Senate Counsel, Research
and Fiscal Analysis
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Tom Bottern
Director
   Senate   
State of Minnesota
 
 
 
 
 
H.F. No. 3167 - Omnibus Supplemental Tax Bill (The Second Unofficial Engrossment)
 
Author: Senator Rod Skoe
 
Prepared By: Eric S. Silvia, Senate Counsel (651/296-1771)
Nora Pollock, Senate Counsel (651/297-8066)
 
Date: April 11, 2014



 

Article 1

Property Tax

Section 1. Property tax levy authority. Modifies emergency medical services special taxing districts levy authority.

Sections 2, 4, and 5. Notification; exclusion and exemptions. Requires the commissioner of revenue to notify the county assessor, city finance officer, and school superintendent of the jurisdictions that host an electric generation facility that an application was received for the pollution control exemption or the sliding scale market value exclusion.

Section 3. Electric generation facility; personal property. Extends, by five years, the time frame that an electric generating facility in Beltrami County must commence construction in order to receive a personal property tax exemption.

Section 6. Limitation. Limits the sliding scale market value exclusion for electric generation facilities to those that were eligible in 2014. No new facilities are eligible for this exclusion.

Section 7.  Real property. Modifies the definition of real property by clarifying that the exterior shell of a structure used in the production of biofuels, wine, beer, distilled beverages or dairy products is not considered real property, even if the exterior shell has structural, insulation, or temperature control functions. The exterior shell of the structure shall be considered real property if it is used primarily for the storage of ingredients/materials used in the production of the same.

Section 8. Proposed levy. Extends, from September 15 to September 30, the deadline for counties and cities to certify their proposed levies to the county auditor. Towns and special taxing districts are still required to adopt and submit their proposed levy by September 15. For towns, the final certified levy shall also be considered the proposed levy.

Section 9. Composite judgment. Clarifies that confessions of judgments covering any part of a parcel classified as either residential homestead or the special homestead classification for persons qualified as blind or permanently and totally disabled are subject to the new interest rate schedule established in Section 9.

Section 10. Installment payments. Provides that for parcels classified as residential homestead or the special homestead classification for persons qualified as blind or permanently and totally disabled, the interest rate on confessions of judgments shall be set annually by the commissioner of revenue at the greater of five percent or two percent above the prime rate charged by banks during the six-month period ending on September 30 of that year.  The interest rate established under this section will remain for the duration of the judgment.

Section 11 and 12. Anoka County; levy authority. Allows Anoka County to levy property taxes for public safety improvements and equipment. Currently, Anoka County has the authority to bond for public safety projects on behalf of the Anoka County Joint Law Enforcement Council. This section allows the county to levy for projects and have the levy continue to appear on a separate line on the TNT and property tax statement.

Section 13. Special services districts; treatment of levy. Provides that a property that is wholly or partially classified as class 3 and located in a special service district is subject to the charges imposed by the city on the special service district. If a property is subject to the service charge, then all portions of the property, including those not classified as class 3, may be subject to the charge. Current law requires that 50 percent or more of the property be class 3.

Section 14. County program aid; AIS definitions. Defines ‘watercraft trailer launch’ and ‘watercraft trailer parking space’.

Section 15. County program aid; AIS need aid. Allocates the county need aid appropriation for aquatic invasive specifies prevention at 50 percent based on each county’s share of watercraft trailer launches and 50 percent based on each county’s share of watercraft trailer parking spaces.

Section 16. County program aid; AIS use of proceeds. Requires that a county that receives a distribution under the county need aid for aquatic invasive species prevention must use the proceeds solely to prevent the introduction of or limit the spread of aquatic invasive species. The county may appropriate the proceeds directly or use any portion to provide funding for a joint powers board or cooperative agreement with another political subdivision.

Section 17. City formula aid. Clarifies that for city aids payable in 2015 and thereafter, if a city’s certified aid from the previous year is greater than the sum of its unmet need plus its aid adjustment, its formula aid is adjusted to equal its unmet need.

Section 18. County program aid; AIS appropriation. Appropriates $10,000,000 of county program need aid for aquatic invasive species prevention for aids payable in 2015 and thereafter. The first installment payment for aids payable in 2015 shall be made on March 15, 2015, and the second payment shall be made on July 20, 2015.

Section 19. PILT; ditch assessments. Provides that the distribution of funds for local assessments to counties containing state-owned lands with a conservation area shall be divided to the counties in proportion to each county’s percentage of the total annual ditch assessments.

Section 20. PILT; procedure. Requires each county containing state-owned land within a conservation area to determine and certify to the commissioner of natural resources by May 31 of the payment year the county’s ditch assessment for state-owned land. The commissioner of natural resources shall certify the assessments to the commissioner of revenue by June 15.

Section 21. PILT; general distribution. Provides technical change that ensures that each township will receive ten percent of the PILT payment relating to tax-exempt natural resource land located in the township.

Section 22 and 25. Helena Township; Scott County; board plan and program. Provides that if the subordinate service district established in Helena Township for the Silver Maple Bay Estate is eliminated and after all outstanding obligations are paid in full, the town board may vote to sell or use surplus property or the surplus of tax revenues or services charges collected from the district to connect property owners in the district to another public sewer system.  

Section 23. City of Jackson; limitation on abatement. Increases the abatement authority for the City of Jackson for taxes payable in 2015 through 2019 to the greater of ten percent of the city’s net tax capacity for the taxes payable year to which the abatement applies or $240,000.

Section 24. Fund transfer; IRRRB. Requires the Iron Range Resource and Rehabilitation Board to transfer: (1) $60,000 to the commissioner of management and budget for deposit into the general fund on July 1, 2014, for purposes of the Iron Range fiscal disparities study; and (2) $30,000 to the commissioner of management and budget for deposit into the general fund on July 1, 2016, for purposes of levy interactions.

Section 26. Iron Range fiscal disparities study. Requires the commissioner of revenue, in consultation with the IRFD administration auditor, to study the Iron Range fiscal disparities program and analyze the ability to use a municipality’s contribution based on its CI values from the current year rather than the previous year, and recommend changes to decrease the volatility of the program’s distribution. A report is due by January 15, 2015 to the chairs and ranking minority members of the house of representatives and senate tax committees.

Section 27. District One hospital. Authorizes the District One hospital district, located in the city of Faribault in Rice County, to sell the personal and real property of the district to a private hospital.  When the district board determines that all sale requirements have been met and there exists sufficient funds to pay off all outstanding bonds, each city or town in the district must file a petition for dissolution with the board.

Section 28. Special service districts; transition provision. Provides that if an owner of property within the boundaries of a special service district in existence as of June 1, 2014 and therefore becomes potentially liable for the service charges given the general law changes made in an earlier section, the owner may file a written objection with the city clerk by August 1, 2014. The city must make a determination on the objection within 30 days of the filing.

Section 29. Working group; recommendations. Requires the commissioner of revenue to convene a temporary working group to develop recommendations on methods, other than the general fund, for compensating local units of government for lost property tax revenue due to acquisitions of land funded by the outdoor heritage fund. A report is due by January 15, 2015.

Section 30. AIS; 2014 supplemental payment. Provides that for aids payable in 2014 only, the total aid payable for AIS need aid is $5,000,000. That same amount is appropriated from the general fund to the commissioner of revenue in fiscal year 2015 to make payments to the counties on July 20.

Section 31. Appropriation. Appropriates $60,000 in fiscal year 2015 from the general fund to the commissioner of revenue to pay for the Iron Range fiscal disparities study. This is a onetime appropriation.

Section 32. Study of North Dakota oil production; impact on Minnesota. Appropriates $250,000 in fiscal year 2015 from the general fund to the commissioner of employment and economic development, in consultation with the commissioner of revenue, to finance a study and analysis of the effects of current and projected oil production in North Dakota on the Minnesota economy.

Section 33. Study of Energy Producing Systems. Appropriates $150,000 in fiscal year 2015 from the general fund to the commissioner of revenue to conduct a study and analysis of the property taxation of energy producing systems. The study must address the various methods of taxation, the availability of exclusions, exemptions or payment-in-lieu arrangements, and recommendations on the taxation of solar energy producing systems. A report is due by February 1, 2015.

Section 34. Repealer. Repeals enabling legislation related to the District One hospital district that is being repealed in this bill.

 

Article 2

Sales, Use and Excise Taxes

Section 1.  Qualified Business, definition.  Adds language to limit the types of businesses that are ineligible to be certified by DEED as a qualified business for the greater Minnesota business expansion program sales tax exemption.  Effective the day following final enactment.

Section 2.  Certification of qualified business.  Extends the period in which DEED must act on an application by a business, and the period for which inaction is deemed approved from 60 days to 90 days.  Strikes the requirements for the increase in the minimum number of full-time equivalent (FTE) employees employed under the business subsidy agreement and requires instead that the business must increase the number of FTE employees during the business subsidy agreement by two employees or ten percent, whichever is greater.  Reduces the effective period for certification of a qualified greater Minnesota business from 12 years to seven years.  The certification would be effective beginning on the date that the DEED commissioner informs the business that it has been certified as a qualified business.  Effective the day following final enactment.

