Bill Text: MN SF2135 | 2011-2012 | 87th Legislature | Introduced

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Bill Title: Miscellaneous tax provisions modifications

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2012-02-27 - Referred to Taxes [SF2135 Detail]

Download: Minnesota-2011-SF2135-Introduced.html

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A bill for an act

relating to taxation; making policy, technical, administrative, and other changes
to estate, property, sales and use, special, and various taxes and tax-related
provisions; amending Minnesota Statutes 2010, sections 65B.84, subdivision
1; 270.077; 270C.38, subdivision 1; 270C.69, subdivision 1; 272.0211,
subdivision 2; 272.03, subdivision 9; 273.372, subdivision 4; 287.20, subdivision
2; 297A.665; 297F.01, subdivision 23; 297G.04, subdivision 2; 297I.30, by
adding a subdivision; Minnesota Statutes 2011 Supplement, sections 273.114,
subdivision 6; 273.13, subdivisions 23, 25; 291.03, subdivisions 8, 9, 10, 11;
297I.05, subdivisions 7, 12; 297I.30, subdivisions 1, 2; proposing coding for new
law in Minnesota Statutes, chapter 297I; repealing Minnesota Statutes 2010,
section 168A.40, subdivisions 3, 4.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

ARTICLE 1

ESTATE TAXES

    Section 1. Minnesota Statutes 2011 Supplement, section 291.03, subdivision 8, is
amended to read:
    Subd. 8. Definitions. (a) For purposes of this section, the following terms have the
meanings given in this subdivision.
(b) "Family member" means a family member as defined in section 2032A(e)(2)
of the Internal Revenue Code or a trust whose beneficiaries are all family members as
defined in section 2032A(e)(2) of the Internal Revenue Code.
(c) "Qualified heir" means a family member who acquired qualified property
from the decedent and satisfies the requirement under subdivision 9, clause (6) (8), or
subdivision 10, clause (4), for the property.
(d) "Qualified property" means qualified small businesss property under subdivision
9 and qualified farm property under subdivision 10.
EFFECTIVE DATE.This section is effective for estates of decedents dying after
June 30, 2011.

    Sec. 2. Minnesota Statutes 2011 Supplement, section 291.03, subdivision 9, is
amended to read:
    Subd. 9. Qualified small business property. Property satisfying all of the following
requirements is qualified small business property:
(1) The value of the property was included in the federal adjusted taxable estate.
(2) The property consists of the assets of a trade or business or shares of stock or
other ownership interests in a corporation or other entity engaged in a trade or business.
The decedent or the decedent's spouse must have materially participated in the trade or
business within the meaning of section 469 of the Internal Revenue Code during the
taxable year that ended before the date of the decedent's death. Shares of stock in a
corporation or an ownership interest in another type of entity do not qualify under this
subdivision if the shares or ownership interests are traded on a public stock exchange at
any time during the three-year period ending on the decedent's date of death.
(3) During the decedent's taxable year that ended before the decedent's death, the
trade or business must not have been a passive activity within the meaning of section
469(c) of the Internal Revenue Code and the decedent or the decedent's spouse must have
materially participated in the trade or business within the meaning of section 469(h) of the
Internal Revenue Code, excluding section 469(h)(3) of the Internal Revenue Code and
any other provision provided by Treasury Department regulation that substitutes material
participation in prior taxable years for material participation in the taxable year that ended
before the decedent's death.
(3) (4) The gross annual sales of the trade or business were $10,000,000 or less for
the last taxable year that ended before the date of the death of the decedent.
(4) (5) The property does not consist of cash or, cash equivalents, publicly traded
securities, or assets not used in the operation of the trade or business. For property
consisting of shares of stock or other ownership interests in an entity, the amount value of
cash or, cash equivalents, publicly traded securities, or assets not used in the operation of
the trade or business held by the corporation or other entity must be deducted from the
value of the property qualifying under this subdivision in proportion to the decedent's
share of ownership of the entity on the date of death.
(6) The property does not consist of agricultural land as defined by section 500.24,
subdivision 2, paragraph (g). For property consisting of shares of stock or other ownership
interests in an entity, the value of agricultural land held by the corporation or other entity
must be deducted from the value of the property qualifying under this subdivision in
proportion to the decedent's share of ownership of the entity on the date of death.
(5) (7) The decedent continuously owned the property for the three-year period
ending on the date of death of the decedent. In the case of a sole proprietor, if the property
replaced similar property within the three-year period, the replacement property will be
treated as having been owned for the three-year period ending on the date of death of
the decedent.
(6) A family member continuously uses the property in the operation of the trade or
business for three years following the date of death of the decedent.
(8) For three years following the date of death of the decedent, the trade or business
is not a passive activity within the meaning of section 469(c) of the Internal Revenue
Code and a family member materially participates in the operation of the trade or business
within the meaning of section 469(h) of the Internal Revenue Code, excluding section
469(h)(3) of the Internal Revenue Code and any other provision provided by Treasury
Department regulation that substitutes material participation in prior taxable years for
material participation in the three years following the date of death of the decedent.
(7) (9) The estate and the qualified heir elect to treat the property as qualified small
business property and agree, in the form prescribed by the commissioner, to pay the
recapture tax under subdivision 11, if applicable.
EFFECTIVE DATE.This section is effective for estates of decedents dying after
June 30, 2011.

