1.1.................... moves to amend H.F. No. 2337 as follows:
1.2Delete everything after the enacting clause and insert:


1.5    Section 1. Minnesota Statutes 2010, section 275.025, subdivision 1, is amended to read:
1.6    Subdivision 1. Levy amount. (a) The state general levy is levied against
1.7commercial-industrial property and seasonal residential recreational property, as defined
1.8in this section.
1.9(b) The state general levy base amount for commercial-industrial property is
1.10$721,752,000. For taxes payable in 2013, the state general levy for commercial-industrial
1.11property is equal to the base amount. For taxes payable in 2014 to taxes payable in 2024,
1.12the levy is reduced each year from the previous year's levy amount by 8.33 percent of
1.13the base amount. For taxes payable in 2025 and thereafter, the state general levy for
1.14commercial-industrial property is $0.
1.15(c) The state general levy base amount for seasonal recreational property is
1.16$592,000,000 for taxes payable in 2002 $40,871,000. For taxes payable in subsequent
1.17years, the levy 2013, the state general levy for seasonal-recreational property is equal
1.18to the base amount is increased each year by multiplying the levy base amount for
1.19the prior year by the sum of one plus the rate of increase, if any, in the implicit price
1.20deflator for government consumption expenditures and gross investment for state and
1.21local governments prepared by the Bureau of Economic Analysts of the United States
1.22Department of Commerce for the 12-month period ending March 31 of the year prior
1.23to the year the taxes are payable. For taxes payable in 2014 to taxes payable in 2024,
1.24the levy is reduced each year from the previous year's levy amount by 8.33 percent of
1.25the base amount. For taxes payable in 2025 and thereafter, the state general levy for
1.26seasonal-recreational property is $0.
2.1(d) The tax under this section is not treated as a local tax rate under section 469.177
2.2and is not the levy of a governmental unit under chapters 276A and 473F.
2.3(e) The commissioner shall increase or decrease the preliminary or final rate rates for
2.4a year as necessary to account for errors and tax base changes that affected a preliminary
2.5or final rate for either of the two preceding years. Adjustments are allowed to the extent
2.6that the necessary information is available to the commissioner at the time the rates for a
2.7year must be certified, and for the following reasons:
2.8(1) an erroneous report of taxable value by a local official;
2.9(2) an erroneous calculation by the commissioner; and
2.10(3) an increase or decrease in taxable value for commercial-industrial or seasonal
2.11residential recreational property reported on the abstracts of tax lists submitted under
2.12section 275.29 that was not reported on the abstracts of assessment submitted under
2.13section 270C.89 for the same year.
2.14    (f) The commissioner may, but need not, make adjustments if the total difference in
2.15the tax levied for the year would be less than $100,000.
2.16EFFECTIVE DATE. This section is effective for taxes payable in 2013 and
2.17thereafter.

2.18    Sec. 2. Minnesota Statutes 2010, section 275.025, subdivision 2, is amended to read:
2.19    Subd. 2. Commercial-industrial tax capacity. For the purposes of this section,
2.20"commercial-industrial tax capacity" means the tax capacity of all taxable property
2.21classified as class 3 or class 5(1) under section 273.13, except for excluding electric
2.22generation attached machinery under class 3 and property described in section 473.625,
2.23and provided that property in the first tier of value as defined in section 273.13, subdivision
2.2424, has a tax capacity for this purpose equal to 30 percent of its tax capacity under
2.25section 273.13. County commercial-industrial tax capacity amounts are not adjusted
2.26for the captured net tax capacity of a tax increment financing district under section
2.27469.177, subdivision 2 , the net tax capacity of transmission lines deducted from a local
2.28government's total net tax capacity under section 273.425, or fiscal disparities contribution
2.29and distribution net tax capacities under chapter 276A or 473F.
2.30EFFECTIVE DATE.This section is effective for taxes payable in 2013 and
2.31thereafter.

2.32    Sec. 3. Minnesota Statutes 2010, section 275.025, subdivision 4, is amended to read:
3.1    Subd. 4. Apportionment and levy of state general tax. Ninety-five percent of The
3.2state general tax must be levied by applying a uniform rate to all commercial-industrial tax
3.3capacity and five percent of the state general tax must be levied by applying a uniform
3.4rate to all seasonal residential recreational tax capacity. On or before October 1 each
3.5year, the commissioner of revenue shall certify the preliminary state general levy rates to
3.6each county auditor that must be used to prepare the notices of proposed property taxes
3.7for taxes payable in the following year. By January 1 of each year, the commissioner
3.8shall certify the final state general levy rate rates to each county auditor that shall be
3.9used in spreading taxes.
3.10EFFECTIVE DATE.This section is effective for taxes payable in 2013 and
3.11thereafter.

3.12    Sec. 4. Minnesota Statutes 2011 Supplement, section 290A.03, subdivision 11, is
3.13amended to read:
3.14    Subd. 11. Rent constituting property taxes. "Rent constituting property taxes"
3.15means 17 15 percent of the gross rent actually paid in cash, or its equivalent, or the portion
3.16of rent paid in lieu of property taxes, in any calendar year by a claimant for the right
3.17of occupancy of the claimant's Minnesota homestead in the calendar year, and which
3.18rent constitutes the basis, in the succeeding calendar year of a claim for relief under this
3.19chapter by the claimant.
3.20EFFECTIVE DATE.This section is effective for claims based on rent paid in
3.212011 and thereafter.

3.22    Sec. 5. Minnesota Statutes 2011 Supplement, section 290A.03, subdivision 13, is
3.23amended to read:
3.24    Subd. 13. Property taxes payable. "Property taxes payable" means the property tax
3.25exclusive of special assessments, penalties, and interest payable on a claimant's homestead
3.26after deductions made under sections 273.135, 273.1384, 273.1391, 273.42, subdivision 2,
3.27and any other state paid property tax credits in any calendar year, and after any refund
3.28claimed and allowable under section 290A.04, subdivision 2h, that is first payable in
3.29the year that the property tax is payable. In the case of a claimant who makes ground
3.30lease payments, "property taxes payable" includes the amount of the payments directly
3.31attributable to the property taxes assessed against the parcel on which the house is located.
3.32No apportionment or reduction of the "property taxes payable" shall be required for the
3.33use of a portion of the claimant's homestead for a business purpose if the claimant does not
4.1deduct any business depreciation expenses for the use of a portion of the homestead in the
4.2determination of federal adjusted gross income. For homesteads which are manufactured
4.3homes as defined in section 273.125, subdivision 8, and for homesteads which are park
4.4trailers taxed as manufactured homes under section 168.012, subdivision 9, "property
4.5taxes payable" shall also include 17 15 percent of the gross rent paid in the preceding
4.6year for the site on which the homestead is located. When a homestead is owned by
4.7two or more persons as joint tenants or tenants in common, such tenants shall determine
4.8between them which tenant may claim the property taxes payable on the homestead. If
4.9they are unable to agree, the matter shall be referred to the commissioner of revenue
4.10whose decision shall be final. Property taxes are considered payable in the year prescribed
4.11by law for payment of the taxes.
4.12In the case of a claim relating to "property taxes payable," the claimant must have
4.13owned and occupied the homestead on January 2 of the year in which the tax is payable
4.14and (i) the property must have been classified as homestead property pursuant to section
4.15273.124 , on or before December 15 of the assessment year to which the "property taxes
4.16payable" relate; or (ii) the claimant must provide documentation from the local assessor
4.17that application for homestead classification has been made on or before December 15
4.18of the year in which the "property taxes payable" were payable and that the assessor has
4.19approved the application.
4.20EFFECTIVE DATE.This section is effective for claims based on rent paid in
4.212011 and thereafter.

4.22    Sec. 6. Minnesota Statutes 2010, section 290A.04, subdivision 2a, is amended to read:
4.23    Subd. 2a. Renters; senior or disabled. A claimant whose rent constituting property
4.24taxes exceeds the percentage of the household income stated below must pay an amount
4.25equal to the percent of income shown for the appropriate household income level along
4.26with the percent to be paid by the claimant of the remaining amount of rent constituting
4.27property taxes. The state refund equals the amount of rent constituting property taxes that
4.28remain, up to the maximum state refund amount shown below. This subdivision applies
4.29only if the claimant or the claimant's spouse was disabled or attained the age of 65 on or
4.30before December 31 of the year for which the rent was paid.

4.31 4.32 4.33	Household Income	Percent of Income	Percent Paid by Claimant	Maximum State Refund
4.34	$0 to 3,589	1.0 percent	5 percent	$	1,190
4.35	3,590 to 4,779	1.0 percent	10 percent	$	1,190
5.1	4,780 to 5,969	1.1 percent	10 percent	$	1,190
5.2	5,970 to 8,369	1.2 percent	10 percent	$	1,190
5.3	8,370 to 10,759	1.3 percent	15 percent	$	1,190
5.4	10,760 to 11,949	1.4 percent	15 percent	$	1,190
5.5	11,950 to 13,139	1.4 percent	20 percent	$	1,190
5.6	13,140 to 15,539	1.5 percent	20 percent	$	1,190
5.7	15,540 to 16,729	1.6 percent	20 percent	$	1,190
5.8	16,730 to 17,919	1.7 percent	25 percent	$	1,190
5.9	17,920 to 20,319	1.8 percent	25 percent	$	1,190
5.10	20,320 to 21,509	1.9 percent	30 percent	$	1,190
5.11	21,510 to 22,699	2.0 percent	30 percent	$	1,190
5.12	22,700 to 23,899	2.2 percent	30 percent	$	1,190
5.13	23,900 to 25,089	2.4 percent	30 percent	$	1,190
5.14	25,090 to 26,289	2.6 percent	35 percent	$	1,190
5.15	26,290 to 27,489	2.7 percent	35 percent	$	1,190
5.16	27,490 to 28,679	2.8 percent	35 percent	$	1,190
5.17	28,680 to 29,869	2.9 percent	40 percent	$	1,190
5.18	29,870 to 31,079	3.0 percent	40 percent	$	1,190
5.19	31,080 to 32,269	3.1 percent	40 percent	$	1,190
5.20	32,270 to 33,459	3.2 percent	40 percent	$	1,190
5.21	33,460 to 34,649	3.3 percent	45 percent	$	1,080
5.22	34,650 to 35,849	3.4 percent	45 percent	$	960
5.23	35,850 to 37,049	3.5 percent	45 percent	$	830
5.24	37,050 to 38,239	3.5 percent	50 percent	$	720
5.25	38,240 to 39,439	3.5 percent	50 percent	$	600
5.26	38,440 to 40,629	3.5 percent	50 percent	$	360
5.27	40,630 to 41,819	3.5 percent	50 percent	$	120

5.28 5.29 5.30	Household Income	Percent of Income	Percent Paid by Claimant	Maximum State Refund
5.31	$0 to 4,689	1.0 percent	5 percent	$	1,550
5.32	4,690 to 6,239	1.0 percent	10 percent	$	1,550
5.33	6,240 to 7,799	1.1 percent	10 percent	$	1,550
5.34	7,800 to 10,929	1.2 percent	10 percent	$	1,550
5.35	10,930 to 14,049	1.3 percent	15 percent	$	1,550
5.36	14,050 to 15,609	1.4 percent	15 percent	$	1,550
5.37	15,610 to 17,159	1.4 percent	20 percent	$	1,550
5.38	17,160 to 20,289	1.5 percent	20 percent	$	1,550
5.39	20,290 to 21,849	1.6 percent	20 percent	$	1,550
5.40	21,850 to 23,399	1.7 percent	25 percent	$	1,550
5.41	23,400 to 26,539	1.8 percent	25 percent	$	1,500
5.42	26,540 to 28,089	1.9 percent	30 percent	$	1,400
5.43	28,090 to 29,649	2.0 percent	30 percent	$	1,300
6.1	29,650 to 31,209	2.2 percent	30 percent	$	1,200
6.2	31,210 to 32,769	2.4 percent	30 percent	$	1,100
6.3	32,770 to 34,329	2.6 percent	35 percent	$	1,000
6.4	34,330 to 35,899	2.7 percent	35 percent	$	1,000
6.5	35,900 to 37,449	2.8 percent	35 percent	$	750
6.6	37,450 to 39,009	2.9 percent	40 percent	$	500
6.7	39,010 to 39,999	3.0 percent	40 percent	$	250

6.8The payment made to a claimant is the amount of the state refund calculated under
6.9this subdivision. No payment is allowed if the claimant's household income is $41,820
6.10$40,000 or more.
6.11EFFECTIVE DATE.This section is effective for claims based on rent paid in
6.122011 and thereafter.

6.13    Sec. 7. Minnesota Statutes 2010, section 290A.04, is amended by adding a subdivision
6.14to read:
6.15    Subd. 2k. Renters; nonsenior nondisabled. A claimant whose rent constituting
6.16property taxes exceeds the percentage of the household income stated below must pay
6.17an amount equal to the percent of income shown for the appropriate household income
6.18level along with the percent to be paid by the claimant of the remaining amount of rent
6.19constituting property taxes. The state refund equals the amount of rent constituting
6.20property taxes that remain, up to the maximum state refund amount shown below. This
6.21subdivision applies only if the claimant or the claimant's spouse is not eligible for a refund
6.22under subdivision 2a.

6.23 6.24 6.25	Household Income	Percent of Income	Percent Paid by Claimant	Maximum State Refund
6.26	$0 to 6,239	1.0 percent	15 percent	$	1,000
6.27	6,240 to 7,799	1.1 percent	20 percent	$	1,000
6.28	7,800 to 10,929	1.2 percent	20 percent	$	900
6.29	10,930 to 14,049	1.3 percent	25 percent	$	800
6.30	14,050 to 15,609	1.4 percent	25 percent	$	800
6.31	15,610 to 17,159	1.4 percent	30 percent	$	600
6.32	17,160 to 20,289	1.5 percent	30 percent	$	600
6.33	20,290 to 21,849	1.6 percent	35 percent	$	400
6.34	21,850 to 23,399	1.7 percent	35 percent	$	400
6.35	23,400 to 24,999	1.8 percent	40 percent	$	200

7.1The payment made to a claimant is the amount of the state refund calculated under
7.2this subdivision. No payment is allowed if the claimant's household income is $25,000
7.3or more.
7.4EFFECTIVE DATE.This section is effective for claims based on rent paid in
7.52011 and thereafter.

7.6    Sec. 8. Minnesota Statutes 2011 Supplement, section 290A.04, subdivision 4, is
7.7amended to read:
7.8    Subd. 4. Inflation adjustment. (a) Beginning for property tax refunds payable in
7.9calendar year 2002, the commissioner shall annually adjust the dollar amounts of the
7.10income thresholds and the maximum refunds under subdivisions 2 and 2a subdivision 2
7.11for inflation. The commissioner shall make the inflation adjustments in accordance with
7.12section 1(f) of the Internal Revenue Code, except that for purposes of this subdivision the
7.13percentage increase shall be determined as provided in this subdivision.
7.14(b) In adjusting the dollar amounts of the income thresholds and the maximum
7.15refunds under subdivision 2 for inflation, the percentage increase shall be determined from
7.16the year ending on June 30, 2011, to the year ending on June 30 of the year preceding that
7.17in which the refund is payable.
7.18(c) In adjusting the dollar amounts of the income thresholds and the maximum
7.19refunds under subdivision 2a for inflation, the percentage increase shall be determined
7.20from the year ending on June 30, 2000, to the year ending on June 30 of the year preceding
7.21that in which the refund is payable.
7.22(d) (c) The commissioner shall use the appropriate percentage increase to annually
7.23adjust the income thresholds and maximum refunds under subdivisions 2 and 2a for
7.24inflation without regard to whether or not the income tax brackets are adjusted for inflation
7.25in that year. The commissioner shall round the thresholds and the maximum amounts,
7.26as adjusted to the nearest $10 amount. If the amount ends in $5, the commissioner shall
7.27round it up to the next $10 amount.
7.28(e) (d) The commissioner shall annually announce the adjusted refund schedule at
7.29the same time provided under section 290.06. The determination of the commissioner
7.30under this subdivision is not a rule under the Administrative Procedure Act.
7.31EFFECTIVE DATE.This section is effective for claims based on rent paid in
7.322012 and thereafter.