Section 3.  Available tax incentives.  Provides that a qualified business is eligible for a sales tax exemption up to $2 million annually and $10 million over the total period of the business subsidy agreement.  Allows the DEED commissioner discretion to set maximum amounts for the annual and total exemption amounts allowed for a qualifying business.  Effective the day following final enactment.

Section 4.  Sales and use tax, accelerated remittance.  Increases the annual liability threshold from $120,000 to $250,000 for vendors required to remit sales and use taxes on an accelerated basis and reduces the amount for the liability from 90 percent to 81.4 percent of the estimated June liability, effective beginning with the June 2014 remittances.  Under current law, vendors with sales and use, cigarettes, other tobacco products, and liquor tax liability of $120,000 or more during a fiscal year ending June 30, must pay 90 percent of the estimated June liability two business days before June 30.  Any additional tax not remitted in June is due by the following August 20 for the sales tax and August 18 for the other taxes. 

Section 5.  Accelerated payment of June sales tax liability; penalty.  Decreases the percentage of June sales tax liability that must be paid on an accelerated basis from 90 percent to 81.4 percent for purposes of the penalty for underpayment. Effective beginning with June 2014 remittances.

Section 6.  Instructional materials.  Specifies that digital audio works and digital audiovisual works prescribed in conjunction with a postsecondary education program to students regularly enrolled in that program are exempt from sales tax.  Effective the day following final enactment.

Section 7.  Bullion coin.  Provides a sales tax exemption for bullion coin, which is defined as any coin containing more than one percent by weight of silver, gold, platinum, or other precious metal.  Effective for sales and purchases made after June 30, 2014.

Section 8.  Presentations accessed as digital audio and audiovisual works.  Provides that live or pre-recorded presentations accessed as a digital audio work or digital audiovisual work, such as a seminar or course, are exempt from sales tax if the in-person presentation is not subject to sales tax.  Participants must be connected electronically and must be able to discuss information with each other and the presenter.  For presentations that may be accessed both electronically and in-person, any limitations on the amount of interaction when the presentation occurs must be the same for participants accessing the presentation electronically as for those attending in person.   Effective for sales and purchases made after June 30, 2014.

Section 9.  Coin-operated entertainment and amusement devices.  Provides a sales tax exemption for coin-operated devices when purchased by retailers selling admission to places of amusement and making amusement devices available.  Exempt devices would include juke boxes, pinball and video games, foosball and pool tables, photo booths, batting cages, and machines used in carnival games and rides.  Effective for sales and purchases after June 30, 2014.

Section 10.  Qualified data centers.  Provides that the exemption added in 2013 for computer software maintenance agreements applies for purchases made after June 30, 2013.  Adds language to paragraph (b) to specify that electricity used or consumed in a qualified refurbished data center is exempt. Strikes language in paragraph (c) that was erroneously added in the 2013 changes. Adds references to qualified refurbished data centers for purposes of the definitions of "computer software" and "enterprise information technology equipment." Adds qualified refurbished data centers to the authorization to claim the credit. Clarifies that computer software maintenance agreements purchased before July 1, 2013, do not count toward the investment threshold for a qualified data center. Strikes an internal effective date for the exemption.  

Requires DEED to certify to the commissioner of revenue when a data center or refurbished data center has met the requirements to qualify for the sales tax exemption.  The certification must include total square footage, investment amount, and the time period in which the qualifying investments were made.  Provides that refunds will not be issued until the commissioner of revenue has received the certification.  Also requires DEED to annually notify the commissioner of revenue of the data centers and refurbished data centers that are projected to become qualified in each of the next four years.  Effective the day following final enactment.  

Section 11.  Greater Minnesota business expansion sales tax exemption. Specifies that the sales tax exemption applies to property or services primarily used or consumed at the facility identified in the business subsidy agreement.  Requires that the total amount refunded to qualifying businesses is limited to the amount specified in the business subsidy agreement.  Effective the day following final enactment.

Section 12.  Sales to government.  Expands the definition of “local governments” to include instrumentalities of cities, counties, and towns; special districts; joint powers boards; or organizations created under joint powers authority.  Removes the reference to the Metropolitan Council, since the Metropolitan Council would qualify under the proposed change to the definition of "local governments."  Modifies the list of goods and services generally provided by a private business to include solid waste management services, housing facility improvements and maintenance, fitness and special interest classes, recreational and athletic facilities, banquet and private party facilities, aquatic facilities, and cemeteries.  Adds to the list of “goods and services generally not provided by a private business.” Additional goods and services would include computing services, ball fields, any goods and service provided by local government only to local governments, and housing chore, or homemaking services provided to the poor, elderly, or disabled individuals.  Effective for sales and purchases made after December 31, 2014.

Section 13.  Fundraising sales by or for nonprofit groups. Increases annual exemption threshold for fund-raising sales by nonprofit groups from $10,000 to $20,000 and provides that only the sales that exceed the $20,000 threshold are subject to sales tax.  Effective for sales and purchases made after June 30, 2014.

Section 14.  Definition of fund-raising events. Defines “fund-raising events.” For purposes of the 24-day limitation, “fund-raising events” means community, social, and entertainment events such as bake sales, galas, and carnivals. “Fund-raising events” does not include activities that are carried out in the normal course of business, such as operating a gift shop, bookstore, or restaurant. Effective the day following final enactment.

Section 15.  Nonprofit snowmobile clubs machinery and equipment.  Exempts grooming machines, attachments and other associated accessories, and repair parts from sales tax if purchased by a nonprofit snowmobile club and used primarily and directly for the grooming of state or grant-in-aid snowmobile trails.  Effective for sales and purchases made after June 30, 2014.

Section 16.  Excise tax rates; cigarettes.  Removes the excise tax rate of 283 mills for cigarettes weighing more than three pounds per thousand.  This change would also apply to little cigars, as they are taxed under the same rate structure as cigarettes.  One rate would apply to all cigarettes (and little cigars) sold in the state.  Effective July 1, 2014. 

Section 17.  Accelerated remittance; cigarette or tobacco products distributors.  Increases the annual liability threshold from $120,000 to $250,000 for taxpayers required to remit cigarette sales and excise taxes and tobacco products excise taxes on an accelerated basis and reduces the liability amount from 90 percent to 81.4 percent.  Effective beginning with the June 2014 liabilities. 

Section 18.  Accelerated remittance; alcoholic beverages distributors; penalty.  Increases the annual liability threshold from $120,000 to $250,000 for the penalty taxpayers required to remit alcoholic beverage excise taxes on an accelerated basis and reduces the liability amount from 90 percent to 81.4 percent.  Effective beginning with the June 2014 liabilities. 

Section 19.  Aircraft in lieu tax rate.  Clarifies the applicable base price amounts for the in lieu tax on aircraft using Minnesota airspace or airports to capture base prices at the threshold amounts.  The base price brackets in current law could be interpreted to exclude base prices at the threshold amounts.  Effective July 1, 2014, for aircraft tax due on or after that date.

Section 20.  Duluth food and beverage sales and use tax.  Allows the city of Duluth to increase, by ordinance, the rate on its local food and beverage tax by 0.5 percent.  The tax would increase from 1.75 percent as currently authorized to 2.25 percent.  Additional revenue generated from the increased tax rate must be used to pay bond debt service on $18,000,000 in principal to finance capital projects related to tourism and recreation in the portion of the city west of 34th Avenue West.  The increase expires when the additional revenue raised is sufficient to fund the allowed projects.  This section also eliminates obsolete language from 1998 authorizing a temporary increase in the Duluth food and beverage tax from 1.75 percent to 2.25 percent to fund the Duluth Entertainment and Convention Center and the Great Lakes Aquarium.  The authority for this increase has expired.  Effective upon the city filing approval with the secretary of state.

Section 21.  Albert Lea local sales and use tax extension.  Extends the period for the imposition of the local sales tax in Albert Lea from the lesser of 10 years or when $15 million is raised to the lesser of 15 years or when the $15 million is raised.  Effective upon the city filing approval with the secretary of state.

Section 22. Minnesota State High School League admissions ticket exemption.  Makes permanent the exemption for admission to games, events, and activities sponsored by the Minnesota State High School League (MSHSL), which is set to sunset in 2015.  Effective the day following final enactment.

Section 23.  Effective date modification for exemption for purchases covered by Medicare and Medicaid.  In the 2013 Omnibus Tax Bill, the sales tax exemption for drugs and medical devices was expanded to include items purchased in transactions covered by Medicare and Medicaid and the definition of “durable medical equipment” was expanded to include single patient use items.  These changes were effective for sales and purchases made after June 30, 2013.  This section modifies the effective date of that provision to be retroactive to April 1, 2009, and allows claims for refunds to be filed until June 30, 2015. 

Section 24.  Effective date modification for exemption for certain accessories and supplies.  In the 2013 Omnibus Tax Bill, the sales tax exemption for drugs and medical devices was expanded to include accessories and supplies required for effective use of durable medical equipment, effective for sales and purchases made after June 30, 2013.  Similar to section 23, this section modifies the effective date of that provision to be retroactive to April 1, 2009, and allows claims for refunds to be filed until June 30, 2015.

