
161.32meet the definition. "Grooming and hygiene products" are soaps, cleaning solutions,
161.33shampoo, toothpaste, mouthwash, antiperspirants, and suntan lotions and sunscreens.
161.34    (5) (4) "Prescribed" and "prescription" means a direction in the form of an order,
161.35formula, or recipe issued in any form of oral, written, electronic, or other means of
161.36transmission by a duly licensed health care professional.
162.1    (6) (5) "Prosthetic device" means a replacement, corrective, or supportive device,
162.2including repair and replacement parts, worn on or in the body to:
162.3    (i) artificially replace a missing portion of the body;
162.4    (ii) prevent or correct physical deformity or malfunction; or
162.5    (iii) support a weak or deformed portion of the body.
162.6Prosthetic device does not include corrective eyeglasses.
162.7    (7) (6) "Kidney dialysis equipment" means equipment that:
162.8    (i) is used to remove waste products that build up in the blood when the kidneys are
162.9not able to do so on their own; and
162.10    (ii) can withstand repeated use, including multiple use by a single patient,
162.11notwithstanding the provisions of clause (2).
162.12(7) A transaction is covered by Medicare or Medicaid if any portion of the cost of
162.13the item purchased in the transaction is paid for or reimbursed by the federal government
162.14or the state of Minnesota pursuant to the Medicare or Medicaid program, by a private
162.15insurance company administering the Medicare or Medicaid program on behalf of the
162.16federal government or the state of Minnesota, or by a managed care organization for the
162.17benefit of a patient enrolled in a prepaid program that furnishes medical services in lieu
162.18of conventional Medicare or Medicaid coverage pursuant to agreement with the federal
162.19government or the state of Minnesota.
162.20EFFECTIVE DATE.Changes to paragraph (a), clause (1), and paragraph (c),
162.21clause (4), are effective for sales and purchases made after June 30, 2013. Changes to
162.22paragraph (b) and paragraph (c), clauses (2) and (7), are effective retroactively for sales
162.23and purchases made after April 1, 2009. Purchasers may apply for a refund of tax paid on
162.24qualifying purchases under paragraph (b) and paragraph (c), clauses (2) and (7), made
162.25after April 1, 2009, and before July 1, 2013, in the manner provided in section 297A.75.
162.26Notwithstanding limitations on claims for refunds under section 289A.40, claims may be
162.27filed with the commissioner until June 30, 2014.

162.28    Sec. 28. Minnesota Statutes 2012, section 297A.67, is amended by adding a
162.29subdivision to read:
162.30    Subd. 7a. Accessories and supplies. Accessories and supplies required for the
162.31effective use of durable medical equipment for home use only or purchased in a transaction
162.32covered by medicare or Medicaid, that are not already exempt under section 297A.67,
162.33subdivision 7, are exempt. Accessories and supplies for the effective use of a prosthetic
162.34device that are not already exempt under section 297A.67, subdivision 7, are exempt.
163.1For purposes of this subdivision "durable medical equipment," "prosthetic device,"
163.2"Medicare," and "Medicaid" have the definitions given in section 297A.67, subdivision 7.
163.3EFFECTIVE DATE.This section is effective retroactively for sales and purchases
163.4made after April 1, 2009. Purchasers may apply for a refund of tax paid on qualifying
163.5purchases under this section made after April 1, 2009, and before July 1, 2013, in the
163.6manner provided in section 297A.75. Notwithstanding limitations on claims for refunds
163.7under section 289A.40, claims may be filed with the commissioner until June 30, 2014.

163.8    Sec. 29. Minnesota Statutes 2012, section 297A.68, subdivision 2, is amended to read:
163.9    Subd. 2. Materials consumed in industrial production. (a) Materials stored, used,
163.10or consumed in industrial production of tangible personal property intended to be sold
163.11ultimately at retail, are exempt, whether or not the item so used becomes an ingredient
163.12or constituent part of the property produced. Materials that qualify for this exemption
163.13include, but are not limited to, the following:
163.14(1) chemicals, including chemicals used for cleaning food processing machinery
163.15and equipment;
163.16(2) materials, including chemicals, fuels, and electricity purchased by persons
163.17engaged in industrial production to treat waste generated as a result of the production
163.18process;
163.19(3) fuels, electricity, gas, and steam used or consumed in the production process,
163.20except that electricity, gas, or steam used for space heating, cooling, or lighting is exempt
163.21if (i) it is in excess of the average climate control or lighting for the production area, and
163.22(ii) it is necessary to produce that particular product;
163.23(4) petroleum products and lubricants;
163.24(5) packaging materials, including returnable containers used in packaging food
163.25and beverage products;
163.26(6) accessory tools, equipment, and other items that are separate detachable units
163.27with an ordinary useful life of less than 12 months used in producing a direct effect upon
163.28the product; and
163.29(7) the following materials, tools, and equipment used in metal-casting: crucibles,
163.30thermocouple protection sheaths and tubes, stalk tubes, refractory materials, molten metal
163.31filters and filter boxes, degassing lances, and base blocks.
163.32(b) This exemption does not include:
163.33(1) machinery, equipment, implements, tools, accessories, appliances, contrivances
163.34and furniture and fixtures, except those listed in paragraph (a), clause (6); and
164.1(2) petroleum and special fuels used in producing or generating power for propelling
164.2ready-mixed concrete trucks on the public highways of this state.
164.3(c) Industrial production includes, but is not limited to, research, development,
164.4design or production of any tangible personal property, manufacturing, processing (other
164.5than by restaurants and consumers) of agricultural products (whether vegetable or animal),
164.6commercial fishing, refining, smelting, reducing, brewing, distilling, printing, mining,
164.7quarrying, lumbering, generating electricity, the production of road building materials,
164.8and the research, development, design, or production of computer software. Industrial
164.9production does not include painting, cleaning, repairing or similar processing of property
164.10except as part of the original manufacturing process.
164.11(d) Industrial production does not include:
164.12(1) the furnishing of services listed in section 297A.61, subdivision 3, paragraph (g),
164.13clause (6), items (i) to (vi) and (viii), or paragraph (m) or (n); or
164.14(2) the transportation, transmission, or distribution of petroleum, liquefied gas,
164.15natural gas, water, or steam, in, by, or through pipes, lines, tanks, mains, or other means of
164.16transporting those products. For purposes of this paragraph, "transportation, transmission,
164.17or distribution" does not include blending of petroleum or biodiesel fuel as defined
164.18in section 239.77.
164.19EFFECTIVE DATE.This section is effective for sales and purchases made after
164.20June 30, 2013.

164.21    Sec. 30. Minnesota Statutes 2012, section 297A.68, subdivision 5, is amended to read:
164.22    Subd. 5. Capital equipment. (a) Capital equipment is exempt. Except as provided
164.23in paragraphs (e) and (f), the tax must be imposed and collected as if the rate under section
164.24297A.62, subdivision 1 , applied, and then refunded in the manner provided in section
164.25297A.75 .
164.26"Capital equipment" means machinery and equipment purchased or leased, and used
164.27in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining,
164.28or refining tangible personal property to be sold ultimately at retail if the machinery and
164.29equipment are essential to the integrated production process of manufacturing, fabricating,
164.30mining, or refining. Capital equipment also includes machinery and equipment
164.31used primarily to electronically transmit results retrieved by a customer of an online
164.32computerized data retrieval system.
164.33(b) Capital equipment includes, but is not limited to:
164.34(1) machinery and equipment used to operate, control, or regulate the production
164.35equipment;
165.1(2) machinery and equipment used for research and development, design, quality
165.2control, and testing activities;
165.3(3) environmental control devices that are used to maintain conditions such as
165.4temperature, humidity, light, or air pressure when those conditions are essential to and are
165.5part of the production process;
165.6(4) materials and supplies used to construct and install machinery or equipment;
165.7(5) repair and replacement parts, including accessories, whether purchased as spare
165.8parts, repair parts, or as upgrades or modifications to machinery or equipment;
165.9(6) materials used for foundations that support machinery or equipment;
165.10(7) materials used to construct and install special purpose buildings used in the
165.11production process;
165.12(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed
165.13as part of the delivery process regardless if mounted on a chassis, repair parts for
165.14ready-mixed concrete trucks, and leases of ready-mixed concrete trucks; and
165.15(9) machinery or equipment used for research, development, design, or production
165.16of computer software.
165.17(c) Capital equipment does not include the following:
165.18(1) motor vehicles taxed under chapter 297B;
165.19(2) machinery or equipment used to receive or store raw materials;
165.20(3) building materials, except for materials included in paragraph (b), clauses (6)
165.21and (7);
165.22(4) machinery or equipment used for nonproduction purposes, including, but not
165.23limited to, the following: plant security, fire prevention, first aid, and hospital stations;
165.24support operations or administration; pollution control; and plant cleaning, disposal of
165.25scrap and waste, plant communications, space heating, cooling, lighting, or safety;
165.26(5) farm machinery and aquaculture production equipment as defined by section
165.27297A.61 , subdivisions 12 and 13;
165.28(6) machinery or equipment purchased and installed by a contractor as part of an
165.29improvement to real property;
165.30(7) machinery and equipment used by restaurants in the furnishing, preparing, or
165.31serving of prepared foods as defined in section 297A.61, subdivision 31;
165.32(8) machinery and equipment used to furnish the services listed in section 297A.61,
165.33subdivision 3 , paragraph (g), clause (6), items (i) to (vi) and (viii);
165.34(9) machinery or equipment used in the transportation, transmission, or distribution
165.35of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines,
165.36tanks, mains, or other means of transporting those products. This clause does not apply to
166.1machinery or equipment used to blend petroleum or biodiesel fuel as defined in section
166.2239.77 ; or
166.3(10) any other item that is not essential to the integrated process of manufacturing,
166.4fabricating, mining, or refining.
166.5(d) For purposes of this subdivision:
166.6(1) "Equipment" means independent devices or tools separate from machinery but
166.7essential to an integrated production process, including computers and computer software,
166.8used in operating, controlling, or regulating machinery and equipment; and any subunit or
166.9assembly comprising a component of any machinery or accessory or attachment parts of
166.10machinery, such as tools, dies, jigs, patterns, and molds.
166.11(2) "Fabricating" means to make, build, create, produce, or assemble components or
166.12property to work in a new or different manner.
166.13(3) "Integrated production process" means a process or series of operations through
166.14which tangible personal property is manufactured, fabricated, mined, or refined. For
166.15purposes of this clause, (i) manufacturing begins with the removal of raw materials
166.16from inventory and ends when the last process prior to loading for shipment has been
166.17completed; (ii) fabricating begins with the removal from storage or inventory of the
166.18property to be assembled, processed, altered, or modified and ends with the creation
166.19or production of the new or changed product; (iii) mining begins with the removal of
166.20overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and
166.21ends when the last process before stockpiling is completed; and (iv) refining begins with
166.22the removal from inventory or storage of a natural resource and ends with the conversion
166.23of the item to its completed form.
166.24(4) "Machinery" means mechanical, electronic, or electrical devices, including
166.25computers and computer software, that are purchased or constructed to be used for the
166.26activities set forth in paragraph (a), beginning with the removal of raw materials from
166.27inventory through completion of the product, including packaging of the product.
166.28(5) "Machinery and equipment used for pollution control" means machinery and
166.29equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity
166.30described in paragraph (a).
166.31(6) "Manufacturing" means an operation or series of operations where raw materials
166.32are changed in form, composition, or condition by machinery and equipment and which
166.33results in the production of a new article of tangible personal property. For purposes of
166.34this subdivision, "manufacturing" includes the generation of electricity or steam to be
166.35sold at retail.
166.36(7) "Mining" means the extraction of minerals, ores, stone, or peat.
167.1(8) "Online data retrieval system" means a system whose cumulation of information
167.2is equally available and accessible to all its customers.
167.3(9) "Primarily" means machinery and equipment used 50 percent or more of the time
167.4in an activity described in paragraph (a).
167.5(10) "Refining" means the process of converting a natural resource to an intermediate
167.6or finished product, including the treatment of water to be sold at retail.
167.7(11) This subdivision does not apply to telecommunications equipment as
167.8provided in subdivision 35, and does not apply to wire, cable, fiber, poles, or conduit
167.9for telecommunications services.
167.10(e) Materials exempt under this section may be purchased without imposing and
167.11collecting the tax and without applying for a refund under section 297A.75, provided that:
167.12(1) the purchaser employed not more than 80 full-time equivalent employees at
167.13any time during calendar year 2013; and
167.14(2) if another business owns at least 20 percent of the purchaser, then the sum of the
167.15number of full-time equivalent employees employed by the purchaser and the number
167.16of full-time equivalent employees employed by any other business that owns at least 20
167.17percent of the purchaser's business is not more than 80 full-time equivalent employees
167.18during calendar year 2013. This clause must be applied for each business that owns at
167.19least 20 percent of the purchaser.
167.20(f) For the state's fiscal year 2016 and thereafter, all purchases exempt under this
167.21section may be purchased without imposing and collecting the tax and without applying
167.22for a refund under section 297A.75.
167.23EFFECTIVE DATE.Paragraph (e) is effective for sales and purchases made
167.24after June 30, 2014, and through June 30, 2015. Paragraph (f) is effective for sales and
167.25purchases made after June 30, 2015.