7.33    Sec. 9. Minnesota Statutes 2010, section 290A.23, subdivision 1, is amended to read:
8.1    Subdivision 1. Renters credit. There is appropriated from the general fund in the
8.2state treasury to the commissioner of revenue the amount necessary to make the payments
8.3required under section 290A.04, subdivision 2a subdivisions 2a and 2k.
8.4EFFECTIVE DATE.This section is effective for claims based on rent paid in
8.52011 and thereafter.

8.6    Sec. 10. Minnesota Statutes 2010, section 290B.07, is amended to read:
8.7290B.07 LIEN; DEFERRED PORTION.
8.8(a) Payment by the state to the county treasurer of property taxes, penalties, interest,
8.9or special assessments and interest deferred under this chapter is deemed a loan from the
8.10state to the program participant. The commissioner must compute the interest as provided
8.11in section 270C.40, subdivision 5, but not to exceed five percent, and maintain records of
8.12the total deferred amount and interest, if any, for each participant. Interest shall accrue
8.13beginning September 1 of the payable year for which the taxes are deferred. Any deferral
8.14made under this chapter shall not be construed as delinquent property taxes.
8.15(b) The lien created under section 272.31 continues to secure payment by the
8.16taxpayer, or by the taxpayer's successors or assigns, of the amount deferred, including
8.17interest, with respect to all years for which amounts are deferred. The lien for deferred
8.18taxes and interest has the same priority as any other lien under section 272.31, except that
8.19liens, including mortgages, recorded or filed prior to the recording or filing of the notice
8.20under section 290B.04, subdivision 2, have priority over the lien for deferred taxes and
8.21interest. A seller's interest in a contract for deed, in which a qualifying homeowner is the
8.22purchaser or an assignee of the purchaser, has priority over deferred taxes and interest
8.23on deferred taxes, regardless of whether the contract for deed is recorded or filed. The
8.24lien for deferred taxes and interest for future years has the same priority as the lien for
8.25deferred taxes and interest for the first year, which is always higher in priority than any
8.26mortgages or other liens filed, recorded, or created after the notice recorded or filed under
8.27section 290B.04, subdivision 2. The county treasurer or auditor shall maintain records
8.28of the deferred portion and shall list the amount of deferred taxes for the year and the
8.29cumulative deferral and interest for all previous years as a lien against the property. In any
8.30certification of unpaid taxes for a tax parcel, the county auditor shall clearly distinguish
8.31between taxes payable in the current year, deferred taxes and interest, and delinquent
8.32taxes. Payment of the deferred portion becomes due and owing at the time specified in
8.33section 290B.08. Upon receipt of the payment, the commissioner shall issue a receipt for
8.34it to the person making the payment upon request and shall notify the auditor of the county
9.1in which the parcel is located, within ten days, identifying the parcel to which the payment
9.2applies. Upon receipt by the commissioner of revenue of collected funds in the amount of
9.3the deferral, the state's loan to the program participant is deemed paid in full.
9.4(b) (c) If property for which taxes have been deferred under this chapter forfeits
9.5under chapter 281 for nonpayment of a nondeferred property tax amount, or because
9.6of nonpayment of amounts previously deferred following a termination under section
9.7290B.08 , the lien for the taxes deferred under this chapter, plus interest and costs, shall be
9.8canceled by the county auditor as provided in section 282.07. However, notwithstanding
9.9any other law to the contrary, any proceeds from a subsequent sale of the property under
9.10chapter 282 or another law, must be used to first reimburse the county's forfeited tax sale
9.11fund for any direct costs of selling the property or any costs directly related to preparing
9.12the property for sale, and then to reimburse the state for the amount of the canceled
9.13lien. Within 90 days of the receipt of any sale proceeds to which the state is entitled
9.14under these provisions, the county auditor must pay those funds to the commissioner of
9.15revenue by warrant for deposit in the general fund. No other deposit, use, distribution,
9.16or release of gross sale proceeds or receipts may be made by the county until payments
9.17sufficient to fully reimburse the state for the canceled lien amount have been transmitted
9.18to the commissioner.
9.19EFFECTIVE DATE.This section is effective July 1, 2013.

9.20    Sec. 11. Minnesota Statutes 2010, section 290B.08, subdivision 2, is amended to read:
9.21    Subd. 2. Payment upon termination. Upon the termination of the deferral under
9.22subdivision 1, the amount of deferred taxes, penalties, interest, and special assessments
9.23and interest, plus the recording or filing fees under both section 290B.04, subdivision 2,
9.24and this subdivision becomes due and payable to the commissioner within 90 days of
9.25termination of the deferral for terminations under subdivision 1, paragraph (a), clauses
9.26(1) and (2), and within one year of termination of the deferral for terminations under
9.27subdivision 1, paragraph (a), clauses (3) and (4). No additional interest is due on the
9.28deferral if timely paid. On receipt of payment, the commissioner shall within ten days
9.29notify the auditor of the county in which the parcel is located, identifying the parcel
9.30to which the payment applies and shall remit the recording or filing fees under section
9.31290B.04, subdivision 2 , and this subdivision to the auditor. A notice of termination of
9.32deferral, containing the legal description and the recording or filing data for the notice
9.33of qualification for deferral under section 290B.04, subdivision 2, shall be prepared
9.34and recorded or filed by the county auditor in the same office in which the notice of
9.35qualification for deferral under section 290B.04, subdivision 2, was recorded or filed, and
10.1the county auditor shall mail a copy of the notice of termination to the property owner.
10.2The property owner shall pay the recording or filing fees. Upon recording or filing of the
10.3notice of termination of deferral, the notice of qualification for deferral under section
10.4290B.04, subdivision 2 , and the lien created by it are discharged. If the deferral is not
10.5timely paid, the penalty, interest, lien, forfeiture, and other rules for the collection of
10.6ad valorem property taxes apply.
10.7EFFECTIVE DATE.This section is effective July 1, 2013.

10.8    Sec. 12. Minnesota Statutes 2010, section 477A.011, subdivision 36, is amended to
10.9read:
10.10    Subd. 36. City aid base. (a) Except as otherwise provided in this subdivision,
10.11"city aid base" is zero.
10.12    (b) The city aid base for any city with a population less than 500 is increased by
10.13$40,000 for aids payable in calendar year 1995 and thereafter, and the maximum amount
10.14of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also
10.15increased by $40,000 for aids payable in calendar year 1995 only, provided that:
10.16    (i) the average total tax capacity rate for taxes payable in 1995 exceeds 200 percent;
10.17    (ii) the city portion of the tax capacity rate exceeds 100 percent; and
10.18    (iii) its city aid base is less than $60 per capita.
10.19    (c) The city aid base for a city is increased by $20,000 in 1998 and thereafter and
10.20the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
10.21paragraph (c), is also increased by $20,000 in calendar year 1998 only, provided that:
10.22    (i) the city has a population in 1994 of 2,500 or more;
10.23    (ii) the city is located in a county, outside of the metropolitan area, which contains a
10.24city of the first class;
10.25    (iii) the city's net tax capacity used in calculating its 1996 aid under section
10.26477A.013 is less than $400 per capita; and
10.27    (iv) at least four percent of the total net tax capacity, for taxes payable in 1996, of
10.28property located in the city is classified as railroad property.
10.29    (d) The city aid base for a city is increased by $200,000 in 1999 and thereafter and
10.30the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
10.31paragraph (c), is also increased by $200,000 in calendar year 1999 only, provided that:
10.32    (i) the city was incorporated as a statutory city after December 1, 1993;
10.33    (ii) its city aid base does not exceed $5,600; and
10.34    (iii) the city had a population in 1996 of 5,000 or more.
11.1    (e) The city aid base for a city is increased by $150,000 for aids payable in 2000 and
11.2thereafter, and the maximum amount of total aid it may receive under section 477A.013,
11.3subdivision 9 , paragraph (c), is also increased by $150,000 in calendar year 2000 only,
11.4provided that:
11.5    (1) the city has a population that is greater than 1,000 and less than 2,500;
11.6    (2) its commercial and industrial percentage for aids payable in 1999 is greater
11.7than 45 percent; and
11.8    (3) the total market value of all commercial and industrial property in the city
11.9for assessment year 1999 is at least 15 percent less than the total market value of all
11.10commercial and industrial property in the city for assessment year 1998.
11.11    (f) The city aid base for a city is increased by $200,000 in 2000 and thereafter, and
11.12the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
11.13paragraph (c), is also increased by $200,000 in calendar year 2000 only, provided that:
11.14    (1) the city had a population in 1997 of 2,500 or more;
11.15    (2) the net tax capacity of the city used in calculating its 1999 aid under section
11.16477A.013 is less than $650 per capita;
11.17    (3) the pre-1940 housing percentage of the city used in calculating 1999 aid under
11.18section 477A.013 is greater than 12 percent;
11.19    (4) the 1999 local government aid of the city under section 477A.013 is less than
11.2020 percent of the amount that the formula aid of the city would have been if the need
11.21increase percentage was 100 percent; and
11.22    (5) the city aid base of the city used in calculating aid under section 477A.013
11.23is less than $7 per capita.
11.24    (g) The city aid base for a city is increased by $102,000 in 2000 and thereafter, and
11.25the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
11.26paragraph (c), is also increased by $102,000 in calendar year 2000 only, provided that:
11.27    (1) the city has a population in 1997 of 2,000 or more;
11.28    (2) the net tax capacity of the city used in calculating its 1999 aid under section
11.29477A.013 is less than $455 per capita;
11.30    (3) the net levy of the city used in calculating 1999 aid under section 477A.013 is
11.31greater than $195 per capita; and
11.32    (4) the 1999 local government aid of the city under section 477A.013 is less than
11.3338 percent of the amount that the formula aid of the city would have been if the need
11.34increase percentage was 100 percent.
12.1    (h) The city aid base for a city is increased by $32,000 in 2001 and thereafter, and
12.2the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
12.3paragraph (c), is also increased by $32,000 in calendar year 2001 only, provided that:
12.4    (1) the city has a population in 1998 that is greater than 200 but less than 500;
12.5    (2) the city's revenue need used in calculating aids payable in 2000 was greater
12.6than $200 per capita;
12.7    (3) the city net tax capacity for the city used in calculating aids available in 2000
12.8was equal to or less than $200 per capita;
12.9    (4) the city aid base of the city used in calculating aid under section 477A.013
12.10is less than $65 per capita; and
12.11    (5) the city's formula aid for aids payable in 2000 was greater than zero.
12.12    (i) The city aid base for a city is increased by $7,200 in 2001 and thereafter, and
12.13the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
12.14paragraph (c), is also increased by $7,200 in calendar year 2001 only, provided that:
12.15    (1) the city had a population in 1998 that is greater than 200 but less than 500;
12.16    (2) the city's commercial industrial percentage used in calculating aids payable in
12.172000 was less than ten percent;
12.18    (3) more than 25 percent of the city's population was 60 years old or older according
12.19to the 1990 census;
12.20    (4) the city aid base of the city used in calculating aid under section 477A.013
12.21is less than $15 per capita; and
12.22    (5) the city's formula aid for aids payable in 2000 was greater than zero.
12.23    (j) The city aid base for a city is increased by $45,000 in 2001 and thereafter and
12.24by an additional $50,000 in calendar years 2002 to 2011, and the maximum amount of
12.25total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also
12.26increased by $45,000 in calendar year 2001 only, and by $50,000 in calendar year 2002
12.27only, provided that:
12.28    (1) the net tax capacity of the city used in calculating its 2000 aid under section
12.29477A.013 is less than $810 per capita;
12.30    (2) the population of the city declined more than two percent between 1988 and 1998;
12.31    (3) the net levy of the city used in calculating 2000 aid under section 477A.013 is
12.32greater than $240 per capita; and
12.33    (4) the city received less than $36 per capita in aid under section 477A.013,
12.34subdivision 9 , for aids payable in 2000.
12.35    (k) The city aid base for a city with a population of 10,000 or more which is located
12.36outside of the seven-county metropolitan area is increased in 2002 and thereafter, and the
13.1maximum amount of total aid it may receive under section 477A.013, subdivision 9,
13.2paragraph (b) or (c), is also increased in calendar year 2002 only, by an amount equal to
13.3the lesser of:
13.4    (1)(i) the total population of the city, as determined by the United States Bureau of
13.5the Census, in the 2000 census, (ii) minus 5,000, (iii) times 60; or
13.6    (2) $2,500,000.
13.7    (l) The city aid base is increased by $50,000 in 2002 and thereafter, and the
13.8maximum amount of total aid it may receive under section 477A.013, subdivision 9,
13.9paragraph (c), is also increased by $50,000 in calendar year 2002 only, provided that:
13.10    (1) the city is located in the seven-county metropolitan area;
13.11    (2) its population in 2000 is between 10,000 and 20,000; and
13.12    (3) its commercial industrial percentage, as calculated for city aid payable in 2001,
13.13was greater than 25 percent.
13.14    (m) The city aid base for a city is increased by $150,000 in calendar years 2002 to
13.152011 and by an additional $75,000 in calendar years 2009 to 2014 and the maximum
13.16amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is
13.17also increased by $150,000 in calendar year 2002 only and by $75,000 in calendar year
13.182009 only, provided that:
13.19    (1) the city had a population of at least 3,000 but no more than 4,000 in 1999;
13.20    (2) its home county is located within the seven-county metropolitan area;
13.21    (3) its pre-1940 housing percentage is less than 15 percent; and
13.22    (4) its city net tax capacity per capita for taxes payable in 2000 is less than $900
13.23per capita.
13.24    (n) The city aid base for a city is increased by $200,000 beginning in calendar
13.25year 2003 and the maximum amount of total aid it may receive under section 477A.013,
13.26subdivision 9 , paragraph (c), is also increased by $200,000 in calendar year 2003 only,
13.27provided that the city qualified for an increase in homestead and agricultural credit aid
13.28under Laws 1995, chapter 264, article 8, section 18.
13.29    (o) The city aid base for a city is increased by $200,000 in 2004 only and the
13.30maximum amount of total aid it may receive under section 477A.013, subdivision 9, is
13.31also increased by $200,000 in calendar year 2004 only, if the city is the site of a nuclear
13.32dry cask storage facility.
13.33    (p) The city aid base for a city is increased by $10,000 in 2004 and thereafter and the
13.34maximum total aid it may receive under section 477A.013, subdivision 9, is also increased
13.35by $10,000 in calendar year 2004 only, if the city was included in a federal major disaster
14.1designation issued on April 1, 1998, and its pre-1940 housing stock was decreased by
14.2more than 40 percent between 1990 and 2000.
14.3    (q) The city aid base for a city is increased by $30,000 in 2009 and thereafter and the
14.4maximum total aid it may receive under section 477A.013, subdivision 9, is also increased
14.5by $25,000 in calendar year 2006 only if the city had a population in 2003 of at least 1,000
14.6and has a state park for which the city provides rescue services and which comprised at
14.7least 14 percent of the total geographic area included within the city boundaries in 2000.
14.8    (r) The city aid base for a city is increased by $80,000 in 2009 and thereafter and
14.9the minimum and maximum amount of total aid it may receive under section 477A.013,
14.10subdivision 9, is also increased by $80,000 in calendar year 2009 only, if:
14.11    (1) as of May 1, 2006, at least 25 percent of the tax capacity of the city is proposed
14.12to be placed in trust status as tax-exempt Indian land;
14.13    (2) the placement of the land is being challenged administratively or in court; and
14.14    (3) due to the challenge, the land proposed to be placed in trust is still on the tax
14.15rolls as of May 1, 2006.
14.16    (s) The city aid base for a city is increased by $100,000 in 2007 and thereafter and
14.17the minimum and maximum total amount of aid it may receive under this section is also
14.18increased in calendar year 2007 only, provided that:
14.19    (1) the city has a 2004 estimated population greater than 200 but less than 2,000;
14.20    (2) its city net tax capacity for aids payable in 2006 was less than $300 per capita;
14.21    (3) the ratio of its pay 2005 tax levy compared to its city net tax capacity for aids
14.22payable in 2006 was greater than 110 percent; and
14.23    (4) it is located in a county where at least 15,000 acres of land are classified as
14.24tax-exempt Indian reservations according to the 2004 abstract of tax-exempt property.
14.25    (t) The city aid base for a city is increased by $30,000 in 2009 only, and the
14.26maximum total aid it may receive under section 477A.013, subdivision 9, is also increased
14.27by $30,000 in calendar year 2009, only if the city had a population in 2005 of less than
14.283,000 and the city's boundaries as of 2007 were formed by the consolidation of two cities
14.29and one township in 2002.
14.30    (u) The city aid base for a city is increased by $100,000 in 2009 and thereafter, and
14.31the maximum total aid it may receive under section 477A.013, subdivision 9, is also
14.32increased by $100,000 in calendar year 2009 only, if the city had a city net tax capacity for
14.33aids payable in 2007 of less than $150 per capita and the city experienced flooding on
14.34March 14, 2007, that resulted in evacuation of at least 40 homes.
15.1    (v) The city aid base for a city is increased by $100,000 in 2009 to 2013, and the
15.2maximum total aid it may receive under section 477A.013, subdivision 9, is also increased
15.3by $100,000 in calendar year 2009 only, if the city:
15.4    (1) is located outside of the Minneapolis-St. Paul standard metropolitan statistical
15.5area;
15.6    (2) has a 2005 population greater than 7,000 but less than 8,000; and
15.7    (3) has a 2005 net tax capacity per capita of less than $500.
15.8    (w) The city aid base is increased by $25,000 in calendar years 2009 to 2013 and the
15.9maximum amount of total aid it may receive under section 477A.013, subdivision 9, is
15.10increased by $25,000 in calendar year 2009 only, provided that:
15.11    (1) the city is located in the seven-county metropolitan area;
15.12    (2) its population in 2006 is less than 200; and
15.13    (3) the percentage of its housing stock built before 1940, according to the 2000
15.14United States Census, is greater than 40 percent.
15.15    (x) The city aid base is increased by $90,000 in calendar year 2009 only and the
15.16minimum and maximum total amount of aid it may receive under section 477A.013,
15.17subdivision 9, is also increased by $90,000 in calendar year 2009 only, provided that the
15.18city is located in the seven-county metropolitan area, has a 2006 population between 5,000
15.19and 7,000 and has a 1997 population of over 7,000.
15.20    (y) In calendar year 2010 only, the city aid base for a city is increased by $225,000 if
15.21it was eligible for a $450,000 payment in calendar year 2008 under Minnesota Statutes
15.222006, section 477A.011, subdivision 36, paragraph (e), and the second half of the payment
15.23under that paragraph in December 2008 was canceled due to the governor's unallotment.
15.24The payment under this paragraph is not subject to any aid reductions under section
15.25477A.0134 or any future unallotment of the city aid under section 16A.152.
15.26(z) The city aid base and the maximum total aid the city may receive under section
15.27477A.013, subdivision 9, is increased by $25,000 in calendar year 2010 only if:
15.28(1) the city is a first class city in the seven-county metropolitan area with a
15.29population below 300,000; and
15.30(2) the city has made an equivalent grant to its local growers' association to
15.31reimburse up to $1,000 each for membership fees and retail leases for members of the
15.32association who farm in and around Dakota County and who incurred crop damage as a
15.33result of the hail storm in that area on July 10, 2008.
15.34The payment under this paragraph is not subject to any aid reductions under section
15.35477A.0134 or any future unallotment of the city aid under section 16A.152.
16.1(aa) The city aid base for a city is increased by $106,964 in 2011 only and the
16.2minimum and maximum amount of total aid it may receive under section 477A.013,
16.3subdivision 9, is also increased by $106,964 in calendar year 2011 only, if the city had a
16.4population as defined in Minnesota Statutes, section 477A.011, subdivision 3, that was in
16.5excess of 1,000 in 2007 and that was less than 1,000 in 2008.
16.6(z) In calendar year 2013 only, the city aid base and the maximum total aid the city
16.7may receive under section 477A.013, subdivision 9, is increased by $12,000 if:
16.8(1) the city's 2010 population is less than 100 and its population growth between
16.92000 and 2010 was more than 55 percent; and
16.10(2) its commercial industrial percentage as defined in subdivision 32, based on
16.11assessments for calendar year 2010, payable in 2011, is greater than 15 percent.
16.12EFFECTIVE DATE.This section is effective for aids payable in calendar year
16.132013 and thereafter.

