Sec.

Article 1: Income, Corporate, and Estate and Gift Taxes

Article 1: Individual Income, Corporate Franchise, and Insurance Premium Taxes

Article 2: Federal Update

No comparable provision

Article 1, section 1. Minnesota Business Investment Company tax credit. This section proposes a new section in chapter 116 for a Minnesota Business Investment Company tax credit. The language proposes a credit against the insurance premiums tax for insurance companies that invest in Minnesota small business investment companies. These businesses must be certified by the Commissioner of the Department of Employment and Economic Development (DEED) as meeting the requirements of the law. The certification includes a nonrefundable application fee of $7,500 and an audited balance sheet stating the applicants has an equity capitalization of $500,000 or more. Qualifying businesses must have their headquarters and 80 percent of their employees in Minnesota. When certified by DEED, they must have no more than 100 employees and cannot be engaged in a list of types of businesses, such as providing professional services, banking, real estate development, insurance, oil and gas exploration, gambling, retail sales, or lending money to affiliates. This language changes the amount of the annual management fee from two to one percent of designated capital on an annual basis. The credit equals 80 percent of the qualifying investment. It is limited to the amount of the premiums tax. Qualifying for the credit also exempts the insurance company for the retaliatory tax equal to the credit. The bill caps the total credits at $150 million. The credits are allowed beginning for investments made in tax year 2010, but could not be claimed until the time period outside of the budget window.

Update of administrative tax provisions. Adopts federal tax administrative provisions made between December 31, 2008, and March 31, 2009, that Minnesota references for state tax administration purposes under chapter 289A. The 2009 federal stimulus law was the only federal law enacted in that time period, and did not change federal provisions that Minnesota provisions refer to in chapter 289A.

Effective date: day following final enactment

Article 2, section 1

Identical provision

Tax due; failure to withhold from employee. Provides that if an employer who is required to withhold taxes from the wages of an employee fails to do so as a result of treating the employee as not being an employee, the employer must pay withholding tax equal to three percent of the wages paid to the employee. The employer may not recover tax due under this section from the employee, and the amount paid is not credited against the employee’s liability.

Article 9, section 5

Identical provision

Domestic corporation definitions. Expands the definition of domestic corporation for purposes of the corporate franchise tax to include the following foreign corporations (i.e., corporations or other entities organized under the laws of a foreign country):

} Incorporated in a tax haven (defined in section 4),

} Doing sufficient business in a tax haven to be subject to tax by the tax haven, or

} With 20 percent or more of the average of their property, payroll, and sales in the United States.

Domestic corporations that are part of a unitary business must be included on the combined report. As a result, this will require the income and apportionment factors of these foreign corporations to be reflected in the combined report and will subject them to Minnesota corporate franchise tax. Present Minnesota law excludes all foreign corporations from the combined report, except foreign sales corporations.

Effective date: tax year 2009

No comparable provision

Tax haven. Defines “tax haven” as a list of foreign countries that have been publicly identified by both the Organization of Economic Opportunity and Cooperation (OECD) and by the Internal Revenue Services (based on federal court documents). The commissioner of revenue may add to or delete from this list by administrative rule. Countries qualify as tax havens by having both (1) nominal tax rates or no tax and (2) secrecy policies that restrict the ability of U.S. tax administrators to obtain tax information. The commissioner must remove countries from the list, if the United States enters into a tax treaty or similar agreement with the country that provides for sharing tax information with the Internal Revenue Service.

Effective date: tax year 2009

No comparable provision

Update to federal definition of taxable income. Adopts all of the federal changes to taxable income effective when the federal changes became effective, for tax year 2009 and following years. The one new federal law and important changes were:

The American Recovery and Reinvestment Act of 2009, Public Law 111-5, enacted February 17, 2009, made the following major changes:

} Allows deferral of discharge of indebtedness income resulting from reacquisition of business indebtedness in 2009 and 2010. Instead of being recognized in the tax year in which it is received, the income is deferred and recognized in equal parts from 2014 to 2019 (Minnesota would not conform to this deferral; instead additions to taxable income for individuals and corporations would be required under sections 6 and 8, and corresponding subtractions allowed under sections 7 and 9).

} Allows deduction of motor vehicle sales taxes as an itemized deduction for individuals who choose to deduct state income taxes, and as an additional standard deduction for non-itemizers, for purchases from February 17, 2009, through December 31, 2009 (Minnesota would not conform to this deduction; instead an addition to taxable income would be required under section 6).

} Extends 50 percent bonus depreciation amounts to tax year 2009 (Minnesota would not conform to the extension of bonus depreciation but would retain its current law requirement that taxpayers add-back to taxable income 80 percent of the additional depreciation amount in the first tax year, and then subtract one-fifth of the amount added back in each of the five following tax years).

} Allows deduction of the first $2,400 of unemployment compensation

} Extends the increased section 179 expensing amount and phase-out threshold to tax year 2009 (allows $250,000 of property to be claimed as section 179 expensing, with the allowance phased out dollar-for-dollar for businesses that place more than $800,000 of qualifying property in service during the tax year).

} Extends the carryback period for 2008 net-operating losses for businesses with gross receipts of $15 million or less from two years to five years.

} Reduces the holding period for assets of S corporations that converted from C corporations from ten years to seven years, for tax years 2009 and 2010 only, allowing S corporations to sell assets held more than seven years without being taxed on built-in gains.

} Increases from 50 percent to 75 percent the exclusion for the gain on sale of qualified small business stock held for more than five years for stock acquired between February 18, 2009, and December 31, 2010.

} Extends the definition of qualified higher education expenses that can be paid from section 529 plans to include computer equipment and software for tax years 2009 and 2010 only (excludes software designed for sports, games, or hobbies unless it is predominantly educational in nature).

} Increases the maximum amount of benefit that an employer may exclude from gross income for employee transit and vanpool expenses to equal the amount allowed to be excluded for employee parking expenses, for tax years 2009 and 2010 only.

} Removes the limitation on net operating loss carryforwards and use of built-in losses in the case of an ownership change for manufacturing firms if the ownership change is required under a loan agreement or line of credit entered into with the Treasury Department under the Emergency Economic Stabilization Act of 2008.

} Expands availability of industrial development bonds and tribal economic development bonds, modifies rules relating to interest expenses of financial institutions for tax-exempt income, and exempts private activity bond interest from alternative minimum taxable income (generally for bonds issued in 2009 and 2010).

} Reverses IRS Notice 2008-83, which allowed an acquiring bank to use the built-in losses of an acquired bank to reduce its taxable income without regard to the limits in section 382 of the Internal Revenue Code.

Effective date provides that intent is to include interest paid on Build America Bonds in net income.

Article 2, section 2, similar provision, except no reference in effective date to inclusion of interest on Build America Bonds in net income.

Additions to federal taxable income (FTI) for individuals. Requires the following items to be added to FTI, subjecting this income to Minnesota tax:

} Interest on Minnesota state and local government bonds that are not qualified bonds, as defined in section 13

Additions to federal taxable income (FTI) for individuals.

No comparable provision

} Real and personal property taxes deducted in computing FTI

No comparable provision

} Qualified residence interest (home mortgage interest) deducted in computing FTI

Article 1, section 2, qualified residence interest on a second residence deducted in computing FTI

} Charitable contributions deducted as itemized deductions in computing FTI

No comparable provision

} Motor vehicle sales taxes allowed as an itemized deduction in computing FTI

Article 2, section 3, same provision

} The additional standard deduction amount for motor vehicle sales tax

Article 2, section 3, same provision

Deferred income from the discharge of indebtedness resulting from reacquisition of business indebtedness

Article 2, section 3, same provision

The additions for real and personal property taxes, home mortgage interest, charitable contributions and motor vehicle sales taxes would be limited to the amount that the sum of itemized deductions, less these deductions and the deduction for state income or sales tax, exceeds the standard deduction. Thus, the addition can not be more than total itemized deductions in excess of the standard deduction.

Article 2, section 3, The addition for motor vehicle sales tax is limited to the amount that the sum of itemized deductions, less the motor vehicle sales tax deduction and the deduction for state income or sales tax, exceeds the standard deduction. Thus, the addition can not be more than total itemized deductions in excess of the standard deduction.

This section also ends the addition for the section 179 expensing deduction, conforming to the federal allowance for tax year 2009 and following years.

No comparable provision

Also requires the new additional standard deduction amount for motor vehicle sales taxes to be added to taxable income. Modifies the definition of the standard deduction used in limiting the addition for state income or sales taxes deducted at the federal level to include the new additional amount for motor vehicle sales taxes.

Effective date: tax year 2009

Article 2, section 3, same provision

Subtractions from FTI for individuals. Eliminates the following subtractions from FTI:

} K-12 education expenses

} Elderly exclusion

} Capital gains realized by an insolvent farmer and used to pay off debt

} Charitable contribution subtraction for nonitemizers

} Federal credit for small ethanol producers (obsolete)

} Foreign subnational taxes in excess of the federal foreign tax credit

} Income earned in a JOBZ (capital gain, rent, and business income)

} Organ donor expenses

} National service (Americorps) education awards

Subtractions from FTI for individuals.

No comparable provision for all

Also allows subtraction of discharge of indebtedness income included in federal taxable income that was included in Minnesota taxable income in an earlier year as a result of the addition required in section 6, clause 16.

Effective date: tax year 2009

Article 2, section 4, same provision

No comparable provision

Article 1, section 3, subtraction from FTI of ten percent of a taxpayer’s total Minnesota nonpassive pass-through income.

Additions to FTI for corporations. Repeals the corporate franchise tax additions to federal taxable income for foreign operating corporations’ (FOCs) deemed dividends and for section 179 expensing. This, in combination with the general update in section 5, will conform to the federal section 179 rules for corporations. Section 30 repeals FOCs. This provision eliminates the corresponding addition to income for the deemed dividend.

Additions to FTI for corporations.

No comparable provisions

Corrects a reference enacted in Laws 2009, chapter 12, to subpart F income.

No comparable provision

Also requires addition of deferred income from the discharge of indebtedness resulting from reacquisition of business indebtedness.

Effective date: tax year 2009

Article 2, section 5, same provision.

Subtractions from FTI for corporations. Repeals the subtraction from federal taxable income for foreign royalties.

Subtractions from FTI for corporations

No comparable provision

Effective date: tax year 2009

Article 2, section 6, same provision.

Corporate exemptions for JOBZ, BHSIZ, and IEDZ; Minnesota development subsidies. Repeals the corporate franchise exemptions for the JOBZ, BHSIZ, and IEDZ programs. In addition, it imposes the corporate franchise tax on Minnesota development subsidies (defined in section 12).

Effective date: tax year 2010

No comparable provision

Update to other references to the Internal Revenue Code in chapter 290. Adopts federal changes to federal adjusted gross income used for computing individual alternative minimum tax and determining withholding on wages. FAGI also is the starting point for calculating household income which is used to compute the dependent care and K-12 education credit for tax year 2009 and following years. The main changes to federal adjusted gross income are described in section 5.

Article 2, section 7, same provision.

Minnesota development subsidies. Defines “Minnesota development subsidies” (added to Minnesota taxable income and to alternative minimum taxable income for corporate franchise tax purposes under sections 10 and 25). These amounts are defined as the greater of:

} One-half of payments that the taxpayer deducted in computing federal taxable income as business expenses attributable to property taxes or lease payments derived from property taxes (e.g., under a triple net lease that requires the lessee to pay the property taxes) on property that is in a TIF district or abatement project. The property must be subject to a development agreement (for TIF) or derive a benefit from the abatement to be included. (Simply paying property taxes on property located in a TIF district would not qualify, if the property owner or developer did not enter a development agreement related to the TIF district or if the property did not derive a direct benefit from the TIF or abatement expenditures.)

} The amount of payments directly received by the corporation under a development that is funded by tax increments or abatement, but excluding amounts that are reimbursements for pollution cleanup under a removal or remediation plan approved by PCA.

Tax increments for purposes of this definition exclude those from:

} Housing districts

} Soils districts

} Hazardous substance districts

Effective date: tax year 2010

No comparable provision

Qualified obligations. Defines qualified obligations. Under section 6, interest on state and local obligations that are not qualified obligations will be subject to tax. Qualified obligations are comprised of two categories:

} Minnesota state and local bonds that were sold before July 1, 2009; and

} State general obligation bonds, if the commissioner of finance believes it is in the best interest of the state to issue as tax exempt bonds. Prior to making this election, the commission must estimate the effect on state borrowing costs of issuing the bonds exempt from state tax. This estimate must take into account the combined effects on tax collections and the interest rates, if they are issued exempt from state tax.

If the commissioner determines to issue bonds under this authority, the commissioner must provide written notice to the chairs of the legislative committees on capital investment and taxes within 15 days after selling the bonds, including the details on the cost estimates.

The authority to issue state bonds tax exempt expires on July 1, 2011. If the commissioner issues tax exempt bonds, a report to the 2011 legislature is required.

No comparable provision

Individual income tax, nexus rules. Provides that for a single-member Limited Liability Company (LLC), which the owner has elected to disregarded status for individual income tax purposes and which has income that is assigned to Minnesota, the income is taxed as though it was received directly by the individual, rather than by the LLC. This parallels the similar treatment of ownership interests in partnerships (which includes multi-member LLCs) and S corporations.

Effective date: day following final enactment

Article 1, section 4, same provision.

Individual income tax rates. Adds a new 9 percent rate at $300,000 of taxable income for married joint filers, with the threshold adjusted for other filing statuses ($150,000 for married separate filers, $169,700 for single filers, and $255,560 for head of household filers)

Article 1, section 5. Individual income tax rates. Amends Minn. St. § 290.06, subdivision 2c, related to income tax brackets and rates for individuals, estates and trusts. Adjusts the current three brackets and rates and adds a fourth tier bracket and rate. The new rates are for tax years 2009 and following years, with a return to current rates in one of the expiration years defined in this section. There are four expiration years tied to each of the four tax brackets. Each expiration year allows a new rate to return to the current rate after a February forecast projects a positive general fund balance by the end of fiscal year 2013 that equals or exceeds the amount of tax revenue produced by the new rate. The new rates would return to current rates in numerical order, from lowest to highest. More than one new rate could be eliminated if the positive balance is sufficient to cover the revenue produced by each of the rate increases. The current rates are changed as follows: 5.35 percent to 6.00 percent, 7.05 percent to 7.70 percent, 7.85 percent to 8.50 percent. The income brackets are changed to reflect the inflation adjustment for 2009 as the new base year. The new fourth tier rate is 9.25 percent, and it begins at the following taxable net income levels: $250,000 for married individuals filing joint returns ($125,000 for married filing separately), $141,250 for unmarried individuals, and $212,500 for unmarried individuals qualifying as head of household.

Also makes conforming changes to the calculation of the ratio used by nonresidents and part-year residents to apportion tax to Minnesota to reflect new additions and subtractions in response to federal changes, elimination of various subtractions and repeal of the exemptions for JOBZ and IEDZ income.

Effective date: tax year 2009

Article 2, section 8 is the same with regard to changes to the nonresident ratio that reflect federal changes.

Inflation adjustment. Re-sets the annual inflation adjustment of the income tax brackets to use the tax year 2009 amounts specified in section 15 as the base for future annual adjustments. Allows brackets to be adjusted downward in case of deflation between the 2009 base year and the year for which the inflation adjustment is being made.

Article 1, section 6, similar provision, but does not allow brackets to be adjusted downward in case of deflation. In that circumstance, brackets would remain fixed at previous tax year’s levels.

Mortgage interest credit. Allows a nonrefundable individual income tax credit equal to 7 percent of up to $6,000 of mortgage interest paid during the taxable year. The credit does not apply to the first $4,000 of mortgage interest paid; thus, a taxpayer must pay at least $10,000 in mortgage interest to qualify for the full credit. The credit applies to both acquisition indebtedness and home equity indebtedness. Because the current law deduction for mortgage interest is not allowed under the alternative minimum tax, the credit does not apply to alternative minimum tax.

Effective date: tax year 2009

No comparable provision

Charitable contribution credit. Allows an 8-percent nonrefundable individual income tax credit for charitable contributions made in excess of the greater of:

} $500, or

} 2 percent of the taxpayer’s adjusted gross income

Charitable contributions qualifying for the credit are subject to the same limitations as under federal law. The charitable contribution credit is allowed against both the regular tax and the alternative minimum tax.

Effective date: tax year 2009

No comparable provision

Article 1, section 7. Investment tax credit. Amends Minn. St. § 290.06 by adding a subdivision. This section provides for a 25 percent tax credit for qualified taxpayers' investment in a qualified high technology, biotechnology or medical device, or green manufacturing business. There is also a list of activities where the business must not be engaged. The business must also have at least 80 percent of its employees and payroll in the state, have less than 25 employees (each paid a certain minimum wage), have gross receipts less than $2 million, and be in operation for less than ten years. The section provides a ceiling on maximum amount of tax credits that can be issued at $10,000,000 per fiscal year. The tax credit can be claimed in the fourth year after the credit certificate is awarded. The credit applies both to the individual income tax and the corporate franchise tax. The maximum credit is $50,000 for an individual who is not part of a partnership, and the maximum credit is $100,000 for a C corporation or a pass‑through entity. Unused tax credits can be carried forward ten years.

Working family credit. Eliminates references to the exemptions for JOBZ and IEDZ income and updates references to military pay subtractions in the working family credit statute.

Effective date: tax year 2009

No comparable provision

Article 1, section 8. Historic structure rehabilitation credit. Proposes a new section in chapter 290, giving a tax credit for new historic structure rehabilitation projects. These projects are rehabilitation of properties which are either certified historic structures or structures in a certified historic district, and includes national historic landmarks. A taxpayer who incurs costs can take a tax credit equal to 20 percent of the total costs of rehabilitation. The costs are based on definition of qualified rehabilitation expenditures in the Internal Revenue Code, and must not exceed 50 percent of the total basis in the property. The unused credit may be carried forward for up to ten years, and the credits are assignable. Taxpayers must start the application for the credits before the project begins. The section allows for a mortgage credit certificate in lieu of the tax credit. This certificate can be transferred to a lending institution in connection with a loan that is secured by the building, and the proceeds of which may not be used for any purpose other than the acquisition of rehabilitation of the building. The net amount of the mortgage credit certificate must be applied to either the principal of the loan, the rate of interest on the loan, or the taxpayer's cost of purchasing the building. The lending institution can get a tax credit equal to the amount specified in the certificate, and may carry forward all unused credits until exhausted. If the amount of the discount retained by the lender exceeds the amount by which their federal tax liability is increased, the excess is refunded to the borrower with interest at the rate prescribed the State Historic Preservation Office. Lending institutions are not required to accept a historic rehabilitation certificate from any person. The Minnesota Historical Society must annually determine the economic impact to the state from the rehabilitation of eligible property that tax credits are provided for. The impact report must be presented to the taxes committees in the senate and in the house. Effective date: only projects that have obtained a certificate after June 30, 2009 are eligible for the credit.

Research credit. Allows the research and development tax credit against the individual income tax and increases the first-tier rate from five to ten percent of the first $2 million of qualifying expenditures. Present law limits the credit to corporate franchise tax liability.

Background. The credit applies principally to amounts expended for wages for qualifying research activities that exceed a base amount. When the research credit was first enacted in 1982, it applied to both corporate franchise and individual income tax liability. In 1987 as part of elimination of several credits, the research credit was restricted to the corporate franchise tax. The federal research credit, on which the Minnesota is based, is available to both corporate and individual taxpayers. Under present law the credit equals five percent of the first $2 million of qualifying expenditures, and 2.5 percent of expenditures over $2 million. Qualifying expenditures are largely defined as personnel and other operating costs (e.g., they typically do not include outlays for capital equipment used in the research, although these can qualify for special expensing rules that apply to determine federal and Minnesota taxable income).

No comparable provision

Carryover; research credit. Makes a conforming change to the carryover of the research credit among partners or shareholders of S corporations to reflect the allowance of the credit against the individual income tax.

No comparable provision

Allocation of research credit. Makes a conforming change to the allocation of the research credit among partners or shareholders of S corporations to reflect the allowance of the credit against the individual income tax.

No comparable provision

Article 1, section 9. Film production investment credit. Proposes a new subdivision in chapter 290 that gives a credit for film production investment. Provides a 25 percent carry forward credit against income taxes of the qualified investment in a qualifying film production. A qualifying film production is a motion picture that is certified by the Minnesota Film and TV Board as made wholly in Minnesota. The maximum amount of credits that can be certified is $1 million per year. A qualifying investment means cash used to pay qualifying production expenses that is provided by an investor with no financial interest in the picture or production company responsible for filming the picture.

Minnesota child credit. Allows a credit against the individual income tax equal to the lesser of:

} $200 per qualifying child (as defined for purposes of the federal child credit – generally a dependent child up to age 16); or

} 10 percent of adjusted gross income in excess of $14,000.

The credit is reduced by 5 percent of adjusted gross income above $28,000.

The dollar amounts of the credit, the $14,000 phase-in floor, and the $28,000 phase-out floor are annually adjusted for inflation.

No comparable provision

Article 1, section 10. Alternative minimum tax rate. Amends Minn. § St. 290.091, subdivision 1, related to the alternative minimum tax for individual, trusts, and estates. The rate is changed to 7.0 percent for tax years 2009 and following years, with one rate decreasing to 6.8, 6.6, 6.5, and 6.4 percent, if the same contingencies for the expiration years listed in article 1, section 5 occur.