167.26    Sec. 31. Minnesota Statutes 2012, section 297A.68, subdivision 10, is amended to read:
167.27    Subd. 10. Publications; publication materials. Tangible personal property that
167.28is used or consumed in producing any publication regularly issued at average intervals
167.29not exceeding three months is exempt, and any such publication is exempt. "Publication"
167.30includes, but is not limited to, a qualified newspaper as defined by section 331A.02,
167.31together with any supplements or enclosures. "Publication" does not include magazines
167.32and periodicals, whether sold over the counter or by subscription. Tangible personal
167.33property that is used or consumed in producing a publication does not include machinery,
167.34equipment, implements, tools, accessories, appliances, contrivances, furniture, and fixtures
167.35used in the publication, or fuel, electricity, gas, or steam used for space heating or lighting.
168.1Advertising contained in a publication is a nontaxable service and is exempt.
168.2Persons who publish or sell newspapers are engaging in a nontaxable service with
168.3respect to gross receipts realized from such news-gathering or news-publishing activities,
168.4including the sale of advertising.
168.5EFFECTIVE DATE.This section is effective for sales and purchases made after
168.6June 30, 2013.

168.7    Sec. 32. Minnesota Statutes 2012, section 297A.68, subdivision 42, is amended to read:
168.8    Subd. 42. Qualified data centers. (a) Purchases of enterprise information
168.9technology equipment and computer software for use in a qualified data center are exempt.
168.10The tax on purchases exempt under this paragraph must be imposed and collected as if the
168.11rate under section 297A.62, subdivision 1, applied, and then refunded after June 30, 2013,
168.12in the manner provided in section 297A.75. This exemption includes enterprise information
168.13technology equipment and computer software purchased to replace or upgrade enterprise
168.14information technology equipment and computer software in a qualified data center.
168.15(b) Electricity used or consumed in the operation of a qualified data center is exempt.
168.16(c) For purposes of this subdivision, "qualified data center" means a facility in
168.17Minnesota:
168.18(1) that is comprised of one or more buildings that consist in the aggregate of at least
168.1930,000 25,000 square feet, and that are located on a single parcel or on contiguous parcels,
168.20where the total cost of construction or refurbishment, investment in enterprise information
168.21technology equipment, and computer software is at least $50,000,000 $20,000,000 within
168.22a 24-month period;
168.23(2) that is constructed or substantially refurbished after June 30, 2012, where
168.24"substantially refurbished" means that at least 30,000 25,000 square feet have been rebuilt
168.25or modified; and, including:
168.26(i) installation of enterprise information technology equipment, environmental
168.27control, and energy efficiency improvements; and
168.28(ii) building improvements; and
168.29(3) that is used to house enterprise information technology equipment, where the
168.30facility has the following characteristics:
168.31(i) uninterruptible power supplies, generator backup power, or both;
168.32(ii) sophisticated fire suppression and prevention systems; and
168.33(iii) enhanced security. A facility will be considered to have enhanced security if it
168.34has restricted access to the facility to selected personnel; permanent security guards; video
169.1camera surveillance; an electronic system requiring pass codes, keycards, or biometric
169.2scans, such as hand scans and retinal or fingerprint recognition; or similar security features.
169.3In determining whether the facility has the required square footage, the square
169.4footage of the following spaces shall be included if the spaces support the operation
169.5of enterprise information technology equipment: office space, meeting space, and
169.6mechanical and other support facilities. For purposes of this subdivision, "computer
169.7software" includes, but is not limited to, software utilized or loaded at the qualified data
169.8center, including maintenance, licensing, and software customization.
169.9(d) For purposes of this subdivision, "enterprise information technology equipment"
169.10means computers and equipment supporting computing, networking, or data storage,
169.11including servers and routers. It includes, but is not limited to: cooling systems,
169.12cooling towers, and other temperature control infrastructure; power infrastructure for
169.13transformation, distribution, or management of electricity used for the maintenance
169.14and operation of a qualified data center, including but not limited to exterior dedicated
169.15business-owned substations, backup power generation systems, battery systems, and
169.16related infrastructure; and racking systems, cabling, and trays, which are necessary for
169.17the maintenance and operation of the qualified data center.
169.18(e) A qualified data center may claim the exemptions in this subdivision for
169.19purchases made either within 20 years of the date of its first purchase qualifying for the
169.20exemption under paragraph (a), or by June 30, 2042, whichever is earlier.
169.21(f) The purpose of this exemption is to create jobs in the construction and data
169.22center industries.
169.23(g) This subdivision is effective for sales and purchases made after June 30, 2012,
169.24and before July 1, 2042.
169.25EFFECTIVE DATE.This section is effective for sales and purchases made after
169.26June 30, 2013.

169.27    Sec. 33. Minnesota Statutes 2012, section 297A.68, is amended by adding a
169.28subdivision to read:
169.29    Subd. 49. Greater Minnesota business expansions. (a) Purchases and use of
169.30tangible personal property or taxable services by a qualified business, as defined in section
169.31116J.3738, are exempt if:
169.32(1) the business subsidy agreement provides that the exemption under this
169.33subdivision applies;
169.34(2) the property or services are primarily used or consumed in greater Minnesota; and
170.1(3) the purchase was made and delivery received during the duration of the
170.2certification of the business as a qualified business under section 116J.3738.
170.3(b) Purchase and use of construction materials and supplies used or consumed in,
170.4and equipment incorporated into, the construction of improvements to real property in
170.5greater Minnesota are exempt if the improvements after completion of construction are
170.6to be used in the conduct of the trade or business of the qualified business, as defined in
170.7section 116J.3738. This exemption applies regardless of whether the purchases are made
170.8by the business or a contractor.
170.9(c) The exemptions under this subdivision apply to a local sales and use tax.
170.10(d) A qualifying business may claim an exemption under this subdivision in an
170.11amount up to $15,000.
170.12(e) The tax on purchases imposed under this subdivision must be imposed and
170.13collected as if the rate under section 297A.62, subdivision 1, applied, and then refunded in
170.14the manner provided in section 297A.75. No more than $1,000,000 may be refunded in a
170.15fiscal year for all purchases under this subdivision. Any portion of the balance of funds
170.16allocated for refunds under this paragraph does not cancel and shall be carried forward to
170.17and available for refunds in subsequent fiscal years.
170.18EFFECTIVE DATE.This section is effective for sales and purchases made after
170.19June 30, 2013.

170.20    Sec. 34. Minnesota Statutes 2012, section 297A.70, subdivision 2, is amended to read:
170.21    Subd. 2. Sales to government. (a) All sales, except those listed in paragraph (b),
170.22to the following governments and political subdivisions, or to the listed agencies or
170.23instrumentalities of governments and political subdivisions, are exempt:
170.24(1) the United States and its agencies and instrumentalities;
170.25(2) school districts, local governments, the University of Minnesota, state universities,
170.26community colleges, technical colleges, state academies, the Perpich Minnesota Center for
170.27Arts Education, and an instrumentality of a political subdivision that is accredited as an
170.28optional/special function school by the North Central Association of Colleges and Schools;
170.29(3) hospitals and nursing homes owned and operated by political subdivisions of
170.30the state of tangible personal property and taxable services used at or by hospitals and
170.31nursing homes;
170.32(4) the Metropolitan Council, for its purchases of vehicles and repair parts to equip
170.33operations provided for in section 473.4051;
170.34(5) other states or political subdivisions of other states, if the sale would be exempt
170.35from taxation if it occurred in that state; and
171.1(6) public libraries, public library systems, multicounty, multitype library systems as
171.2defined in section 134.001, county law libraries under chapter 134A, state agency libraries,
171.3the state library under section 480.09, and the Legislative Reference Library; and.
171.4(7) towns.
171.5(b) This exemption does not apply to the sales of the following products and services:
171.6(1) building, construction, or reconstruction materials purchased by a contractor
171.7or a subcontractor as a part of a lump-sum contract or similar type of contract with a
171.8guaranteed maximum price covering both labor and materials for use in the construction,
171.9alteration, or repair of a building or facility;
171.10(2) construction materials purchased by tax exempt entities or their contractors to
171.11be used in constructing buildings or facilities which will not be used principally by the
171.12tax exempt entities;
171.13(3) the leasing of a motor vehicle as defined in section 297B.01, subdivision 11,
171.14except for leases entered into by the United States or its agencies or instrumentalities;
171.15(4) lodging as defined under section 297A.61, subdivision 3, paragraph (g), clause
171.16(2), and prepared food, candy, soft drinks, and alcoholic beverages as defined in section
171.17297A.67, subdivision 2 , except for lodging, prepared food, candy, soft drinks, and alcoholic
171.18beverages purchased directly by the United States or its agencies or instrumentalities; or
171.19(5) goods or services purchased by a town local government as inputs to goods and
171.20services that are generally provided by a private business and the purchases would be
171.21taxable if made by a private business engaged in the same activity.
171.22(c) As used in this subdivision, "school districts" means public school entities and
171.23districts of every kind and nature organized under the laws of the state of Minnesota, and
171.24any instrumentality of a school district, as defined in section 471.59.
171.25(d) As used in this subdivision, "local governments" means cities, counties, and
171.26townships.
171.27(d) (e) As used in this subdivision, "goods or services generally provided by a private
171.28business" include, but are not limited to, goods or services provided by liquor stores, gas
171.29and electric utilities, golf courses, marinas, health and fitness centers, campgrounds, cafes,
171.30and laundromats. "Goods or services generally provided by a private business" do not
171.31include housing services, sewer and water services, wastewater treatment, ambulance and
171.32other public safety services, correctional services, chore or homemaking services provided
171.33to elderly or disabled individuals, or road and street maintenance or lighting.
171.34EFFECTIVE DATE.This section is effective for sales and purchases made after
171.35June 30, 2013.

172.1    Sec. 35. Minnesota Statutes 2012, section 297A.70, subdivision 4, is amended to read:
172.2    Subd. 4. Sales to nonprofit groups. (a) All sales, except those listed in paragraph
172.3(b), to the following "nonprofit organizations" are exempt:
172.4(1) a corporation, society, association, foundation, or institution organized and
172.5operated exclusively for charitable, religious, or educational purposes if the item
172.6purchased is used in the performance of charitable, religious, or educational functions; and
172.7(2) any senior citizen group or association of groups that:
172.8(i) in general limits membership to persons who are either age 55 or older, or
172.9physically disabled;
172.10(ii) is organized and operated exclusively for pleasure, recreation, and other
172.11nonprofit purposes, not including housing, no part of the net earnings of which inures to
172.12the benefit of any private shareholders; and
172.13(iii) is an exempt organization under section 501(c) of the Internal Revenue Code.
172.14For purposes of this subdivision, charitable purpose includes the maintenance of a
172.15cemetery owned by a religious organization.
172.16(b) This exemption does not apply to the following sales:
172.17(1) building, construction, or reconstruction materials purchased by a contractor
172.18or a subcontractor as a part of a lump-sum contract or similar type of contract with a
172.19guaranteed maximum price covering both labor and materials for use in the construction,
172.20alteration, or repair of a building or facility;
172.21(2) construction materials purchased by tax-exempt entities or their contractors to
172.22be used in constructing buildings or facilities that will not be used principally by the
172.23tax-exempt entities; and
172.24(3) lodging as defined under section 297A.61, subdivision 3, paragraph (g), clause
172.25(2), and prepared food, candy, soft drinks, and alcoholic beverages as defined in section
172.26297A.67, subdivision 2 , except wine purchased by an established religious organization
172.27for sacramental purposes or as allowed under subdivision 9a; and
172.28(4) leasing of a motor vehicle as defined in section 297B.01, subdivision 11, except
172.29as provided in paragraph (c).
172.30(c) This exemption applies to the leasing of a motor vehicle as defined in section
172.31297B.01, subdivision 11 , only if the vehicle is:
172.32(1) a truck, as defined in section 168.002, a bus, as defined in section 168.002, or a
172.33passenger automobile, as defined in section 168.002, if the automobile is designed and
172.34used for carrying more than nine persons including the driver; and
173.1(2) intended to be used primarily to transport tangible personal property or
173.2individuals, other than employees, to whom the organization provides service in
173.3performing its charitable, religious, or educational purpose.
173.4(d) A limited liability company also qualifies for exemption under this subdivision if
173.5(1) it consists of a sole member that would qualify for the exemption, and (2) the items
173.6purchased qualify for the exemption.
173.7EFFECTIVE DATE.This section is effective retroactively for sales and purchases
173.8made after June 30, 2012.

173.9    Sec. 36. Minnesota Statutes 2012, section 297A.70, subdivision 5, is amended to read:
173.10    Subd. 5. Veterans groups. Sales to an organization of military service veterans or
173.11an auxiliary unit of an organization of military service veterans are exempt if:
173.12(1) the organization or auxiliary unit is organized within the state of Minnesota
173.13and is exempt from federal taxation under section 501(c), clause (19), of the Internal
173.14Revenue Code; and
173.15(2) the tangible personal property is or services are for charitable, civic, educational,
173.16or nonprofit uses and not for social, recreational, pleasure, or profit uses.
173.17EFFECTIVE DATE.This section is effective for sales and purchases made after
173.18June 30, 2013.