    Sec. 3. Minnesota Statutes 2011 Supplement, section 291.03, subdivision 10, is
amended to read:
    Subd. 10. Qualified farm property. Property satisfying all of the following
requirements is qualified farm property:
(1) The value of the property was included in the federal adjusted taxable estate.
(2) The property consists of agricultural land as defined by section 500.24,
subdivision 2, paragraph (g), and owned by a farm meeting the requirements of person
or entity that is not excluded from owning agricultural land by section 500.24, and was
classified for property tax purposes as the homestead of the decedent or the decedent's
spouse or both under section 273.124, and as class 2a property under section 273.13,
subdivision 23 .
(3) The decedent continuously owned the property for the three-year period ending
on the date of death of the decedent and the property was classified for property tax
purposes as the homestead of the decedent or the decedent's spouse or both under section
273.124, and as class 2a property under section 273.13, subdivision 23.
(4) A family member continuously uses the property in the operation of the trade or
business The property is classified for property tax purposes as class 2a property under
section 273.13, subdivision 23, for three years following the date of death of the decedent.
(5) The estate and the qualified heir elect to treat the property as qualified farm
property and agree, in a form prescribed by the commissioner, to pay the recapture tax
under subdivision 11, if applicable.
EFFECTIVE DATE.This section is effective for estates of decedents dying after
June 30, 2011.

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

ARTICLE 2

PROPERTY TAXES

    Section 1. Minnesota Statutes 2010, 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 for reports filed on July 1, 2012,
and thereafter.

    Sec. 2. Minnesota Statutes 2010, section 272.0211, subdivision 2, is amended to read:
    Subd. 2. Sliding scale exclusion. Based upon the efficiency determination provided
by the commissioner of commerce as described in subdivision 1, the commissioner of
revenue shall subtract eight percent of the taxable market value of the qualifying property
for each percentage point that the efficiency of the specific facility, as determined by the
commissioner of commerce, is above 40 percent. For determinations made before July
1, the reduction in taxable market value shall be reflected in the taxable market value
of the facility beginning with the current assessment year immediately following the
determination. For determinations made after July 1, the reduction in taxable market value
shall be reflected in the taxable market value of the facility beginning with the assessment
year immediately following the determination. For a facility that is assessed by the county
in which the facility is located, the commissioner of revenue shall certify to the assessor of
that county the percentage of the taxable market value of the facility to be excluded.
EFFECTIVE DATE.This section is effective for assessment year 2013.

    Sec. 3. Minnesota Statutes 2010, 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. 4. Minnesota Statutes 2011 Supplement, 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 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. 5. Minnesota Statutes 2011 Supplement, 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 for 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 this paragraph means all of, or a contiguous portion of,
a tax parcel as defined in section 272.193, or all of, or a contiguous portion of, a set of
contiguous tax parcels under section 272.193 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 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 conducted on other parcels of property operated by the same farming
entity person;
    (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 this paragraph means all of a tax parcel as defined in section
272.193, or, all of a set of contiguous tax parcels under section 272.193 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 the day following final enactment.

