Bill Text: MN HF490 | 2013-2014 | 88th Legislature | Introduced

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Bill Title: Income and franchise taxes, property taxes, sales and use taxes, and other taxes and tax provision policy changes made.

Sponsorship: Partisan Bill (Democrat 1)

Status: (Introduced - Dead) 2013-02-28 - Committee report, without further recommendation re-refer to Civil Law [HF490 Detail]

Download: Minnesota-2013-HF490-Introduced.html

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A bill for an act

relating to taxation; making policy changes to income and franchise taxes,
property taxes, sales and use taxes, and other taxes and tax provisions;amending
Minnesota Statutes 2012, sections 123A.455, subdivision 1; 270.077; 270C.34,
subdivision 1; 270C.38, subdivision 1; 272.03, subdivision 9; 273.114,
subdivision 6; 273.13, subdivisions 23, 25; 273.372, subdivision 4; 289A.12,
subdivision 14; 290.9705, subdivision 1; 290B.04, subdivision 2; 296A.01,
subdivision 19; 297A.665; 297F.01, subdivision 23; 297I.05, subdivisions 7,
12; 297I.30, subdivisions 1, 2.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

ARTICLE 1

INCOME AND FRANCHISE TAXES

    Section 1. Minnesota Statutes 2012, section 289A.12, subdivision 14, is amended to
read:
    Subd. 14. Regulated investment companies; reporting exempt-interest
dividends. (a) A regulated investment company paying $10 or more in exempt-interest
dividends to an individual who is a resident of Minnesota must make a return indicating
the amount of the exempt-interest dividends, the name, address, and Social Security
number of the recipient, and any other information that the commissioner specifies. The
return must be provided to the shareholder by February 15 of the year following the year
of the payment. The return provided to the shareholder must include a clear statement,
in the form prescribed by the commissioner, that the exempt-interest dividends must be
included in the computation of Minnesota taxable income. By June 1 of each year, the
regulated investment company must file a copy of the return with the commissioner.
    (b) This subdivision applies to regulated investment companies required to register
under chapter 80A.
    (c) (b) For purposes of this subdivision, the following definitions apply.
    (1) "Exempt-interest dividends" mean exempt-interest dividends as defined in
section 852(b)(5) of the Internal Revenue Code, but does not include the portion of
exempt-interest dividends that are not required to be added to federal taxable income
under section 290.01, subdivision 19a, clause (1)(ii).
    (2) "Regulated investment company" means regulated investment company as
defined in section 851(a) of the Internal Revenue Code or a fund of the regulated
investment company as defined in section 851(g) of the Internal Revenue Code.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 2. Minnesota Statutes 2012, section 290.9705, subdivision 1, is amended to read:
    Subdivision 1. Withholding of payments to out-of-state contractors. (a) In this
section, "person" means a person, corporation, or cooperative, the state of Minnesota and
its political subdivisions, and a city, county, and school district in Minnesota.
(b) A person who in the regular course of business is hiring, contracting, or having a
contract with a nonresident person or foreign corporation, as defined in Minnesota Statutes
1986, section 290.01, subdivision 5, to perform construction work in Minnesota, shall
deduct and withhold eight percent of cumulative calendar year payments made to the
contractor which exceed if the value of the contract exceeds $50,000.
EFFECTIVE DATE.This section is effective for payments made to contractors
after December 31, 2013.

ARTICLE 2

PROPERTY TAXES

    Section 1. Minnesota Statutes 2012, section 123A.455, subdivision 1, is amended to
read:
    Subdivision 1. Definitions. "Split residential property parcel" means a parcel of
real estate that is located within the boundaries of more than one school district and that
is classified as residential property under:
(1) section 273.13, subdivision 22, paragraph (a) or (b);
(2) section 273.13, subdivision 25, paragraph (b), clause (1); or
(3) section 273.13, subdivision 25, paragraph (c), clause (1).
EFFECTIVE DATE.This section is effective for taxes payable in 2014 and
thereafter.