16.14    Sec. 13. Minnesota Statutes 2011 Supplement, section 477A.013, subdivision 9,
16.15is amended to read:
16.16    Subd. 9. City aid distribution. (a) In calendar year 2013 only, each city will
16.17receive an aid distribution equal to its aid distribution in 2012 under this section plus
16.18the additional city aid base authorized in calendar year 2013 under section 477A.011,
16.19subdivision 36, paragraph (z). In calendar year 2009 2014 and thereafter, each city shall
16.20receive an aid distribution equal to the sum of (1) the city formula aid under subdivision 8,
16.21and (2) its city aid base.
16.22    (b) For aids payable in 2013 only, the total aid in the previous year for any city
16.23shall mean the amount of aid it was certified to receive for aids payable in 2012 under
16.24this section. For aids payable in 2014 and thereafter, the total aid in the previous year
16.25for any city means the amount of aid it was certified to receive under this section in the
16.26previous payable year.
16.27    (c) For aids payable in 2010 2014 and thereafter, the total aid for any city shall
16.28not exceed the sum of (1) ten percent of the city's net levy for the year prior to the aid
16.29distribution plus (2) its total aid in the previous year. For aids payable in 2009 2014 and
16.30thereafter, the total aid for any city with a population of 2,500 or more may not be less
16.31than its total aid under this section in the previous year minus the lesser of $10 multiplied
16.32by its population, or ten percent of its net levy in the year prior to the aid distribution.
16.33    (d) For aids payable in 2010 2014 and thereafter, the total aid for a city with a
16.34population less than 2,500 must not be less than the amount it was certified to receive in
16.35the previous year minus the lesser of $10 multiplied by its population, or five percent of its
17.12003 certified aid amount. For aids payable in 2009 only, the total aid for a city with a
17.2population less than 2,500 must not be less than what it received under this section in the
17.3previous year unless its total aid in calendar year 2008 was aid under section 477A.011,
17.4subdivision 36, paragraph (s), in which case its minimum aid is zero.
17.5    (e) A city's aid loss under this section may not exceed $300,000 in any year in
17.6which the total city aid appropriation under section 477A.03, subdivision 2a, is equal or
17.7greater than the appropriation under that subdivision in the previous year, unless the
17.8city has an adjustment in its city net tax capacity under the process described in section
17.9469.174, subdivision 28 .
17.10    (f) If a city's net tax capacity used in calculating aid under this section has decreased
17.11in any year by more than 25 percent from its net tax capacity in the previous year due to
17.12property becoming tax-exempt Indian land, the city's maximum allowed aid increase
17.13under paragraph (c) shall be increased by an amount equal to (1) the city's tax rate in the
17.14year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease
17.15resulting from the property becoming tax exempt.
17.16EFFECTIVE DATE.This section is effective for aids payable in calendar year
17.172013 and thereafter.

17.18    Sec. 14. Minnesota Statutes 2011 Supplement, section 477A.03, subdivision 2a,
17.19is amended to read:
17.20    Subd. 2a. Cities. For aids payable in 2013 2014 and thereafter, the total aid paid
17.21under section 477A.013, subdivision 9, is $426,438,012.
17.22EFFECTIVE DATE.This section is effective for aids payable in calendar year
17.232013 and thereafter.

17.24    Sec. 15. ADDITIONAL AID PAYMENT IN 2012 FOR CERTAIN CITIES.
17.25For calendar year 2012 only, a city shall receive a onetime payment of $12,000 if:
17.26(1) the city's 2010 population is less than 100 and its population growth between 2000 and
17.272010 was more than 55 percent; and (2) its commercial industrial percentage as defined in
17.28subdivision 32, based on assessments for calendar year 2010, payable 2011, is greater than
17.2915 percent. The aid paid under this section shall be paid on the same schedule as aid paid
17.30under sections 477A.011 to 477A.03. The amount necessary to make the payment under
17.31this section shall be appropriated from the general fund in fiscal year 2013.
17.32EFFECTIVE DATE.This section is effective the day following final enactment.

18.1    Sec. 16. SUPPLEMENTAL TARGETING REFUND FOR TAXES PAYABLE IN
18.22012 ONLY.
18.3    Subdivision 1. Determination of supplemental refund. (a) For property tax refund
18.4claims under Minnesota Statutes, section 290A.04, subdivision 2h, based upon property
18.5taxes payable in 2012, the state must pay a supplemental refund such that the combined
18.6amount of the regular refund under Minnesota Statutes, section 290A.04, subdivision 2h,
18.7and the supplemental refund is equal to 90 percent of the increase over the greater of (1) 12
18.8percent of the payable 2011 property taxes, or (2) $100. The maximum combined refund
18.9under Minnesota Statutes, section 290A.04, subdivision 2h, and this section is $1,000.
18.10(b) The supplemental refund amount must be determined by the commissioner of
18.11revenue based upon the information submitted with the claim for the regular refund and
18.12must be combined with the regular refund for payment.
18.13(c) Any supplemental refund paid under this section must be subtracted from
18.14"property taxes payable" for the purposes of determining any refund amount under
18.15Minnesota Statutes, section 290A.04, subdivision 2, based upon property taxes payable
18.16in 2012.
18.17(d) Any supplemental refund paid under this section must be subtracted from
18.18"property taxes payable" for taxes payable in 2012 for the purposes of determining any
18.19refund amount under Minnesota Statutes, section 290A.04, subdivision 2h, based upon
18.20property taxes payable in 2013.
18.21    Subd. 2. Appropriation. The amount necessary to make the payments required
18.22under this section is appropriated to the commissioner of revenue from the general fund
18.23for fiscal years 2013 and 2014.
18.24EFFECTIVE DATE.This section is effective for refund claims based on taxes
18.25payable in 2012 only.

18.26    Sec. 17. ADMINISTRATION OF PROPERTY TAX REFUND CLAIMS; 2012.
18.27In administering this bill for claims for refunds submitted using 17 percent of gross
18.28rent as rent constituting property taxes under prior law, the commissioner shall recalculate
18.29and pay the refund amounts using 15 percent of gross rent, subject to the reduced
18.30maximum income limits, maximum refunds, and increased co-payment percentages in
18.31this bill. The commissioner shall notify the claimant that the recalculation was mandated
18.32by action of the 2012 legislature.


19.3    Section 1. Minnesota Statutes 2011 Supplement, section 116J.8737, subdivision 1,
19.4is amended to read:
19.5    Subdivision 1. Definitions. (a) For the purposes of this section, the following terms
19.6have the meanings given.
19.7(b) "Qualified small business" means a business that has been certified by the
19.8commissioner under subdivision 2.
19.9(c) "Qualified investor" means an investor who has been certified by the
19.10commissioner under subdivision 3.
19.11(d) "Qualified fund" means a pooled angel investment network fund that has been
19.12certified by the commissioner under subdivision 4.
19.13(e) "Qualified investment" means a cash investment in a qualified small business
19.14of a minimum of:
19.15(1) $10,000 in a calendar year by a qualified investor; or
19.16(2) $30,000 in a calendar year by a qualified fund.
19.17A qualified investment must be made in exchange for common stock, a partnership
19.18or membership interest, preferred stock, debt with mandatory conversion to equity, or an
19.19equivalent ownership interest as determined by the commissioner.
19.20(f) "Family" means a family member within the meaning of the Internal Revenue
19.21Code, section 267(c)(4).
19.22(g) "Pass-through entity" means a corporation that for the applicable taxable year is
19.23treated as an S corporation or a general partnership, limited partnership, limited liability
19.24partnership, trust, or limited liability company and which for the applicable taxable year is
19.25not taxed as a corporation under chapter 290.
19.26(h) "Intern" means a student of an accredited institution of higher education, or a
19.27former student who has graduated in the past six months from an accredited institution
19.28of higher education, who is employed by a qualified small business in a nonpermanent
19.29position for a duration of nine months or less that provides training and experience in the
19.30primary business activity of the business.
19.31EFFECTIVE DATE.This section is effective for qualified small businesses
19.32certified after June 30, 2012, except that the provision striking paragraph (h) is effective
19.33the day following final enactment.