Alternative minimum tax; individuals. Eliminates the subtraction of charitable contributions for alternative minimum taxable income, consistent with the disallowance of the itemized deduction in section 6 and the elimination of the subtraction for non-itemizers in section 7.

No comparable provision

The new charitable contribution credit proposed in section 18 is allowed against the alternative minimum tax, replacing the subtraction for charitable contributions.

No comparable provision

Also updates references to additions to and subtractions from alternative minimum taxable income, so that the addition for deferred discharge of indebtedness income will be included in alternative minimum taxable income, and the subtraction for deferral of discharge of indebtedness income when included at the federal level in 2014 to 2019 is excluded from alternative minimum taxable income.

Article 2, section 9, similar provision (different clause references; substantively the same).

No comparable provision

Article 1, section 11, the subtraction from FTI for pass-through income is also allowed as a subtraction from AMT income.

Alternative minimum tax; corporations. Includes Minnesota development subsidies in corporate alternative minimum taxable income, updates references to additions to and subtractions from alternative minimum taxable income, strikes references to tax preferences for JOBZ, Biotechnology and Health Science Industry Zones (BHSIZ), and International Economic Development Zones (IEDZ).

No comparable provision

Franchise tax minimum fee. Increases the corporate minimum fee amounts and thresholds at which the fee amounts apply. The lowest fee under present law of $100 is increased to $170; the highest fee under present law of $5,000 increases to $8,320. The thresholds at which these fees apply increase from $500,000 (for the $100 fee) to $830,000 and from $20 million (for the $5,000 fee) to $33.3 million. These amounts are based on adjusting these amounts for inflation, as measured by the consumer price index, from the year in which the original fee amounts were set.

Effective date: tax year 2009

No comparable provision

Minimum fee. Eliminates the JOBZ, BHSIZ, and IEDZ program exemptions from the property and payroll factors used in computing the corporate minimum fee. These exemptions would be eliminated.

Effective date: tax year 2010

No comparable provision

Inflation adjustment of fee amounts. Directs the commissioner to annually adjust the dollar amounts under the franchise tax minimum fee for inflation.

Effective date: tax year 2010

No comparable provision

Article 1, section 12. Surtax on certain interest income. Proposes a new section in chapter 290, providing surtax on certain interest income. Any person or organization who conducts a trade or business subject to Federal Regulation Z, and who charges interest on the credit issued is subject to the surtax. A transferee or assignee of a transaction is also subject to the tax. The rate is 30 percent of any income attributable to interest collected from the portion of an annual percentage rate that exceeds 15 percent on these transactions.

Income tax, assignment or allocation rules. Clarifies that capital gain realized on the sale of a single-member LLC that is disregarded for federal income tax purposes is allocated to Minnesota and taxed as if the LLC did not exist. This parallels the similar treatment of ownership interests in partnership (which includes multi-member LLCs) and S corporations.

Effective date: day following final enactment

Article 1, section 13, same provision.

FOC deemed dividends. Eliminates the authority to exclude the income and apportionment factors of FOCs from the combined report and eliminates the deemed dividend deduction for 80 percent of FOC income.

Effective date: tax year 2009

No comparable provision

Apportionment formula, general application. Adopts single sales apportionment effective in tax year 2009. Under present law, single sales apportionment is being phased in, effective for tax year 2014.

Article 1, section 14, freezes the apportionment formula at the 2008 level. Sales factor, 81 percent, property factor, 9.5 percent, and payroll factor, 9.5 percent. Technical language change needed to extend freeze beyond tax year 2009

Apportionment formula, financial institutions. Adopts single sales apportionment for financial institutions.

Effective date: tax year 2009

No comparable provision

Update of references to Internal Revenue Code in the property tax refund chapter. Adopts the federal changes that affect household income, which uses the definition of federal adjusted gross income as a starting point.

Article 2, section 10, same provision.

Estate tax; nonresidents, gifts in contemplation of death, and federal conformity.

Nonresidents. Provides special situs rules under the estate tax for nonresidents who have ownership interests in pass-through entities that own real or tangible personal property in Minnesota. Pass-through entities are defined as:

} S corporations

} Partnerships

} Disregarded single-member LLCs

} Trusts

Under present law, ownership interests in these entities are treated as intangibles and would be assigned to the decedent’s state of residence and, thus, would not be included in the Minnesota estate. This change assigns the situs of the real and tangible personal property as if the pass-through entity did not exist. Thus, it will include the Minnesota real and tangible personal property owned by the pass-through entity in the Minnesota estate of the decedent. If there are multiple owners of the entity, the property is assigned to the decedent based on his or her share of the capital interest in the entity.

Effective date: estates of decedents dying after December 31, 2009

Article 15, section 4, same provision.

Gifts in contemplation of death. Modifies the definition of Minnesota adjusted taxable estate so that taxable gifts, as defined under the Minnesota gift tax, made within three years of the decedent’s date of death must be added in computing the Minnesota adjusted taxable estate. This will result in taxing these gifts at the potentially higher rate under the estate tax. Sections 35 and 42 allow a credit against the estate tax for the gift tax paid on these gifts.

Effective date: estates of decedents dying after December 31, 2009

No comparable provision

Federal conformity. Also changes the date through which Minnesota incorporates the federal estate tax from December 31, 2008, to March 31, 2009. Since there have not been any federal changes to the estate tax since the last update, this change does not have any substantive effect.

Article 2, section 11, same provision.

Conforming change. Provides that any gift tax paid on a gift included in the taxable estate reduces the estate tax due.

No comparable provision

Definitions; gift tax. Defines terms for purposes of the gift tax:

} Terms defined in the estate tax chapter apply to the gift tax.

} Taxable gifts are defined by reference to the federal gift tax. As result, gifts below the annual exemption amount (for calendar year 2009 $13,000 per recipient, indexed for inflation) are excluded. Generation skipping gifts under federal law would not be treated as taxable gifts. Gifts to charities and spouses would also not be taxable, as under the federal gift tax.

No comparable provision

Gift tax imposition. Imposes a 10 percent tax on taxable gifts. A lifetime credit of $100,000 is allowed (the equivalent of a $1 million exemption). The tax does not apply to transfers of tangible personal property or real property with a situs outside of Minnesota. Situs rules are established that parallel those under the estate tax.

No comparable provision

Gift tax returns. Requires an individual making a taxable gift during the taxable year to file a gift tax return in the form and manner prescribed by the commissioner. If the donor dies before filing, the personal representative must file the return. The return is to include:

} Each gift

} The deductions claimed

} Description of the gift, the donee’s name, address, and Social Security number

} Fair market value of non-cash gifts

} Any other information the commissioner requires.

No comparable provision

Gift tax filing requirements. Requires returns to be filed by April 15^th after the close of the calendar year in which the gift was made. If the donor dies, the due date is the time for filing the federal gift tax return.

No comparable provision

Gift tax; appraisal of property. Authorizes the commissioner to require the donor or donee to show the property subject to tax and to hire suitable persons to appraise the property. The donor is required to provide a statement that the return reflects all of the taxable gifts for the year.

No comparable provision

Gift tax; administrative provisions. Imposes a payment date of April 15^th following the calendar year in which the gift was made. If the donor dies, the time for payment of the federal gift tax applies. A 10-percent penalty (or $100, if greater) applies to late payments. The commissioner can extend the time for filing upon written request, filing of a tentative return, and a showing of good cause. However, tentative tax must be paid with interest (if applicable).

The taxpayer must notify the commissioner of federal changes in the value of taxable gifts within 180 days of a final determination. If a federal amended gift tax return is filed, the taxpayer must file an amended Minnesota return within 180 days.

Various special federal valuation rules apply, such as those for transfers of interests in closely held corporations and trusts.

No comparable provision

Gift tax credit against estate tax. Provides that the amount of gift tax paid is a credit against the Minnesota estate tax to extent that the gift is included in the Minnesota adjusted taxable estate.

No comparable provision

JOBZ tax incentives. Repeals individual income and corporate franchise tax exemptions references in the list of tax incentives that are available under JOBZ. Section 46 repeals the substantive allowance of these exemptions.

No comparable provision

Amendment of JOBZ agreements. Allows a business to withdraw from JOBZ or renegotiate its business subsidy agreement in light of the repeal of the income and corporate franchise tax exemptions. (The JOBZ program would retain the sales tax exemption, property tax exemption, and jobs credit.) A business has six months after enactment to take this action.

No comparable provision

Revisor’s instruction. Directs the Revisor to identify and correct internal references affected by the repealer in section 46.

No comparable provision

Repealer. Repeals the following provisions:

Section of Statutes of Laws	Description	Effective date
272.02, subd. 83	IEDZ property tax exemption	Tax year 2010
290.01 subd. 6b	Definition of FOC	Tax year 2009
290.06, subd. 24	Job credit for heavy maintenance base	Tax year 2010
290.06, subd. 28	Transit pass credit	Tax year 2010
290.06, subd. 30	BHSIZ job credit	Tax year 2010
290.06, subd. 31	BHSIZ research credit	Tax year 2010
290.06, subd. 32	IEDZ job credit	Tax year 2010
290.06, subd. 33	Bovine testing credit	Tax year 2009
290.06, subd. 34	Lower income motor fuels credit	Tax year 2009
290.067	Dependent care credit	Tax year 2009
290.0672	Long term care insurance credit	Tax year 2009
290.0674	Minnesota K-12 education credit	Tax year 2009
290.0679	Assignment of education credit	Tax year 2009
290.0802	Elderly exclusion	Tax year 2009
290.0921, subd. 7	Corporate AMT limitation for foreign operating corporations	Tax year 2009
290.191, subd. 4	Sales only apportionment for mail order businesses	Tax year 2009
290.491	Capital gain exclusion for insolvent farmers	Tax year 2009
297A.68, subd. 38	BHSIZ sales tax exemption	Tax year 2010
297A.68, subd. 41	IEDZ sales tax exemption	Tax year 2010
297A.815, subd. 3	Sales tax on motor vehicle lease offset to lower-income fuels credit	July 1, 2009
469.316	JOBZ individual income tax exemption	Tax year 2010
469.317	JOBZ corporate franchise tax exemption	Tax year 2010
469.321 – 469.329	IEDZ program and tax provision	Tax year 2010
469.330 – 469.339	BHSIZ program and tax provisions	Tax year 2010
Laws 2009, ch. 3, section 1	Health insurance premiums credit	Tax year 2009

Article 1, section 16, no comparable provision, with the exceptions of Minnesota Statutes, sections 290.06, subdivision 34, the lower income motor fuels tax credit, and 297A.815, subdivision 3, the sales tax on motor vehicle leases offset to the lower income fuels credit.

No comparable provision

Article 1, section 15. Minnesota Business Investment Company insurance premiums tax credit. Proposes a new section in chapter 297I related to the Minnesota Business Investment Company tax credit. This section authorizes a participating investor to earn a credit against the insurance tax equal to 80 percent of the investment of designated capital in a Minnesota business investment company. It specifies the schedule for claiming the credit, which can be taken starting in tax year 2014, and over the next five tax years.

Sec.	Article 2: County Revenue Reform
1	Local government unit. Removes cities with a population of 2,500 or more from the application of levy limits.	Article 4, section 61, paragraph (b), repeals levy limits for cities.
2	Levy limit base. Repeals the levy limits for taxes levied in 2010, payable in 2011 for counties.	Article 4, section 61, paragraph (b), repeals levy limits for counties.
3	Adjusted levy limit base. Repeals the levy limits for taxes levied in 2010, payable in 2011 for counties.	Article 4, section 61, paragraph (b), repeals levy limits for counties.
4	Property tax levy limit. Adjusts the county levy limits so that a county that imposes a local sales tax cannot “levy back” the county program aid reductions since the new sales tax revenue offsets the cuts.	No comparable provision
5	Authorization, scope. Provides a cross-reference to the new county sales tax authority in the general local sales tax statutes.	No comparable provision
6	County local option sales tax. Allows a county to impose a local sales tax of ½ of one percent, subject to a reverse referendum, with the money to go to the county’s general fund. Subd. 1. Authorization; rates. Allows a county to impose a local sales tax of ½ of one percent on all sales taxable under chapters 297A (general) and a $20 per vehicle excise tax on motor vehicle sales made by dealers in the county. Subd. 2. Application of election requirement. The county is required to post a notice and hold a hearing on the intent to impose the tax. Voters have up to 30 days after the public hearing to petition for a reverse referendum on the issue. Signatures equal to the greater of (1) 500 or (2) ten percent of the votes cast at the last general election are needed to trigger the referendum. The referendum may be held at a general or special election and must pass before the tax would be imposed. A county must notify the commissioner of revenue by September 1, if they intend to use this authority. Subd. 3. Use of revenues. The county must first use revenues to meet obligations for preempted local sales taxes under section 4, with the remainder deposited into the county general fund. Subd. 4. Administration, collection, and enforcement. A tax imposed under this section is administered, collected, and enforced according to most of the general local sales tax statute. Subd. 5. Termination. States that a county can only terminate a tax imposed under this section if all obligations for preempted local taxes have been met.	No comparable provision
7	Effect on existing local sales taxes; satisfaction of preexisting obligations. Preempts most local sales taxes in a county imposing a sales tax under section 6 and requires the county to use its new sales tax revenue to meet obligations related to the preempted sales taxes. Subd. 1. Preemption of preexisting local sales taxes. States that if a county imposes a local sales tax under section 6, that all other local sales taxes imposed in the county are preempted except for (1) a county transportation tax, (2) a local sales tax imposed by a city of the first class (Minneapolis, St. Paul, and Duluth), or (3) a city with a 2007 population of at least 100,000 (Rochester), or (4) the sales tax authorized for Cook County in the 2008 tax bill. To retain its separate local sales tax Rochester must pass a resolution to that effect within two months of the enactment of this provision and provide a copy of the resolution to the county and the commissioner of revenue. Subd. 2. County payment to cities; foregone revenue. Requires a county imposing a local sales tax to pay a portion of that revenue to a county to fund obligations previously funded by any preempted city sales tax. The payments will be made within five business days of the state making quarterly payments to the county. The payments to cities are calculated under subdivisions 4 or 5. Subd. 3. Dedication of tax to fund county projects. Requires a county to meet any obligations for a preempted county tax out of the revenues from the new sales tax. This only applies to the Hennepin County tax of 0.15% to fund the Twins stadium. Subd. 4. Calculation of foregone revenue in cities located entirely within a county. Provides the mechanism to calculate the county payments to a city with a preempted sales tax. The payment in the first year are based on the collections from the previous year in the city, adjusted for the percent change in current state sales tax revenue collections over the previous year. In subsequent years the quarterly payments will be based on the quarterly payment in the previous year, adjusted for the percent change in the county sales tax revenue in the current quarter, compared to the same quarter in the previous year. Subd. 5. Calculation of foregone revenues in cities partially located within a county. Provides the mechanism to calculate the county payments to a city with a preempted sales tax that is split between more than one county. There are two “split” cities with city sales taxes – Mankato and St. Cloud. The split of city existing sales tax revenue between the different county portions of the city shall be determined in a reasonable manner by the commissioner of revenue in consultation with the county and city, however, if no other option is agreed to the split will be made based on the share of the city’s nonutility commercial and industrial property in each part of the city. A county’s revenue payment to the city is then based on the same mechanism as in subdivision 4, but multiplied by the county share. Subd. 6. Establishment of special sales tax districts within certain cities. Provides for the case where a county tax is imposed in one part of a “split” city but not in another. A special taxing district is then established in the part of the city outside of a county imposing a sales tax. The special taxing district will impose the sales tax in the remaining portion of the city and used to pay for the obligations under the preempted city sales tax. This is necessary because the Streamlined Sales and Use tax Agreement (SSUTA) prohibits a city from imposing different rates in different parts of the city.	No comparable provision
8	County program aid. Freezes county program aid distribution at the Pay 2009 certified distribution and then reduces each county’s aid in Pay 2010 and thereafter by one of the following amounts: } If a county does not impose a local sales tax its aid is reduced by an amount equal to 3.58 percent of its 2009 levy plus aid amount. } If a county does impose a local sales tax its aid is not reduced for the first $7 per capita or $70,000 in revenue, whichever is greater. Aid is reduced by an amount equal to 50% of its net sales tax revenue over $7 per capita, or 470,000, whichever is greater, and an additional 25% of its net sales tax revenue in excess of $17 dollars per capita or $170,000, whichever is greater. “Net sale tax revenue” is the revenue raised by a sales tax under section 6 minus the revenues used to fund obligations under section 7.	Article 5, section 6, subd. 2. The formula continues to determine the distribution but each county’s program aid is reduced by 0.5 percent of the previous year’s levy, plus aid for 2010, 2011, and 2012.
9	Counties (appropriation). Eliminates the cap on the county program aid appropriation for 2010 and thereafter, since CPA amounts would be determined under section 8. Provides an explicit appropriation for public defenders and local impact notes currently paid from the county program aid appropriation. Provides that the commissioner of finance shall use a portion of the appropriation to contract with associations of local governments for preparing local impact notes. Specifies that 2009 CPA distributions will be the original 2009 certified amounts minus the reductions provided under article 7, section 7.	No comparable provision
10	Repealer. Repeals the formulas for the different portions of county program aid.	No comparable provision