173.19    Sec. 37. Minnesota Statutes 2012, section 297A.70, subdivision 7, is amended to read:
173.20    Subd. 7. Hospitals and, outpatient surgical centers, and critical access dental
173.21providers. (a) Sales, except for those listed in paragraph (c) (d), to a hospital are exempt,
173.22if the items purchased are used in providing hospital services. For purposes of this
173.23subdivision, "hospital" means a hospital organized and operated for charitable purposes
173.24within the meaning of section 501(c)(3) of the Internal Revenue Code, and licensed under
173.25chapter 144 or by any other jurisdiction, and "hospital services" are services authorized or
173.26required to be performed by a "hospital" under chapter 144.
173.27    (b) Sales, except for those listed in paragraph (c) (d), to an outpatient surgical center
173.28are exempt, if the items purchased are used in providing outpatient surgical services. For
173.29purposes of this subdivision, "outpatient surgical center" means an outpatient surgical
173.30center organized and operated for charitable purposes within the meaning of section
173.31501(c)(3) of the Internal Revenue Code, and licensed under chapter 144 or by any other
173.32jurisdiction. For the purposes of this subdivision, "outpatient surgical services" means:
173.33(1) services authorized or required to be performed by an outpatient surgical center under
174.1chapter 144; and (2) urgent care. For purposes of this subdivision, "urgent care" means
174.2health services furnished to a person whose medical condition is sufficiently acute to
174.3require treatment unavailable through, or inappropriate to be provided by, a clinic or
174.4physician's office, but not so acute as to require treatment in a hospital emergency room.
174.5    (c) Sales, except for those listed in paragraph (d), to a critical access dental provider
174.6are exempt, if the items purchased are used in providing critical access dental care
174.7services. For the purposes of this subdivision, "critical access dental provider" means
174.8a dentist or dental clinic designated as a critical access dental provider under section
174.9256B.76, subdivision 4, that serve only recipients of Minnesota health care programs.
174.10    (d) This exemption does not apply to the following products and services:
174.11    (1) purchases made by a clinic, physician's office, or any other medical facility not
174.12operating as a hospital or, outpatient surgical center, or critical access dental provider,
174.13even though the clinic, office, or facility may be owned and operated by a hospital or,
174.14 outpatient surgical center, or critical access dental provider;
174.15    (2) sales under section 297A.61, subdivision 3, paragraph (g), clause (2), and
174.16prepared food, candy, and soft drinks;
174.17    (3) building and construction materials used in constructing buildings or facilities
174.18that will not be used principally by the hospital or, outpatient surgical center, or critical
174.19access dental provider;
174.20    (4) building, construction, or reconstruction materials purchased by a contractor or a
174.21subcontractor as a part of a lump-sum contract or similar type of contract with a guaranteed
174.22maximum price covering both labor and materials for use in the construction, alteration, or
174.23repair of a hospital or, outpatient surgical center, or critical access dental provider; or
174.24    (5) the leasing of a motor vehicle as defined in section 297B.01, subdivision 11.
174.25    (d) (e) A limited liability company also qualifies for exemption under this
174.26subdivision if (1) it consists of a sole member that would qualify for the exemption, and
174.27(2) the items purchased qualify for the exemption.
174.28    (e) (f) An entity that contains both a hospital and a nonprofit unit may claim this
174.29exemption on purchases made for both the hospital and nonprofit unit provided that:
174.30    (1) the nonprofit unit would have qualified for exemption under subdivision 4; and
174.31    (2) the items purchased would have qualified for the exemption.
174.32EFFECTIVE DATE.This section is effective retroactively for sales and purchases
174.33made after June 30, 2007. Purchasers may apply for a refund of tax paid for qualifying
174.34purchases under this subdivision made after June 30, 2007, and before July 1, 2013, in the
174.35manner provided in Minnesota Statutes, section 297A.75.

175.1    Sec. 38. Minnesota Statutes 2012, section 297A.70, is amended by adding a
175.2subdivision to read:
175.3    Subd. 9a. Established religious orders. Sales of lodging, prepared food, candy,
175.4soft drinks, and alcoholic beverages at noncatered events between an established religious
175.5order and an affiliated institution of higher education are exempt. For purposes of this
175.6subdivision, an institution of higher education is "affiliated" with an established religious
175.7order if members of the religious order are represented on the governing board of the
175.8institution of higher education and the two organizations share campus space and common
175.9facilities.
175.10EFFECTIVE DATE.This section is effective retroactively for sales and purchases
175.11made after June 30, 2012.

175.12    Sec. 39. Minnesota Statutes 2012, section 297A.70, subdivision 13, is amended to read:
175.13    Subd. 13. Fund-raising sales by or for nonprofit groups. (a) The following
175.14sales by the specified organizations for fund-raising purposes are exempt, subject to the
175.15limitations listed in paragraph (b):
175.16(1) all sales made by a nonprofit organization that exists solely for the purpose of
175.17providing educational or social activities for young people primarily age 18 and under;
175.18(2) all sales made by an organization that is a senior citizen group or association of
175.19groups if (i) in general it limits membership to persons age 55 or older; (ii) it is organized
175.20and operated exclusively for pleasure, recreation, and other nonprofit purposes; and (iii)
175.21no part of its net earnings inures to the benefit of any private shareholders;
175.22(3) the sale or use of tickets or admissions to a golf tournament held in Minnesota if
175.23the beneficiary of the tournament's net proceeds qualifies as a tax-exempt organization
175.24under section 501(c)(3) of the Internal Revenue Code; and
175.25(4) sales of candy sold for fund-raising purposes by a nonprofit organization that
175.26provides educational and social activities primarily for young people age 18 and under.
175.27(b) The exemptions listed in paragraph (a) are limited in the following manner:
175.28(1) the exemption under paragraph (a), clauses (1) and (2), applies only if the gross
175.29annual receipts of the organization from fund-raising do not exceed $10,000; and
175.30(2) the exemption under paragraph (a), clause (1), does not apply if the sales are
175.31derived from admission charges or from activities for which the money must be deposited
175.32with the school district treasurer under section 123B.49, subdivision 2, or be recorded in
175.33the same manner as other revenues or expenditures of the school district under section
175.34123B.49, subdivision 4 .
176.1(c) Sales of tangible personal property and services are exempt if the entire proceeds,
176.2less the necessary expenses for obtaining the property or services, will be contributed to
176.3a registered combined charitable organization described in section 43A.50, to be used
176.4exclusively for charitable, religious, or educational purposes, and the registered combined
176.5charitable organization has given its written permission for the sale. Sales that occur over
176.6a period of more than 24 days per year are not exempt under this paragraph.
176.7(d) For purposes of this subdivision, a club, association, or other organization of
176.8elementary or secondary school students organized for the purpose of carrying on sports,
176.9educational, or other extracurricular activities is a separate organization from the school
176.10district or school for purposes of applying the $10,000 limit.
176.11EFFECTIVE DATE.This section is effective for sales and purchases made after
176.12June 30, 2013.

176.13    Sec. 40. Minnesota Statutes 2012, section 297A.70, subdivision 14, is amended to read:
176.14    Subd. 14. Fund-raising events sponsored by nonprofit groups. (a) Sales of
176.15tangible personal property or services at, and admission charges for fund-raising events
176.16sponsored by, a nonprofit organization are exempt if:
176.17(1) all gross receipts are recorded as such, in accordance with generally accepted
176.18accounting practices, on the books of the nonprofit organization; and
176.19(2) the entire proceeds, less the necessary expenses for the event, will be used solely
176.20and exclusively for charitable, religious, or educational purposes. Exempt sales include
176.21the sale of prepared food, candy, and soft drinks at the fund-raising event.
176.22(b) This exemption is limited in the following manner:
176.23(1) it does not apply to admission charges for events involving bingo or other
176.24gambling activities or to charges for use of amusement devices involving bingo or other
176.25gambling activities;
176.26(2) all gross receipts are taxable if the profits are not used solely and exclusively for
176.27charitable, religious, or educational purposes;
176.28(3) it does not apply unless the organization keeps a separate accounting record,
176.29including receipts and disbursements from each fund-raising event that documents all
176.30deductions from gross receipts with receipts and other records;
176.31(4) it does not apply to any sale made by or in the name of a nonprofit corporation as
176.32the active or passive agent of a person that is not a nonprofit corporation;
176.33(5) all gross receipts are taxable if fund-raising events exceed 24 days per year;
176.34(6) it does not apply to fund-raising events conducted on premises leased for more
176.35than five days but less than 30 days; and
177.1(7) it does not apply if the risk of the event is not borne by the nonprofit organization
177.2and the benefit to the nonprofit organization is less than the total amount of the state and
177.3local tax revenues forgone by this exemption.
177.4(c) For purposes of this subdivision, a "nonprofit organization" means any unit of
177.5government, corporation, society, association, foundation, or institution organized and
177.6operated for charitable, religious, educational, civic, fraternal, and senior citizens' or
177.7veterans' purposes, no part of the net earnings of which inures to the benefit of a private
177.8individual.
177.9EFFECTIVE DATE.This section is effective for sales and purchases made after
177.10June 30, 2013.

177.11    Sec. 41. Minnesota Statutes 2012, section 297A.70, is amended by adding a
177.12subdivision to read:
177.13    Subd. 18. Nursing homes and boarding care homes. (a) All sales, except those
177.14listed in paragraph (b), to a nursing home licensed under section 144A.02 or a boarding
177.15care home certified as a nursing facility under title 19 of the Social Security Act are
177.16exempt if the facility:
177.17(1) is exempt from federal income taxation pursuant to section 501(c)(3) of the
177.18Internal Revenue Code; and
177.19(2) is certified to participate in the medical assistance program under title 19 of the
177.20Social Security Act, or certifies to the commissioner that it does not discharge residents
177.21due to the inability to pay.
177.22(b) This exemption does not apply to the following sales:
177.23(1) building, construction, or reconstruction materials purchased by a contractor
177.24or a subcontractor as a part of a lump-sum contract or similar type of contract with a
177.25guaranteed maximum price covering both labor and materials for use in the construction,
177.26alteration, or repair of a building or facility;
177.27(2) construction materials purchased by tax-exempt entities or their contractors to
177.28be used in constructing buildings or facilities that will not be used principally by the
177.29tax-exempt entities;
177.30(3) lodging as defined under section 297A.61, subdivision 3, paragraph (g), clause
177.31(2), and prepared food, candy, soft drinks, and alcoholic beverages as defined in section
177.32297A.67, subdivision 2; and
177.33(4) leasing of a motor vehicle as defined in section 297B.01, subdivision 11, except
177.34as provided in paragraph (c).
178.1(c) This exemption applies to the leasing of a motor vehicle as defined in section
178.2297B.01, subdivision 11, only if the vehicle is:
178.3(1) a truck, as defined in section 168.002; a bus, as defined in section 168.002; or a
178.4passenger automobile, as defined in section 168.002, if the automobile is designed and
178.5used for carrying more than nine persons including the driver; and
178.6(2) intended to be used primarily to transport tangible personal property or residents
178.7of the nursing home or boarding care home.
178.8EFFECTIVE DATE.This section is effective for sales and purchases made after
178.9June 30, 2013.

178.10    Sec. 42. Minnesota Statutes 2012, section 297A.71, is amended by adding a
178.11subdivision to read:
178.12    Subd. 45. Biopharmaceutical manufacturing facility. (a) Materials and
178.13supplies used or consumed in, capital equipment incorporated into, and privately
178.14owned infrastructure in support of the construction, improvement, or expansion of a
178.15biopharmaceutical manufacturing facility in the state are exempt if the following criteria
178.16are met:
178.17(1) the facility is used for the manufacturing of biologics;
178.18(2) the total capital investment made at the facility exceeds $50,000,000; and
178.19(3) the facility creates and maintains at least 190 full-time equivalent positions at the
178.20facility. These positions must be new jobs in Minnesota and not the result of relocating
178.21jobs that currently exist in Minnesota.
178.22(b) The tax must be imposed and collected as if the rate under section 297A.62,
178.23subdivision 1, applied, and refunded in the manner provided in section 297A.75.
178.24(c) To be eligible for a refund, the owner of the biopharmaceutical manufacturing
178.25facility must:
178.26(1) initially apply to the Department of Employment and Economic Development
178.27for certification no later than one year from the final completion date of construction,
178.28improvement, or expansion of the facility; and
178.29(2) for each year that the owner of the biopharmaceutical manufacturing facility
178.30applies for a refund, the owner must have received written certification from the
178.31Department of Employment and Economic Development that the facility has met the
178.32criteria of paragraph (a).
178.33(d) The refund is to be paid annually at a rate of 25 percent of the total allowable
178.34refund payable to date, with the commissioner making annual payments of the remaining
178.35refund until all of the refund has been paid.
179.1(e) For purposes of this subdivision, "biopharmaceutical" and "biologics" are
179.2interchangeable and mean medical drugs or medicinal preparations produced using
179.3technology that uses biological systems, living organisms or derivatives of living
179.4organisms, to make or modify products or processes for specific use. The medical drugs or
179.5medicinal preparations include but are not limited to proteins, antibodies, nucleic acids,
179.6and vaccines.
179.7EFFECTIVE DATE.This section is effective retroactively to capital investments
179.8made and jobs created after December 31, 2012, and effective retroactively for sales and
179.9purchases made after December 31, 2012, and before July 1, 2019.

179.10    Sec. 43. Minnesota Statutes 2012, section 297A.71, is amended by adding a
179.11subdivision to read:
179.12    Subd. 46. Research and development facilities. Materials and supplies used
179.13or consumed in, and equipment incorporated into, the construction or improvement of
179.14a research and development facility that has laboratory space of at least 400,000 square
179.15feet and utilizes both high-intensity and low-intensity laboratories, provided that the
179.16project has a total construction cost of at least $140,000,000 within a 24-month period.
179.17The tax on purchases imposed under this subdivision must be imposed and collected as if
179.18the rate under section 297A.62, subdivision 1, applied and then refunded in the manner
179.19provided in section 297A.75.
179.20EFFECTIVE DATE.This section is effective for sales and purchases made after
179.21June 30, 2013, and before September 1, 2015.