    Sec. 2. Minnesota Statutes 2012, section 270.077, is amended to read:
270.077 TAXES CREDITED TO STATE AIRPORTS FUND.
All taxes levied under sections 270.071 to 270.079 must be collected by the
commissioner and credited to the state airports fund created in section 360.017.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 3. Minnesota Statutes 2012, section 270C.34, subdivision 1, is amended to read:
    Subdivision 1. Authority. (a) The commissioner may abate, reduce, or refund any
penalty or interest that is imposed by a law administered by the commissioner, or imposed
by section 270.0725, subdivision 1 or 2, or 270.075, subdivision 2, as a result of the late
payment of tax or late filing of a return, or any part of an additional tax charge under
section 289A.25, subdivision 2, or 289A.26, subdivision 4, if the failure to timely pay the
tax or failure to timely file the return is due to reasonable cause, or if the taxpayer is located
in a presidentially declared disaster or in a presidentially declared state of emergency area
or in an area declared to be in a state of emergency by the governor under section 12.31.
    (b) The commissioner shall abate any part of a penalty or additional tax charge
under section 289A.25, subdivision 2, or 289A.26, subdivision 4, attributable to erroneous
advice given to the taxpayer in writing by an employee of the department acting in
an official capacity, if the advice:
    (1) was reasonably relied on and was in response to a specific written request of the
taxpayer; and
    (2) was not the result of failure by the taxpayer to provide adequate or accurate
information.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 4. Minnesota Statutes 2012, section 272.03, subdivision 9, is amended to read:
    Subd. 9. Person. "Person" includes means an individual, association, estate, trust,
partnership, firm, company, or corporation.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 5. Minnesota Statutes 2012, section 273.114, subdivision 6, is amended to read:
    Subd. 6. Additional taxes. (a) When real property which is being, or has been
valued and assessed under this section is sold, transferred, or no longer qualifies under
subdivision 2, the portion sold, transferred, or no longer qualifying shall be subject to
additional taxes in the amount equal to the difference between the taxes determined in
accordance with subdivision 3 and the amount determined under subdivision 4, provided
that the amount determined under subdivision 4 shall not be greater than it would have
been had the actual bona fide sale price of the real property at an arm's-length transaction
been used in lieu of the market value determined under subdivision 4. The additional taxes
shall be extended against the property on the tax list for taxes payable in the current year,
provided that no interest or penalties shall be levied on the additional taxes if timely paid
and provided that the additional taxes shall only be levied with respect to the current year
plus two prior years that the property has been valued and assessed under this section.
(b) In the case of a sale or transfer, the additional taxes under paragraph (a) shall not
be extended against the property if the new owner submits a successful application under
this section by the later of May 1 of the current year or 30 days after the sale or transfer.
(c) For the purposes of this section, the following events do not constitute a sale or
transfer for property that qualified under subdivision 2 prior to the event:
(1) death of a property owner when the surviving owners retain ownership of the
property;
(2) divorce of a married couple when one of the spouses retains ownership of the
property;
(3) marriage of a single property owner when that owner retains ownership of the
property in whole or in part;
(4) the organization or reorganization of a farm ownership entity that is not prohibited
from owning agricultural land in this state under section 500.24, if all owners maintain the
same beneficial interest both before and after the organization or reorganization; and
(5) transfer of the property to a trust or trustee, provided that the individual owners
of the property are the grantors of the trust and they maintain the same beneficial interest
both before and after placement of the property in trust.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 6. Minnesota Statutes 2012, section 273.13, subdivision 23, is amended to read:
    Subd. 23. Class 2. (a) An agricultural homestead consists of class 2a agricultural
land that is homesteaded, along with any class 2b rural vacant land that is contiguous to
the class 2a land under the same ownership. The market value of the house and garage
and immediately surrounding one acre of land has the same class rates as class 1a or 1b
property under subdivision 22. The value of the remaining land including improvements
up to the first tier valuation limit of agricultural homestead property has a net class rate
of 0.5 percent of market value. The remaining property over the first tier has a class rate
of one percent of market value. For purposes of this subdivision, the "first tier valuation
limit of agricultural homestead property" and "first tier" means the limit certified under
section 273.11, subdivision 23.
    (b) Class 2a agricultural land consists of parcels of property, or portions thereof, that
are agricultural land and buildings. Class 2a property has a net class rate of one percent of
market value, unless it is part of an agricultural homestead under paragraph (a). Class 2a
property must also include any property that would otherwise be classified as 2b, but is
interspersed with class 2a property, including but not limited to sloughs, wooded wind
shelters, acreage abutting ditches, ravines, rock piles, land subject to a setback requirement,
and other similar land that is impractical for the assessor to value separately from the rest of
the property or that is unlikely to be able to be sold separately from the rest of the property.
    An assessor may classify the part of a parcel described in this subdivision that is used
for agricultural purposes as class 2a and the remainder in the class appropriate to its use.
    (c) Class 2b rural vacant land consists of parcels of property, or portions thereof,
that are unplatted real estate, rural in character and not used for agricultural purposes,
including land used for growing trees for timber, lumber, and wood and wood products,
that is not improved with a structure. The presence of a minor, ancillary nonresidential
structure as defined by the commissioner of revenue does not disqualify the property from
classification under this paragraph. Any parcel of 20 acres or more improved with a
structure that is not a minor, ancillary nonresidential structure must be split-classified, and
ten acres must be assigned to the split parcel containing the structure. Class 2b property
has a net class rate of one percent of market value unless it is part of an agricultural
homestead under paragraph (a), or qualifies as class 2c under paragraph (d).
    (d) Class 2c managed forest land consists of no less than 20 and no more than 1,920
acres statewide per taxpayer that is being managed under a forest management plan that
meets the requirements of chapter 290C, but is not enrolled in the sustainable forest
resource management incentive program. It has a class rate of .65 percent, provided that
the owner of the property must apply to the assessor in order for the property to initially
qualify for the reduced rate and provide the information required by the assessor to verify
that the property qualifies for the reduced rate. If the assessor receives the application
and information before May 1 in an assessment year, the property qualifies beginning
with that assessment year. If the assessor receives the application and information after
April 30 in an assessment year, the property may not qualify until the next assessment
year. The commissioner of natural resources must concur that the land is qualified. The
commissioner of natural resources shall annually provide county assessors verification
information on a timely basis. The presence of a minor, ancillary nonresidential structure
as defined by the commissioner of revenue does not disqualify the property from
classification under this paragraph.
    (e) Agricultural land as used in this section means:
    (1) contiguous acreage of ten acres or more, used during the preceding year for
agricultural purposes.; or
    (2) contiguous acreage used during the preceding year for an intensive livestock or
poultry confinement operation, provided that land used only for pasturing or grazing
does not qualify under this clause.
    "Agricultural purposes" as used in this section means the raising, cultivation, drying,
or storage of agricultural products for sale, or the storage of machinery or equipment
used in support of agricultural production by the same farm entity. For a property to be
classified as agricultural based only on the drying or storage of agricultural products,
the products being dried or stored must have been produced by the same farm entity as
the entity operating the drying or storage facility. "Agricultural purposes" also includes
enrollment in the Reinvest in Minnesota program under sections 103F.501 to 103F.535 or
the federal Conservation Reserve Program as contained in Public Law 99-198 or a similar
state or federal conservation program if the property was classified as agricultural (i)
under this subdivision for the assessment year 2002 taxes payable in 2003 because of its
enrollment in a qualifying program and the land remains enrolled or (ii) in the year prior
to its enrollment. Agricultural classification shall not be based upon the market value of
any residential structures on the parcel or contiguous parcels under the same ownership.
    "Contiguous acreage," for purposes of this paragraph, means all of, or a contiguous