Sec.	Article 3: Property Tax Reform, Accountability, Value, and Efficiency Provisions	Senate has no comparable provisions to entire article
1	Council on local results and innovation. Subd. 1. Creation. Creates the council with 11 members, including the state auditor, eight persons who are not legislators appointed by the chair and minority leads of the house and senate committees with jurisdiction over property taxes, and one person each appointed by the Association of Minnesota Counties and the League of Minnesota Cities. Specifies four-year, staggered terms, desired knowledge, and experience of appointees. Provides that after the initial appointments, the eight appointments by legislators must be made by the council. Subd. 2. Duties. (a) By February 15, 2010, requires the council to develop approximately ten standard performance measures for counties and ten for cities aimed at measuring the efficiency and effectiveness of counties and cities in providing services. (b) By February 15, 2011, requires the council to develop minimum standards for comprehensive performance measurement systems, which may vary by size and type of jurisdiction. (c) Requires the council to serve as a statewide resource to aid in the development, promotion, and implementation of local government performance measurement systems. Subd. 3. Reports. Requires the council to report its initial set of county and city standard performance measures to the property tax committees of the house and senate by February 28, 2010. Requires an annual report by February 1 in subsequent years. Permits the state auditor to make the reports instead of the council if agreed by both the state auditor and the council. Subd. 4. Operation of council. Directs the state auditor to convene the first council meeting; provides for the chair to be elected by and from among the council members for two-year terms; provides that council members serve without compensation; provides that council members are to rotate and share administrative support responsibilities; exempts the council from the open meeting law but requires it to conduct open meetings; and requires meeting notices to be published on the state auditor’s web site. Subd. 5. Termination. Provides that the council expires January 1, 2019. Effective upon enactment.
2	Local performance measurement and reporting. Subd. 1. Reports of local performance measures. Requires a county or city that participates in the standard measures program to report results to its citizens annually and to file a report with the state auditor by July 1. Describes two levels of participation. A city or county participating in the standard measures program must report on results for the standard set of performance measures. In 2011, a city or county participating in the comprehensive performance measurement program must submit a resolution indicating it either has implemented or is in the process of implementing a local performance measurement system meeting the minimum standards. In 2012 and thereafter, comprehensive performance measurement system participants must affirm that they have implemented a local performance measurement system meeting the minimum standards. Subd. 2. Benefits of participation. (a) A participant in 2010 may receive a per capita reimbursement of 25 cents, up to $25,000, and is exempt from levy limits and truth in taxation hearing requirements for taxes payable in 2011. (b) A participant in the standard measures program in 2011 may receive a per capita reimbursement of 25 cents, up to $25,000. A participant in the comprehensive performance measurement program in 2011 is exempt from levy limits and truth in taxation hearing requirements for taxes payable in 2012. (c) A participant in the standard measures program in 2012 or any year thereafter may receive a per capita reimbursement of 25 cents, up to $25,000. A participant in the comprehensive performance measurement program in 2012 or any year thereafter is exempt from levy limits and truth in taxation hearing requirements for taxes payable in the following year. Subd. 3. Certification of participation. Directs the state auditor to certify participation to the commissioner of revenue. Provides for the commissioner of revenue to make the per capita reimbursements and notify each city and county that is exempt from levy limits. Subd. 4. Appropriation. Establishes a standing appropriation from the general fund for payments made under this section. Effective December 31, 2009.
3	Local support levels. Paragraph (a) modifies the existing formula for calculating the minimum library maintenance of effort (MOE) to be based on the average of adjusted net tax capacity (ANTC) for the second, third and fourth preceding years. Currently this is based on the ANTC from the second preceding year. Effective beginning with calendar year 2011. Paragraph (b) requires that counties and cities notify the regional library system, which will notify the Department of Education, if they want to reduce their MOE for aid cuts under section 4.
4	Regional libraries, maintenance of effort (MOE). This section makes three changes. (a) Changes the minimum MOE for each county and city to be its lowest library spending in the second or third preceding year. Under current law, a county or city has to spend at least the amount it spent two years ago which means that if a city or county increases its library spending it must maintain that higher levy of spending every other year in perpetuity. (b) and (c) Allow a city or county to reduce its library MOE if general purpose county or city state aids and credits are cut. The allowed reduction is the lesser of (1) 10 percent of its current MOE, or (2) a percent equal to percent of its aid and credit cut to its levy plus general purpose aids. The percent in clause (2) is based on the certified aid and levy amounts for the current year for cuts that occur after the current year’s levies have been set, and on the paid amount of levy plus aids in the previous year for proposed future cuts. Requires that the Pay 2009 reductions be based on both 2008 unallotments and 2009 aid and credit cuts. The commissioner of revenue is required to calculate the MOE reductions for calendar year 2009 and in future years must certify the percentage used in calculating reductions under paragraph (c) to the commissioner of education by August 1 of the year prior to the year in which the reduced aids are paid. (d) States that regardless of the allowed cuts in paragraphs (a) to (c), no city or county MOE can go below the minimum required effort currently in law. Also states that if a county imposes a local option tax under the provisions of article 1, they may not reduce their MOE under paragraphs (b) or (c). Effective for support in calendar year 2009 and thereafter for library grants paid in fiscal year 2010 and thereafter, except that changes in paragraph (a) are effective for support in calendar year 2010 and thereafter.
5	Collaborative responsibilities. Removes the maintenance of effort requirement from the children’s mental health collaborative. The intent is that this is replaced with the general MOE in section 8. Effective beginning January 1, 2012.
6	Facilities. Removes the county responsibility for funding temporary commitment of sexual predators before final commitment. The intent is that this is replaced with the general MOE in section 8. Effective beginning January 1, 2012.
7	Eligibility. Removes some mandatory county payments related to chemical dependency. The intent is that this is replaced with the general MOE in section 8. Effective beginning January 1, 2012.
8	Equitable funding health and human service services reform. Consolidates and changes the county funding of local health and human service programs beginning in calendar year 2012. Subd. 1. Reform. Enumerates the goals that are to be achieved by this change in funding mechanism for health and human service programs. Subd. 2. Consolidated program funding. Provides that each county will have a local health and human service MOE equal to a uniform percentage of its adjusted net tax capacity, subject to some limits on increases. The percentage is set at a rate so that the total MOE amount for all counties is equal to the sum of the existing required local spending for health and human services. Paragraph (a) lists the programs whose county share of funding will be replaced with the revenues raised by this new MOE. Paragraph (b) requires the commissioner of health and human services do whatever collection and/or allocation of all or a portion of the total county MOEs necessary to meet federal matching requirements. Any part of a county’s MOE not needed for federal matching may be spent at the discretion of the county. Paragraphs (c) and (d) explain how the MOE is calculated. Paragraph (e) limits the increase in the MOE in any year to one percent of a county’s property tax levy in the previous year, unless the increase is due to tax base growth. This allows counties that spend below the average to gradually increase toward the spending level, as a share of tax base. Subd. 3. County discretionary spending. States that a county may spend more than the amount required under this section on health and human services but they may not be required to maintain the higher spending level into the future.
9	Property tax system benchmarks and critical indicators. Subd. 1. Purpose. States that state policy makers should be provided with the tools to create a more accountable and efficient property tax system. This section contains the principals and the available tools necessary to work toward achieving that goal. Subd. 2. Property tax principles. Contains the basic property tax principals that should be taken into consideration in evaluating the various property tax proposals that come before the legislature. The principals are transparent and understandable; simple and efficient; equitable; stable and predictable; compliance and accountability; competitive, both nationally and globally; and responsive to economic conditions. Subd. 3. Major indicators. Provides that there are many different types of indicators available to legislators to evaluate tax legislation, each has its own limitations. Contains the following list of the available major indicators: property tax principles scale (components are listed in subdivision 2) relate to the property tax system features; price of government report; tax incidence report; tax expenditure budget and report; state tax rankings; property tax levy plus aid data, and market value and net tax capacity data by taxing district; effective tax rate and equalized effective tax rate; assessment sales ratio study; “Voss” data base, which matches homeowner property taxes and household income; revenue estimates and state fiscal notes; and local impact notes, with improved local analysis as described in subdivision 7. Subd. 4. Property tax working group. Establishes a working group. The goals of the working group are: to investigate ways to simplify the property tax system, to reexamine the property tax calendar, and to determine the cost versus the benefits of the various property tax components. Provides for the working group to have 12 members appointed as follows: } two house members, one from the majority caucus and one from the minority caucus, both appointed by the tax committee chair } two senators, one from the majority caucus and one from the minority caucus, both appointed by the tax committee chair } the commissioner of revenue or the commissioner’s designee } one person from each: appointed by the Association of Minnesota Counties, the League of Minnesota Cities, the Minnesota Association of Townships, the Minnesota Chamber of Commerce, and the Minnesota Association of Assessing Officers } two homeowners, one under 65 and one over 65, appointed by the commissioner of revenue. Provides for the commissioner of revenue to convene the first meeting and then for the working group to elect a chair. The working group meets at the call of the chair and members serve without compensation. Requires the working group to make its advisory recommendations to the chairs of the house and senate tax committees on or before February 1, 2011, at which time the working group is finished (and this subdivision expires). Subd. 5. Tax committee review and resolution. Requires that on or before March 1, 2011, and every two years thereafter, the house and senate tax committees must review the major indicators (as contained in subdivision 3) and ascertain the accountability and efficiency of the property tax system. Requires each committee to prepare a resolution on targets and benchmarks for use during the current biennium. Subd. 6. Department of Revenue; revenue estimates. Requires that beginning with the 2010 legislative session, the revenue estimates prepared by the Department of Revenue must also identify how the property tax principles (contained in subdivision 2) apply to the proposed changes. Requires the commissioner to develop a scale for measuring the appropriate principles for each proposed change. If possible, requires the department to quantify the effects, or at a minimum identify the relevant factors so that legislators are aware of possible outcomes, including administrative difficulties and cost. The interaction of property tax shifting should be identified. Subd. 7. Local impact notes. Seeks more participation from political subdivisions for the local impact note process. Creates a local impact network of political subdivisions consisting of at least one representative association from Minnesota counties, cities, towns, and school districts, and other members as needed. Requires them to work with the legislature and the commissioner of finance to analyze changes in local government tax revenues and expenditures and incidences of tax shifting. For tax bills, the local impact network shall rate the impact on the tax system using the tax principles contained in subdivision 2. Some of the cost for preparing these local impact notes shall be provided under section 2. Effective the day following final enactment.
10	Reimbursement reductions. Provides for minor reductions in market value credit reimbursements each year to fund per capita payments for counties and cities participating in the local performance measurement program in section 2, and for certain administrative costs related to the commission on local results and improvement (sections 1 and 2), the property tax working group (section 9), and the computation of library MOE support levels (section 3).
11	Temporary suspension of new or increased maintenance of effort and matching fund requirements. Imposes a two-year moratorium on the implementation of new or increased MOE or matching fund requirements. This should give the Legislative Commission on Mandate Reform, established in another article of the bill, time to study and make recommendations on any new proposals. To avoid causing a problem with the new federal stimulus bill that may require some increased spending, the counties and cities will remain responsible if the city or county is currently providing the federal MOE or match and the federal government increases those requirements. Effective the day after enactment.
12	Repealer. Repeals a number of health and human service maintenance of effort and matching fund requirements in law. Effective January 1, 2012 but contingent on the implementation of new funding mechanisms using revenues generated by the new MOE in section 8.

Sec.	Article 4: Local Government Flexibility and Mandate Reduction Provisions	Senate bill has no comparable provisions to entire article. Some provisions are comparable to provisions in S.F. 3 – these are indicated
1	Objections to rules. Adds the Legislative Commission on Mandate Reform, established below, to the law that authorizes the Legislative Coordinating Commission or a house or senate committee with jurisdiction over administrative rules to file an objection to a rule with the secretary of state, which has the effect of placing the burden of proving the validity of the rule on the agency in any proceeding for judicial review or enforcement of the rule. Also permits the commission to petition for declaratory judgment as to the validity of a rule objected to and to intervene in litigation.
2	Public hearings by state agencies. Adds the Legislative Commission on Mandate Reform, established below, to the law that authorizes the Legislative Coordinating Commission to request an agency to hold a public hearing on rules to which the commission objects.
3	Legislative Commission on Mandate Reform; established. Subd. 1. Established. Subd. 2. Membership. Four senators appointed by the senate subcommittee on committees and three senators appointed by the senate minority leader; four house members appointed by the speaker and three appointed by the house minority leader. Subd. 3. Terms; vacancies. Two-year terms. Vacancies must be filled so as to preserve the representation established in this section. Subd. 4. Chair. Elected by and from among the members for two years. Must alternate between house and senate. Subd. 5. Compensation. May be reimbursed for reasonable expenses as members of the legislature. Subd. 6. Staff. Direct the Legislative Coordinating Commission to provide administrative support. Subd. 7. Meetings; procedures; tie votes. Meetings at the call of the chair. Action requires votes in favor by at least four house members and four senators. Subd. 8. Funding. Directs the commission to bill the commissioner of revenue for costs of administrative support and grants, up to $100,000 per year. Provides for one half the costs to come from state aid to counties and one half to come from state aid to cities.
4	Legislative Commission on Mandate Reform; review and recommendations to legislature. Directs the commission to solicit from local governments information on laws and rules that are problematic mandates and then to determine why each was enacted or adopted, if that reason still exists, costs to comply, and whether it can be repealed or modified. Requires the commission to submit a bill with mandate reform each session.
5	Legislative Commission on Mandate Reform; grants. Provides for the commission to make recommendations to the commissioner of revenue to make grants to local government associations, the University of Minnesota, MnSCU, or other accredited postsecondary institutions to research and make recommendations on mandate reform.
6	Expiration. The commission expires June 30, 2013.
7	Effective date for rules requiring local implementation. Provides two set times a year for rules to take effect if they would require a local government to make a plan or ordinance change. Subd. 1. Determination. Requires a state agency to determine if a local government (city county, town) will be required to adopt or amend a local regulation to comply with a proposed rule. Provides for the administrative law judge (ALJ) to approve or disapprove. Subd. 2. Effective dates. Provides that a rule becomes effective the next July 1 or January 1, or a later date provided by the law or rule, after final adoption if it does require a new or amended local regulation. Subd. 3. Exceptions. Provides that the effective dates in subdivision 2 do not apply when the good cause exemption, expedited rulemaking process, or process for repealing obsolete rules apply, or when any other law specifies that the rulemaking process in chapter 14 do not apply; if federal law requires an effective date before the dates in subdivision 2; or the governor waives application of subdivision 2.	S.F. 3, article 5, section 2. Similar provision; allows one more exception in subdivision 3 – if the agency has been directed by law to adopt the rule or to commence the rulemaking process.
8	Best value contracting. Strikes the limit on the number of contracts per year for all entities.
9	Abandonment; end of operation as cemetery. Permits a county that has taken over an abandoned cemetery to prohibit further burials in the cemetery.	S.F. No. 3, article 5, section 5 is identical.
10	Compensation of (fence) viewers. Strikes the $60 cap on compensation for fence viewers and allows a town board to recover all costs. The language is based on the damages provision in the law governing establishment of cartways.	S.F. No. 3, article 5, section 7 is identical.
11	Public burial ground is town’s after ten years. Permits a town that has assumed ownership of a cemetery to prohibit further burials in it.	S.F. No. 3, article 5, section 7 is similar; it also authorizes the town to “cease acceptance of responsibility for new burials.”
12	Plans and specifications, advertisement for bids. Updates the threshold amounts for contracts and day labor under the special assessment statute by providing a cross-reference to the Uniform Municipal Contracting Law (UMCL).	S.F. No. 3, article 5, section 17 is same.
13	Contracts; day labor. Same as section 12.	S.F. No. 3, article 5, section 18 is same.
14	Letting of contracts; performance bonds (HRA). Same as sections 12 and 13.	S.F. No. 3, article 5, section 19 is same.
15	Fee. Strikes the $10 cap on booking fees and allows a county to recover actual costs of booking.
16	Legislative Commission on Mandate Reform; first meeting. Requires a first meeting of the Legislative Commission on Mandate Reform, established in section 3, as soon as practicable after all appointments are made. Provides for the speaker of the house to designate a commission member to convene the first meeting.

Sec.	Article 5: Truth in Taxation
1	Budgets; form of notification (TnT). Conforming change related to eliminating the truth in taxation hearing requirement. Effective for taxes payable in 2010 and thereafter.	Article 4, section 1, same
2	Proposed levy. Advances the dates for each taxing authority certifying their proposed levy to the county auditor. Effective for taxes payable in 2011 and thereafter.	Article 4, section 22. Senate language does not advance the date for levy certification. The language regarding subsequent meetings is the same.
3	Overlapping jurisdictions. Advances the dates for certifying the proposed levy and the proposed tax rate to the other county auditors when taxing authorities lie in two or more counties and allows the notice to refer to a regularly scheduled meeting, rather than a separate public hearing. Effective for taxes payable in 2011 and thereafter.	S.F. No. 3, article 6, section is same, except it does not advance the dates.
4	Levy; shared, merged, consolidated services. Advancing the dates for certifying proposed levies when two or more taxing authorities are in the process of negotiating an agreement for sharing, merging, or consolidating services. Effective for taxes payable in 2011 and thereafter.	No comparable provision
5	Notice of proposed property taxes. Advances the date for mailing the proposed truth in taxation notices from November 10-24 to October 15-24. Many of the dates that are advanced in other sections of this article are to allow for the necessary information to be available to the county auditor so that the TnT notices can be mailed out earlier. Effective for taxes payable in 2011 and thereafter.	No comparable provision
	Also includes the requirement that since the truth in taxation hearings have been eliminated, the taxing authorities must provide the county auditor with information on when their regularly scheduled meetings (which occur after the notice has been mailed) at which the budget and levy will be discussed. Effective for taxes payable in 2010 and thereafter.	Article 4, section 23. Same, except that the Senate language also strikes a reference to a levy limit increase approved by the voters.
6	Adoption of budget and levy (TnT). Strikes the language prescribing the TnT hearing and authorizes unalloted aid to be certified in excess of the TnT levy under article 13, section 6. Effective for taxes payable in 2010 and thereafter.	Article 4, section 25, same, except the Senate language allows an exception to increase the levy for emergency debt certificates issued after the proposed levy was certified and does not contain the authority to recertify the levy for unallotment of aid.
7	Certification of levy. Advances the dates for the taxing authorities to certify their final levy to the county auditor. Effective for taxes payable in 2011 and thereafter.	No comparable provision
8	Report to commissioner. Advances the dates for the county auditor to report to the commissioner of revenue the proposed levies of the various taxing authorities in the county. Effective for taxes payable in 2011 and thereafter.	No comparable provision
9	Determination of county tax rate (TnT). Conforming change related to eliminating the truth in taxation hearing requirement. Effective for taxes payable in 2010 and thereafter.	Article 4, section 31, same.
10	Duties (TnT). Conforming change related to eliminating the truth in taxation hearing requirement. Effective for taxes payable in 2010 and thereafter.	Article 4, section 32, same.
11	Tax levy for repayment (TnT). Conforming change related to eliminating the truth in taxation hearing requirement. Effective for taxes payable in 2010 and thereafter.	Article 4, section 38, same.
12	Application of other laws (TnT). Conforming change related to eliminating the truth in taxation hearing requirement. Effective for taxes payable in 2010 and thereafter.	Article 4, section 39, same.
13	Budget (TnT). Conforming change related to eliminating the truth in taxation hearing requirement. Effective for taxes payable in 2010 and thereafter.	Article 4, section 42, same, except Senate language does not advance the date for the budget adoption.
14	Repealer. Repeals the provisions related to the truth in taxation hearing and newspaper notice. Effective for taxes payable in 2010 and thereafter.	Article 4, section 61, repeals the Truth in Taxation hearing, but not the newspaper notice. Senate Article 4, section 24, suspends the Truth in Taxation newspaper advertisement requirement for payable years 2010 and 2011.