Section 25.  Effective date, qualified data centers and qualified refurbished data centers.  Clarifies the effective date for the 2013 changes to the qualified data center sales tax exemption.  Provides that the exemption applies to qualifying purchases made after June 30, 2012, except for computer software maintenance agreements (only these purchases made after June 30, 2013 would count toward the qualification threshold and be eligible for a sales tax exemption).  If a data center qualified under the criteria as provided in the original exemption (enacted in 2011 and effective beginning July 1, 2012), then the 2013 changes (other than for computer software maintenance agreements) would continue to be effective for sales and purchases made after June 30, 2012. Effective the day following final enactment.

Section 26.  Effective date, construction materials for a biopharmaceutical facility.  Clarifies that the sales tax refund on construction materials and capital equipment for construction or expansion of a qualifying pharmaceutical manufacturing facility may not be applied for before June 30, 2015. Effective the day following final enactment.

Section 27.  Proctor food and beverage sales and use tax.  Authorizes the city of Proctor to impose a sales tax of up to one percent on food and beverages sold in restaurants and places of refreshment, including retail on-sale liquor and fermented malt beverages, located in the city.  Provides that the proceeds of the taxes must be used to fund construction and improvement of walking and bicycle trails; a civic center and parking improvements; and redevelopment and realignment of a road through the fairgrounds.  Proceeds may also be used to pay debt service on bonds or other obligations issued to finance the projects.  Authorizes the city to enter into an agreement with the commissioner of revenue to administer, collect, and enforce the food and beverage and entertainment taxes.  Effective upon the city filing approval with the secretary of state.

Section 28.  Albert Lea local sales and use tax; validation of prior act.  Authorizes the city to file its approval of its local sales taxes originally authorized in 2005 and 2006 by June 15, 2014.  Under current general law, if a local government does not file a certificate of approval before the first day of the next legislative session, the law is deemed to be disapproved by such unit unless otherwise provided in the special law.  Effective the day after final enactment.      

Section 29. Sales tax exemption; instrumentalities of the states.  Authorizes a temporary sales tax exemption for prepared food, candy, beverages, and alcoholic beverages purchased by an organization that is an instrumentality of all the states and made in connection with holding an annual meeting in Minnesota.  Effective for sales and purchases made between July 1, and December 31, 2014.

 

Article 3

Income and Estate Taxes

Section 1.  Small business investment credit.  Removes unnecessary language pertaining to the administration of the credit.  Effective the day following final enactment. 

Section 2.  Greater Minnesota internship credit; definitions.  Modifies the definition of “eligible institution” to include graduate degree-granting colleges and universities.  Modifies the definition of “eligible student” to include a student who has completed one-half of the credits necessary to obtain a graduate degree.  Effective the day following final enactment.

Section 3.  Greater Minnesota internship credit; length of internship.   Decreases the minimum length of time for a qualifying internship from 12 weeks to eight weeks.  Effective the day following final enactment.

Section 4.  Greater Minnesota internship credit; reporting requirement.  Extends by one year the dates for the two reports due to the legislature.  Effective the day following final enactment. 

Section 5.  Minnesota tax laws; definition. Strikes a reference to the gift tax chapter in the definition of “Minnesota tax laws”.  The gift tax was repealed in Laws 2014, Chapter 150.  Effective the day following final enactment.

Section 6.  Gift tax; disclosure to data subject. Strikes language allowing donors to inspect gift tax returns, as the gift tax was repealed in Laws 2014, chapter 150.  Effective the day following final enactment.

Section 7.  Update of administrative tax provisions. Adopts federal tax administrative changes made between December 20, 2013, and March 26, 2014.  The federal law enacted in that time period does not change federal provisions referenced in chapter 289A.  Effective retroactive to tax year 2013.

Section 8. Factors in determining domicile. Requires that the commissioner or a court shall not consider the location of an individual's attorneys, CPAs, or financial advisors when making a determination of the individual's abode for purposes of the definition of "resident." Effective the day following final enactment.

Section 9.  Update to federal definition of taxable income. Adopts the federal changes to taxable income made in the Philippines Charitable Giving Assistance Act, which allows taxpayers to elect to treat contributions for typhoon relief made after March 25, 2014, and before April 15, 2014, as though they were made on December 31, 2013.  This would allow individual and corporate calendar-year taxpayers to deduct qualifying typhoon relief contributions on their 2013 federal income tax returns rather than on their 2014 returns and would allow deductions made by Minnesota taxpayers to flow through to their 2013 state returns.  Effective retroactive to tax year 2013.

Section 10.  Subtractions from federal taxable income.  Provides a subtraction from income for the value of employee transit passes and van pooling transportation expenses at the same level as the federal exclusion for qualified parking expenses. This subtraction effectively extends the "transit parity rule" by providing a new subtraction for Minnesota taxable income for the amount of transit and vanpool expenses allowed under federal law but expiring after tax year 2013. The amount would be calculated the same way as previously done under federal law, including indexing for inflation. Effective beginning in tax year 2014.

Also provides a subtraction for income resulting from discharge of indebtedness on a principal residence. The subtraction applies to debt reduced as part of a mortgage restructuring as well as debt forgiven in connection with a foreclosure. This income has been excluded from income at the federal and state level for tax years 2007 through 2013; the subtraction in this section has the effect of extending the exclusion at the state level to tax year 2014. Effective for tax year 2014 only.

Section 11.  Internal Revenue Code. Adopts federal changes to federal adjusted gross income (FAGI) made between December 20, 2013 and March 26, 2014. AGI is used for computing individual alternative minimum tax and determining withholding, and is the starting point for calculating household income, which is used to compute the dependent care and K-12 education credit. The change to federal adjusted gross income is described in an earlier section.  Effective retroactive to tax year 2013.

Section 12.  Credit allowed; current military service.  Increases the credit amount from $120 to $200 per month that is allowed for each month that an individual served in a combat zone or qualified hazardous duty area anytime on or after January 1, 2014. The pay received by the individual claiming the credit must have been excluded as combat pay from federal gross income for federal purposes and the claimant’s home of record during military service must have been in Minnesota.  Effective beginning in tax year 2014. 

Section 13.  Credit allowed; past military service.  Increases the credit amount from $750 to $1,500 for individuals who separated from military service before the end of the year and served at least 20 years in the military, had a service-connected disability rating of 100 percent total and permanent (as rated by the U.S. Department of Veterans’ Affairs), or were honorably discharged and receive a pension or other retirement pay for service in the military.  Effective beginning in tax year 2014.

Section 14.  Volunteer first responder credit.  Provides a $450 income tax credit for qualified volunteer firefighters, volunteer ambulance attendants, and volunteer emergency medical responders who have served in that capacity for a total of more than one calendar year and for at least six months in the year for which the credit is claimed.  Effective beginning in tax year 2014.

Section 15. Reciprocity.  Modifies the requirements for the commissioner to enter into an income tax reciprocity agreement with Wisconsin. Requires that the state with a net revenue loss must receive the amount of that loss by the other state. If an agreement is entered into before October 1, 2014, then the amount received by Minnesota must be at least the net revenue loss minus $1,000,000. The $1,000,000 amount must not be subtracted from the payment if an agreement is reached after September 30, 2014. Defines "net revenue loss."  Effective the day following final enactment.

Section 16.  Alternative minimum tax; individuals. Provides a subtraction from alternative minimum taxable income for amounts deducted under the subtraction for qualifying transit and vanpooling expenses and discharge of indebtedness income provided in an earlier section.  Effective beginning in tax year 2014. 

Section 17.  Internal Revenue Code reference; property tax refund chapter. Adopts the federal changes that affect household income in the property tax refund chapter, which uses the definition of federal adjusted gross income as a starting point.  Effective retroactively to tax year 2013.

Section 18.  Estate tax; definitions.  Requires that the provisions in section 8 regarding allowed factors for determining domicile also apply for purposes of estate tax. Effective the day following final enactment.

Provides a new definition for “qualified work of art” to mean a work of art, as defined under federal estate tax law that is owned by a non-resident and on loan to a Minnesota art museum or similar charity.  Under this provision, these works of art would not be treated as having a Minnesota situs and therefore would not be included in the Minnesota taxable estate.  Also updates the reference to the Internal Revenue Code for the estate tax through March 26, 2014.  Effective retroactively for decedents dying after December 31, 2013.

Section 19.  Effective date; Minnesota taxable estate. Clarifies that the effective date of the new definition of the Minnesota taxable estate, enacted in Laws 2014, chapter 150, applies only to taxable gifts made after June 30, 2013.  The three-year look back for the (now repealed) gift tax, which included taxable gifts made within three years of the date of death in the estate, would be limited to gifts that were taxable under the repealed gift tax.  Effective the day following final enactment.

Section 20.  Definition of taxable gift.  Defines taxable gifts for purpose of the three-year look back rule for estates of decedents who died between June 30, 2013 and January 1, 2014.  This provision codifies the definition in the repealed gift tax.  Effective retroactively for taxable gifts made after June 30, 2013.  