portion of, a tax parcel as described in section 272.193, or all of, or a contiguous portion
of, a set of contiguous tax parcels under that section that are owned by the same person.
    (f) Real estate of Agricultural land under this section also includes:
    (1) contiguous acreage that is less than ten acres, which is in size and exclusively or
intensively used in the preceding year for raising or cultivating agricultural products, shall
be considered as agricultural land. To qualify under this paragraph, property that includes
a residential structure must be used intensively for one of the following purposes:; or
    (2) contiguous acreage that contains a residence and is less than 11 acres in size, if
the contiguous acreage exclusive of the house, garage, and surrounding one acre of land
was used in the preceding year for one or more of the following three uses:
    (i) for an intensive grain drying or storage of grain operation, or for intensive
machinery or equipment storage of machinery or equipment activities used to support
agricultural activities on other parcels of property operated by the same farming entity;
    (ii) as a nursery, provided that only those acres used intensively to produce nursery
stock are considered agricultural land; or
    (iii) for livestock or poultry confinement, provided that land that is used only for
pasturing and grazing does not qualify; or
    (iv) (iii) for intensive market farming; for purposes of this paragraph, "market
farming" means the cultivation of one or more fruits or vegetables or production of animal
or other agricultural products for sale to local markets by the farmer or an organization
with which the farmer is affiliated.
    "Contiguous acreage," for purposes of this paragraph, means all of a tax parcel as
described in section 272.193, or all of a set of contiguous tax parcels under that section
that are owned by the same person.
    (g) Land shall be classified as agricultural even if all or a portion of the agricultural
use of that property is the leasing to, or use by another person for agricultural purposes.
    Classification under this subdivision is not determinative for qualifying under
section 273.111.
    (h) The property classification under this section supersedes, for property tax
purposes only, any locally administered agricultural policies or land use restrictions that
define minimum or maximum farm acreage.
    (i) The term "agricultural products" as used in this subdivision includes production
for sale of:
    (1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing
animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains,
bees, and apiary products by the owner;
    (2) fish bred for sale and consumption if the fish breeding occurs on land zoned
for agricultural use;
    (3) the commercial boarding of horses, which may include related horse training and
riding instruction, if the boarding is done on property that is also used for raising pasture
to graze horses or raising or cultivating other agricultural products as defined in clause (1);
    (4) property which is owned and operated by nonprofit organizations used for
equestrian activities, excluding racing;
    (5) game birds and waterfowl bred and raised (i) on a game farm licensed under
section 97A.105, provided that the annual licensing report to the Department of Natural
Resources, which must be submitted annually by March 30 to the assessor, indicates
that at least 500 birds were raised or used for breeding stock on the property during the
preceding year and that the owner provides a copy of the owner's most recent schedule F;
or (ii) for use on a shooting preserve licensed under section 97A.115;
    (6) insects primarily bred to be used as food for animals;
    (7) trees, grown for sale as a crop, including short rotation woody crops, and not
sold for timber, lumber, wood, or wood products; and
    (8) maple syrup taken from trees grown by a person licensed by the Minnesota
Department of Agriculture under chapter 28A as a food processor.
    (j) If a parcel used for agricultural purposes is also used for commercial or industrial
purposes, including but not limited to:
    (1) wholesale and retail sales;
    (2) processing of raw agricultural products or other goods;
    (3) warehousing or storage of processed goods; and
    (4) office facilities for the support of the activities enumerated in clauses (1), (2),
and (3),
the assessor shall classify the part of the parcel used for agricultural purposes as class
1b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its
use. The grading, sorting, and packaging of raw agricultural products for first sale is
considered an agricultural purpose. A greenhouse or other building where horticultural
or nursery products are grown that is also used for the conduct of retail sales must be
classified as agricultural if it is primarily used for the growing of horticultural or nursery
products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of
those products. Use of a greenhouse or building only for the display of already grown
horticultural or nursery products does not qualify as an agricultural purpose.
    (k) The assessor shall determine and list separately on the records the market value
of the homestead dwelling and the one acre of land on which that dwelling is located. If
any farm buildings or structures are located on this homesteaded acre of land, their market
value shall not be included in this separate determination.
    (l) Class 2d airport landing area consists of a landing area or public access area of
a privately owned public use airport. It has a class rate of one percent of market value.
To qualify for classification under this paragraph, a privately owned public use airport
must be licensed as a public airport under section 360.018. For purposes of this paragraph,
"landing area" means that part of a privately owned public use airport properly cleared,
regularly maintained, and made available to the public for use by aircraft and includes
runways, taxiways, aprons, and sites upon which are situated landing or navigational aids.
A landing area also includes land underlying both the primary surface and the approach
surfaces that comply with all of the following:
    (i) the land is properly cleared and regularly maintained for the primary purposes of
the landing, taking off, and taxiing of aircraft; but that portion of the land that contains
facilities for servicing, repair, or maintenance of aircraft is not included as a landing area;
    (ii) the land is part of the airport property; and
    (iii) the land is not used for commercial or residential purposes.
The land contained in a landing area under this paragraph must be described and certified
by the commissioner of transportation. The certification is effective until it is modified,
or until the airport or landing area no longer meets the requirements of this paragraph.
For purposes of this paragraph, "public access area" means property used as an aircraft
parking ramp, apron, or storage hangar, or an arrival and departure building in connection
with the airport.
    (m) Class 2e consists of land with a commercial aggregate deposit that is not actively
being mined and is not otherwise classified as class 2a or 2b, provided that the land is not
located in a county that has elected to opt-out of the aggregate preservation program as
provided in section 273.1115, subdivision 6. It has a class rate of one percent of market
value. To qualify for classification under this paragraph, the property must be at least
ten contiguous acres in size and the owner of the property must record with the county
recorder of the county in which the property is located an affidavit containing:
    (1) a legal description of the property;
    (2) a disclosure that the property contains a commercial aggregate deposit that is not
actively being mined but is present on the entire parcel enrolled;
    (3) documentation that the conditional use under the county or local zoning
ordinance of this property is for mining; and
    (4) documentation that a permit has been issued by the local unit of government
or the mining activity is allowed under local ordinance. The disclosure must include a
statement from a registered professional geologist, engineer, or soil scientist delineating
the deposit and certifying that it is a commercial aggregate deposit.
    For purposes of this section and section 273.1115, "commercial aggregate deposit"
means a deposit that will yield crushed stone or sand and gravel that is suitable for use
as a construction aggregate; and "actively mined" means the removal of top soil and
overburden in preparation for excavation or excavation of a commercial deposit.
    (n) When any portion of the property under this subdivision or subdivision 22 begins
to be actively mined, the owner must file a supplemental affidavit within 60 days from
the day any aggregate is removed stating the number of acres of the property that is
actively being mined. The acres actively being mined must be (1) valued and classified
under subdivision 24 in the next subsequent assessment year, and (2) removed from the
aggregate resource preservation property tax program under section 273.1115, if the
land was enrolled in that program. Copies of the original affidavit and all supplemental
affidavits must be filed with the county assessor, the local zoning administrator, and the
Department of Natural Resources, Division of Land and Minerals. A supplemental
affidavit must be filed each time a subsequent portion of the property is actively mined,
provided that the minimum acreage change is five acres, even if the actual mining activity
constitutes less than five acres.
(o) The definitions prescribed by the commissioner under paragraphs (c) and (d) are
not rules and are exempt from the rulemaking provisions of chapter 14, and the provisions
in section 14.386 concerning exempt rules do not apply.
EFFECTIVE DATE.This section is effective for taxes payable in 2014 and
thereafter.