Sec.	Article 6: Property Tax	Article 4: Property Tax
1	Agricultural preserve; eligibility. Terminates participation in the agricultural land preservation program for a violation of agricultural chemical or water protection laws. Requires any deferred special assessments to be paid, plus back-taxes equal to the tax benefits received over the last five years. Prohibits reenrollment for a period of three years. Effective for payable 2011 and thereafter.	No comparable provision
	No comparable provision	Section 2. Interdistrict cooperation. Provides that school districts with career and technical programs that are part of an interdistrict cooperation agreement must allocate the levy for the program among the participating districts.
	No comparable provision	Section 3. Referendum market value; seasonal recreational property. Provides that noncommercial seasonal recreational property, such as cabins, will no longer be excluded from "referendum market value." This has the effect of making this property subject to school referendum levies.
	Art. 1, Sec. 14 of H.F. 2 contains similar, but not identical, provision	Section 4. Retired employee health benefits. Clarifies the effective date for school levies for retired employee health benefits.
	No comparable provision	Section 5. Emergency Medical Services Taxing District Board. Provides that in cases where only part of a township participates in the medical services district, all partial townships in the district will be represented by a single member on the taxing district board.
2	Institutions of public charity. (a) Provides that institutions of purely public charity that are exempt from federal income taxes under section 501(c)(3) are exempt from property tax if they meet the requirements of this subdivision. When determining whether the real property is exempt, the following factors must be considered, which are a general codification of the “North Star” factors: 1. Whether the stated purpose of the undertaking is to be helpful without immediate expectation of material reward; 2. Whether the institution of public charity is supported by material donations, gifts, or government grants for services to the public in whole or in part; 3. Whether a material number of the recipients of the charity receive benefits or services at reduced or no cost, or whether the organization provides services to the public that alleviate burdens or responsibilities that would otherwise borne by the government;	Article 4, section 6, same, except:
	4. Whether the income received, including material gifts and donations, produces a profit to the institution that is distributed to private interests; 5. Whether the beneficiaries of the charity are restricted or unrestricted, and if restricted, whether the class of persons to whom the charity is made available is one having reasonable relationship to the charitable objectives; and 6. Whether dividends, in form or substance, or assets upon dissolution, are available to private interests.	Senate language refers to profit that is not distributed to private interests.
	For a property to be exempt under this subdivision, the charitable organization must satisfy the factors in clauses (1) to (6), unless there is a reasonable justification for missing the factors in (2), (3), or (5). If there is a reasonable justification for failing to meet the factors in clauses (2), (3), or (5), an organization is a public charity without meeting those factors. An exemption properly granted under this subdivision will remain in effect unless there is a material change in the facts. (b) Defines “grants” as a written instrument or electronic document defining a legal relationship between a granting agency and a grantee when its principal purpose is to transfer cash or something of value to the grantee to support a public purpose authorized in law in a general manner, instead of acquiring by professional or technical contract, purchase, lease, or barter property or services for the direct benefit or use of the granting agency. This section is effective for taxes payable in 2010 and thereafter.	Senate language refers to a “compelling factual reason” rather than “reasonable justification.”
	No comparable provision	Section 7. Utility pollution control property tax exemption. Requires the Commissioner of Revenue to submit the advice of the Pollution Control Agency regarding a requested personal property tax exemption for electric generation pollution control equipment to the municipality and the county where the property is located for their approval. The local governments must submit their approval or disapproval to the Commissioner of Revenue within 90 days, or the exemption is deemed to be approved.
	No comparable provision	Section 8. Apprenticeship training facilities; property tax exemption. Provides that the current law property tax exemption for apprenticeship training facilities extends to the land on which the building is located, not to exceed five acres. Parking areas on the exempt land are exempt to the extent that they are used for the purposes of the training facility.
	No comparable provision	Section 10. Electric generation personal property exemption. Provides that the personal property of a described electric generation facility will be exempt from property taxation for three years. The exemption is phased out over the following three years. To qualify for the exemption, the facility must: · exceed 40 megawatts of installed capacity, but not exceed 125 megawatts of installed capacity; · utilize natural gas as a primary fuel; · be located within two miles of parallel existing 36‑inch natural gas pipelines and an existing 115‑kilovolt electric transmission line; · be designed to provide peaking, emergency backup or contingency services; and · satisfy a resource deficiency identified in an approved integrated resource plan.
	No comparable provision	Section 11. Phaseout of exemptions for electric generation personal property. Provides that exemptions for electric generation personal property will be allowed in full for three years and the exemption will be phased out by one‑third each year over the following three years. Existing exemptions that have been in place for more than three years will be phased out beginning with the 2009 assessment year.
	No comparable provision	Section 12. Elderly living facility exemption. Provides a property tax exemption for an elderly living facility that meets the following requirements: · the facility consists of no more than 75 living units; · it is located in a city with a population of more than 350,000; · it is owned and operated by a nonprofit corporation; · the owner of the facility is an affiliate of entities that own and operate assisted living and skilled nursing facilities that are located across a street from the facility, are adjacent to a church, include a congregate dining program, and provide assisted living or similar social and physical support; · the residents of the facility must be at least 62 years of age or handicapped; · before the effective date of the subdivision, the facility has received certain approvals from the city. The exemption from property taxes would extend for the longer of 25 years or the term of the facility's initial permanent financing.
3	Nursing homes. Provides a property tax exemption for nonprofit nursing homes or boarding care facilities that are certified to participate in the medical assistance program or that certify to the commissioner of revenue that they do not discharge residents due to their inability to pay. Effective for taxes payable in 2010 and thereafter.	Article 4, section 13, same
4	Railroad wye connections. Exempts any portion of a railroad wye connection including the track, ties, ballast, switch gear, and related equipment, if it meets all of the following: 1. is publicly owned; 2. is funded, in whole or in part, by state grants; 3. is located within the metropolitan area; 4. includes a single track segment that is no longer than 2,500 feet in length; 5. connects intersecting rail lines; and 6. is constructed after January 1, 2009. This section (which is in the City of New Brighton, Ramsey County) is effective for assessment year 2009 and thereafter, for taxes payable in 2010 and thereafter.	Article 4, section 14, same, except House language specifies “real or personal property” while Senate language refers to “any portion” of a railroad wye connection.
5	Electric generation facility; personal property. Exempts attached machinery and other personal property that is part of an electric generation facility that meets certain conditions from property taxes. (The proposed facility is in Lent Township, Chisago County.) Some of the conditions are that the facility: · has installed capacity between 150 and 780 megawatts; · is designed to utilize natural gas as a primary fuel;	Article 4, section 9, same, except:
	· is owned by an entity other than a public utility; · is located near existing interstate natural gas pipelines and an electric transmission substation;	Senate language refers to “not owned by a public utility.”
	· is subject to a development agreement with the county board adopted by a two-thirds vote of the county board;	No comparable provision
	· is subject to a development agreement with the township board adopted by a two-thirds vote of the township board; and · is to be constructed starting sometime after March 1, 2010, and before March 1, 2014.	No comparable provision
	Effective the day following final enactment.	Effective for taxes payable in 2010 and thereafter, subject to phase out in section 11.
6	Personal property exemption; electric generating plants (generic). Subdivision 1. New electric generating plants. Provides a general exemption for personal property of electric generating plants built and placed in service after January 1, 2010, if a siting agreement signed by the utility and the host county and city or town, is filed with the commissioner of revenue. Subd. 2. Definition; applicability. Defines “personal property” as tools, implements, and machinery of the generating plant. The exemption does not apply to transformers, transmission lines, distribution lines, or any other tools, implements, and machinery that are part of an electric substation, wherever located. Effective the day following final enactment.	No comparable provision
	No comparable provision	Section 15. Leased seasonal recreational land. Modifies the property tax exemption that applies to leased seasonal recreational property. It removes the requirement that a county board must approve the exemption as well as the requirement that the particular parcel was exempt from taxation for property taxes payable in 2008.
7	Distribution of revenues. Modifies the formula for distribution of revenues from the wind energy production tax for 2010 and thereafter, so that 80 percent of the revenues are distributed to the county and 20 percent to the city or township. Under current law, the distribution is 80 percent to the county, 14 percent to the city or township, and 6 percent to the school district.	No comparable provision
8	Cross-compliance with applicable laws. Terminates participation in Green Acres for a violation of agricultural chemical or water protection laws. Requires any deferred special assessments to be paid, plus back-taxes equal to five years of the tax benefits received. Prohibits reenrollment for a period of three years. Effective for taxes payable in 2011 and thereafter.	No comparable provision
	No comparable provision; the property tax credit is repealed in section 39, and a comparable grant program is created in article 13, section 2	Section 16. Bovine tuberculosis credit definitions. Modifies the definitions that apply to this program. The definition of the zone is no longer referred to as a "proposed" zone, but instead means the modified accredited zone that has been designated by the Board of Animal Health. The reference to "located within" means that the herd is kept in the area for at least part of calendar years 2006, 2007, or 2008. Current law is limited to 2007 and a new definition of "animal" is added to mean cattle, bison, goats, and farmed cervidae.
	No comparable provision	Section 17. Bovine tuberculosis credit calculation. Clarifies the application of the credit to rural vacant land as well as agricultural land. The amount of the credit will be determined as the greater of $5.00 per acre on the first 160 acres of property where the herd had been located or an amount equal to $5.00 per acre, times five acres, times the highest number of animals tested on the property for bovine tuberculosis in 2006, 2007, or 2008. The amount of the credit may not exceed the property tax payable on the land where the herd had been located, excluding the tax attributable to residential structures.
9	Preservation of riparian buffers. Subdivision 1. Definitions. Defines “riparian buffer” as a strip of original or restored native vegetation adjacent to public waters that extends a minimum of 50 and a maximum of 100 feet from the ordinary high water level. Subd. 2. Requirements. (a) Provides that land must be classified as 2a or adjacent to land classified as 2a to be enrolled in the program. (b) Provides that the buffer must be maintained in a natural state, and that annual buffer maintenance will be performed. Provides that the property owner must file an affidavit every three years stating that the buffer has been maintained. (c) Provides that property enrolled in the program will be liable for taxes based on the reduced valuation prescribed in subdivision 3, and that all special assessments shall be deferred until the property is withdrawn or becomes ineligible. (d) Provides that land enrolled under this program may not be enrolled in other reduced valuation programs, such as “Green Acres.” Also provides that land removed from “Green Acres” for enrollment in this program is not subject to normal “Green Acres” back-taxes. Subd. 3. Determination of value. (a) Provides that enrolled land under an irrevocable covenant must be valued at 25 percent of the average value of class 2b (rural vacant) land in the surrounding area. (b) Provides that enrolled land under a revocable covenant must be valued at 75 percent of the average value of class 2b (rural vacant) land in the surrounding area. Subd. 4. Separate determination of market value and tax. Provides that the assessor shall each year make a separate determination of the tax on the parcel based on its “highest and best use” value. Subd. 5. Application and covenant agreement. Provides that the owner/ applicant must record a covenant agreement with the county recorder. Provides that if the covenant is revocable, it must require a 4-year advance notice of termination, which may not be given until the covenant has been in effect for at least 16 years. Provides that the covenant must be binding on the owner or the owner’s successor, and that it runs with the land. Also provides that once a revocable covenant has been terminated, the property may not be reenrolled unless sold or transferred to a different owner. Subd. 6. Additional taxes. Provides that when a covenant is terminated, the property shall be subject to back-taxes equal to the difference between the tax based on the “highest and best use” value and the tax based on the reduced value for the past seven years. Subd. 7. Cross-compliance with agricultural chemical and water laws. Terminates program participation for a violation of agricultural chemical or water protection laws occurring on the property. Requires any deferred special assessments to be paid, plus back-taxes equal to the tax benefits received over the last 7 years of enrollment. Prohibits reenrollment for a period of three years. Subd. 8. Lien. Provides that the additional taxes imposed under subdivisions 6 and 7 constitute a lien on the property. Effective date: Provides that the bill is effective for taxes payable in 2012 and thereafter.	No comparable provision
10	Applicability. Technical change relating to disaster-damaged homes provision in section 12.	No comparable provision
11	Reassessments required. Technical change relating to disaster-damaged homes provision in section 12.	No comparable provision
12	Disaster-damaged homes; partial valuation exclusion. Provides for a valuation exclusion for a home that: } sustained sufficient damage in a disaster to reduce its value by at least $15,000, } was restored or rebuilt by the end of the year after the disaster, } has a gross living area after reconstruction that does not exceed 130 percent of its pre-disaster gross living area, and } has an estimated market value after reconstruction that exceeds its pre-disaster value by at least $25,000. Provides that the difference between the post-reconstruction value and the pre-disaster value will be excluded in the first assessment year following reconstruction, and one-half of the difference will be excluded in the second assessment year following reconstruction. Requires the owner to file an application for the valuation exclusion by January 2 of the year following the year in which the restoration or reconstruction was substantially completed. Effective for assessment year 2009 and thereafter (extends application deadline to June 30, 2009, for restoration or reconstruction occurring in 2008).	No comparable provision
13	General rule (new relative homestead prohibition). Prohibits any new properties from qualifying for relative homestead classification after July 1, 2009 (does not affect agricultural properties).	No comparable provision
	No comparable provision	Section 18. Utility property class rates. Increases the class rate that applies to personal property of an electric generation system to 2.8 percent, and the class rate that applies to personal property that is either part of a pipeline system that transports water, gas, crude oil, or petroleum or part of an electric transmission or distribution system, to 2.25 percent. Under current law, all utility personal property has a class rate of 2 percent.
14	Class 4 (commercial-seasonal classification for small inns). Extends the 4c property classification to property containing 20 or fewer rental units, devoted to temporary residential occupancy, and located in a city or township outside the seven-county metropolitan area with a population of 2,500 or less. Subjects the property to a class rate of 1 percent on the first $500,000 of market value and 1.25 percent on the value in excess of $500,000, and to the seasonal-recreational state general tax rate. Under current law, this property is classified as class 3a with class rates of 1.5 percent on the first $150,000 of value and 2.0 percent on the value in excess of $150,000, and is subject to the commercial-industrial state general tax rate. Effective for assessment year 2009, taxes payable in 2010, and thereafter. For assessment year 2009, the January 15 application deadline is extended to July 1, 2009.	Section 19, same, except Senate language requires occupancy no more than 250 days in the year, and that the city or town contains a portion of a state trail. The Senate language also includes property used as a marina that is open to the public.
15	Homestead of disabled veteran. Extends the time period from one year to five years that the surviving spouse of a deceased disabled veteran can continue to qualify for the disabled veteran homestead market value exclusion, provided the spouse remains in the house and does not remarry. Effective for taxes payable in 2010 and thereafter.	No comparable provision
16	Computation of net property taxes. Deletes the bovine tuberculosis credit from the list of property tax credits (the property tax credit is transformed to a state grant program in article 13, section 2).	No comparable provision. Senate bill modifies the bovine tuberculosis property tax credit in article 4, sections 16 and 17.
17	State general tax rate. Provides that in setting the rate of the state general tax on commercial-industrial property for taxes payable in 2010, the commissioner is to ignore the tax capacity of the airport property added to the base in section 18. Provides that in following years, the tax on the airport property will be “rolled-into” the base.	Section 20. Senate bill freezes the rate of the state general tax at the rate imposed for payable 2003.
18	State general tax; airport exemption. Eliminates the exemption for metropolitan airport commission property from the state general tax. This will subject property at the Minneapolis St. Paul International Airport and the St. Paul airport (Holman Field) to the state general tax. The area of these airports will remain “detached” and the property on the grounds will not be subject to city or school district property taxes. Effective date: property taxes payable in 2010	Sections 20 and 21. Senate bill removes seasonal recreational property from the state general tax.
19	Contents of tax statements. Provides that the property tax statement must not state or imply that property tax credits are paid by the state.	No comparable provision
	No comparable provision	Sections 26 and 27. Levy limit cross references. Section 26 strikes a reference to levy limit provisions that are repealed in section 61. Section 27 adds a reference to 2008 Minnesota Statutes to the levy categories required for the property tax levy report.
	No comparable provision	Section 28. Property tax installments. Increases from $50 to $250 the minimum property tax amount for which counties must allow payments in two installments.
20	Publication corrected. Provides that if the county auditor discovers an error in the delinquent tax list as published in the newspaper, the auditor does not have to republish the entire list, but only the information that needs to be corrected. (The other changes are not substantive.) Effective the day following final enactment.	Section 29, same
21	Apportionment of tax-forfeited land proceeds to taxing districts. Authorizes counties to use a portion of the proceeds from the sale or rental of tax-forfeited lands to replace all or a portion of their county program aid or market value credit reimbursement cuts or unallotments. Provides that if a county board decides to use some of these funds, they must pass a resolution within six months of the actual aid or credit reimbursement loss. The amount of the transfer from a county’s tax-forfeited fund to its general fund cannot exceed the aid or credit reimbursement loss. Authority expires January 1, 2012. Effective the day following final enactment.	No comparable provision
22	Senior citizen property tax deferral program; qualifications. Makes two changes to the list of qualifications for the senior citizen property tax deferral program: } Changes the age requirement so that at the time deferral is initially granted, only one spouse must be at least 65 years old. Requires the other spouse to be at least 62 years old. Under present law both spouses must be at least 65 years old for a married couple to qualify for the deferral. } Increases the maximum household income allowable for program participation from the $60,000 under current law to $75,000. Effective July 1, 2009.	No comparable provision
23	Senior deferral; excess income certification by homeowner. Increases the income level that triggers the requirement for the homeowner to notify the commissioner of “excess income” from $60,000 to $75,000.	No comparable provision
24	Senior deferral; resumption of eligibility. Changes the income level that triggers eligibility for a homeowner to resume program participation from income under $60,000 to income under $75,000. This applies to homeowners who become ineligible due to having income over the limit, but are then allowed to resume participation when their income falls below the maximum in a subsequent year.	No comparable provision
25	Senior deferral; determination by commissioner. Increases the maximum household income level at which program participation is allowed from $60,000 to $75,000.	No comparable provision
	No comparable provision	Section 30. Airport authority. Permits airport authorities to exercise the municipal power of airport zoning.
26	Special service districts; deadline for establishing. Extends the sunset date for establishing special service districts without special legislation from June 30, 2009, to June 30, 2013. (The sunset of the general law does not affect districts established prior to the sunset date.)	Section 33, same
		Sections 34 and 35. Housing improvement areas. Provides that before establishing a housing improvement area, a city must provide full disclosure of public expenditures, including terms of financing for improvement area projects. If fees are imposed on housing units within the area on a basis other than tax capacity or square footage of the units, the council must make a finding that the alternative is more equitable. Fees imposed must meet the standard for benefits as special assessments and are subject to the same appeal processes.
27	Housing improvement districts; deadline for establishing. Extends the sunset date for establishing housing improvement districts without special legislation from June 30, 2009, to June 30, 2012. (The sunset of the general law does not affect districts established prior to the sunset date.)	Section 36, same, except Senate extends the date to June 30, 2013.
28	Municipality; certain counties (abatement authorization). Allows counties to use special assessments to abate nuisances and to correct environmental, wetland, or land use violations. This section, along with the changes made in section 29, allow a county to clean-up nuisances that are violations of environmental, wetland, or land use regulations, and charge the owner for those costs. Effective the day following final enactment.	Section 37. Senate language is the same with respect to abatements of nuisances, but does not include environmental, wetland, or land use violations.
29	Improvements authorized. Authorizes cities and counties to make improvements for the purpose of correcting environmental, wetland, or land use violations. Effective the day following final enactment.	No comparable provision
30	Municipal street improvement districts. Subd. 1. Definitions. Defines “class of property” (classes 1 through 5 without regard to subclasses, exempt property may be subject to fee as additional class); “governing body” (city council); “improvements “(essentially any type of street improvement); “maintenance;” “municipal street;” “municipality” (home rule charter or statutory city); and “street improvement district.” Subd. 2. Authorization. Authorizes a city to establish municipal street improvement districts to finance street improvements and maintenance by apportioning the costs to properties in the district. When establishing boundaries, a city may not exclude any class or parcel that is served by the municipal street on an equal basis with other classes or parcels, except this limitation does not apply to tax exempt property. Subd. 3. Uniformity. (a) Requires costs to be apportioned to all parcels on a uniform basis within each class of property; separate methods could be used for different classes of property (e.g., residential versus commercial). (b) Requires that the method of apportioning costs must not apportion costs to any class of property at a ratio of more than 2 to 1, relative to rate for the property in any other class. Provides the limit does not apply to fees that municipality elects to impose on tax exempt property. Subd. 4. Adoption of plan. (a) Requires the city, before adopting a street improvement ordinance or authorizing a fee, to (1) identify and estimate costs for the proposed improvements for the life of the district; (2) identify the location of the district, limiting included properties to those that will be served by the improvements; and (3) specify how costs will be apportioned. (b) Requires notice and a public hearing. Notice must be given to all affected landowners and must include how fees would be imposed and illustrative examples of amount of fees for average parcels for each class of property in district. Subd. 5. Use of fees. Requires a separate account for the fees collected and that fees be used only for projects in the district and identified in the plan. Subd. 6. Collection. (a) Permits collection of fees on a monthly, quarterly or other basis. Provides that a governing body may collect fees for a maximum of ten years, which is the maximum duration of a district. (b) Provides that fees that have remained unpaid for at least 30 days as of October 15 of each year, may be certified for collection as property taxes in the following year. Subd. 7. Notice; hearing. (a) Provides an ordinance establishing a district cannot be adopted until a public hearing is held. After adoption, a summary must be sent to each property owner that would be subject to the fee. (b) Requires that mailing must include notice that owners subject to fee have right to petition for referendum vote; and estimates of the fee that would be imposed on owner’s parcel in the first year, and of the maximum annual fee that would be imposed on the owner’s parcel during the duration of the project. Subd. 8. Reverse referendum. Provides 35 percent of the owners in the district can trigger a referendum on the ordinance by filing objections within 45 days after the ordinance is adopted. The election will be conducted by mail ballot and each parcel of property is entitled to one vote. Subd. 9. Not exclusive means of financing improvements. Provides that the city may use other measures to pay the costs of local street improvements, except that the city cannot also impose special assessments for the projects funded with fees under this section and must recognize credits allowed in any previously negotiated development agreements.	No comparable provision
	No comparable provision	Section 40. Duluth Seaway Port Authority levy. Provides that the Seaway Port Authority of Duluth is a special taxing district with the power to levy a property tax of up to 0.01813 percent of taxable market value.
	No comparable provision	Section 41. Implicit price deflator. Provides a definition for the implicit price deflator to replace the definition that is repealed in the levy limit law.
	No comparable provision	Sections 43 through 45. Levy limit cross references. Replaces references to the implicit price deflator used for miscellaneous levy limits provisions with the statutory reference in section 41.
	No comparable provision; except that the administrative auditor must prepare a report on the feasibility of eliminating the lag (article 6, section 37)	Sections 46 and 47. Fiscal disparities lag. Modifies the fiscal disparities program that applies within the seven‑county metropolitan area. These sections eliminate the one‑year lag so that fiscal disparities distribution amounts would be based on current year tax rates. To accommodate these changes, deadlines for various stages of the property tax process are changed in order to provide sufficient time to obtain the current year data. These sections are effective beginning with taxes payable in 2014.
31	Termination of eligibility (Metro Ag preserves). Terminates participation in the metro ag preserves program for a violation of agricultural chemical or water protection laws. Requires any deferred special assessments to be paid, plus back-taxes equal to five years of tax benefits received. Does not affect the covenant restricting use of the land. Prohibits reenrollment for a period of three years. Effective for taxes payable in 2011 and thereafter.	No comparable provision
32	Application date (Metro Ag preserves). Extends the deadline for initial application to the Metropolitan Agricultural Preserve program from March 1 to June 1 for taxes payable in the following year. Effective the day following final enactment, except that in 2009 the application date is extended to August 1.	No comparable provision
	H.F. 1298 (first engrossment), section 36 is the same and repeals the referendum exemption for OPEB bonds.	Section 48. Emergency debt certificates referendum. Provides that a referendum is not required for issuance of emergency debt certificates issued under section 49.
	Article 13, section 13. Similar, but coordinates issuance of emergency debt certificates with special levies authorized in article 13, section 7.	Section 49. Emergency debt certificates. Authorizes the issuance of emergency debt certificates by a local government. It provides that, if any time during a fiscal year, the receipts of the local government are reasonably expected to be reduced below the amount provided in the local government's budget when the final property tax levy was certified, and the receipts are insufficient to meet the expenses for the fiscal year, the governing body may authorize and sell certificates of indebtedness. The certificates must mature within two years from the end of the fiscal year in which they were issued. The maximum principle amount of the certificates is limited to the expected reduction in receipts plus the cost of issuance of the certificate. The governing body is authorized to levy taxes for the payment of the debt service on the certificates; the certificates would not be included in the net debt limit of the local government. Local governments are defined to include: cities, towns, or counties. Receipts are defined to include the amounts scheduled to be received by the local government for the fiscal year from taxes, aid payments previously certified by the state, state reimbursement payments for property tax credits, and any other source.
	No comparable provision	Section 50. Red River Watershed Management Board. Allows the Red River Watershed Management Board to conduct meetings at a public facility within the Red River basin or within a jurisdiction with which the board is authorized to cooperate.
33	Extends date; emergency medical service districts. Extends the date for establishing emergency medical (EMS) services special taxing districts for three additional years.	Section 51. Senate bill removes the sunset on emergency medical special service districts.
34	Effective date. Clarifies that the change made to the metropolitan area plat law in the 2008 omnibus tax law only affects land platted after the 2008 omnibus tax law was passed.	Section 52, same
35	Effective date. Clarifies that the change made to the non-metropolitan area plat law in the 2008 omnibus tax law only affects land platted after the 2008 omnibus tax law was passed.	Section 53, same
36	Purpose: commissioner of revenue guidance. States that the purpose of section 1 is not to contract or expand the definition of “institutions of purely public charity” but to provide clear standards that can be applied uniformly to determine eligibility for exemption from property taxation. Requires the commissioner of revenue to prepare a bulletin providing guidance to assessors as to the commissioner’s interpretation of section 2.	Section 60, similar, Senate language refers to “compelling factual reason” rather than “reasonable justification.”
37	Report by administrative auditor. Requires the administrative auditor of the fiscal disparities program (currently Anoka County), in cooperation with the other metro county auditors, to study the feasibility of basing fiscal disparities distributions on current year tax rates, and to report the findings to the House and Senate Tax committees by February 1, 2011, along with any recommendations for changes in the law that would be necessary to implement the change.	Section 59. Senate language requires a working model of the metropolitan revenue system, and recommendations for implementing Senate sections 46 and 47. Senate report is due February 1, 2012.
38	Minneapolis Convention Center; lease; property tax exemption. Exempts property at the Minneapolis Convention Center that is subject to a lease or use agreement between the city of Minneapolis and a private entity for providing food and beverage services. Effective for assessment year 2009 and thereafter, for taxes payable in 2010 and thereafter	No comparable provision
39	Repealer. Repeals the bovine tuberculosis credit, effective for taxes payable in 2010 and thereafter (the property tax credit is transformed to a state grant program in article 13, section 1).	No comparable provision; Senate modifies the bovine tuberculosis property tax credit in article 15, sections 16 and 17.
	No comparable provision	Section 54. Conservation management plans. Provides that the conservation management plans required for the Rural Preserve property tax program must be prepared according to guidance provided by the Board of Water and Soil Resources. The board must provide a training course for conservation plan writers.
	No comparable provision	Section 55. Rural preserves. Strikes a limitation that not more than 50 percent of the acreage of an agricultural homestead can be class 2b property enrolled in rural preserves.
	No comparable provision	Section 56. Cloquet Fire and Ambulance special taxing district. Authorizes the City of Cloquet and Perch Lake township to create a special taxing district for the purpose of providing fire and ambulance services throughout the district. Other adjoining municipalities are authorized to join the district with the approval of the member municipalities. The special taxing district is authorized to levy 0.2835 percent of taxable market value for taxes payable in 2010.
	No comparable provision	Section 57. Property tax treatment of horse breeding and horse boarding properties. Requires the Commissioner of Revenue, in consultation with the Commissioner of Agriculture, to study the property tax treatment of properties used for horse breeding and horse boarding under current law. The commissioner is required to report to the Senate and House Tax Committees by February 1, 2010. The owner of property that had been classified as agricultural in 2008 based on its use for horse breeding or boarding may appeal its 2009 classification to the commissioner if the property's use has not substantially changed, and the commissioner must resolve the appeal by issuing a written order.
	No comparable provision	Section 58. Disrupted access abatements. Allows municipalities to abate taxes on business property with a market value of $250,000 or less if a public transportation project has impeded access to the business for more than three months resulting in a loss of revenue to the business.
	Article 5, section 14 repeals truth-in-taxation hearing requirements.	Section 61. Repealer. Repeals: (a) Truth in Taxation hearing requirements; (b) levy limits applicable to county governments and cities over 2,500 population; and (c) the allocation of the statewide general levy between seasonal recreational and commercial‑industrial properties.