Section 21.  Temporary education credits.  Allows a credit for taxpayers with a child who has an individualized education program (IEP).  The credit amount is 75 percent of expenses paid for tutoring or other instruction paid to an instructor that is not compensated by insurance or other means to assist a qualifying child in improving specified academic standards, up to $2,000.  Allows a credit for taxpayers with a qualifying child who has been evaluated for, but not found to have, a specific learning disability, and for whom the evaluation indicated a determination of deficiency in reading skills that impaired the child in meeting expected standards.   The credit amount is 75 percent of expenses paid for tutoring, instruction, or treatment by an instructor not compensated by insurance or other means to assist students in improving reading skills, up to $2,000.  Both credits are refundable and assignable.  The form and manner for claiming the credit is prescribed by the commissioner of revenue.  Requires the commissioner of revenue to provide a report to the House and Senate tax committees indicating the number of taxpayers claiming the credits and the average amount of credits claimed, and on the administration of the credits, including recommendations for compliance.  Both credits are effective for tax year 2014 only.     

 

Article 4

Minerals

Section 1. Net proceeds tax; distribution. Modifies the distribution of the net proceeds tax for cities, counties and school districts to include the area where the mine and concentration plants are located. The allocation to the DJJ fund is reduced and the allocation to the taconite environmental protection fund is increased. Effective July 1, 2014.

Section 2. Iron Range school consolidation and cooperatively operated school account. Modifies the definition of ‘qualified school project’.

Section 3. Aggregate materials tax. Extends, by five years, the authority for a county that borders two other states and that is not contiguous to a county that imposes the tax to charge a reduced rate of ten cents per cubic yard or seven cents per ton.

Section 4. 2008 distributions only. Modifies the allocation of the taconite production tax to the city of Aitkin by allowing usage for any economic development project.

Section 5. 2013 distributions only. Modifies the allocation of the taconite production tax to the city of Cook by eliminating the .5 cent per ton allocation for a water line project and adding it to the existing 1.5 cent per ton allocation for street improvements, business park infrastructure and maintenance garage.

Section 6. Reallocation of bond payments. Reallocates certain terminating school bond amounts to the Iron Range school consolidation and cooperatively operated school account.

 

Article 5

Local Development

Section 1. Five-year rule. Extends the five-year rule to eight years for redevelopment districts certified after April 20, 2009 and before June 30, 2013.

Section 2. City of Bloomington; Old Cedar Avenue bridge. Allows the city of Bloomington to use any remaining funds that were authorized in the 2013 Omnibus Tax Bill for the purposes of repairing, renovating or replacing of the Old Cedar Avenue bridge, to improve bicycle and pedestrian trails that access the bridge.

Section 3. City of Baxter; tax increment financing. Authorizes the city of Baxter to expand the boundaries of Isle Drive TIF district to include an additional parcel and provides special rules for calculating the original tax capacity of the district and the use of increments.

Section 4. City of Eagan; tax increment financing. Provides a ten-year duration extension for the Cedar Grove tax increment financing district in the city of Eagan.

Section 5. City of Edina; tax increment financing. Authorizes the city of Edina to establish one or more housing districts in the Southeast Edina Redevelopment Project Area subject to the following special rules: (1) the districts would have a 20-year duration; (2) the city may elect to increase, by up to 15 percentage points, the permitted amount of pooling; and (3) the city may substitute “20 percent” for “40 percent” for purposes of the number of units occupied by individuals whose income is 60 percent or less of the area median gross income.

Section 6 and 9. Cities of Maple Grove and Savage; tax increment financing. Provides the cities of Maple Grove and Savage special law authority to establish TIF districts until December 31, 2022. Before using this authority, the cities must find that 80 percent of the defined area has one or more of the following conditions (a parcel is treated as wholly meeting a requirement if 70 percent of its area meets the requirement, except a 30-percent test applies for the substandard building requirement):

  • Peat or other geotechnical difficulties with the soil that impair the ability to develop the parcel;
  • Landfills, dumps, or similar conditions
  • Quarries (e.g., gravel pits) or similar  extraction sites;
  • Floodway; and
  • Substandard building(s)

Any type of TIF district, except an economic development or housing district, would qualify for special rules, including a newly created soil deficiency district. The five-year rule does not apply, and not more than 80 percent of the total revenue derived from the district may be spent outside the district but within the project area.

Section 7. City of Mound; tax increment financing. Extends the five-year rule to thirteen years for the Mound Harbor tax increment financing district.

Section 8. City of North St. Paul; tax increment financing. Provides the city of North St. Paul additional time to request certification of a redevelopment tax increment financing district. A specified parcel is allowed to be included in the district if the building was (1) demolished after the city adopted a resolution; (2) the building was removed by the city or owner of the property by entering into a development agreement; and (3) the request for certification is filed by December 31, 2017. The city may use the current value of the parcels for purposes of calculating original net tax capacity.

Section 10. Workforce housing tax increment financing pilot project. Authorizes the governing body of a city with a population exceeding 1,500 and located in either Roseau or Pennington County to establish a maximum of two housing tax increment financing districts subject to special rules. The city may elect to substitute “80 percent” for both the 40-60 percentage requirements in the 40-60 test for determining income limits. Within five years of certification of the district, the city must submit a report to the legislature outlining how the project was funded, in addition to the use of tax increment financing.

 

Article 6

Miscellaneous

Section 1.  Appropriation.  Removes language requiring the transfer of $1 million for the Agricultural Utilization Research Institute (AURI) from the general fund to the commissioner of revenue for deposit in a special revenue fund.  The proposed language would appropriate the amount from the general fund and not require deposit into a special revenue fund. 

Section 2.  Transfer-on-death of title to motor vehicle.  Allows a transfer-on-death (TOD) beneficiary designation to be entered on a motor vehicle certificate of title.  This designation is subject to rights of secured parties.  Specifies the information that must be included on the title certificate to accomplish registration in TOD form. The title transfer need not be supported by consideration, and the title does not need to be delivered to the beneficiary.  Provides that a TOD beneficiary has no interest in the motor vehicle until the death of the owner.  The owner or joint owners with rights of survivorship may change the TOD designation without the beneficiary’s consent by applying for a new certificate of title.  Provides that motor vehicle ownership vests in a TOD beneficiary upon the death of the owner or the last surviving joint owner, subject to the rights of secured parties, including a claim or lien by the state or a county agency under specified circumstances.  The TOD beneficiary may obtain a new certificate of title upon providing proof of the death of the transferor.  If no TOD beneficiaries survive the transferor, the motor vehicle is included in the probate estate of the deceased owner.  A TOD transfer is not a testamentary transfer.  States that this section does not limit the rights of secured parties or creditors, including the state or a county agency in specified circumstances, of the owner against a TOD beneficiary.

Section 3.  Tax clearance required.  Requires that a licensing authority (of professional and occupational licenses) notify a license holder of the potential revocation of license within ten days of receipt of notification by the commissioner of the license holder’s tax delinquency.  The notice must provide a copy of the commissioner’s notice to the licensing authority and include information on the option to receive tax clearance from the commissioner.  The licensing authority must revoke the license after 30 days from receipt of notice by the commissioner, unless it receives tax clearance from the commissioner.  Effective July 1, 2014.

Section 4.  Notice and hearing.  Requires the commissioner to notify the taxpayer of the intent to require revocation of a professional or occupational license and of the applicant’s right to a hearing.  The notice required to the license holder under section 3 may not be made until the notification to the taxpayer is made under this section.  Effective July 1, 2014. 

Section 5.  Motor vehicle sales tax for TOD vehicles.  Provides that the acquisition of a motor vehicle by inheritance or bequest also include TOD vehicles.  These acquisitions are not considered a sale, purchase, or acquisition that would otherwise trigger obligation to pay the motor vehicle sales tax.

 

Article 7

Unsession

Sections 1 to 3.  References to “debt qualification plan.”  Amends section 16D.02, subdivisions 3 and 6, and section 16D.04, subdivision 3, to replace all references to debt qualification plans.  The definition of “debt qualification plan” is also repealed in the repealer section.  The department no longer uses debt qualification plans, but instead uses service level agreements.  Effective the day following final enactment.

Section 4.  References to management and budget.  Amends section 16D.04, subdivision 4, to remove references to management and budget.  Revenue contracts directly with collection entities.  Effective the day following final enactment.

Sections 5 and 6.  Notice requirements.  Amends section 16D.07 and section 16D.11, subdivision 1, to put all notice requirements in the same section.  The notice language currently contained in section 16D.11 is moved to section 16D.07.  An obsolete reference to management and budget is removed from section 16D.11, subdivision 1; management and budget is no longer involved in determining the collection cost amount.  An obsolete sentence appropriating collection costs collected by private agencies to referring agencies to pay collection fees is removed because collection fees to private agencies are now paid by the department.  Effective the day following final enactment.

Sections 7, 8, and 16.  References to “enterprise.”  Amends section 16D.11, subdivisions 3 and 7; and section 270A.03, subdivision 2, to remove references to the enterprise.  The definition of “enterprise” is repealed in the repealer section because there is no longer a separate unit within Revenue that collects only nontax debt.  The entire Collection Division collects both tax and nontax debt.  Effective the day following final enactment.

Section 9.  Reforestation areas, 1931.  Amends section 84A.20, subdivision 2, to eliminate obsolete tax references (to property tax base amounts in 1931) under a program allowing counties to apply for the state takeover of lands for reforestation.  Effective the day following final enactment.

Section 10.  Reforestation areas, 1933.  Amends section 84A.31, subdivision 2, to eliminate obsolete tax references (to property tax base amounts in 1933) under a program allowing counties to apply for the state takeover of lands for reforestation.  Effective the day following final enactment.