179.22    Sec. 44. Minnesota Statutes 2012, section 297A.71, is amended by adding a
179.23subdivision to read:
179.24    Subd. 47. Industrial measurement manufacturing and controls facility. (a)
179.25Materials and supplies used or consumed in, capital equipment incorporated into,
179.26fixtures installed in, and privately owned infrastructure in support of the construction,
179.27improvement, or expansion of an industrial measurement manufacturing and controls
179.28facility are exempt if:
179.29(1) the total capital investment made at the facility is at least $60,000,000;
179.30(2) the facility employs at least 250 full-time equivalent employees that are not
179.31employees currently employed by the company in the state; and
180.1(3) the Department of Employment and Economic Development determines that
180.2the expansion, remodeling, or improvement of the facility has a significant impact on
180.3the state economy.
180.4(b) The tax must be imposed and collected as if the rate under section 297A.62,
180.5subdivisions 1 and 1a, applied and refunded in the manner provided in section 297A.75,
180.6only after the following criteria are met:
180.7(1) a refund may not be issued until the owner of the facility has received
180.8certification from the Department of Employment and Economic Development that the
180.9company meets the requirements in paragraph (a); and
180.10(2) to receive the refund, the owner of the industrial measurement manufacturing
180.11and controls facility must initially apply to the Department of Employment and Economic
180.12Development for certification no later than one year from the final completion date of
180.13construction, improvement, or expansion of the industrial measurement manufacturing
180.14and controls facility.
180.15EFFECTIVE DATE.This section is effective for sales and purchases made after
180.16June 30, 2013, and before December 31, 2015.

180.17    Sec. 45. Minnesota Statutes 2012, section 297A.71, is amended by adding a
180.18subdivision to read:
180.19    Subd. 48. Retail, hotel, amusement, and office construction project. Materials
180.20and supplies used or consumed in, and equipment incorporated into the construction or
180.21improvement of buildings and infrastructure for retail, hotel, amusement, and office use
180.22within a two square mile area with a capital investment of at least $250,000,000, are
180.23exempt. The tax on purchases exempt under this provision must be imposed and collected
180.24as if the rate under section 297A.62, subdivision 1, applied and then refunded in the
180.25manner provided in section 297A.75. This subdivision expires June 30, 2023.
180.26EFFECTIVE DATE.This section is effective for sales and purchases made after
180.27June 30, 2014, and before July 1, 2024.

180.28    Sec. 46. Minnesota Statutes 2012, section 297A.75, subdivision 1, is amended to read:
180.29    Subdivision 1. Tax collected. The tax on the gross receipts from the sale of the
180.30following exempt items must be imposed and collected as if the sale were taxable and the
180.31rate under section 297A.62, subdivision 1, applied. The exempt items include:
180.32    (1) capital equipment exempt under section 297A.68, subdivision 5;
181.1    (2) (1) building materials for an agricultural processing facility exempt under section
181.2297A.71, subdivision 13 ;
181.3    (3) (2) building materials for mineral production facilities exempt under section
181.4297A.71, subdivision 14 ;
181.5    (4) (3) building materials for correctional facilities under section 297A.71,
181.6subdivision 3 ;
181.7    (5) (4) building materials used in a residence for disabled veterans exempt under
181.8section 297A.71, subdivision 11;
181.9    (6) (5) elevators and building materials exempt under section 297A.71, subdivision
181.1012 ;
181.11    (7) (6) building materials for the Long Lake Conservation Center exempt under
181.12section 297A.71, subdivision 17;
181.13    (8) (7) materials and supplies for qualified low-income housing under section
181.14297A.71, subdivision 23 ;
181.15    (9) (8) materials, supplies, and equipment for municipal electric utility facilities
181.16under section 297A.71, subdivision 35;
181.17    (10) (9) equipment and materials used for the generation, transmission, and
181.18distribution of electrical energy and an aerial camera package exempt under section
181.19297A.68 , subdivision 37;
181.20    (11) (10) commuter rail vehicle and repair parts under section 297A.70, subdivision
181.213, paragraph (a), clause (10);
181.22    (12) (11) materials, supplies, and equipment for construction or improvement of
181.23projects and facilities under section 297A.71, subdivision 40;
181.24(13) (12) materials, supplies, and equipment for construction or improvement of a
181.25meat processing facility exempt under section 297A.71, subdivision 41;
181.26(14) (13) materials, supplies, and equipment for construction, improvement, or
181.27expansion of:
181.28(i) an aerospace defense manufacturing facility exempt under section 297A.71,
181.29subdivision 42;
181.30(ii) a biopharmaceutical manufacturing facility exempt under section 297A.71,
181.31subdivision 45;
181.32(iii) a research and development facility exempt under section 297A.71, subdivision
181.334b;
181.34(iv) an industrial measurement manufacturing and controls facility exempt under
181.35section 297A.71, subdivision 47; and
182.1(v) buildings and infrastructure for retail, hotel, amusement, and office facilities
182.2exempt under section 297A.71, subdivision 48;
182.3(15) (14) enterprise information technology equipment and computer software for
182.4use in a qualified data center exempt under section 297A.68, subdivision 42; and
182.5(16) (15) materials, supplies, and equipment for qualifying capital projects under
182.6section 297A.71, subdivision 44;
182.7(16) items purchased for use in providing critical access dental services exempt
182.8under section 297A.70, subdivision 7, paragraph (c);
182.9(17) items purchased in transactions covered under Medicare or Medicaid exempt
182.10under section 297A.67, subdivision 7, paragraphs (b) and (c), and accessories and supplies
182.11exempt under section 297A.67, subdivision 7a; and
182.12(18) items and services purchased under a business subsidy agreement for use or
182.13consumption primarily in greater Minnesota exempt under section 297A.68, subdivision 49.
182.14EFFECTIVE DATE.The change to clause (1) is effective for sales and purchases
182.15made after June 30, 2015. The changes in clauses (13), (16), and (17), are effective the
182.16day following final enactment.

182.17    Sec. 47. Minnesota Statutes 2012, section 297A.75, subdivision 2, is amended to read:
182.18    Subd. 2. Refund; eligible persons. Upon application on forms prescribed by the
182.19commissioner, a refund equal to the tax paid on the gross receipts of the exempt items
182.20must be paid to the applicant. Only the following persons may apply for the refund:
182.21    (1) for subdivision 1, clauses (1) to (3) (2), (16), and (17), the applicant must be
182.22the purchaser;
182.23    (2) for subdivision 1, clauses (4) (3) and (7) (6), the applicant must be the
182.24governmental subdivision;
182.25    (3) for subdivision 1, clause (5) (4), the applicant must be the recipient of the
182.26benefits provided in United States Code, title 38, chapter 21;
182.27    (4) for subdivision 1, clause (6) (5), the applicant must be the owner of the
182.28homestead property;
182.29    (5) for subdivision 1, clause (8) (7), the owner of the qualified low-income housing
182.30project;
182.31    (6) for subdivision 1, clause (9) (8), the applicant must be a municipal electric utility
182.32or a joint venture of municipal electric utilities;
182.33    (7) for subdivision 1, clauses (10), (9), (12), (13), (14), and (15) and (18), the owner
182.34of the qualifying business; and
183.1    (8) for subdivision 1, clauses (10), (11), (12), and (16) (15), the applicant must be
183.2the governmental entity that owns or contracts for the project or facility.
183.3EFFECTIVE DATE.This section is effective the day following final enactment.

183.4    Sec. 48. Minnesota Statutes 2012, section 297A.75, subdivision 3, is amended to read:
183.5    Subd. 3. Application. (a) The application must include sufficient information
183.6to permit the commissioner to verify the tax paid. If the tax was paid by a contractor,
183.7subcontractor, or builder, under subdivision 1, clause (3), (4), (5), (6), (7), (8), (9), (10),
183.8(11), (12), (13), (14), (15), or (16) (18), the contractor, subcontractor, or builder must
183.9furnish to the refund applicant a statement including the cost of the exempt items and the
183.10taxes paid on the items unless otherwise specifically provided by this subdivision. The
183.11provisions of sections 289A.40 and 289A.50 apply to refunds under this section.
183.12    (b) An applicant may not file more than two applications per calendar year for
183.13refunds for taxes paid on capital equipment exempt under section 297A.68, subdivision 5.
183.14    (c) Total refunds for purchases of items in section 297A.71, subdivision 40, must not
183.15exceed $5,000,000 in fiscal years 2010 and 2011. Applications for refunds for purchases
183.16of items in sections 297A.70, subdivision 3, paragraph (a), clause (11), and 297A.71,
183.17subdivision 40, must not be filed until after June 30, 2009.
183.18EFFECTIVE DATE.This section is effective for sales and purchases made after
183.19June 30, 2015.

183.20    Sec. 49. Minnesota Statutes 2012, section 297A.815, subdivision 3, is amended to read:
183.21    Subd. 3. Motor vehicle lease sales tax revenue. (a) For purposes of this
183.22subdivision, "net revenue" means an amount equal to:
183.23    (1) the revenues, including interest and penalties, that would have been collected
183.24under this section, during the fiscal year if the rate had been 6.875 percent; less
183.25    (2) in fiscal year 2011, $30,100,000; in fiscal year 2012, $31,100,000; and in fiscal
183.26year 2013 and following fiscal years, $32,000,000.
183.27    (b) On or before June 30 of each fiscal year, the commissioner of revenue shall
183.28estimate the amount of the revenues and subtraction under paragraph (a) for the current
183.29fiscal year.
183.30    (c) On or after July 1 of the subsequent fiscal year, the commissioner of management
183.31and budget shall transfer the net revenue as estimated in paragraph (b) from the general
183.32fund, as follows:
183.33    (1) 50 percent to the greater Minnesota transit account; and
184.1    (2) 50 percent to the county state-aid highway fund. Notwithstanding any other law
184.2to the contrary, the commissioner of transportation shall allocate the funds transferred
184.3under this clause to the counties in the metropolitan area, as defined in section 473.121,
184.4subdivision 4, excluding the counties of Hennepin and Ramsey, so that each county shall
184.5receive of such amount the percentage that its population, as defined in section 477A.011,
184.6subdivision 3, estimated or established by July 15 of the year prior to the current calendar
184.7year, bears to the total population of the counties receiving funds under this clause.
184.8    (d) For fiscal years 2010 and 2011, the amount under paragraph (a), clause (1), must
184.9be calculated using the following percentages of the total revenues:
184.10    (1) for fiscal year 2010, 83.75 percent; and
184.11    (2) for fiscal year 2011, 93.75 percent.
184.12EFFECTIVE DATE.This section is effective for sales and purchases made after
184.13June 30, 2013.

184.14    Sec. 50. Minnesota Statutes 2012, section 297A.99, subdivision 1, is amended to read:
184.15    Subdivision 1. Authorization; scope. (a) A political subdivision of this state may
184.16impose a general sales tax (1) under section 297A.992, (2) under section 297A.993, (3) if
184.17permitted by special law, or (4) if the political subdivision enacted and imposed the tax
184.18before January 1, 1982, and its predecessor provision.
184.19    (b) This section governs the imposition of a general sales tax by the political
184.20subdivision. The provisions of this section preempt the provisions of any special law:
184.21    (1) enacted before June 2, 1997, or
184.22    (2) enacted on or after June 2, 1997, that does not explicitly exempt the special law
184.23provision from this section's rules by reference.
184.24    (c) This section does not apply to or preempt a sales tax on motor vehicles or a
184.25special excise tax on motor vehicles.
184.26(d) A political subdivision may not advertise or expend funds for the promotion of a
184.27referendum to support imposing a local option sales tax.
184.28(e) Notwithstanding paragraph (d), a political subdivision may only expend funds to:
184.29(1) conduct the referendum.;
184.30(2) disseminate information included in the resolution adopted under subdivision 2;
184.31(3) provide notice of, and conduct public forums at which proponents and opponents
184.32on the merits of the referendum are given equal time to express their opinions on the
184.33merits of the referendum;
184.34(4) provide facts and data on the impact of the proposed sales tax on consumer
184.35purchases; and
185.1(5) provide facts and data related to the programs and projects to be funded with
185.2the sales tax.
185.3EFFECTIVE DATE.This section is effective the day following final enactment.

185.4    Sec. 51. Minnesota Statutes 2012, section 469.190, is amended by adding a subdivision
185.5to read:
185.6    Subd. 1a. Tax base; locally collected taxes. A tax imposed on the gross receipts
185.7from lodging under this section or under a special law applies to the same base as taxes
185.8collected by the commissioner of revenue under subdivision 7 and section 270C.171.
185.9EFFECTIVE DATE.This section is effective the day following final enactment.
185.10In enacting this section, the legislature confirms its original intent in enacting Minnesota
185.11Statutes, section 469.190, its predecessor provisions, and any special laws authorizing
185.12political subdivisions to impose lodging taxes, and that those taxes were and are intended
185.13to apply to the entire consideration paid to obtain access to transient lodging, including
185.14ancillary or related services, such as services provided by accommodation intermediaries
185.15as defined in Minnesota Statutes, section 297A.61, and similar services. The provisions of
185.16this section must not be interpreted to imply a narrower construction of the tax base under
185.17lodging tax provisions of Minnesota law prior to the enactment of this section.