Sec.	Article 8: Seasonal Recreational Property Tax Deferral Program
1	Seasonal recreational property tax deferral program. Establishes the “seasonal recreational property tax deferral program” (sections 2 to 9).	Senate has no comparable provisions
2	Terms. Subd. 1. Terms. Defines the terms used in this section. Subd. 2. Primary property owner. “Primary property owner” means a person (1) who has been the owner, or one of the owners, of the eligible property for at least 15 years prior to filing the application to be in the program; and (2) applies for the deferral of the property taxes. Subd. 3. Secondary property owner. “Secondary property owner” means any person, other than the primary property owner, who has been an owner of the eligible property for at least 15 years prior to the year the initial application is filed for deferral of property taxes. Subd. 4. Eligible property. “Eligible property” means a parcel of property or contiguous parcels of property under the same ownership and classified as noncommercial seasonal residential recreational property (i.e., cabins). Subd. 5. Base property tax amount. “Base property tax amount” means the total property taxes levied by all taxing jurisdictions, including special assessments, on the eligible property in the year prior to the year that the initial application is approved and payable in the year of that application. Subd. 6. Special assessments. “Special assessments” mean any assessment, fee, or other change that may be made by law, and that appears on the property tax statement for the property for collection under the laws and enforcement of real estate taxes. Subd. 7. Commissioner. “Commissioner” means the commissioner of revenue.
3	Qualifications for deferral. Defines the criteria needed for a property to qualify for deferral: (1) the property must have been owned by the primary owner for at least 15 years prior to enrolling in the deferral program. (2) there can be no state or federal tax liens or judgment liens on the property; (3) there can be no mortgages or other liens on the property except for those subject to the credit limits under clause (4); and (4) the total amount of secured debt on the property, including mortgages and other liens, delinquent special assessments, and delinquent property taxes, but not including the current year’s property taxes, may not exceed 60 percent of the property’s estimated market value.
4	Application for deferral. Subdivision 1. Initial application. (a) Requires an owner of a qualified property to file an application on or before July 1 of any year in order for property taxes payable in the forthcoming year to qualify for deferral. The application must include: (1) the name, address and social security number of the primary owner and any secondary owners; (2) a copy of the current year’s property tax statement; (3) the initial year of ownership of the primary owner and any secondary owners; (4) information on all loans secured by mortgages or other liens on the property; and (5) the signature of the primary owner and all other owners, stating that they agree to having the property enrolled in the program. The application must state that program participation is voluntary, including authorization for the annual deferred amount. Provides that the deferred tax amount is public data. (b) Allows the commissioner of revenue to ask for a report by a licensed abstracter in the case of abstract property seeking enrollment in the deferral program. Subd. 2. Approval; recording. Requires the commissioner of revenue to notify applicants of enrollment prior to December 1 for taxes payable in the following year, and to file a notice of qualification for deferral with the county recorder. Subd. 3. Penalty for failure; investigations. Requires the commissioner to assess a penalty equal to 20 percent of the deferred tax in the case of a false application, or 50 percent in the case of the taxpayer knowingly filing a false application. Subd. 4. Annual certification to commissioner. Requires the primary property owner to certify annually by July 1 that the property continues to qualify for the program. Requires that if the primary owner has died or has transferred the property, the primary owner’s spouse or a secondary owner may make the certification, and in that case that person will become the primary owner. Provides that if neither the primary owner, the primary owner’s spouse nor a secondary owner are eligible to file the annual certification, the property’s participation in the program will terminate and payment of the deferred taxes must be made. Subd. 5. Annual notice to primary owner. Requires the commissioner of revenue to annually notify the primary owner of the total amount of deferred taxes for each participating property.
5	Deferred property tax amount. Subd. 1. Calculation of deferred property tax amount. Provides that the deferred tax amount for a qualifying property each year is 50 percent of the amount by which the current year’s property tax (including special assessments) exceeds the property taxes in the base year (year of application). Provides that any tax attributable to improvements made to the property since the base year are not subject to deferral. Also provides that the deferred tax amount is to be shown on the tax statement. Subd. 2. Certification to commissioner. Provides that the county auditor shall annually by April 15 certify the amount of deferred taxes to the commissioner of revenue for each qualifying property. Subd. 3. Limitation on amount of deferred taxes. Provides that the total amount of deferred taxes on a property, when added to any unpaid special assessments and/or property taxes and the balance owed on any mortgages at the time of application and the amount of other secured liens at the time of application, must not exceed 60 percent of the property’s estimated market value.
6	Lien; deferred portion. (a) Provides that interest on the deferred taxes will accrue at a rate not to exceed two percent more than the interest rate on deferred taxes under the senior deferral program in chapter 290B. (b) Provides that the deferred taxes become a lien on the property. Contains standard language pertaining to what happens when the property taxes are not paid on the property participating in the program.
7	Termination of deferral; payment of deferred taxes. Subdivision 1. Termination. (a) Provides for program termination whenever: (1) the eligible property is transferred to someone other than the primary owner’s spouse or a secondary owner; (2) the primary owner dies, or in the case of a married couple both spouses die, provided that there is not a secondary owner eligible to become a primary owner; (3) the owners notify the commissioner of revenue that they no longer wish to participate in the program; or (4) the property no longer qualifies under section 3. (b) Provides that a property is not terminated from the program just because no taxes are deferred in any given year. (c) Provides that if an eligible property becomes the homestead of one of the owners, and if the homeowner qualifies for the senior deferral program, the deferred tax under the seasonal-recreational deferral program will be rolled-over to the senior deferral program. Subd. 2. Payment upon termination. Provides that the deferred taxes become due and payable within 90 days of termination if the primary owner dies or transfers the property, or within one year if the owners opt-out of the program or if the property ceases to remain eligible.
8	State reimbursement. Provides that the state will pay the deferred tax amount to each county treasurer by August 31 of each taxes payable year. The county treasurer shall distribute the dollars as part of the regular October settlement. Appropriates to the commissioner of revenue annually a sum sufficient to pay the deferred tax amounts.
9	Effective date. Provides that sections 1 to 8 are effective for applications filed July 1, 2009, and thereafter.

Sec.	Article 10: Sales and Use Tax	Article 3: Sales and Excise Taxes
1	Proof of sales tax payments; used snowmobiles. Requires all purchasers of a used snowmobile to either provide proof that the sales tax has been paid or provide the necessary information so the sales tax can be calculated and paid at the time that the purchaser registers the snowmobile. Effective for sales and purchases made after June 30, 2009.	No comparable provision
2	Proof of sales tax payments; all-terrain vehicles. Requires all purchasers of a used all-terrain vehicle to either provide proof that the sales tax has been paid or provide the necessary information so the sales tax can be calculated and paid at the time that the purchaser applies for transfer of the registration. Effective for sales and purchases made after June 30, 2009.	No comparable provision
3	Proof of sales tax payments; used boats. Requires all purchasers of a used boat to either provide proof that the sales tax has been paid or provide the necessary information so the sales tax can be calculated and paid at the time that the purchaser applies for a boat license. Effective for sales and purchases made after June 30, 2009.	No comparable provision
4	Notification requirements. Requires the Department of Revenue to establish a “listserv” to electronically notify persons holding a sales tax permit of changes in the sales tax law and the issuance of new rules, notices, and fact sheets or similar information related to sales tax. The requirement only applies if the permit holder has provided an email address. A permit holder can request to not be included in the notification. The notification must begin by December 31, 2009.	No comparable provision
5	Return required. Allows a person prohibited due to religious beliefs from using electronics to file a sales tax return by mail without additional fees. Effective for returns filed after June 30, 2009.	No comparable provision
6	Sales and use tax (remittance). Allows a person prohibited due to religious beliefs from using electronics to remit sales taxes by mail without additional fees. The payment must be postmarked at least two business days before the day it is due. Effective for sales taxes remitted after June 30, 2009.	No comparable provision
7	Sales and purchase. Adds specified digital products and other digital products to the definition of taxable sales. Paragraph (l) adds the right to access or use digital products for a consideration, whether on a temporary or permanent basis, to the definition of a taxable sale.	No comparable provision
8	Retail sale. Adds a number of cross-references to specified digital products and other digital products to the existing definition of retail sales. Clarifies that retail sales includes temporary access to specified digital products or other digital products. Clarifies that the purchase of a digital code to access digital products is retail sales and subsequent access to digital products using the code are not retail sales. States that purchase of digital music by a person that provides music through a juke box or similar device is a sale for resale.	No comparable provision
9	Storage. Adds a cross-reference to specified digital products and other digital products to the existing definition of storage.	No comparable provision
10	Use. Adds a cross-reference to specified digital products and other digital products to the existing definition of use.	No comparable provision
11	Tangible personal property. Clarifies that the electronic delivery of computer software is still included in the definition of tangible personal property although other digital products are not tangible personal property.	No comparable provision
12	Lease or rental. Adds a cross-reference to specified digital products and other digital products to the existing definition of lease or rental.	No comparable provision
13	Delivered electronically. Clarifies that computer software is not “delivered electronically” and does apply to computer software even if the purchaser only has access to the software online.	No comparable provision
14	Normal course of business. Adds a cross-reference to specified digital products and other digital products to the existing definition of normal course of business.	No comparable provision
15	Bundled transaction. Adds a cross-reference to specified digital products and other digital products to the existing law related to bundled transactions.	No comparable provision
16	Digital audio visual work. Defines “digital audio visual work” using the SSUTA required definition and expands on it to list specific items included such as movies, music videos, and live events, and items that are excluded such as video greeting cards, which are included in the definition of “other digital products.” Includes digital codes or subscriptions used to access these works.	No comparable provision
17	Digital audio work. Defines “digital audio work” using the SSUTA required definition and expands on it to list specific items included such as music, voice recordings, and ring tones, and items excluded such as audio greeting cards which are included in the definition of “other digital products.” Includes digital codes or subscriptions used to access these works.	No comparable provision
18	Digital book. Defines “digital book” using the SSUTA required definition and expands on it to list specific items included such as fiction, non-fiction, and short stories, and items excluded such as magazines and newspapers. Includes digital codes or subscriptions used to access these works.	No comparable provision
19	Digital code. Defines “digital code” as a code that allows a purchaser to access digital products, regardless of how the code is transmitted to the purchaser. Digital codes do not include gift card or gift certificates.	No comparable provision
20	Specified digital products. Defined as the digital products currently defined in the SSUTA. These include digital audio-visual works, digital audio works, and digital books.	No comparable provision
21	Transferred electronically. Adopts the SSUTA definition of “transferred electronically” and clarifies that the purchaser does not have to be given a copy of the product; they just need to have access to the digital product.	No comparable provision
22	Other digital products. Defines other digital products for sales tax purposes to be digital greeting cards, digital artwork, and video or electronic games. These items are currently taxable in Minnesota in tangible form but SSUTA has currently not adopted definitions for these products.	No comparable provision
23	Constitutionally required additional sales tax. Adds a subdivision with the 0.375 percent rate increase required under the constitution to the sales tax rate statute so that the total state rate is easily identified.	No comparable provision
24	Use tax imposed; rates. Adds a number of cross-references to specified digital products and other digital products to the existing law related to use tax.	No comparable provision
25	Fee imposed (short term motor vehicle rental). Exempts nonprofit car sharing organizations from the special car rental fee that applies in lieu of the motor vehicle registration tax and makes them subject to the motor vehicle registration tax. Only nonprofit corporation that charges persons or group oh an hourly basis to use the vehicles qualify and they must } Use unstaffed self-service locations that are available any time of the day; } Provide vehicle maintenance, insurance, and fuel; and } Not provide discounts or lower rates for increased use.	Article 3, section 1, identical
26	Definitions (retailer in this state). Adds a cross-reference to specified digital products and other digital products to the existing definition of a “retailer maintaining a place of business in this state.”	No comparable provision
27	Solicitor. Defines a “solicitor” as a person who enters into a contract to directly or indirectly refer potential customers to a business or the Web site of the business. States that a business is presumed to have a solicitor in this state, and therefore has a duty to collect the state sales tax, if it has at least $10,000 annually of sales into Minnesota based on referrals from residents of this state or businesses with a physical presence in the state. Provides for a rebuttal of that presumption. Effective beginning with sales made after June 30, 2009.	Article 3, section 2, identical
28	Sales tax exemption; home heating fuels. Currently, natural gas and electricity for residential heating are exempt from the sales tax for the months of November through April. Paragraph (a) limits the exemptions for natural gas to the first 850 hundred cubic feet (CCF) per residential unit during the 6 month period and the exemption for electricity to the first 5,750 kilo-watt hours per dwelling unit during the six-month period. Effective for sales and purchases made after June 30, 2009. In paragraph (b) the current exemption for all natural gas or electricity used for home heating during the months of October through April is retained for any customer receiving aid from a low income home energy assistance program (LIHEAP).	No comparable provision
29	Occasional sales. Excludes the sale of a used snowmobile, all-terrain vehicle, or boat from the isolated and occasional sale exemption. Effective for sales and purchases made after June 30, 2009. Also adds a cross-reference to specified digital products and other digital products to the existing exemption for occasional sales. Effective for sales and purchases after June 30, 2009.	No comparable provision
	No comparable provision	Section 3. Upfront sales tax exemption ‑ capital equipment. Amends Minn. St. § 297A.68, subdivision 5. This is part of the changes required to give an upfront sales tax exemption for capital equipment.
	No comparable provision	Section 4. Sales tax exemption-meat processing facility. Adds a subdivision to Minnesota Statutes, section 297A.71, providing a sales tax exemption for construction materials related to a meat processing facility built to replace one destroyed by a fire this year and employed more than 200 people. The refunds issued for this exemption will be refunded after June 30, 2011.
	No comparable provision	Section 5. Sales tax exemptions. Amends Minn. St. § 297A.75, subdivision 1, related to sales tax collection for exempt items. This is part of the changes required to give an upfront stales tax exemption for capital equipment, and one exemption for a meat processing facility in section 4.
	No comparable provision	Section 6. Sales tax ‑ refunds of exempt items. Amends Minn. St. § 297A.75, subdivision 2, related to refunds of exempt items. Also part of the upfront sales tax exemption for capital equipment, and one exemption for a meat processing facility in section 4.
	No comparable provision	Section 7. Sales tax refund applications. Amends Minn. St. § 297A.75, subdivision 3, related to application for refunds of exempt items. Final part of the upfront sales tax exemption for capital equipment.
30	Quarterly transfer of sales tax on motor vehicle leases. Eliminates the dedication of revenues from the sales tax on motor vehicle leases to the lower income motor fuels credit. This credit is repealed in article 1. The dedicated portion of the revenue from the sales tax on these leases will now be split 50-50 between the greater Minnesota transit account and the county state-aid highway fund. Allows the commissioner to estimate the revenue collected from the sales tax on motor vehicle leases and deposit into those accounts on a quarterly basis. Effective July 1, 2009.	No comparable provision
31	Commissioner’s discretion. Adds a cross-reference to specified digital products and other digital products to the existing law regarding whom the commissioner regards as a retailer.	No comparable provision
32	Deposit of revenues. Clarifies that the statutorily dedicated portions of the current sales tax do not include any revenue raised by the imposition of the constitutionally dedicated 0.375 percent tax increase. The main dedications are revenues from motor vehicle leases to transportation, and the revenue from the in lieu tax on lottery tickets.	No comparable provision
33	Use tax. Adds a cross-reference to specified digital products and other digital products to the existing local sales tax law.	No comparable provision
34	Rate (motor vehicle sales). Removes the link on tax rates between the general sales tax and the motor vehicle sales tax. The motor vehicles sales tax rate will remain at 6.5 percent.	No comparable provision
35	Use of property ( Minneapolis local sales tax.) Allows the city of Minneapolis to use revenues from their local sales tax to pay for the purposes in section 36. Deletes obsolete language allowing the city to impose the local tax on a different tax base then the one used for the state tax	No comparable provision
36	Minneapolis city services and neighborhood projects. Allows the city to use any local sales tax revenues not needed to pay bonds to: } Fund city services in 2009 and 2010, up to an amount equal to the city’s aid losses in 2008, 2009, and 2010; and } Fund neighborhood projects in 2011 and thereafter	No comparable provision
37	Minneapolis downtown taxing area. Modifies the area in which the special Minneapolis convention center tax applies to exclude properties that are zoned under chapter 546 of the Minneapolis zoning code (this is the chapter that zones residential uses) and contain a restaurant or bar. Effective for sales after July 31, 2012, and provides that the taxes collected between July 1, 2009, and July 31, 2012, from that area shall be deposited in the state general fund to recover taxes paid to the city that the state never collected.	Article 3, section 8, same provision with technical language difference.
38	Mankato local sales tax - use of revenues. Amends the allowed uses of the Mankato local sales tax revenue by deleting the requirement that the performing arts center and a women’s hockey arena must be attached to the Mankato Civic Center. The amount allowed to be raised by the local sales tax remains unchanged.	Article 3, section 9, identical
39	St. Paul local sales tax - use of revenues. Extends the city of St. Paul’s authority to use up to $3.5 million annually of its sales tax revenue to pay for bonds for capital projects related to cultural and economic development projects. Currently this authority ends after this year; the bill extends the authority to 2014.	Article 3, section 10, identical
40	St. Paul local sales tax - unexpended funds and interest. Limits the use of interest on loan repayments and returned funds from revenues allocated to the residential, cultural, commercial, and economic development capital projects to other capital projects authorized under the same provision.	Article 3, section 11, identical
41	Little Falls food and beverage tax. Allows the city of Little Falls to extend its local food and beverage tax for an additional 15 years and allows it to expand the tax base to include alcoholic as well as non-alcoholic beverages.	No comparable provision
42	St. Paul local sales tax - requirement. Amends the citizen review process for the expenditure of St. Paul sales tax revenues dedicated to neighborhood investments to explicitly state that the review process must be open, fair, and competitive and that all proposals must be reviewed before the panel makes a proposal to the city council.	Article 3, section 12, identical
43	Rochester lodging tax. Increases the existing Rochester lodging tax of 1 percent by another 1 percent. The revenues from the increased tax must be used to pay for renovation and expansion of the Mayo Civic Center Complex and related bonds. The tax may only be increased if the state appropriates money for this project and the city approves a total financing package. The authority for the increased tax expires when revenues raised are sufficient to fund the project and pay associated bonds, or earlier if the city desires.	Article 3, section 13, similar provision, but no requirement for the state to appropriate new money, money cannot be used for parking, and contains a reference to the design grant from 2008 in expiration date.
44	Owatonna local sales tax – use of revenues. Modifies the allowed uses of revenue generated by the city of Owatonna’s local sales tax. Currently the city is allowed to use up to $4.5 million for transportation projects listed in the 2004 U.S. Highway 14-Owatonna Beltline study. This allows the city to use up to $1.5 million of the $4.5 million for another road project in the city. The change in use would not require a local referendum. The amount allowed to be raised by the local sales tax remains unchanged.	Article 3, section 14, identical
45	Mankato local restaurant and entertainment taxes - use of revenues. Makes a conforming change to the change in section 38.	Article 13, section 15, identical
46	Sales and local lodging taxes collection; Department of Revenue. Requires the Department of Revenue to make efforts to collect any unpaid sales and local lodging taxes from online travel companies on the total rent paid for the lodging. Currently these travel companies are paying taxes on the amount they pay to the hotel or motel for the right to make reservations on behalf of their customers. The companies then re-sell the use of these rooms to their customers at a higher rate. No taxes are currently being paid on the difference between the travel company’s cost and the final amount paid by the customer. A city must specifically request that the Department take action to collect the lost revenue from the lodging tax on their behalf and the commissioner of revenue may request that the attorney general conduct legal proceedings to enforce collection of this underpaid tax.	No comparable provision
47	Rochester food and beverage tax. Allows the city of Rochester to impose a food and beverage tax of 1 percent. The revenues from the tax must be used to pay for renovation and expansion of the Mayo Civic Center Complex and related bonds. The tax may only be imposed if the state appropriates money for this project and the city approves a total financing package. The tax expires when revenues raised are sufficient to fund the project and pay associated bonds, or earlier if the city desires.	Article 3, section 18, similar provisions with same differences as Article 3, section 13.
	No comparable provision	Section 16. Cook County local sales tax revenue uses. Eliminates the use for construction and improvement of a county community center and recreation area and replaces it with authority to use it for construction or additions to multiple community centers and public recreation areas. Also adds construction and improvement of a high speed communications infrastructure (Internet) and construction and improvement of a district energy plant for public facilities in Grand Marais to the allowed uses. Increases the amount of revenue that the county can issue for authorized projects from $14 million to $20 million.
	No comparable provision	Section 17. Cook County bond limits. Increases the amount of bonds that Cook County can issue for authorized projects from $14 million to $20 million. The extra authority may delay the expiration date for the tax since the tax does not expire until the later of (1) 20 years, or (2) when revenues are sufficient to repay the bonds.
48	Repealer. Repeals the existing definition of ring tone, which is now included in the definition of digital audio works.	No comparable provision

Sec.