Section 11.  Drycleaner fee.  Amends section 115B.49, subdivision 4, to provide that sellers of dry cleaning solvents must file their returns and pay the tax on the same time and manner that they pay their sales tax.  This section is effective for fees due after June 30, 2014.

Section 12.  County road and bridge levy.  Amends section 163.06, subdivision 1, to eliminate an obsolete reference to the tax on money and credits.  This tax has not been imposed since the 1940s and was formally repealed in 1979.  Effective the day following final enactment.

Section 13.  State Board of Equalization.  Amends section 270.11, subdivision 1, to remove the unnecessary phrase, “which board of equalization is hereby continued.”  The remaining language provides that the commissioner continues as the State Board of Equalization.  Effective the day following final enactment.

Sections 14 and 29.  State Board of Equalization meeting times/dates.  Amends section 270.12, subdivision 2, to streamline language and eliminate duplicative provisions.  This bill strikes paragraphs 2 and 5.  The language in those paragraphs provides that the board can reduce aggregate valuations. Paragraphs 1 and 3, which already provide that the board can increase aggregate valuations, are amended to provide that the board may add or deduct from aggregate valuation.  Also amends a cross reference in section 273.1325, subdivision 2 that will be incorrect when paragraph 5 is eliminated.  Effective the day following final enactment.

Section 15.  State Board of Equalization/treatment of public utility property.  Amends section 270.12, subdivision 4, to remove unnecessary language.  The provision provides that public utility property is treated as a separate class of property.  The stricken language states that this treatment is notwithstanding the fact that its class rate is the same as commercial industrial property.  Effective the day following final enactment.

Section 17.  Return information of biotechnology and health sciences industry zone businesses.  Amends section 270B.14, subdivision 3, to remove data practices reference to the biotechnology and health sciences industry zone, which is repealed in the repealer section.  Effective January 1, 2016. 

Section 18.  Notification requirements; sales and use taxes.  Amends section 270C.085, which requires the commissioner of revenue to electronically update sales-tax-permit-holders of changes in sales tax laws and interpretation and administration of those laws.  Because the commissioner established its notification system as required prior to December 31, 2009, the language requiring its completion by December 31, 2009 is no longer necessary.  Effective the day following final enactment.

Section 19.  Payment agreement fee.  Amends section 270C.52, subdivision 2, to remove obsolete language that indicates the payment agreement fee reflects the commissioner’s costs for entering into payment agreements.  When the payment agreement fee was initially proposed, it was a flat $25 fee that was adjusted annually to reflect the commissioner’s costs. It was subsequently changed to a flat $50 fee with no annual adjustment, but the language referencing the commissioner’s costs was not removed.  Effective the day following final enactment.

Section 20.  Exempt property.  Amends section 272.01, subdivision 1, to remove language exempting specific personal property, which is covered by the remaining general-exemption language for personal property.  Effective the day following final enactment.

Sections 21, 45, 52, 55 and 63.  Telegraph companies.  Amends section 272.01, subdivision 3; 280.03; and 282.01, subdivision 6; 282.04, subdivision 4; 282.261, subdivision 5; and 290.015, subdivision 1, to remove obsolete references to telegraph companies (the outdated communication system of sending messages by telegram).  Effective the day following final enactment.

Section 22.  Remove a cross reference in section 272.025, property tax filing requirement.  The cross reference to section 272.02, subdivision 1, is removed because that subdivision is being repealed.  The repealed subdivision is redundant language.  Effective the day following final enactment.

Section 23.  Utility personal property.  Amends section 272.027, subdivision 1, to eliminate a cross reference to a subdivision repealed in the repealer section and to a previously repealed subdivision.  Effective the day following final enactment.

Section 24.  Wind energy production tax.  Amends section 272.029, subdivision 6, to eliminate obsolete language governing past distributions of wind energy production tax revenues.  Effective the day following final enactment.

Sections 25 and 80.  Assessor salaries.  Amends sections 273.061, subdivision 6 and 412.131, to remove obsolete assessor salary scales and compensation for city and county assessors.  This language provides minimum compensation levels that are far below current assessor salaries.  Effective the day following final enactment.

Section 26.  Assessment books.  Amends section 273.10, to remove requirements for recording certain information in obsolete paper assessment books.  Counties electronically maintain the required information about the school district in which property lies. Effective the day after final enactment.

Section 27.  Income producing property.  Amends section 273.11, subdivision 13, to remove the phrase, “Beginning with the 1995 assessment.”  Because the 1995 assessment is long past, this phrase is now obsolete.  Effective the day following final enactment.

Section 28.  Private golf club guidelines.  Amends section 273.112, subdivision 6a, to remove obsolete language for mailing program guidelines.  The language required the commissioner of revenue to mail qualification guidelines related to outdoor recreation space for private golf courses to county attorneys and county assessors within 60 days of May 26, 1989, and for assessors to mail those guidelines to each golf club in the county within 15 days of receiving the guidelines from the commissioner.  Effective the day following final enactment.

Section 30.  Exempt property records.  Amends section 273.18, to remove a reference to obsolete paper assessment books because these records are now maintained electronically.  The amendment also updates the statute’s year-of-reference to allow auditors to base their six-year cycle from 2010 rather than 1926.  Effective the day following final enactment.

Section 31.  Boards of appeal and equalization.  Amends section 274.01, subdivision 1, to remove unnecessary and obsolete language requiring the board to list omitted property “on a form appended to the assessment book.”  The reference to the assessment book is stricken because some boards use electronic systems.  Effective the day following final enactment.

Section 32.  Special boards of equalization.  Amends section 274.01 subdivision 2, to remove the phrase “including a city whose charter provides for a board of equalization” so that the first sentence of the subdivision will read: “The governing body of a city may appoint a special board of review.”  The removed language is superfluous.  Effective the day following final enactment.

Sections 33 and 34.  Computation of tax capacity.  Amends section 275.08 subdivision 1a and 1d to remove obsolete language applicable to taxes payable in 1989 and 1990.  Effective the day following final enactment. 

Sections 35, 36 and 37.  Special levies.  Amends section 275.70, subdivision 5 to eliminate obsolete and minor provisions from the definition of special levies under general law.  This provision is not now in effect; the 2014 levy limits were imposed under a temporary, uncodified provision of law that only recognized selected special levies.  Also amends cross references in sections 275.74, subdivision 2; and 275.75.  Effective the day following final enactment.

Section 38 and 39.  Interest on delinquent property taxes.  Amends section 279.03, subdivisions 1 and 1a to remove obsolete date-specific provisions that have passed and are no longer applicable.  Effective the day following final enactment.

Sections 40, 41, 42, 46, 48, and 50.  Tax judgments.  Amends section 279.16; 279.23; 279.25; 280.07; 281.03; and 281.327, to remove obsolete references to a paper judgment book.  While these paper records were once necessary for recording and tracing property tax judgments, these records are now maintained electronically.  Effective the day following final enactment.

Section 43.  Installment payments for tax forfeited property.  Amends section 279.37, subdivision 2, to eliminate obsolete references to 1941 statutes, and replace those references with references to current statutes.  Effective day following final enactment.

Sections 44 and 47.  Tax judgment sales.  Amends  section 280.001 and 280.11, to remove obsolete date-specific language related to public sales of property against which there is a tax judgment and a provision prohibiting the assignment of the state’s interest in a parcel of land after it has been bid in for the state, as well as to remove obsolete references to telegraphs.  Effective the day following final enactment.

Section 49.  Redemption periods.  Amends section 281.17, to remove obsolete redemption provisions for land in the Loring Park neighborhood for redemption periods beginning after June 30, 1991, but before July 1, 1996.  Effective the day following final enactment.

Section 53.  Repurchase of tax-forfeited property.  Amends section 282.261, subdivision 2, to remove obsolete date-specific language.  Effective the day following final enactment.

Section 54.  Service fee for repurchase of tax-forfeited land.  Amends section 282.261, subdivision 4, by removing the obsolete provision that the statute applies to repurchase applications received after July 1, 1985, as the statute has long been in effect.  Effective the day following final enactment.

Section 56.  Forfeited lands.  Amends section 282.322 to remove obsolete references to session laws.  Effective the day following final enactment.

Section 57.  Documentary stamps.  Amends section 287.30, to remove reference to obsolete deed tax documentary stamps, which are no longer used to reflect that deed tax has been paid.  Effective the day following final enactment.

Section 58.  Requirement to pay estimated tax.  Amends section 289A.25, subdivision 1, to remove duplicative language that says estimated payments are not required if the estimated tax is less than $500.  This language is also found in 289A.25, subdivision 4.  Effective the day following final enactment.

Section 59.  Domestic Corporation.  Amends section 290.01, subdivision 5, to eliminate references to foreign sales corporations, which no longer exist under federal law.  Effective for tax years beginning after December 31, 2013.

Sections 60 and 65.  Obsolete modifications for intangible drilling costs.  Amends  sections 290.01, subdivision 19d, and 290.0921, subdivision 3, to remove obsolete modifications for intangible drilling costs incurred in table years prior to 1987.  Effective for taxable years beginning after December 31, 2013.