    Sec. 7. Minnesota Statutes 2012, section 273.13, subdivision 25, is amended to read:
    Subd. 25. Class 4. (a) Class 4a is residential real estate containing four or more
units and used or held for use by the owner or by the tenants or lessees of the owner
as a residence for rental periods of 30 days or more, excluding property qualifying for
class 4d. Class 4a also includes hospitals licensed under sections 144.50 to 144.56, other
than hospitals exempt under section 272.02, and contiguous property used for hospital
purposes, without regard to whether the property has been platted or subdivided. The
market value of class 4a property has a class rate of 1.25 percent.
    (b) Class 4b includes:
    (1) residential real estate containing less than four units that does not qualify as class
4bb, other than seasonal residential recreational property;
    (2) manufactured homes not classified under any other provision;
    (3) a dwelling, garage, and surrounding one acre of property on a nonhomestead
farm classified under subdivision 23, paragraph (b) containing two or three units; and
    (4) unimproved property that is classified residential as determined under subdivision
33.
    The market value of class 4b property has a class rate of 1.25 percent.
    (c) Class 4bb includes:
    (1) nonhomestead residential real estate containing one unit, other than seasonal
residential recreational property; and
    (2) a single family dwelling, garage, and surrounding one acre of property on a
nonhomestead farm classified under subdivision 23, paragraph (b).
    Class 4bb property has the same class rates as class 1a property under subdivision 22.
    Property that has been classified as seasonal residential recreational property at
any time during which it has been owned by the current owner or spouse of the current
owner does not qualify for class 4bb.
    (d) Class 4c property includes:
    (1) except as provided in subdivision 22, paragraph (c), real and personal property
devoted to commercial temporary and seasonal residential occupancy for recreation
purposes, for not more than 250 days in the year preceding the year of assessment. For
purposes of this clause, property is devoted to a commercial purpose on a specific day
if any portion of the property is used for residential occupancy, and a fee is charged for
residential occupancy. Class 4c property under this clause must contain three or more
rental units. A "rental unit" is defined as a cabin, condominium, townhouse, sleeping room,
or individual camping site equipped with water and electrical hookups for recreational
vehicles. A camping pad offered for rent by a property that otherwise qualifies for class
4c under this clause is also class 4c under this clause regardless of the term of the rental
agreement, as long as the use of the camping pad does not exceed 250 days. In order for a
property to be classified under this clause, either (i) the business located on the property
must provide recreational activities, at least 40 percent of the annual gross lodging receipts
related to the property must be from business conducted during 90 consecutive days,
and either (A) at least 60 percent of all paid bookings by lodging guests during the year
must be for periods of at least two consecutive nights; or (B) at least 20 percent of the
annual gross receipts must be from charges for providing recreational activities, or (ii) the
business must contain 20 or fewer rental units, and must be located in a township or a city
with a population of 2,500 or less located outside the metropolitan area, as defined under
section 473.121, subdivision 2, that contains a portion of a state trail administered by the
Department of Natural Resources. For purposes of item (i)(A), a paid booking of five or
more nights shall be counted as two bookings. Class 4c property also includes commercial
use real property used exclusively for recreational purposes in conjunction with other class
4c property classified under this clause and devoted to temporary and seasonal residential
occupancy for recreational purposes, up to a total of two acres, provided the property is
not devoted to commercial recreational use for more than 250 days in the year preceding
the year of assessment and is located within two miles of the class 4c property with which
it is used. In order for a property to qualify for classification under this clause, the owner
must submit a declaration to the assessor designating the cabins or units occupied for 250
days or less in the year preceding the year of assessment by January 15 of the assessment
year. Those cabins or units and a proportionate share of the land on which they are located
must be designated class 4c under this clause as otherwise provided. The remainder of the
cabins or units and a proportionate share of the land on which they are located will be
designated as class 3a. The owner of property desiring designation as class 4c property
under this clause must provide guest registers or other records demonstrating that the units
for which class 4c designation is sought were not occupied for more than 250 days in the
year preceding the assessment if so requested. The portion of a property operated as a
(1) restaurant, (2) bar, (3) gift shop, (4) conference center or meeting room, and (5) other
nonresidential facility operated on a commercial basis not directly related to temporary and
seasonal residential occupancy for recreation purposes does not qualify for class 4c. For
the purposes of this paragraph, "recreational activities" means renting ice fishing houses,
boats and motors, snowmobiles, downhill or cross-country ski equipment; providing
marina services, launch services, or guide services; or selling bait and fishing tackle;
    (2) qualified property used as a golf course if:
    (i) it is open to the public on a daily fee basis. It may charge membership fees or
dues, but a membership fee may not be required in order to use the property for golfing,
and its green fees for golfing must be comparable to green fees typically charged by
municipal courses; and
    (ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).
    A structure used as a clubhouse, restaurant, or place of refreshment in conjunction
with the golf course is classified as class 3a property;
    (3) real property up to a maximum of three acres of land owned and used by a
nonprofit community service oriented organization and not used for residential purposes
on either a temporary or permanent basis, provided that:
    (i) the property is not used for a revenue-producing activity for more than six days
in the calendar year preceding the year of assessment; or
    (ii) the organization makes annual charitable contributions and donations at least
equal to the property's previous year's property taxes and the property is allowed to be
used for public and community meetings or events for no charge, as appropriate to the
size of the facility.
    For purposes of this clause:
    (A) "charitable contributions and donations" has the same meaning as lawful
gambling purposes under section 349.12, subdivision 25, excluding those purposes
relating to the payment of taxes, assessments, fees, auditing costs, and utility payments;
    (B) "property taxes" excludes the state general tax;
    (C) a "nonprofit community service oriented organization" means any corporation,
society, association, foundation, or institution organized and operated exclusively for
charitable, religious, fraternal, civic, or educational purposes, and which is exempt from
federal income taxation pursuant to section 501(c)(3), (8), (10), or (19) of the Internal
Revenue Code; and
    (D) "revenue-producing activities" shall include but not be limited to property or that
portion of the property that is used as an on-sale intoxicating liquor or 3.2 percent malt
liquor establishment licensed under chapter 340A, a restaurant open to the public, bowling
alley, a retail store, gambling conducted by organizations licensed under chapter 349, an