Article 11: Local Development

Article 6: Local Development

TIF for tourism projects. Expands the authority to use economic development TIF districts for tourism projects to include counties in Region 7E. This will add the counties of Chisago, Isanti, Mille Lacs, Kanabec, and Pine to those now allowed to use this authority. To qualify, projects must also be located in counties with incomes that are no more than 85 percent of the state median income and can not be in a city with a population of over 20,000.

The following counties are located in regions that now qualify to use the authority:

Counties in Development Regions 2, 3, 4, and 5
Aitkin	Cook	Koochiching	St. Louis
Becker	Crow Wing	Lake of the Woods	Stevens
Beltrami	Douglas	Mahnomen	Todd
Carlton	Grant	Morrison	Traverse
Cass	Hubbard	Otter Tail	Wadena
Clay	Itasca	Pope	Wilkin
Clearwater

Section 4, same

TIF plan requirement. Makes the following changes in the required contents of the TIF plan:

} Eliminates the requirement that the TIF plan include references to the portion of the development or redevelopment that will be financed with non-TIF revenues.

} Limits the total authorized costs to an estimate of the increments that will be generated by the expected development of the district.

Effective date: TIF plans approved after June 30, 2009

Section 5, similar, but also eliminates the requirement of identification of other expected developments within the project.

TIF annual financial reporting. Eliminates references in the annual TIF financial report to non-TIF funds, such as special assessments, grants, and transfers from other funds. References to public park and social and recreational facilities are eliminated, since these are no longer purposes for which increments generally may be spent. References to revenue bonds and pay-as-you-go notes are combined, since these are legally indistinguishable.

Effective date: TIF reports due after December 31, 2009

Section 6, same

TIF administrative costs. Clarifies that the county’s cost of administration are not counted against the 10-percent limit on TIF administrative expenses.

Effective date: All districts, regardless of when the request for certification was made

Section 9, same

TIF transfers to offset state aid reductions. Allows cities with aid reductions to transfer surplus or excess tax increments to their general funds to offset state aid cuts. To use this authority, the development authority (HRA, EDA, etc.) must authorize the transfer by resolution on the request of the city.

Permitted amount of transfer. The transfer cannot exceed the lesser of:

1. The amount of increment the district has available, less the amount the district is obligated to pay in bonds or binding contracts during the calendar year and the next six months plus any transfers to offset deficits caused by the 1997 – 2001 property tax changes; or

2. The cuts in state aids and credits that the city experiences for the calendar year. This could include reductions in LGA and market value credit reimbursements, whether as a result of an unallotment or a legislatively enacted reduction. It does not include aid cuts that the city opts to levy back under the special levy for unallotments.

Effect of election on future use of TIF district’s increments. If the city and development authority elect to use this authority, they may only use increments from the TIF district in the future for the following purposes:

} Paying bonds and contracts that were outstanding when the election was made,

} Making transfers to other districts to offset deficits caused by the 1997 – 2001 property tax changes,

} Paying its administrative expenses,

} Making the transfers to the general fund permitted by the bill.

In other words, the TIF district could no longer be used to finance new developments or improvements.

Cities with more 12 percent or more of their tax capacity in TIF would not be permitted to use this authority.

Expiration. The authority to make these transfers expires on December 31, 2010.

No comparable provision

Four-year knock-down rule. Extends the four-year knockdown rule to six years for TIF districts that were certified between January 1, 2005, and July 1, 2010. The knockdown rule requires development activity to take place on a parcel (qualifying activities include the installation of public infrastructure improvements adjacent to the parcel) within four years after certification. Failing this, the parcel is dropped from the TIF district and is only recertified (with its then tax value) as part of the district when the requisite activity takes place.

No comparable provision

Additional pooling for housing. Expands the permitted purposes for using the additional pooling percentage for housing to include purposes that mirror the permitted uses of increments for special law housing replacement districts. Present law allows a city to increase the permitted pooling percentages (i.e., the amount of a TIF district’s increment that may be spent outside of the area of the TIF district) by 10 percentage points and to use the money for low-income housing (i.e., housing that meets the federal law tests for occupancy by low-income families and rent affordability). This section expands those purposes to allow use for purposes taken from the special laws allowing housing replacement districts. This would allow use for owner-occupied housing that does not exceed 150 percent of the average market value of housing in the city. The money could be used to acquire the houses, demolish or relocate them, rehab them, do site preparation, or pollution cleanup. To qualify, the sites or housing must meet one of the following conditions:

} Be a one to four unit dwelling that has been vacant for at least three months

} Be a one to four unit dwelling that is structurally substandard

} Be in foreclosure

} Consist of vacant land, if the parcel would be used to develop or redevelop housing meeting one of the other three conditions

This authority expires on December 31, 2015.

Effective date: Applies to all TIF districts subject to the pooling rules

Section 10 authorizes expenditure of tax increments from districts located within transit improvement areas outside of the district but within the transit improvement area to support its activities.

Five-year rule. Extends the five-year rule to eight years for districts certified on or after January 1, 2004, and before July 1, 2010. The five-year rule requires the development authority to complete the district’s in-district activities within five years after certification of the district.

Section 11, similar, but extends to ten years for redevelopment and renewal and renovation districts certified between July 1, 2003, and April 20, 2009. States purpose of accommodating delays in development activities due to economic circumstances.

Interfund loans. Provides that the interest rates on interfund loans are set at the time when the loans are authorized, not when they are made.

Effective date: Interfund loans made after June 30, 2009

Section 12, same

Brooklyn Park, housing replacement authority. Provides a definition of “authority” for the city of Brooklyn Park’s exercise of housing replacement district authority. Section 11 grants Brooklyn Park housing replacement district authority.

Effective date: Final enactment

Section 14, same

Housing replacement districts. Grants the city of Brooklyn Park authority to exercise housing replacement district powers.

Increases from 50 to 100 the maximum number of parcels for housing replacement districts, and eliminates annual limits on parcels added to districts, as well as ten-year overall limit.

Effective date: Final enactment

Section 15, authorizes Brooklyn Park to exercise housing replacement district powers, but does not increase maximum number of parcels or annual limit on parcels.

Oakdale TIF. Corrects an error in the 2008 special TIF law for the city of Oakdale. It adds references to property tax PINs for two of the parcels, which the city intended to include in one of the TIF districts, but which were not included in the 2008 law.

Effective date: Upon local approval by the city of Oakdale.

Section 20, same

South St. Paul; TIF. Authorizes the city of South St. Paul to establish a new redevelopment TIF district with the same area and original tax capacity as its Concord Street TIF district, a pre-1979 TIF district. As a condition for establishing the district, the city must enter an agreement with Dakota County providing for transfer of the increment attributable to the county’s tax rate to the county. The increments from the district would be used to pay the convention center bonds. The district terminates in 2024.

Because this is a new district, it would contribute to the fiscal disparities pool, unlike pre-1979 HRA districts. To prevent the district from affecting local government aid, county program aid, or school aid the captured net tax capacity of the district is included in adjusted net tax capacity for those programs.

Section 30, similar, except authorizes new district to collect and use second half 2009 tax increments from existing Concord Street TIF district for purposes of the new district.

City of Minnetonka; TIF. Authorizes the city of Minnetonka to extend the Glenhaven TIF district by up to seven years. To exercise this authority, the city must find that the area, at the time of the original approval of the plan, would have qualified to be certified as a redevelopment district. This is a renewal and renovation district, which under general law is allowed a duration of 15 years after the receipt of the first increment. Thus, this would extend the duration to a maximum of 22 years after the receipt of the first increment.

Effective date: Local approval by the city, county, and school district

No comparable provision

Arden Hills TIF; authorization. Authorizes the city of Arden Hills to establish a TIF district on the TCAAP site.

This district will be exempt from several general law TIF rules:

} It is deemed to be a redevelopment district without meeting the blight test.

} The five-year rule is extended to ten years.

} The duration limit of the district is increased from 25 years to 30 years.

} The city may elect to delay receipt of the first increment (which starts the duration limit running) by up to six years. Under general law, the authority to do this is limited to four years.

The authority to create a district under the special law expires on December 31, 2019.

No comparable provision

St. Paul, housing replacement powers. Re-authorizes the city of St. Paul to exercise housing replacement district powers. This power was granted to the city under a 1995 special law, but the city did not approve the law and so it lost the authority to do so in 1997. This would reinstate that authority (not subject to local approval). The city of Richfield is in a similar situation (i.e., it received authority, but did not approve the law).

Effective date: Final enactment

Section 27, similar, but extends treatment to the city of Fridley.

City of Sauk Rapids; TIF. Authorizes the city of Sauk Rapids to use special rules in meeting the blight test for redevelopment districts by extending the time allowed to certify parcels with previously demolished substandard buildings on them.

Background

To qualify as a redevelopment district, 70 percent of the parcels of an area must be occupied by buildings or other improvements and 50 percent of the buildings must be “substandard.” The development authority can treat a vacant parcel as being occupied by a substandard parcel if four conditions are met:

1. The parcel was occupied by a substandard building three years before the district was certified.

2. The substandard building was removed by the authority or by the developer under a development agreement with the authority.

3. The authority made findings, by resolution, that the building was substandard and that it intended to include the parcel in a redevelopment district.

4. The authority notifies the county auditor that the original tax capacity of the district must include the value of the parcel with the building, if this is greater than the bare land value.

Changes Made by this Section

The bill extends the time period, as described under item #1 above, so that it runs until at least December 31, 2012, even if the demolition occurred more than three years before that date.

Section 29, similar, but removes alternative time limit of three years from date of demolition.

Duluth Port Authority; five-year rule. Allows the Seaway Port Authority to create one or more TIF districts in a defined area that would qualify for special treatment under the five-year rule. The five-year rule requires the development authority to complete the district’s in-district activities within five years after certification of the district.

Under this section, the five-year rule would begin to run for the listed parcels from the later of (1) the rule under general law (i.e., from certification of the district) or (2) when all of the qualifying parcels in the district are delisted (i.e., cleaned up).

Section 33, extends the five-year rule to a ten-year period.

City of Mankato; special TIF authority. Provides exemptions from the general law rules under the TIF act for a district in the city of Mankato. These exceptions include:

} Pooling limitations. The city is permitted to use revenues from the district to construct street and roadway improvements located within 500 feet or less of the TIF district boundaries, notwithstanding the percentage limits on pooling under general law.

} Five-year rule. The five-year rule is extended to 11 years. The five-year rule requires the development authority to complete the district’s in-district activities within five years after certification of the district.

Effective date: Upon local approval by the city.

Section 23 provides exceptions from general law for the same district:

· authorizes the city to expend increments generated from its South Riverfront tax increment financing district anywhere within the South Riverfront redevelopment project area;

· increments from this district may be used to pay the city of Mankato for allowable expenditures under the planned budget for the district; and

· the requirement for resolutions relating to the granting of interfund loans would not apply to this district.

Faribault; JOBZ extension. Allows the city of Faribault, with approval of the commissioner of the department of employment and economic development (DEED), to extend the duration of JOBZ tax benefits for one site in the city by five years. (This will allow the benefits to be provided through 2021, rather than 2016.) This authority only applies, if the city enters a business subsidy agreement with a firm that produces products to increase the efficiency of the use of energy resources. This authority expires on January 1, 2011.

Effective date: Day following final enactment.

No comparable provision

Section 1 provides that there will be no municipal incorporations after June 1, 2009, and before June 1, 2014.

No comparable provision

Section 2 adds to the definition of "special services" for a special service district in a city that includes a portion of the Central Corridor light rail transit project, public redevelopments costs related to the project, including the cost of programs to mitigate lost parking caused by the project.

No comparable provision

Section 3 provides a definition of a new type of tax increment financing district, a "compact development district." This district would consist of a project within which parcels consisting of 70 percent of the area of the district are occupied by commercial or industrial buildings or other structures, and the planned redevelopment or development of the district will increase the total square footage of commercial or industrial buildings in the district by three times or more.

No comparable provision

Section 7 provides that a compact development district will have a duration of 25 years

No comparable provision

Section 8 provides that tax increments derived from a compact development district may be used only to pay the cost of acquiring land located in the district or a abutting its boundary, demolition and removal of buildings or other improvements or site preparation, and installation of public infrastructure or public improvements serving the district, not to include the cost of streets, roads, highways, parking, or other public improvements designed to serve private passenger motor vehicles.

No comparable provision

Section 13 provides that no additional JOBZ designations will be made after April 30, 2009.

No comparable provision

Sections 16 to 19 modify the availability of the public financing for public improvements at the Mall of America so that they are available for any phase of the Mall of America, rather than being limited to Phase II. In section 18 revenue bonds may be sold to pay for public improvements not related to parking at the Mall of America.

No comparable provision

Section 21 imposes a labor peace agreement requirement as a condition of providing any public financing to any phase of the Mall of America project.

H.F. 1298 (first engrossment), section 45 is the same, except for a minor language difference.

Section 22 authorizes the cities of Chisago City and Lindstrom and their development authorities, as well as Chisago County, to enter into a joint powers agreement to acquire and develop a business park in either city. Any of the parties to the agreement may spend money or incur debt for the project, even if the project is not located within its corporate boundaries. An election is not required for issuance of debt under this section. If the project is included in a tax increment financing district, each city and authority that is a party to the agreement may treat the tax increment district as being located within its corporate boundaries.

No comparable provision

Section 24 enables the city of North Mankato to expand the boundaries of an existing tax increment financing district to include specified property. The original tax capacity of the district will be adjusted according to the amount of value added by the addition of the new area permitted under this proposal. The bill provides that the tax increments derived from the enlarged districts may be used to pay the port authority of the city of North Mankato and the city for allowable expenditures under the tax increment plan and to pay debt service on tax increment bonds issued by the city for redevelopment costs in the district. The requirement that, when a redevelopment district is enlarged, the reasons and supporting facts for the determination that the addition to the district meets the criteria for creation of the original district must be documented is waived for this addition.

No comparable provision

Section 25 authorizes a ten‑year duration extension for a tax increment financing district in the city of St. Louis Park.

No comparable provision

Section 26 authorizes the St. Paul HRA to establish a Central Corridor light rail transit project area as a redevelopment project. At least 80 percent of the property included in the project area must located within one‑quarter mile of the Central Corridor light rail transit alignment

No comparable provision

Section 28 provides that four existing tax increment financing districts in the city of St. Paul would be allowed to expend money for costs related to the Central Corridor.

No comparable provision

Section 31 provides that, of the money available in the Minnesota Investment Fund, $3,000,000 will be appropriated in fiscal year 2010 for a loan to an aircraft manufacturing and assembly company for equipment used to establish an aircraft completion center at the Minneapolis‑St. Paul International Airport. The center must use the state's vocational training programs designed specifically for aircraft maintenance training, and to the extent possible, recruit employees from these programs. The center is required to create at least 200 new manufacturing jobs within 24 months of receiving the loan, and not less than 500 new manufacturing jobs over a five‑year period in Minnesota. The loan is not subject to the $1,000,000 loan limitation under the general law, and match requirements may be made from current resources.

H.F. 1298 (first engrossment), section 46 is the same.

Section 32 authorizes the Mountain Iron Economic Development Authority to form or become a member of a limited liability company for the purpose of developing a community‑based energy development project. The LLC would be subject to the open meeting requirements of state law. The project is prohibited from selling, transmitting, or distributing the electrical energy at retail or providing for end use of the electrical energy to an off‑site facility of the economic development authority or the LLC. The authority is authorized to acquire a leasehold interest in property outside its boundaries for the purpose of the project.

H.F. 1298 (first engrossment), section 47 is the same.

Section 34 authorizes the Winona County Development Economic Authority to form or become a member of a limited liability company for the purpose of developing a community‑based energy development project. The LLC would be subject to the open meeting requirements of state law. The project is prohibited from selling, transmitting, or distributing the electrical energy at retail or providing for end use of the electrical energy to an off‑site facility of the economic development authority or the limited liability company. The authority is allowed to acquire a leasehold interest in property outside its corporate boundaries for the purpose of developing the project.

No comparable provision

Section 35 is the repealer. Laws 1996, chapter 464, article 1, section 8, subdivisions 3 and 5, are limitations of the expenditures on tax increment from the Bloomington tax increment financing district in the vicinity of the Mall of America. Laws 2008, chapter 366, article 5, section 30, subdivision 7, is a requirement that the Legislative Commission on Planning and Fiscal Policy would review Mall of America financing information.