20.1    Sec. 2. Minnesota Statutes 2011 Supplement, section 116J.8737, subdivision 2, is
20.2amended to read:
20.3    Subd. 2. Certification of qualified small businesses. (a) Businesses may apply
20.4to the commissioner for certification as a qualified small business for a calendar year.
20.5The application must be in the form and be made under the procedures specified by the
20.6commissioner, accompanied by an application fee of $150. Application fees are deposited
20.7in the small business investment tax credit administration account in the special revenue
20.8fund. The application for certification for 2010 must be made available on the department's
20.9Web site by August 1, 2010. Applications for subsequent years' certification must be made
20.10available on the department's Web site by November 1 of the preceding year.
20.11(b) Within 30 days of receiving an application for certification under this subdivision,
20.12the commissioner must either certify the business as satisfying the conditions required of a
20.13qualified small business, request additional information from the business, or reject the
20.14application for certification. If the commissioner requests additional information from the
20.15business, the commissioner must either certify the business or reject the application within
20.1630 days of receiving the additional information. If the commissioner neither certifies the
20.17business nor rejects the application within 30 days of receiving the original application or
20.18within 30 days of receiving the additional information requested, whichever is later, then
20.19the application is deemed rejected, and the commissioner must refund the $150 application
20.20fee. A business that applies for certification and is rejected may reapply.
20.21(c) To receive certification, a business must satisfy all of the following conditions:
20.22(1) the business has its headquarters in Minnesota;
20.23(2) at least 51 percent of the business's employees are employed in Minnesota, and
20.2451 percent of the business's total payroll is paid or incurred in the state;
20.25(3) the business is engaged in, or is committed to engage in, innovation in Minnesota
20.26in one of the following as its primary business activity:
20.27(i) using proprietary technology to add value to a product, process, or service in a
20.28qualified high-technology field;
20.29(ii) researching or developing a proprietary product, process, or service in a qualified
20.30high-technology field; or
20.31(iii) researching, developing, or producing a new proprietary technology for use in
20.32the fields of agriculture, tourism, forestry, mining, manufacturing, or transportation;
20.33(4) other than the activities specifically listed in clause (3), the business is not
20.34engaged in real estate development, insurance, banking, lending, lobbying, political
20.35consulting, information technology consulting, wholesale or retail trade, leisure,
20.36hospitality, transportation, construction, ethanol production from corn, or professional
21.1services provided by attorneys, accountants, business consultants, physicians, or health
21.2care consultants;
21.3(5) the business has fewer than 25 employees;
21.4(6) the business must pay its employees annual wages of at least 175 percent of the
21.5federal poverty guideline for the year for a family of four and must pay its interns annual
21.6wages of at least 175 percent of the federal minimum wage used for federally covered
21.7employers, except that this requirement must be reduced proportionately for employees
21.8and interns who work less than full-time, and does not apply to an executive, officer, or
21.9member of the board of the business, or to any employee who owns, controls, or holds
21.10power to vote more than 20 percent of the outstanding securities of the business has not
21.11issued securities that are traded on a public exchange;
21.12(7) the business has not been in operation for more than ten years;
21.13(8) the business has not previously received private equity investments of more
21.14than $4,000,000; and
21.15    (9) the business is not an entity disqualified under section 80A.50, paragraph (b),
21.16clause (3).
21.17(d) In applying the limit determining whether a business satisfies the conditions
21.18under paragraph (c), clause (5), the employees in all members clauses (1) to (9), for a
21.19business that is or was a member or part, during the current or prior three taxable years, of
21.20the a unitary business, as defined in section 290.17, subdivision 4, must be included the
21.21entire unitary business must satisfy each of the conditions.
21.22(e) In order for a qualified investment in a business to be eligible for tax credits,:
21.23 (1) the business must have applied for and received certification for the calendar
21.24year in which the investment was made prior to the date on which the qualified investment
21.25was made;
21.26(2) the business must not have issued securities that are traded on a public exchange;
21.27(3) the business must not have issued securities that are traded on a public exchange
21.28within 180 days after the date on which the qualified investment was made; and
21.29(4) the business must not have converted the qualified investment for cash, cash and
21.30other consideration, or any other form of equity or a debt interest within 180 days after the
21.31date on which the qualified investment was made.
21.32(f) The commissioner must maintain a list of businesses certified under this
21.33subdivision for the calendar year and make the list accessible to the public on the
21.34department's Web site.
21.35(g) For purposes of this subdivision, the following terms have the meanings given:
22.1(1) "qualified high-technology field" includes aerospace, agricultural processing,
22.2renewable energy, energy efficiency and conservation, environmental engineering, food
22.3technology, cellulosic ethanol, information technology, materials science technology,
22.4nanotechnology, telecommunications, biotechnology, medical device products,
22.5pharmaceuticals, diagnostics, biologicals, chemistry, veterinary science, and similar
22.6fields; and
22.7(2) "proprietary technology" means the technical innovations that are unique and
22.8legally owned or licensed by a business and includes, without limitation, those innovations
22.9that are patented, patent pending, a subject of trade secrets, or copyrighted.
22.10EFFECTIVE DATE.This section is effective the day following final enactment,
22.11except the amendment to paragraph (e) is effective for qualified small businesses certified
22.12after June 30, 2012.

22.13    Sec. 3. Minnesota Statutes 2010, section 116J.8737, subdivision 5, is amended to read:
22.14    Subd. 5. Credit allowed. (a) A qualified investor or qualified fund is eligible for
22.15a credit equal to 25 percent of the qualified investment in a qualified small business.
22.16Investments made by a pass-through entity qualify for a credit only if the entity is a
22.17qualified fund. The commissioner must not allocate more than $11,000,000 in credits to
22.18qualified investors or qualified funds for taxable years beginning after December 31, 2009,
22.19and before January 1, 2011, and must not allocate more than $12,000,000 in credits per
22.20year for taxable years beginning after December 31, 2010, and before January 1, 2015
22.212012, and must not allocate more than $17,000,000 in credits per year for taxable years
22.22beginning after December 31, 2011, and before January 1, 2015. Any portion of a taxable
22.23year's credits that is not allocated by the commissioner does not cancel and may be carried
22.24forward to subsequent taxable years until all credits have been allocated.
22.25(b) The commissioner may not allocate more than a total maximum amount in credits
22.26for a taxable year to a qualified investor for the investor's cumulative qualified investments
22.27as an individual qualified investor and as an investor in a qualified fund; for married
22.28couples filing joint returns the maximum is $250,000, and for all other filers the maximum
22.29is $125,000. The commissioner may not allocate more than a total of $1,000,000 in credits
22.30over all taxable years for qualified investments in any one qualified small business.
22.31(c) The commissioner may not allocate a credit to a qualified investor either as an
22.32individual qualified investor or as an investor in a qualified fund if the investor receives
22.33more than 50 percent of the investor's gross annual income from the qualified small
22.34business in which the qualified investment is proposed. A member of the family of an
22.35individual disqualified by this paragraph is not eligible for a credit under this section. For
23.1a married couple filing a joint return, the limitations in this paragraph apply collectively
23.2to the investor and spouse. For purposes of determining the ownership interest of an
23.3investor under this paragraph, the rules under section 267(c) and 267(e) of the Internal
23.4Revenue Code apply.
23.5(d) Applications for tax credits for 2010 must be made available on the department's
23.6Web site by September 1, 2010, and the department must begin accepting applications
23.7by September 1, 2010. Applications for subsequent years must be made available by
23.8November 1 of the preceding year.
23.9(e) Qualified investors and qualified funds must apply to the commissioner for tax
23.10credits. Tax credits must be allocated to qualified investors or qualified funds in the order
23.11that the tax credit request applications are filed with the department. The commissioner
23.12must approve or reject tax credit request applications within 15 days of receiving the
23.13application. The investment specified in the application must be made within 60 days of
23.14the allocation of the credits. If the investment is not made within 60 days, the credit
23.15allocation is canceled and available for reallocation. A qualified investor or qualified fund
23.16that fails to invest as specified in the application, within 60 days of allocation of the
23.17credits, must notify the commissioner of the failure to invest within five business days of
23.18the expiration of the 60-day investment period.
23.19(f) All tax credit request applications filed with the department on the same day must
23.20be treated as having been filed contemporaneously. If two or more qualified investors or
23.21qualified funds file tax credit request applications on the same day, and the aggregate
23.22amount of credit allocation claims exceeds the aggregate limit of credits under this section
23.23or the lesser amount of credits that remain unallocated on that day, then the credits must
23.24be allocated among the qualified investors or qualified funds who filed on that day on a
23.25pro rata basis with respect to the amounts claimed. The pro rata allocation for any one
23.26qualified investor or qualified fund is the product obtained by multiplying a fraction,
23.27the numerator of which is the amount of the credit allocation claim filed on behalf of
23.28a qualified investor and the denominator of which is the total of all credit allocation
23.29claims filed on behalf of all applicants on that day, by the amount of credits that remain
23.30unallocated on that day for the taxable year.
23.31(g) A qualified investor or qualified fund, or a qualified small business acting on their
23.32behalf, must notify the commissioner when an investment for which credits were allocated
23.33has been made, and the taxable year in which the investment was made. A qualified fund
23.34must also provide the commissioner with a statement indicating the amount invested by
23.35each investor in the qualified fund based on each investor's share of the assets of the
23.36qualified fund at the time of the qualified investment. After receiving notification that the
24.1investment was made, the commissioner must issue credit certificates for the taxable year
24.2in which the investment was made to the qualified investor or, for an investment made by
24.3a qualified fund, to each qualified investor who is an investor in the fund. The certificate
24.4must state that the credit is subject to revocation if the qualified investor or qualified
24.5fund does not hold the investment in the qualified small business for at least three years,
24.6consisting of the calendar year in which the investment was made and the two following
24.7years. The three-year holding period does not apply if:
24.8(1) the investment by the qualified investor or qualified fund becomes worthless
24.9before the end of the three-year period;
24.10(2) 80 percent or more of the assets of the qualified small business is sold before
24.11the end of the three-year period;
24.12(3) the qualified small business is sold before the end of the three-year period; or
24.13(4) the qualified small business's common stock begins trading on a public exchange
24.14before the end of the three-year period.
24.15(h) The commissioner must notify the commissioner of revenue of credit certificates
24.16issued under this section.
24.17EFFECTIVE DATE.This section is effective for taxable years beginning after
24.18December 31, 2011.

24.19    Sec. 4. Minnesota Statutes 2010, section 116J.8737, subdivision 8, is amended to read:
24.20    Subd. 8. Data privacy. (a) Data contained in an application submitted to the
24.21commissioner under subdivision 2, 3, or 4 are nonpublic data, or private data on
24.22individuals, as defined in section 13.02, subdivision 9 or 12, except that the following
24.23data items are public:
24.24(1) the name, mailing address, telephone number, e-mail address, contact person's
24.25name, and industry type of a qualified small business upon approval of the application
24.26and certification by the commissioner under subdivision 2;
24.27(2) the name of a qualified investor upon approval of the application and certification
24.28by the commissioner under subdivision 3;
24.29(3) the name of a qualified fund upon approval of the application and certification
24.30by the commissioner under subdivision 4;
24.31(4) for credit certificates issued under subdivision 5, the amount of the credit
24.32certificate issued, amount of the qualifying investment, the name of the qualifying investor
24.33or qualifying fund that received the certificate, and the name of the qualifying small
24.34business in which the qualifying investment was made;
25.1(5) for credits revoked under subdivision 7, paragraph (a), the amount revoked and
25.2the name of the qualified investor or qualified fund; and
25.3(6) for credits revoked under subdivision 7, paragraphs (b) and (c), the amount
25.4revoked and the name of the qualified small business.
25.5(b) The following data, including data classified as nonpublic or private, must be
25.6provided to the consultant for use in conducting the program evaluation under subdivision
25.710:
25.8(1) the commissioner of employment and economic development shall provide data
25.9contained in an application for certification received from a qualified small business,
25.10qualified investor, or qualified fund, and any annual reporting information received on a
25.11qualified small business, qualified investor, or qualified fund; and
25.12(2) the commissioner of revenue shall provide data contained in any applicable tax
25.13returns of a qualified small business, qualified investor, or qualified fund.
25.14EFFECTIVE DATE.This section is effective for businesses requesting certification
25.15starting on the day following final enactment.