insurance business, or office or other space leased or rented to a lessee who conducts a
for-profit enterprise on the premises.
Any portion of the property not qualifying under either item (i) or (ii) is class 3a. The use
of the property for social events open exclusively to members and their guests for periods
of less than 24 hours, when an admission is not charged nor any revenues are received by
the organization shall not be considered a revenue-producing activity.
    The organization shall maintain records of its charitable contributions and donations
and of public meetings and events held on the property and make them available upon
request any time to the assessor to ensure eligibility. An organization meeting the
requirement under item (ii) must file an application by May 1 with the assessor for
eligibility for the current year's assessment. The commissioner shall prescribe a uniform
application form and instructions;
    (4) postsecondary student housing of not more than one acre of land that is owned by
a nonprofit corporation organized under chapter 317A and is used exclusively by a student
cooperative, sorority, or fraternity for on-campus housing or housing located within two
miles of the border of a college campus;
    (5)(i) manufactured home parks as defined in section 327.14, subdivision 3,
excluding manufactured home parks described in section 273.124, subdivision 3a, and (ii)
manufactured home parks as defined in section 327.14, subdivision 3, that are described in
section 273.124, subdivision 3a;
    (6) real property that is actively and exclusively devoted to indoor fitness, health,
social, recreational, and related uses, is owned and operated by a not-for-profit corporation,
and is located within the metropolitan area as defined in section 473.121, subdivision 2;
    (7) a leased or privately owned noncommercial aircraft storage hangar not exempt
under section 272.01, subdivision 2, and the land on which it is located, provided that:
    (i) the land is on an airport owned or operated by a city, town, county, Metropolitan
Airports Commission, or group thereof; and
    (ii) the land lease, or any ordinance or signed agreement restricting the use of the
leased premise, prohibits commercial activity performed at the hangar.
    If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must
be filed by the new owner with the assessor of the county where the property is located
within 60 days of the sale;
    (8) a privately owned noncommercial aircraft storage hangar not exempt under
section 272.01, subdivision 2, and the land on which it is located, provided that:
    (i) the land abuts a public airport; and
    (ii) the owner of the aircraft storage hangar provides the assessor with a signed
agreement restricting the use of the premises, prohibiting commercial use or activity
performed at the hangar; and
    (9) residential real estate, a portion of which is used by the owner for homestead
purposes, and that is also a place of lodging, if all of the following criteria are met:
    (i) rooms are provided for rent to transient guests that generally stay for periods
of 14 or fewer days;
    (ii) meals are provided to persons who rent rooms, the cost of which is incorporated
in the basic room rate;
    (iii) meals are not provided to the general public except for special events on fewer
than seven days in the calendar year preceding the year of the assessment; and
    (iv) the owner is the operator of the property.
The market value subject to the 4c classification under this clause is limited to five rental
units. Any rental units on the property in excess of five, must be valued and assessed as
class 3a. The portion of the property used for purposes of a homestead by the owner must
be classified as class 1a property under subdivision 22;
    (10) real property up to a maximum of three acres and operated as a restaurant
as defined under section 157.15, subdivision 12, provided it: (A) is located on a lake
as defined under section 103G.005, subdivision 15, paragraph (a), clause (3); and (B)
is either devoted to commercial purposes for not more than 250 consecutive days, or
receives at least 60 percent of its annual gross receipts from business conducted during
four consecutive months. Gross receipts from the sale of alcoholic beverages must be
included in determining the property's qualification under subitem (B). The property's
primary business must be as a restaurant and not as a bar. Gross receipts from gift shop
sales located on the premises must be excluded. Owners of real property desiring 4c
classification under this clause must submit an annual declaration to the assessor by
February 1 of the current assessment year, based on the property's relevant information for
the preceding assessment year;
(11) lakeshore and riparian property and adjacent land, not to exceed six acres, used
as a marina, as defined in section 86A.20, subdivision 5, which is made accessible to
the public and devoted to recreational use for marina services. The marina owner must
annually provide evidence to the assessor that it provides services, including lake or river
access to the public by means of an access ramp or other facility that is either located on
the property of the marina or at a publicly owned site that abuts the property of the marina.
No more than 800 feet of lakeshore may be included in this classification. Buildings used
in conjunction with a marina for marina services, including but not limited to buildings
used to provide food and beverage services, fuel, boat repairs, or the sale of bait or fishing
tackle, are classified as class 3a property; and
(12) real and personal property devoted to noncommercial temporary and seasonal
residential occupancy for recreation purposes.
    Class 4c property has a class rate of 1.5 percent of market value, except that (i) each
parcel of noncommercial seasonal residential recreational property under clause (12)
has the same class rates as class 4bb property, (ii) manufactured home parks assessed
under clause (5), item (i), have the same class rate as class 4b property, and the market
value of manufactured home parks assessed under clause (5), item (ii), has the same class
rate as class 4d property if more than 50 percent of the lots in the park are occupied by
shareholders in the cooperative corporation or association and a class rate of one percent if
50 percent or less of the lots are so occupied, (iii) commercial-use seasonal residential
recreational property and marina recreational land as described in clause (11), has a
class rate of one percent for the first $500,000 of market value, and 1.25 percent for the
remaining market value, (iv) the market value of property described in clause (4) has a
class rate of one percent, (v) the market value of property described in clauses (2), (6), and
(10) has a class rate of 1.25 percent, and (vi) that portion of the market value of property
in clause (9) qualifying for class 4c property has a class rate of 1.25 percent.
    (e) Class 4d property is qualifying low-income rental housing certified to the assessor
by the Housing Finance Agency under section 273.128, subdivision 3. If only a portion
of the units in the building qualify as low-income rental housing units as certified under
section 273.128, subdivision 3, only the proportion of qualifying units to the total number
of units in the building qualify for class 4d. The remaining portion of the building shall be
classified by the assessor based upon its use. Class 4d also includes the same proportion of
land as the qualifying low-income rental housing units are to the total units in the building.
For all properties qualifying as class 4d, the market value determined by the assessor must
be based on the normal approach to value using normal unrestricted rents.
    Class 4d property has a class rate of 0.75 percent.
EFFECTIVE DATE.This section is effective for taxes payable in 2014 and
thereafter.