Sec.	Article 13: Miscellaneous	Article 15: Miscellaneous
1	Bovine tuberculosis testing grants. Authorizes a grant program to replace the income tax credit repealed by article 1. Grants would be administered by the commissioner of agriculture, and would compensate cattle owners for bovine tuberculosis testing expenses. The grant amounts would mirror the repealed tax credit – i.e., 25 percent of the testing costs for corporations and 50 percent for all others. Grant payments would be made annually by March 31 for testing costs incurred in the previous calendar year. The appropriation for the grants is in section 15 and is ongoing.	No comparable provision
2	Bovine tuberculosis grants; split-state status. Authorizes a grant program to replace the property tax credit for owners of cows, bison, and goats in the bovine tuberculosis modified accredited zone. The existing property tax credit is repealed in article 6. Grants would be administered by the commissioner of agriculture. Grants equal $25 for each animal tested in the largest whole-herd test performed on cattle, bison, and goats in the modified accredited zone in 2006 through 2008. The grant is paid annually between July 1 and July 15, beginning in 2010 and is available until the year following the year in which the Board of Animal Health declares Minnesota to be free of bovine tuberculosis. The appropriations for the grants are in section 15 and are ongoing.	Article 4, sections 16 and 17, modify the existing property tax credit for bovine tuberculosis.
		Article 4, section 16. The definition of the zone is no longer referred to as a "proposed" zone, but instead means the modified accredited zone that has been designated by the Board of Animal Health. The reference to "located within" means that the herd is kept in the area for at least part of calendar years 2006, 2007, or 2008. Current law is limited to 2007 and a new definition of "animal" is added to mean cattle, bison, goats, and farmed cervidae.
		Article 4, section 17. Clarifies the application of the credit to rural vacant land as well as agricultural land. The amount of the credit will be determined as the greater of $5.00 per acre on the first 160 acres of property where the herd had been located or an amount equal to $5.00 per acre, times five acres, times the highest number of animals tested on the property for bovine tuberculosis in 2006, 2007, or 2008. The amount of the credit may not exceed the property tax payable on the land where the herd had been located, excluding tax attributable to residential structures.
3	Income tax microdata coordinating committee. Exempts the income tax microdata coordinating committee from the general sunset on commissions and similar groups.	Article 14, section 2, same
4	Tax preparation services.	Article 15, section 1, similar provision
	Subdivision 1. Scope. Provides within the scope that the statute governing tax preparation does not apply to: } a person who provides services to fewer than ten clients per year; } a person who provides services only to immediate family members; } an employee who prepares the employer’s return as part of his job; } a fiduciary acting on behalf of an estate; } nonprofit organizations providing services under IRS volunteer tax assistance programs. With the exception of the nonprofit organizations, these individuals are exempt under current law under subdivision 8 of this section, relating to exemptions from the statute. The changes to this subdivision move these exemptions to the scope subdivision, and increase the number of clients an individual may provide services for while remaining exempt from fewer than six to fewer than ten. [Note: since “tax preparation services” is defined as services for a fee or other consideration, nonprofit organizations participating in IRS volunteer programs are exempt under current law since they do not charge for their services.]	Identical provision
	Subd. 2. Definitions. Adds definitions necessary for the disclosure requirements of this section to apply to refund anticipation checks and for the proposed requirement that disclosures be made in the client’s primary language, if the preparer advertises in that language. Current law imposes disclosure requirements on refund anticipation loans.	Identical provision
	Subd. 3. Standards of conduct. Prohibits tax preparers from: } Establishing an account to receive a client’s refund solely in the preparer’s name (makes an exception consistent with statute allowing taxpayers to assign K-12 credits to another party); } Failing to act in the client’s best interests; } Failing to safeguard and account for any money handled for the client; } Failing to disclose material facts; } Taking any action prohibited for collection agencies; } Including in any agreement to provide tax preparation services a hold harmless clause, confession of judgment, waiver of a right to a jury trial, assignment of wages for services, provision preventing the client from asserting claims, waiver of any provision of statute relating to tax preparers, or waiver of the client’s right to relief; } Failing to provide disclosures required under the federal Truth in Lending Act as part of offering refund anticipation loans.	Identical provision
	Subd. 3a. Written agreements required; refund anticipation loans and checks. Requires refund anticipation loan and check agreements to be in writing and prohibits the loans and checks from requiring payment of any item other than tax preparation fees or other related fees and the anticipated refund amount that is advanced via the loan or check. If a RAL or RAC agreement includes a mandatory arbitration clause, requires a separate written notice that arbitration is the only means of dispute resolution, that the client has 30 days to opt out of the arbitration clause, and that the arbitration clause does not apply if the client’s dispute involves a violation on the part of the tax preparer or if the client pursues a civil action as provided in subdivision 7. Requires the preparer to notify the client orally and in writing of how to opt out of the arbitration clause.	Similar provision, only difference is last sentence of paragraph (a) does not contain the words “associated with the refund anticipation loan or refund anticipation check.”
	Subd. 4. Required disclosures. Restructures the current subdivision 4, which requires disclosures for refund anticipation loans, to instead specify the format for disclosures for refund anticipation loans (which are provided in the proposed subdivision 4a) and disclosures for refund anticipation checks (which are provided in the proposed subdivision 4b). Disclosures for both kinds of advance payments of refunds must be in writing on a single sheet of paper, and signed and dated by both the client and the tax preparer. These requirements are in current law with regard to refund anticipation loans; the changes to this section and the proposed subdivision 4b would extend the same requirements to refund anticipation checks. Also requires disclosures to be provided in the client’s primary language, if the tax preparer advertises in that language.	Similar provision, technical and stylistic differences, and the Senate does not have require disclosures to be in at least 14-point type with at least a double space between each statement.
	Subd. 4a. Refund anticipation loan disclosures. Restates the disclosure requirements for refund anticipation loans that are stricken in subdivision 4 in the proposed subdivision 4a, with the following additions: } Requires an explicit statement that the RAL is not the client’s tax refund; } Notifies the client of the right to cancel the RAL by returning the loan check or the amount of the loan in cash to the preparer within one business day.	Identical provision
	Subd. 4b. Refund anticipation check disclosures. Provides disclosure requirements for refund anticipation checks, different from the requirements for refund anticipation loans. Statements required on the disclosure: } The client is not required to purchase a RAC in order to get their tax refund } The IRS can direct deposit the refund to the client’s account within 8 to 15 days } Clients who purchase a RAC will have access to their tax refund within 8 to 15 days } the RAC is not a loan } the cost of the RAC } the option to the client of paying for the RAC at the time of filing or having it withheld from the refund } that the cost of return preparation does not change if the client purchases a RAC Also provides that preparers who offer products that meet the definition of a refund anticipation check but use a different product name must substitute the product name for the term ‘RAC’ in the required disclosure.	Similar provision, minor technical language difference: use of “eight” vs. “8.”
	Subd. 5. Itemized bill required. Adds fees associated with a refund anticipation check to the list of items required to be itemized on the bill for tax preparation services.	Identical provision
	Subd. 5b. Right to rescind refund anticipation loan. Authorizes clients to rescind a refund anticipation loan within one business day of entering an agreement by providing written notification to the preparer and either returning the check or conveying the same amount in cash to the preparer. Allows a tax preparer to charge a fee for rescinding a loan only if the preparer established an account at a financial institution to receive the refund and limits the fee to the amount the financial institution charged to open the account.	Similar provision, paragraph (a) has technical language difference; intent of both bills is to require (i) written notification of rescinding agreement and (ii) either return of the check or payment of the same amount in cash to the preparer.
	Subd. 6. Enforcement; penalties. Applies the existing $1,000 administrative penalty in current law to violations of the new written agreement requirement and right to rescind loans proposed in subdivisions 3a and 5b. Provides that the administrative penalty does not apply if the conduct is also subject to civil penalties under section 289A.60, including termination of the preparer’s authorization to submit returns electronically.	Identical provision
	Subds. 6a to 6c. Exchange of data. Extends the requirement that the commissioner of revenue, the State Board of Accountancy, and the Lawyers Board of Professional Responsibility exchange information about complaints they receive about accountants and lawyers who are preparers to apply to violations of proposed subdivisions 3a, 4a, and 5b.	Similar provision, no reference to 3a, 4, 4a, and 4b, but assumed to be included in span of subdivisions referenced.
	Subd. 7. Enforcement; civil actions. Provides that an action taken by the attorney general to enforce this section of statute is in the public interest. Also expands the amount a court finding for a plaintiff must award to include statutory damages equal to tax preparation fees, interest and fees for refund anticipation loan, times two. Under present law, plaintiffs are awarded actual damages, attorney fees, court costs, and any other relief the court finds reasonable.	Identical provision
	Subd. 8. Limited exemptions. Strikes exemptions for various classes of individuals who will still be exempt as a result of changes to subdivision 1. Provides that the proposed written agreement requirement in subdivision 3a and the proposed right to rescind refund anticipation loans in subdivision 5b apply to attorneys, certified public accountants, and enrolled agents. Provides a new exemption for employees and supervisors who assist people exempt under this subdivision in preparing returns.	Identical provision
5	Time for filing. Establishes a procedure for filing claims for refunds of payments made under the law that imposes personal liability on responsible officers and directors for unpaid taxes of a business entity. The personal liability statute generally applies to individuals who are responsible (by themselves or with others) for filing and paying the specified taxes on behalf of the business. This liability most frequently arises with regard to sales tax and withholding tax, but also applies to some other tax types. If the business fails to pay, the Department of Revenue (DOR) issues an order assessing personal liability for the tax against the director or officer. Authorizes individuals, subject to personal liability assessments, to file claims for refunds (which will enable them to appeal administratively or file a lawsuit), if they do so within 120 days of making a payment and if this is no more than 3½ years after DOR issued the assessment. The ability to claim a refund applies to both voluntary payments and to amounts collected by DOR (e.g., by garnishing wages or levying on a bank account). It does not require paying the full assessment to file a claim for a refund. Background. Under present law, directors and officer have 60 days to appeal the DOR order. If they fail to appeal within the 60-day period, they lose their right to contest the liability (e.g., by claiming that they are not “responsible” within the meaning of the statute). Although it is somewhat unclear, the law does not provide the authority for an assessed individual to pay the liability and, then, seek a refund as an alternative method of contesting their liability. (Taxpayers can contest most other tax liabilities in two ways – either by appealing before payment or by paying and seeking a refund.) Effective for personal liability assessments issued after the day following final enactment.	Article 15, section 2, same; minor technical difference, use of “three and one-half years” vs. “3-1/2 years.”
6	Recertification of levy due to unallotment. Allows local governments to recertify their levy by January 15 of the year in which the levy is paid if it has a reduction in its December property tax aid and credit payments due to a governor’s unallotment. If the recertification is not reported to the county auditor within two business days of January 15, the original levy certification stands.	No comparable provision
7	Special levies. Provides for the following changes to special levies outside of levy limits: } puts the existing limit on the special levy for animal shelters into this section since the limit in the cross reference was eliminated in another bill; } expands the existing special levy for aid and credit reductions due to unallotments to include (1) aid losses that occur in the previous year, after a city or county has certified its levy; and (2) reductions in market values credits; } adds a special levy to pay for the state share of the costs of confining sex offenders undergoing the civil commitment process to the extent the state does not fund its share; and } adds a special levy for counties to pay the first year costs of maintaining and operating a new public safety and courts facility that was funded prior to the imposition of levy limits in 2008. This amount is rolled into the county’s levy limit base in subsequent years.	Article 4, section 61, repeals levy limits.
8	Adjusted levy limit base. Clarifies that the inflation adjustment for the levy limit can not be less than a 2 percent increase.	Article 4, section 61, repeals levy limits.
9	Mortgage registry tax; property located in multiple counties. Modifies the distribution of the mortgage registry tax (MRT) when a mortgage covers real property located in more than one county. Provides that the total tax, regardless of the amount of the mortgage, must be paid to the treasurer of the county where the mortgage is first presented for recording. Under current law, if the principal debt or obligation secured by a multiple county mortgage exceeds $1,000,000, the nonstate portion (i.e., the 3 percent that the counties retain) must be redistributed to each of the counties where the property is located (by the county treasurer who initially receives the total payment), based on the ratio that the portion of the market value of each of the counties is to the total market value of the entire property. Requires that this settlement be done on or before the 20^th day of each month when these transactions occur. This section eliminates this and provides that the total tax must be paid to the treasurer of the county where the mortgage is first recorded, and that county keeps the full amount of the tax, regardless of the amount of the mortgage. Effective the day following final enactment.	Article 15, section 3. Mortgage registry tax payments. Related provision Amends Minn. St. § 287.08, paragraph (d), related to apportionment of payments of the tax for real property located in more than one county. This section raises the value of the debt secured by the mortgage that is subject to division and payment by the county treasurer from $1 million to $10 million. Effective the day following final enactment.
	No comparable provisions	Sections 5 and 6. Hospital tax and surgical center tax. Amends Minnesota Statutes, section 295.52, subdivisions 1 and 1a. Provides for an unspecified change to each of these taxes.
	No comparable provision	Section 7. Gambling taxes‑reports and records. Amends Minnesota Statutes, section 297E.06, subdivision 4. Raises the threshold for annual financial audits from $300,000 receipts to $500,000. Allows the Commissioner of Revenue to require a financial audit of organizations with less than $500,000 of gross receipts for various violations of gambling tax compliance requirements. Organizations licensed under chapter 349 must now perform a certified inventory and cash count each year. The Commissioner of Revenue will prescribe the standards for these requirements.
		Section 8. Solid waste management tax exemptions. Amends Minn. St. § 297H.06, subdivision 1, related to certain surcharges or fees that are exempt from the solid waste management tax. This section provides an exemption from the solid waste management tax that would apply to service charges imposed by a home rule charter city that owns and operates a solid waste‑to‑energy resource recovery facility. The exemption is effective retroactively for taxes imposed after March 31, 2007.
	No comparable provision	Section 9. Charitable organizations‑financial statement requirements. Amends Minnesota Statutes, section 309.53, subdivision 3. Raises the threshold from revenue of $350,000 to $750,000 that triggers an audited financial statement that has been examined by an independent certified public accountant.
	No comparable provisions	Sections 10 and 11. Gambling taxes compliance. Amends Minnesota Statutes, sections 349.1641 and 349.19, subdivision 9. Shortens the time for suspension of a license for filing a late tax return from three months to 45 days. Amends one annual audit requirement to still require an annual financial audit, but discontinue the requirement for an annual financial review.
	No comparable provisions	Sections 12 to 14. Local police and firefighters relief association amortization state aid. Provides corrective language clarifying that the distribution of amortization state aid and supplementary amortization state aid is an open and standing appropriation. Current law contains the distribution amounts, but lacks conventional open and standing appropriation language. Subdivision 3a provides for retroactive annual appropriation language from the general fund to the Commissioner of Revenue for both aid programs.
10	Net debt limit. Narrows the net debt limit exception for bonds issued to fund other postemployment employee benefits (OPEB) liabilities to apply only to school district bonds. Section 11 repeals the authority of cities, counties, and towns to issues these bonds. Effective date: August 1, 2009	No comparable provision
11	Authority to issue OPEB bonds. Eliminates the authority of cities, counties, and towns to issue bonds to fund actuarial liabilities for OPEB, but preserves the authority for schools to issue these bonds. Present law defines these liabilities by reference to Governmental Accounting Standard Board (GASB) Statement No. 45. Effective date: August 1, 2009	No comparable provision
12	Referendum exemption. Eliminates the exemption from the election requirement for OPEB bonds. This exemption was enacted in 2008, and authorized municipalities to issues bonds, without holding referenda, to pay for other postemployment employee benefits. Because section 11 repeals the authority for cities, counties, and towns to issue these bonds, this change will only affect school districts, requiring them to seek voter approval to issue these bonds. Effective date: August 1, 2009	No comparable provision
13	Emergency certificates of indebtedness. Emergency debt certificates. Authorizes a city, county, or town to issue emergency debt certificates if both of the following occur in a fiscal year: } The governmental unit’s current year revenues are expected to be reduced below their budgeted amounts (i.e., the amount set in the budget used to set the property tax levy) } The reduction is so large that current year expenses will exceed current year receipts. This authority, for example, could be triggered by a mid-year reduction in state payments of aids or credits, by an unexpectedly high level of property tax delinquencies or a drop in receipts from fees for issuing building permits and similar. The maximum amount of certificates that may be issued is limited to the expected reduction in receipts, plus the costs of issuance. The certificates must mature (be paid off) within two years of the end of the fiscal year in which they were issued. The certificates are excluded from net debt limits. A governmental unit issuing emergency debt certificates is adjusted to prohibit it from exercising special levy authority (outside levy limits) for amounts funded with the certificates. Since levies to repay bonded debt (including the emergency debt certificates) are special levies, this prevents a city or county from both receiving an additional direct levy for the same aid reduction.	Article 4, section 49, similar provision. House coordinates issuance of emergency certificates with special levies authorized in House article 13, section 7. Senate does not authorize special levies.
14	Budget reserve. Directs the commissioner of finance to transfer $250 million to the budget reserve account in fiscal year 2010. In order for the transfer to be in compliance with the requirements of the 2009 federal stimulus law, the transfer is made from revenues resulting from legislation enacted in 2009.	No comparable provision
15	Appropriations. Bovine tuberculosis grants. Appropriates $360,000 each year from the general fund to the commissioner of agriculture to make grants for bovine tuberculosis testing expenses to replace the current income tax credit. Appropriates $400,000 each year from the general fund to the commissioner of agriculture to make grants to owners of cattle, bison, and goats in the modified accredited bovine tuberculosis zone to replace the current property tax credit. The commissioner of agriculture may use up to 5 percent of each appropriation to administer the grant program. Both appropriations are ongoing and added to the budget base, but the authority for the grants to replace the property tax credit ends when the state is declared free of bovine tuberculosis. Effective beginning in fiscal year 2010. Basic sliding fee child care. Appropriates $5 million each year from the general fund for FY 2010 and FY 2011 to the commissioner of human services for the basic sliding fee child care program. This is in addition to other appropriations for this purpose and would be added to the budget base. Article 1 repeals the dependent care credit.	No comparable provision
	No comparable provision	Section 15. Appropriation. Appropriates $164,081,000 from the general fund to be used for the purpose of 2009 S.F. 2078, if enacted. S.F. 2078 relates to economic development.

Sec.		Senate Article 7: Public Finance
	H.F. 1298 (first engrossment), section 1 is the same.	Section 1 provides that, when the Commissioner of Finance issues state general obligation bonds authorized under law, the bonds may be either tax credit bonds or interest subsidy bonds or a combination of them. Tax credit bonds are bonds that provide taxable income, but for which the owner of the bonds is entitled to a federal tax credit. Interest subsidy bonds are bonds with taxable interest for which the issuer is entitled to federal interest subsidy payments.
	H.F. 1298 (first engrossment), section 49 repeals the sunset.	Section 2 extends the sunset date for the authority to issue bonds by the State Fair Board from July 1, 2009, to July 1, 2015.
	H.F. 1298 (first engrossment), section 6 is the same.	Section 3 provides that whenever the state pays interest on bonds issued by a school district for which the issuer is entitled to federal interest subsidy payments, the state is subrogated to the issuer's rights to federal interest subsidy payments until the state has been reimbursed by the issuer.
	H.F. 1298 (first engrossment), section 7 is the same.	Section 4 eliminates the prohibition on submitting more than two ballot questions at a mail election.
	H.F. 1298 (first engrossment), section 9 is the same.	Section 5 eliminates the referendum requirement for airport improvement bonds that are issued by a municipality if the bonds are authorized by resolution of the governing body of the municipality with a vote of at least 60 percent of its members
	H.F. 1298 (first engrossment), section 10 is the same.	Section 6 extends the maximum maturity of certificates of indebtedness issued by towns from five to ten years.
	H.F. 1298 (first engrossment), section 13 is the same.	Section 7 provides that bonds issued for a public safety radio system by a county under its capital improvement program do not count against the limitation on the total amount of the bonds that may be issued under the program.
	H.F. 1298 (first engrossment), section 25 is the same.	Section 8 provides that when the state pays interest on bonds issued under the public facilities authority, the state is subrogated to the issuer's rights to any federal interest subsidy payments until the state has been reimbursed in full.
	H.F. 1298 (first engrossment), section 26 is the same.	Section 9 removes the requirement that an authority that has been established within a city in which a county and multi‑county housing and redevelopment authority intends to operate a project must adopt a resolution declaring that there is a need for the exercise of powers by the authority. The governing body of the city in which the project will be located is still required to adopt a resolution to that effect.
	No comparable provision	Sections 10 to 12 amend the bidding and payment and performance bond requirements for HRAs so that those requirements are the same as provided under the Uniform Municipal Contracting Law and the law that generally applies to contractors' bonds for public work.
	H.F. 1298 (first engrossment), section 27 is the same.	Section 13 provides that a housing and redevelopment authority may issue bonds to refund outstanding bonds secured by the general obligation pledge of the city or county without making additional findings regarding the adequacy of pledged revenues or conducting a public hearing. This provision is made effective retroactively to apply to refunding bonds issued after June 30, 1992.
	No comparable provision	Section 14 provides that the law that renders previously tax‑exempt HRA property taxable, does not apply to leases by the authority to individuals or families for residential use. This section is made applicable to housing projects and housing development projects constructed or acquired by an authority after July 1, 1987.
	No comparable provision	Section 15 modifies the tax treatment of metropolitan area HRA properties that include both subsidized housing and other types of housing so that the ratio of taxable to nontaxable property is determined according to the number of units in the facility that are constructed with funds provided under section 5 of the United States Housing Act of 1937, and that receive operating subsidies under section 5 or rental assistance under section 8.
	H.F. 1298 (first engrossment), section 28 is the same.	Section 16 expands the definition of "project" in the municipal industrial development law to include property used in connection with manufacturing, creation, or production of intangible property including any patent, copyright, formula, process, design, know‑how, format or similar item.
	H.F. 1298 (first engrossment), section 29 is the same.	Section 17 provides that facilities for conventions and conferences are included within the properties for which a city operating a program of public recreation and playgrounds may acquire or lease property.
	H.F. 1298 (first engrossment), section 32 is the same.	Section 18 modifies the definition of "annual volume cap" in the bond allocation law to specify that it refers to obligations constituting private activity bonds under federal tax law. It also provides that the Department of Finance will administer the volume cap allocations for obligations permitted under the federal American Recovery and Reinvestment Act of 2009.
	H.F. 1298 (first engrossment), section 33 is the same.	Section 19 modifies the definition of "manufacturing project" to include the type of facility that is used in the manufacturing, creation, or production of intangible property.
	H.F. 1298 (first engrossment), section 37 is the same.	Section 20 defines "rating category" to mean a generic securities rating category without regard to subcategories of the ratings.
	H.F. 1298 (first engrossment), section 40 is the same.	Section 21 extends from ten to 30 years the greatest maturity date of bonds issued by the city of St. Paul for public buildings or parking structures.
	H.F. 1298 (first engrossment), section 43 is the same.	Section 22 requires the Commissioner of Finance to apply a deposit of $31,800 paid by the St. Paul Port Authority in 2008 for a proposed bond issue of $1,590,000 for District Cooling St. Paul, Inc. to a later application for an allocation of tax‑exempt bonds for the same project. This authority expires January 1, 2011.
	H.F. 1298 (first engrossment), section 50 is the same.	Section 23 is the effective date, which is the day following final enactment for all provisions in the article other than those that specify a different date.