25.16    Sec. 5. [116J.8738] TECHNOLOGY CORPORATE FRANCHISE TAX
25.17CERTIFICATE TRANSFER PROGRAM.
25.18    Subdivision 1. Program established. The commissioner shall establish a corporate
25.19franchise tax benefit certificate transfer program to allow new or expanding biotechnology
25.20companies in this state with unused net operating loss carryovers under section 290.095 to
25.21surrender those tax benefits for use by other corporate franchise taxpayers in this state.
25.22The tax benefits may be used on the corporate franchise tax returns to be filed by those
25.23taxpayers in exchange for private financial assistance to be provided by the corporate
25.24franchise taxpayer that is the recipient of the tax benefit certificate to assist in the funding
25.25of costs incurred by the new or expanding biotechnology company.
25.26    Subd. 2. Definitions. (a) For purposes of this section, the following terms have the
25.27meanings given, unless the context clearly requires otherwise.
25.28(b) "Biotechnology" means the continually expanding body of fundamental
25.29knowledge about the functioning of biological systems from the macro level to the
25.30molecular and subatomic levels, as well as novel products, services, technologies, and
25.31subtechnologies developed as a result of insights gained from research advances that add
25.32to that body of fundamental knowledge.
25.33(c) "Biotechnology company" means a corporation that:
25.34(1) has its headquarters or base of operations and at least one-half of its full-time
25.35employees in this state;
26.1(2) owns, has filed for, or has a valid license to use protected, proprietary intellectual
26.2property;
26.3(3) is engaged in the research, development, production, or provision of
26.4biotechnology for the purpose of developing or providing products or processes for
26.5specific commercial or public purposes, including but not limited to, medical, medical
26.6device, pharmaceutical, nutritional, and other health-related purposes, agricultural
26.7purposes, and environmental purposes; and
26.8(4) has received, at least, $2,500,000 of private investments, whether in the form of
26.9equity or debt.
26.10(d) "Full-time employee" means a person employed by a new or expanding
26.11biotechnology company for consideration for at least 35 hours a week, or who renders
26.12any other standard of service generally accepted by custom or practice as full-time
26.13employment and whose wages are subject to withholding as provided in section 290.92,
26.14or who is a partner of a new or expanding biotechnology company who works for the
26.15partnership for at least 35 hours a week, or who renders any other standard of service
26.16generally accepted by custom or practice as full-time employment, and whose distributive
26.17share of income, gain, loss, or deduction, or whose guaranteed payments, or any
26.18combination thereof, is subject to the payment of estimated taxes, as provided in section
26.19289A.25. To qualify as a full-time employee, an employee must also receive from the
26.20new or expanding biotechnology company group health benefits under a health plan as
26.21defined under section 62A.011, subdivision 3, or under a self-insured employee welfare
26.22benefit plan as defined in United States Code, title 29, section 1002. Full-time employee
26.23excludes any person who works as an independent contractor or on a consulting basis for
26.24the new or expanding biotechnology company.
26.25(e) "Maximum annual credit limit" means the following amount of tax benefits for
26.26the specified fiscal years:
26.27(1) for fiscal years 2013 and 2014, $15,000,000;
26.28(2) for fiscal years 2015 and 2016, $30,000,000; and
26.29(3) for fiscal years 2017 and 2018, $60,000,000.
26.30(f) "New or expanding" means a biotechnology company that:
26.31(1) on June 30 of the year in which the corporation files an application for surrender
26.32of unused but otherwise allowable tax benefits under this section and on the date of the
26.33exchange of the corporate franchise tax benefit certificate, has fewer than 250 employees
26.34in the United States and on the later of those dates, the business, whether as part of the
26.35corporation or another entity, has not been in operation for more than ten years;
27.1(2) on June 30 of the year in which the corporation files the application, has at least
27.2one full-time employee working in this state if the company has been incorporated for less
27.3than three years, has at least five full-time employees working in this state if the company
27.4has been incorporated for more than three years but less than five years, and has at least
27.5ten full-time employees working in this state if the company has been incorporated for
27.6more than five years; and
27.7(3) on the date of the exchange of the corporate franchise tax benefit certificate, the
27.8corporation has the number of full-time employees in this state required by clause (2).
27.9    Subd. 3. Allocation of tax benefits; annual limit. (a) The commissioner, in
27.10cooperation with the commissioner of revenue, shall review and approve applications
27.11by new or expanding biotechnology companies in this state with unused but otherwise
27.12allowable net operating loss carryovers under section 290.095, to surrender those tax
27.13benefits in exchange for private financial assistance to be made by the corporate franchise
27.14taxpayer that is the recipient of the corporate franchise tax benefit certificate in an amount
27.15equal to at least 75 percent of the amount of the surrendered tax benefit. The amount of
27.16the surrendered tax benefit is the amount of the net operating loss carryover multiplied by
27.17the new or expanding biotechnology company's anticipated apportionment percentage, as
27.18determined under section 290.191, for the taxable year in which the benefit is transferred
27.19and subsequently multiplied by the corporate franchise tax rate under section 290.06,
27.20subdivision 1.
27.21(b) The commissioner must approve the transfer of no more than the maximum
27.22annual credit limit in each fiscal year. If the total amount of transferable tax benefits
27.23requested to be surrendered by approved applicants exceeds the maximum annual credit
27.24limit for a fiscal year, the commissioner, in cooperation with the commissioner of revenue,
27.25must not approve the transfer of more than the maximum annual credit limit for that fiscal
27.26year and shall allocate the transfer of tax benefits by approved corporations using the
27.27following method:
27.28(1) an eligible applicant with $250,000 or less of transferable tax benefits is
27.29authorized to surrender the entire amount of its transferable tax benefits;
27.30(2) an eligible applicant with more than $250,000 of transferable tax benefits is
27.31authorized to surrender a minimum of $250,000 of its transferable tax benefits; and
27.32(3) an eligible applicant with more than $250,000 of transferable tax benefits is
27.33authorized to surrender additional transferable tax benefits determined by multiplying
27.34the applicant's transferable tax benefits less the minimum transferable tax benefits that
27.35corporation is authorized to surrender under clause (2) by a fraction, the numerator of
27.36which is the total amount of transferable tax benefits that the commissioner is authorized
28.1to approve less the total amount of transferable tax benefits approved under clauses (1)
28.2and (2) and the denominator of which is the total amount of transferable tax benefits
28.3requested to be surrendered by all eligible applicants less the total amount of transferable
28.4tax benefits approved under clauses (1) and (2).
28.5(c) If the total amount of transferable tax benefits that would be authorized using the
28.6method under paragraph (b) exceeds the maximum annual credit limit for a fiscal year,
28.7then the commissioner, in cooperation with the commissioner of revenue, shall limit the
28.8total amount of tax benefits authorized to be transferred to the maximum annual credit
28.9limit by applying the above method on an apportioned basis.
28.10    Subd. 4. Qualifying tax benefits and corporations. For purposes of this section,
28.11transferable tax benefits include an eligible applicant's unused but otherwise allowable
28.12carryover of net operating losses multiplied by the applicant's anticipated allocation factor
28.13as determined under section 290.191 for the taxable year in which the benefit is transferred
28.14and subsequently multiplied by the corporate franchise tax rate under section 290.06,
28.15subdivision 1. An eligible applicant's transferable tax benefits are limited to net operating
28.16losses that the applicant requests to surrender in its application to the authority and must
28.17not, in total, exceed the maximum amount of tax benefits that the applicant is eligible to
28.18surrender. No application for a corporate franchise tax benefit transfer certificate must be
28.19approved in which the new or expanding biotechnology company:
28.20(1) has demonstrated positive net operating income in any of the two previous full
28.21years of ongoing operations as determined on its financial statements issued according to
28.22generally accepted accounting standards endorsed by the Financial Accounting Standards
28.23Board; or
28.24(2) is directly or indirectly at least 50 percent owned or controlled by another
28.25corporation that has demonstrated positive net operating income in any of the two previous
28.26full years of ongoing operations as determined on its financial statements issued according
28.27to generally accepted accounting standards endorsed by the Financial Accounting
28.28Standards Board or is part of a consolidated group of affiliated corporations, as filed for
28.29federal income tax purposes, that in the aggregate has demonstrated positive net operating
28.30income in any of the two previous full years of ongoing operations as determined on
28.31its combined financial statements issued according to generally accepted accounting
28.32standards endorsed by the Financial Accounting Standards Board.
28.33The maximum lifetime value of surrendered tax benefits that a corporation is permitted to
28.34surrender under the program is $15,000,000.
28.35    Subd. 5. Recapture of tax benefits. The commissioner, in consultation with the
28.36commissioner of revenue, shall develop a standard form agreement that each new or
29.1expanding biotechnology company must enter as a condition of qualifying to surrender
29.2tax benefits under this section. The agreement must provide for the recapture of all, or a
29.3portion of, the amount of a grant of a corporate franchise tax benefit certificate from the
29.4new or expanding biotechnology company under this section if the taxpayer fails to use
29.5the private financial assistance received for the surrender of tax benefits as required by
29.6this section or fails to maintain a headquarters or a base of operation in this state during
29.7the five years following receipt of the private financial assistance; except if the failure to
29.8maintain a headquarters or a base of operation in this state is due to the liquidation of the
29.9new or expanding biotechnology company, other than as a result of a merger or acquisition
29.10of the company.
29.11    Subd. 6. Approval of acquisition of tax benefits; purposes; required agreement.
29.12(a) The commissioner, in cooperation with the commissioner of revenue, shall review and
29.13approve applications by taxpayers under the corporate franchise tax in chapter 290 to
29.14acquire surrendered tax benefits approved under subdivision 3, which must be issued in
29.15the form of corporate franchise tax benefit transfer certificates, in exchange for private
29.16financial assistance to be made by the taxpayer in an amount equal to at least 75 percent of
29.17the amount of the surrendered tax benefit of a biotechnology company. The commissioner
29.18must not issue a corporate franchise tax benefit transfer certificate, unless the applicant
29.19certifies that as of the date of the exchange of the corporate franchise tax benefit certificate
29.20it is operating as a new or expanding biotechnology company and has no current intention
29.21to cease operating as a new or expanding biotechnology company.
29.22(b) The private financial assistance shall assist in funding expenses incurred in
29.23connection with the operation of the new or expanding biotechnology company in this
29.24state, including but not limited to the expenses of fixed assets, such as the construction
29.25and acquisition and development of real estate, materials, start-up, tenant fit-out, working
29.26capital, salaries, research and development expenditures, and any other expenses
29.27determined by the commissioner to be necessary to carry out biotechnology company
29.28operations in this state.
29.29(c) The commissioner shall require a corporate franchise taxpayer that acquires
29.30a corporate franchise tax benefit certificate to enter into a written agreement with the
29.31new or expanding biotechnology company concerning the terms and conditions of the
29.32private financial assistance made in exchange for the certificate. The written agreement
29.33may contain terms concerning the maintenance by the new or expanding biotechnology
29.34company of a headquarters or a base of operation in this state.
29.35    Subd. 7. Program evaluation. (a) No later than December 31, 2015, the
29.36commissioner of revenue, after consultation with the commissioners of management and
30.1budget and employment and economic development, shall contract with a qualified outside
30.2entity or individual to evaluate the effects of the program on the Minnesota economy.
30.3The contractor must not be associated with, employed by, or have contracts with the
30.4entities involved in or associated with the biotechnology industry that benefits from the
30.5program. The program evaluation must be completed by January 2017, and provided to
30.6the chairs and ranking minority members of the legislative committees having jurisdiction
30.7over taxes and economic development in the senate and the house of representatives, in
30.8compliance with sections 3.195 and 3.197. The program evaluation must include, in
30.9addition to any other matters the commissioner of revenue considers relevant to evaluating
30.10the effectiveness of the credit, analysis of:
30.11(1) the amount of economic activity, including the number of jobs and the wages of
30.12those jobs, generated by emerging biotechnology companies that received investments
30.13that qualified for the credit;
30.14(2) the incremental change in Minnesota state and local taxes paid as a result of
30.15the allowance of the credit; and
30.16(3) the net benefit to the Minnesota economy of allowance of the credit relative to
30.17alternative uses of the resources, such as increasing the research and development credit
30.18or reducing the corporate franchise tax rate.
30.19(b) To the extent necessary to complete the program evaluation, the consultant
30.20or consultants may request from the commissioner of revenue tax return information
30.21of taxpayers who surrender tax benefits under the program. To the extent necessary to
30.22complete the program evaluation, the consultant or consultants may request from the
30.23commissioner of employment and economic development applications for certification
30.24and annual reports made by qualified small businesses, qualified investors, and qualified
30.25funds. The consultant or consultants may not disclose or release any data received under
30.26this section except as permitted for a government entity under chapter 13, and is subject to
30.27the penalties and remedies provided in law for violation of that chapter.
30.28    Subd. 8. Sunset. This section expires effective following the allocation for fiscal
30.29year 2018.
30.30EFFECTIVE DATE.This section is effective the day following final enactment
30.31and applies to taxable years beginning after December 31, 2011.

30.32    Sec. 6. Minnesota Statutes 2010, section 289A.08, subdivision 3, is amended to read:
30.33    Subd. 3. Corporations. (a) A corporation that is subject to the state's jurisdiction to
30.34tax under section 290.014, subdivision 5, must file a return, except that a foreign operating
30.35corporation as defined in section 290.01, subdivision 6b, is not required to file a return.
31.1(b) Members of a unitary business that are required to file a combined report on one
31.2return must designate a member of the unitary business to be responsible for tax matters,
31.3including the filing of returns, the payment of taxes, additions to tax, penalties, interest,
31.4or any other payment, and for the receipt of refunds of taxes or interest paid in excess of
31.5taxes lawfully due. The designated member must be a member of the unitary business that
31.6is filing the single combined report and either:
31.7(1) a corporation that is subject to the taxes imposed by chapter 290; or
31.8(2) a corporation that is not subject to the taxes imposed by chapter 290:
31.9(i) Such corporation consents by filing the return as a designated member under this
31.10clause to remit taxes, penalties, interest, or additions to tax due from the members of the
31.11unitary business subject to tax, and receive refunds or other payments on behalf of other
31.12members of the unitary business. The member designated under this clause is a "taxpayer"
31.13for the purposes of this chapter and chapter 270C, and is liable for any liability imposed
31.14on the unitary business under this chapter and chapter 290.
31.15(ii) If the state does not otherwise have the jurisdiction to tax the member designated
31.16under this clause, consenting to be the designated member does not create the jurisdiction
31.17to impose tax on the designated member, other than as described in item (i).
31.18(iii) The member designated under this clause must apply for a business tax account
31.19identification number.
31.20(c) The commissioner shall adopt rules for the filing of one return on behalf of the
31.21members of an affiliated group of corporations that are required to file a combined report.
31.22All members of an affiliated group that are required to file a combined report must file one
31.23return on behalf of the members of the group under rules adopted by the commissioner.
31.24(d) If a corporation claims on a return that it has paid tax in excess of the amount of
31.25taxes lawfully due, that corporation must include on that return information necessary for
31.26payment of the tax in excess of the amount lawfully due by electronic means.
31.27EFFECTIVE DATE.This section is effective for returns filed for taxable years
31.28beginning after December 31, 2011.

31.29    Sec. 7. Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19c, is
31.30amended to read:
31.31    Subd. 19c. Corporations; additions to federal taxable income. For corporations,
31.32there shall be added to federal taxable income:
31.33    (1) the amount of any deduction taken for federal income tax purposes for income,
31.34excise, or franchise taxes based on net income or related minimum taxes, including but not
31.35limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
32.1another state, a political subdivision of another state, the District of Columbia, or any
32.2foreign country or possession of the United States;
32.3    (2) interest not subject to federal tax upon obligations of: the United States, its
32.4possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
32.5state, any of its political or governmental subdivisions, any of its municipalities, or any
32.6of its governmental agencies or instrumentalities; the District of Columbia; or Indian
32.7tribal governments;
32.8    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
32.9Revenue Code;
32.10    (4) the amount of any net operating loss deduction taken for federal income tax
32.11purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
32.12deduction under section 810 of the Internal Revenue Code;
32.13    (5) the amount of any special deductions taken for federal income tax purposes
32.14under sections 241 to 247 and 965 of the Internal Revenue Code;
32.15    (6) losses from the business of mining, as defined in section 290.05, subdivision 1,
32.16clause (a), that are not subject to Minnesota income tax;
32.17    (7) the amount of any capital losses deducted for federal income tax purposes under
32.18sections 1211 and 1212 of the Internal Revenue Code;
32.19    (8) the exempt foreign trade income of a foreign sales corporation under sections
32.20921(a) and 291 of the Internal Revenue Code;
32.21    (9) the amount of percentage depletion deducted under sections 611 through 614 and
32.22291 of the Internal Revenue Code;
32.23    (10) for certified pollution control facilities placed in service in a taxable year
32.24beginning before December 31, 1986, and for which amortization deductions were elected
32.25under section 169 of the Internal Revenue Code of 1954, as amended through December
32.2631, 1985, the amount of the amortization deduction allowed in computing federal taxable
32.27income for those facilities;
32.28    (11) the amount of any deemed dividend from a foreign operating corporation
32.29determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend
32.30shall be reduced by the amount of the addition to income required by clauses (20), (21),
32.31(22), and (23);
32.32    (12) (11) the amount of a partner's pro rata share of net income which does not flow
32.33through to the partner because the partnership elected to pay the tax on the income under
32.34section 6242(a)(2) of the Internal Revenue Code;
32.35    (13) (12) the amount of net income excluded under section 114 of the Internal
32.36Revenue Code;
33.1    (14) (13) any increase in subpart F income, as defined in section 952(a) of the
33.2Internal Revenue Code, for the taxable year when subpart F income is calculated without
33.3regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
33.4    (15) (14) 80 percent of the depreciation deduction allowed under section
33.5168(k)(1)(A) and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if
33.6the taxpayer has an activity that in the taxable year generates a deduction for depreciation
33.7under section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable
33.8year that the taxpayer is not allowed to claim for the taxable year, "the depreciation
33.9allowed under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess
33.10of the depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A)
33.11over the amount of the loss from the activity that is not allowed in the taxable year. In
33.12succeeding taxable years when the losses not allowed in the taxable year are allowed, the
33.13depreciation under section 168(k)(1)(A) and (k)(4)(A) is allowed;
33.14    (16) (15) 80 percent of the amount by which the deduction allowed by section 179 of
33.15the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
33.16Revenue Code of 1986, as amended through December 31, 2003;
33.17    (17) (16) to the extent deducted in computing federal taxable income, the amount of
33.18the deduction allowable under section 199 of the Internal Revenue Code;
33.19    (18) (17) for taxable years beginning before January 1, 2013, the exclusion allowed
33.20under section 139A of the Internal Revenue Code for federal subsidies for prescription
33.21drug plans;
33.22    (19) (18) the amount of expenses disallowed under section 290.10, subdivision 2;
33.23    (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
33.24accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
33.25of a corporation that is a member of the taxpayer's unitary business group that qualifies
33.26as a foreign operating corporation. For purposes of this clause, intangible expenses and
33.27costs include:
33.28    (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
33.29use, maintenance or management, ownership, sale, exchange, or any other disposition of
33.30intangible property;
33.31    (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
33.32transactions;
33.33    (iii) royalty, patent, technical, and copyright fees;
33.34    (iv) licensing fees; and
33.35    (v) other similar expenses and costs.
34.1For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
34.2applications, trade names, trademarks, service marks, copyrights, mask works, trade
34.3secrets, and similar types of intangible assets.
34.4This clause does not apply to any item of interest or intangible expenses or costs paid,
34.5accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
34.6to such item of income to the extent that the income to the foreign operating corporation
34.7is income from sources without the United States as defined in subtitle A, chapter 1,
34.8subchapter N, part 1, of the Internal Revenue Code;
34.9    (21) except as already included in the taxpayer's taxable income pursuant to clause
34.10(20), any interest income and income generated from intangible property received or
34.11accrued by a foreign operating corporation that is a member of the taxpayer's unitary
34.12group. For purposes of this clause, income generated from intangible property includes:
34.13    (i) income related to the direct or indirect acquisition, use, maintenance or
34.14management, ownership, sale, exchange, or any other disposition of intangible property;
34.15    (ii) income from factoring transactions or discounting transactions;
34.16    (iii) royalty, patent, technical, and copyright fees;
34.17    (iv) licensing fees; and
34.18    (v) other similar income.
34.19For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
34.20applications, trade names, trademarks, service marks, copyrights, mask works, trade
34.21secrets, and similar types of intangible assets.
34.22This clause does not apply to any item of interest or intangible income received or accrued
34.23by a foreign operating corporation with respect to such item of income to the extent that
34.24the income is income from sources without the United States as defined in subtitle A,
34.25chapter 1, subchapter N, part 1, of the Internal Revenue Code;
34.26    (22) the dividends attributable to the income of a foreign operating corporation that
34.27is a member of the taxpayer's unitary group in an amount that is equal to the dividends
34.28paid deduction of a real estate investment trust under section 561(a) of the Internal
34.29Revenue Code for amounts paid or accrued by the real estate investment trust to the
34.30foreign operating corporation;
34.31    (23) the income of a foreign operating corporation that is a member of the taxpayer's
34.32unitary group in an amount that is equal to gains derived from the sale of real or personal
34.33property located in the United States;
34.34    (24) (19) for taxable years beginning before January 1, 2010, the additional amount
34.35allowed as a deduction for donation of computer technology and equipment under section
34.36170(e)(6) of the Internal Revenue Code, to the extent deducted from taxable income; and
35.1(25) (20) discharge of indebtedness income resulting from reacquisition of business
35.2indebtedness and deferred under section 108(i) of the Internal Revenue Code.
35.3EFFECTIVE DATE.This section is effective for taxable years beginning after
35.4December 31, 2011.