    Sec. 6. Minnesota Statutes 2011 Supplement, 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 2013 and
thereafter.

    Sec. 7. Minnesota Statutes 2010, 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 2013.

ARTICLE 3

SALES AND USE TAXES

    Section 1. Minnesota Statutes 2010, 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 the day following final enactment.

ARTICLE 4

SPECIAL TAXES

    Section 1. Minnesota Statutes 2010, section 65B.84, subdivision 1, is amended to read:
    Subdivision 1. Program described; commissioner's duties; appropriation. (a)
The commissioner of commerce shall:
(1) develop and sponsor the implementation of statewide plans, programs, and
strategies to combat automobile theft, improve the administration of the automobile theft
laws, and provide a forum for identification of critical problems for those persons dealing
with automobile theft;
(2) coordinate the development, adoption, and implementation of plans, programs,
and strategies relating to interagency and intergovernmental cooperation with respect
to automobile theft enforcement;
(3) annually audit the plans and programs that have been funded in whole or in part
to evaluate the effectiveness of the plans and programs and withdraw funding should the
commissioner determine that a plan or program is ineffective or is no longer in need
of further financial support from the fund;
(4) develop a plan of operation including:
(i) an assessment of the scope of the problem of automobile theft, including areas
of the state where the problem is greatest;
(ii) an analysis of various methods of combating the problem of automobile theft;
(iii) a plan for providing financial support to combat automobile theft;
(iv) a plan for eliminating car hijacking; and
(v) an estimate of the funds required to implement the plan; and
(5) distribute money, in consultation with the commissioner of public safety,
pursuant to subdivision 3 from the automobile theft prevention special revenue account
for automobile theft prevention activities, including:
(i) paying the administrative costs of the program;
(ii) providing financial support to the State Patrol and local law enforcement
agencies for automobile theft enforcement teams;
(iii) providing financial support to state or local law enforcement agencies for
programs designed to reduce the incidence of automobile theft and for improved
equipment and techniques for responding to automobile thefts;
(iv) providing financial support to local prosecutors for programs designed to reduce
the incidence of automobile theft;
(v) providing financial support to judicial agencies for programs designed to reduce
the incidence of automobile theft;
(vi) providing financial support for neighborhood or community organizations or
business organizations for programs designed to reduce the incidence of automobile
theft and to educate people about the common methods of automobile theft, the models
of automobiles most likely to be stolen, and the times and places automobile theft is
most likely to occur; and
(vii) providing financial support for automobile theft educational and training
programs for state and local law enforcement officials, driver and vehicle services exam
and inspections staff, and members of the judiciary.
(b) The commissioner may not spend in any fiscal year more than ten percent of the
money in the fund for the program's administrative and operating costs. The commissioner
is annually appropriated and must distribute the amount of the proceeds credited to
the automobile theft prevention special revenue account each year, less the transfer
of $1,300,000 each year to the general fund described in section 168A.40, subdivision
4 297I.11, subdivision 2.
EFFECTIVE DATE.This section is effective for premiums collected after June
30, 2012.

    Sec. 2. Minnesota Statutes 2010, section 287.20, subdivision 2, is amended to read:
    Subd. 2. Consideration. (a) "Consideration" means generally the total monetary
value that is given in return for a conveyance of real property in this state and includes
all lump-sum payments, all prior or future installment payments that are required under
the agreement between the parties, and the fair market value of any property taken, or
to be taken, in exchange.
(b) Consideration does not include the reasonable and lawful amounts of interest
paid for the privilege of paying the purchase price in installments and the fair market value
of any items of intangible personal property that are conveyed by the taxable instrument.
(c) Consideration does not include the amount paid for the personal property located
on the real property being conveyed and transferred as a part of the total consideration,
except that the amount paid for the personal property located on the real property being
conveyed must be included if the real property being conveyed is a one-, two-, or
three-unit residential structure.
(d) When a conveyance of real property is made pursuant to a contract for deed, the
consideration is the price for the real property reflected in the contract; except that, subject
to the limitations under section 287.221, if the contract for deed, or other agreement
entered into as a condition to the seller executing the contract, requires the property to be
improved during the term of the contract and the price of the real property as reflected
in the contract does not include the consideration for the required improvements, then
the consideration is the price for the real property as reflected in the contract and the
consideration for the required improvements added during the term of the contract.
(e) "Total consideration" has the same meaning as consideration.
(f) "Consideration, exclusive of the value of any lien or encumbrance remaining at
the time of sale" or "net consideration" means the amount of consideration as reduced by
the amount outstanding under any lien that attached to the real property prior to the time
of sale and that is not released or satisfied as a result of the sale.
(g) Except in the case of a gift, when the amount of the consideration for a
conveyance includes something other than money or promises to pay money, the
consideration for that a conveyance is rebuttably presumed to equal the fair most recent
equalized estimated market value of contained in the county's property tax assessment
records for the real property being conveyed.
EFFECTIVE DATE.This section is effective for deeds that are both executed
and recorded after June 30, 2012.