185.18    Sec. 52. Laws 2005, First Special Session chapter 3, article 5, section 37, subdivision
185.192, is amended to read:
185.20    Subd. 2. Use of revenues. (a) Revenues received from the tax authorized by
185.21subdivision 1 by the city of St. Cloud must be used for the cost of collecting and
185.22administering the tax and to pay all or part of the capital or administrative costs of the
185.23development, acquisition, construction, improvement, and securing and paying debt
185.24service on bonds or other obligations issued to finance the following regional projects as
185.25approved by the voters and specifically detailed in the referendum authorizing the tax or
185.26extending the tax:
185.27    (1) St. Cloud Regional Airport;
185.28    (2) regional transportation improvements;
185.29    (3) regional community and aquatics centers;
185.30    (4) regional public libraries; and
185.31    (5) acquisition and improvement of regional park land and open space.
185.32    (b) Revenues received from the tax authorized by subdivision 1 by the cities of St.
185.33Joseph, Waite Park, Sartell, Sauk Rapids, and St. Augusta must be used for the cost of
186.1collecting and administering the tax and to pay all or part of the capital or administrative
186.2costs of the development, acquisition, construction, improvement, and securing and paying
186.3debt service on bonds or other obligations issued to fund the projects specifically approved
186.4by the voters at the referendum authorizing the tax or extending the tax. The portion of
186.5revenues from the city going to fund the regional airport or regional library located in the
186.6city of St. Cloud will be as required under the applicable joint powers agreement.
186.7    (c) The use of revenues received from the taxes authorized in subdivision 1 for
186.8projects allowed under paragraphs (a) and (b) are limited to the amount authorized for
186.9each project under the enabling referendum.
186.10EFFECTIVE DATE.This section is effective for the city that approves them the
186.11day after compliance by the governing body of each city with Minnesota Statutes, section
186.12645.021, subdivision 3.

186.13    Sec. 53. Laws 2005, First Special Session chapter 3, article 5, section 37, subdivision
186.144, is amended to read:
186.15    Subd. 4. Termination of tax. The tax imposed in the cities of St. Joseph, St. Cloud,
186.16St. Augusta, Sartell, Sauk Rapids, and Waite Park under subdivision 1 expires when the
186.17city council determines that sufficient funds have been collected from the tax to retire or
186.18redeem the bonds and obligations authorized under subdivision 2, paragraph (a), but no
186.19later than December 31, 2018. Notwithstanding Minnesota Statutes, section 297A.99,
186.20subdivision 3, paragraphs (a), (c), and (d), a city may extend the tax imposed under
186.21subdivision 1 through December 31, 2038, if approved under the referendum authorizing
186.22the tax under subdivision 1 or if approved by voters of the city at a general election held
186.23no later than November 6, 2017.
186.24EFFECTIVE DATE.This section is effective for the city that approves them the
186.25day after compliance by the governing body of each city with Minnesota Statutes, section
186.26645.021, subdivision 3.

186.27    Sec. 54. Laws 2008, chapter 366, article 7, section 19, subdivision 3, as amended by
186.28Laws 2011, First Special Session chapter 7, article 4, section 8, is amended to read:
186.29    Subd. 3. Use of revenues. Notwithstanding Minnesota Statutes, section 297A.99,
186.30subdivision 3 , paragraph (b), the proceeds of the tax imposed under this section shall be
186.31used to pay for the costs of improvements to the Sportsman Park/Ballfields, Riverside
186.32Park, Lions Park/Pavilion, Cedar South Park also known as Eldorado Park, and Spring
186.33Street Park; improvements to and extension of the River County Bike Trail; acquisition,
187.1 and construction, improvement, and development of regional parks, bicycle trails, park
187.2land, open space, and of a pedestrian walkways, as described in the city improvement
187.3plan adopted by the city council by resolution on December 12, 2006, and walkway
187.4over Interstate 94 and State Highway 24; and the acquisition of land and construction of
187.5buildings for a community and recreation center. The total amount of revenues from the
187.6taxes in subdivisions 1 and 2 that may be used to fund these projects is $12,000,000
187.7plus any associated bond costs.
187.8EFFECTIVE DATE.This section is effective the day after compliance by the
187.9governing body of the city of Clearwater with Minnesota Statutes, section 645.021,
187.10subdivisions 2 and 3.

187.11    Sec. 55. DULUTH LOCAL SALES TAX; RATE REDUCTION.
187.12Notwithstanding Minnesota Statutes, section 297A.99 or 645.021, or any ordinance,
187.13city charter, or other provision of law, the city of Duluth shall reduce its rate of tax
187.14authorized under Laws 1973, chapter 461, section 1, as amended by Laws 1977, chapter
187.15438, to 0.87 percent.
187.16EFFECTIVE DATE.This section is effective for sales and purchases made after
187.17June 30, 2013.

187.18    Sec. 56. REVISOR'S INSTRUCTION.
187.19In Minnesota Rules, part 8130.9700, the revisor of statutes shall remove the last
187.20sentence in subpart 3, item B, that reads "Use of equipment on a time-sharing basis,
187.21where access to the equipment is only by means of remote access facilities, is not taxable
187.22leasing of such equipment."
187.23EFFECTIVE DATE.This section is effective for sales and purchases made after
187.24June 30, 2013.

187.25    Sec. 57. REPEALER.
187.26(a) Minnesota Statutes 2012, sections 297A.61, subdivision 27; 297A.66, subdivision
187.274; 297A.67, subdivision 8; and 297A.68, subdivisions 9, 22, and 35, are repealed.
187.28(b) Minnesota Rules, part 8130.0500, subpart 2, is repealed.
187.29EFFECTIVE DATE.This section is effective for sales and purchases made after
187.30June 30, 2013.

188.1ARTICLE 8
188.2LOCAL DEVELOPMENT

188.3    Section 1. Minnesota Statutes 2012, section 469.174, subdivision 2, is amended to read:
188.4    Subd. 2. Authority. "Authority" means a rural development financing authority
188.5created pursuant to sections 469.142 to 469.151; a housing and redevelopment authority
188.6created pursuant to sections 469.001 to 469.047; a port authority created pursuant to
188.7sections 469.048 to 469.068; an economic development authority created pursuant to
188.8sections 469.090 to 469.108; a redevelopment agency as defined in sections 469.152 to
188.9469.165 ; a municipality that is administering a development district created pursuant to
188.10sections 469.124 to 469.134 or any special law; a municipality that undertakes a project
188.11pursuant to sections 469.152 to 469.165, except a town located outside the metropolitan
188.12area or with a population of 5,000 persons or less; a municipality that undertakes a project
188.13located in an area designated under subdivision 30; or a municipality that exercises the
188.14powers of a port authority pursuant to any general or special law.
188.15EFFECTIVE DATE.This section is effective the day following final enactment.

188.16    Sec. 2. Minnesota Statutes 2012, section 469.174, is amended by adding a subdivision
188.17to read:
188.18    Subd. 19a. Soil deficiency district. "Soil deficiency district" means a type of tax
188.19increment financing district consisting of a project, or portions of a project, within which
188.20the authority finds by resolution that the following conditions exist:
188.21(1) parcels consisting of 70 percent of the area of the district contain unusual terrain
188.22or soil deficiencies which require substantial filling, grading, or other physical preparation
188.23for use and a parcel is eligible for inclusion if at least 50 percent of the area of the parcel
188.24requires substantial filling, grading, or other physical preparation for use; and
188.25(2) the estimated cost of the physical preparation under clause (1), but excluding
188.26costs directly related to roads as defined in section 160.01, and local improvements as
188.27described in sections 429.021, subdivision 1, clauses (1) to (7), (11), and (12), and 430.01,
188.28exceeds the fair market value of the land before completion of the preparation.
188.29EFFECTIVE DATE.This section is effective for districts for which the request for
188.30certification is made after April 30, 2013.

188.31    Sec. 3. Minnesota Statutes 2012, section 469.174, is amended by adding a subdivision
188.32to read:
189.1    Subd. 30. Mining reclamation project area. (a) An authority may designate an
189.2area within its jurisdiction as a mining reclamation project area by finding by resolution,
189.3that parcels consisting of at least 70 percent of the acreage, excluding street and railroad
189.4rights-of-way, are characterized by one or more of the following conditions:
189.5(1) peat or other soils with geotechnical deficiencies that impair development of
189.6buildings or infrastructure;
189.7(2) soils or terrain that requires substantial filling in order to permit the development
189.8of buildings or infrastructure;
189.9(3) landfills, dumps, or similar deposits of municipal or private waste;
189.10(4) quarries or similar resource extraction sites;
189.11(5) floodway; and
189.12(6) substandard buildings, within the meaning of section 469.174, subdivision 10.
189.13(b) For the purposes of paragraph (a), clauses (1) to (5), a parcel is characterized by
189.14the relevant condition if at least 50 percent of the area of the parcel contains the relevant
189.15condition. For the purposes of paragraph (a), clause (6), a parcel is characterized by
189.16substandard buildings if substandard buildings occupy at least 30 percent of the area
189.17of the parcel.
189.18EFFECTIVE DATE.This section is effective for districts for which the request for
189.19certification is made after April 30, 2013.

189.20    Sec. 4. Minnesota Statutes 2012, section 469.175, subdivision 3, is amended to read:
189.21    Subd. 3. Municipality approval. (a) A county auditor shall not certify the original
189.22net tax capacity of a tax increment financing district until the tax increment financing plan
189.23proposed for that district has been approved by the municipality in which the district
189.24is located. If an authority that proposes to establish a tax increment financing district
189.25and the municipality are not the same, the authority shall apply to the municipality in
189.26which the district is proposed to be located and shall obtain the approval of its tax
189.27increment financing plan by the municipality before the authority may use tax increment
189.28financing. The municipality shall approve the tax increment financing plan only after a
189.29public hearing thereon after published notice in a newspaper of general circulation in the
189.30municipality at least once not less than ten days nor more than 30 days prior to the date
189.31of the hearing. The published notice must include a map of the area of the district from
189.32which increments may be collected and, if the project area includes additional area, a map
189.33of the project area in which the increments may be expended. The hearing may be held
189.34before or after the approval or creation of the project or it may be held in conjunction with
189.35a hearing to approve the project.
190.1    (b) Before or at the time of approval of the tax increment financing plan, the
190.2municipality shall make the following findings, and shall set forth in writing the reasons
190.3and supporting facts for each determination:
190.4    (1) that the proposed tax increment financing district is a redevelopment district, a
190.5renewal or renovation district, a housing district, a soils condition district, soil deficiency
190.6district, or an economic development district; if the proposed district is a redevelopment
190.7district or a renewal or renovation district, the reasons and supporting facts for the
190.8determination that the district meets the criteria of section 469.174, subdivision 10,
190.9paragraph (a), clauses (1) and (2), or subdivision 10a, must be documented in writing
190.10and retained and made available to the public by the authority until the district has been
190.11terminated;
190.12    (2) that, in the opinion of the municipality:
190.13    (i) the proposed development or redevelopment would not reasonably be expected to
190.14occur solely through private investment within the reasonably foreseeable future; and
190.15    (ii) the increased market value of the site that could reasonably be expected to occur
190.16without the use of tax increment financing would be less than the increase in the market
190.17value estimated to result from the proposed development after subtracting the present
190.18value of the projected tax increments for the maximum duration of the district permitted
190.19by the plan. The requirements of this item do not apply if the district is a housing district;
190.20    (3) that the tax increment financing plan conforms to the general plan for the
190.21development or redevelopment of the municipality as a whole;
190.22    (4) that the tax increment financing plan will afford maximum opportunity,
190.23consistent with the sound needs of the municipality as a whole, for the development or
190.24redevelopment of the project by private enterprise;
190.25    (5) that the municipality elects the method of tax increment computation set forth in
190.26section 469.177, subdivision 3, paragraph (b), if applicable; and
190.27(6) that for a redevelopment district, renewal and renovation district, soils condition
190.28district, or soil deficiency district established by the authority in a mining reclamation
190.29project area, the reasons and supporting facts for the determination that the mining
190.30reclamation project area meets the requirements under section 469.174, subdivision 30,
190.31must be documented in writing and retained and made available to the public by the
190.32authority until two years after the district is decertified. These findings must have been
190.33made and documented no more than ten years before approval of the tax increment
190.34financing plan for the district.
190.35    (c) When the municipality and the authority are not the same, the municipality shall
190.36approve or disapprove the tax increment financing plan within 60 days of submission by the
191.1authority. When the municipality and the authority are not the same, the municipality may
191.2not amend or modify a tax increment financing plan except as proposed by the authority
191.3pursuant to subdivision 4. Once approved, the determination of the authority to undertake
191.4the project through the use of tax increment financing and the resolution of the governing
191.5body shall be conclusive of the findings therein and of the public need for the financing.
191.6    (d) For a district that is subject to the requirements of paragraph (b), clause (2),
191.7item (ii), the municipality's statement of reasons and supporting facts must include all of
191.8the following:
191.9    (1) an estimate of the amount by which the market value of the site will increase
191.10without the use of tax increment financing;
191.11    (2) an estimate of the increase in the market value that will result from the
191.12development or redevelopment to be assisted with tax increment financing; and
191.13    (3) the present value of the projected tax increments for the maximum duration of
191.14the district permitted by the tax increment financing plan.
191.15    (e) For purposes of this subdivision, "site" means the parcels on which the
191.16development or redevelopment to be assisted with tax increment financing will be located.
191.17EFFECTIVE DATE.This section is effective for districts for which the request for
191.18certification is made after April 30, 2013.