35.5    Sec. 8. Minnesota Statutes 2010, section 290.01, subdivision 19d, is amended to read:
35.6    Subd. 19d. Corporations; modifications decreasing federal taxable income. For
35.7corporations, there shall be subtracted from federal taxable income after the increases
35.8provided in subdivision 19c:
35.9    (1) the amount of foreign dividend gross-up added to gross income for federal
35.10income tax purposes under section 78 of the Internal Revenue Code;
35.11    (2) the amount of salary expense not allowed for federal income tax purposes due to
35.12claiming the work opportunity credit under section 51 of the Internal Revenue Code;
35.13    (3) any dividend (not including any distribution in liquidation) paid within the
35.14taxable year by a national or state bank to the United States, or to any instrumentality of
35.15the United States exempt from federal income taxes, on the preferred stock of the bank
35.16owned by the United States or the instrumentality;
35.17    (4) amounts disallowed for intangible drilling costs due to differences between
35.18this chapter and the Internal Revenue Code in taxable years beginning before January
35.191, 1987, as follows:
35.20    (i) to the extent the disallowed costs are represented by physical property, an amount
35.21equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09,
35.22subdivision 7 , subject to the modifications contained in subdivision 19e; and
35.23    (ii) to the extent the disallowed costs are not represented by physical property, an
35.24amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
35.25290.09, subdivision 8 ;
35.26    (5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
35.27Internal Revenue Code, except that:
35.28    (i) for capital losses incurred in taxable years beginning after December 31, 1986,
35.29capital loss carrybacks shall not be allowed;
35.30    (ii) for capital losses incurred in taxable years beginning after December 31, 1986,
35.31a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
35.32allowed;
35.33    (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
35.34capital loss carryback to each of the three taxable years preceding the loss year, subject to
35.35the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
36.1    (iv) for capital losses incurred in taxable years beginning before January 1, 1987,
36.2a capital loss carryover to each of the five taxable years succeeding the loss year to the
36.3extent such loss was not used in a prior taxable year and subject to the provisions of
36.4Minnesota Statutes 1986, section 290.16, shall be allowed;
36.5    (6) an amount for interest and expenses relating to income not taxable for federal
36.6income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
36.7expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
36.8291 of the Internal Revenue Code in computing federal taxable income;
36.9    (7) in the case of mines, oil and gas wells, other natural deposits, and timber for
36.10which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a
36.11reasonable allowance for depletion based on actual cost. In the case of leases the deduction
36.12must be apportioned between the lessor and lessee in accordance with rules prescribed
36.13by the commissioner. In the case of property held in trust, the allowable deduction must
36.14be apportioned between the income beneficiaries and the trustee in accordance with the
36.15pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
36.16of the trust's income allocable to each;
36.17    (8) for certified pollution control facilities placed in service in a taxable year
36.18beginning before December 31, 1986, and for which amortization deductions were elected
36.19under section 169 of the Internal Revenue Code of 1954, as amended through December
36.2031, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
36.211986, section 290.09, subdivision 7;
36.22    (9) amounts included in federal taxable income that are due to refunds of income,
36.23excise, or franchise taxes based on net income or related minimum taxes paid by the
36.24corporation to Minnesota, another state, a political subdivision of another state, the
36.25District of Columbia, or a foreign country or possession of the United States to the extent
36.26that the taxes were added to federal taxable income under section 290.01, subdivision 19c,
36.27clause (1), in a prior taxable year;
36.28    (10) 80 percent of royalties, fees, or other like income accrued or received from a
36.29foreign operating corporation or a foreign corporation which is part of the same unitary
36.30business as the receiving corporation, unless the income resulting from such payments or
36.31accruals is income from sources within the United States as defined in subtitle A, chapter
36.321, subchapter N, part 1, of the Internal Revenue Code;
36.33    (11) income or gains from the business of mining as defined in section 290.05,
36.34subdivision 1 , clause (a), that are not subject to Minnesota franchise tax;
36.35    (12) the amount of disability access expenditures in the taxable year which are not
36.36allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
37.1    (13) the amount of qualified research expenses not allowed for federal income tax
37.2purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that
37.3the amount exceeds the amount of the credit allowed under section 290.068;
37.4    (14) the amount of salary expenses not allowed for federal income tax purposes due
37.5to claiming the Indian employment credit under section 45A(a) of the Internal Revenue
37.6Code;
37.7    (15) for a corporation whose foreign sales corporation, as defined in section 922
37.8of the Internal Revenue Code, constituted a foreign operating corporation during any
37.9taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
37.10claiming the deduction under section 290.21, subdivision 4, for income received from
37.11the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of
37.12income excluded under section 114 of the Internal Revenue Code, provided the income is
37.13not income of a foreign operating company;
37.14    (16) any decrease in subpart F income, as defined in section 952(a) of the Internal
37.15Revenue Code, for the taxable year when subpart F income is calculated without regard to
37.16the provisions of Division C, title III, section 303(b) of Public Law 110-343;
37.17    (17) in each of the five tax years immediately following the tax year in which an
37.18addition is required under subdivision 19c, clause (15) (14), an amount equal to one-fifth
37.19of the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
37.20amount of the addition made by the taxpayer under subdivision 19c, clause (15) (14). The
37.21resulting delayed depreciation cannot be less than zero;
37.22    (18) in each of the five tax years immediately following the tax year in which an
37.23addition is required under subdivision 19c, clause (16) (15), an amount equal to one-fifth
37.24of the amount of the addition; and
37.25(19) to the extent included in federal taxable income, discharge of indebtedness
37.26income resulting from reacquisition of business indebtedness included in federal taxable
37.27income under section 108(i) of the Internal Revenue Code. This subtraction applies only
37.28to the extent that the income was included in net income in a prior year as a result of the
37.29addition under section 290.01, subdivision 19c, clause (25) (20).
37.30EFFECTIVE DATE.This section is effective for taxable years beginning after
37.31December 31, 2011.

37.32    Sec. 9. Minnesota Statutes 2010, section 290.01, subdivision 29, is amended to read:
37.33    Subd. 29. Taxable income. The term "taxable income" means:
37.34(1) for individuals, estates, and trusts, the same as taxable net income;
37.35(2) for corporations, the taxable net income less
38.1(i) the net operating loss deduction under section 290.095, excluding any amount
38.2surrendered under section 116J.8738;
38.3(ii) the dividends received deduction under section 290.21, subdivision 4;
38.4(iii) the exemption for operating in a job opportunity building zone under section
38.5469.317 ;
38.6(iv) the exemption for operating in a biotechnology and health sciences industry
38.7zone under section 469.337; and
38.8(v) the exemption for operating in an international economic development zone
38.9under section 469.326.
38.10EFFECTIVE DATE.This section is effective for taxable years beginning after
38.11December 31, 2011.

38.12    Sec. 10. Minnesota Statutes 2010, section 290.06, is amended by adding a subdivision
38.13to read:
38.14    Subd. 36. Employment of qualified veteran tax credit. (a) A taxpayer is allowed a
38.15credit against the tax imposed under this chapter for employment of one or more qualified
38.16veterans.
38.17(b) "Qualified veteran" has the meaning given in section 51 of the Internal Revenue
38.18Code.
38.19(c) The credit equals the credit allowed under section 51 of the Internal Revenue
38.20Code without regard to the limitation to federal liability, but is limited to the portion of the
38.21federal credit allowed for employment of qualified veterans in Minnesota.
38.22(d) The credit under this subdivision is in effect without regard to whether or not the
38.23credit allowed under section 51 of the Internal Revenue Code is allowed for wages paid
38.24during the taxable year.
38.25(e) If the amount of the credit determined under this section exceeds the liability for
38.26tax under this chapter, the excess may be carried forward to each of the next ten taxable
38.27years. The entire amount of the excess unused credit for the taxable year shall be carried
38.28first to the earliest of the taxable years to which the credit may be carried, and then to each
38.29successive year to which the credit may be carried. The amount of the unused credit which
38.30may be added under this paragraph shall not exceed the taxpayer's liability for tax less the
38.31credit under this section for the taxable year.
38.32EFFECTIVE DATE.This section is effective for taxable years beginning after
38.33December 31, 2011.

39.1    Sec. 11. Minnesota Statutes 2010, section 290.06, is amended by adding a subdivision
39.2to read:
39.3    Subd. 37. Credit; technology corporate franchise tax certificate transfer.
39.4A taxpayer may take a credit against the tax imposed under subdivision 1 or section
39.5290.0921 equal to the amount of the transferable tax benefits certified to the taxpayer for
39.6the taxable year by the commissioner of employment and economic development under
39.7section 116J.8738.
39.8EFFECTIVE DATE.This section is effective for taxable years beginning after
39.9December 31, 2011.

39.10    Sec. 12. Minnesota Statutes 2010, section 290.06, is amended by adding a subdivision
39.11to read:
39.12    Subd. 38. Property tax credit. (a) A credit is allowed against the taxes imposed
39.13under subdivision 1 and section 290.0921 for the taxable year equal to the lesser of:
39.14(1) ad valorem property tax paid on real property, located in this state and owned by
39.15a legal entity that is part of the unitary business, as defined in section 290.17, subdivision
39.164, paid during the taxable year, or
39.17(2) 7.84 percent of the Minnesota foreign operating corporation income of the
39.18unitary business for the taxable year.
39.19(b) For purposes of this subdivision, "foreign operating corporation income of the
39.20unitary business" means the sum of the amounts of federal taxable income, as modified
39.21by the provisions of paragraph (c), of all of the foreign operating corporations that are
39.22part of the unitary business that is:
39.23(1) derived from sources without the United States, as defined in subtitle A, chapter
39.241, subchapter N, part 1, of the Internal Revenue Code; and
39.25(2) attributable to the active conduct of a trade or business in a foreign country.
39.26(c) Foreign operating corporation income must be decreased by the following
39.27amounts to the extent that they were reflected in the computation of the amount of federal
39.28taxable income used in paragraph (b):
39.29(1) an amount equal to the interest and intangible expenses, losses, and costs paid,
39.30accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
39.31of a foreign operating corporation that is a member of the unitary business group. For
39.32purposes of this clause, intangible expenses and costs include:
39.33(i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
39.34use, maintenance or management, ownership, sale, exchange, or any other disposition of
39.35intangible property;
40.1(ii) losses incurred, directly or indirectly, from factoring transactions or discounting
40.2transactions;
40.3(iii) royalty, patent, technical, and copyright fees;
40.4(iv) licensing fees; and
40.5(v) other similar expenses and costs.
40.6This clause does not apply to any item of interest or intangible expenses or costs paid,
40.7accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
40.8to such item of income to the extent that the income to the foreign operating corporation
40.9is income from sources without the United States as defined in subtitle A, chapter 1,
40.10subchapter N, part 1, of the Internal Revenue Code;
40.11(2) except as already excluded in the taxpayer's taxable income under clause (1), any
40.12interest income and income generated from intangible property received or accrued by a
40.13foreign operating corporation that is a member of the unitary business group. For purposes
40.14of this clause, income generated from intangible property includes:
40.15(i) income related to the direct or indirect acquisition, use, maintenance or
40.16management, ownership, sale, exchange, or any other disposition of intangible property;
40.17(ii) income from factoring transactions or discounting transactions;
40.18(iii) royalty, patent, technical, and copyright fees;
40.19(iv) licensing fees; and
40.20(v) other similar income.
40.21For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
40.22applications, trade names, trademarks, service marks, copyrights, mask works, trade
40.23secrets, and similar types of intangible assets. This clause does not apply to any item
40.24of interest or intangible income received or accrued by a foreign operating corporation
40.25with respect to such item of income to the extent that the income is income from sources
40.26without the United States as defined in subtitle A, chapter 1, subchapter N, part 1, of
40.27the Internal Revenue Code; and
40.28(3) the income of a foreign operating corporation that is a member of the taxpayer's
40.29unitary group in an amount that is equal to gains derived from the sale of real or personal
40.30property located in the United States.
40.31(d) For purposes of this subdivision, "Minnesota foreign operating corporation
40.32income of the unitary business" means foreign operating company income of the unitary
40.33business multiplied by a percentage equal to the apportionment percentage for the taxable
40.34year, determined under section 290.191, but computed using the factors of the entire
40.35unitary business group and excluding from the numerator factors of entities that are not
40.36taxable in this state.
41.1(e) The unitary business may allocate the credit under this subdivision among the
41.2legal entities that are members of its group, but the total amount of the credit under this
41.3subdivision cannot the exceed the liability for tax for the taxable year under sections
41.4290.06, subdivision 1, and 290.0921.
41.5EFFECTIVE DATE.This section is effective for taxable years beginning after
41.6December 31, 2011.

41.7    Sec. 13. Minnesota Statutes 2010, section 290.068, subdivision 1, is amended to read:
41.8    Subdivision 1. Credit allowed. A corporation, partners in a partnership, or
41.9shareholders in a corporation treated as an "S" corporation under section 290.9725 are
41.10allowed a credit against the tax computed under this chapter for the taxable year equal to:
41.11    (a) ten percent of the first $2,000,000 of the excess (if any) of
41.12    (1) the qualified research expenses for the taxable year, over
41.13    (2) the base amount; and
41.14    (b) 2.5 4.5 percent on all of such excess expenses over $2,000,000.
41.15EFFECTIVE DATE.This section is effective for taxable years beginning after
41.16December 31, 2011.