Sections 60, 61, and 70.  Basis modifications.  Amends section 290.01, subdivision 19f to remove obsolete language related to the Accelerated Cost Recovery System (ACRS).  All assets placed in service using ACRS have now been completely depreciated. Minnesota now uses the same depreciation schedule as federal law (Modified Accelerated Cost Recovery System - MACRS).  Assets depreciated under ACRS and the Minnesota law modifications now have the same basis and there are no longer any taxpayers who need to make this modification.  For the same reasons, section 290.01, subdivision 19e is repealed in this bill.  Cross references to subdivision 19e are also struck from sections 290.01, subdivision 19d, and 280.0921 subdivision 3 and 290.9728, subdivision 2.  Effective for taxable years beginning after December 31, 2013.

Section 62.  Corporate taxable income.  Amends section 290.01, subdivision 29, to remove the exemption of income attributable to operating in biotechnology and health sciences industry zone from the definition of taxable income of a corporation.  The biotechnology zone program is repealed in the repealer section.  Effective for taxable years beginning after December 31, 2015.

Section 64.  Annual accounting period.  Amends section 290.07, subdivision 1, to repeal obsolete language regarding accounting periods.  Because Minnesota starts with federal taxable income (290.01, subdivision 19), income taxpayers must use the same accounting periods for Minnesota purposes as used for federal purposes.  Effective for taxable years beginning after December 31, 2013.

Section 65.  Accounting methods.  Amends section 290.07, subdivision 2, to repeal obsolete language regarding accounting methods.  Because we start with federal taxable income (290.01, subdivision 19), income taxpayers must use the same accounting method for Minnesota purposes as used for federal purposes.  Effective for taxable years beginning after December 31, 2013.

Section 66.  Corporate alternative minimum taxable income.  Amends section 290.0921, subdivision 3 to remove the reference to intangible drilling costs and the exclusion of income attributable to operating in a biotechnology and health sciences industry zone from the definition of alternative minimum taxable income of a corporation.  The biotechnology zone program is repealed in the repealer section.  The provision dealing with intangible drilling costs is effective for taxable years beginning after December 31, 2013 and the provision dealing with the biotechnology zone is effective for taxable years beginning after December 31, 2015. 

Section 67.  Minimum fee calculation.  Amends section 290.0922, subdivision 3, to eliminate the exemption for biotechnology and health science industry zone property and payroll factors from the minimum fee calculation.  The biotechnology zone program is repealed in the repealer section.  Effective for taxable years beginning after December 31, 2015.

Section 68.  Net operating loss carryover.  Amends section 290.095, subdivision 3, to remove obsolete language regarding net operating losses incurred in taxable years beginning before January 1, 1987, which allowed five-year carryovers and three-year carrybacks.  These periods are now complete.  The remaining language allows losses incurred in taxable years beginning after January 1, 1987 to be carried over for fifteen years.  Effective for taxable years beginning after December 31, 2013. 

Section 69.  Obsolete sales clause.  Amends section 290.191, subdivision 5, to remove an obsolete phrase regarding sales of tangible personal property made within this state.  The phrase was made obsolete by prior year legislative changes to the sales factor.  Effective the day following final enactment.

Section 71.  Admissions.  Amends section 297A.61, subdivision 3, to remove the term “Turkish bath” because they are considered “steam baths” which are already specifically taxable under this statute, making “Turkish bath” redundant.  Effective the day following final enactment.

Section 72.  Nonprofit tickets or admissions.  Amends section 297A.70, subdivision 10, which provides a sales tax exemption for tickets or admissions to events sold by qualifying nonprofit organizations.  The amendment deletes language that governed the phase in of the requirement that the nonprofit’s annual revenue includes a fixed percentage of voluntary contributions.  The fixed percentage phased in from 3 percent to 5 percent.  Effective the day following final enactment. 

Sections 73, 74 and 75.  Exemption refunds.  Amends section 297A.75, subdivision 1, to remove the refund provision for building materials for the Long Lake Conservation Center.  Construction of that facility is complete.  Amends cross references found in section 297A.75, subdivisions 2 and 3.  Also amends section 297A.75, subdivision 3, to delete language regarding construction material and equipment refund limits for the Central Corridor Light Rail line for tax years 2010 and 2011.  These refunds have already been paid.  Also deletes language providing that refund applications by the Metropolitan Council or the Department of Transportation for equipment operations and Central Corridor Light Rail must not be issued until after July 1, 2009.  Because 2009 is past, this language is obsolete.  Effective the day following final enactment.

Section 76.  Deposit of revenues.  Amends  section 297A.94, clause (e), to remove deposit percentages that relate to past years 2001, 2002, 2003, and 2004 for the deposit of Lottery in lieu taxes.  Effective the day following final enactment.

Section 77.  Allocation of revenue.  Amends section 297B.09 subdivision 1, to remove deposit allocation provisions that relate to past years 2007, 2008, 2009, 2010 and up to June 30, 2011, for motor vehicle sales tax.  Effective the day following final enactment.

Section 78.  Cigarette and tobacco products license application forms.  Amends section 297F.03, subdivision 2, to delete a list of information required on applications for cigarette and tobacco product licenses (e.g. name, address, type of business entity, and any other information).  The remaining language provides for a form as prescribed by the commissioner.  Effective the day following final enactment.

Section 79.  Life insurance.  Amends section 297I.05, subdivision 14, to delete superfluous language.  The deleted language provides phased-in tax rate for insurers who sell life insurance for different periods starting in January 1, 2006, and ending December 31, 2008.  Since the rate during these periods is no longer relevant, only the current rate of 1.5 percent should be provided.  Effective the day following final enactment.

Section 81.  Police and fire retirement supplemental aid.  Amends section 423A.022, subdivision 3, to remove irrelevant language what was erroneously left in the bill that enacted the statute in 2013.  The bill was amended through the legislative process, and this language inadvertently remained from an early version of that bill.  Effective the day after final enactment.

Section 82.  Compact development TIF districts.  Amends section 469.176, subdivision 1b, to eliminate reference to compact development TIF districts.  The authority to establish these districts expired in 2012 and was apparently never used.  Effective the day following final enactment.

Section 83.  TIF administrative expenses.  Amends section 469.176, subdivision 3, to eliminate obsolete language in the TIF statute governing administrative expenses.  This would remove language that applied to districts that requested certification between July 31, 1979 and June 30, 1982, and is no longer applicable.  Effective the day following final enactment. 

Section 84.  TIF authority for biotechnology and health science industry zones.  Amends section 469.1763, subdivision 2 to clarify that the special TIF authority for biotechnology and health science industry zones (which are being repealed in the repealer section) can be used until those zones expire.  This authority is not dependent on state funding of the zone and remains viable until the zone, which has subzones in Minneapolis, St. Paul, and Rochester, expires at the end of 2015.  Effective the day following final enactment and applies to all districts, regardless of when the request for certification was made.

Section 85.  Metropolitan Airports Commission (MAC) bonds.  Amends section 473.665, subdivision 5, to eliminate an obsolete reference to the tax on money and credits in a MAC bonding statute.  This tax has not been imposed since the 1940s and was formally repealed in 1979.  Effective the day following final enactment.

Section 86.  County program aid.  Amends section 477A.0124, subdivision 5, to remove outdated provisions for 2009 county program aid to Pine County, which has already been paid and is no longer effective.  Effective the day following final enactment.

Sections 87.  Local government aid.  Amends section 477A.014, subdivision 1, to remove obsolete references to road accident factor, which is no longer used as a factor for calculating local aid.  Effective the day following final enactment.

Sections 88 and 89.  County Aid.  Amends section 611.27, subdivisions 13 and 15, by removing cross-references to section 477A.0124, subdivision 1, which is being repealed in this bill.  These provisions in section 611.27, instruct the commissioner of revenue to pay for county program aid and court transcripts using the county aid funds under section 477A.0124, subdivision 1, which only applied to county program aid for 2004.  Effective the day after final enactment.

Section 90.  Revisor’s Instruction.  Instructs the Revisor of Statutes to make all necessary cross references in Minnesota Statutes and rules and other changes consistent with the changes made in this bill.

Section 91.  Repealer.  Repeals the following statutes and rules:

3.192

Tax expenditure statement of purpose requirement. Effective retroactively from April 1, 2014.

16D.02, subdivision 5

Defines “debt qualification plans,” which are no longer used.  The department uses service level agreements.  Effective the day following final enactment.

16D.02, subdivision 8

Defines “enterprise,” which was a separate unit within Revenue that collected only nontax debt.  Now, the entire Collection Division collects both tax and nontax debt, making any reference to “enterprise” obsolete.  Effective the day following final enactment.

16D.11, subdivision 2

Relating to obsolete computation and requirement to return debts.  This subdivision set the initial percentage rate for calculating collection costs, and this rate is now obsolete.  The current rate and method of determining the rate are contained in subdivision 7 of this section.  Debts are no longer returned to the commissioner when collection cost cancellation is requested by the debtor.  Instead, the commissioner resolves the request and notifies the agency of the resolution.  Effective the day following final enactment.

270C.131

This statute is repealed because this quarterly sales tax report is no longer wanted or needed by Explore Minnesota Tourism.  Effective the day following final enactment.