    Sec. 8. Minnesota Statutes 2012, section 273.372, subdivision 4, is amended to read:
    Subd. 4. Administrative appeals. (a) Companies that submit the reports under
section 270.82 or 273.371 by the date specified in that section, or by the date specified by
the commissioner in an extension, may appeal administratively to the commissioner prior
to bringing an action in court by submitting.
(b) Companies that must submit reports under section 270.82 must submit a written
request with to the commissioner for a conference within ten days after the date of the
commissioner's valuation certification or notice to the company, or by May June 15,
whichever is earlier.
(c) Companies that submit reports under section 273.371 must submit a written
request to the commissioner for a conference within ten days after the date of the
commissioner's valuation certification or notice to the company, or by July 1, whichever
is earlier.
(d) The commissioner shall conduct the conference upon the commissioner's entire
files and records and such further information as may be offered. The conference must
be held no later than 20 days after the date of the commissioner's valuation certification
or notice to the company, or by the date specified by the commissioner in an extension.
Within 60 days after the conference the commissioner shall make a final determination of
the matter and shall notify the company promptly of the determination. The conference
is not a contested case hearing.
(b) (e) In addition to the opportunity for a conference under paragraph (a), the
commissioner shall also provide the railroad and utility companies the opportunity to
discuss any questions or concerns relating to the values established by the commissioner
through certification or notice in a less formal manner. This does not change or modify
the deadline for requesting a conference under paragraph (a), the deadline in section
271.06 for appealing an order of the commissioner, or the deadline in section 278.01 for
appealing property taxes in court.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 9. Minnesota Statutes 2012, section 290B.04, subdivision 2, is amended to read:
    Subd. 2. Approval; recording. The commissioner shall approve all initial
applications that qualify under this chapter and shall notify qualifying homeowners on or
before December 1. The commissioner may investigate the facts or require confirmation
in regard to an application. The commissioner shall record or file a notice of qualification
for deferral, including the names of the qualifying homeowners and a legal description
of the property, in the office of the county recorder, or registrar of titles, whichever is
applicable, in the county where the qualifying property is located. The notice must state
that it serves as a notice of lien and that it includes deferrals under this section for future
years. The commissioner shall prescribe the form of the notice. Execution of the notice
by the original or facsimile signature of the commissioner or a delegate entitles them to
be recorded, and no other attestation, certification, or acknowledgment is necessary. The
homeowner shall pay the recording or filing fees for the notice, which, notwithstanding
section 357.18, shall be paid by the homeowner at the time of satisfaction of the lien.
EFFECTIVE DATE.This section is effective for notices that are both executed
and recorded after June 30, 2013.