41.17    Sec. 14. Minnesota Statutes 2010, section 290.17, subdivision 4, is amended to read:
41.18    Subd. 4. Unitary business principle. (a) If a trade or business conducted wholly
41.19within this state or partly within and partly without this state is part of a unitary business,
41.20the entire income of the unitary business is subject to apportionment pursuant to section
41.21290.191 . Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary
41.22business is considered to be derived from any particular source and none may be allocated
41.23to a particular place except as provided by the applicable apportionment formula. The
41.24provisions of this subdivision do not apply to business income subject to subdivision 5,
41.25income of an insurance company, or income of an investment company determined under
41.26section 290.36.
41.27(b) The term "unitary business" means business activities or operations which
41.28result in a flow of value between them. The term may be applied within a single legal
41.29entity or between multiple entities and without regard to whether each entity is a sole
41.30proprietorship, a corporation, a partnership or a trust.
41.31(c) Unity is presumed whenever there is unity of ownership, operation, and use,
41.32evidenced by centralized management or executive force, centralized purchasing,
41.33advertising, accounting, or other controlled interaction, but the absence of these
42.1centralized activities will not necessarily evidence a nonunitary business. Unity is also
42.2presumed when business activities or operations are of mutual benefit, dependent upon or
42.3contributory to one another, either individually or as a group.
42.4(d) Where a business operation conducted in Minnesota is owned by a business
42.5entity that carries on business activity outside the state different in kind from that
42.6conducted within this state, and the other business is conducted entirely outside the state, it
42.7is presumed that the two business operations are unitary in nature, interrelated, connected,
42.8and interdependent unless it can be shown to the contrary.
42.9(e) Unity of ownership is not deemed to exist when a corporation is involved unless
42.10that corporation is a member of a group of two or more business entities and more than 50
42.11percent of the voting stock of each member of the group is directly or indirectly owned
42.12by a common owner or by common owners, either corporate or noncorporate, or by one
42.13or more of the member corporations of the group. For this purpose, the term "voting
42.14stock" shall include membership interests of mutual insurance holding companies formed
42.15under section 66A.40.
42.16(f) The net income and apportionment factors under section 290.191 or 290.20 of
42.17foreign corporations and other foreign entities which are part of a unitary business shall
42.18not be included in the net income or the apportionment factors of the unitary business.
42.19A foreign corporation or other foreign entity which is required to file a return under this
42.20chapter shall file on a separate return basis. The net income and apportionment factors
42.21under section 290.191 or 290.20 of foreign operating corporations shall not be included in
42.22the net income or the apportionment factors of the unitary business except as provided in
42.23paragraph (g).
42.24(g) The adjusted net income of a foreign operating corporation shall be deemed to
42.25be paid as a dividend on the last day of its taxable year to each shareholder thereof, in
42.26proportion to each shareholder's ownership, with which such corporation is engaged in
42.27a unitary business. Such deemed dividend shall be treated as a dividend under section
42.28290.21, subdivision 4.
42.29Dividends actually paid by a foreign operating corporation to a corporate shareholder
42.30which is a member of the same unitary business as the foreign operating corporation shall
42.31be eliminated from the net income of the unitary business in preparing a combined report
42.32for the unitary business. The adjusted net income of a foreign operating corporation
42.33shall be its net income adjusted as follows:
42.34(1) any taxes paid or accrued to a foreign country, the commonwealth of Puerto
42.35Rico, or a United States possession or political subdivision of any of the foregoing shall
42.36be a deduction; and
43.1(2) the subtraction from federal taxable income for payments received from foreign
43.2corporations or foreign operating corporations under section 290.01, subdivision 19d,
43.3clause (10), shall not be allowed.
43.4If a foreign operating corporation incurs a net loss, neither income nor deduction
43.5from that corporation shall be included in determining the net income of the unitary
43.6business.
43.7(h) (g) For purposes of determining the net income of a unitary business and the
43.8factors to be used in the apportionment of net income pursuant to section 290.191 or
43.9290.20 , there must be included only the income and apportionment factors of domestic
43.10corporations or other domestic entities other than foreign operating corporations that are
43.11determined to be part of the unitary business pursuant to this subdivision, notwithstanding
43.12that foreign corporations or other foreign entities might be included in the unitary business.
43.13(i) (h) Deductions for expenses, interest, or taxes otherwise allowable under
43.14this chapter that are connected with or allocable against dividends, deemed dividends
43.15described in paragraph (g), or royalties, fees, or other like income described in section
43.16290.01, subdivision 19d , clause (10), shall not be disallowed.
43.17(j) (i) Each corporation or other entity, except a sole proprietorship, that is part of
43.18a unitary business must file combined reports as the commissioner determines. On the
43.19reports, all intercompany transactions between entities included pursuant to paragraph
43.20(h) (g) must be eliminated and the entire net income of the unitary business determined in
43.21accordance with this subdivision is apportioned among the entities by using each entity's
43.22Minnesota factors for apportionment purposes in the numerators of the apportionment
43.23formula and the total factors for apportionment purposes of all entities included pursuant
43.24to paragraph (h) (g) in the denominators of the apportionment formula.
43.25(k) (j) If a corporation has been divested from a unitary business and is included in a
43.26combined report for a fractional part of the common accounting period of the combined
43.27report:
43.28(1) its income includable in the combined report is its income incurred for that part
43.29of the year determined by proration or separate accounting; and
43.30(2) its sales, property, and payroll included in the apportionment formula must
43.31be prorated or accounted for separately.
43.32EFFECTIVE DATE.This section is effective for returns filed for taxable years
43.33beginning after December 31, 2011.

43.34    Sec. 15. REPEALER.
43.35Minnesota Statutes 2010, section 290.0921, subdivision 7, is repealed.
44.1EFFECTIVE DATE.This section is effective for returns filed for taxable years
44.2beginning after December 31, 2011.


44.5    Section 1. Minnesota Statutes 2010, section 289A.20, subdivision 4, is amended to
44.6read:
44.7    Subd. 4. Sales and use tax. (a) The taxes imposed by chapter 297A are due and
44.8payable to the commissioner monthly on or before the 20th day of the month following
44.9the month in which the taxable event occurred, or following another reporting period
44.10as the commissioner prescribes or as allowed under section 289A.18, subdivision 4,
44.11paragraph (f) or (g), except that:
44.12(1) use taxes due on an annual use tax return as provided under section 289A.11,
44.13subdivision 1 , are payable by April 15 following the close of the calendar year; and.
44.14(2) except as provided in paragraph (f), for a vendor having a liability of $120,000
44.15or more during a fiscal year ending June 30, 2009, and fiscal years thereafter, the taxes
44.16imposed by chapter 297A, except as provided in paragraph (b), are due and payable to the
44.17commissioner monthly in the following manner:
44.18(i) On or before the 14th day of the month following the month in which the taxable
44.19event occurred, the vendor must remit to the commissioner 90 percent of the estimated
44.20liability for the month in which the taxable event occurred.
44.21(ii) On or before the 20th day of the month in which the taxable event occurs, the
44.22vendor must remit to the commissioner a prepayment for the month in which the taxable
44.23event occurs equal to 67 percent of the liability for the previous month.
44.24(iii) On or before the 20th day of the month following the month in which the taxable
44.25event occurred, the vendor must pay any additional amount of tax not previously remitted
44.26under either item (i) or (ii ) or, if the payment made under item (i) or (ii) was greater than
44.27the vendor's liability for the month in which the taxable event occurred, the vendor may
44.28take a credit against the next month's liability in a manner prescribed by the commissioner.
44.29(iv) Once the vendor first pays under either item (i) or (ii), the vendor is required to
44.30continue to make payments in the same manner, as long as the vendor continues having a
44.31liability of $120,000 or more during the most recent fiscal year ending June 30.
44.32(v) Notwithstanding items (i), (ii), and (iv), if a vendor fails to make the required
44.33payment in the first month that the vendor is required to make a payment under either item
44.34(i) or (ii), then the vendor is deemed to have elected to pay under item (ii) and must make
44.35subsequent monthly payments in the manner provided in item (ii).
45.1(vi) For vendors making an accelerated payment under item (ii), for the first month
45.2that the vendor is required to make the accelerated payment, on the 20th of that month, the
45.3vendor will pay 100 percent of the liability for the previous month and a prepayment for
45.4the first month equal to 67 percent of the liability for the previous month.
45.5    (b) Notwithstanding paragraph (a), A vendor having a liability of $120,000 or more
45.6during a fiscal year ending June 30 must remit the June liability for the next year in the
45.7following manner:
45.8    (1) Two business days before June 30 of the year, the vendor must remit 90 percent
45.9of the estimated June liability to the commissioner.
45.10    (2) On or before August 20 of the year, the vendor must pay any additional amount
45.11of tax not remitted in June.
45.12    (c) A vendor having a liability of:
45.13    (1) $10,000 or more, but less than $120,000 during a fiscal year ending June 30,
45.142009, and fiscal years thereafter, must remit by electronic means all liabilities on returns
45.15due for periods beginning in the subsequent calendar year on or before the 20th day of
45.16the month following the month in which the taxable event occurred, or on or before the
45.1720th day of the month following the month in which the sale is reported under section
45.18289A.18, subdivision 4 ; or
45.19(2) $120,000 or more, during a fiscal year ending June 30, 2009, and fiscal years
45.20thereafter, must remit by electronic means all liabilities in the manner provided in
45.21paragraph (a), clause (2), on returns due for periods beginning in the subsequent calendar
45.22year, except for 90 percent of the estimated June liability, which is due two business days
45.23before June 30. The remaining amount of the June liability is due on August 20.
45.24(d) Notwithstanding paragraph (b) or (c), a person prohibited by the person's
45.25religious beliefs from paying electronically shall be allowed to remit the payment by mail.
45.26The filer must notify the commissioner of revenue of the intent to pay by mail before
45.27doing so on a form prescribed by the commissioner. No extra fee may be charged to a
45.28person making payment by mail under this paragraph. The payment must be postmarked
45.29at least two business days before the due date for making the payment in order to be
45.30considered paid on a timely basis.
45.31(e) Whenever the liability is $120,000 or more separately for: (1) the tax imposed
45.32under chapter 297A; (2) a fee that is to be reported on the same return as and paid with the
45.33chapter 297A taxes; or (3) any other tax that is to be reported on the same return as and
45.34paid with the chapter 297A taxes, then the payment of all the liabilities on the return must
45.35be accelerated as provided in this subdivision.
46.1(f) At the start of the first calendar quarter at least 90 days after the cash flow
46.2account established in section 16A.152, subdivision 1, and the budget reserve account
46.3established in section 16A.152, subdivision 1a, reach the amounts listed in section
46.416A.152, subdivision 2, paragraph (a), the remittance of the accelerated payments required
46.5under paragraph (a), clause (2), must be suspended. The commissioner of management
46.6and budget shall notify the commissioner of revenue when the accounts have reached
46.7the required amounts. Beginning with the suspension of paragraph (a), clause (2), for a
46.8vendor with a liability of $120,000 or more during a fiscal year ending June 30, 2009,
46.9and fiscal years thereafter, the taxes imposed by chapter 297A are due and payable to the
46.10commissioner on the 20th day of the month following the month in which the taxable
46.11event occurred. Payments of tax liabilities for taxable events occurring in June under
46.12paragraph (b) are not changed.
46.13EFFECTIVE DATE.This section is effective for taxes due and payable after
46.14July 1, 2012.

46.15    Sec. 2. Minnesota Statutes 2010, section 297A.68, subdivision 5, is amended to read:
46.16    Subd. 5. Capital equipment. (a) Capital equipment is exempt. Except as provided
46.17in paragraph (e), the tax must be imposed and collected as if the rate under section
46.18297A.62, subdivision 1 , applied, and then refunded in the manner provided in section
46.19297A.75 .
46.20"Capital equipment" means machinery and equipment purchased or leased, and used
46.21in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining,
46.22or refining tangible personal property to be sold ultimately at retail if the machinery and
46.23equipment are essential to the integrated production process of manufacturing, fabricating,
46.24mining, or refining. Capital equipment also includes machinery and equipment
46.25used primarily to electronically transmit results retrieved by a customer of an online
46.26computerized data retrieval system.
46.27(b) Capital equipment includes, but is not limited to:
46.28(1) machinery and equipment used to operate, control, or regulate the production
46.29equipment;
46.30(2) machinery and equipment used for research and development, design, quality
46.31control, and testing activities;
46.32(3) environmental control devices that are used to maintain conditions such as
46.33temperature, humidity, light, or air pressure when those conditions are essential to and are
46.34part of the production process;
46.35(4) materials and supplies used to construct and install machinery or equipment;
47.1(5) repair and replacement parts, including accessories, whether purchased as spare
47.2parts, repair parts, or as upgrades or modifications to machinery or equipment;
47.3(6) materials used for foundations that support machinery or equipment;
47.4(7) materials used to construct and install special purpose buildings used in the
47.5production process;
47.6(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed
47.7as part of the delivery process regardless if mounted on a chassis, repair parts for
47.8ready-mixed concrete trucks, and leases of ready-mixed concrete trucks; and
47.9(9) machinery or equipment used for research, development, design, or production
47.10of computer software.
47.11(c) Capital equipment does not include the following:
47.12(1) motor vehicles taxed under chapter 297B;
47.13(2) machinery or equipment used to receive or store raw materials;
47.14(3) building materials, except for materials included in paragraph (b), clauses (6)
47.15and (7);
47.16(4) machinery or equipment used for nonproduction purposes, including, but not
47.17limited to, the following: plant security, fire prevention, first aid, and hospital stations;
47.18support operations or administration; pollution control; and plant cleaning, disposal of
47.19scrap and waste, plant communications, space heating, cooling, lighting, or safety;
47.20(5) farm machinery and aquaculture production equipment as defined by section
47.21297A.61 , subdivisions 12 and 13;
47.22(6) machinery or equipment purchased and installed by a contractor as part of an
47.23improvement to real property;
47.24(7) machinery and equipment used by restaurants in the furnishing, preparing, or
47.25serving of prepared foods as defined in section 297A.61, subdivision 31;
47.26(8) machinery and equipment used to furnish the services listed in section 297A.61,
47.27subdivision 3 , paragraph (g), clause (6), items (i) to (vi) and (viii);
47.28(9) machinery or equipment used in the transportation, transmission, or distribution
47.29of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines,
47.30tanks, mains, or other means of transporting those products. This clause does not apply to
47.31machinery or equipment used to blend petroleum or biodiesel fuel as defined in section
47.32239.77 ; or
47.33(10) any other item that is not essential to the integrated process of manufacturing,
47.34fabricating, mining, or refining.
47.35(d) For purposes of this subdivision:
48.1(1) "Equipment" means independent devices or tools separate from machinery but
48.2essential to an integrated production process, including computers and computer software,
48.3used in operating, controlling, or regulating machinery and equipment; and any subunit or
48.4assembly comprising a component of any machinery or accessory or attachment parts of
48.5machinery, such as tools, dies, jigs, patterns, and molds.
48.6(2) "Fabricating" means to make, build, create, produce, or assemble components or
48.7property to work in a new or different manner.
48.8(3) "Integrated production process" means a process or series of operations through
48.9which tangible personal property is manufactured, fabricated, mined, or refined. For
48.10purposes of this clause, (i) manufacturing begins with the removal of raw materials
48.11from inventory and ends when the last process prior to loading for shipment has been
48.12completed; (ii) fabricating begins with the removal from storage or inventory of the
48.13property to be assembled, processed, altered, or modified and ends with the creation
48.14or production of the new or changed product; (iii) mining begins with the removal of
48.15overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and
48.16ends when the last process before stockpiling is completed; and (iv) refining begins with
48.17the removal from inventory or storage of a natural resource and ends with the conversion
48.18of the item to its completed form.
48.19(4) "Machinery" means mechanical, electronic, or electrical devices, including
48.20computers and computer software, that are purchased or constructed to be used for the
48.21activities set forth in paragraph (a), beginning with the removal of raw materials from
48.22inventory through completion of the product, including packaging of the product.
48.23(5) "Machinery and equipment used for pollution control" means machinery and
48.24equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity
48.25described in paragraph (a).
48.26(6) "Manufacturing" means an operation or series of operations where raw materials
48.27are changed in form, composition, or condition by machinery and equipment and which
48.28results in the production of a new article of tangible personal property. For purposes of
48.29this subdivision, "manufacturing" includes the generation of electricity or steam to be
48.30sold at retail.
48.31(7) "Mining" means the extraction of minerals, ores, stone, or peat.
48.32(8) "Online data retrieval system" means a system whose cumulation of information
48.33is equally available and accessible to all its customers.
48.34(9) "Primarily" means machinery and equipment used 50 percent or more of the time
48.35in an activity described in paragraph (a).
49.1(10) "Refining" means the process of converting a natural resource to an intermediate
49.2or finished product, including the treatment of water to be sold at retail.
49.3(11) This subdivision does not apply to telecommunications equipment as
49.4provided in subdivision 35, and does not apply to wire, cable, fiber, poles, or conduit
49.5for telecommunications services.
49.6(e) Materials exempt under this section may be purchased without imposing and
49.7collecting the tax and applying for a refund under section 297A.75 if the purchaser is a
49.8small business, as defined under section 645.445.
49.9EFFECTIVE DATE.This section is effective for sales and purchases made after
49.10June 30, 2012.