270C.53

Repeal of a provision that gives the commissioner the authority to abate the liability of a taxpayer who is not able to pay a delinquent tax liability if the taxpayer agrees to perform uncompensated public service.  This program has not been used in a number of years, and it is not anticipated that the program will be used in the future as it was rarely used and found to be difficult to administer and track.  Effective the day following final enactment.

270C.991, subdivision 4

Repeals the Property Tax Working Group that completed its duties in 2013.  Effective the day following final enactment.

272.02, subdivisions 1 and 1a

Repeals redundant language stating the property listed in section 272.02 is exempt and these exemptions are subject to the limitations of section 272.025.  This language is redundant, as each subdivision in the section specifically states each identified type of property is exempt, and section 272.025 already states that it is applicable to section 272.02.  Effective the day following final enactment.

272.02, subdivisions 48, 51, 53, 67, 72 and 82

Repeals exemptions for electric generation facilities that required that these facilities be built by the specific date in each subdivision, and the facilities that were intended to be covered by these exemptions were never built.  No taxpayers are covered by the subdivisions that would be repealed, and the time-limiting provisions prevent any taxpayer from claiming these exemptions in the future.  These exemptions were for facilities in Fillmore County (subdivision 48); Waseca County (subdivisions 51 and 72); City of Minneapolis (subdivisions 53 and 82); and Dakota County (subdivision 67).  Effective the day following final enactment.

272.027, subdivision 2

Repeals personal property tax exemption for public utility project in Itasca County.  Plans to construct the plant were cancelled in 2002.  Effective the day following final enactment.

272.031

Repeals unnecessary language specifying that abbreviations may be used in property tax records, but ditto marks and the abbreviation “do” may only be used as to a property owner’s name and the addition or the subdivision in which property lies.  Effective the day following final enactment.

273.015, subdivision 1

Repeals unnecessary language specifying that property tax statements must be rounded to the nearest even cent, such as $--.02, $--.54, or $--.78.  Counties round property tax to the nearest dollar, which makes this provision obsolete.  Effective the day following final enactment.

273.03, subdivision 3

Repeals unnecessary language specifying that other laws that are not inconsistent with certain statutes continue in full force and effect.  This states a basic tenet of statutory interpretation and is therefore superfluous.  Effective the day following final enactment.

273.075

Repeals obsolete provision related to a one-time appropriation in 1971 for payment of assessor instructional courses at the University of Minnesota, which are no longer offered.  Effective the day following final enactment.

273.1383

Repeals provisions providing for replacement aid to counties affected by flooding in 1997.  These counties included Polk, Clay, Kittson, Marshall, Norman, and Wilkin.  This provision is obsolete, because it only applied to assessment years 1998, 1999, and 2000, and provided for general fund appropriations in fiscal years 2000, 2001, and 2002, which have passed.  Effective the day following final enactment.

273.1386

Repeals provisions providing for replacement aid to cities affected by flooding in 2002. These counties included Roseau, Becker, Beltrami, Clay, Clearwater, Itasca, Kittson, Koochiching, Lake of the Woods, Mahnomen, Marshall, McLeod, Norman, Pennington, Polk, Red Lake, and Wright.  This provision is obsolete, as it only provided for flood aid to be paid in 2004.  This statute’s provision that reduced local aid to affected cities that received the flood aid in fiscal year 2006 is similarly obsolete.  Effective the day following final enactment.

273.80

Repeals the distressed homestead reinvestment property tax exemption, which has sunset as a function of statute.  The statute required, among other factors, that a property qualify for the exemption by May 1, 2003. Additionally, a property could only qualify for the exemption for five years after initially qualifying.  Accordingly, the latest that a property owner could have claimed the exemption was in 2008.  Effective the day following final enactment.

275.77

Repeals expired date-specific language regarding maintenance of effort and matching fund requirements.  This obsolete provision temporarily suspended any new or increased maintenance of effort or matching fund requirements until July 1, 2011.  Effective the day following final enactment.

279.32

Obsolete provision related to lands with delinquent tax repurchased before 1936, which allowed a county to take certain action by February 1, 1945, to list such property as delinquent for taxes for 1942.  Effective the day following final enactment.

281.173, subdivision 8

Repeals the section’s subdivision providing that the statute, relating to redemption periods for certain abandoned properties, is applicable only to tax judgment sales on or after April 13, 1996.  Because the statute remains in effect, and the effective date has passed, this subdivision is obsolete.  Effective the day following final enactment.

281.174, subdivision 8

Repeals the section’s subdivision providing that the statute, relating to redemption periods for certain vacant properties, is applicable only to tax judgment sales on or after April 13, 1996.  Because the statute remains in effect, and the effective date has passed, this subdivision is obsolete.  Effective the day following final enactment.

281.328

Obsolete provision validating state assignment certificates issued before January 1, 1972, even if such certificates have not been recorded within seven years of being issued.  Effective the day following final enactment.

282.10

Obsolete provision authorizing reimbursement to the purchaser of tax-forfeited property made before 1940 that are invalidated by a court, if the parcel was sold pursuant to 1935 law.  Effective the day following final enactment.

282.23

Obsolete provision providing that the sale of property that was forfeited to the state in 1926 or 1927 shall be conducted in the usual manner.  Effective the day following final enactment.

287.20, subdivision 4

Repeals the definition of “documentary stamps,” which is obsolete because such stamps are no longer used to verify that deed tax has been paid on recorded conveyances.  Effective the day following final enactment.

287.27, subdivision 2

Repeals provision authorizing the use of tax meter machines, used to affix documentary stamps, which are obsolete, as counties no longer use either tax meter machines or documentary stamps.  Effective the day following final enactment.

290.01, subdivision 4b

Repeals the definition of “mutual property and casualty insurance company,” which is no longer used in Chapter 290 since its reference was repealed from section 290.05 in 2001.  Effective the day following final enactment.

290.01, subdivision 19e

Repeals obsolete language related to the Accelerated Cost Recovery System (ACRS) because all assets placed in service using ACRS have now been completely depreciated.  Effective for taxable years beginning after December 31, 2013.

290.01, subdivision 20e

Repeals a duplicate modification in computing taxable income of the estate of a decedent. Federally, estates are allowed to deduct expenses either on the fiduciary income tax return or estate tax return, but not both.  Minnesota follows this election by operation of section 290.01, subdivision 19 (income tax) and section 291.03, subdivision 1a (estate tax).  The duplication in section 290.01, subdivision 20e is not necessary.  Effective the day following final enactment.

290.0674, subdivision 3

Repeals the prohibition against claiming the education credit against the alternative minimum tax.  This prohibition has not affected any taxpayers.  A similar prohibition concerning the working family credit was repealed in 2003.  Effective for taxable years beginning after December 31, 2013.

290.33

Repeals a provision that explains how to administer a tax imposed in the middle of a calendar year.  Introduced in the 1930s, this section is no longer relied on.  Instead, each law change is enacted with an appropriate effective date.  Effective for taxable years beginning after December 31, 2013.

291.41 – 291.47

Repeals the law authorizing arbitration of disputes between or among states over their jurisdiction to impose estate or inheritance taxes on a decedent’s estate.  This law was enacted in 1951 and according to DOR has never been used.  Effective the day following final enactment.

295.52, subdivision 7

Repeals language that deals with a temporary tax rate reduction of the MinnesotaCare tax for the years 1998 to 2003.  The current tax rate is stated in section 295.52, subdivisions 1- 4.  Effective the day following final enactment.

297A.71, subdivision4

Repeals an obsolete sales tax construction exemption for the Lake Superior Center, which was built in 2000.  Effective the day following final enactment.

297A.71, subdivision 5

Repeals an obsolete sales tax construction exemption for the Science Museum of Minnesota, which was built in 1999.  Effective the day following final enactment.

297A.71, subdivision 7

Repeals an obsolete sales tax construction exemption enacted in 1997 for an alfalfa biomass facility, which was never built.  Effective the day following final enactment.

297A.71, subdivision10

Repeals a sales tax construction exemption that applies to Northwest Airlines in 1991 to build a heavy maintenance facility in Duluth, Minnesota.  Effective the day following final enactment.

297A.71, subdivision 17

Repeals an obsolete sales tax construction exemption for the Long Lake Conservation Center located in Aitkin County because the construction and improvements for this center are complete.  Effective the day following final enactment.

297A.71, subdivision 18

Repeals an obsolete sales tax construction exemption for a soybean oilseed processing and refining facility for CHS, Inc. in Marshall, Minnesota because construction was completed in 2002-2003.  Effective the day following final enactment.

297A.71, subdivision 20

Repeals a sales tax construction exemption enacted in 1999 for the construction of a cattle slaughterhouse facility that was completed in December, 2001.  Effective the day following final enactment.

297A.71, subdivision 32

Repeals an obsolete the sales tax construction exemption for the construction of the Walker Art Center, which was completed in April 2005.  Effective the day following final enactment.

297F.08, subdivision 11

Repeals obsolete language in cigarette tax dealing with railroad sleeping car companies as distributors.  There are no licensed distributors who identify themselves as railroad sleeping car companies.  Effective the day following final enactment.

297H.10, subdivision 2

Repeals solid waste management penalty for failure to file.  Subdivision 1 imposes the same failure to file penalty as applies for sales tax, which is a penalty of 5 percent of the tax not paid.  Effective the day following final enactment.