191.19    Sec. 5. Minnesota Statutes 2012, section 469.176, subdivision 1b, is amended to read:
191.20    Subd. 1b. Duration limits; terms. (a) No tax increment shall in any event be
191.21paid to the authority:
191.22(1) after 15 years after receipt by the authority of the first increment for a renewal
191.23and renovation district;
191.24(2) after 20 years after receipt by the authority of the first increment for a soils
191.25condition district or a soil deficiency district;
191.26(3) after eight years after receipt by the authority of the first increment for an
191.27economic development district;
191.28(4) for a housing district, a compact development district, or a redevelopment
191.29district, after 25 years from the date of receipt by the authority of the first increment.
191.30(b) For purposes of determining a duration limit under this subdivision or subdivision
191.311e that is based on the receipt of an increment, any increments from taxes payable in the year
191.32in which the district terminates shall be paid to the authority. This paragraph does not affect
191.33a duration limit calculated from the date of approval of the tax increment financing plan or
191.34based on the recovery of costs or to a duration limit under subdivision 1c. This paragraph
191.35does not supersede the restrictions on payment of delinquent taxes in subdivision 1f.
192.1(c) An action by the authority to waive or decline to accept an increment has no
192.2effect for purposes of computing a duration limit based on the receipt of increment under
192.3this subdivision or any other provision of law. The authority is deemed to have received an
192.4increment for any year in which it waived or declined to accept an increment, regardless
192.5of whether the increment was paid to the authority.
192.6(d) Receipt by a hazardous substance subdistrict of an increment as a result of a
192.7reduction in original net tax capacity under section 469.174, subdivision 7, paragraph
192.8(b), does not constitute receipt of increment by the overlying district for the purpose of
192.9calculating the duration limit under this section.
192.10EFFECTIVE DATE.This section is effective for districts for which the request for
192.11certification is made after April 30, 2013.

192.12    Sec. 6. Minnesota Statutes 2012, section 469.176, subdivision 4b, is amended to read:
192.13    Subd. 4b. Soils condition districts. Revenue derived from Tax increment from a
192.14soils condition district may be used only to (1) acquire parcels on which the improvements
192.15described in clause (2) will occur; (2) pay for the cost of removal or remedial action; and
192.16(3) pay for the administrative expenses of the authority allocable to the district, including
192.17the cost of preparation of the development action response plan. For a soils condition
192.18district located in a mining reclamation project area, tax increments may also be expended
192.19on the additional cost of public improvements directly caused by the removal or remedial
192.20action and located within the mining reclamation project area.
192.21EFFECTIVE DATE.This section is effective for districts for which the request for
192.22certification is made after April 30, 2013.

192.23    Sec. 7. Minnesota Statutes 2012, section 469.176, subdivision 4c, is amended to read:
192.24    Subd. 4c. Economic development districts. (a) Revenue derived from tax increment
192.25from an economic development district may not be used to provide improvements, loans,
192.26subsidies, grants, interest rate subsidies, or assistance in any form to developments
192.27consisting of buildings and ancillary facilities, if more than 15 percent of the buildings and
192.28facilities (determined on the basis of square footage) are used for a purpose other than:
192.29(1) the manufacturing or production of tangible personal property, including
192.30processing resulting in the change in condition of the property;
192.31(2) warehousing, storage, and distribution of tangible personal property, excluding
192.32retail sales;
192.33(3) research and development related to the activities listed in clause (1) or (2);
193.1(4) telemarketing if that activity is the exclusive use of the property;
193.2(5) tourism facilities; or
193.3(6) qualified border retail facilities; or
193.4(7) space necessary for and related to the activities listed in clauses (1) to (6) (5).
193.5(b) Notwithstanding the provisions of this subdivision, revenues derived from tax
193.6increment from an economic development district may be used to provide improvements,
193.7loans, subsidies, grants, interest rate subsidies, or assistance in any form for up to 15,000
193.8square feet of any separately owned commercial facility located within the municipal
193.9jurisdiction of a small city, if the revenues derived from increments are spent only to
193.10assist the facility directly or for administrative expenses, the assistance is necessary to
193.11develop the facility, and all of the increments, except those for administrative expenses,
193.12are spent only for activities within the district.
193.13(c) A city is a small city for purposes of this subdivision if the city was a small city
193.14in the year in which the request for certification was made and applies for the rest of
193.15the duration of the district, regardless of whether the city qualifies or ceases to qualify
193.16as a small city.
193.17(d) Notwithstanding the requirements of paragraph (a) and the finding requirements
193.18of section 469.174, subdivision 12, tax increments from an economic development district
193.19may be used to provide improvements, loans, subsidies, grants, interest rate subsidies, or
193.20assistance in any form to developments consisting of buildings and ancillary facilities, if
193.21all the following conditions are met:
193.22(1) the municipality finds that the project will create or retain jobs in this state,
193.23including construction jobs, and that construction of the project would not have
193.24commenced before July 1, 2012 June 30, 2014, without the authority providing assistance
193.25under the provisions of this paragraph;
193.26(2) construction of the project begins no later than July 1, 2012 June 30, 2014;
193.27(3) the request for certification of the district is made no later than June 30, 2012
193.28 December 31, 2014; and
193.29(4) for development of housing under this paragraph, the construction must begin
193.30before January 1, 2012.
193.31The provisions of this paragraph may not be used to assist housing that is developed
193.32to qualify under section 469.1761, subdivision 2 or 3, or similar requirements of other law,
193.33if construction of the project begins later than July 1, 2011.
193.34EFFECTIVE DATE.This section is effective the day following final enactment.

193.35    Sec. 8. Minnesota Statutes 2012, section 469.176, subdivision 4m, is amended to read:
194.1    Subd. 4m. Temporary authority to stimulate construction. (a) Notwithstanding
194.2the restrictions in any other subdivision of this section or any other law to the contrary,
194.3except the requirement to pay bonds to which the increments are pledged and the
194.4provisions of subdivisions 4g and 4h, the authority may spend tax increments for one or
194.5more of the following purposes:
194.6(1) to provide improvements, loans, interest rate subsidies, or assistance in any
194.7form to private development consisting of the construction or substantial rehabilitation
194.8of buildings and ancillary facilities, if doing so will create or retain jobs in this state,
194.9including construction jobs, and that the construction commences before July 1, 2012June
194.1030, 2014, and would not have commenced before that date without the assistance; or
194.11(2) to make an equity or similar investment in a corporation, partnership, or limited
194.12liability company that the authority determines is necessary to make construction of a
194.13development that meets the requirements of clause (1) financially feasible.
194.14(b) The authority may undertake actions under the authority of this subdivision only
194.15after approval by the municipality of a written spending plan that specifically authorizes
194.16the authority to take the actions. The spending plan must contain a detailed description
194.17of each action to be undertaken. The municipality shall approve the spending plan only
194.18after a public hearing after published notice in a newspaper of general circulation in
194.19the municipality at least once, not less than ten days nor more than 30 days prior to the
194.20date of the hearing.
194.21(c) The authority to spend tax increments under this subdivision expires December
194.2231, 2012 December 31, 2014.
194.23(d) For a development consisting of housing, the authority to spend tax increments
194.24under this subdivision expires December 31, 2011, and construction must commence
194.25before July 1, 2011, except the authority to spend tax increments on market rate housing
194.26developments under this subdivision expires July 31, 2012, and construction must
194.27commence before January 1, 2012.
194.28EFFECTIVE DATE.This section is effective the day following final enactment
194.29and applies to all tax increment financing districts, regardless of when the request for
194.30certification was made. The amendments to paragraph (b) apply to projects approved
194.31after the day following final enactment.

194.32    Sec. 9. Minnesota Statutes 2012, section 469.176, is amended by adding a subdivision
194.33to read:
195.1    Subd. 4n. Soil deficiency district. Tax increments from a soil deficiency district
195.2may only be used to pay for the following costs for activities located within the mining
195.3reclamation project area:
195.4(1) acquisition of parcels on which the improvements described in clause (2) will
195.5occur;
195.6(2) the cost of correcting the unusual terrain or soil deficiencies and the additional
195.7cost of installing public improvements directly caused by the deficiencies;
195.8(3) administrative expenses of the authority allocable to the district; and
195.9(4) costs described in subdivision 4j for the district, if these payments do not exceed
195.1025 percent of the tax increment from the district.
195.11EFFECTIVE DATE.This section is effective for districts for which the request for
195.12certification is made after April 30, 2013.

195.13    Sec. 10. Minnesota Statutes 2012, section 469.176, subdivision 6, is amended to read:
195.14    Subd. 6. Action required. (a) If, after four years from the date of certification of
195.15the original net tax capacity of the tax increment financing district pursuant to section
195.16469.177 , no demolition, rehabilitation, or renovation of property or other site preparation,
195.17including qualified improvement of a street adjacent to a parcel but not installation
195.18of utility service including sewer or water systems, has been commenced on a parcel
195.19located within a tax increment financing district by the authority or by the owner of the
195.20parcel in accordance with the tax increment financing plan, no additional tax increment
195.21may be taken from that parcel, and the original net tax capacity of that parcel shall be
195.22excluded from the original net tax capacity of the tax increment financing district. If the
195.23authority or the owner of the parcel subsequently commences demolition, rehabilitation,
195.24or renovation or other site preparation on that parcel including qualified improvement of
195.25a street adjacent to that parcel, in accordance with the tax increment financing plan, the
195.26authority shall certify to the county auditor that the activity has commenced, and the
195.27county auditor shall certify the net tax capacity thereof as most recently certified by the
195.28commissioner of revenue and add it to the original net tax capacity of the tax increment
195.29financing district. The county auditor must enforce the provisions of this subdivision. The
195.30authority must submit to the county auditor evidence that the required activity has taken
195.31place for each parcel in the district. The evidence for a parcel must be submitted by
195.32February 1 of the fifth year following the year in which the parcel was certified as included
195.33in the district. For purposes of this subdivision, qualified improvements of a street are
195.34limited to (1) construction or opening of a new street, (2) relocation of a street, and (3)
195.35substantial reconstruction or rebuilding of an existing street.
196.1(b) For districts which were certified on or after January 1, 2005, and before April
196.220, 2009, the four-year period under paragraph (a) is increased to six years deemed to end
196.3on December 31, 2016.
196.4EFFECTIVE DATE.This section is effective the day following final enactment
196.5and applies to districts certified on or after January 1, 2005, and before April 20, 2009.

196.6    Sec. 11. Minnesota Statutes 2012, section 469.1763, subdivision 3, is amended to read:
196.7    Subd. 3. Five-year Ten-year rule. (a) Revenues derived from tax increments are
196.8considered to have been expended on an activity within the district under subdivision 2
196.9only if one of the following occurs:
196.10(1) before or within five ten years after certification of the district, the revenues are
196.11actually paid to a third party with respect to the activity;
196.12(2) bonds, the proceeds of which must be used to finance the activity, are issued and
196.13sold to a third party before or within five ten years after certification, the revenues are
196.14spent to repay the bonds, and the proceeds of the bonds either are, on the date of issuance,
196.15reasonably expected to be spent before the end of the later of (i) the five-year ten-year
196.16 period, or (ii) a reasonable temporary period within the meaning of the use of that term
196.17under section 148(c)(1) of the Internal Revenue Code, or are deposited in a reasonably
196.18required reserve or replacement fund;
196.19(3) binding contracts with a third party are entered into for performance of the
196.20activity before or within five ten years after certification of the district and the revenues
196.21are spent under the contractual obligation;
196.22(4) costs with respect to the activity are paid before or within five ten years after
196.23certification of the district and the revenues are spent to reimburse a party for payment
196.24of the costs, including interest on unreimbursed costs; or
196.25(5) expenditures are made for housing purposes as permitted by subdivision 2,
196.26paragraphs (b) and (d), or for public infrastructure purposes within a zone as permitted
196.27by subdivision 2, paragraph (e).
196.28(b) For purposes of this subdivision, bonds include subsequent refunding bonds if
196.29the original refunded bonds meet the requirements of paragraph (a), clause (2).
196.30(c) For a redevelopment district or a renewal and renovation district certified after
196.31June 30, 2003, and before April 20, 2009, the five-year periods described in paragraph
196.32(a) are extended to ten years after certification of the district. This extension is provided
196.33primarily to accommodate delays in development activities due to unanticipated economic
196.34circumstances.
197.1(d) If the authority so elects in the tax increment financing plan for a redevelopment
197.2district, renewal and renovation district, soils condition district, or soil deficiency district
197.3located in a mining reclamation project area, the ten-year periods described in paragraph
197.4(a) do not apply.
197.5EFFECTIVE DATE.This section is effective for districts certified after June 30,
197.62003.