49.11    Sec. 3. REPEALER.
49.12Minnesota Statutes 2011 Supplement, section 289A.60, subdivision 31, is repealed.
49.13EFFECTIVE DATE.This section is effective for taxes due and payable after
49.14July 1, 2012.


49.17    Section 1. Minnesota Statutes 2010, section 297A.8155, is amended to read:
49.18297A.8155 LIQUOR REPORTING REQUIREMENTS; PENALTY.
49.19    A person who sells liquor, as defined in section 295.75, subdivision 1, in Minnesota
49.20to a retailer that sells liquor, shall file with the commissioner an annual informational
49.21report, in the form and manner prescribed by the commissioner, indicating the name,
49.22address, and Minnesota business identification number of each retailer, and the total
49.23dollar amount of liquor sold to each retailer in the previous calendar year. The report
49.24must be filed on or before March 31 following the close of the calendar year. A person
49.25failing to file this report is subject to the penalty imposed under section 289A.60. A
49.26person required to file a report under this section is not required to provide a copy of an
49.27exemption certificate, as defined in section 297A.72, provided to the person by a retailer,
49.28along with the annual informational report.
49.29EFFECTIVE DATE.This section is effective for reports required to be filed
49.30beginning in calendar year 2012 and thereafter.

49.31    Sec. 2. Minnesota Statutes 2010, section 297G.04, subdivision 2, is amended to read:
50.1    Subd. 2. Tax credit. A qualified brewer producing fermented malt beverages
50.2is entitled to a tax credit of $4.60 per barrel on 25,000 barrels sold in any fiscal year
50.3beginning July 1, regardless of the alcohol content of the product. Qualified brewers may
50.4take the credit on the 18th day of each month, but the total credit allowed may not exceed
50.5in any fiscal year the lesser of:
50.6(1) the liability for tax; or
50.7(2) $115,000.
50.8For purposes of this subdivision, a "qualified brewer" means a brewer, whether or
50.9not located in this state, manufacturing less than 100,000 250,000 barrels of fermented
50.10malt beverages in the calendar year immediately preceding the calendar year for which
50.11the credit under this subdivision is claimed. In determining the number of barrels, all
50.12brands or labels of a brewer must be combined. All facilities for the manufacture of
50.13fermented malt beverages owned or controlled by the same person, corporation, or other
50.14entity must be treated as a single brewer.
50.15EFFECTIVE DATE.This section is effective for determinations based on calendar
50.16year 2011 production and thereafter.

50.17    Sec. 3. Minnesota Statutes 2010, section 298.75, is amended by adding a subdivision
50.18to read:
50.19    Subd. 12. Tax may be imposed; Otter Tail County. (a) If Otter Tail County
50.20does not impose a tax under this section and approves imposition of the tax under this
50.21subdivision, the city of Vergas in Otter Tail County may impose the aggregate materials
50.22tax under this section.
50.23(b) For purposes of exercising the powers contained in this section, the "city" is
50.24deemed to be the "county."
50.25(c) All provisions in this section apply to the city of Vergas, except that in lieu of the
50.26tax proceeds under subdivision 7, all proceeds of the tax must be retained by the city.
50.27(d) If Otter Tail County imposes an aggregate materials tax under this section, the
50.28tax imposed by the city of Vergas under this subdivision is repealed on the effective
50.29date of the Otter Tail County tax.
50.30EFFECTIVE DATE.This section is effective the day after the governing body of
50.31the city of Vergas and its chief clerical officer comply with Minnesota Statutes, section
50.32645.021, subdivisions 2 and 3.

51.1    Sec. 4. Minnesota Statutes 2010, section 469.169, is amended by adding a subdivision
51.2to read:
51.3    Subd. 19. Additional border city allocation; 2012. (a) In addition to tax
51.4reductions authorized in subdivisions 7 to 18, the commissioner shall allocate $75,000
51.5for tax reductions to border city enterprise zones in cities located on the western border
51.6of the state. The commissioner shall make allocations to zones in cities on the western
51.7border on a per capita basis. Allocations made under this subdivision may be used for
51.8tax reductions as provided in section 469.171, or for other offsets of taxes imposed on
51.9or remitted by businesses located in the enterprise zone, but only if the municipality
51.10determines that the granting of the tax reduction or offset is necessary in order to retain a
51.11business within or attract a business to the zone. The city alternatively may elect to use
51.12any portion of the allocation provided in this paragraph for tax reductions under section
51.13469.1732 or 469.1734.
51.14(b) The commissioner shall allocate $75,000 for tax reductions under section
51.15469.1732 or 469.1734 to cities with border city enterprise zones located on the western
51.16border of the state. The commissioner shall allocate this amount among the cities on a per
51.17capita basis. The city alternatively may elect to use any portion of the allocation provided
51.18in this paragraph for tax reductions as provided in section 469.171.

51.19    Sec. 5. Laws 1971, chapter 773, section 1, subdivision 2, as amended by Laws 1974,
51.20chapter 351, section 5, Laws 1976, chapter 234, sections 1 and 7, Laws 1978, chapter 788,
51.21section 1, Laws 1981, chapter 369, section 1, Laws 1983, chapter 302, section 1, Laws
51.221988, chapter 513, section 1, Laws 1992, chapter 511, article 9, section 23, Laws 1998,
51.23chapter 389, article 3, section 27, and Laws 2002, chapter 390, section 23, is amended to
51.24read:
51.25    Subd. 2. For each of the years 2003 to 2013 2012 to 2024, the city of St. Paul is
51.26authorized to issue bonds in the aggregate principal amount of $20,000,000 for each year.
51.27EFFECTIVE DATE.This section is effective the day after final enactment.

51.28    Sec. 6. SPECIAL RECOVERY FUND; CANCELLATION.
51.29$4,300,000 of the balance in the Revenue Department service and recovery special
51.30revenue fund is transferred in fiscal year 2012 to the general fund.
51.31EFFECTIVE DATE.This section is effective the day following final enactment.

51.32    Sec. 7. LIQUOR REPORTING REQUIREMENTS.
52.1A person who was required to submit an annual informational report under
52.2Minnesota Statutes, section 297A.8155, to the commissioner of revenue during calendar
52.3year 2010 or 2011 is not required to provide a copy of an exemption certificate or a
52.4retailer's tax identification number along with the informational report.
52.5EFFECTIVE DATE.This section is effective the day following final enactment
52.6and applies to reports required to be filed in calendar year 2010 or 2011.

52.7    Sec. 8. PURPOSE STATEMENTS; TAX EXPENDITURES.
52.8    Subdivision 1. Authority. This section is intended to fulfill the requirement under
52.9Minnesota Statutes, section 3.192, that a bill creating, renewing, or continuing a tax
52.10expenditure provide a purpose for the tax expenditure and a standard or goal against
52.11which its effectiveness may be measured.
52.12    Subd. 2. Employment of qualified veterans tax credit. The provisions of article 2,
52.13section 9, providing a tax credit for the employment of qualified veterans, are intended
52.14to give an incentive to employers to hire returning veterans who would otherwise be
52.15unemployed and to encourage their reintegration into the community. The standard against
52.16which the effectiveness of the credit is to be measured is the additional number of veterans
52.17who are hired as a result of the tax credit.
52.18    Subd. 3. Corporate franchise tax certificate transfer program. The provisions of
52.19article 2, sections 4 and 10, providing for the transfer of tax benefits, are intended to create
52.20new high paying and high quality jobs in Minnesota. The standard against which the
52.21effectiveness of the transfer program is to be measured is the number of new high paying
52.22and high quality jobs created in Minnesota as a result of the credit.
52.23    Subd. 4. Foreign operating corporation property tax credit. The provisions of
52.24article 2, section 11, providing a corporate franchise tax credit for Minnesota foreign
52.25operating corporations income, is intended to create and retain jobs in Minnesota. The
52.26standard against which the effectiveness of the credit is to be measured is the number of
52.27jobs provided by corporations claiming the credit.
52.28EFFECTIVE DATE.This section is effective the day following final enactment.

52.29    Sec. 9. TAX REFORM COMMISSION.
53.1    Subdivision 1. Findings. The legislature finds that Minnesota's state and local tax
53.2system is flawed and not well adapted to the changing nature of the economy and the
53.3demographics of the state and must be reformed so that it is:
53.4(1) simple and transparent;
53.5(2) beneficial for job creation;
53.6(3) fair and equitable to all Minnesotans; and
53.7(4) neutral and efficient.
53.8    Subd. 2. Commission established. A tax reform action commission is established
53.9in the legislative branch to study the Minnesota tax and revenue system and to make
53.10recommendations to the legislature.
53.11    Subd. 3. Membership. (a) The commission consists of 15 members, appointed
53.12as follows:
53.13(1) three members appointed by the governor, two from the executive branch and
53.14one from private life;
53.15(2) four members appointed by the majority leader of the senate, two members of the
53.16senate and two from private life;
53.17(3) two members appointed by the minority leader of the senate, one member of the
53.18senate and one from private life;
53.19(4) four members appointed by the speaker of the house, two members of the house
53.20of representatives and two from private life; and
53.21(5) two members appointed by the minority leader of the house of representatives,
53.22one member of the house of representatives and one from private life.
53.23(b) The appointing authority shall select members who are of recognized standing
53.24and distinction and who possess demonstrated capacity to discharge the duties of the
53.25commission. In making appointments, the appointing authorities shall attempt to appoint
53.26some individuals to the commission who have special experience or knowledge in
53.27taxation, economics, and accounting.
53.28 (c) The speaker of the house and majority leader of the senate shall each designate a
53.29member of the commission as a chair of the commission. The cochairs shall determine the
53.30duties of the commission and supervise its staff.
53.31 (d) The appointing authorities shall appoint members of the commission no later
53.32than 14 days after enactment of this section. Members serve for the life of the commission.
53.33A vacancy in the commission membership does not affect the power of the remaining
53.34members to execute the duties of the commission. A vacancy in commission membership
53.35is filled in the same manner in which the original appointment was made.
54.1(e) The commission shall hold its initial meeting no later than 60 days after
54.2enactment of this section.
54.3    Subd. 4. Duties; report. (a) The commission shall study and evaluate the Minnesota
54.4state and local tax and revenue system with a goal of making long-term improvements in
54.5the system for the citizens of the state, given standard principles of good tax policy and
54.6the background of expected demographic and economic changes in the state, nation, and
54.7world. The commission must specifically address ways to make the Minnesota state tax
54.8and revenue system more effective in encouraging business formation, retention, and
54.9expansion in the state, as well as increasing general capital investment in the state. The
54.10commission's recommendations must be done on a revenue neutral basis. The commission
54.11shall examine:
54.12(1) the mix of state revenues between tax revenues and fees and charges for services
54.13used or benefits received;
54.14(2) the implications of likely demographic and economic changes, affecting both (i)
54.15the demands for state and local government services and (ii) taxes and other revenues; and
54.16(3) the extent to which the existing tax system and the commission's proposal satisfy
54.17the following basic tax policy principles:
54.18(i) equity or fairness, including measures based on ability to pay, equal treatment of
54.19equals, and payment for benefits received;
54.20(ii) neutrality or efficiency, the extent to which the effects on private market
54.21decisions are minimized;
54.22(iii) revenue adequacy, the extent to which the revenues are stable and predictable
54.23and grow with increases in income or economic activity;
54.24(iv) competitiveness, the extent to which the state's attractiveness as a location for
54.25investment, working, and living is increased;
54.26(v) simplicity, the extent to which it is easy to understand;
54.27(vi) ease of compliance and administration, the extent to which taxpayers can easily
54.28comply and the government can easily administer it; and
54.29(vii) visibility or accountability, the extent to which the taxes or other charges are
54.30clear and apparent to their payers as a cost of government and that the government
54.31officials imposing the tax are accountable, through election or otherwise, to the principal
54.32payers of the tax.
54.33(b) The commission shall report to the legislature no later than March 1, 2013.
54.34The report must include:
54.35(1) the results of the commission's evaluation of the present tax and revenue system
54.36and its research on alternatives;
55.1(2) recommendations for reform and improvement of the Minnesota state and
55.2local tax and revenue system, on a revenue neutral basis, along with the rationale for
55.3the proposed changes; and
55.4(3) a draft bill implementing the commission's recommendation for introduction
55.5in the 2014 legislative session.
55.6    Subd. 5. Per diem and expenses. Members of the commission may be compensated
55.7and receive reimbursement for expenses, as provided for members of advisory councils
55.8under Minnesota Statutes, section 15.059, subdivision 3. This subdivision does not apply
55.9to members of the legislature or state employees.
55.10    Subd. 6. Staff. The commission may employ staff as it deems appropriate to carry
55.11out its duties or use existing legislative and executive branch staff. All staff are in the
55.12unclassified state service. Legislative staff and the Department of Revenue staff must
55.13provide research, bill drafting, and other services to the commission upon its request. The
55.14commission may contract with consultants for research and other services and enter other
55.15contracts as it deems necessary or appropriate to carry out its duties. These contracts are
55.16not subject to the requirements of Minnesota Statutes, chapter 16C.
55.17    Subd. 7. Appropriations. $....... is appropriated from the general fund to the
55.18commission for fiscal years 2012 and 2013 to carry out the provisions of this section.
55.19    Subd. 8. Expiration. The commission terminates 30 days after transmitting its
55.20report to the legislature under subdivision 4, paragraph (b).
55.21EFFECTIVE DATE.This section is effective the day after final enactment."
55.22Amend the title accordingly