    Sec. 3. Minnesota Statutes 2010, 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 without any reduction for federal excise taxes,
freight charges, discounts, packaging, or other reductions. Wholesale sales price includes
the applicable federal excise tax regardless of whether it is included in the purchase price.
EFFECTIVE DATE.This section is effective for purchases made after December
31, 2012.

    Sec. 4. Minnesota Statutes 2010, section 297G.04, subdivision 2, is amended to read:
    Subd. 2. Tax credit. A qualified brewer producing fermented malt beverages
is entitled to a tax credit of $4.60 per barrel on 25,000 barrels sold in any fiscal year
beginning July 1, regardless of the alcohol content of the product. Qualified brewers may
take the credit on the 18th day of each month, but the total credit allowed may not exceed
in any fiscal year the lesser of:
(1) the liability for tax; or
(2) $115,000.
For purposes of this subdivision, a "qualified brewer" means a brewer, whether
or not located in this state, manufacturing less than 100,000 barrels of fermented malt
beverages in the calendar year immediately preceding the calendar fiscal year for which
the credit under this subdivision is claimed. In determining the number of barrels, all
brands or labels of a brewer must be combined. All facilities for the manufacture of
fermented malt beverages owned or controlled by the same person, corporation, or other
entity must be treated as a single brewer. A brewer is owned or controlled when more than
50 percent of the voting stock of each member of the group is directly or indirectly owned
by a common owner or by common owners, whether they are corporate or noncorporate.
EFFECTIVE DATE.This section is effective for claims filed after December
31, 2012.

    Sec. 5. Minnesota Statutes 2011 Supplement, 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 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, 2012.

    Sec. 6. Minnesota Statutes 2011 Supplement, 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, 2012.

    Sec. 7. [297I.11] AUTOMOBILE THEFT PREVENTION SURCHARGE.
    Subdivision 1. Surcharge. Each insurer engaged in the writing of policies of
automobile insurance shall collect a surcharge, at the rate of 50 cents per vehicle
for every six months of coverage, on each policy of automobile insurance providing
comprehensive insurance coverage issued or renewed in this state. The surcharge may not
be considered premium for any purpose, including the computation of premium tax or
agents' commissions. The amount of the surcharge must be separately stated on either a
billing or policy declaration sent to an insured. Insurers shall remit the revenue derived
from this surcharge to the commissioner of revenue for purposes of the automobile theft
prevention program described in section 65B.84. For purposes of this subdivision, "policy
of automobile insurance" has the meaning given it in section 65B.14, covering only the
following types of vehicles as defined in section 168.002:
(1) a passenger automobile;
(2) a pickup truck;
(3) a van but not commuter vans as defined in section 168.126; or
(4) a motorcycle,
except that no vehicle with a gross vehicle weight in excess of 10,000 pounds is included
within this definition.
    Subd. 2. Automobile theft prevention account. A special revenue account in
the state treasury shall be credited with the proceeds of the surcharge imposed under
subdivision 1. Of the revenue in the account, $1,300,000 each year must be transferred to
the general fund. Revenues in excess of $1,300,000 each year may be used only for the
automobile theft prevention program described in section 65B.84.
    Subd. 3. Collection and administration. The commissioner shall collect and
administer the surcharge imposed by this section in the same manner as the taxes imposed
by this chapter. The commissioner is appropriated annually, from the automobile theft
prevention special revenue account, an amount to reimburse the Department of Revenue
for the costs incurred in administering and collecting the surcharge imposed under
subdivision 1.
EFFECTIVE DATE.This section is effective for premiums collected after June
30, 2012.