197.7    Sec. 12. Minnesota Statutes 2012, section 469.1763, subdivision 4, is amended to read:
197.8    Subd. 4. Use of revenues for decertification. (a) In each year beginning with the
197.9sixth 11th year following certification of the district, if the applicable in-district percent of
197.10the revenues derived from tax increments paid by properties in the district exceeds the
197.11amount of expenditures that have been made for costs permitted under subdivision 3, an
197.12amount equal to the difference between the in-district percent of the revenues derived from
197.13tax increments paid by properties in the district and the amount of expenditures that have
197.14been made for costs permitted under subdivision 3 must be used and only used to pay or
197.15defease the following or be set aside to pay the following:
197.16(1) outstanding bonds, as defined in subdivision 3, paragraphs (a), clause (2), and (b);
197.17(2) contracts, as defined in subdivision 3, paragraph (a), clauses (3) and (4);
197.18(3) credit enhanced bonds to which the revenues derived from tax increments are
197.19pledged, but only to the extent that revenues of the district for which the credit enhanced
197.20bonds were issued are insufficient to pay the bonds and to the extent that the increments
197.21from the applicable pooling percent share for the district are insufficient; or
197.22(4) the amount provided by the tax increment financing plan to be paid under
197.23subdivision 2, paragraphs (b), (d), and (e).
197.24(b) The district must be decertified and the pledge of tax increment discharged
197.25when the outstanding bonds have been defeased and when sufficient money has been set
197.26aside to pay, based on the increment to be collected through the end of the calendar year,
197.27the following amounts:
197.28(1) contractual obligations as defined in subdivision 3, paragraph (a), clauses (3)
197.29and (4);
197.30(2) the amount specified in the tax increment financing plan for activities qualifying
197.31under subdivision 2, paragraph (b), that have not been funded with the proceeds of bonds
197.32qualifying under paragraph (a), clause (1); and
197.33(3) the additional expenditures permitted by the tax increment financing plan for
197.34housing activities under an election under subdivision 2, paragraph (d), that have not been
197.35funded with the proceeds of bonds qualifying under paragraph (a), clause (1).
198.1(c) If the authority so elects in the tax increment financing plan for a redevelopment
198.2district, renewal and renovation district, soils condition district, or soil deficiency district
198.3located in a mining reclamation project area, the provisions of this section do not apply.
198.4EFFECTIVE DATE.This section is effective for districts certified after June 30,
198.52003.

198.6    Sec. 13. Minnesota Statutes 2012, section 469.177, subdivision 1a, is amended to read:
198.7    Subd. 1a. Original local tax rate. At the time of the initial certification of the
198.8original net tax capacity for a tax increment financing district or a subdistrict, the county
198.9auditor shall certify the original local tax rate that applies to the district or subdistrict. The
198.10original local tax rate is the sum of all the local tax rates, excluding that portion of the
198.11school rate attributable to the general education levy under section 126C.13, that apply
198.12to a property in the district or subdistrict. The local tax rate to be certified is the rate in
198.13effect for the same taxes payable year applicable to the tax capacity values certified as
198.14the district's or subdistrict's original tax capacity. The resulting tax capacity rate is the
198.15original local tax rate for the life of the district or subdistrict.
198.16EFFECTIVE DATE.This section is effective for districts for which the request for
198.17certification is made after April 15, 2013.

198.18    Sec. 14. Laws 2008, chapter 366, article 5, section 34, as amended by Laws 2009,
198.19chapter 88, article 5, section 11, is amended to read:
198.20    Sec. 34. CITY OF OAKDALE; ORIGINAL TAX CAPACITY PARCELS
198.21DEEMED OCCUPIED.
198.22    (a) The provisions of this section apply to redevelopment tax increment financing
198.23districts created by the Housing and Redevelopment Authority in and for the city of
198.24Oakdale in the areas comprised of the parcels with the following parcel identification
198.25numbers: (1) 3102921320053; 3102921320054; 3102921320055; 3102921320056;
198.263102921320057; 3102921320058; 3102921320062; 3102921320063; 3102921320059;
198.273102921320060; 3102921320061; 3102921330005; and 3102921330004; and (2)
198.282902921330001 and 2902921330005.
198.29    (b) For a district subject to this section, the Housing and Redevelopment Authority
198.30may, when requesting certification of the original tax capacity of the district under
198.31Minnesota Statutes, section 469.177, elect to have the original tax capacity of the district
198.32be certified as the tax capacity of the land.
199.1    (c) The authority to request certification of a district under this section expires on
199.2July 1, 2013.
199.3    (a) Parcel numbers 3102921320054, 3102921320055, 3102921320056,
199.43102921320057, 3102921320061, and 3102921330004 are deemed to meet the
199.5requirements of Minnesota Statutes, section 469.174, subdivision 10, paragraph (d),
199.6notwithstanding any contrary provisions of that paragraph, if the following conditions
199.7are met:
199.8    (1) a building located on any part of each of the specified parcels was demolished after
199.9the Housing and Redevelopment Authority for the city of Oakdale adopted a resolution
199.10under Minnesota Statutes, section 469.174, subdivision 10, paragraph (d), clause (3);
199.11    (2) the building was removed either by the authority, by a developer under a
199.12development agreement with the Housing and Redevelopment Authority for the city of
199.13Oakdale, or by the owner of the property without entering into a development agreement
199.14with the Housing and Redevelopment Authority for the city of Oakdale; and
199.15    (3) the request for certification of the parcel as part of a district is filed with the
199.16county auditor by December 31, 2017.
199.17    (b) The provisions of this section allow an election by the authority for the parcels
199.18deemed occupied under paragraph (a), notwithstanding the provisions of Minnesota
199.19Statutes, sections 469.174, subdivision 10, paragraph (d), and 469.177, subdivision 1,
199.20paragraph (f).
199.21EFFECTIVE DATE.This section is effective upon compliance by the governing
199.22body of the city of Oakdale with the requirements of Minnesota Statutes, section 645.021,
199.23subdivision 3.

199.24    Sec. 15. CITY OF MINNEAPOLIS; STREETCAR FINANCING.
199.25    Subdivision 1. Definitions. (a) For purposes of this section, the following terms
199.26have the meanings given them.
199.27(b) "City" means the city of Minneapolis.
199.28(c) "County" means Hennepin County.
199.29(d) "District" means the areas certified by the city under subdivision 2 for collection
199.30of value capture taxes.
199.31(e) "Project area" means the area including one city block on either side of a streetcar
199.32line designated by the city to serve the downtown and adjacent neighborhoods of the city.
199.33    Subd. 2. Authority to establish district. (a) The governing body of the city may,
199.34by resolution, establish a value capture district consisting of some or all of the following
200.1parcels located within the city, as described in the resolution: 27-029-24-31-0130;
200.222-029-24-41-0008; 22-029-24-44-0038; 22-029-24-44-0035; 22-029-24-44-0036;
200.322-029-24-44-0037; and 22-029-24-42-0051.
200.4(b) The city may establish the district and the project area only after holding a public
200.5hearing on its proposed creation after publishing notice of the hearing and the proposal at
200.6least once not less than ten days nor more than 30 days before the date of the hearing.
200.7    Subd. 3. Calculation of value capture district; administrative provisions. (a) If
200.8the city establishes a value capture district under subdivision 2, the city shall request the
200.9county auditor to certify the district for calculation of the district's tax revenues.
200.10(b) For purposes of calculating the tax revenues of the district, the county auditor
200.11shall treat the district as if it were a request for certification of a tax increment financing
200.12district under the provisions of Minnesota Statutes, section 469.177, subdivision 1,
200.13and shall calculate the tax revenues of the district for each year of its duration under
200.14subdivision 4 as equaling the amount of tax increment under Minnesota Statutes, section
200.15469.177, subdivisions 1, 2, and 3. The city shall provide the county auditor with the
200.16necessary information to certify the district, including the option for calculating revenues
200.17derived from the areawide tax rate under Minnesota Statutes, chapter 473F.
200.18(c) The county auditor shall pay to the city at the same times provided for settlement
200.19of taxes and payment of tax increments the tax revenues of the district. The city must use
200.20the tax revenues as provided under subdivision 4.
200.21    Subd. 4. Permitted uses of district tax revenues. (a) In addition to paying for
200.22reasonable administrative costs of the district, the city may spend tax revenues of the
200.23district for property acquisition, improvements, and equipment to be used for operations
200.24within the project area, along with related costs, for:
200.25(1) planning, design, and engineering services related to the construction of the
200.26streetcar line;
200.27(2) acquiring property for, constructing, and installing a streetcar line;
200.28(3) acquiring and maintaining equipment and rolling stock and related facilities, such
200.29as maintenance facilities, which need not be located in the project area;
200.30(4) acquiring, constructing, or improving transit stations; and
200.31(5) acquiring or improving public space, including the construction and installation
200.32of improvements to streets and sidewalks, decorative lighting and surfaces, and plantings
200.33related to the streetcar line.
200.34(b) The city may issue bonds or other obligations under Minnesota Statutes, chapter
200.35475, without an election, to fund acquisition or improvement of property of a capital
201.1nature authorized by this section, including any costs of issuance. The city may also issue
201.2bonds or other obligations to refund those bonds or obligations. Payment of principal
201.3and interest on the bonds or other obligations issued under this paragraph is a permitted
201.4use of the district's tax revenues.
201.5(c) Tax revenues of the district may not be used for the operation of the streetcar line.
201.6    Subd. 5. Duration of the district. A district established under this section is limited
201.7to the lesser of (1) 25 years of tax revenues, or (2) the time necessary to collect tax revenues
201.8equal to the amount of the capital costs permitted under subdivision 4 or the amount needed
201.9to pay or defease bonds or other obligations issued under subdivision 4, whichever is later.
201.10EFFECTIVE DATE.This section is effective the day following final enactment.

201.11    Sec. 16. DAKOTA COUNTY COMMUNITY DEVELOPMENT AGENCY; TAX
201.12INCREMENT FINANCING DISTRICT.
201.13    Subdivision 1. Authorization. Notwithstanding the provisions of any other law,
201.14the Dakota County Community Development Agency may establish a redevelopment tax
201.15increment financing district comprised of the properties that (1) were included in the
201.16CDA 10 Robert and South Street district in the city of West St. Paul, and (2) were not
201.17decertified before July 1, 2012. The district created under this section terminates no later
201.18than December 31, 2018.
201.19    Subd. 2. Special rules. The requirements for qualifying a redevelopment district
201.20under Minnesota Statutes, section 469.174, subdivision 10, do not apply to parcels located
201.21within the district. Minnesota Statutes, section 469.176, subdivision 4j, do not apply to the
201.22district. The original tax capacity of the district is $93,239.
201.23    Subd. 3. Authorized expenditures. Tax increment from the district may be
201.24expended to pay for any eligible activities authorized by Minnesota Statutes, chapter 469,
201.25within the redevelopment area that includes the district provided that the boundaries of the
201.26redevelopment area may not be expanded to add new area after April 1, 2013. All such
201.27expenditures are deemed to be activities within the district under Minnesota Statutes,
201.28section 469.1763, subdivisions 2 and 4.
201.29    Subd. 4. Adjusted net tax capacity. The captured tax capacity of the district must
201.30be included in the adjusted net tax capacity of the city, county, and school district for the
201.31purposes of determining local government aid, education aid, and county program aid.
202.1The county auditor shall report to the commissioner of revenue the amount of the captured
202.2tax capacity for the district at the time the assessment abstracts are filed.
202.3EFFECTIVE DATE.This section is effective upon compliance by the governing
202.4body of the Dakota County Community Development Agency with the requirements of
202.5Minnesota Statutes, section 645.021, subdivision 3.

202.6    Sec. 17. ST. CLOUD; TAX INCREMENT FINANCING.
202.7    The request for certification of Tax Increment District No. 2, commonly referred to
202.8as the Norwest District, in the city of St. Cloud is deemed to have been made on or after
202.9August 1, 1979, and before July 1, 1982. Revenues derived from tax increment for that
202.10district must be treated for purposes of any law as revenue of a tax increment financing
202.11district for which the request for certification was made during that time period.
202.12EFFECTIVE DATE.This section is effective upon approval by the governing
202.13body of the city of St. Cloud and compliance with Minnesota Statutes, section 645.021,
202.14subdivision 3.

202.15    Sec. 18. CITY OF ELY; TAX INCREMENT FINANCING.
202.16    Subdivision 1. Extension of district. Notwithstanding Minnesota Statutes, section
202.17469.176, subdivision 1b, or any other law, the city of Ely may collect tax increment from
202.18Tax Increment Financing District No. 1 through December 31, 2021. Increments from the
202.19district may only be used to pay binding obligations and administrative expenses.
202.20    Subd. 2. Binding obligations. For purposes of this section, "binding obligations"
202.21means the binding contractual or debt obligation of Tax Increment Financing District
202.22No. 1 entered into before January 1, 2013.
202.23    Subd. 3. Expenditures outside district. Notwithstanding Minnesota Statutes,
202.24section 469.1763, subdivision 2, the governing body of the city of Ely may elect to
202.25transfer revenues derived from its Tax Increment Financing District No. 3 to the tax
202.26increment account established under Minnesota Statutes, section 469.177, subdivision
202.275, for Tax Increment Financing District No. 1. The amount that may be transferred is
202.28limited to the lesser of:
202.29(1) $168,000; or
202.30(2) the total amount due on binding obligations and outstanding on that date, less the
202.31amount of increment collected by Tax Increment Financing District No. 1 after December
203.131, 2012, and administrative expenses of Tax Increment Financing District No. 1 incurred
203.2after December 31, 2012.
203.3EFFECTIVE DATE.This section is effective upon approval by the governing
203.4body of the city of Ely, St. Louis County, and Independent School District No. 696, with
203.5the requirements of Minnesota Statutes, sections 469.1782, subdivision 2, and 645.021,
203.6subdivision 3.