469.174, subdivision 10c

Definition of compact development TIF districts – the authority to establish these districts expired in 2012.  Effective the day following final enactment.

469.175, subdivision 2b

Sunset of compact development TIF district authority.  Effective the day following final enactment.

469.176, subdivision 1i

Permitted use of increments for compact development TIF districts.  Effective the day following final enactment.

469.1764

Pre-1982 TIF districts – these districts have now all been decertified; any remaining increments would be required to be returned.  Effective the day following final enactment.

469.177, subdivision 10

Distribution of TIF revenues generated by referendum levies to school districts – this provision is obsolete since all of these operating referenda levies are now spread on market value, which do not generate tax increment.  Effective the day following final enactment.

477A.0124, subdivisions 1 and 6

Repeals provisions providing for county program aid in 2004, 2011, and 2012.  Because these aid payments have been made and the provisions have no ongoing effects, these provisions are obsolete.  Effective the day following final enactment.

505.173

Repeals obsolete authority for local governments to correct defects in plats.  The authority granted in this statute expired in 1953.  Effective the day following final enactment.

Minnesota Rules, 8002.0200, subpart 8

Repeals a rule related to individual net operating loss, which is obsolete as a result of numerous law changes since the rule was promulgated in the 1970’s.  Effective the day following final enactment.

Minnesota Rules, 8007.0200

Repeals a rule regarding changes in accounting methods, which is obsolete because income taxpayers must use the same accounting periods for Minnesota purposes as used for federal purposes.  Effective for taxable years beginning after December 31, 2013.

Minnesota Rules, 8100.0800

Repeals an obsolete rule relating to the phase-in of utility property valuation changes due to amendments made to Minnesota Rule 8100 (Utility Valuation).  Valuation changes between the new and old rule were phased in for assessment years 2007-2009.  This rule is no longer needed because for assessment years 2009 and subsequent years the current rule is fully in place.  Effective the day following final enactment.

Minnesota Rules, 8130.7500, subpart 7

Minnesota Rules, 8130.8900, subpart 3

 

Minnesota Rules, 8130.9500, subparts 1, 1a, 2, 3, 4, and 5

Repeals an obsolete subpart concerning microfilm reproductions of records.  Microfilm is an outdated technology, and taxpayers no longer store records using microfilm.  Effective the day following final enactment.

Repeals a rule regarding florists and nurseries, to delete language regarding sourcing of telegraphic orders by florists and nurseries that became obsolete when section 297A.668 was amended in 2011 to add subdivision 9.  Effective the day following final enactment.

 

Repeals the aircraft registration rule in its entirety, as the reporting and registration requirements in the rule are obsolete.  Aircrafts are now registered through the Office of Aeronautics, Department of Transportation, by using its aircraft registration application and procedures.  Effective the day following final enactment.

Also repeals the following provisions related to the biotechnology and health science industry zone program, which under current law is set to sunset December 31, 2015, but for which no tax benefits have been available since 2005:

  • Section 290.06, subdivision 30 (biotechnology and health science industry zone job credit); and
  • Section 290.06, subdivision 31 (biotechnology and health science industry zone research and  development credit) are repealed effective for taxable years beginning after December 31, 2015.
  • Section 289A.56, subdivision 7 (interest payable on biotechnology and health science industry zone sales tax refunds);
  • Section 297A.68, subdivision 38 (biotechnology and health science industry zone sales tax exemption);
  • Section 469.330 (biotechnology and health science industry zone definitions);
  • Section 469.331 (biotechnology and health science industry zone development plans);
  • Section 469.332 (biotechnology and health science industry zone zone limits);
  • Section 469.333 (applications for biotechnology and health science industry zone designations);
  • Section 469.334 (designation of biotechnology and health science industry zones);
  • Section 469.335 (application for biotechnology and health science industry zone tax benefits);
  • Section 469.336 (tax incentives available in biotechnology and health science industry zones);
  • Section 469.337 (corporate biotechnology and health science industry zone franchise tax exemption);
  • Section 469.338 (biotechnology and health science industry zone jobs credit);
  • Section 469.339 (biotechnology and health science industry zone research credit);
  • Section 469.340 (repayment of biotechnology and health science industry zone tax benefits); and
  • Section 469.341 (biotechnology and health science industry zone performance and remedies) are repealed effective January 1, 2016.

 

Article 8

Department Policy and Technical: Property Tax

Section 1. Certification to county assessors. Allows commissioner of revenue to make clerical corrections to state assessed values until December 31 of the assessment year.

Section 2. Correction of errors. Allows the commissioner to make clerical corrections relating to wind energy production amounts up until December 31.

Section 3. Listing and assessment, time. Allows county assessors to make clerical corrections relating to personal as well as real property valuations.

Section 4. Class 1. Specifies that the market value of class 1d property has a classification rate of one percent on the first $500,000 of market value and a classification rate of 1.25 percent on the market value that exceeds $500,000.

Section 5. Class 4. Clarifies that class 4bb property has a classification rate of one percent on the first $500,000 of market value and a classification rate of 1.25 percent on the market value that exceeds $500,000.  Class 4c shall have a classification rate of one percent on the first $500,000 and 1.25 percent on the remainder.

Section 6. Computation. Changes the deadline for the Department of Revenue to file its annual adjusted net tax capacity report from June 15 to June 30.

Section 7. Listing and assessment by commissioner. Allows the commissioner to make clerical corrections to state assessed pipeline values until December 31.

Section 8. Listing and assessment by commissioner. Allows the commissioner to make clerical corrections to transmission line values until December 31.

Section 9. Recommend and ordered values. Allows the commissioner to make clerical corrections to state assessed values until December 31 of the assessment year.

Section 10. Ordinary board; meeting, deadlines, grievances. Allows local board of equalizations to meet at a central location within the county or at the office of the town or city clerk. Current law requires the meetings be held at the office of the clerk.

Section 11. Proof of compliance; transfer of duties. Changes the date by which the local board of equalizations must provide proof that they have complied with training requirements from December 1 to February 15. Also changes the deadline from December 1 to February 15 for local boards whose powers are transferred to the county to file the required resolutions and proofs of compliance with training requirements to the county assessor in order to have their powers restored.

Section 12. Reallocation of amortization state aid. Corrects an internal reference to a repealed subdivision by providing the appropriate subdivision.

Section 13. PILT; general distribution. Clarifies that a township with qualifying land receives ten percent of the payment a county receives for the land in that township

Section 14. Revisor’s instruction. Instructs the Revisor to replace the term “class rate” with the term “classification rate” wherever it appears in statute.

 

Article 9

Department Policy and Technical:  Income and Franchise; Sales and Use

Section 1. Procedure to Request Abatement.  Allows the commissioner to abate certain late filing and late payment penalties, related interest, and the additional tax charge.  This section clarifies that the procedures provided in the amended subdivision apply to all of the items listed in  the previous subdivision.  Effective the day following final enactment.

Section 2. Limitations Period for Assessment. Allows the commissioner to make a personal liability assessment within one year of a final administrative or judicial determination of the underlying business tax.  Current law limits the commissioner to make a personal liability assessment within the prescribed period of limitations for assessing the underlying business tax, or within one year after the date of an order assessing the underlying tax, whichever period expires later. In some cases, this means a personal liability assessment is made before the amount of the underlying business tax is finally determined.  Effective the day following final enactment.

Section 3. Withholding Tax Return Due Dates.  Changes the due date of the 4th quarter withholding tax return from February 28 to January 31, or to February 10 if all withholding deposits for the quarter have been timely made. This change coincides with the due date of the 4th quarter federal withholding tax return.  Effective for returns due after January 1, 2016.   Also relieves some seasonal employers from having to file withholding tax returns for periods of anticipated inactivity, unless they pay wages during that period. Effective for wages paid after December 31, 2015.

Section 4.  Dyed Fuel. Clarifies that dyed biodiesel and dyed biodiesel blends are included in the definition of dyed fuel.  Effective the day following final enactment.

Section 5.  Special Revenue Account Appropriation.  Provides an annual appropriation language for the amounts the commissioner of revenue is authorized to deduct as reimbursement of its indirect costs for administering the collection and remittance of the prepaid wireless E911 fee and the prepaid wireless telecommunications access Minnesota fee.  Effective retroactively from January 1, 2014.

Section 6.  Contribution In Aid of Construction. This provision amends Minnesota Laws 2013, Chapter 143, Article 8, Section 3, to make paragraph (p) (providing that payments made to a cooperative electric association or public utility as a contribution in aid of construction is a contract for improvement to real property and is not a retail sale) effective the day following final enactment.  Effective retroactively from the day following final enactment of the session law.

Section 7.  Repealer.  Florists and Nurseries; Aircraft Registration. Repeals language regarding sourcing of telegraphic orders by florists and nurseries that became obsolete when the sourcing statute was amended in 2011 to add a provision regarding sourcing of florist sales. Repeals obsolete reporting and registration requirements contained in the rule.  Aircrafts are now registered through the Office of Aeronautics, Department of Transportation, by using its aircraft registration application and procedures. Both repealers are effective the day following final enactment.

 

ESS/NPB/JP/SM:tg

 
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