ARTICLE 3

MISCELLANEOUS

    Section 1. Minnesota Statutes 2012, section 270C.38, subdivision 1, is amended to read:
    Subdivision 1. Sufficient notice. (a) If no method of notification of a written
determination or action of the commissioner is otherwise specifically provided for by
law, notice of the determination or action sent postage prepaid by United States mail to
the taxpayer or other person affected by the determination or action at the taxpayer's
or person's last known address, is sufficient. If the taxpayer or person being notified is
deceased or is under a legal disability, or, in the case of a corporation being notified that
has terminated its existence, notice to the last known address of the taxpayer, person, or
corporation is sufficient, unless the department has been provided with a new address by a
party authorized to receive notices from the commissioner.
(b) If a taxpayer or other person agrees to accept notification by electronic means,
notice of a determination or action of the commissioner sent by electronic mail to the
taxpayer's or person's last known electronic mailing address as provided for in section
325L.08 is sufficient.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 2. Minnesota Statutes 2012, section 296A.01, subdivision 19, is amended to read:
    Subd. 19. E85. "E85" means a petroleum product that is a blend of agriculturally
derived denatured ethanol and gasoline or natural gasoline that typically contains not more
than 85 percent ethanol by volume, but at a minimum must contain 60 greater than 50
percent ethanol by volume. For the purposes of this chapter, the energy content of E85
will be considered to be 82,000 BTUs per gallon. E85 produced for use as a motor fuel in
alternative fuel vehicles as defined in subdivision 5 must comply with ASTM specification
D5798-07 D5798-11.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 3. Minnesota Statutes 2012, section 297A.665, is amended to read:
297A.665 PRESUMPTION OF TAX; BURDEN OF PROOF.
    (a) For the purpose of the proper administration of this chapter and to prevent
evasion of the tax, until the contrary is established, it is presumed that:
    (1) all gross receipts are subject to the tax; and
    (2) all retail sales for delivery in Minnesota are for storage, use, or other consumption
in Minnesota.
    (b) The burden of proving that a sale is not a taxable retail sale is on the seller.
However, a seller is relieved of liability if:
    (1) the seller obtains a fully completed exemption certificate or all the relevant
information required by section 297A.72, subdivision 2, at the time of the sale or within
90 days after the date of the sale; or
    (2) if the seller has not obtained a fully completed exemption certificate or all the
relevant information required by section 297A.72, subdivision 2, within the time provided
in clause (1), within 120 days after a request for substantiation by the commissioner,
the seller either:
    (i) obtains in good faith from the purchaser a fully completed exemption certificate
or all the relevant information required by section 297A.72, subdivision 2, from the
purchaser taken in good faith which means that the exemption certificate claims an
exemption that (A) was statutorily available on the date of the transaction, (B) could be
applicable to the item for which the exemption is claimed, and (C) is reasonable for the
purchaser's type of business; or
    (ii) proves by other means that the transaction was not subject to tax.
    (c) Notwithstanding paragraph (b), relief from liability does not apply to a seller who:
    (1) fraudulently fails to collect the tax; or
    (2) solicits purchasers to participate in the unlawful claim of an exemption.
(d) Notwithstanding paragraph (b), relief from liability does not apply to a seller
who has obtained information under paragraph (b), clause (2), if through the audit process
the commissioner finds the following:
(1) that at the time the information was provided the seller had knowledge or had
reason to know that the information relating to the exemption was materially false; or
(2) that the seller knowingly participated in activity intended to purposefully evade
the sales tax due on the transaction.
    (d) (e) A certified service provider, as defined in section 297A.995, subdivision 2, is
relieved of liability under this section to the extent a seller who is its client is relieved of
liability.
    (e) (f) A purchaser of tangible personal property or any items listed in section 297A.63
that are shipped or brought to Minnesota by the purchaser has the burden of proving that the
property was not purchased from a retailer for storage, use, or consumption in Minnesota.
(f) (g) If a seller claims that certain sales are exempt and does not provide the
certificate, information, or proof required by paragraph (b), clause (2), within 120 days
after the date of the commissioner's request for substantiation, then the exemptions
claimed by the seller that required substantiation are disallowed.
EFFECTIVE DATE.This section is effective retroactively from January 1, 2013.