203.7    Sec. 19. CITY OF GLENCOE; TAX INCREMENT FINANCING DISTRICT
203.8EXTENSION.
203.9    Subdivision 1. Duration of district. Notwithstanding the provisions of Minnesota
203.10Statutes, section 469.176, subdivision 1b, paragraph (a), clause (4), or any other law to
203.11the contrary, the city of Glencoe may collect tax increments from tax increment financing
203.12district No. 4 (McLeod County District No. 007) through December 31, 2023, subject to
203.13the conditions in subdivision 2.
203.14    Subd. 2. Exclusive use of revenues. (a) All tax increments derived from tax
203.15increment financing district No. 4 (McLeod County District No. 007) that are collected
203.16after December 31, 2013, must be used only to pay debt service on or to defease bonds that
203.17were outstanding on January 1, 2013, and that were issued to finance improvements serving:
203.18(1) tax increment financing district No. 14 (McLeod County District No. 033)
203.19(Downtown);
203.20(2) tax increment financing district No. 15 (McLeod County District No. 035)
203.21(Industrial Park); and
203.22(3) benefited properties as further described in proceedings related to the city's series
203.232007A bonds, dated September 1, 2007, and any bonds issued to refund those bonds.
203.24(b) Increment may also be used to pay debt service on or to defease bonds issued to
203.25refund the bonds described in paragraph (a), if the refunding bonds do not increase the
203.26present value of debt service due on the refunded bonds when the refunding is closed.
203.27(c) When the bonds described in paragraphs (a) and (b) have been paid or defeased,
203.28the district must be decertified and any remaining increment returned to the city, county,
203.29and school district as provided by Minnesota Statutes, section 469.176, subdivision 2,
203.30paragraph (c), clause (4).
203.31EFFECTIVE DATE.This section is effective upon compliance by the governing
203.32body of the city of Glencoe, McLeod County, and Independent School District No. 2859
204.1with the requirements of Minnesota Statutes, sections 469.1782, subdivision 2, and
204.2645.021, subdivision 3.

204.3    Sec. 20. CITY OF BLOOMINGTON; TAX INCREMENT FINANCING.
204.4    Subdivision 1. Addition of property to Tax Increment Financing District
204.5No. 1-G. (a) Notwithstanding the provisions of Minnesota Statutes, section 469.175,
204.6subdivision 4, or any other law to the contrary, the governing bodies of the Port Authority
204.7of the city of Bloomington and the city of Bloomington may elect to eliminate the real
204.8property north of the existing building line on Lot 1, Block 1, Mall of America 7th
204.9Addition, exclusive of Lots 2 and 3 from Tax Increment Financing District No. 1-C
204.10within Industrial Development District No. 1 Airport South in the city of Bloomington,
204.11Minnesota, and expand the boundaries of Tax Increment Financing District No. 1-G
204.12to include that property.
204.13    (b) If the city elects to transfer parcels under this authority, the county auditor shall
204.14transfer the original tax capacity of the affected parcels from Tax Increment Financing
204.15District No. 1-C to Tax Increment Financing District No. 1-G.
204.16EFFECTIVE DATE.This section is effective upon compliance of the governing
204.17body of the city of Bloomington with the requirements of Minnesota Statutes, section
204.18645.021, subdivision 3.

204.19ARTICLE 9
204.20DESTINATION MEDICAL CENTER

204.21    Section 1. Minnesota Statutes 2012, section 297A.71, is amended by adding a
204.22subdivision to read:
204.23    Subd. 45. Construction materials, public infrastructure related to the
204.24destination medical center. Materials and supplies used in, and equipment incorporated
204.25into, the construction and improvement of publicly owned buildings and infrastructure
204.26included in the development plan adopted under section 469.42, and financed with public
204.27funds, are exempt.
204.28EFFECTIVE DATE.This section is effective for sales and purchases made after
204.29June 30, 2015.

204.30    Sec. 2. [469.40] DEFINITIONS.
204.31    Subdivision 1. Application. For the purposes of section 469.40 to 469.46, the terms
204.32defined in this section have the meanings given them.
205.1    Subd. 2. Authority. "Authority" means the Destination Medical Center Authority
205.2established in section 469.41.
205.3    Subd. 3. Board. "Board" means the governing body of the Destination Medical
205.4Center Authority.
205.5    Subd. 4. City. "City" means the city of Rochester.
205.6    Subd. 5. County. "County" means Olmsted County.
205.7    Subd. 6. Destination medical center development district. "Destination medical
205.8center development district" or "development district" means a geographic area in the
205.9city identified in the adopted authority development plan in which public infrastructure
205.10projects are implemented.
205.11    Subd. 7. Development plan. "Development plan" means the plan adopted by the
205.12authority under section 469.46.
205.13    Subd. 8. Medical business entity. "Medical business entity" means a medical
205.14business entity with its principal place of business in the city that, as of the effective date
205.15of this section, together with all business entities of which it is the sole member or sole
205.16shareholder, collectively employs more than 30,000 persons in the state.
205.17    Subd. 9. Public infrastructure project. (a) "Public infrastructure project" means
205.18a project financed in part or whole with public money in order to support the medical
205.19business entity's development plans, as identified in the adopted development plan. A
205.20project may be to:
205.21(1) acquire real property and other assets associated with the real property;
205.22(2) demolish, repair, or rehabilitate buildings;
205.23(3) remediate land and buildings as required to prepare the property for acquisition
205.24or development;
205.25(4) install, construct, or reconstruct elements of public infrastructure required to
205.26support the overall development of the destination medical center development district,
205.27including, but not limited to, streets, roadways, utilities systems and related facilities,
205.28utility relocations and replacements, network and communication systems, streetscape
205.29improvements, drainage systems, sewer and water systems, subgrade structures and
205.30associated improvements, landscaping, façade construction and restoration, wayfinding
205.31and signage, and other components of community infrastructure;
205.32(5) acquire, construct or reconstruct, and equip parking facilities and other facilities
205.33to encourage intermodal transportation and public transit;
205.34(6) install, construct or reconstruct, furnish, and equip parks, cultural, and
205.35recreational facilities, facilities to promote tourism and hospitality, conferencing and
205.36conventions, broadcast and related multimedia infrastructure;
206.1(7) make related site improvements, including, without limitation, excavation, earth
206.2retention, soil stabilization and correction, site improvements to support the destination
206.3medical center development district; and
206.4(8) prepare land for private development and to sell or lease land.
206.5    (b) A public infrastructure project is not a business subsidy under section 116J.993.

206.6    Sec. 3. [469.41] AUTHORITY ESTABLISHMENT; BOARD MEMBERS;
206.7TERMS, VACANCIES, PAY, CONTINUITY.
206.8    Subdivision 1. Destination Medical Center Authority; establishment. The
206.9Destination Medical Center Authority is established. The authority's governing board
206.10shall have eight members, and a quorum of the board consists of at least six members.
206.11Four members are appointed by the governor and confirmed by the senate. One member
206.12shall represent the county and is appointed by the county board of commissioners. Two
206.13members shall represent the city and are appointed by the city council. One member
206.14shall represent the medical business entity and is appointed by the board of directors of
206.15the medical business entity. A member appointed by the governor must not be a resident
206.16of Rochester. A member must not have a direct or indirect financial interest in the Mayo
206.17Clinic, its subsidiaries, or affiliated businesses, the Destination Medical Center, or any
206.18projects authorized by or under consideration by the authority, except for the member.
206.19This provision does not apply to the member appointed by the medical business entity.
206.20    Subd. 2. Terms; vacancies. The initial eight members shall be appointed by the
206.21first Monday in January 2014. Except as provided in this subdivision, a member's term is
206.22six years. The governor shall make replacement appointments for two of the governor's
206.23appointees by the first Monday in January 2017 and every six years thereafter. The city
206.24council shall make one replacement appointment and the county board of commissioners
206.25shall make its replacement appointment by the first Monday in January 2017 and every
206.26six years thereafter. The medical business entity shall make its replacement appointment
206.27by the first Monday in January 2020 and every six years thereafter. Each member shall
206.28serve until a replacement for the member's seat on the board has been confirmed by the
206.29senate in the case of the governor's appointments. When a member resigns or is removed
206.30for cause, the governor shall fill the vacancy for the balance of the member's term shall
206.31be filled subject to the same confirmation required for an appointment for a full term as
206.32provided in subdivision 1.
206.33    Subd. 3. Chair. The governor shall appoint a chair from the board's membership,
206.34and the chair shall convene the first meeting within two months of senate confirmation of
206.35the governor's appointed members.
207.1    Subd. 4. Pay. Members must be compensated as provided in section 15.0575,
207.2subdivision 3, for each regular or special authority board meeting attended. In addition,
207.3the board members may be reimbursed for actual expenses incurred in doing official
207.4business of the authority. All money paid for compensation or reimbursement must be
207.5paid out of the authority's budget.
207.6    Subd. 5. Removal for cause. A member may be removed by the board for
207.7inefficiency, neglect of duty, or misconduct in office. A member may be removed only
207.8after a hearing of the board. A copy of the charges must be given to the board member at
207.9least ten days before the hearing. The board member must be given an opportunity to be
207.10heard in person or by counsel at the hearing. When written charges have been submitted
207.11against a board member, the board may temporarily suspend the member. If the board finds
207.12that those charges have not been substantiated, the board member shall be immediately
207.13reinstated. If a board member is removed, a record of the proceedings, together with the
207.14charges and findings, shall be filed with the office of the appointing authority.
207.15    Subd. 6. Sunset. The authority shall sunset December 31, 2043. When the authority
207.16sunsets, all right, title, and interest to all assets held by the authority are transferred or
207.17assigned to the city of Rochester.

207.18    Sec. 4. [469.42] CHARACTERISTICS AND JURISDICTION.
207.19    Subdivision 1. Public body characteristics. The authority is a body politic and
207.20corporate and a political subdivision of the state, with the right to sue and be sued in
207.21its own name.
207.22    Subd. 2. Boundaries. The boundary for activities and the use of the powers of
207.23the authority must be within a medical center development district. The authority also
207.24has the power to finance activities outside of a medical center development district but
207.25within the county, if necessary; provided, however, that the financing of activities outside
207.26of a medical center development district but within the county must be included in the
207.27development plan and must be approved by, and subject to the planning, zoning, sanitary
207.28and building laws, ordinances, regulations, and land use plans applicable to, the city,
207.29county, or town in which such activities are undertaken.

207.30    Sec. 5. [469.43] OFFICERS; DUTIES; ORGANIZATIONAL MATTERS.
207.31    Subdivision 1. Bylaws, rules, seal. The authority may adopt bylaws and rules of
207.32procedure and may adopt an official seal.
208.1    Subd. 2. Officers. The authority shall annually elect a treasurer. The authority shall
208.2appoint a secretary and assistant treasurer. The secretary and assistant treasurer need
208.3not, but may, be members of the board.
208.4    Subd. 3. Duties and powers. The officers have the usual duties and powers of their
208.5offices. They may be given other duties and powers by the authority.
208.6    Subd. 4. Treasurer's duties. The treasurer:
208.7(1) shall receive and is responsible for authority money;
208.8(2) is responsible for the acts of the assistant treasurer;
208.9(3) shall disburse authority money by check or electronic procedures;
208.10(4) shall keep an account of the source of all receipts, and the nature, purpose, and
208.11authority of all disbursements; and
208.12(5) shall file the authority's detailed financial statement with its secretary at least
208.13once a year at times set by the authority.
208.14    Subd. 5. Secretary. The secretary shall perform duties as required by the board.
208.15    Subd. 6. Assistant treasurer. The assistant treasurer has the powers and duties of
208.16the treasurer if the treasurer is absent or disabled.
208.17    Subd. 7. Treasurer's bond. The treasurer shall give bond to the state conditioned
208.18for the faithful discharge of official duties. The bond must be approved as to form and
208.19surety by the authority and filed with its secretary. The bond must be for twice the amount
208.20of money likely to be on hand at any one time, as determined at least annually by the
208.21authority, except that the bond must not exceed $300,000.
208.22    Subd. 8. Public money. Authority money is public money.
208.23    Subd. 9. Checks. An authority check must be signed by the treasurer and by one
208.24other officer named by the authority in a resolution. The check must state the name of the
208.25payee and the nature of the claim for which the check is issued.
208.26    Subd. 10. Financial statements; filing with state auditor. The financial statements
208.27of the authority must be prepared, audited, filed, and published or posted in the manner
208.28required for the financial statements of the city. The authority shall employ a certified
208.29public accountant to annually examine and audit its books. The report of the exam and audit
208.30must be filed with the state auditor by June 30 of each year. The state auditor shall review
208.31the report and may accept it or, in the public interest, audit the books of the authority.
208.32    Subd. 11. Meetings. Except at otherwise provided in this chapter, the authority is
208.33subject to chapters 13 and 13D.

208.34    Sec. 6. [469.44] DEPOSITORIES; DEFAULT; COLLATERAL.
209.1    Subdivision 1. Named; bond. Every two years the authority shall name national
209.2or state banks within the state as depositories. Before acting as a depository, a named
209.3bank shall give the authority a bond approved as to form and surety by the authority.
209.4The bond must be conditioned for the safekeeping and prompt repayment of deposits.
209.5The amount of the bond must be at least equal to the maximum sum expected to be on
209.6deposit at any one time.
209.7    Subd. 2. Default; collateral. When authority funds are deposited by the treasurer
209.8in a bonded depository, the treasurer and the surety on the treasurer's official bond are
209.9exempt from liability for the loss of the deposits because of the failure, bankruptcy, or any
209.10other act or default of the depository. The authority may accept assignments of collateral