    Sec. 8. Minnesota Statutes 2011 Supplement, 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, 2012.

    Sec. 9. Minnesota Statutes 2011 Supplement, 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, 2012.

    Sec. 10. Minnesota Statutes 2010, section 297I.30, is amended by adding a subdivision
to read:
    Subd. 10. Automobile theft prevention surcharge. On or before May 1, August
1, November 1, and February 1 of each year, every insurer required to pay the surcharge
under section 297I.11 shall file a return with the commissioner for the preceding
three-month period ending March 31, June 30, September 30, and December 31, in the
form prescribed by the commissioner.
EFFECTIVE DATE.This section is effective for premiums collected after June
30, 2012.

    Sec. 11. REPEALER.
Minnesota Statutes 2010, section 168A.40, subdivisions 3 and 4, are repealed.
EFFECTIVE DATE.This section is effective for premiums collected after June
30, 2012.

ARTICLE 5

MISCELLANEOUS

    Section 1. Minnesota Statutes 2010, 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 2010, section 270C.69, subdivision 1, is amended to read:
    Subdivision 1. Notice and procedures. (a) The commissioner may, within five years
after the date of assessment of the tax, or if a lien has been filed under section 270C.63,
within the statutory period for enforcement of the lien, give notice to any employer
deriving income which has a taxable situs in this state regardless of whether the income is
exempt from taxation, that an employee of that employer is delinquent in a certain amount
with respect to any taxes, including penalties, interest, and costs. The commissioner can
proceed under this section only if the tax is uncontested or if the time for appeal of the tax
has expired. The commissioner shall not proceed under this section until the expiration of
30 days after mailing to the taxpayer, at the taxpayer's last known address, a written notice
of (1) the amount of taxes, interest, and penalties due from the taxpayer and demand for
their payment, and (2) the commissioner's intention to require additional withholding by
the taxpayer's employer pursuant to this section. The effect of the notice shall expire one
year after it has been mailed to the taxpayer provided that the notice may be renewed by
mailing a new notice which is in accordance with this section. The renewed notice shall
have the effect of reinstating the priority of the original claim. The notice to the taxpayer
shall be in substantially the same form as that provided in section 571.72. The notice
shall further inform the taxpayer of the wage exemptions contained in section 550.37,
subdivision 14 . If no statement of exemption is received by the commissioner within 30
days from the mailing of the notice, the commissioner may proceed under this section.
The notice to the taxpayer's employer may be served by mail or by delivery by an agent of
the department and shall be in substantially the same form as provided in section 571.75.
Upon receipt of notice, the employer shall withhold from compensation due or to become
due to the employee, the total amount shown by the notice, subject to the provisions of
section 571.922. The employer shall continue to withhold each pay period until the notice
is released by the commissioner under section 270C.7109. Upon receipt of notice by the
employer, the claim of the state of Minnesota shall have priority over any subsequent
garnishments or wage assignments. The commissioner may arrange between the employer
and the employee for withholding a portion of the total amount due the employee each pay
period, until the total amount shown by the notice plus accrued interest has been withheld.
(b) The "compensation due" any employee is defined in accordance with the
provisions of section 571.921. The maximum withholding allowed under this section for
any one pay period shall be decreased by any amounts payable pursuant to a garnishment
action with respect to which the employer was served prior to being served with the notice
of delinquency and any amounts covered by any irrevocable and previously effective
assignment of wages; the employer shall give notice to the commissioner of the amounts
and the facts relating to such assignments within ten days after the service of the notice of
delinquency on the form provided by the commissioner as noted in this section.
(c) Within ten days after the expiration of such pay period, the employer shall remit
to the commissioner, on a form and in the manner prescribed by the commissioner,
the amount withheld during each pay period under this section. If the commissioner
has prescribed that withholding returns be filed electronically under section 289A.09,
subdivision 1, the employer must file all wage levy disclosure forms and remit all wage
levy payments by electronic means.
EFFECTIVE DATE.This section is effective for wage levy disclosures or wage
levy payments filed or made after December 31, 2012.