Sec.	HF 885, Art. 1, as passed by House Tax Committee (April 29) and sent to Floor	Senate Article 9: Department Individual Income, Corporate Franchise, and Estate Taxes
	H.F. 885 (first engrossment), Article 1, section 1, same	Section 1. Designated member for single combined returns. Amends Minn. Stat. § 289A.08, subd. 3, to allow a corporation without Minnesota nexus that is a member of a unitary business to file and be liable as the designated member for tax matters of the unitary business that is required to file a single combined report. Effective for tax years beginning after December 31, 2008.
	H.F. 885 (first engrossment), Article 1, sections 2 and 3, same.	Sections 2 and 3. Information reporting by qualified intermediaries. Amends Minn. Stat. §§ 289A.12 and 289A.18 to require qualified intermediaries to report information to the commissioner concerning exchanges facilitated by the intermediary. The reports are due 30 days after demand by the commissioner. Effective July 1, 2009, and applies to all transactions whether facilitated on, before or after that date.
	H.F. 885 (first engrossment), Article 1, section 4, same	Section 4. Estate tax return due date. Amends Minn. Stat. § 289A.19, subd. 4, removing the requirement that taxpayers request the obligatory six‑month filing extension for estate tax returns by automatically providing the same. Effective for estates of decedents dying after December 31, 2008.
	Article 1, section 2, identical	Section 5. Penalty for failure to withhold from wages or from pay to independent contractors in the construction trades. Amends Minn. Stat. § 289A.31, subd. 5, by adding a penalty that applies when employers fail to withhold income tax when required to do so under Minn. St. § 290.92, subdivision 2a, by reason of not treating such person as not being an employee. The penalty is equal to three percent of the wages paid to an employee. Effective for taxes that should have been withheld after June 30, 2009.
	H.F. 885 (first engrossment), Article 1, section 5, same	Section 6. Reporting of federal adjustments to withholding tax returns. Amends Minn. Stat. § 289A.38, subd. 7, to clarify that the requirement to report federal changes to withholding tax returns applies when there have been changes during a withholding tax period to the wages reported to the Internal Revenue Service. Effective the day following final enactment.
	Article 1, section 7 repeals the K-12 education subtraction	Section 7. K‑12 education deduction ‑ transportation in taxpayer's vehicle. Amends Minn. Stat. § 290.01, subd. 19b (3), to clarify that a taxpayer cannot claim expenses paid to transport a qualifying child in the taxpayer's or the child's vehicle. This codifies the position found in Minnesota Rule 8009.3000, which is otherwise being repealed as obsolete. Effective the day following final enactment.
	H.F. 885 (first engrossment), Article 1, section 6, same	Section 8. Inflation adjustment for working family credit. Amends Minn. Stat. § 290.0671 so that the inflation adjustments required beginning in 2009 for the higher married filing joint working family credit phase out threshold conforms to inflation adjustment changes made in 2008 and thus reflects only one year of inflation. Also removes obsolete language related to the working family credit calculations for taxable years 2002 through 2007. Effective for taxable years beginning after December 31, 2008.
	H.F. 885 (first engrossment), Article 1, sections 7 and 8, same	Sections 9 and 10. Confession of judgment for manufactured homes. Amends Minn. Stat. § 290A.10 and 290A.14 to clarify that property taxes on a manufactured home are not considered delinquent for purposes of the property tax refund if the owner has entered into, and is current with, a confession of judgment to pay the delinquency. Effective the day following final enactment.
	Article 1, section 7 repeals the K-12 education subtraction	Section 11. Repealer. School tuition and transportation. Minnesota Rule 8009.3000 is repealed. A portion of the Rule is being codified in the amendment to Minn. Stat. § 290.01, subd. 19b (3). The remainder of the Rule is repealed as obsolete. Effective the day following final enactment.

Sec.	HF 885, Art. 2, as passed by House Tax Committee (April 29) and sent to Floor	Senate Article 10: Department Sales and Use Taxes
	H.F. 885, Article 2, sec. 1, same	Section 1. Sales to government. Amends Minn. Stat. § 297A.70, subd. 2, to provide that the exemption for sales to exempt units of government does not apply to the purchase of alcoholic beverages. Effective for sales and purchases made after June 30, 2009.
	H.F. 885, Article 2, sec. 2, same	Section 2. Sales to nonprofit groups. Amends Minn. Stat. § 297A.70, subd. 4, to provide that the exemption for sales to nonprofit groups does not apply to the purchase of alcoholic beverages other than alcohol purchased by religious organizations for sacramental purposes. Effective for sales and purchases made after June 30, 2009. This section also provides that the exemption for purchases made by senior citizens groups does not extend to housing and that the senior citizen groups must have exempt status under Internal Revenue Code § 501(c). Effective for sales and purchases made after June 30, 2009, except the change for senior citizens groups is effective the day following final enactment.
	H.F. 885, Article 2, sections 3 and 4, same	Sections 3 and 4. Motor vehicle definition. Amends Minn. Stat. §§ 297A.992, subd. 2, and 297A.993, subd. 1, to provide that for purposes of the Metropolitan Transit Improvement Tax and the Greater Minnesota Transportation Tax, the term "motor vehicle" is defined in Minn. Stat. § 297B.01, subd. 5, for the sales tax on motor vehicles. Effective the day following final enactment.
	H.F. 885, Article 2, sec. 5, same	Section 5. Repealer. Repeals Minn. Stat. § 297A.67, subd. 24, which provided a sales tax exemption for all sales and uses that the state was prohibited from taxing under the United States and Minnesota Constitutions. The statutory exemption is duplicative and not necessary since the Constitutions already prevent the state from taxing certain sales and uses. Effective the day following final enactment.

Sec.	HF 885, Art. 3, as passed by House Tax Committee (April 29) and sent to Floor	Senate Article 11: Department Special Taxes
	H.F. No. 885 (first engrossment), article 3, section 3 is same.	Section 1. Mortgage tax; agricultural loan exemption. Amends Minn. Stat. § 287.04, clause (i), to update the cross‑reference to the property tax classification statute for agricultural property. The update is necessary because of recent changes to the classification statute. Effective the day following final enactment.
	H.F. No. 885 (first engrossment), article 3, section 4 is same.	Section 2. Mortgage registry tax. Amends Minn. Stat. § 287.05 by adding the new subd. 9. The provision clarifies the tax result when mortgages contain multiple statements that are each designed to limit the debt secured by the mortgage, the resulting tax obligation, or both. In such cases, the tax on the mortgage is based on the actual combined effect of those statements, if any, and not on the statements, or portions of them, taken in isolation. Effective the day following final enactment.
	H.F. No. 885 (first engrossment), article 3, section 5 is same.	Section 3. Deed tax; transfer on death deeds. Amends Minn. Stat. § 287.22, clause (15). This exemption clause was added by the 2008 Legislature to exempt the new "transfer on death" deeds from the deed tax. This change makes clear that the exemption also applies to related recorded documents. Effective the day following final enactment.
	H.F. No. 885 (first engrossment), article 3, section 6 is same.	Sections 4 and 17. Deed tax stamps. Amends Minn. Stat. § 287.25 and repeals Minn. Stat. §§ 287.26 and 287.27, subd. 1, to eliminate the procedure for paying the deed tax by purchasing stamps of given denominations from the county and affixing the proper number of stamps to the deed when it is presented for recording. Taxpayers no longer use this procedure. Effective the day following final enactment.
	H.F. No. 885 (first engrossment), article 3, section 7 is same.	Section 5. Transfer of accounts receivable. Amends Minn. Stat. § 295.56 to add surgical centers and wholesale drug distributors to the list of entities whose liability is transferred to the transferee, assignee, or buyer when accounts receivable are sold. Effective the day following final enactment.
	H.F. No. 885 (first engrossment), article 3, section 8 is same.	Section 6. Exemption for amounts paid for legend drugs. Amends Minn. Stat. § 295.57, subd. 5, adds surgical centers to the list of entities that may use an alternative method for calculating the cost of legend drugs when the entity cannot determine the actual cost of the drug. Effective the day following final enactment.
	H.F. No. 885 (first engrossment), article 3, section 9 is same.	Section 7. Petroleum tax ‑ general rules. Amends Minn. Stat. § 296A.21, subd. 1, which deals with the statute of limitations, to clarify that a tax return filed before the last day prescribed by law for filing is considered to be filed on the last day. Effective the day following final enactment.
	H.F. No. 885 (first engrossment), article 3, sections 10, 13, 14, 16, and 18 are the same.	Sections 8, 11, 12, 14, and 16. Electronic payments. Amends Minn. Stat. §§ 297E.02, subd. 4 (lawful gambling tax), 297F.09, subd. 7 (cigarette and tobacco products tax), 297G.09, subd. 6 (liquor tax), 297I.35, subd. 2 (insurance tax), and 473.843, subd. 3 (metropolitan solid waste landfill fee), to reduce the electronic payment threshold from $120,000 to $10,000 per fiscal year. Effective for payments due in calendar years 2010 and thereafter, based upon liabilities incurred in the fiscal year ending June 30, 2009, and in fiscal years thereafter.
	H.F. No. 885 (first engrossment), article 3, section 11 is same.	Section 9. Lawful gambling ‑ required signatures. Amends Minn. Stat. § 297E.06 by adding a new subdivision to clarify that signatures of organization's CEO, gambling manager, and return preparer are all required on tax returns. This identical requirement was contained in a Minnesota rule which was recently repealed. Effective the day following final enactment.
	H.F. No. 885 (first engrossment), article 3, section 12 is same.	Section 10. Lawful gambling ‑ general rule. Amends Minn. Stat. § 297E.11, subd. 1, which deals with the statute of limitations, to clarify that a tax return filed before the last day prescribed by law for filing is considered to be filed on the last day. Effective the day following final enactment.
	H.F. No. 885 (first engrossment), article 3, section 15 is same.	Section 13. Insurance tax ‑ extensions for filing returns. Amends Minn. Stat. § 297I.30, by adding a new subdivision 9, which provides that when good cause exists, the commissioner may extend the time for filing returns for not more than 6 months. Effective the day following final enactment.
	H.F. No. 885 (first engrossment), article 3, section 18 is same.	Section 15. Distribution of production tax; remainder. Amends Minn. Stat. § 298.28, subd. 11, to delete obsolete language (the provision was effective for 2003 distributions) and a reference to the deleted language. Effective the day following final enactment.
	H.F. No. 885 (first engrossment), article 3, section 20 is same.	Section 17. Repealer. Amends Minn. Stat. § 298.28, repealing obsolete subdivisions 11a and 13. Subdivision 11a provided for prorated distributions in production years 1994 through 1999. Subdivision 13 required a deduction of credits authorized under ' 298.24, subdivision 3, that was repealed in 2003. Effective the day following final enactment.

Sec.	HF 885, Art. 4, as passed by House Tax Committee (April 29) and sent to Floor	Senate Article 12: Department Property Taxes and Aids
	H.F. 885, Art. 4, section 1. Same, except that the first tier valuation limit for agricultural homestead is set to $1,100,000 (Senate amount is $1,110,000).	Section 1. Indexing agricultural homestead first tier upper‑limit. Modifies the procedures for indexing the value of the first tier valuation limit for homestead agricultural property. Due to provisions passed in 2008 revising the class 2 definitions, the needed data is not consistent after 2009, so the limit is re‑set for assessment year 2010; and, the formula is resumed for assessment year 2011, with a two‑ year lag for the base year. Effective for taxes payable in 2011 and thereafter.
	H.F. 885, Art. 4, section 2. Same	Section 2. Greens Acres; Indexing of "low" value for nonproductive land. Allows the data used to index the "low" value for nonproductive land to be based on data from the prior assessment year; in order to avoid using data from the current year that is not final. Effective for taxes payable in 2009 and thereafter.
	H.F. 885, Art. 4, section 3. Same	Section 3. Aggregate resource preservation act. Clarifies that class 2e lands are eligible if the 2e lands were class 1a or 1b immediately before becoming 2e. This effectively allows all properties to qualify for both a partial value exclusion and a preferential class rate. Effective for taxes payable in 2010 and thereafter.
	H.F. 885, Art. 4, sections 4 and 5. Bovine zone property tax credit. Clarifies that the credit applies to farms rather than to farm parcels, and to farms from which herds were eradicated in 2006. Effective for taxes payable in 2009 only (credit repealed effective for payable 2010 in article 6, section 39).	Senate modifies bovine zone credit in article 4, sections 16 and 17.
	H.F. 885, Art. 4, section 6. Same	Section 4. Abatements and credits for damaged properties; utility property. Clarifies that "utility property" for these purposes ‑ i.e., authorizing the Commissioner of Revenue to grant a disaster‑related abatement or credit ‑‑ is limited to property that is valued and classified by the Commissioner of Revenue on an order. Effective the day following final enactment.
	No comparable provision	Sections 5 and 6. Cooperative associations. Adds a reference to chapter 308B to clarify that cooperative associations are included under these sections.
	No comparable provision (deleted in committee since Article 6, section 13 prohibits new residential relative homesteads after July 1, 2009).	Section 7. Homestead applications Requires that the spouse of an occupying relative must also sign, and provide their SSN on, the applications. Effective for applications received after June 30, 2009.
	H.F. 885, Art. 4, section 8. Same	Section 8. Trust‑held homesteads. Clarifies that the provisions of this subdivision, that specify when trust‑held property can qualify for the homestead classification, applies to personal property as well as real property. The remaining changes are for readability and clarity. Effective the day following final enactment.
	H.F. 885, Art. 4, section 9. House has same provisions as Senate, except for minor technical language. Also, House adds language clarifying that the “2e” (aggregate) classification is only available in counties that have not elected to opt-out of the aggregate preservation program.	Section 9. Class 2 properties. Clarifies that the presence of a minor structure will not disqualify property from the managed forest land class; and to provide a May 1 deadline for the applications required from owners of managed forest land. The remaining changes are for readability and clarity. Effective the day following final enactment.
	H.F. 885, Art. 4, section 10. Same provision	Section 10. Class 4 properties. Includes organizations described in IRC ' 501(c)(8) in the definition of "community service organizations" under clause (d)(3) ‑ Class 4c(3); and, to make several technical clarifications in clause (d)(1) covering seasonal recreational‑residential properties ‑ i.e., Class 4c(1) ‑ so that the requirements in the clause apply only to the properties classified therein, instead of to all class 4c properties. Effective the day following final enactment.
	H.F. 885, Art. 4, section 11. Same provision	Section 11. Vacant land. Updates references to section 273.13, subd. 23, which were changed in 2008. The updates clarify the requirements of current law to classify vacant land according to its "highest and best " use by adding an exception for unimproved rural lands, because those lands have a specifically‑designated classification. Effective the day following final enactment.
	H.F. 885, Art. 4, sections 12, 13, and 17. Same provisions	Sections 12, 13, and 17. Date for sending utility values to the counties. Changes the date by which the Department of Revenue must send the ordered and assessed values of pipelines and electric utilities to the counties from June 30 to August 1. The change is needed because current timing allows a very short time for review by the companies and counties prior to issuance of the orders resulting in the department having to send out revised orders. Effective for assessment year 2009 and thereafter.
	H.F. 885, Art. 4, sections 14, 15, and 16. Same provisions	Sections 14, 15, and 16. County boards of appeal and equalization. Provides that if a county board of appeal and equalization or special board of equalization fails to satisfy the training and quorum requirements, owners and taxpayers who could have appealed to that board can appeal to the commissioner. A fee of $500 per tax parcel will be assessed to the county. Section 14 is effective the day following final enactment. Section 15 is effective for taxes payable in 2010 and thereafter. Allows county boards of appeal and equalization to meet for up to ten days after the second Friday in July, rather than requiring them to meet for a full "ten consecutive days". Effective the day following final enactment.
	H.F. 885, Art. 4, section 18. Overall levy limitations. Makes changes to three “special levy” provisions: (i) technical change to special levy for voter-approved debt levies since they are now levied against a different tax base; (ii) the special levy for lake improvement district purposes is revised to eliminate redundant language; and, (iii) the special levy in clause (14) is stricken because it is obsolete. Effective for taxes payable in 2009 and thereafter.	No comparable provision (levy limits repealed in article 4, section 61)
	H.F. 885, Art. 4, section 19. Adjusted levy limit base. Corrects an erroneous cross-reference. Effective for taxes payable in 2009, 2010, and 2011.	No comparable provision (levy limits repealed in article 4, section 61)
	H.F. 885, Art. 4, section 20. Same provision	Section 18. Sustainable Forest Incentive Act, calculation of annual average market value. Conforms to changes made in 2008 that created a new forest land classification (2c property) titled "managed forest land" in Minn. Stat. ' 237.13, subd. 23(d). Under the Sustainable Forest Incentive Act, the department must calculate the annual average market value of forest land. These changes are needed to make sure that the calculation is consistent with prior years' calculations. The new classification contains roughly the same type of land that was formerly included in 2b property (timberlands) which is referred to in the original calculation. This section is effective for calculations made in 2010 and thereafter.
	H.F. 885, Art. 4, section 21. Same provision	Section 19. Sustainable Forest Incentive Act, Calculation of incentive payment. Conforms to changes made in 2008 regarding classification of forest land. The changes are necessary so that the statutory calculation will remain the same under current law. Prior law that referred to 2b property was amended and now includes different property. The references in ' 290C.07 to the class rate for 2b property have been changed to "a class rate of 1%" which was the class rate for 2b property under the old law. References to "timberlands" have been changed to refer to "managed forest land" which is now the correct term. This section is effective for calculations made in 2010 and thereafter.
	H.F. 885, Art. 4, sections 22, 23, and 24. Same provisions.	Sections 20, 21, and 22. Local government aid. Corrects the placement in the statute of the $285 minimum amount for city revenue need. This provision was included in paragraph (c), but should have been placed in paragraph (a) instead. Corrects a cross‑reference in Minn. Stat. ' 477A.011, subd. 42, to the "regional‑center aid base." The definition of city jobs base refers to the regional center aid base in Minn. Stat. 477A.011, subd. 36(l); but, the reference should have been to subd. 34(k). Eliminate two internal conflicts with other pre‑existing provisions by clarifying that the levies used to determine the minimum/maximum aid‑change caps are the levies for taxes payable in the year the aid is calculated (i.e., the year prior to the year the aid is distributed); and, by clarifying that the population data to be used in the aid calculations are the data available as of July 15 of the year the aid is calculated. These three sections are effective for aids payable in 2009 and thereafter.
	H.F. 885, Art. 4, section 25. Same provision	Section 23. Repealer. Repeals Minn. Rules chapter 8115 which are obsolete rules that applied to levy limits that were repealed in 1997. Effective day following final enactment.

Sec.	HF 885, Art. 6, as passed by House Tax Committee (April 29) and sent to Floor	Senate Article 14: Department Miscellaneous
	H.F. No. 885 (first engrossment), article 6, section 1 is similar, but does not specify the permitted return information that may be disclosed.	Section 1. Disclosure to law enforcement authorities of harassment. Amends Minn. Stat. § 270B.14, subd. 16, to include harassment as an additional circumstance under which tax return information can be disclosed to law enforcement authorities. Under current law, the Department of Revenue can apprise law enforcement authorities of circumstances involving the threat of death or physical injury to someone. There are other situations where, as part of a tax case, the department may become aware that a taxpayer is harassing someone or is being harassed by another person to the point where notifying law enforcement is necessary for protection. This includes the harassment of a Department of Revenue employee. Harassment is defined as purposeful conduct directed at an individual, and causing them to feel frightened, threatened, oppressed, persecuted, or intimidated.
	H.F. No. 885 (first engrossment), article 6, section 2 is same.	Section 2. Amends Minn. St. § 270C.12 by adding a subdivision. The subdivision states that the microdata coordinating committee established in this section shall not expire.
	H.F. No. 885 (first engrossment), article 6, sections 3 and 4 are same.	Sections 3 and 4. Publication of names of tax prepares subject to penalties. Amends Minn. Stat. § 270C.446, subds. 2 and 5, to clarify that a tax preparer who is subject to publication due to criminal penalty must have been a preparer with respect to the return or claim from which the criminal penalty arose and that the preparer must demonstrate to the commissioner that conditions for removal from the list have been met, including satisfaction of any sentence imposed. Effective the day following final enactment.
	H.F. No. 885 (first engrossment), article 6, section 5 is same.	Section 5. Personal liability for penalty and interest assessments procedure. Amends Minn. Stat. § 270C.56, subd. 1, to clarify that all applicable penalties and interest may be assessed for personal liability in the same manner as the underlying tax. This clarifies that the personal liability assessment of penalties and interest is treated consistently for all taxes subject to personal liability assessment and parallels language that existed prior to various recodifications of the state tax laws which have occurred over the last several years. Effective the day following final enactment.
	H.F. No. 885 (first engrossment), article 6, section 6 is same.	Section 6. Bankruptcy; suspension of time clarification. Amends Minn. Stat. § 289A.41 to make a technical correction to clarify the application of the statute. Clarifies that the notice requirement applies to the termination or expiration of the automatic stay, as well as notice that the bankruptcy proceedings have been closed or dismissed. Effective the day following final enactment.

Article 1: Income, Corporate, and Estate and Gift Taxes

Article 2: County Revenue Reform

Article 3: Property Tax Reform, Accountability, Value, and Efficiency Provisions

Article 4: Local Government Flexibility and Mandate Reduction Provisions

Article 5: Truth in Taxation

Article 6: Property Tax

Article 7: Aids and Credits

Article 8: Seasonal Recreational Property Tax Deferral Program

Article 9: Special Taxes

Article 10: Sales and Use Tax

Article 11: Local Development

Article 12: Minerals

Article 13: Miscellaneous

Senate Article 7: Public Finance

Senate Article 9: Department Individual Income, Corporate Franchise, and Estate Taxes

Senate Article 10: Department Sales and Use Taxes

Senate Article 11: Department Special Taxes

Senate Article 12: Department Property Taxes and Aids

Senate Article 13: Department Conditional Use Deeds

Senate Article 14: Department Miscellaneous