    Sec. 4. Minnesota Statutes 2012, section 297F.01, subdivision 23, is amended to read:
    Subd. 23. Wholesale sales price. "Wholesale sales price" means the price stated
on the price list in effect at the time of sale for which a manufacturer or person sells a
tobacco product to a distributor, exclusive of any discount, promotional offer, or other
reduction. For purposes of this subdivision, "price list" means the manufacturer's price at
which tobacco products are made available for sale to all distributors on an ongoing basis
at which a distributor purchases a tobacco product. Wholesale sales price includes the
applicable federal excise tax, freight charges, or packaging costs, regardless of whether
they were included in the purchase price.
EFFECTIVE DATE.This section is effective for purchases made after December
31, 2013.

    Sec. 5. Minnesota Statutes 2012, section 297I.05, subdivision 7, is amended to read:
    Subd. 7. Nonadmitted insurance premium tax. (a) A tax is imposed on surplus
lines brokers. The rate of tax is equal to three percent of the gross premiums less return
premiums paid by an insured whose home state is Minnesota.
(b) A tax is imposed on persons, firms, or corporations a person, firm, corporation,
or purchasing group as defined in section 60E.02, or any member of a purchasing group,
that procure procures insurance directly from a nonadmitted insurer. The rate of tax is
equal to two percent of the gross premiums less return premiums paid by an insured
whose home state is Minnesota.
(c) No state other than the home state of an insured may require any premium tax
payment for nonadmitted insurance. When Minnesota is the home state of the insured,
as provided under section 297I.01, 100 percent of the gross premiums are taxable in
Minnesota with no allocation of the tax to other states.
EFFECTIVE DATE.This section is effective for premiums received after
December 31, 2013.

    Sec. 6. Minnesota Statutes 2012, section 297I.05, subdivision 12, is amended to read:
    Subd. 12. Other entities. (a) A tax is imposed equal to two percent of:
    (1) gross premiums less return premiums written for risks resident or located in
Minnesota by a risk retention group;
    (2) gross premiums less return premiums received by an attorney in fact acting
in accordance with chapter 71A;
    (3) gross premiums less return premiums received pursuant to assigned risk policies
and contracts of coverage under chapter 79; and
    (4) the direct funded premium received by the reinsurance association under section
79.34 from self-insurers approved under section 176.181 and political subdivisions that
self-insure; and.
    (5) gross premiums less return premiums paid to an insurer other than a licensed
insurance company or a surplus lines broker for coverage of risks resident or located in
Minnesota by a purchasing group or any members of the purchasing group to a broker or
agent for the purchasing group.
    (b) A tax is imposed on a joint self-insurance plan operating under chapter 60F. The
rate of tax is equal to two percent of the total amount of claims paid during the fund year,
with no deduction for claims wholly or partially reimbursed through stop-loss insurance.
    (c) A tax is imposed on a joint self-insurance plan operating under chapter 62H.
The rate of tax is equal to two percent of the total amount of claims paid during the
fund's fiscal year, with no deduction for claims wholly or partially reimbursed through
stop-loss insurance.
    (d) A tax is imposed equal to the tax imposed under section 297I.05, subdivision 5,
on the gross premiums less return premiums on all coverages received by an accountable
provider network or agents of an accountable provider network in Minnesota, in cash or
otherwise, during the year.
EFFECTIVE DATE.This section is effective for premiums received after
December 31, 2013.

    Sec. 7. Minnesota Statutes 2012, section 297I.30, subdivision 1, is amended to read:
    Subdivision 1. General rule. On or before March 1, every taxpayer subject to
taxation under section 297I.05, subdivisions 1 to 5,; 7, paragraph (b),; 12, paragraphs (a),
clauses (1) to (4), (b), (c), and (d),; and 14, shall file an annual return for the preceding
calendar year in the form prescribed by the commissioner.
EFFECTIVE DATE.This section is effective for premiums received after
December 31, 2013.

    Sec. 8. Minnesota Statutes 2012, section 297I.30, subdivision 2, is amended to read:
    Subd. 2. Surplus lines brokers and purchasing groups. On or before February
15 and August 15 of each year, every surplus lines broker subject to taxation under
section 297I.05, subdivision 7, paragraph (a), and every purchasing group or member of
a purchasing group subject to tax under section 297I.05, subdivision 12, paragraph (a),
clause (5), shall file a return with the commissioner for the preceding six-month period
ending December 31, or June 30, in the form prescribed by the commissioner.
EFFECTIVE DATE.This section is effective for premiums received after
December 31, 2013.